Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains “forward-looking statements,” including statements about our beliefs and expectations. There are many risks and uncertainties that could cause actual results to differ materially from those discussed in the forward-looking statements. Potential factors that could cause actual results to differ materially from those discussed in any forward-looking statements include, but are not limited to, those stated under the heading “Cautionary Statement Concerning Forward-Looking Statements” at the end of this Item 2 and “Risk Factors” in Item 1A of Part II of this Quarterly Report on Form 10-Q, as well as those described from time to time in our filings with the Securities and Exchange Commission.

All forward-looking statements are based on information available to us on the date of this filing, and we assume no obligation to update such statements, whether as a result of new information, future events or otherwise, except as required by law. The following discussion should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”), our subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and other filings with the Securities and Exchange Commission and the condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q.

Overview

CoStar Group, Inc. (the “Company,” “CoStar Group,” “we,” “us” or “our”) is a leading provider of information, analytics and online marketplaces to the commercial real estate industry in the United States (“U.S.”) and United Kingdom (“U.K.”) based on the fact that we offer a comprehensive commercial real estate database available; have the largest research department in the industry; own and operate leading online marketplaces for commercial real estate and apartment listings in the U.S., based on the numbers of unique visitors and site visits per month; and provide more information, analytics and marketing services than any of our competitors. We have created and compiled a standardized platform of information, analytics and online marketplace services where industry professionals and consumers of commercial real estate, including apartments, and the related business communities, can continuously interact and facilitate transactions by efficiently accessing and exchanging accurate and standardized real estate-related information. Our service offerings span all commercial property types, including office, retail, industrial, multifamily, commercial land, mixed-use and hospitality. With our recent acquisitions of Homesnap, Inc. (“Homesnap”) and Homes Group, LLC ("Homes.com"), we also offer online platforms for marketing and workflow management for residential real estate agents and brokers and residential property listings for homebuyers.

Our services are typically distributed to our clients under subscription-based license agreements that renew automatically, a majority of which have a term of at least one year. Upon renewal, many of the subscription contract rates may change in accordance with contract provisions or as a result of contract renegotiations. To encourage clients to use our services regularly, we generally charge a fixed monthly amount for our subscription-based services rather than charging fees based on actual system usage or number of paid clicks. Depending on the type of service, contract rates are generally based on one or more of the following factors: 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. Our subscription clients generally pay contract fees on a monthly basis, but in some cases may pay us on a quarterly or annual basis. Our transaction-based services primarily consist of auction fees from our Ten-X online auction platform, which are generally calculated as a percentage of the final sales price for the commercial real estate property sold and recognized as revenue upon the successful closure of an auction. Other transaction-based services are described by service offering below.

Our primary brands include CoStar®, LoopNet®, Apartments.comTM, STR®, Ten-X®, BizBuySell®, LandsofAmericaTM, HomeSnap®, and Homes.com®, which are accessible via the Internet and through our mobile applications. Our principal service offerings are discussed in more detail below.

Impacts of the COVID-19 Pandemic and Current Economic Conditions

The COVID-19 pandemic has created significant economic volatility, uncertainty and disruption around the world. Further, in response to the concerns over inflation risk, the U.S. Federal Reserve has raised interest rates in the first, second and third quarters of 2022 and signaled it expects additional rate increases. While the impacts of the COVID-19 pandemic and current economic conditions continue to evolve, they have not materially affected our consolidated financial statements during 2021 or our condensed consolidated financial statements for September 30, 2022. It is currently unclear how the commercial real estate industry will ultimately be impacted by the COVID-19 pandemic as businesses formulate and execute plans for employees to return to the office, implement hybrid work arrangements – allowing work from the office or home, or switch to all work from home. These activities may result in reduced demand for office space and rising interest rates may reduce demand for all types of real estate. If the demand for office space or other real estate decreases significantly, there could be a downturn in the commercial real estate market that may materially adversely affect many of our clients. A depressed commercial real estate market would have a negative impact on our core customer base, which could impact our customers’ ability to subscribe and pay for our services and reduce demand for our services. Reduced demand and increased cancellations could cause our revenues or our revenue growth rates to decline and reduce our profitability.

Service Offerings

Our portfolio of information, analytics and online marketplace services are branded and marketed to our customers and marketplace end users. Our services are primarily derived from a database of building-specific information and offering customers specialized tools for accessing, analyzing and using our information. Over time, we enhanced and expanded, and we expect to continue to enhance and expand, our existing information, analytics and online marketplace services and we have developed, and we expect to continue to develop, additional services that use our comprehensive database to meet the needs of our existing customers as well as potential new categories of customers.

Our principal information, analytics and online marketplace services are described in the following paragraphs by type of service:

CoStar

CoStar® is our subscription-based integrated platform for commercial real estate intelligence, which includes information about office, industrial, retail, multifamily and student housing properties, properties for sale, comparable sales, tenants, space available for lease, industry professionals and their business relationships, industry news, and market and lease analytical capabilities. CoStar's year-over-year revenue growth rate for the third quarter of 2022 increased compared to the third quarter of 2021. The number of subscribers has increased year-over-year and we have also realized the impact of price increases and existing customers upgrading to our global service offering. We began applying price increases in late 2021, which had been temporarily suspended earlier in the COVID-19 pandemic. We expect CoStar's revenue growth rate for 2022 to increase compared to the revenue growth rate for 2021 as a result of expected increases in subscriber counts and price increases and customer upgrades for renewing contracts.

Information Services

We provide real estate and lease management technology solutions, including lease administration, lease accounting and abstraction services, through our CoStar Real Estate Manager® service offerings, as well as portfolio and debt analysis, management and reporting capabilities through our CoStar Investment Analysis and CoStar Risk Analytics® service offerings. We also provide benchmarking reports for the hospitality industry. STARTM reports are provided on a subscription basis and we also provide one-time or ad hoc reports or analysis on a transaction basis. We provide information services internationally, through our Grecam, Belbex and Thomas Daily businesses in France, Spain and Germany, respectively. Information Services' year-over-year revenue growth rate for the third quarter of 2022 increased compared to the third quarter of 2021 as a result of increased revenue from CoStar Real Estate Manager services. We expect the Information Services revenue growth rate for 2022 to be consistent with the revenue growth rate for 2021.

Multifamily

Apartments.com™ is part of our network of apartment marketing sites, which primarily includes ApartmentFinder®, ForRent.com®, ApartmentHomeLiving.com™, Apartamentos.com™, Westside Rentals, and Off Campus Partners, LLC. Our network of subscription-based advertising services provides property management companies and landlords with a comprehensive advertising destination for their available rental units and offers renters a platform for searching for available rentals. Apartments.com also receives transaction-based revenue for tenant processing fees. Multifamily's year-over-year revenue growth rate in the third quarter of 2022 increased compared to the third quarter of 2021 as a result of the new pricing structure implemented in late 2021. We expect Multifamily's year-over-year revenue growth rate for 2022 to decrease compared to the revenue growth rate for 2021 primarily due to pricing of contracts executed prior to new pricing structure.

LoopNet

Our LoopNet.com network of commercial real estate websites offer subscription-based online marketplace services that enable commercial property owners, landlords and real estate agents working on their behalf to advertise properties for sale or for lease and to submit detailed information about property listings. Commercial real estate agents, buyers and tenants use the LoopNet.com network of online marketplace services to search for available property listings that meet their criteria. LoopNet's year-over-year revenue growth rate for the third quarter of 2022 decreased compared to the third quarter of 2021. We expect LoopNet's year-over-year revenue growth rate for 2022 to decrease compared to the revenue growth rate for 2021 as we continue to develop a dedicated sales force for LoopNet.

Residential

On December 22, 2020, we acquired Homesnap, an online and mobile software platform that provides subscription-based access to applications that manage residential real estate agent workflow and marketing campaigns delivered on third-party platforms. Homesnap also receives transaction-based revenue for short-term advertising delivered on third-party platforms. On May 24, 2021, we acquired Homes.com, a residential advertising and marketing services company primarily operating through its portal, Homes.com. Residential's third quarter 2022 revenue decreased compared to the third quarter of 2021 due to the discontinuation of certain Homes.com products and services that were inconsistent with our long-term business strategy, partially offset by increased sales of Homesnap products and services. We expect Residential's revenue for the year ended December 31, 2022 to decline when compared to the year ended December 31, 2021 due to the same factors.

Other Marketplaces

On June 24, 2020, we acquired Ten-X, an online auction platform for commercial real estate. Our BizBuySell network, which includes BizQuest® and FindaFranchise, and our Land.com network of sites, which includes LandsofAmerica, LandAndFarm and LandWatch®, are also included in Other Marketplaces revenue. The BizBuySell network provides online marketplaces for businesses for-sale and our Land.com network of sites provides online marketplaces for rural lands for-sale. Other Marketplaces' third quarter 2022 revenue growth rate decreased compared to the third quarter of 2021 due to the impact of the Ten-X acquisition in 2020. Other Marketplaces' revenue growth rate is expected to be lower in 2022 compared to 2021 given the impact of the Ten-X acquisition in 2020.

Subscription-based Services

The majority of our revenue is generated from service offerings, which are distributed to our clients under subscription-based agreements that typically renew automatically and have a term of at least one year. We recognize subscription revenues on a straight-line basis over the life of the contract.

For the three months ended September 30, 2022 and September 30, 2021, our annualized net new bookings of subscription-based services on all contracts were approximately $76 million and $47 million, respectively. Net new bookings is calculated based on the annualized amount of change in our sales bookings resulting from all new subscription-based contracts or upgrades on existing subscription-based contracts, less downgrades and cancellations for the period reported. Net new bookings is considered an operating metric that is an indicator of future subscription revenue growth and is also used as a metric of sales force productivity by us and investors. However, information regarding net new bookings is not comparable to, nor should it be substituted for, an analysis of our revenues over time. Revenue from our subscription-based contracts was approximately 92% and 90% of total revenue for the three months ended September 30, 2022 and September 30, 2021, respectively.

For the trailing twelve months ended September 30, 2022 and 2021, our contract renewal rates for existing CoStar Group subscription-based services for contracts with a term of at least one year were approximately 91% and 92%, respectively, and

therefore our cancellation rates for those services for the same periods were approximately 9% and 8% respectively. Our contract renewal rate is a quantitative measurement that is typically closely correlated with our revenue results. As a result, we believe that the rate may be a reliable indicator of short-term and long-term performance absent extraordinary circumstances. Our trailing twelve-month contract renewal rate may decline as a result of negative economic conditions, consolidations among our clients, reductions in customer spending, or decreases in our customer base. Revenue from our subscription-based contracts with a term of at least one year was approximately 79% and 77% of total revenue for the trailing twelve months ended September 30, 2022 and September 30, 2021, respectively.

Development, Investments and Expansion

We plan to continue to invest in our business and our services, evaluate strategic growth opportunities, and pursue our key priorities as described below, while we closely monitor the economic impacts of the COVID-19 pandemic and manage our response. We are committed to supporting, improving and enhancing our information, analytics and online marketplace solutions, including expanding and improving our offerings for our client base and site users, including property owners, property managers, buyers, commercial tenants, brokers, agents and residential renters. We expect to continue our software development efforts to improve existing services, introduce new services, integrate and cross-sell services, integrate recently completed acquisitions and expand and develop supporting technologies for our research, sales and marketing organizations. We reevaluate our priorities on a regular basis and may reevaluate our priorities as the COVID-19 pandemic continues to evolve.

Our key priorities for the remainder of 2022 currently include:

Continuing to develop and invest in residential marketplaces. Our residential team is creating new and improved tools to help consumers have a highly contextual experience when searching for homes supported by high quality media and in-depth attributes of homes and details of the surrounding neighborhoods, parks and schools and to help consumers collaborate with their agent and co-buyers. We are also creating new and improved tools to help agents promote their residential listings, connect with buyers and sellers and streamline their daily workflow. In the second quarter of 2022, we launched Citysnap™, a consumer-facing search website and mobile app specifically for the five boroughs of New York City in conjunction with the Real Estate Board of New York. To support the expanded product offerings, we expect to increase our investment in residential products in 2022 by approximately $125 million compared to 2021 levels. The most significant components of our investment are expected to be content development, marketing costs and technology resources. The increase in our investment in residential products in 2022 is expected to reduce our results of operations and cash flow from operations for the year ended December 31, 2022. We plan to continue to monitor and evaluate these investments and adjust our residential business strategy and level of investment as we determine appropriate.
Continuing to invest in our international business. We plan to enhance our international commercial real estate marketplaces leveraging our LoopNet brand in the United Kingdom, Spain, France and Germany and to expand our international presence by hiring managers and teams of field researchers in certain European markets.
Continuing to expand our sales forces. We have implemented initiatives to improve our retention and new employee training and have increased the size of our sales recruiting team. These actions have resulted in a net increase in our sales force headcount. We plan further increases in our sales force headcount and further development of sales teams dedicated to our key products.
Continuing to invest in CoStar, including:

◦Enhancing benchmarking capabilities. We integrated STR's data into CoStar in 2021 and plan to apply STR's benchmarking expertise within CoStar. We will continue to integrate the STR products into our core platform.

◦Continuing to develop and market a solution for lenders that leverages CoStar's Risk Analytics capabilities to support lenders with risk management, underwriting, surveillance and compliance reporting. We released our new Lender product in the first quarter of 2022. This solution provides a focus on portfolio risk analytics and surveillance to help lenders meet regulatory and accounting requirements. Subsequent product releases are expected to focus on loan origination and underwriting.

◦Enhancing analytics capabilities. We are adding information on commercial property investment funds and linking property data to to allow fund investors to perform detailed analysis on their property portfolios directly in the CoStar platform.

We intend to continue to assess the need for additional investments in our business in order to develop and distribute new services and functionality within our current platform or expand the reach of, or otherwise improve, our current service offerings. Any future product development or expansion of services, combination and coordination of services or elimination of services or corporate expansion, development or restructuring efforts could reduce our profitability and increase our capital expenditures. Any new investments, changes to our service offerings or other unforeseen events could cause us to experience reduced revenues or generate losses and negative cash flow from operations in the future. Any development efforts must comply with our credit facility, which contains restrictive covenants that restrict our operations and use of our cash flow and may prevent us from taking certain actions that we believe could increase our profitability or otherwise enhance our business.

Non-GAAP Financial Measures

We prepare and publicly release quarterly unaudited financial statements prepared in accordance with generally accepted accounting principles (“GAAP”). We also disclose and discuss certain non-GAAP financial measures in our public releases, investor conference calls and filings with the Securities and Exchange Commission. The non-GAAP financial measures that we may disclose include net income before interest (expense) income, other (expense) income, loss on debt extinguishment, income taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income and non-GAAP net income per diluted share. EBITDA is our net income before interest (expense) income, other (expense) income, loss on debt extinguishment, income taxes, depreciation and amortization. We typically disclose EBITDA on a consolidated and an operating segment basis in our earnings releases, investor conference calls and filings with the Securities and Exchange Commission. Adjusted EBITDA is different from EBITDA because we further adjust EBITDA for stock-based compensation expense, acquisition- and integration-related costs, restructuring costs and settlements and impairments incurred outside our ordinary course of business. Adjusted EBITDA margin represents adjusted EBITDA divided by revenues for the period. Non-GAAP net income is determined by adjusting our net income for stock-based compensation expense, acquisition- and integration-related costs, restructuring costs, settlement and impairment costs incurred outside our ordinary course of business and loss on debt extinguishment, as well as amortization of acquired intangible assets and other related costs, and then subtracting an assumed provision for income taxes. Non-GAAP net income per diluted share is a non-GAAP financial measure that represents non-GAAP net income divided by the number of diluted shares outstanding for the period used in the calculation of GAAP net income per diluted share.

We may disclose adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income and non-GAAP net income per diluted share on a consolidated basis in our earnings releases, investor conference calls and filings with the Securities and Exchange Commission. The non-GAAP financial measures that we use may not be comparable to similarly titled measures reported by other companies. Also, in the future, we may disclose different non-GAAP financial measures in order to help our investors meaningfully evaluate and compare our results of operations to our previously reported results of operations or to those of other companies in our industry.

We view EBITDA, adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income and non-GAAP net income per diluted share as operating performance measures. We believe that the most directly comparable GAAP financial measure to EBITDA, adjusted EBITDA and non-GAAP net income is net income. We believe the most directly comparable GAAP financial measures to non-GAAP net income per diluted share and adjusted EBITDA margin are net income per diluted share and net income divided by revenue, respectively. In calculating EBITDA, adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income and non-GAAP net income per diluted share, we exclude from net income the financial items that we believe should be separately identified to provide additional analysis of the financial components of the day-to-day operation of our business. We have outlined below the type and scope of these exclusions and the material limitations on the use of these non-GAAP financial measures as a result of these exclusions. EBITDA, adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income and non-GAAP net income per diluted share are not measurements of financial performance under GAAP and should not be considered as a measure of liquidity, as an alternative to net income or as an indicator of any other measure of performance derived in accordance with GAAP. Investors and potential investors in our securities should not rely on EBITDA, adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income and non-GAAP net income per diluted share as a substitute for any GAAP financial measure, including net income and net income per diluted share. In addition, we urge investors and potential investors in our securities to carefully review the GAAP financial information included as part of our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q that are filed with the Securities and Exchange Commission, as well as our quarterly earnings releases, and compare the GAAP financial information with our EBITDA, adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income and non-GAAP net income per diluted share.

EBITDA, adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income and non-GAAP net income per diluted share may be used by management to internally measure our operating and management performance and may be used by investors as supplemental financial measures to evaluate the performance of our business. We believe that these non-GAAP measures, when viewed with our GAAP results and accompanying reconciliations, provide additional information to investors that is useful to understand the factors and trends affecting our business without the impact of certain acquisition-related items. We have spent more than 30 years building our database of commercial real estate information and expanding our markets and services partially through acquisitions of complementary businesses. Due to these acquisitions, our net income has included significant charges for amortization of acquired intangible assets, depreciation and other amortization, acquisition- and integration-related costs, restructuring costs, and loss on debt extinguishment. Adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income and non-GAAP net income per diluted share exclude these charges and provide meaningful information about the operating performance of our business, apart from charges for amortization of acquired intangible assets, depreciation and other amortization, acquisition- and integration-related costs, restructuring costs; settlement and impairment costs incurred outside our ordinary course of business. We believe the disclosure of non-GAAP measures can help investors meaningfully evaluate and compare our performance from quarter to quarter and from year to year without the impact of these items. We also believe the non-GAAP measures we disclose are measures of our ongoing operating performance because the isolation of non-cash charges, such as amortization and depreciation, and other items, such as interest (expense) income and other (expense) income, income taxes, stock-based compensation expenses, acquisition- and integration-related costs, restructuring costs, loss on debt extinguishment and settlement and impairment costs incurred outside our ordinary course of business, provides additional information about our cost structure, and, over time, helps track our operating progress. In addition, investors, securities analysts and others have regularly relied on EBITDA and may rely on adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income or non-GAAP net income per diluted share to provide a financial measure by which to compare our operating performance against that of other companies in our industry.

Set forth below are descriptions of financial items that have been excluded from net income to calculate EBITDA and the material limitations associated with using this non-GAAP financial measure as compared to net income:

Amortization of acquired intangible assets in cost of revenues may be useful for investors to consider because it represents the diminishing value of any acquired trade names and other intangible assets and the use of our acquired technology, which is one of the sources of information for our database of commercial real estate information. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure.
Amortization of acquired intangible assets in operating expenses may be useful for investors to consider because it represents the estimated attrition of our acquired customer base. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure.
Depreciation and other amortization may be useful for investors to consider because they generally represent the wear and tear on our property and equipment used in our operations. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure.
The amount of interest (expense) income and other (expense) income we generate and incur may be useful for investors to consider and may result in current cash inflows and outflows. However, we do not consider the amount of interest (expense) income and other (expense) income to be a representative component of the day-to-day operating performance of our business.
Income tax expense may be useful for investors to consider because it generally represents the taxes which may be payable for the period and the change in deferred income taxes during the period and may reduce the amount of funds otherwise available for use in our business. However, we do not consider the amount of income tax expense to be a representative component of the day-to-day operating performance of our business.
The amount of loss on our debt extinguishment may be useful for investors to consider because it generally represents losses from the early extinguishment of debt. However, we do not consider the amount of the loss on debt extinguishment to be a representative component of the day-to-day operating performance of our business.

Set forth below are descriptions of additional financial items that have been excluded from EBITDA to calculate adjusted EBITDA and the material limitations associated with using this non-GAAP financial measure as compared to net income:

Stock-based compensation expense may be useful for investors to consider because it represents a portion of the compensation of our employees and executives. Determining the fair value of the stock-based instruments involves a high degree of judgment and estimation and the expenses recorded may bear little resemblance to the actual value realized upon the future exercise or termination of the related stock-based awards. Therefore, we believe it is useful to exclude stock-based compensation in order to better understand the long-term performance of our core business.
The amount of acquisition- and integration-related costs incurred may be useful for investors to consider because such costs generally represent professional service fees and direct expenses related to acquisitions. Because we do not acquire businesses on a predictable cycle, we do not consider the amount of acquisition- and integration-related costs to be a representative component of the day-to-day operating performance of our business.
The amount of settlement and impairment costs incurred outside of our ordinary course of business may be useful for investors to consider because they generally represent gains or losses from the settlement of litigation matters or impairments on acquired intangible assets. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure.
The amount of restructuring costs incurred may be useful for investors to consider because they generally represent costs incurred in connection with a change in a contract or a change in the makeup of our properties or personnel. We do not consider the amount of restructuring related costs to be a representative component of the day-to-day operating performance of our business.

The financial items that have been excluded from our net income to calculate non-GAAP net income and non-GAAP net income per diluted share are amortization of acquired intangible assets and other related costs, stock-based compensation, acquisition- and integration-related costs, restructuring and related costs and settlement and impairment costs incurred outside our ordinary course of business. These items are discussed above with respect to the calculation of adjusted EBITDA together with the material limitations associated with using this non-GAAP financial measure as compared to net income. In addition to these exclusions from net income, we subtract an assumed provision for income taxes to calculate non-GAAP net income. In 2022 and 2021, we assumed a 26% and 25% tax rate, respectively, which approximated our historical long-term statutory corporate tax rate, excluding the impact of discrete items.

We compensate for the above-described limitations of using non-GAAP measures by using a non-GAAP measure only to supplement our GAAP results and to provide additional information that is useful to investors to understand the factors and trends affecting our business.

The following table shows our net income reconciled to our EBITDA and our net cash flows from operating, investing and financing activities for the indicated periods (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Net income	$	72,290	$	64,304	$	245,081	$	199,664
Amortization of acquired intangible assets in cost of revenues	6,945		7,209		21,980		21,565
Amortization of acquired intangible assets in operating expenses	29,651		19,121		60,621		55,885
Depreciation and other amortization	7,224		6,610		21,199		22,138
Interest (income) expense, net	(10,656)		7,943		461		23,698
Other income, net	(1,389)		(1,546)		(3,596)		(2,343)
Income tax expense	25,084		19,031		81,841		70,933
EBITDA	$	129,149	$	122,672	$	427,587	$	391,540






Net cash flows provided by (used in)
Operating activities	$	81,490	$	98,929	$	293,589	$	319,218
Investing activities	$	(18,779)	$	(12,715)	$	(76,486)	$	(297,505)
Financing activities	$	749,103	$	1,800	$	734,533	$	(14,338)

Comparison of Three Months Ended September 30, 2022 and Three Months Ended September 30, 2021

The following table provides a comparison of our selected consolidated results of operations for the three months ended September 30, 2022 and September 30, 2021 (in thousands):


	Three Months Ended September 30,
	2022		2021		Increase (Decrease) ($)		Increase (Decrease) (%)
Revenues:
CoStar	$	212,690	$	183,265	$	29,425	16	%
Information Services	41,013		35,926		5,087		14
Multifamily	189,536		171,125		18,411		11
LoopNet	58,901		52,527		6,374		12
Residential	19,351		24,747		(5,396)		(22)
Other Marketplaces	35,430		31,729		3,701		12
Total revenues	556,921		499,319		57,602		12
Cost of revenues	108,364		92,597		15,767		17
Gross profit	448,557		406,722		41,835		10
Operating expenses:
Selling and marketing (excluding customer base amortization)	185,395		180,055		5,340		3
Software development	56,912		53,143		3,769		7
General and administrative	91,270		64,671		26,599		41
Customer base amortization	29,651		19,121		10,530		55
Total operating expenses	363,228		316,990		46,238		15
Income from operations	85,329		89,732		(4,403)		(5)
Interest income (expense), net	10,656		(7,943)		(18,599)		NM
Other income, net	1,389		1,546		(157)		(10)
Income before income taxes	97,374		83,335		14,039		17
Income tax expense	25,084		19,031		6,053		32
Net income	$	72,290	$	64,304	$	7,986	12
__________________________
NM - Not meaningful

Revenues. Revenues increased to $557 million for the three months ended September 30, 2022, from $499 million for the three months ended September 30, 2021. The $58 million increase was attributable to increases in revenues for several of our service offerings. CoStar revenues increased $29 million, or 16%, due to higher sales volume driven by an increase in subscribers, as well as, the impact of annual price increases and customer upgrades on contract renewals. Multifamily revenues increased $18 million, or 11%, due to increases in pricing on renewals, partially offset by a less favorable mix of ad packages purchased. LoopNet revenue increased $6 million or 12%, primarily as a result of an increase in average prices, and to a lesser extent, due to the acquisition of BureauxLocaux. Information Services revenues increased $5 million, or 14%, primarily attributable to increased revenue for our CoStar Real Estate Manager product and STR service offerings. Other Marketplaces revenues increased $4 million, or 12%, driven by an increase of Land for Sale revenue and to a lesser extent, an increase in revenue for BizBuySell, and Ten-X. Residential revenues decreased $5 million, or 22%, due to the discontinuation of certain Homes.com products and services that were inconsistent with our long-term business strategy, partially offset by an increase in sales of Homesnap's products and services.

Gross Profit. Gross profit increased to $449 million for the three months ended September 30, 2022, from $407 million for the three months ended September 30, 2021, and the gross profit percentage was consistent at 81% for both the three months ended September 30, 2022 and 2021, The increase in gross profit was due to higher revenues, partially offset by, an increase in cost of revenues of $16 million, or 17%. The increase in cost of revenues was primarily due to an increase of $11 million in personnel costs, driven by a $5 million increase in salaries attributable to an increase in headcount and a $3 million increase in bonus and severance expenses. In addition, there was an increase of $4 million in software and equipment, to support our researchers and investment and further development of our residential marketplaces.

Selling and Marketing Expenses. Selling and marketing expenses increased to $185 million for the three months ended September 30, 2022, from $180 million for the three months ended September 30, 2021. The $5 million increase was primarily attributable to a $9 million increase in personnel costs driven by a $6 million increase in salaries, primarily attributable to an increase in headcount, and an increase in commissions of $2 million, as well as, a $2 million increase in travel spend. These increases were partially offset by a $7 million decrease in marketing costs, primarily attributable to an $18 million decrease in marketing spend for products, excluding our residential marketplaces, mostly due to lower agency fees for LoopNet and multifamily. The decrease in marketing costs was partially offset by, an $11 million increase in marketing for our residential marketplace products, lead by increases in spending on search engine marketing, agency fees, digital marketing, and events spending.

Software Development Expenses. Software development expenses increased to $57 million for the three months ended September 30, 2022, from $53 million for the three months ended September 30, 2021, and decreased as a percentage of revenues to 10% for the three months ended September 30, 2022 from 11% from the three months ended September 30, 2021. The $4 million increase was primarily due to an increase of $3 million in personnel costs, driven by an increase in headcount to support the development of our products, and to lesser extent, an increase of $1 million in occupancy expense.

General and Administrative Expenses. General and administrative expenses increased to $91 million for the three months ended September 30, 2022, from $65 million, for the three months ended September 30, 2021 and increased as a percentage of revenues to 16% for the three months ended September 30, 2022 from 13% for the three months ended September 30, 2021. The increase of $27 million was due to a $5 million increase in personnel costs, driven by a $3 million increase in salaries, as well as, a $1 million increase in stock-based compensation expense, and increases of $5 million in professional services fees, $5 million in bad debt expense, a $4 million increase in travel and entertainment and conference costs, and a $4 million fee to terminate a contract.

Customer Base Amortization Expense. Customer base amortization expense increased to $30 million for the three months ended September 30, 2022 from $19 million for the three months ended September 30, 2021, and increased as a percentage of revenues at 5% for the three months ended September 30, 2022 from 4% for the three months ended September 30, 2021. The increase was primarily attributable to an increase of $15 million in amortization expense driven by intangible assets related to a Homesnap product for which we decided to eliminate usage fees in the third quarter of 2022. This increase was offset by decreases in amortization expense related to the customer base intangible assets acquired in the acquisitions of ForRent, Ten-X, and STR, which have been amortizing on an accelerated basis since their acquisitions.

Interest Income, net. Interest income, net was $11 million for the three months ended September 30, 2022, as compared to interest expense, net of $8 million for the three months ended September 30, 2021. This change was primarily due to an increased rate of return on cash equivalents.

Other Income, net. Other income, net remained consistent for the three months ended September 30, 2022 and September 30, 2021.

Income Tax Expense. Income tax expense increased to $25 million for the three months ended September 30, 2022, from $19 million for the three months ended September 30, 2021. The increase was mostly due to higher income before taxes during the three months ended September 30, 2022.

Comparison of Business Segment Results for Three Months Ended September 30, 2022 and Three Months Ended September 30, 2021

internally measure our operating and management performance and to evaluate the performance of our 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. See “Non-GAAP Financial Measures” for further information regarding our segment operating results.

Segment Revenues. North America revenues increased to $538 million for the three months ended September 30, 2022, from $483 million for the three months ended September 30, 2021. The $55 million increase in North America revenues was attributable to increases in revenues for several of our service offerings, including an increase in CoStar revenues of $30 million due to higher sales volume driven by an increase in subscribers, as well as, the impact of annual price increases and customer upgrades on contract renewals. Multifamily revenues increased $18 million, due to increases in pricing on renewals, partially offset by a less favorable mix of ad packages purchased. LoopNet revenues increased $5 million as a result of price increases. Other Marketplaces revenues increased $4 million, driven by an increase of Land for Sale revenue and to a lesser extent, an increase in revenue for BizBuySell, and Ten-X. Information Services revenues increased $3 million due to increased revenue from our CoStar Real Estate Manager product and STR service offerings. Residential revenues decreased $5 million due to the discontinuation of certain Homes.com products and services that were inconsistent with our long-term business strategy, partially offset by an increase in sales of Homesnap's products and services. International revenues increased to $19 million for the three months ended September 30, 2022, from $16 million for the three months ended September 30, 2021. The increase in International revenues was primarily driven by the acquisitions of BureauxLocaux and Business Immo.

Segment EBITDA. North America EBITDA increased to $128 million for the three months ended September 30, 2022, from $120 million for the three months ended September 30, 2021. The increase in North America EBITDA was primarily due to an increase in revenue, partially offset by, increases in general and administrative, and personnel costs, partially offset by, a decrease in marketing costs. International EBITDA for the three months ended September 30, 2022 decreased to $1 million from $3 million for the three months ended September 30, 2021. The decrease was due to an increases in personnel and general and administrative costs, partially offset by, an increase in revenue.

Comparison of Nine Months Ended September 30, 2022 and Nine Months Ended September 30, 2021

The following table provides a comparison of our selected consolidated results of operations for the nine months ended September 30, 2022 and 2021 (in thousands):


	Nine Months Ended September 30,
	2022		2021		Increase (Decrease) ($)		Increase (Decrease) (%)
Revenues:
CoStar	$	617,905	$	532,428	$	85,477	16	%
Information Services	116,730		105,779		10,951		10
Multifamily	547,372		508,629		38,743		8
LoopNet	169,645		152,852		16,793		11
Residential	57,565		53,939		3,626		7
Other Marketplaces	99,837		83,722		16,115		19
Total revenues	1,609,054		1,437,349		171,705		12
Cost of revenues	304,814		270,911		33,903		13
Gross profit	1,304,240		1,166,438		137,802		12
Operating expenses:
Selling and marketing (excluding customer base amortization)	510,736		483,354		27,382		6
Software development	162,520		148,500		14,020		9
General and administrative	246,576		186,747		59,829		32
Customer base amortization	60,621		55,885		4,736		8
Total operating expenses	980,453		874,486		105,967		12
Income from operations	323,787		291,952		31,835		11
Interest expense, net	(461)		(23,698)		(23,237)		(98)
Other income, net	3,596		2,343		1,253		53
Income before income taxes	326,922		270,597		56,325		21
Income tax expense	81,841		70,933		10,908		15
Net income	$	245,081	$	199,664	$	45,417	23

Revenues. Revenues increased to $1,609 million for the nine months ended September 30, 2022, from $1,437 million for the nine months ended September 30, 2021. The $172 million increase was attributable to increases in revenues for several of our service offerings. CoStar revenues increased $85 million, or 16%, due to higher sales volume driven by the impact of annual price increases and customer upgrades on contract renewals, as well as, an increase in subscribers. Multifamily revenues increased $39 million, or 8%, due to increases in pricing on renewals, partially offset by a less favorable mix of ad packages purchased. LoopNet revenues increased $17 million, or 11%, primarily as a result of an increase in average prices, and to a lesser extent, due to the acquisition of BureauxLocaux. Other Marketplaces revenues increased $16 million, or 19%, primarily driven by increases in Ten-X and Land for Sale revenue in nearly equal amounts, and to a lesser extent, an increase in revenue for BizBuySell. Information Services revenues increased $11 million, or 10%, primarily due to increased revenue from our CoStar Real Estate Manager product and STR service offerings. Residential revenues increased $4 million, or 7%, due to an increase in sales of Homesnap's products and services, partially offset by, the discontinuation of certain Homes.com products and services that were inconsistent with our long-term business strategy.

Gross Profit. Gross profit increased to $1,304 million for the nine months ended September 30, 2022, from $1,166 million for the nine months ended September 30, 2021, and the gross profit percentage remained consistent at 81% for the nine months ended September 30, 2022 and 2021. The increase in gross profit was due to higher revenues, partially offset by, an increase in cost of revenues of $34 million, or 13%, mostly due to an increase of $20 million related to our investment and further development of our residential marketplaces, including research equipment, personnel, software and equipment, and data and content costs. There were also increases of $7 million in personnel costs, driven by an increase in salaries, and $5 million in software and equipment to support our researchers.

Selling and Marketing Expenses. Selling and marketing expenses increased to $511 million for the nine months ended September 30, 2022, from $483 million for the nine months ended September 30, 2021. The $27 million increase was primarily attributable to increases of $20 million in personnel costs driven by a $11 million increase in salaries, primarily attributable to an increase in headcount, and an increase in commissions of $6 million, as well as, a $13 million increase in conferences and travel costs. These increases were partially offset by a $10 million decrease in marketing costs, primarily attributable to a $34 million decrease in marketing spend for our other products, mainly to lower agency fees for LoopNet and Multifamily, partially offset by a $25 million increase in marketing for our residential marketplace products led by increases in spending on search engine marketing, agency fees, events, and digital marketing.

Software Development Expenses. Software development expenses increased to $163 million for the nine months ended September 30, 2022, from $149 million for the nine months ended September 30, 2021, and remained consistent as a percentage of revenues at 10% for the nine months ended September 30, 2022, and 2021. The $14 million increase was primarily due to an increase of $10 million in personnel costs, driven by increased headcount to support the development of our products, and to a lesser extent to an increase of $2 million in occupancy costs.

General and Administrative Expenses. General and administrative expenses increased to $247 million for the nine months ended September 30, 2022, from $187 million for the nine months ended September 30, 2021, and increased as a percentage of revenues to 15% for the nine months ended September 30, 2022 from 13% for the nine months ended September 30, 2021. The $60 million increase in the amount of general and administrative expense was driven by an increase of $15 million in personnel costs, primarily due to increases in salaries and stock-based compensation expense, and to a lesser extent, increases of $10 million in professional services, and $9 million in travel and conferences costs, driven partially by an increase in the average cost of air travel. There were also increases of $6 million each in software and equipment and bad debt expense,$2 million each in property taxes and recruiting agency fees, and an increase of $4 million for a fee paid to a counterparty to terminate a contract.

Customer Base Amortization Expense. Customer base amortization expense increased to $61 million for the nine months ended September 30, 2022 from $56 million for the nine months ended September 30, 2021, and remained consistent as a percentage of revenues at 4% for the nine months ended September 30, 2022, and 2021. The increase in customer base amortization expense was primarily attributable to an increase of $14 million in amortization expense driven by intangible assets related to a Homesnap product for which we decided to eliminate usage fees in the third quarter of 2022. This increase was offset by decreases in amortization expense related to the customer base intangible assets acquired in the acquisitions of ForRent, STR, and Ten-X, which had been amortizing on an accelerated basis since their acquisitions.

Interest Expense, net. Interest expense, net was a net expense of $0.5 million for the nine months ended September 30, 2022, as compared to net expense of $24 million for the nine months ended September 30, 2021. The decrease of $23 million for the nine months ended September 30, 2022 was primarily due to an increased rate of return on cash equivalents.

Other Income, net. Other income, net increased $1 million for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021. The increase was primarily due to increases in foreign exchange gains due to rate fluctuations.

Income Tax Expense. Income tax expense increased to $82 million for the nine months ended September 30, 2022 from $71 million for the nine months ended September 30, 2021. The increase was mostly due to higher income before taxes and a decrease in excess tax benefits, partially offset by, a tax restructuring gain recognized in the nine months ended September 30, 2021.

Comparison of Business Segment Results for Nine Months Ended September 30, 2022 and Nine Months Ended September 30, 2021

We manage our business geographically in two operating segments, with our 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, which is our net income before interest (expense) income and other (expense) income, loss on debt extinguishment, income taxes, depreciation and amortization. Management believes that operating segment EBITDA is an appropriate measure for evaluating the operational performance of our operating segments. EBITDA is used by management to internally measure our operating and management performance and to evaluate the performance of our 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.

Segment Revenues. North America revenues increased to $1,553 million for the nine months ended September 30, 2022, from $1,388 million for the nine months ended September 30, 2021. The $164 million increase in North America revenues was attributable to increases in revenues for several of our services. CoStar revenues increased $85 million, due to higher sales volume driven by the impact of annual price increases and customer upgrades on contract renewals, as well as, an increase in subscribers. Multifamily revenues increased $39 million, due to increases in pricing on renewals, partially offset by a less favorable mix of ad packages purchased. Other Marketplaces revenues increased $16 million, primarily driven by increases in Ten-X and Land for Sale revenue in nearly equal amounts, and to a lesser extent, an increase in revenue for BizBuySell. LoopNet revenues increased $13 million, primarily as a result of an increase in average prices. Information Services revenues increased $8 million, primarily due to increased revenue from our CoStar Real Estate Manager and STR service offerings. Residential revenues increased $4 million, due to an increase in sales of Homesnap's products and services partially offset by the discontinuation of certain Homes.com products and services that were inconsistent with our long-term business strategy. International revenues increased to $56 million for the nine months ended September 30, 2022, from $49 million for the nine months ended September 30, 2021. The increase in International revenues was primarily driven by the acquisitions of BureauxLocaux and Business Immo, and to a lesser extent, due to growth in our CoStar product revenue.

Segment EBITDA. North America EBITDA increased to $422 million for the nine months ended September 30, 2022, from $386 million for the nine months ended September 30, 2021. The increase in North America EBITDA was primarily due to an increase in revenue, and to a lesser extent, to a decrease in marketing costs, partially offset by, increases in general and administrative and personnel costs. International EBITDA for the nine months ended September 30, 2022 was income of $5 million, as compared to $6 million for the nine months ended September 30, 2021, the decrease was due to increases in personnel, general and administrative, and marketing costs, partially offset by, an increase in revenue.

Liquidity and Capital Resources

We believe the balance of cash, cash equivalents and restricted cash, which was approximately $4.8 billion as of September 30, 2022, along with cash generated by ongoing operations and continued access to capital markets, will be sufficient to satisfy our cash requirements over the next 12 months and beyond. Our cash requirements have not changed materially since the 2021 Form 10-K.

Our future capital requirements will depend on many factors, including, among others, our operating results, expansion and integration efforts, and our level of acquisition activity or other strategic transactions. To date, we have grown in part by acquiring other companies, and we expect to continue to make acquisitions.

We currently plan to expand our Richmond, Virginia campus which may result in a material cash requirement in 2022 and beyond. We currently plan to fund the expansion with cash on hand.

Cash, cash equivalents and restricted cash increased to approximately $4.8 billion as of September 30, 2022, compared to cash, cash equivalents and restricted cash of approximately $3.8 billion as of December 31, 2021. The increase in cash, cash equivalents, and restricted cash for the nine months ended September 30, 2022 was primarily due to $746 million of net proceeds from our September 2022 equity offering, and cash provided by operating activities of $294 million. These increases were partially offset by $76 million of cash used in investing activities, primarily attributable to purchases of property and equipment and other assets of $75 million, including the purchase of assets related to the expansion of our campus in Richmond, Virginia.

Net cash provided by operating activities for the nine months ended September 30, 2022 was approximately $294 million compared to approximately $319 million for the nine months ended September 30, 2021. The $26 million decrease in cash

provided by operating activities was primarily due a decrease from changes in net working capital of $62 million, partially offset by, an increase in net income excluding certain non-cash expenses such as deferred income taxes and stock-based compensation expense.

Net cash used in investing activities for the nine months ended September 30, 2022 was approximately $76 million compared to approximately $298 million of cash used in investing activities for the nine months ended September 30, 2021. The $221 million decrease in cash used in investing activities was primarily due to $146 million additional cash paid for acquisitions during the nine months ended September 30, 2021 , as well as, $92 million additional cash paid for assets related to the expansion of our campus in Richmond, Virginia, partially offset by, an increase in cash used for the purchase of other property and equipment, including capitalized software development costs, during the nine months ended September 30, 2022.

Net cash provided by financing activities for the nine months ended September 30, 2022 was approximately $735 million compared to approximately $14 million used in financing activities for the nine months ended September 30, 2021. The $749 million increase in cash used in financing activities was primarily due to $746 million of net proceeds from our September 2022 equity offering.

Critical Accounting Estimates

The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the period reported. The following accounting policies involve a “critical accounting estimate” because they are particularly dependent on estimates and assumptions made by management about matters that are highly uncertain at the time the accounting estimates are made. In addition, while we have used our best estimates based on facts and circumstances available to us at the time, different acceptable assumptions would yield different results. Changes in the accounting estimates are reasonably likely to occur from period to period, which may have a material impact on the presentation of our financial condition and results of operations. We review these estimates and assumptions periodically and reflect the effects of revisions in the period that they are determined to be necessary. We consider the following significant accounting policies to contain critical accounting estimates:

Long-lived assets, intangible assets and goodwill;
Income taxes;
Revenue recognition; and
Business combinations.

For an in-depth discussion of each of our significant accounting policies, including the related critical accounting estimates. and further information regarding estimates and assumptions involved in their application, see the 2021 Form 10-K and Note 2 to the condensed consolidated financial statements included in Part I of this Quarterly Report on Form 10-Q. During the nine months ended September 30, 2022, there were no material changes to our critical accounting estimates from those described in the 2021 Form 10-K.

Recent Accounting Pronouncements

See Note 2 of the Notes to the condensed consolidated financial statements included in Part I of this Quarterly Report on Form 10-Q.

Cautionary Statement Concerning Forward-Looking Statements

We have made forward-looking statements in this Quarterly Report on Form 10-Q and make forward-looking statements in our press releases, investor conference calls, Annual Reports on Form 10-K, other Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings with the Securities and Exchange Commission that are subject to risks and uncertainties. Forward-looking statements include information that is not purely historic fact and include, without limitation, statements concerning our financial outlook for 2022 and beyond, our possible or assumed future results of operations generally, and other statements and information regarding assumptions or expectations about our revenues, revenue growth rates, gross margin percentage, net income, net income per share, fully diluted net income per share, EBITDA, adjusted EBITDA, adjusted EBITDA margin, non-generally accepted accounting principles (“GAAP”) net income, non-GAAP net income per share, weighted-average outstanding shares, cash flow from operating activities, operating costs, capital and other expenditures, the impact of COVID-19 on our revenues, revenue growth rates and profitability, key priorities for 2022, trends in customer behavior, legal proceedings and claims, legal costs, effective tax rate, the anticipated benefits of completed or proposed acquisitions, the anticipated timing for integration of completed acquisitions, the anticipated benefits of cross-selling efforts,

product development and release, geographic and product expansion, planned service enhancements, expansion and development of our sales forces, planned sales and marketing activities and investments, the impact or results of sales and marketing initiatives, product integrations, elimination and de-emphasizing of services, investments in residential marketplace services and our residential marketplace strategy, net new sales, contract renewal rates, use of proceeds from equity and debt offerings, the use of proceeds of any draws under our $750 million credit facility (the “2020 Credit Agreement”), employee relations, attrition and retention, management’s plans, goals and objectives for future operations, deferral of tax payments, sources and adequacy of liquidity, and growth and markets for our stock. Sections of this Report which contain forward-looking statements include the Financial Statements and related Notes, “Management's Discussion and Analysis of Financial Condition and Results of Operations,” “Quantitative and Qualitative Disclosures About Market Risk,” “Controls and Procedures,” “Legal Proceedings” and “Risk Factors.”

Our forward-looking statements may be identified by words such as “hope,” “anticipate,” “may,” “believe,” “expect,” “intend,” “will,” “should,” “plan,” “estimate,” “predict,” “continue” and “potential” or the negative of these terms or other comparable terminology. You should understand that these forward-looking statements are estimates reflecting our judgment, beliefs and expectations, not guarantees of future performance. They are subject to a number of assumptions, risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. The following important factors, in addition to those discussed or referred to under the heading “Risk Factors,” and other unforeseen events or circumstances, could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in our forward-looking statements: potential declines in our revenues, revenue growth rates and profitability due to the impacts of the COVID-19 pandemic and economic conditions on the commercial real estate industry and our core customer base; our inability to attract and retain clients; our inability to successfully develop and introduce new or upgraded information, analytics and online marketplace services that are attractive to our users and advertisers or successfully combine or shift focus from current services with less demand; our inability to compete successfully against existing or future competitors in attracting advertisers; a downturn or consolidation in the real estate industry that may decrease customer demand for our services; our inability to hire qualified persons or retain and continue to develop our sales force; downward pressure on our operating margins by our internal and external investments; our inability to increase awareness of our brands, including CoStar, LoopNet, Apartments.com, BizBuySell, LandsofAmerica, STR, Ten-X, Homes.com and Homesnap; our inability to maintain or increase traffic to our marketplaces and the possibility of internet search engines not featuring our websites on the search engine results page; competition; our inability to successfully identify, finance, integrate and/or manage costs related to acquisitions; our actual or perceived failure to comply with privacy laws and standards; cyberattacks and security vulnerabilities; technical problems or disruptions that affect either our customers’ ability to access our services, or the software, internal applications, database and network systems underlying our services; the costs of a large infrastructure project to build out our campus in Richmond, Virginia; our current or future geographic expansion plans that may not result in increased revenues; fluctuations and market cyclicality; our inability to retain and attract highly capable management and operating personnel; changes in tax laws, regulations or fiscal and tax policies; risks related to acceptance of credit cards and debit cards and facilitation of other customer payments; risks related to our data, intellectual property and listings; risks related to our international operations, including fluctuating foreign currencies and the economic effects of “Brexit” and risks related to our indebtedness.

Accordingly, you should not place undue reliance on forward-looking statements, which speak only as of, and are based on information available to us on, the date of this Quarterly Report on Form 10-Q (unless otherwise indicated). All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to update any such statements or release publicly any revisions to these forward-looking statements to reflect new information or events or circumstances after the date of this Report or to reflect the occurrence of unanticipated events.

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