Item 16. Form 10-K Summary

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

			COSTAR GROUP, INC.
			By:			/s/ Andrew C. Florance
February 21, 2024						Andrew C. Florance
						President and Chief Executive Officer

KNOW ALL PERSONS BY THESE PRESENTS, that each individual whose signature appears below constitutes and appoints Andrew C. Florance and Scott T. Wheeler, and each of them individually, as their true and lawful attorneys-in-fact and agents, with full power of substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this report, and to file the same, with all exhibits thereto and to all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, herein by ratifying and confirming all that said attorneys-in-fact and agents or any of them, or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1934, as amended, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature						Capacity						Date
/s/ Michael R. Klein						Chairman of the Board						February 21, 2024
Michael R. Klein
/s/ Andrew C. Florance						Chief Executive Officer and						February 21, 2024
Andrew C. Florance						President and a Director
						(Principal Executive Officer)
/s/ Scott T. Wheeler						Chief Financial Officer						February 21, 2024
Scott T. Wheeler						(Principal Financial and Accounting Officer)
/s/ Angelique G. Brunner						Director						February 21, 2024
Angelique G. Brunner
/s/ Michael J. Glosserman						Director						February 21, 2024
Michael J. Glosserman
/s/ John W. Hill						Director						February 21, 2024
John W. Hill
/s/ Laura Cox Kaplan						Director						February 21, 2024
Laura Cox Kaplan
/s/ Christopher J. Nassetta						Director						February 21, 2024
Christopher J. Nassetta
/s/ Louise S. Sams						Director						February 21, 2024
Louise S. Sams
/s/ Robert W. Musslewhite						Director						February 21, 2024
Robert W. Musslewhite

COSTAR GROUP, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firm (PCAOB ID Number 42)			F-2
Consolidated Statements of Operations			F-6
Consolidated Statements of Comprehensive Income			F-7
Consolidated Balance Sheets			F-8
Consolidated Statements of Changes in Stockholders’ Equity			F-9
Consolidated Statements of Cash Flows			F-10
Notes to Consolidated Financial Statements			F-12

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of CoStar Group, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of CoStar Group, Inc. (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 21, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

F-2

						Highly Automated Revenue Systems related to Subscription Revenue
Description of the Matter						As described in Note 2 to the consolidated financial statements, the Company derives revenues primarily by (i) providing access to its proprietary database of commercial real estate information and (ii) providing online marketplaces for professional property management companies, property owners, real estate agents and brokers and landlords, in each case, typically through a fixed fee for its subscription-based services. Revenues from subscription-based contracts are approximately 95% of total revenues for the current year and are recognized on a straight-line basis over the term of the agreement. The Company’s revenue recognition process involves several applications responsible for the initiation, processing, and recording of transactions. These applications interface with the Company’s enterprise resource planning system through automated and manual journal entries to accurately reflect revenue.
						The process to calculate, aggregate, and record revenue relies on multiple internally developed and external software programs and systems and involves interfacing significant volumes of data across the systems. Auditing the Company's accounting for revenue from subscription-based contracts was challenging and complex due to the high volume of individually-low-monetary-value transactions, dependency on the effective design and operation of multiple applications, some of which are specifically designed for the Company's business, and the use of multiple data sources in the revenue recognition process. Given the complexity of the information technology (IT) environment, the required involvement of professionals with expertise in IT to identify, test, and evaluate the revenue data flows, systems, and automated controls, we considered the audit of the Company’s subscription revenue-generating transactions to be a critical audit matter.
How We Addressed the Matter in Our Audit						We performed procedures related to the Company’s internal controls that included, among others, obtaining an understanding, evaluating the design, and testing the operating effectiveness of internal controls over the Company’s accounting for subscription revenue. We tested the controls over the initiation and billing of new and recurring subscriptions, the provisioning of customers, and the Company’s cash to billings reconciliation process. We tested the controls related to the key application interfaces between the provisioning, billing, and accounting systems and tested IT general controls related to access to the relevant applications and data, and changes made to the relevant systems, configurations and interfaces.
						We performed substantive audit procedures that included, among others, testing the Company’s accounting for revenue from contracts with customers, by testing, on a sample basis, the completeness and accuracy of the underlying data within the Company’s billing system. We performed data analytics by extracting data from the general ledger to evaluate the completeness and accuracy of recorded revenue and deferred revenue amounts, tracing a sample of sales transactions to source data, and testing a sample of cash to billings reconciliations.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 1994.

Tysons, Virginia

February 21, 2024

F-3

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of CoStar Group, Inc.

Opinion on Internal Control over Financial Reporting

We have audited CoStar Group, Inc.’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, CoStar Group, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of CoStar Group, Inc. as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income, changes in stockholders' equity and cash flows for each of the three years in the period ended December 31, 2023 and the related notes of CoStar Group, Inc. and our report dated February 21, 2024 expressed an unqualified opinion thereon.

As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of OnTheMarket Plc., which is included in the 2023 consolidated financial statements of the Company and constituted less than 1% and 1% of total and net assets, respectively, as of December 31, 2023, and less than 1% and less than 1% of revenues and net income, respectively, for the year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of OnTheMarket Plc.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

F-4

Tysons, Virginia

February 21, 2024

F-5

COSTAR GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data)

			Year Ended December 31,
			2023						2022						2021
Revenues			$	2,455.0					$	2,182.4					$	1,944.1
Cost of revenues			491.5						414.0						357.2
Gross profit			1,963.5						1,768.4						1,586.9
Operating expenses:
Selling and marketing (excluding customer base amortization)			989.9						684.2						622.0
Software development			267.6						220.9						201.0
General and administrative			381.5						338.7						256.8
Customer base amortization			42.2						73.6						74.8
			1,681.2						1,317.4						1,154.6
Income from operations			282.3						451.0						432.3
Interest income (expense), net			213.6						32.1						(31.6)
Other income, net			5.4						3.4						3.3
Income before income taxes			501.3						486.5						404.0
Income tax expense			126.6						117.0						111.4
Net income			$	374.7					$	369.5					$	292.6
Net income per share — basic			$	0.92					$	0.93					$	0.75
Net income per share — diluted			$	0.92					$	0.93					$	0.74
Weighted-average outstanding shares — basic			405.3						396.3						392.2
Weighted-average outstanding shares — diluted			406.9						397.8						394.2

See accompanying notes.

F-6

COSTAR GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)

						Year Ended December 31,
						2023						2022						2021
Net income						$	374.7					$	369.5					$	292.6
Other comprehensive income (loss), net of tax
Foreign currency translation adjustment						11.5						(23.3)						(4.9)
Total other comprehensive income (loss)						11.5						(23.3)						(4.9)
Total comprehensive income						$	386.2					$	346.2					$	287.7

See accompanying notes.

F-7

COSTAR GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(in millions, except per share data)

			December 31,
			2023						2022
ASSETS
Current assets:
Cash and cash equivalents			$	5,215.9					$	4,968.0
Accounts receivable			213.2						166.1
Less: Allowance for credit losses			(23.2)						(12.2)
Accounts receivable, net			190.0						153.9
Prepaid expenses and other current assets			70.2						64.0
Total current assets			5,476.1						5,185.9
Deferred income taxes, net			4.3						9.7
Property and equipment, net			472.2						321.3
Lease right-of-use assets			79.8						80.4
Goodwill			2,386.2						2,314.8
Intangible assets, net			313.7						329.3
Deferred commission costs, net			167.7						142.5
Deposits and other assets			17.7						16.6
Income tax receivable			2.0						2.0
Total assets			$	8,919.7					$	8,402.5
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable			$	23.1					$	28.6
Accrued wages and commissions			117.8						105.0
Accrued expenses			163.0						89.1
Income taxes payable			7.7						10.4
Lease liabilities			40.0						36.0
Deferred revenue			104.2						103.6
Total current liabilities			455.8						372.7
Long-term debt, net			990.5						989.2
Deferred income taxes, net			36.7						76.2
Income taxes payable			18.2						14.0
Lease and other long-term liabilities			79.9						80.4
Total liabilities			1,581.1						1,532.5
Stockholders’ equity:
Preferred stock, $0.01 par value; 2 million shares authorized; zero outstanding			—						—
Common stock, $0.01 par value; 1.2 billion shares authorized; 408.1 million and 406.7 million issued and outstanding as of December 31, 2023 and 2022, respectively			4.1						4.1
Additional paid-in capital			5,147.8						5,065.4
Accumulated other comprehensive loss			(17.6)						(29.1)
Retained earnings			2,204.3						1,829.6
Total stockholders’ equity			7,338.6						6,870.0
Total liabilities and stockholders’ equity			$	8,919.7					$	8,402.5

See accompanying notes.

F-8

COSTAR GROUP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in millions)

			Common Stock												Additional Paid-In Capital						Accumulated Other Comprehensive Loss						Retained Earnings						Total Stockholders’ Equity
			Shares						Amount
Balance at January 1, 2021			394.3						$	3.9					$	4,204.7					$	(0.9)					$	1,167.5					$	5,375.2
Net income			—						—						—						—						292.6						292.6
Other comprehensive loss			—						—						—						(4.9)						—						(4.9)
Exercise of stock options			0.2						—						6.3						—						—						6.3
Restricted stock issued			0.9						—						—						—						—						—
Restricted stock grants surrendered			(0.6)						—						(33.3)						—						—						(33.3)
Stock-based compensation expense			—						—						62.6						—						—						62.6
Employee stock purchase plan			0.2						—						13.0						—						—						13.0
Balance at December 31, 2021			395.0						3.9						4,253.3						(5.8)						1,460.1						5,711.5
Net income			—						—						—						—						369.5						369.5
Other comprehensive loss			—						—						—						(23.3)						—						(23.3)
Restricted stock issued			1.5						0.1						—						—						—						0.1
Restricted stock grants surrendered			(0.7)						—						(23.1)						—						—						(23.1)
Stock-based compensation expense			—						—						74.6						—						—						74.6
Employee stock purchase plan			0.2						—						15.0						—						—						15.0
Stock issued for equity offerings, net of transaction costs			10.7						0.1						745.6						—						—						745.7
Balance at December 31, 2022			406.7						4.1						5,065.4						(29.1)						1,829.6						6,870.0
Net income			—						—						—						—						374.7						374.7
Other comprehensive income			—						—						—						11.5						—						11.5
Exercise of stock options			0.4						—						7.5						—						—						7.5
Restricted stock issued			1.4						—						—						—						—						—
Restricted stock grants surrendered			(0.7)						—						(23.2)						—						—						(23.2)
Stock-based compensation expense			—						—						83.6						—						—						83.6
Management stock purchase plan			0.1						—						(3.2)						—						—						(3.2)
Employee stock purchase plan			0.2						—						17.7						—						—						17.7
Balance at December 31, 2023			408.1						$	4.1					$	5,147.8					$	(17.6)					$	2,204.3					$	7,338.6

See accompanying notes.

F-9

COSTAR GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

			Year Ended December 31,
			2023						2022						2021
Operating activities:
Net income			$	374.7					$	369.5					$	292.6
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			107.5						137.9						139.6
Amortization of deferred commissions costs			95.2						76.1						63.4
Amortization of Senior Notes discount and issuance costs			2.4						2.4						2.3
Non-cash lease expense			30.0						38.5						28.5
Stock-based compensation expense			85.0						75.2						63.7
Deferred income taxes, net			(37.2)						(31.2)						24.2
Credit loss expense			35.0						18.3						10.9
Other operating activities, net			(3.2)						(2.4)						(0.7)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable			(66.6)						(46.4)						(29.6)
Prepaid expenses and other current assets			(16.2)						(17.9)						(14.9)
Deferred commissions			(120.2)						(116.8)						(72.0)
Accounts payable and other liabilities			33.9						23.2						(30.2)
Lease liabilities			(39.2)						(37.4)						(30.9)
Income taxes payable, net			10.7						(19.3)						5.9
Deferred revenue			(1.3)						6.8						17.4
Other assets			(1.0)						2.2						(0.5)
Net cash provided by operating activities			489.5						478.7						469.7
Investing activities:
Proceeds from sale and settlement of investments			3.8						0.9						—
Proceeds from sale of property and equipment and other assets			—						30.1						0.6
Purchase and construction of Richmond assets			(117.5)						(35.2)						(123.7)
Purchases of property and equipment and other assets			(25.3)						(58.6)						(65.2)
Cash paid for acquisitions, net of cash acquired			(99.6)						(6.3)						(193.0)
Net cash used in investing activities			(238.6)						(69.1)						(381.3)
Financing activities:
Payments of long-term debt assumed in acquisition			—						(2.2)						—
Repurchase of restricted stock to satisfy tax withholding obligations			(26.4)						(23.0)						(33.3)
Proceeds from equity offering, net of transaction costs			—						745.7						—
Proceeds from exercise of stock options and employee stock purchase plan			23.4						13.5						18.0
Other financing activities			(0.7)						—						(0.4)
Net cash (used in) provided by financing activities			(3.7)						734.0						(15.7)
Effect of foreign currency exchange rates on cash and cash equivalents			0.7						(2.7)						(1.5)
Net increase in cash and cash equivalents			247.9						1,140.9						71.2
Cash and cash equivalents at beginning of year			4,968.0						3,827.1						3,755.9
Cash and cash equivalents at end of year			$	5,215.9					$	4,968.0					$	3,827.1

F-10

COSTAR GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

			Year Ended December 31,
			2023						2022						2021
Supplemental cash flow disclosures:
Interest paid			$	30.7					$	29.9					$	31.5
Income taxes paid			$	163.2					$	169.2					$	82.1
Supplemental non-cash investing and financing activities:
Consideration owed for acquisitions			$	7.6					$	—					$	0.1
Accrued capital expenditures and non-cash landlord incentives			$	28.9					$	14.7					$	2.1

See accompanying notes.

F-11

COSTAR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

**1.**ORGANIZATION

CoStar Group (the “Company”) provides information, analytics, online marketplaces and auction services to the commercial real estate and related business community through its comprehensive, proprietary database of commercial real estate information and related tools. The Company provides online marketplaces for commercial real estate, apartment rentals, residential real estate, land for sale and businesses for sale, and its services are typically distributed to its clients under subscription-based agreements that typically renew automatically, a majority of which have a term of at least one year. The Company operates within two operating segments, North America, which includes the U.S. and Canada, and International, which primarily includes Europe, Asia-Pacific and Latin America.

The Company acquired Homes.com, BureauxLocaux, Business Immo, and OnTheMarket in May 2021, October 2021, April 2022 and December 2023, respectively. Through our Homes.com Acquisition and OnTheMarket Acquisition, we also offer online platforms that manage workflow and marketing for residential real estate agents and brokers and provide portals for homebuyers to view residential property listings. See Note 5 for further discussion of these acquisitions.

**2.**SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Accounting policies are consistent for each operating segment.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. On an ongoing basis, the Company evaluates its estimates and assumptions, including those related to revenue recognition, allowance for credit losses, the useful lives and recoverability of long-lived and intangible assets, goodwill, income taxes, accounting for business combinations, stock-based compensation, estimating the Company's incremental borrowing rate for its leases, and contingencies, among others. The Company bases these estimates on historical and anticipated results, trends and various other assumptions that it believes are reasonable, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities and recorded revenues and expenses. Actual results could differ from these estimates.

Revenue Recognition

The Company derives revenues primarily by (i) providing access to its proprietary database of commercial real estate information and (ii) providing online marketplaces for professional property management companies, property owners, real estate agents and brokers and landlords, in each case, typically through a fixed monthly fee for its subscription-based services. Other subscription-based services include (i) real estate and lease management solutions to commercial customers, real estate investors and lenders, (ii) access to applications to manage workflow and advertising and marketing services for residential real estate agents through its Homes.com Network and the acquisition of OnTheMarket, (iii) benchmarking and analytics for the hospitality industry and (iv) market research, portfolio and debt analysis, management and reporting capabilities.

Subscription contract rates are generally based on the number of sites, number of users, organization size, the client’s business focus, geography, the number of properties reported on or analyzed, the number and types of services to which a client subscribes, the number of properties a client advertises and the prominence and placement of a client's advertised properties in the search results. The Company’s subscription-based license agreements typically renew automatically, and a majority have a term of at least one year. Revenue from our subscription-based contracts was approximately 95%, 93% and 93% of total revenue for the years ended December 31, 2023, 2022 and 2021, respectively.

The Company also derives revenues from transaction-based services including: (i) an online auction platform for commercial real estate through Ten-X, (ii) providing online tenant applications, including background and credit checks, and rental payment processing and (iii) ancillary products and services that are sold on an ad hoc basis.

The Company analyzes contracts to determine the appropriate revenue recognition using the following steps: (i) identification of contracts with customers, (ii) identification of distinct performance obligations in the contract, (iii)

F-12

COSTAR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

determination of contract transaction price, (iv) allocation of contract transaction price to the performance obligations and (v) determination of revenue recognition based on timing of satisfaction of the performance obligations.

The Company recognizes revenues upon the satisfaction of its performance obligation(s) (upon transfer of control of promised services to its customers) in an amount that reflects the consideration to which it expects to be entitled to in exchange for those services. Revenues from subscription-based services are recognized on a straight-line basis over the term of the agreement. Revenues from transaction-based services are recognized when the promised product or services are delivered, which, in the case of Ten-X auctions, is at the time of a successful closing for the sale of the property.

In limited circumstances, the Company's contracts with customers include promises to transfer multiple services, such as contracts for its subscription-based services and professional services. For these contracts, the Company accounts for individual performance obligations separately if they are distinct, which involves the determination of the standalone selling price for each distinct performance obligation.

Deferred revenue results from amounts billed in advance to customers or cash received from customers in advance of the Company's fulfillment of its performance obligation(s) and is recognized as those obligations are satisfied.

Contract assets represent a conditional right to consideration for satisfied performance obligations that become a receivable when the conditions are satisfied. Contract assets are generated when contractual billing schedules differ from revenue recognition timing.

Certain sales commissions are considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions incurred for obtaining new contracts are deferred and then amortized as selling and marketing expenses on a straight-line basis over a period of benefit that the Company has determined to be three years. The three-year amortization period was determined based on several factors, including the nature of the technology and proprietary data underlying the services being purchased, customer contract renewal rates and industry competition. Sales commissions that do not represent incremental costs of obtaining a contract, or that would otherwise be amortized over a period of one year or less, are not subject to capitalization.

See Note 3 for further discussion of the Company's revenue recognition.

Cost of Revenues

Cost of revenues principally consists of salaries, benefits, bonuses, stock-based compensation expenses and other indirect costs for the Company's researchers who collect and analyze the real estate data that is the basis for the Company's information, analytics and online marketplaces and for employees that support these products. Additionally, cost of revenues includes the cost of data from third-party data sources, product hosting costs, and costs related to advertising purchased on behalf of customers, credit card and other transaction fees relating to processing customer transactions, which are expensed as incurred, and the amortization of acquired trade names, technology and certain other intangible assets.

Foreign Currency Translation

The Company’s reporting currency is the U.S. dollar. The functional currency for the majority of its operations is the local currency, with the exception of certain international locations for which the functional currency is the British Pound. Assets and liabilities denominated in a foreign currency are translated into U.S. dollars using the exchange rates in effect as of the balance sheet date. Gains and losses resulting from translation are included in accumulated other comprehensive loss. Currency gains and losses on the translation of intercompany loans made to foreign subsidiaries that are of a long-term investment nature are also included in accumulated other comprehensive loss. Gains and losses resulting from transactions denominated in a currency other than the functional currency of the entity are included in other income, net in the consolidated statements of operations using the average exchange rates in effect during the period. The Company recognized net foreign currency gains of $3.0 million, $1.4 million, and a loss of $0.3 million for the years ended December 31, 2023, 2022 and 2021, respectively, which are included in other income, net on the consolidated statements of operations.

Accumulated Other Comprehensive Loss

F-13

COSTAR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The components of accumulated other comprehensive loss, net of tax, were as follows (in millions):

			As of December 31,
			2023						2022
Foreign currency translation loss			$	(17.6)					$	(29.1)
Total accumulated other comprehensive loss			$	(17.6)					$	(29.1)

There were no amounts reclassified out of accumulated other comprehensive loss to the consolidated statements of operations for both the years ended December 31, 2023 and 2022.

Advertising Costs

The Company expenses advertising costs as incurred. Advertising costs include digital marketing, television, radio, print and other media advertising. Advertising costs were $549.6 million, $305.7 million and $312.0 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Income Taxes

Deferred income taxes result from temporary differences between the tax basis of assets and liabilities and the basis reported in the Company’s consolidated financial statements. Deferred tax liabilities and assets are determined based on the difference between the financial statement and the tax basis of assets and liabilities using enacted rates in effect during the year in which the Company expects differences to reverse. Valuation allowances are provided against assets, including net operating losses, if the Company determines it is more likely than not that some portion or all of an asset may not be realized. Interest and penalties related to income tax matters are recognized in income tax expense.

The Company has elected to record the GILTI under the current-period cost method.

See Note 12 for further discussion of income taxes.

Net Income Per Share

Net income per share is computed by dividing net income by the weighted-average number of common shares outstanding during the period on a basic and diluted basis. The Company's potentially dilutive securities include outstanding stock options, unvested stock-based awards, which include restricted stock awards that vest over a specific service period, restricted stock awards with a performance and market condition, restricted stock units and Matching RSUs awarded under the MSPP. Shares underlying unvested restricted stock awards that vest based on a performance and market condition that have not been achieved as of the end of the period are not included in the computation of basic or diluted earnings per share. Diluted net income per share considers the impact of potentially dilutive securities except when the inclusion of the potentially dilutive securities would have an anti-dilutive effect.

See Note 16 for further discussion of the Company's calculation of net income per share.

Stock-Based Compensation

Equity instruments issued in exchange for services performed by officers, employees and directors of the Company are accounted for using a fair-value based method and the fair value of such equity instruments is recognized as expense in the consolidated statements of operations.

For stock-based awards that vest over a specific service period, compensation expense is measured based on the fair value of the awards at the grant date and is recognized on a straight-line basis over the service period of the awards, net of an estimated forfeiture rate. For equity instruments that vest based on achievement of both a performance and market condition, stock-based compensation expense is recognized over the service period of the awards based on the expected achievement of the related performance conditions at the end of each reporting period. If the Company's initial estimates of the achievement of the performance conditions change, the related stock-based compensation expense may fluctuate from period to period based on those estimates. If the performance conditions are not met, no stock-based compensation expense will be recognized and any previously recognized stock-based compensation expense will be reversed. For awards with both a performance and a market condition, the Company estimates the fair value of each equity instrument granted on the date of grant using a Monte-Carlo simulation model. This pricing model uses multiple simulations to evaluate the probability of achieving the market condition to calculate the fair value of the awards which includes the recent market price and volatility of the Company's shares. When

F-14

COSTAR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

determining the grant date fair value of all stock-based awards, the Company considers whether it is in possession of any material, non-public information that upon its release would have a material effect on its share price, and if so, whether the observable share price or expected volatility assumptions used in determining the fair value of the awards should be adjusted.

Stock-based compensation expense for stock options, restricted stock awards and restricted stock units issued under equity incentive plans, stock purchases under the ESPP, DSUs and Matching RSUs awarded under the MSPP included in the Company’s consolidated statements of operations were as follows (in millions):

			Year Ended December 31,
			2023						2022						2021
Cost of revenues			$	14.3					$	12.6					$	11.2
Selling and marketing (excluding customer base amortization)			9.1						7.8			7.8			6.3
Software development			17.5						13.0						12.5
General and administrative			44.1						41.8						33.7
Total stock-based compensation expense			$	85.0					$	75.2					$	63.7

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. Cash and cash equivalents were $5.2 billion and $5.0 billion as of December 31, 2023 and 2022, respectively. The Company had no restricted cash as of December 31, 2023 and 2022.

Concentration of Credit Risk and Financial Instruments

The Company’s customer base creates a lack of dependence on any individual customer that mitigates the risk of nonpayment of the Company’s accounts receivable. No single customer accounted for more than 5% of the Company’s revenues for each of the years ended December 31, 2023, 2022 and 2021. The carrying amount of the accounts receivable approximates the net realizable value.

The Company holds cash at major financial institutions that often exceed Federal Deposit Insurance Corporation-insured limits. The Company manages its credit risk associated with cash concentrations by diversifying cash holdings across AAA rated Government and Treasury Money Market Funds and multiple high quality financial institutions, and by periodically evaluating the credit quality of the primary financial institutions holding such deposits. The carrying value of cash approximates fair value. Historically, the Company has not experienced any losses due to such cash concentrations.

Allowance for Credit Losses

The Company maintains an allowance for credit losses to cover its current expected credit losses on its trade receivables and contract assets arising from the failure of customers to make contractual payments. The Company estimates credit losses expected over the life of its trade receivables and contract assets based on historical information combined with current conditions that may affect a customer’s ability to pay and reasonable and supportable forecasts. While the Company uses various credit quality metrics, it primarily monitors collectability by reviewing the duration of collection pursuits on its delinquent trade receivables and historical write-off trends. Based on the Company’s experience, the customer's delinquency status, which is analyzed periodically, is the strongest indicator of the credit quality of the underlying trade receivables. The Company’s policy is to write-off trade receivables when they are deemed uncollectible. A majority of the Company's trade receivables are less than 365 days outstanding.

Under the CECL impairment model, the Company develops and documents its allowance for credit losses on its trade receivables based on five portfolio segments. The determination of portfolio segments is based primarily on the qualitative consideration of the nature of the Company’s business operations and the characteristics of the underlying trade receivables, as follows:

• CoStar Portfolio Segment - The CoStar portfolio segment consists of two classes of trade receivables based on geographical location: North America and International.

F-15

COSTAR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• Information Services Portfolio Segment - The Information Services portfolio segment consists of four classes of trade receivables: CoStar Real Estate Manager; Information Services, North America; STR, North America; and STR, International.

• Multifamily Portfolio Segment - The Multifamily portfolio segment consists of one class of trade receivables.

• LoopNet Portfolio Segment - The LoopNet portfolio segment consists of one class of trade receivables.

• Other Marketplaces Portfolio Segment - The Other Marketplaces portfolio segment consists of two classes of trade receivables: Ten-X and other marketplaces.

The majority of Residential revenue is e-commerce based and does not result in accounts receivable. Residential accounts receivable and the related allowance for credit losses are not material.

See Note 4 for further discussion of the Company’s accounting for allowance for credit losses.

Leases

The determination of whether an arrangement contains a lease and the classification of a lease, if applicable, is made at the commencement of the arrangement, at which time the Company also measures and recognizes an ROU asset, representing the Company’s right to use the underlying asset, and a lease liability, representing the Company’s obligation to make lease payments under the terms of the arrangement. For the purposes of recognizing ROU assets and lease liabilities associated with the Company’s leases, the Company has elected the practical expedient to not recognize a ROU asset or lease liability for short-term leases, which are leases with a term of 12 months or less. The lease term is defined as the noncancelable portion of the lease term, plus any periods covered by an option to extend the lease if it is reasonably certain that the option will be exercised.

In determining the amount of lease payments used in measuring ROU assets and lease liabilities, the Company has elected the practical expedient not to separate non-lease components from lease components for all classes of underlying assets. Consideration deemed part of the lease payments used to measure ROU assets and lease liabilities generally includes fixed payments and variable payments based on either an index or a rate, offset by lease incentives. Upon commencement, the initial ROU asset also includes any lease prepayments. ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The rates implicit within the Company's leases are generally not determinable. Therefore, the Company's incremental borrowing rate is used to determine the present value of lease payments. The determination of the Company’s incremental borrowing rate requires judgment and is determined at lease commencement and is subsequently reassessed upon a modification to the lease arrangement.

Lease costs related to the Company's operating leases are generally recognized as a single ratable lease cost over the lease term. ROU assets resulting from finance leases are accounted for as property and equipment, net.

See Note 7 for further discussion of the Company’s accounting for leases.

Property and Equipment, Net

Property and equipment are stated at cost, net of accumulated depreciation and amortization. All repairs and maintenance costs are expensed as incurred. Costs related to acquisition of additional aircraft components or the replacement of existing aircraft components are capitalized and depreciated over the estimated useful life of the aircraft or the added or replaced component, whichever is less. Depreciation and amortization are calculated on a straight-line basis over the following estimated useful lives of the assets:

Buildings						Twenty to thirty-nine years
Land						Indefinite
Aircrafts						Ten to twenty years
Furniture and office equipment						Five to ten years
Vehicles						Four to five years
Computer hardware and software						Three to five years
Leasehold improvements						Shorter of lease terms or useful life

F-16

COSTAR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Qualifying internal-use software costs incurred during the application development stage, which consist primarily of internal product development costs, are capitalized and amortized over the estimated useful life of the asset. All other costs are expensed as incurred. The Company removes fully depreciated property and equipment from the cost and accumulated depreciation amounts disclosed in the period they become fully depreciated.

In January 2021, the Company purchased an office building located in Richmond, Virginia, together with the land and assumed an existing lease for a purchase price of $131 million, inclusive of property taxes, title insurance and other transaction costs. The purchase of the Richmond building was accounted for as an asset acquisition, including an intangible asset for the assumed lease. The assumed lease terminated in the year ending December 31 2023. The net impact from the lease arrangement is recorded in other income, net on the consolidated statements of operations and was not material. The Company has broken ground on an expansion of its campus in Richmond, Virginia and acquired a small office building near the campus to facilitate employee staging while the expansion is being constructed. The capitalized spending associated with these efforts is recorded in the purchase and construction of Richmond assets line of the consolidated statements of cash flows.

Long-Lived Assets, Intangible Assets and Goodwill

Long-lived assets, such as property and equipment, and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company capitalizes interest on borrowings during the active construction period of major capital projects. Capitalized interest is added to the cost of the underlying asset and amortized over the estimated useful life of the asset. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset or asset group. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset.

During 2022, the Company ceased using leased properties in California and Maryland as part of efforts to centralize its workforce, which resulted in an impairment charge of $9 million for lease ROU assets and property and equipment related to abandoned leases. The impairment was recorded in the general and administrative expense line of the consolidated statements of operations. The leases related to the North America segment.

Acquired technology and data, customer base assets, trade names and other intangible assets are related to the Company’s acquisitions. Acquired technology and data is amortized on a straight-line basis over periods ranging from 2 years to 7 years. Acquired intangible assets characterized as customer base assets consist of acquired customer contracts and the related customer relationships and are amortized over periods ranging from 3 years to 13 years. Acquired customer bases are amortized on an accelerated or straight-line basis depending on the expected economic benefit of the intangible asset. Acquired trade names and other intangible assets are amortized on a straight-line basis over periods ranging from 3 years to 15 years. The Company removes fully amortized intangible assets from the cost and accumulated amortization amounts disclosed.

Goodwill represents the future economic benefits arising from a business combination and is calculated as the excess of the purchase consideration paid in a business combination over the fair value of the net identifiable assets acquired. Goodwill is not amortized, but instead is assigned to each of the Company's reporting units and tested for impairment at least annually, on October 1, or more frequently if an event or other circumstance indicates that the fair value of a reporting unit may be below its carrying amount. The Company may first assess qualitative factors to evaluate whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or elect to bypass the qualitative assessment. If it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying value, or the Company elects to bypass the qualitative assessment, the Company then performs a quantitative assessment by determining the fair value of each reporting unit. The estimate of the fair value of each reporting unit is based on a projected discounted cash flow model that includes significant assumptions and estimates including the discount rate, growth rate and future financial performance. Assumptions about the discount rate are based on a weighted average cost of capital for comparable companies. Assumptions about the growth rate and future financial performance of a reporting unit are based on the Company's forecasts, business plans, economic projections and anticipated future cash flows. The fair value of each reporting unit is compared to the carrying amount of the reporting unit. If the carrying value of the reporting unit exceeds the fair value, then an impairment loss is recognized for the difference.

See Notes 5, 9 and 10 for further discussion of acquisitions, goodwill and intangible assets, respectively.

F-17

COSTAR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Debt Issuance Costs

Costs incurred in connection with the issuance of long-term debt are deferred and amortized as interest expense over the term of the related debt using the effective interest method for term debt and on a straight-line basis for revolving debt. The Company made a policy election to classify deferred issuance costs on the revolving credit facility as a long-term asset on its consolidated balance sheets. Upon a refinancing or amendment, previously capitalized debt issuance costs are expensed and included in loss on extinguishment of debt if the Company determines that there has been a substantial modification of the related debt. If the Company determines that there has not been a substantial modification of the related debt, any previously capitalized debt issuance costs are amortized as interest expense over the term of the new debt instrument.

See Note 11 for further discussion of the Company's accounting for its outstanding debt, revolving credit facility and related issuance costs.

Business Combinations

The Company includes the results of operations of the businesses that it acquires from the date of acquisition. The Company generally allocates the purchase consideration to the tangible assets acquired and liabilities assumed and intangible assets acquired based on their estimated fair values on the date of the acquisition. The purchase price is generally determined based on the fair value of the assets transferred, liabilities assumed and equity interests issued, after considering any transactions that are separate from the business combination. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. The Company applies significant assumptions, estimates and judgments in determining the fair value of assets acquired and liabilities assumed on the acquisition date, especially with respect to intangible assets and contingent liabilities. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired customer bases, acquired technology and acquired trade names, useful lives, royalty rates and discount rates. Estimates of fair value are based on assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Any adjustments to provisional amounts that are identified during the measurement period, not to exceed one year from the date of acquisition, are recorded in the reporting period in which the adjustment amounts are determined. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.

For a given acquisition, the Company may identify certain pre-acquisition contingencies as of the acquisition date and may extend its review and evaluation of these pre-acquisition contingencies throughout the measurement period in order to obtain sufficient information to assess whether the Company includes these contingencies as a part of the fair value estimates of assets acquired and liabilities assumed and, if so, to determine their estimated amounts.

If the Company cannot reasonably determine the fair value of a pre-acquisition contingency (non-income tax related) by the end of the measurement period, which is generally the case given the nature of such matters, the Company will recognize an asset or a liability for such pre-acquisition contingency if: (i) it is probable that an asset existed or a liability had been assumed at the acquisition date and (ii) the amount of the asset or liability can be reasonably estimated. Subsequent to the measurement period, changes in the Company's estimates of such contingencies will affect earnings and could have a material effect on its results of operations and financial position.

In addition, uncertain tax positions and tax-related valuation allowances assumed in connection with a business combination are initially estimated as of the acquisition date. The Company reevaluates these items based upon facts and circumstances that existed as of the acquisition date with any adjustments to its preliminary estimates being recorded to goodwill, provided that the Company is within the measurement period. Subsequent to the measurement period, changes to these uncertain tax positions and tax-related valuation allowances will affect the Company's provision for income taxes in its consolidated statements of operations and comprehensive income and could have a material impact on its results of operations and financial position.

Transaction costs associated with business combinations are expensed as incurred, and are included in general and administrative expenses in the consolidated statements of operations.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In 2021, the Company adopted ASU 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This guidance requires contract assets and liabilities acquired or assumed in an acquisition be measured in accordance with the accounting framework for revenue from contracts with customers as if the

F-18

COSTAR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Company had originated the acquired contract. This is an exception to the general requirement to measure assets acquired and liabilities assumed at their fair value on the acquisition date. The Company applied this revised guidance to all acquisitions in the year ended December 31, 2021. The application of this guidance to contract assets and contract liabilities acquired or assumed in connection with the Company's acquisitions for the year ended December 31, 2021 did not have a material impact on the Company's consolidated financial statements and related disclosures.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASC 848 contains optional expedients and exceptions for applying GAAP to debt, contracts, hedging relationships and other transactions affected by reference rate reform. The provisions of ASC 848 must be applied to all contracts that are accounted for under a Topic, Subtopic or Industry Subtopic for all transactions other than derivatives, which may be applied at a hedging relationship level. Originally, the guidance was effective for fiscal years beginning after January 1, 2021, including interim periods within those fiscal years. However, in response to the deferral of the cessation date for certain overnight LIBOR measures, the FASB issued ASU 2022-06 on December 21, 2022, which extends the sunset date of Topic 848 to December 31, 2024. The Company's 2020 Credit Agreement provides for a $750 million revolving credit facility and a letter of credit sublimit of $20 million, with interest rates previously benchmarked to LIBOR. The Company adopted this accounting pronouncement with the execution of the First Amendment to the 2020 Credit Agreement in May 2023. This guidance provides an optional practical expedient that allows a qualifying modification to be accounted for as a debt modification rather than be analyzed under existing guidance to determine if the modification should be accounted for as a debt extinguishment. In adopting this accounting standard, we have elected to apply this optional expedient. Adopting this accounting standard did not have a material impact on the Company's consolidated financial statements and related disclosures.

Recent Accounting Pronouncements Not Yet Adopted

In March 2022, the FASB issued ASU 2022-02, Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. This ASU eliminates prior guidance on troubled debt restructurings for creditors that have adopted ASU 2016-13, Measurement of Credit Losses in Financial Statements, and adds enhanced disclosures for creditors with respect to loan refinancings and restructurings for borrowers experiencing financial difficulty. In addition, the ASU amends guidance on "vintage disclosures" to require the disclosure of current period gross write offs by year of origination. This guidance is effective for fiscal years beginning after December 15, 2022. The Company expects there to be no material impact on its consolidated financial statements and related disclosures from the adoption of this ASU.

In November 2023, the FASB issued ASU No. 2023-07 (Topic 280), Improvements to Reportable Segment Disclosures. The ASU primarily will require enhanced disclosures about significant segment expenses. Additionally, it requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU No. 2023-09 (Topic 740), Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as an expansion of other income tax disclosures. The ASU is effective on a prospective basis for annual reporting periods beginning after December 15, 2024. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements and related disclosures.

F-19

COSTAR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. REVENUE FROM CONTRACTS WITH CUSTOMERS

Disaggregated Revenue

The Company provides information, analytics and online marketplaces to the commercial real estate industry, hospitality industry, residential industry and related professionals. Revenues by operating segment and type of service consist of the following (in millions):

			Year Ended December 31,
			2023																		2022																		2021
			North America						International						Total						North America						International						Total						North America						International						Total
CoStar			$	886.0					$	39.2					$	925.2					$	800.2					$	36.8					$	837.0					$	686.9					$	35.9					$	722.8
Information services			132.4						38.5						170.9						125.0						32.4						157.4						113.8						27.9						141.7
Multifamily			914.2						—						914.2						745.4						—						745.4						678.7						—						678.7
LoopNet			255.4						9.4						264.8						223.7						7.2						230.9						204.8						2.7						207.5
Residential			43.9						2.2						46.1						73.7						—						73.7						74.6						—						74.6
Other Marketplaces			133.8						—						133.8						138.0						—						138.0						118.8						—						118.8
Total revenues			$	2,365.7					$	89.3					$	2,455.0					$	2,106.0					$	76.4					$	2,182.4					$	1,877.6					$	66.5					$	1,944.1

Deferred Revenue

Deferred revenue as of December 31, 2023 and 2022 was as follows (in millions):

																					December 31,
Balance			Balance Sheet Caption																		2023						2022
Current portion			Deferred revenue																		$	104.2					$	103.6
Non-current portion			Lease and other long-term liabilities																		0.1						0.2
Total deferred revenue																					$	104.3					$	103.8

Changes in deferred revenue for the period were as follows (in millions):

Balance at December 31, 2022(1)			$	103.8
Revenue recognized in the current period from the amounts in the beginning balance			(103.8)
New deferrals, net of amounts recognized in the current period			103.4
Effects of foreign currency			0.9
Balance at December 31, 2023(2)			$	104.3
__________________________

(1) This balance includes $1.8 million of net new deferrals recognized in connection with business acquisitions made in 2022. See Note 5 for further discussion of acquisitions.

(2) This balance includes $1.0 million of net new deferrals recognized in connection with business acquisitions made in 2023. See Note 5 for further discussion of acquisitions.

Contract Assets

Contract assets are generated when contractual billing schedules differ from revenue recognition timing and represent a conditional right to consideration for satisfied performance obligations that becomes a receivable when the conditions are satisfied. Contract assets as of December 31, 2023 and 2022 were as follows (in millions):

F-20

COSTAR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

																					December 31,
Balance			Balance Sheet Caption																		2023						2022
Current portion			Prepaid expenses and other current assets																		$	5.8					$	4.0
Non-current portion			Deposits and other assets																		8.0						8.4
Total contract assets																					$	13.8					$	12.4

Revenue recognized from contract assets for the years ended December 31, 2023 and 2022 were $1.4 million and $3.2 million, respectively.

Commissions

Commissions expense is included in selling and marketing expense in the Company's consolidated statements of operations. The Company determined that no deferred commissions were impaired as of both December 31, 2023 and 2022. Commissions expense activity for the years ended December 31, 2023, 2022 and 2021, was as follows (in millions):

									Year Ended December 31,
									2023						2022						2021
Commissions incurred									$	173.5					$	162.1					$	117.3
Commissions capitalized in the current period									(120.2)						(116.8)						(72.0)
Amortization of deferred commissions costs									95.2						76.1						63.4
Total commissions expense									$	148.5					$	121.4					$	108.7

See Note 2 for the Company's policy on accounting for commissions.

Unsatisfied Performance Obligations

Remaining contract consideration for which revenue had not been recognized due to unsatisfied performance obligations was $409.6 million as of December 31, 2023, which the Company expects to recognize over the next five years. This amount does not include contract consideration for contracts with a duration of one year or less.

F-21

COSTAR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

**4.**ALLOWANCE FOR CREDIT LOSSES

The following tables detail the activity related to the allowance for credit losses for trade receivables by portfolio segment (in millions):

			Year Ended December 31, 2023
			CoStar						Information Services						Multifamily						LoopNet						Other Marketplaces												Total
Beginning balance at December 31, 2022			$	4.5					$	1.1					$	4.3					$	1.4					$	0.9											$	12.2
Current-period provision (release) for expected credit losses			22.1						1.4						4.9						6.0						0.6												35.0
Write-offs charged against the allowance, net of recoveries and other			(16.9)						—						(1.9)						(4.7)						(0.5)												(24.0)
Ending balance at December 31, 2023			$	9.7					$	2.5					$	7.3					$	2.7					$	1.0											$	23.2

-

			Year Ended December 31, 2022
			CoStar						Information Services						Multifamily						LoopNet						Other Marketplaces												Total
Beginning balance at December 31, 2021			$	5.4					$	1.8					$	3.4					$	2.0					$	0.8											$	13.4
Current-period provision (release) for expected credit losses			9.2						(0.6)						5.8						3.8						0.1												18.3
Write-offs charged against the allowance, net of recoveries and other			(10.1)						(0.1)						(4.9)						(4.4)						—												(19.5)
Ending balance at December 31, 2022			$	4.5					$	1.1					$	4.3					$	1.4					$	0.9											$	12.2

			Year Ended December 31, 2021
			CoStar						Information Services						Multifamily						LoopNet						Other Marketplaces												Total
Beginning balance at December 31, 2020			$	5.6					$	2.7					$	4.4					$	1.7					$	0.8											$	15.2
Current-period provision for expected credit losses			5.6						(0.4)						3.1						2.6						—												10.9
Write-offs charged against the allowance, net of recoveries and other			(5.8)						(0.5)						(4.1)						(2.3)						—												(12.7)
Ending balance at December 31, 2021			$	5.4					$	1.8					$	3.4					$	2.0					$	0.8											$	13.4

Credit loss expense is included in general and administrative expenses on the consolidated statements of operations. Credit loss expense related to contract assets was not material for the years ended December 31, 2023, 2022 and 2021. The majority of the Residential portfolio segment revenue is e-commerce based and does not result in accounts receivable.

F-22

COSTAR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. ACQUISITIONS

OnTheMarket

On December 12, 2023, CoStar UK acquired OnTheMarket, the operator of onthemarket.com, a U.K. residential property portal. At the time of closing, CoStar UK acquired all of the then issued ordinary share capital of OnTheMarket for cash consideration of 110 pence per share or £94.0 million ($117.9 million). OnTheMarket had certain share option contracts that had not been exercised at the time of closing for which CoStar UK has established a liability for £2.0 million ($2.6 million). This resulted in total consideration of £96.0 million ($120.4 million). Certain shares outstanding at the time of the closing resulted from contracts held by employees of OnTheMarket or its subsidiaries that required OnTheMarket to withhold income and employment taxes of £4.0 million ($5.1 million) which represented consideration payable at December 31, 2023 and were remitted in January 2024.

The following table summarized the amounts recorded for acquired assets and assumed liabilities recorded at their fair value as of the closing date of the acquisition (in millions):

															Preliminary: December 12, 2023
Cash and cash equivalents															$	18.2
Accounts receivable															2.3
Goodwill															62.8
Intangible assets															55.2
Accrued expenses															(12.7)
Accrued wages and commissions															(2.0)
Deferred income taxes, net															(3.0)
Other assets and liabilities															(0.4)
Fair value of identifiable net assets acquired															$	120.4

The net assets of OnTheMarket were recorded at their estimated fair values. In valuing the acquired assets and assumed liabilities, fair value estimates were based primarily on future expected cash flows, market rate assumptions for contractual obligations and appropriate discount rates. The purchase price allocation is preliminary, subject primarily to the Company's assessment of certain tax matters, contingencies and intangibles valuation. The estimated fair value of the customer base assets incorporated significant assumptions that had a material impact on the estimated fair value, such as discount rates, projected revenue growth rates, customer attrition rates and profit margins.

The following table summarizes the fair values (in millions) of the identifiable intangible assets acquired in the OnTheMarket Acquisition included in the Company's International operating segment, their related estimated useful lives (in years) and their respective amortization methods:

															Estimated Fair Value						Estimated Useful Life						Amortization Method
Customer base															$	42.0					8						Accelerated
Trade name															10.2						15						Straight-line
Technology															3.0						2						Straight-line
Total intangible assets															$	55.2

F-23

COSTAR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Specifically, the goodwill recorded as part of the OnTheMarket Acquisition includes, but is not limited to: (i) the expected synergies and other benefits that the Company believes will result from combining its operations with international operations and (ii) any intangible assets that do not qualify for separate recognition, such as the assembled workforce. The $62.8 million of goodwill recorded as part of the acquisition is associated with the Company's International operating segment, of which none is expected to be deductible for income tax purposes. Transaction costs associated with the OnTheMarket Acquisition were $11.0 million.

Business Immo

In April 2022, the Company acquired Business Immo, a leading commercial real estate news service provider in France, for €5.8 million ($6.3 million), net of cash acquired and the assumption of outstanding debt. As part of the acquisition, the Company recorded goodwill and intangible assets of $7.1 million and $3.9 million, respectively. The net assets of Business Immo were recorded at their estimated fair value. The Company retired the assumed debt in the second quarter of 2022. The net assets of Business Immo were recorded at their estimated fair value. The Company retired the assumed debt in the second quarter of 2022.

BureauxLocaux

In October 2021, CoStar UK acquired BureauxLocaux, a commercial real estate digital marketplace in France, for a base purchase price of €35.0 million ($40.6 million) in cash, subject to customary working capital and other post-closing adjustments which were settled in the fourth quarter of 2021. As part of the acquisition, the Company recorded goodwill and intangible assets of $27.4 million and $18.3 million, respectively, in the Company's International operating segment. The net assets of BureauxLocaux were recorded at their estimated fair value.

Homes.com

In May 2021, the Company closed the Homes.com Acquisition, in which the Company acquired all of the issued and outstanding equity interests in Homes Group for a purchase price of $150.0 million in cash, subject to customary working capital and other post-closing adjustments which resulted in total consideration of $152.2 million. Homes Group operates Homes.com, a residential marketplace hosted on the website Homes.com and mobile apps that provided real estate advertising and marketing services. In November 2022 CoStar Group integrated the operations of Homes.com and Homesnap.

The following table summarizes the amounts recorded for acquired assets and assumed liabilities recorded at their fair values as of the acquisition date (in millions):

															Final: May 24, 2021
Cash and cash equivalents															$	—
Accounts receivable															1.8
Lease right-of-use assets															0.4
Goodwill															91.9
Intangible assets															53.4
Deferred income taxes, net															7.9
Lease liabilities															(0.4)
Deferred revenue															(1.5)
Other assets and liabilities															(1.3)
Fair value of identifiable net assets acquired															$	152.2

The net assets of Homes Group were recorded at their estimated fair values. In valuing the acquired assets and assumed liabilities, fair value estimates were based primarily on future expected cash flows, market rate assumptions for contractual obligations and appropriate discount rates. The estimated fair value of the customer base assets incorporated significant assumptions that had a material impact on the estimated fair value, such as discount rates, projected revenue growth rates, customer attrition rates and profit margins.

F-24

COSTAR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the fair values (in millions) of the identifiable intangible assets acquired in the Homes.com Acquisition included in the Company's North America operating segment, their related estimated useful lives (in years) and their respective amortization methods:

															Estimated Fair Value						Estimated Useful Life						Amortization Method
Customer base															$	32.0					8						Accelerated
Trade name															21.0						15						Straight-line
Technology															0.4						2						Straight-line
Total intangible assets															$	53.4

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Specifically, the goodwill recorded as part of the Homes.com Acquisition includes but is not limited to: (i) the expected synergies and other benefits that the Company believes will result from combining its operations with Homes.com operations and (ii) any intangible assets that do not qualify for separate recognition, such as the assembled workforce. The $91.9 million of goodwill recorded as part of the acquisition is associated with the Company's North America operating segment, of which $20.0 million is expected to be deductible for income tax purposes.

Transaction costs associated with the Homes.com Acquisition were not material. The Company paid $5.0 million into a cash escrow account for stay bonuses for certain Homes.com employees and recognized compensation expense for the stay bonus over the six-month post-combination period. Upon acquisition, the Company assessed the probability it would be required to pay certain state tax liabilities and recorded an accrual of $6.6 million determined in accordance with the provisions of ASC 450, Contingencies, as the fair value was not determinable. Landmark has agreed to indemnify the Company for tax liabilities related to periods prior to the acquisition and an indemnification asset was established for $6.6 million in the purchase price allocation.

Pro Forma Financial Information (unaudited)

The unaudited pro forma financial information presented below reflects the consolidated results of operations of the Company assuming the OnTheMarket Acquisition had taken place on January 1, 2022 and was as follows (in millions, except per share data):

									Year Ended December 31,
															2023						2022
Revenue															$	2,494.0					$	2,224.3
Net income															$	371.9					$	361.9
Net income per share - basic															$	0.91					$	0.91
Net income per share - diluted															$	0.91					$	0.91

The impact of the OnTheMarket Acquisition on the Company's revenue and net income in the consolidated statements of operations from December 12, 2023 through December 31, 2023 was not material.

F-25

COSTAR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The unaudited pro forma financial information presented below reflects the consolidated results of operations of the Company assuming the Homes.com Acquisition had taken place on January 1, 2020 and was as follows (in millions, except per share data):

									Year Ended December 31,
															2021
Revenue															$	1,962.1
Net income															$	286.7
Net income per share - basic															$	0.74
Net income per share - diluted															$	0.73

The unaudited pro forma financial information for all periods presented includes amortization charges from acquired intangible assets, retention compensation, as referenced above, and the related tax effects, along with certain other accounting effects, but excludes the impacts of any expected operational synergies. The unaudited pro forma financial information, as presented above, is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisitions had not taken on place on the dates listed above.

The impact of the Homes.com Acquisition on the Company's revenues and net income in the consolidated statements of operations from May 24, 2021 through December 31, 2021 was an increase of $13.6 million and a decrease of $23.5 million, respectively.

The pro forma financial information of the BureauxLocaux Acquisition and Business Immo Acquisition was not material.

6. INVESTMENTS AND FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. There is a three-tier fair value hierarchy, which categorizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.

The Company's financial assets comprise Level 1 cash equivalents with original maturities of three months or less in the amount of $5.1 billion and $4.8 billion as of December 31, 2023 and 2022, respectively. The Company had no Level 2 or Level 3 financial assets measured at fair value.

The Company holds other financial instruments, including cash deposits, accounts receivable, accounts payable, accrued expenses and Senior Notes. The carrying value for such financial instruments, other than the Senior Notes, each approximated their fair values as of December 31, 2023 and 2022. The estimated fair value of the Company's outstanding Senior Notes using quoted prices from the over-the-counter markets, considered Level 2 inputs, was $0.9 billion and $0.8 billion as of December 31, 2023 and 2022, respectively.

F-26

COSTAR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7. LEASES

The Company has operating and finance leases for its office facilities, data centers, and vehicles. The Company's leases have remaining terms up to eight years. The leases contain various renewal and termination options. The period that is subject to an option to extend the lease is included in the lease term if it is reasonably certain that the option will be exercised. The period that is subject to an option to terminate the lease is included if it is reasonably certain that the option will not be exercised.

Lease costs related to the Company's operating and finance leases included in the consolidated statements of operations were as follows (in millions):

			Year Ended December 31,
			2023						2022						2021
Operating lease costs:
Cost of revenues			$	10.0					$	8.4					$	10.1
Software development			6.3						7.2						6.9
Selling and marketing (excluding customer base amortization)			15.4						12.6						11.9
General and administrative			4.0						5.4						5.9
Total operating lease costs			35.7						33.6						34.8
Finance lease costs:
Amortization of ROU assets			0.8						—						—
Interest on lease liabilities			0.2						—						—
Total finance lease costs			1.0						—						—
Total lease costs			$	36.7					$	33.6					$	34.8

Finance lease costs primarily relate to vehicles used by the Company's research teams, and the amortization of the ROU assets are recorded to cost of revenue in the consolidated statements of operations. The impact of lease costs related to short-term leases was not material for the years ended December 31, 2023, 2022 and 2021.

F-27

COSTAR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Supplemental balance sheet information related to operating leases was as follows ($ in millions):

									Year Ended December 31,
Balance			Balance Sheet Location						2023						2022
Operating lease liabilities									$	109.9					$	118.3
Less: imputed interest									(7.0)						(6.2)
Present value of lease liabilities									102.9						112.1
Less: current portion of lease liabilities			Lease liabilities						36.9						36.0
Long-term lease liabilities			Lease and other long-term liabilities						$	66.0					$	76.1
Weighted-average remaining lease term in years									3.9						3.6
Weighted-average discount rate									3.6		%				3.1		%
ROU Assets			Lease right-of-use assets						$	79.8					$	80.4
Finance lease liabilities									$	14.6					$	—
Less: imputed interest									(1.6)						—
Present value of lease liabilities									13.0						—
Less: current portion of lease liabilities			Lease liabilities						3.1						—
Long-term lease liabilities			Lease and other long-term liabilities						$	9.9					$	—
Weighted-average remaining lease term in years									3.8						0
Weighted-average discount rate									7.8		%				—		%
ROU Assets			Property and equipment, net						$	10.8					$	—

Supplemental cash flow information related to leases was as follows (in millions):

			Year Ended December 31,
			2023						2022						2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used in operating leases			$	44.9					$	41.6					$	37.3
Operating cash flows used in finance leases			$	0.2					$	—					$	—
Financing cash flows used in finance leases			$	0.7					$	—					$	—
ROU assets obtained in exchange for lease new obligations:
Operating leases			$	29.1					$	20.0					$	34.2
Finance leases			$	13.6					$	—					$	—

F-28

COSTAR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. PROPERTY AND EQUIPMENT

Property and equipment consists of the following (in millions):

			December 31,
			2023						2022
Leasehold improvements			$	87.8					$	108.9
Furniture, office equipment and vehicles			73.4						52.6
Computer hardware and software			56.3						43.8
Aircrafts			44.2						44.2
Land			52.2						52.2
Buildings			263.8						105.1
Property and equipment, gross			577.7						406.8
Accumulated depreciation and amortization			(105.5)						(85.5)
Property and equipment, net			$	472.2					$	321.3

Costs capitalized in connection with the expansion of our Richmond, Virginia campus were included in Buildings in the above table as of December 31, 2023. Depreciation expense for property and equipment was approximately $33.8 million, $29.1 million and $29.0 million, for the years ended December 31, 2023, 2022 and 2021, respectively. For the years ended December 31, 2023 and 2022, the Company removed $14.1 million and $27.6 million, respectively, of property and equipment that was fully depreciated from property and equipment, gross and accumulated depreciation and amortization, which had no net impact on the Company's financial results.

In August 2022, the Company entered into an agreement to sell an aircraft subject to customary condition and inspection terms. The sale of the aircraft closed in October 2022 for cash consideration of $24.9 million. The Company recorded a gain on the sale of the aircraft of $3.3 million, which was recorded to general and administrative expenses in the consolidated statements of operations. The aircraft related to the North America segment.

9. GOODWILL

The changes in the carrying amount of goodwill by operating segment consist of the following (in millions):

			North America						International						Total
Goodwill, December 31, 2021			$	2,145.8					$	175.2					$	2,321.0
Acquisitions, including measurement period adjustments(1)			3.4						7.1						10.5
Effect of foreign currency translation			—						(16.7)						(16.7)
Goodwill, December 31, 2022			2,149.2						165.6						2,314.8
Acquisitions, including measurement period adjustments			—						62.8						62.8
Effect of foreign currency translation			—						8.6						8.6
Goodwill, December 31, 2023			$	2,149.2					$	237.0					$	2,386.2
__________________________

(1) North America goodwill recorded during the year ended December 31, 2022 relates to a measurement period adjustment for income taxes for Homes.com of $3.4 million. International goodwill recorded in connection with the Business Immo Acquisition was $7.1 million.

(2) International goodwill generated during the year ended December 31, 2023 from the OnTheMarket Acquisition was $62.8 million.

Goodwill generated from acquisitions completed in 2023 and 2022 was not deductible for tax purposes.

No impairments of the Company's goodwill were recognized during each of the years ended December 31, 2023, 2022 and 2021.

10. INTANGIBLE ASSETS

Intangible assets consist of the following (in millions, except amortization period data):

F-29

COSTAR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

			December 31,												Weighted- Average Amortization Period (in years)
			2023						2022
Acquired technology and data			$	36.3					$	40.4					5
Accumulated amortization			(21.0)						(20.7)
Acquired technology and data, net			15.3						19.7
Acquired customer base			509.5						464.2						10
Accumulated amortization			(330.7)						(287.0)
Acquired customer base, net			178.8						177.2
Acquired trade names and other intangible assets			258.9						247.4						13
Accumulated amortization			(139.3)						(115.0)
Acquired trade names and other intangible assets, net			119.6						132.4
Intangible assets, net			$	313.7					$	329.3

Amortization expense for intangible assets was approximately $73.7 million, $102.6 million and $103.6 million for the years ended December 31, 2023, 2022 and 2021, respectively. For the years ended December 31, 2023, 2022 and 2021, the Company removed $7.4 million, $87.7 million, and $171.0 million, respectively, of intangible assets that were fully amortized from the acquired intangible assets and accumulated amortization, which had no net impact on the Company's financial results.

In the aggregate, the Company expects the future amortization expense for intangible assets existing as of December 31, 2023 to be approximately $70.8 million, $54.8 million, $43.3 million, $34.7 million and $30.8 million for the years ending December 31, 2024, 2025, 2026, 2027 and 2028, respectively.

Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. No impairments of the Company's intangible assets were recognized during each of the years ended December 31, 2023, 2022 and 2021. The Company decided to eliminate usage fees related to agent access to a Homesnap product charged to a specific customer class. This resulted in an acceleration of $16.3 million of amortization expense in 2022 for acquired customer base for this customer class.

11. LONG-TERM DEBT

The table below presents the components of outstanding debt (in millions):

																		December 31,
																		2023						2022
2.800% Senior Notes due July 15, 2030																		$	1,000.0					$	1,000.0
2020 Credit Agreement, due July 1, 2025																		—						—
Total face amount of long-term debt																		1,000.0						1,000.0
Senior Notes unamortized discount and issuance costs																		(9.5)						(10.8)
Long-term debt, net																		$	990.5					$	989.2

Senior Notes

On July 1, 2020, the Company issued $1.0 billion aggregate principal amount of 2.800% Senior Notes due July 15, 2030. The Senior Notes were sold to a group of financial institutions as initial purchasers who subsequently resold the Senior Notes to non-U.S. persons pursuant to Regulation S under the Securities Act, and to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act at a purchase price equal to 99.921% of their principal amount. Interest on the Senior Notes is payable semi-annually in arrears on January 15 and July 15. The Senior Notes may be redeemed in whole or in part by the Company (a) at any time prior to April 15, 2030 at a redemption price equal to 100% of the principal amount of the Senior Notes, plus the Applicable Premium (as calculated in accordance with the indenture governing

F-30

COSTAR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the Senior Notes), and any accrued and unpaid interest, if any, on the principal amount of Senior Notes being redeemed to, but excluding, the redemption date, and (b) on or after April 15, 2030 at a redemption price equal to 100% of the principal amount of the Senior Notes, plus any accrued and unpaid interest, if any, on the principal amount of Senior Notes being redeemed to, but excluding, the redemption date. The Company’s obligations under the Senior Notes are guaranteed on a senior, unsecured basis by the Company’s domestic wholly owned subsidiaries and the indenture governing the Senior Notes contains covenants, events of default and other customary provisions with which the Company was in compliance as of December 31, 2023.

Revolving Credit Facility

On July 1, 2020, the Company entered into the 2020 Credit Agreement, which provides for a $750 million revolving credit facility with a term of five years (maturing July 1, 2025) and a letter of credit sublimit of $20 million from a syndicate of financial institutions as lenders and issuing banks. A commitment fee of 0.25% to 0.30% per annum, depending on the Total Leverage Ratio (defined in 2020 Credit Agreement), is payable quarterly in arrears based on the unused revolving commitment. The Company and the syndicate of lenders and issuing banks entered into the First Amendment of the 2020 Credit Agreement in May 2023, which replaced LIBOR as the reference rate with Term SOFR for U.S. dollar denominated borrowings, SONIA rates for Sterling denominated borrowings and EURIBOR for Euro denominated borrowings.

Borrowings under the 2020 Credit Agreement can be on a revolving basis or term basis, not to exceed the remaining term of the facility, and denominated in U.S. dollars, sterling, euros or other allowed currency at the Company's option, subject to a limit of $250 million U.S. dollar equivalent for non-U.S. dollar denominated borrowings. Borrowings bear interest at a floating rate which can be, at the Company’s option, either (a) an alternate base rate plus an applicable rate ranging from 0.50% to 1.25% or (b) a Term SOFR, SONIA rate or EURIBOR (with a floor of 0.0%) for the specified interest period plus an applicable rate ranging from 1.50% to 2.25%, in each case depending on the Company's Total Leverage Ratio (as defined in the 2020 Credit Agreement). Any borrowing with a Term SOFR reference rate includes an additional 0.10% credit spread adjustment.

Funds drawn down on the revolving credit facility pursuant to the 2020 Credit Agreement may be used for working capital and other general corporate purposes of the Company and its restricted subsidiaries. The obligations under the 2020 Credit Agreement are guaranteed by each of the Company’s current and future direct or indirect wholly owned restricted domestic subsidiaries, other than certain excluded subsidiaries, in each case subject to certain exceptions, pursuant to guarantee agreements.

The 2020 Credit Agreement includes covenants, including ones that, subject to certain exceptions, restrict the ability of the Company and its subsidiaries to (i) incur additional indebtedness, (ii) incur liens, (iii) pay dividends or make certain other restricted payments, investments or acquisitions, (iv) merge or consolidate with another person, and (v) sell, assign, lease or otherwise dispose of all or substantially all of our assets. In May 2023, the Company amended the 2020 Credit Agreement to replace LIBOR as the reference rate with Term SOFR for U.S. dollar-denominated borrowings, SONIA rates for Sterling-denominated borrowings and EURIBOR for Euro-denominated borrowings.

As of December 31, 2023, the Company is in a Covenant Suspension Period. During any Covenant Suspension Period, the Company will not be subject to certain of these covenants such as restrictions on the ability to incur indebtedness. The 2020 Credit Agreement also requires the Company to maintain a Total Leverage Ratio (as defined in the 2020 Credit Agreement) not exceeding 4.50 to 1.00. The Company was in compliance with the covenants in the 2020 Credit Agreement as of December 31, 2023.

As of December 31, 2023, the Company had no amounts drawn under this facility.

The Company had $1.6 million and $2.7 million of deferred debt issuance costs as of December 31, 2023 and 2022, respectively, in connection with the 2020 Credit Agreement. These amounts are included in deposits and other assets on the Company's consolidated balance sheets.

F-31

COSTAR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the years ended December 31, 2023, 2022 and 2021, the Company recognized interest expense as follows (in millions):

						Year Ended December 31,
						2023						2022						2021
Interest on outstanding borrowings						$	28.0					$	28.0					$	28.0
Amortization of Senior Notes discount and issuance costs						2.4						2.3						2.3
Interest capitalized for construction in process						(1.6)						—						—
Commitment fees and other						2.6						2.0						2.0
Total interest expense						$	31.4					$	32.3					$	32.3

F-32

COSTAR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12. INCOME TAXES

The components of the provision for income taxes attributable to operations consist of the following (in millions):

			Year Ended December 31,
			2023						2022						2021
Current:
Federal			$	126.3					$	116.3					$	61.3
State			36.6						31.2						24.6
Foreign			0.9						0.7						1.3
Total current			163.8						148.2						87.2
Deferred:
Federal			(31.7)						(20.4)						22.9
State			(2.9)						(9.6)						8.5
Foreign			(2.6)						(1.2)						(7.2)
Total deferred			(37.2)						(31.2)						24.2
Total provision for income taxes			$	126.6					$	117.0					$	111.4

The components of deferred tax assets and liabilities consist of the following (in millions):

			December 31,
			2023						2022
Deferred tax assets:
Allowance for credit losses			$	5.8					$	3.4
Accrued compensation			11.9						4.6
Stock compensation			15.3						20.4
Net operating losses			34.7						26.8
Accrued reserve and other			5.8						6.7
Lease liabilities			21.8						26.4
Capitalized research and development costs			92.4						45.4
Research and development credits			4.5						6.1
Total deferred tax assets, prior to valuation allowance			192.2						139.8
Valuation allowance			(9.0)						(5.2)
Total deferred tax assets, net of valuation allowance			183.2						134.6
Deferred tax liabilities:
Deferred commission costs, net			(42.3)						(36.1)
Lease right-of-use assets			(16.0)						(18.2)
Prepaid expenses			(4.1)						(3.2)
Property and equipment, net			(25.1)						(25.8)
Intangible assets, net			(128.1)						(117.8)
Total deferred tax liabilities			(215.6)						(201.1)
Net deferred tax liabilities			$	(32.4)					$	(66.5)

For both the years ended December 31, 2023 and 2022, the Company has not recognized deferred tax liabilities for temporary differences related to investments in foreign subsidiaries that were deemed permanently reinvested. Determination of the amount of unrecognized deferred income tax liabilities on these earnings is not practicable because such liability, if any, depends on certain circumstances existing if and when remittance occurs. A deferred tax liability will be recognized if and when the Company no longer plans to permanently reinvest these undistributed earnings.

As of both December 31, 2023 and 2022, a valuation allowance has been established for certain deferred tax assets due to the uncertainty of realization. The valuation allowance as of both December 31, 2023 and 2022 includes an allowance for acquired net operating losses and foreign deferred tax assets.

F-33

COSTAR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company established the valuation allowance because it is more likely than not that a portion of the deferred tax asset for certain items will not be realized based on the weight of available evidence. A valuation allowance was established for the foreign deferred tax assets due to the cumulative loss in recent years in those jurisdictions. The Company has not had sufficient taxable income historically to utilize the foreign deferred tax assets, and it is uncertain whether the Company will generate sufficient taxable income in the future to utilize the deferred tax assets. The Company has established a valuation allowance for certain acquired net operating losses where Section 382 limitations will impact the ability of the Company to utilize the net operating losses before they expire.

The Company’s change in valuation allowance was an increase of approximately $3.8 million for the year ended December 31, 2023 and a decrease of approximately $0.5 million for the year ended December 31, 2022. The increase for the year ended December 31, 2023 was primarily due to an increase in foreign net operating loss deferred tax assets for which a full valuation allowance has been established. The decrease for the year ended December 31, 2022 was primarily due to an international restructuring.

The Company had U.S. income before income taxes of approximately $526.7 million, $493.2 million and $408.8 million for the years ended December 31, 2023, 2022 and 2021, respectively. The Company had foreign losses before income taxes of approximately $25.4 million, $6.7 million and $4.8 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The Company’s provision for income taxes resulted in effective tax rates that varied from the statutory federal income tax rate as follows (in millions):

			Year Ended December 31,
			2023						2022						2021
Expected federal income tax provision at statutory rate			$	105.3					$	102.1					$	84.8
State income taxes, net of federal benefit			27.4						21.5						21.0
Increase (decrease) in valuation allowance			1.9						(0.5)						(5.0)
Research credits			(20.2)						(17.5)						(13.1)
Excess tax benefit			(5.9)						(1.8)						(10.9)
Tax reserves			4.2						1.5						(12.8)
Nondeductible compensation			8.8						11.4						10.4
International restructuring			0.1						(3.9)						34.9
Other adjustments			5.0						4.2						2.1
Income tax expense			$	126.6					$	117.0					$	111.4

The Company has net operating loss carryforwards for international income tax purposes of approximately $77.3 million that do not expire. The Company has federal net operating loss carryforwards of approximately $71.3 million that begin to expire in 2033, state net operating loss carryforwards with a tax value of approximately $0.4 million that begin to expire in 2033 and state income tax credit carryforwards with a tax value of approximately $8.0 million primarily relating to state research and development credits and the D.C. qualified high technology company tax credit that begin to expire in 2024. The Company realized a cash benefit relating to the use of its tax loss carryforwards of approximately $5.9 million, $12.6 million and $14.1 million in December 31, 2023, 2022 and 2021, respectively.

F-34

COSTAR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the activity related to the Company’s unrecognized tax benefits (in millions):

Unrecognized tax benefit as of December 31, 2020			$	28.9
Increase for current year tax positions			3.1
Decrease for prior year tax positions			(5.4)
Decrease for settlements with taxing authorities			(9.9)
Expiration of the statute of limitation for assessment of taxes			(1.9)
Unrecognized tax benefit as of December 31, 2021			14.8
Increase for current year tax positions			3.4
Increase for prior year tax positions			0.3
Expiration of the statute of limitation for assessment of taxes			(2.3)
Unrecognized tax benefit as of December 31, 2022			16.2
Increase for current year tax positions			4.4
Increase for prior year tax positions			1.7
Expiration of the statute of limitation for assessment of taxes			(2.4)
Unrecognized tax benefit as of December 31, 2023			$	19.9

Approximately $19.9 million and $16.2 million of the unrecognized tax benefits as of December 31, 2023 and 2022, respectively, would favorably affect the annual effective tax rate if recognized in future periods. The increase for current year tax positions of $4.4 million and increase for prior year tax positions of $1.7 million for the year ended December 31, 2023 were primarily attributable to research credits and state apportionment reserves. The decrease for expiration of the statute of limitation of $2.4 million for the year ended December 31, 2023 was attributable to research credits. The Company recognized $0.7 million, recognized $0.1 million and reversed $0.4 million for interest and penalties in its consolidated statements of operations for the years ended December 31, 2023, 2022 and 2021, respectively. The Company had liabilities of $1.4 million, $0.7 million, and $0.6 million for interest and penalties in its consolidated balance sheets as of December 31, 2023, 2022 and 2021, respectively. The Company does not anticipate the amount of the unrecognized tax benefits will change significantly over the next 12 months.

The Company is subject to taxation in the U.S. federal jurisdiction and various states and foreign jurisdictions. The Company’s federal income tax returns for tax years 2015 and 2020 through 2022 remain open to examination. Most of the Company’s state income tax returns for tax years 2020 through 2022 remain open to examination. For states that have a four-year statute of limitations, the state income tax returns for tax years 2019 through 2022 remain open to examination. The Company’s U.K. income tax return for tax year 2022 remains open to examination. The Company believes that an adequate provision has been made for any adjustments that may result from tax examinations.

13. COMMITMENTS AND CONTINGENCIES

The following summarizes the Company's significant contractual obligations, including related payments due by period, as of December 31, 2023 (in millions):

Year Ending December 31,						Operating lease obligations						Finance lease obligations						Long-term debt principal payments						Long-term debt principal interest payments
2024						$	39.0					$	3.9					$	—					$	28.0
2025						25.4						3.9						—						28.0
2026						15.1						3.9						—						28.0
2027						13.1						2.9						—						28.0
2028						10.7						—						—						28.0
Thereafter						6.6						—						1,000.0						56.0
Total						$	109.9					$	14.6					$	1,000.0					$	196.0

The Company leases office facilities under various non-cancelable operating leases, as well as, data centers, and vehicles under finance lease arrangements. The leases contain various renewal options.

F-35

COSTAR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

See Note 7 for further discussion of the Company's lease commitments.

Currently, and from time to time, the Company is involved in litigation incidental to the conduct of its business. The Company records a provision for a liability when it is both probable that a liability has been incurred and the amount can be reasonably estimated. While it is reasonably possible that an unfavorable outcome may occur as a result of one or more of the Company’s current litigation matters, at this time management has concluded that the resolutions of these matters are not expected to have a material effect on the Company's consolidated financial position, future results of operations or liquidity. Legal defense costs are expensed as incurred.

F-36

COSTAR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14. SEGMENT REPORTING

Segment Information

The Company manages its business geographically in two operating segments, with the primary areas of measurement and decision-making being North America, which includes the U.S. and Canada, and International, which primarily includes Europe, Asia-Pacific and Latin America. Management relies on an internal management reporting process that provides revenue and operating segment EBITDA. Management believes that operating segment EBITDA is an appropriate measure for evaluating the operational performance of the Company’s operating segments. EBITDA is used by management to internally measure operating and management performance and to evaluate the performance of the business. However, this measure should be considered in addition to, not as a substitute for or superior to, income from operations or other measures of financial performance prepared in accordance with GAAP.

Summarized EBITDA information by operating segment consists of the following (in millions):

			Year Ended December 31,
			2023						2022						2021
North America			$	403.0					$	577.3					$	557.1
International			(13.2)						5.4						7.9
Total EBITDA			$	389.8					$	582.7					$	565.0

The reconciliation of net income to EBITDA consists of the following (in millions):

			Year Ended December 31,
			2023						2022						2021
Net income			$	374.7					$	369.5					$	292.6
Amortization of acquired intangible assets in cost of revenues			31.5						29.0						28.8
Amortization of acquired intangible assets in operating expenses			42.2						73.6						74.8
Depreciation and other amortization			33.8						29.1						29.1
Interest (income) expense, net			(213.6)						(32.1)						31.6
Other (income), net			(5.4)						(3.4)						(3.3)
Income tax expense			126.6						117.0						111.4
EBITDA			$	389.8					$	582.7					$	565.0

COSTAR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Summarized information by operating segment consists of the following (in millions):

			December 31,
			2023						2022
Property and equipment, net
North America			$	465.7					$	320.3
International			6.5						1.0
Total property and equipment, net			$	472.2					$	321.3
Goodwill
North America			$	2,149.2					$	2,149.2
International			237.0						165.6
Total goodwill			$	2,386.2					$	2,314.8
Assets
North America			$	8,505.5					$	8,146.3
International			414.2						256.2
Total assets			$	8,919.7					$	8,402.5
Liabilities
North America			$	1,499.7					$	1,486.3
International			81.4						46.2
Total liabilities			$	1,581.1					$	1,532.5

F-38

COSTAR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

15. STOCKHOLDER'S EQUITY

Preferred Stock

The Company has 2 million shares of preferred stock, $0.01 par value, authorized for issuance. The Board of Directors may issue the preferred stock from time to time as shares of one or more classes or series.

Common Stock

The Company has 1.2 billion shares of common stock, $0.01 par value, authorized for issuance. Dividends may be declared and paid on the common stock, subject in all cases to the rights and preferences of the holders of preferred stock and authorization by the Board of Directors. In the event of liquidation or winding up of the Company and after the payment of all preferential amounts required to be paid to the holders of any series of preferred stock, any remaining funds shall be distributed among the holders of the issued and outstanding common stock.

Common Stock Split

At the Company's 2021 Annual Meeting of Stockholders in June 2021, upon the recommendation of the Company's Board of Directors, the Company's stockholders approved the adoption of the Company's Fourth Amended and Restated Certificate of Incorporation, which increased the total number of shares of common stock that the Company is authorized to issue from 60 million to 1.2 billion. The Fourth Amended and Restated Certificate of Incorporation became effective on June 7, 2021. On June 7, 2021, the Board of Directors approved a ten-for-one stock split of the Company's outstanding shares of common stock to be effected in the form of a stock dividend. Each stockholder of record on June 17, 2021 received a dividend of nine additional shares of common stock for each then-held share, distributed after close of trading on June 25, 2021. The par value of the Company's common stock remained $0.01 per share. All applicable share and per-share amounts in the consolidated financial statements and the accompanying notes have been retroactively adjusted to reflect the impact of the stock split.

Equity Offerings

On September 20, 2022, the Company completed a public equity offering of 10.7 million shares of common stock at an offering price of $70.38 per share. Net proceeds from the public equity offering were approximately $745.7 million, after deducting approximately $4.3 million of underwriting fees, commissions and other stock issuance costs. On May 28, 2020, the Company completed a public equity offering of 26.3 million shares of common stock for $65.50 per share. Net proceeds from the public equity offering were approximately $1.7 billion, after deducting approximately $35 million of underwriting fees, commissions and other stock issuance costs. The Company intends to use the net proceeds from the sale of the securities to fund all or a portion of the costs of any strategic acquisitions it pursues in the future, to finance the growth of its business and for working capital and other general corporate purposes. General corporate purposes may include additions to working capital, capital expenditures, repayment of debt, investments in the Company’s subsidiaries and the repurchase, redemption or retirement of securities, including the Company’s common stock.

F-39

COSTAR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

16. NET INCOME PER SHARE

The following table sets forth the calculation of basic and diluted net income per share (in millions, except per share data):

			Year Ended December 31,
			2023						2022						2021
Numerator:
Net income			$	374.7					$	369.5					$	292.6
Denominator:
Denominator for basic net income per share — weighted-average outstanding shares			405.3						396.3						392.2
Effect of dilutive securities:
Stock options, restricted stock awards and restricted stock units			1.6						1.5						2.0
Denominator for diluted net income per share — weighted-average outstanding shares			406.9						397.8						394.2
Net income per share — basic			$	0.92					$	0.93					$	0.75
Net income per share — diluted			$	0.92					$	0.93					$	0.74

The following table summarizes the shares underlying the unvested performance-based restricted stock and anti-dilutive securities excluded from the basic and diluted earnings per share calculations (in millions):

			Year Ended December 31,
			2023						2022						2021
Performance-based restricted stock awards			0.2						0.4						0.4
Anti-dilutive securities			0.7						1.0						0.4

17. EMPLOYEE BENEFIT PLANS

Stock Incentive Plans

In April 2007, the Company’s Board of Directors adopted the CoStar Group 2007 Stock Incentive Plan (as amended, the “2007 Plan”), subject to stockholder approval, which was obtained on June 7, 2007. In April 2016, the Company’s Board of Directors adopted the CoStar Group 2016 Stock Incentive Plan (as amended, the “2016 Plan”), subject to stockholder approval, which was obtained on June 9, 2016. All shares of common stock that were authorized for issuance under the 2007 Plan that, as of June 9, 2016, remained available for issuance under the 2007 Plan (excluding shares subject to outstanding awards) were rolled into the 2016 Plan and, as of that date, no shares of common stock were available for new awards under the 2007 Plan. The 2007 Plan continues to govern vested unexercised stock options issued prior to June 9, 2016. Upon the occurrence of a Change of Control, as defined in the 2007 Plan, all outstanding unexercisable options under the 2007 Plan immediately become exercisable.

The 2016 Plan provides for the grant of stock options, restricted stock, restricted stock units and stock appreciation rights to officers, employees and directors of the Company and its subsidiaries. Stock options granted under the 2016 Plan may be non-qualified or may qualify as incentive stock options. Except in limited circumstances related to a merger or other acquisition, the exercise price for an option may not be less than the fair market value of the Company’s common stock on the date of grant. The vesting period for each grant of options, restricted stock, restricted stock units and stock appreciation rights under the 2016 Plan is determined by the Board of Directors or a committee thereof and is generally three to four years, subject to minimum vesting periods for restricted stock and restricted stock units of at least one year. In some cases, vesting of awards under the 2016 Plan may be based on performance conditions. The Company initially reserved approximately 22.7 million shares of common stock for issuance under the 2016 Plan, which included shares of common stock that were authorized and remained available for issuance under the 2007 Plan as of June 9, 2016. Any shares of common stock subject to (a) outstanding awards under the 2007 Plan as of June 9, 2016 or (b) outstanding awards under the 2016 Plan after June 9, 2016, that cease for any reason to be subject to such awards (other than by reason of exercise or settlement of the awards to the extent they are exercised or settled in vested and nonforfeitable shares) will become authorized and unissued under the 2016 Plan. Pursuant to the terms of the 2016 Plan, all amounts reserved or issued under the plan were adjusted to reflect the Company’s ten-for-one common stock split. Unless terminated sooner, the 2016 Plan will terminate in June 2026, but will continue to govern

F-40

COSTAR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

unexercised and unexpired awards issued under the 2016 Plan prior to that date. Approximately 13.4 million shares were available for future grant under the 2016 Plan as of December 31, 2023.

At December 31, 2023, there was approximately $115.3 million of unrecognized compensation cost related to stock incentive plans, net of estimated forfeitures, which the Company expects to recognize over a weighted-average-period of 2.4 years. The income tax benefit realized from stock-based compensation was $6.8 million, immaterial and $2.4 million for the years ended December 31, 2023, 2022 and 2021, respectively.

See Notes 2 and 12 for further discussion of stock-based compensation expense and income taxes, respectively.

Stock Options

Option activity was as follows:

			Number of Shares						Range of Exercise Price						Weighted- Average Exercise Price						Weighted- Average Remaining Contract Life (in years)						Aggregate Intrinsic Value (in millions)
Outstanding at December 31, 2020			2,023,100						$10.22 - $66.65						$	34.18					6.99						$	117.8
Granted			159,000						$91.98						$	91.98
Exercised			(206,000)						$20.49 - $39.82						$	30.78
Outstanding at December 31, 2021			1,976,100						$10.22 - $91.98						$	39.18					6.24						$	80.8
Granted			202,100						$67.29						$	67.29
Exercised			—
Canceled or expired			—
Outstanding at December 31, 2022			2,178,200						$10.22 - $91.98						$	41.79					5.60						$	79.6
Granted			140,800						$76.78						$	76.78
Exercised			(419,340)						$10.22 - $34.21						$	17.77
Canceled or expired			—
Outstanding at December 31, 2023			1,899,660						$20.49 - $91.98						$	49.69					5.53						$	72.4
Exercisable at December 31, 2021			1,473,420						$10.22 - $66.65						$	29.55					5.59						$	72.9
Exercisable at December 31, 2022			1,766,070						$10.22 - $91.98						$	34.40					4.96						$	76.5
Exercisable at December 31, 2023			1,571,105						$20.49 - $91.98						$	44.32					4.93						$	68.1

The aggregate intrinsic value of outstanding options is calculated as the difference between (i) the closing price of the common stock at the end of the period and (ii) the exercise price of the underlying awards, multiplied by the number of outstanding options as of the end of the period that had an exercise price less than the closing price on that date. The aggregate intrinsic value of options exercised, determined as of the exercise date, was approximately $24.3 million and $11.0 million for the years ended December 31, 2023 and 2021, respectively. No options were exercised in the year ended December 31, 2022.

The Company estimated the fair value of each option granted on the date of grant using the Black-Scholes option-pricing model, using the assumptions in the following table:

			Year Ended December 31,
			2023						2022						2021
Dividend yield			0		%				0		%				0		%
Expected volatility			35		%				31		%				30		%
Risk-free interest rate			3.96		%				1.89		%				0.56		%
Expected life (in years)			5						5						5
Weighted-average grant date fair value			$	28.87					$	20.43					$	25.09

F-41

COSTAR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The expected dividend yield is determined based on the Company's past cash dividend history and anticipated future cash dividend payments. The Company has never declared nor paid any dividends on its common stock and does not anticipate paying any dividends on its common stock during the foreseeable future, but intends to retain any earnings for future growth of its business. Expected volatility is calculated based on historical volatility of the daily closing price of the Company's common stock over a period consistent with the expected life of the options granted. The risk-free interest rate is based on the U.S. Treasury rate with terms similar to the expected life of the options granted. The expected life for the options is determined based on multiple factors, including historical employee behavior patterns of exercising options and post-employment termination behavior as well as expected future employee option exercise patterns.

The following table summarizes information regarding options outstanding at December 31, 2023:

						Options Outstanding																		Options Exercisable
Range of Exercise Price						Number of Shares						Weighted-Average Remaining Contractual Life (in years)						Weighted- Average Exercise Price						Number of Shares						Weighted- Average Exercise Price
$20.49 - $27.35						346,000						3.16						$	20.49					346,000						$	20.49
$27.36 - $37.02						354,090						4.16						$	34.21					354,090						$	34.21
$37.03 - $53.24						385,670						5.10						$	39.82					385,670						$	39.82
$53.25 - $66.97						312,000						6.10						$	66.65					312,000						$	66.65
$66.98 - $91.98						501,900						8.09						$	77.77					173,345						$	82.39
						1,899,660						5.53						$	49.69					1,571,105						$	44.32

Restricted Stock Awards

The Compensation Committee of the Board of Directors of the Company historically approved grants of restricted common stock to employees and directors of the Company that vest over a specific service period and to executive officers that vest based on the achievement of certain performance conditions, primarily, the achievement of a three-year cumulative revenue goal established at the grant date. The grant of awards with performance conditions supports the Company’s goal of aligning executive incentives with long-term stockholder value and ensuring that executive officers have a continuing stake in the long-term success of the Company.

The vesting of restricted common stock is subject to continuing employment requirements. Certain performance-based restricted common stock awards are also subject to a market condition such that the actual number of shares that vest at the end of the respective three-year period is determined based on the Company’s achievement of performance goals and an established Company specific TSR factor relative to the S&P 500 Index over the same three-year performance period. At the end of the three-year performance period, if the performance condition is achieved at or above the pre-established threshold, the number of shares earned is further adjusted by a TSR payout percentage, which ranges between 80% and 120%, based on the Company’s TSR performance relative to that of S&P 500 Index over the respective three-year period.

The Company estimates the fair value of its equity awards with both a performance and market condition on the date of grant using a Monte-Carlo simulation valuation model. This pricing model uses multiple simulations to evaluate the probability of achieving the market condition to calculate the fair value of the awards. Expense is only recorded for awards that are expected to vest, net of estimated forfeitures. The assumptions used to estimate the fair value of awards with both a performance and a market condition were as follows:

			Year Ended December 31,
			2023						2022						2021
Dividend yield			0		%				0		%				0		%
Expected volatility			37		%				34		%				42		%
Risk-free interest rate			4.31		%				1.71		%				0.20		%
Expected life (in years)			3						3						3
Weighted-average grant date fair value			$	81.58					$	71.19					$	99.73

F-42

COSTAR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The expected dividend yield is determined based on the Company's past cash dividend history and anticipated future cash dividend payments. The Company has never declared nor paid any dividends on its common stock and does not anticipate paying any dividends on its common stock during the foreseeable future, but intends to retain any earnings for future growth of its business. Expected volatility is calculated based on historical volatility of the daily closing price of the common stock of the companies within the S&P 500 Index over a period consistent with the expected life of the awards. The risk-free interest rate is based on the U.S. Treasury rate with terms similar to the expected life of the awards. The expected life is consistent with the performance measurement period of the awards.

As of December 31, 2023, the Company determined that it was probable that at least the minimum performance goals associated with restricted stock awards with performance and market conditions granted during 2023, 2022 and 2021 would be met by their forfeiture dates. The Company recorded a total of approximately $13.6 million, $11.9 million and $8.0 million of stock-based compensation expense related to restricted stock awards with performance and market conditions for the years ended December 31, 2023, 2022 and 2021, respectively. As of December 31, 2023, the Company expects to record an aggregate stock-based compensation expense of approximately $14.0 million for restricted stock awards with performance and market conditions over the periods 2024, 2025 and 2026.

The following table presents unvested restricted stock awards activity for the year ended December 31, 2023:

			Restricted Stock Awards — without Market Condition												Restricted Stock Awards — with Market Condition
			Number of Shares						Weighted-Average Grant Date Fair Value per Share						Number of Shares						Weighted-Average Grant Date Fair Value per Share
Unvested restricted stock awards at December 31, 2022			2,061,894						$	67.15					620,880						$	80.55
Granted			1,096,446						$	73.27					283,440						$	81.58
Vested			(787,883)						$	66.51					(90,408)						$	72.69
Canceled			(230,546)						$	68.58					(132,792)						$	72.69
Unvested restricted stock awards at December 31, 2023			2,139,911						$	70.38					681,120						$	83.56

Restricted Stock Units

The following table presents unvested restricted stock units activity for the year ended December 31, 2023:

			Number of Units						Weighted-Average Grant Date Fair Value per Share
Unvested restricted stock units at December 31, 2022			21,560						$	65.24
Granted			10,465						$	70.74
Vested			(8,129)						$	65.77
Canceled			(977)						$	68.34
Unvested restricted stock units at December 31, 2023			22,919						$	67.43

Management Stock Purchase Plan

The Board of Directors adopted the Company’s Management Stock Purchase Plan in December 2017 with the intent of providing selected key employees of the Company and its subsidiaries, including the Company's executive officers, the opportunity to defer a portion of their cash incentive compensation and to align management and stockholder interests through awards of DSUs under the MSPP and awards of Matching RSUs issued under the 2016 Plan. Under this plan participants are permitted to elect to defer up to 100% of their annual incentive bonus or commissions earned during the year by submitting an irrevocable election in accordance with Section 409A of the Internal Revenue Code, as amended. On the date the incentive bonus or commission would otherwise be paid in cash (typically during the following calendar year), the Company awards the participant DSUs representing the number of shares of common stock with an aggregate fair market value on that date equal to the amount of compensation elected to be deferred under the MSPP. On the same date the DSUs are awarded, the participant

F-43

COSTAR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

receives a grant of Matching RSUs covering the number of shares of common stock equal up to 100% of the DSUs granted. The expense related to the DSUs is recognized on a straight-line basis during the period that the related incentive bonus or commission is earned. The Company granted 82,374 and 75,479 DSUs during the years 2023 and 2022, respectively. The expense related to the Matching RSUs is recognized over the four-year vesting period following the grant date.

The following tables presents the Matching RSU activity for the year ended December 31, 2023:

			Number of Matching RSU Shares						Weighted-Average Grant Date Fair Value per Share
Unvested MSPP restricted stock units at December 31, 2022			180,431						$	60.52
Granted			82,374						$	67.36
Vested			(52,710)						$	46.91
Canceled			(13,128)						$	66.67
Unvested MSPP restricted stock units at December 31, 2023			196,967						$	66.61

Employee 401(k) Plan

The Company maintains a 401(k) Plan as a defined contribution retirement plan for all eligible employees. The 401(k) Plan provides for tax-deferred contributions of employees’ salaries, limited to a maximum annual amount as established by the IRS. In addition to the traditional 401(k), effective January 1, 2015, eligible employees have the option of making an after-tax contribution to a Roth 401(k) plan or a combination of both. In each of 2023, 2022 and 2021, the Company matched 100% of employee contributions up to a maximum of 4% of total compensation. Amounts contributed to the 401(k) Plan by the Company to match employee contributions for the years ended December 31, 2023, 2022 and 2021 were approximately $25.5 million, $21.5 million and $17.6 million, respectively. The Company had no administrative expenses in connection with the 401(k) Plan for each of the years ended December 31, 2023, 2022 and 2021.

Employee Pension Plan

The Company maintains a GPP Plan for all eligible employees in the Company’s U.K. offices. The GPP Plan is a defined contribution plan. Employees are eligible to contribute a portion of their salaries, subject to a maximum annual amount as established by Her Majesty's Revenue and Customs. In each of 2023, 2022 and 2021, the Company's matching contribution was based on the percentage contributed by the employee, up to a maximum of 6% of total compensation. Amounts contributed to the GPP Plan by the Company to match employee contributions for the years ended December 31, 2023, 2022 and 2021, were approximately $1.2 million, $1.0 million and $0.9 million, respectively.

Registered Retirement Savings Plan

As of January 1, 2015, the Company introduced a RRSP for all eligible employees in the Company’s Canadian offices. In each of the years ended December 31, 2023, 2022 and 2021, the Company matched 100% of employee contributions up to a maximum of 4% of total compensation. Amounts contributed to the RRSP by the Company to match employee contributions were approximately $0.2 million for the year ended December 31, 2023, and $0.1 million for both of the years ended December 31, 2022 and 2021.

Employee Stock Purchase Plan

As of August 1, 2006, the Company introduced an ESPP, pursuant to which eligible employees participating in the plan authorize the Company to withhold specified amounts from the employees’ compensation and use the withheld amounts to purchase shares of the Company's common stock at 90% of the market price. Participating employees are able to purchase common stock under this plan during each offering period. An offering period begins the second Saturday before each of the Company’s regular pay dates and ends on each of the Company’s regular pay dates. On June 2, 2021, the Company’s stockholders approved an amendment to the ESPP to increase the number of shares available for purchase under the ESPP by 1 million shares. The Company registered the issuance of these additional shares under the ESPP pursuant to the registration statement filed on July 28, 2021. There were 782,328 and 1,010,267 shares available for purchase under the ESPP as of December 31, 2023 and 2022, respectively, and approximately 227,939 and 223,596 shares of the Company’s common stock were purchased under the ESPP during 2023 and 2022, respectively.

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COSTAR GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

18. SUBSEQUENT EVENTS

In January 2024, the Company entered into a conditional purchase and sale agreement for an office building in Arlington, Virginia. The Company closed on the transaction in February 2024 along with an agreement to purchase the land underlying the building. These transactions totaled $340.0 million, inclusive of property taxes, titling insurance and other transaction costs and were paid with cash on hand.

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