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, “Risk Factors” in Item 1A of Part I of our 2024 Form 10-K and “Risk Factors” in Item 1A of Part II of this Report, as well as those described from time to time in our filings with the SEC.

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 applicable law. The following discussion should be read in conjunction with our 2024 Form 10-K, our subsequent Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, other filings with the SEC, and the condensed consolidated financial statements and related notes included in this Report.

Overview

CoStar Group is a leading provider of online real estate marketplaces, information, analytics, and 3D digital twin technology in the property markets, based on the numbers of unique visitors and site visits per month; provide more information, analytics, and marketing services than many of our competitors; offer the most comprehensive commercial real estate database available; and have the largest commercial real estate research department in the industry. We have created and compiled a standardized platform of real estate information and analytics and online marketplaces where industry professionals, 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 property types, including office, retail, industrial, multifamily, land, mixed-use, and hospitality. 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.

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.

Our services are typically distributed to our customers under subscription-based license agreements that generally 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 customers to use our services regularly, we generally charge a fixed monthly amount for our subscription-based services rather than charging fees based on actual platform usage or number of paid clicks. Depending on the type of service, contract rates are generally based on the number of sites, number of users, organization size, the customer’s business focus, the customer's geographic location, the number of properties reported on or analyzed, the number and types of services to which a customer subscribes, the number of digital twins hosted, the number of properties a customer advertises and the prominence and placement of a customer's advertised properties in the search results. Our subscription customers 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 for commercial real estate, the sales of Matterport cameras and capture equipment, and providing assistance with the data capture process to create digital twins through Matterport. Other transaction-based services are described by service offering below.

Services

Our portfolio of information, analytics, online real estate marketplaces, and 3D digital twin technology is branded and marketed to our customers and marketplace end users under the primary brands of CoStar®, Apartments.com®, LoopNet®, OnTheMarket, Homes.com®, Matterport®, Land.com®, and Ten-X®. Our services are accessible via the internet and through our mobile applications. Our services are primarily derived from a database of building-specific information and offer customers specialized tools for accessing, analyzing, and using our information. Over time, we have enhanced and expanded, and we expect to continue to enhance and expand, our existing information, analytics, and online marketplaces. We have developed and we expect to continue to develop additional services leveraging our centralized database and 3D digital twin technology to meet the needs of our existing customers as well as potential new categories of customers.

Our principal services are described in the following paragraphs:

CoStar

CoStar is our subscription-based integrated platform for commercial real estate intelligence, which includes information about commercial real estate properties, properties for sale, comparable sales, tenants, space available for lease, industry professionals and their business relationships, industry news and market status and provides benchmarking for the hospitality industry, lease analytical capabilities, and risk management capabilities for lenders. CoStar's revenue growth rate for the six months ended June 30, 2025 decreased compared to the revenue growth rate for the six months ended June 30, 2024, due to a lack of benefit from converting legacy STR customers to our new CoStar-based benchmarking product realized in 2024. We expect CoStar's revenue growth rate for the year ending December 31, 2025 to decrease compared to the revenue growth rate for the year ended December 31, 2024, primarily due to a lack of benefit from converting legacy STR customers to our new CoStar-based benchmarking product realized in 2024.

Information Services

We provide real estate and lease management technology solutions, including lease administration, lease accounting, transaction management, and professional services through our CoStar Real Estate Manager and Visual Lease service offerings. Information Services' revenue growth rate for the six months ended June 30, 2025 increased compared to the revenue growth rate for the six months ended June 30, 2024 primarily as a result of the Visual Lease Acquisition. We expect the Information Services revenue growth rate for the year ending December 31, 2025 to increase compared to the revenue growth rate for the year ended December 31, 2024 as a result of the Visual Lease Acquisition.

Multifamily

Apartments.com is the flagship brand of our apartment marketing network of subscription-based advertising services and provides property management companies and landlords with a comprehensive advertising destination for their available rental units. In addition, it offers renters a platform for searching for available rentals and earns transaction-based revenue primarily from providing online tenant applications, including background and credit checks, and rental payment processing. Multifamily's revenue growth rate for the six months ended June 30, 2025 moderated compared to the revenue growth rate for the six months ended June 30, 2024, primarily due to the impact in 2025 of pivoting the Apartments.com sales force to support the Homes.com product launch in 2024. We expect the Multifamily revenue growth rate for the year ending December 31, 2025 to moderate compared to the revenue growth rate for the year ended December 31, 2024, due to the impact in 2025 of pivoting the Apartments.com sales force to support the Homes.com product launch in 2024.

LoopNet

Our LoopNet Network of commercial real estate websites offers 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. Commercial real estate agents, buyers, and tenants use the LoopNet Network of online marketplace services to search for available property listings that meet their criteria. LoopNet's revenue growth rate for the six months ended June 30, 2025 was consistent with the revenue growth rate for the six months ended June 30, 2024. We expect LoopNet's revenue growth rate for the year ending December 31, 2025 to increase compared to the revenue growth rate for the year ended December 31, 2024 due to an increase in the average revenue per listing, as well as an increase in the number of listings on our sites.

Residential

Homes.com offers real estate agents subscription memberships promoting the agent's home listings and profile on our websites. Homebuyers and real estate agents use Homes.com to find their dream homes using our proprietary research and neighborhood content combined with listing information. OnTheMarket is a property portal in the U.K., which primarily hosts agents' listings on a subscription basis. Residential's revenues for the six months ended June 30, 2025 increased compared to the six months ended June 30, 2024, primarily due to an increase in the number of Homes.com memberships, partially offset by the discontinuation of certain products that were inconsistent with our long-term business strategy. We expect Residential's revenues for the year ending December 31, 2025 to increase compared to the year ended December 31, 2024, due to additional sales of our Homes.com memberships.

Other Revenues

Our other revenues include revenues from the Matterport Acquisition, our Land.com Network, BizBuySell Network, and Ten-X, an online auction platform for commercial real estate. Matterport primarily provides hosting services for its 3D digital twins on a subscription basis. Matterport also provides capture services of spatial data and other add-on services to existing

subscription customers and sells 3D capture cameras and third-party capture devices to customers. The Land.com Network provides online marketplaces for rural lands for sale. Our BizBuySell Network provides online marketplaces for businesses and franchises for sale. Other revenues for the six months ended June 30, 2025 increased compared to the six months ended June 30, 2024, primarily due to the Matterport Acquisition. We expect other revenues for the year ending December 31, 2025 to increase compared to the year ended December 31, 2024 primarily due to the Matterport Acquisition.

Subscription-based Services

The majority of our revenue is generated from service offerings that are distributed to our customers 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 June 30, 2025 and 2024, our annualized net new bookings of subscription-based services on all contracts were $93 million and $67 million, respectively. Net new bookings is calculated based on the annualized amount of change in our sales bookings resulting from new subscription-based contracts, changes to existing subscription-based contracts, and cancellations of subscription-based contracts for the period reported. Net new bookings is calculated on all subscription-based contracts without regard to contract term. 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. Revenues from our subscription-based contracts were approximately 95% and 96% of total revenues for the three months ended June 30, 2025 and 2024, respectively.

For the trailing 12 months ended June 30, 2025 and 2024, our contract renewal rates for existing company-wide CoStar Group subscription-based services for contracts with a term of at least one year were approximately 89% and 90%, respectively, and, therefore, our cancellation rates for those services for the same periods were approximately 11% and 10%, respectively. Contract renewal rates are calculated on all subscription-based contracts with a term of at least one year. 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 12-month contract renewal rate may decline as a result of negative economic conditions, consolidations among our customers, reductions in customer spending or decreases in our customer base. Revenues from our subscription-based contracts with a term of at least one year were approximately 79% and 81% of total revenues for the trailing 12 months ended June 30, 2025 and 2024, respectively. The decrease in the percentage of revenues from our subscription-based contracts with a term of at least one year is due to the transactional product sales and services from Matterport.

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. 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, and residential renters and buyers. 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 may reevaluate our priorities as economic conditions continue to evolve.

Our key priorities for the remainder of 2025 currently include:

*•*Continuing to invest in and develop Homes.com. In 2024, we launched Homes.com memberships giving real estate agents the ability to advertise and promote their listings on our website featuring original, media rich content. We plan to continue hiring our dedicated Homes.com sales force; raising unaided brand awareness of the site through targeted marketing campaigns; and focusing on attracting recurring visitors to the site. In addition, we plan to develop and market additional products.

• Integrating Matterport's existing AI, computer vision, and machine learning across our products to build features that will enhance user experience to drive better engagement with our existing products and use the capability from the Matterport Acquisition to increase development of AI, computer vision, and machine learning to improve property analytics, optimize operational efficiency, and broaden the use of digital twin technologies throughout the real estate industry. We also intend to integrate Matterport's equipment and services into new market offerings to customers.

• Continuing to expand our CoStar and LoopNet products internationally. We continue to increase our international research team to collect data in European markets. We have launched our LoopNet branded advertising products in Spain and plan to launch our LoopNet brand in France and continue to expand our footprint of commercial listings.

• Using the aggregate and anonymized data from leases within CoStar Real Estate Manager and Visual Lease to create a trusted source of pricing and occupancy information for Commercial Real Estate. We also plan to begin the integration of the CoStar Real Estate Manager and Visual Lease products.

We expect our investment in the sales force will increase our selling and marketing expenses (excluding customer base amortization) for the year ending December 31, 2025 compared to the year ended December 31, 2024. 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 GAAP. We also disclose and discuss certain non-GAAP financial measures in our public releases, investor conference calls, and filings with the SEC. The non-GAAP financial measures that we may disclose include EBITDA, adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income, and non-GAAP net income per diluted share. EBITDA is our net income (loss) before interest income or expense, net, other expense or income, net, 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 SEC. Adjusted EBITDA is different from EBITDA because we further adjust EBITDA for stock-based compensation expense; acquisition- and integration-related costs; restructuring and related costs, including certain advisory fees; 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 (loss) for stock-based compensation expense, acquisition- and integration-related costs, including gains or losses on equity investments acquired in prospective targets and related to deal-contingent financial instruments; 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 SEC. 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 (loss). We believe the most directly comparable GAAP financial measure to non-GAAP net income per diluted share and adjusted EBITDA margin are net income (loss) per diluted share and net income (loss) divided by revenues, 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 (loss) 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 (loss), 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 (loss) and net income (loss) 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

SEC, 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 (loss) has included significant charges for amortization of acquired intangible assets; depreciation and other amortization; acquisition- and integration-related costs, including gains or losses on equity investments acquired in prospective targets and related to deal-contingent financial instruments; restructuring and related costs, including certain advisory fees; 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 and related costs, including certain advisory fees; 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 income or expense, net; other expense or income, net; income taxes; stock-based compensation expenses; acquisition- and integration-related costs; restructuring and related costs, including certain advisory fees; 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 (loss) to calculate EBITDA and the material limitations associated with using this non-GAAP financial measure as compared to net income (loss):

• 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 income or expense, net and other expense or income, net 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 income or expense, net and other expense or income, net 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 that 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 (loss):

• 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, charges related to terminations of contracts or impairments of acquired intangible assets or other long-lived 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 and related costs, including certain advisory costs, incurred may be useful for investors to consider because they generally represent costs incurred in connection with changes to the structure of our operations, governance, offices and related properties, and suppliers or employees used to deliver services and include costs to terminate contracts, advisory fees and other professional services, and severance. Because we do not carry out restructuring activities on a predictable cycle, 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, including gains or losses on equity investments acquired in prospective targets and related to deal-contingent financial instruments; 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 non-GAAP financial measures as compared to net income (loss). In addition to these exclusions from net income, we subtract an assumed provision for income taxes to calculate non-GAAP net income. In both 2025 and 2024, we assume a 26.0% tax rate, which approximates our historical long-term statutory corporate tax rate, excluding the impact of discrete items.

Management compensates 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.

Results of Operations

Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024

The following table compares our selected condensed consolidated results of operations for the three months ended June 30, 2025 and 2024 (in millions, except percentages):

			Three Months Ended June 30,
			2025						2024						Increase (Decrease) ($)						Increase (Decrease) (%)
Revenues:
CoStar			$	270.9					$	253.0					$	17.9					7		%
Information Services			39.3						33.4						5.9						18
Multifamily			292.3						264.2						28.1						11
LoopNet			75.7						69.8						5.9						8
Residential			28.4						26.2						2.2						8
Other Revenues			74.7						31.2						43.5						139
Total revenues			781.3						677.8						103.5						15
Cost of revenues			167.8						135.8						32.0						24
Gross profit			613.5						542.0						71.5						13
Operating expenses:
Selling and marketing (excluding customer base amortization)			394.9						358.4						36.5						10
Software development			97.1						79.6						17.5						22
General and administrative			122.2						109.9						12.3						11
Customer base amortization			26.5						10.2						16.3						160
Total operating expenses			640.7						558.1						82.6						15
Loss from operations			(27.2)						(16.1)						(11.1)						69
Interest income, net			32.5						53.5						(21.0)						(39)
Other income (expense), net			16.3						(1.5)						17.8						NM
Income before income taxes			21.6						35.9						(14.3)						(40)
Income tax expense			15.4						16.7						(1.3)						(8)
Net income			$	6.2					$	19.2					$	(13.0)					(68)
__________________________
NM - Not meaningful

Revenues. Revenues increased $104 million, or 15%, to $781 million. The increase in our revenues included:

• an increase in Other revenues of $44 million, or 139%, primarily due to the Matterport Acquisition,

• an increase in Multifamily revenues of $28 million, or 11%, due to an increase in the number of properties listed on our network,

• an increase in CoStar revenues of $18 million, or 7%, due to increased sales driven by inflation-based price increases on renewals and an increase in subscribers,

• an increase in LoopNet revenues of $6 million, or 8%, due to an increase in the average price per listing, as well as the number of listings,

• an increase in Information Services revenues of $6 million, or 18%, primarily attributable to the Visual Lease Acquisition, and

• an increase in Residential revenues of $2 million, or 8%, due to an increase in the number of Homes.com memberships, partially offset by the discontinuation of certain products that were inconsistent with our long-term business strategy.

Gross Profit and Cost of Revenues. Gross profit increased $72 million, or 13%, to $614 million, and the gross profit margin decreased from 80% to 79%. The increase in gross profit was due to higher revenues, partially offset by an increase in cost of revenues. Cost of revenues increased $32 million, or 24%, to $168 million and, as a percentage of revenues, increased from 20% to 21%. The increase in cost of revenues primarily included:

• an increase of $10 million in amortization expense for the acquired technology and trade name from the Matterport Acquisition,

• an increase in $8 million in costs related to sales of Matterport capture equipment and services,

• an increase in personnel costs of $8 million related to additional headcount from the Matterport Acquisition, and

• an increase of $3 million for web hosting costs.

Selling and Marketing Expenses (Excluding Customer Base Amortization). Selling and marketing expenses increased $37 million, or 10%, to $395 million and, as a percentage of revenues, decreased from 53% to 51%. The increase primarily included:

• an increase in personnel costs of $40 million related to sales hiring and the sales force from the Matterport Acquisition,

• an increase in occupancy and equipment costs of $4 million related to our sales force, and

• an increase of $2 million in third party sales commissions for Matterport products, partially offset by

• a decrease in marketing expenses of $13 million.

Software Development Expenses. Software development expenses increased $18 million, or 22%, to $97 million and, as a percentage of revenues, were consistent at 12%. The increase primarily included:

• an increase in personnel costs of $15 million primarily due to additional headcount from the Matterport Acquisition, as well as costs for our existing employees and

• an increase in occupancy and equipment costs of $2 million.

General and Administrative Expenses. General and administrative expenses increased $12 million, or 11%, to $122 million and, as a percentage of revenues, were consistent at 16%. The increase primarily included:

• an increase in personnel and related costs of $24 million, primarily due to additional headcount from the Matterport Acquisition, partially offset by

• a decrease in professional service fees of $9 million, primarily related to acquisition activities, and

• a decrease in occupancy and equipment costs of $3 million.

Customer Base Amortization Expense. Customer base amortization expense increased $16 million, or 160%, to $27 million, and, as a percentage of revenues, increased from 2% to 3%. The increase was primarily due to the Matterport Acquisition and Visual Lease Acquisition.

Interest Income, Net. Interest income, net decreased $21 million, or 39%, to $33 million. The decrease was primarily due to a decrease in our cash and cash equivalents.

Other Income (Expense), Net. Other income, net, for the three months ended June 30, 2025 primarily included:

• an unrealized gain of $13 million on the deal-contingent forward U.S. dollar to Australian dollar contracts entered into in conjunction with the Domain Transaction, and

• an unrealized gain of $9 million related to the equity securities of Domain Group Holdings, LLC partially offset by

• an increase in depreciation and amortization expense from leasing activities driven by a change in the useful life of improvements related to tenants who have modified their leases.

Income Tax Expense. Income tax expense decreased $1 million, or 8%, to $15 million, and the effective tax rate was 71% of income before income taxes for the three months ended June 30, 2025 compared to 47% of income before income taxes for the three months ended June 30, 2024. The decrease in income tax expense was primarily attributable to lower income before income taxes.

Business Segment Results for Three Months Ended June 30, 2025 Compared to Three Months Ended June 30, 2024

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. Management believes that operating segment EBITDA is an appropriate measure for evaluating the operational performance of our operating segments. EBITDA is used by management internally to 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, (loss) 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 $100 million, or 16%, to $744 million and included:

• an increase in Other revenues of $44 million, primarily due to the Matterport Acquisition,

• an increase in Multifamily revenues of $28 million, primarily due to an increase in the number of properties listed on our network,

• an increase in CoStar revenues of $15 million, primarily due to increased sales driven by inflation-based price increases on renewals and an increase in subscribers,

• an increase in Information Services revenues of $8 million, primarily attributable to the Visual Lease Acquisition,

• an increase in Residential revenues of $1 million, primarily due to an increase in the number of Homes.com memberships, partially offset by the discontinuation of certain products that were inconsistent with our long-term business strategy, and

• an increase in LoopNet revenues of $5 million, primarily due to an increase in the average price per listing, as well as the number of listings.

The $3 million, or 10%, increase in International revenues was primarily attributable to an increase in CoStar sales driven by inflation-based price increases on renewals and an increase in subscribers.

Segment EBITDA. North America EBITDA increased $13 million, or 41%, to $43 million. The increase in North America EBITDA was primarily due to an increase in revenues described above, partially offset by increases in personnel costs and general and administrative costs. International EBITDA increased $4 million to a loss of $15 million. The increase was primarily due to an increase in revenues and a decrease in marketing expenses, partially offset by an increase in occupancy costs.

Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

The following table provides a comparison of our selected condensed consolidated results of operations for the six months ended June 30, 2025 and 2024 (in millions):

			Six Months Ended June 30,
			2025						2024						Increase (Decrease) ($)						Increase (Decrease) (%)
Revenues:
CoStar			$	536.0					$	503.3					$	32.7					6		%
Information Services			79.1						66.4						12.7						19
Multifamily			574.8						519.0						55.8						11
LoopNet			148.5						138.9						9.6						7
Residential			55.6						44.8						10.8						24
Other Revenues			119.5						61.8						57.7						93
Total revenues			1,513.5						1,334.2						179.3						13
Cost of revenues			321.1						277.0						44.1						16
Gross profit			1,192.4						1,057.2						135.2						13
Operating expenses:
Selling and marketing (excluding customer base amortization)			763.8						724.5						39.3						5
Software development			191.6						162.0						29.6						18
General and administrative			263.3						208.4						54.9						26
Customer base amortization			43.7						21.2						22.5						106
Total operating expenses			1,262.4						1,116.1						146.3						13
Loss from operations			(70.0)						(58.9)						(11.1)						19
Interest income, net			71.0						109.7						(38.7)						(35)
Other income (expense), net			13.9						(3.4)						17.3						NM
Income before income taxes			14.9						47.4						(32.5)						(69)
Income tax expense			23.5						21.5						2.0						9
Net income (loss)			$	(8.6)					$	25.9					$	(34.5)					NM
__________________________
NM - Not meaningful

Revenues. Revenues increased $179 million, or 13%, to $1.5 billion. The increase in our revenues included:

• an increase in Other Revenues of $58 million, or 93%, primarily due to the Matterport Acquisition,

• an increase in Multifamily revenues of $56 million, or 11%, due to an increase in the number of properties listed on our network, as well as customers selecting higher-priced ad packages,

• an increase in CoStar revenues of $33 million, or 6%, due to increased sales driven by inflation-based price increases on renewals and an increase in subscribers,

• an increase in Information Services revenues of $13 million, or 19%, primarily attributable to the Visual Lease Acquisition,

• an increase in Residential revenues of $11 million, or 24%, due to an increase in the number of Homes.com memberships, partially offset by the discontinuation of certain products that were inconsistent with our long-term business strategy, and

• an increase in LoopNet revenues of $10 million, or 7%, due to an increase in the average price per listing, as well as the number of listings.

Gross Profit and Cost of Revenues. Gross profit increased $135 million, or 13%, to $1,192 million, and the gross profit percentage was consistent at 79%. The increase in gross profit was due to higher revenues partially offset by an increase in cost of revenues. Cost of revenues increased $44 million, or 16%, to $321 million and, as a percentage of revenues, was consistent at 21%. The increase in cost of revenues included:

• an increase of $13 million in amortization expense for the acquired technology and trade name from the Matterport Acquisition,

• an increase in $11 million in costs related to sales of Matterport capture equipment and services

• an increase in personnel costs of $11 million related to the Matterport Acquisition, and

• an increase of $6 million for web hosting costs.

Selling and Marketing Expenses (Excluding Customer Base Amortization). Selling and marketing expenses increased $39 million, or 5%, to $764 million and, as a percentage of revenues, decreased from 54% to 50%. The increase included:

• an increase in personnel costs of $60 million related to sales hiring and the sales force from the Matterport Acquisition,

• an increase in occupancy and equipment costs of $7 million related to our sales force,

• an increase in travel costs of $5 million for trainings and customer engagement, and

• an increase of $2 million related to third party sales commissions, partially offset by

• a decrease in marketing expenses of $37 million.

Software Development Expenses. Software development expenses increased $30 million, or 18% to $192 million and, as a percentage of revenues, increased from 12% to 13%. The increase primarily included:

• an increase in personnel costs of $24 million due to additional headcount from the Matterport Acquisition,, as well as costs for our existing employees and

• an increase in occupancy and equipment costs of $2 million.

General and Administrative Expenses. General and administrative expenses increased $55 million, or 26%, to $263 million and, as a percentage of revenues, increased from 16% to 17%. The increase primarily included:

• an increase in personnel and related costs of $33 million, primarily related to additional headcount from the Matterport Acquisition, as well as an increase in costs for our existing employees,

• an increase in professional service fees of $16 million, primarily related to acquisition activities and costs to defend our intellectual property, and

• an increase of $7 million in costs of intellectual property disputes.

Customer Base Amortization Expense. Customer base amortization expense increased $23 million, or 106%, to $44 million and, as a percentage of revenues, increased from 2% to 3%. The increase was primarily due to the Matterport Acquisition and Visual Lease Acquisition.

Interest Income, Net. Interest income, net decreased $39 million, or 35%, to $71 million. The decrease was primarily due to a decrease in our cash equivalents.

Other Income (Expense), Net. Other income, net was $14 million for the six months ended June 30, 2025, a change of $17 million over the six months ended June 30, 2024. The increase primarily included:

• an unrealized gain of $13 million on the deal-contingent forward U.S. dollar to Australian dollar contracts entered into in conjunction with the Domain Transaction, and

• an unrealized gain of $12 million related to the equity securities of Domain Group Holdings LLC, partially offset by

• an increase in depreciation and amortization expense from leasing activities driven by a change in the useful life of improvements related to tenants who have modified their leases.

Income Tax Expense. Income tax expense increased $2 million, or 9%, to $24 million and the effective tax rate was 158% of income before income taxes for the six months ended June 30, 2025 compared to 45% of income before income taxes for the six months ended June 30, 2024. The increase in income tax expense was primarily attributable to a discrete tax expense for transaction costs, partially offset by lower income before income taxes.

Business Segment Results for Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

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 revenues and operating segment EBITDA. 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 $174 million, or 14%, to $1.4 billion and included:

• an increase in Other Revenues of $58 million, primarily due to the Matterport Acquisition,

• an increase in Multifamily revenues of $56 million, primarily due to an increase in the number of properties listed on our network, as well as customers selecting higher-priced ad packages,

• an increase in CoStar revenues of $26 million, primarily due to increased sales driven by inflation-based price increases on renewals and an increase in subscribers,

• an increase in Information Services revenues of $16 million, primarily attributable to the Visual Lease Acquisition,

• an increase in LoopNet revenues of $9 million, primarily due to an increase in the average price per listing, as well as the number of listings, and

• an increase in Residential revenues of $9 million, primarily due to an increase in the number of Homes.com memberships, partially offset by the discontinuation of certain products that were inconsistent with our long-term business strategy.

The $5 million, or 7%, increase in International revenues was primarily attributable to an increase in CoStar sales driven by inflation-based price increases on renewals and an increase in subscribers.

Segment EBITDA. North America EBITDA increased $18 million, or 54%, to $52 million. The increase in North America EBITDA was primarily due to increases in revenues described above and a decrease in marketing costs, partially offset by increases in personnel costs and general and administrative costs. International EBITDA increased $10 million to a loss of $25 million. The increase was primarily due to an increase in revenues, partially offset by an increase in personnel costs.

Liquidity and Capital Resources

We believe the balance of cash, cash equivalents and restricted cash, which was $3.7 billion as of June 30, 2025, 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. Other than the matters discussed below, our cash requirements have not changed materially from what is described in the 2024 Form 10-K.

Construction Commitments. We are expanding our Richmond, Virginia campus, which is expected to result in a material cash requirement in 2025 and 2026. We broke ground on the expansion in November 2022 and expect construction to be substantially completed in the first half of 2026. We have engaged a project manager, architects, and a general contractor on terms that generally require payments as services are provided or construction is performed. As of June 30, 2025, we were obligated to spend an additional $260 million as further work is performed under these contracts. We expect $150 million of these costs to be paid for the remainder of 2025 and intend to fund these expenditures with cash on hand.

In conjunction with this expansion, we negotiated various tax incentives with the Commonwealth of Virginia and the City of Richmond, including the allowance to use market-based income apportionment for income taxes and partial reimbursements of property tax assessments related to the value of the campus expansion. These incentives are conditional upon achieving job creation and capital expenditure targets from 2022 to 2029. Failure to meet these targets could result in a reduction of the value

of the tax incentives and repayment of previous tax reductions. The value of the allowance to use a market-based income apportionment for income taxes is dependent on our taxable income. We estimate the value of the allowance to use market-based income apportionment for income taxes for tax years 2023 to 2032 and partial reimbursements of property tax assessments related to the value of the campus expansion to be in the range of $275 million to $285 million.

Domain Transaction. From February 20, 2025 through February 21, 2025, in connection with the Domain Proposal, we acquired approximately 17% of the ordinary shares of Domain at A$4.20 per share for a total purchase price of A$452 million ($285 million).

On May 9, 2025, the Company entered into a binding Domain SID to acquire 100% of the issued capital of Domain not previously acquired by CoStar Group by way of Scheme of Arrangement. Pursuant to the Domain SID, Domain shareholders will be entitled to receive total cash consideration of A$4.43 per Domain ordinary share, less any special dividend declared and paid by Domain after May 9, 2025, subject to all applicable conditions being satisfied (or waived) and the scheme being implemented. The Company expects to spend approximately A$2.4 billion ($1.5 billion) to acquire the remaining approximately 83% of Domain’s ordinary shares upon consummation of the Domain Transaction, which is expected to occur in Q3 2025. The Domain Transaction remains subject to a number of conditions, including Domain shareholder approval, Australian Foreign Investment Review Board approval, as well as other customary conditions. Accordingly, there is no guarantee that the Scheme Implementation Deed will result in a transaction.

Stock Repurchase Program. In February 2025, the Board of Directors approved the Stock Repurchase Program that authorizes the repurchase of up to $500 million of the CoStar Group Shares. Stock repurchases may be effected through open market repurchases in compliance with Rule 10b-18 under the Exchange Act or through a trading plan adopted in accordance with Rule 10b5-1 of the Exchange Act. Repurchases may be made from time to time at management's discretion, and the timing and amount of any such repurchases will be determined based on share price, market conditions, legal requirements, and other relevant factors. The program has no time limit and can be discontinued at any time at the Company’s discretion.

During the six months ended June 30, 2025, the Company repurchased 825,000 CoStar Group Shares for an aggregate cost of $63.8 million. As of June 30, 2025, $436.2 million remains available for repurchases under the Stock Repurchase Program. The Company anticipates repurchasing at least $150 million of CoStar Group Shares in total in 2025.

Cash on Hand Cash, cash equivalents, and restricted cash decreased to $3.7 billion as of June 30, 2025, compared to cash and cash equivalents of $4.7 billion as of December 31, 2024. The decrease in cash, cash equivalents, and restricted cash for the six months ended June 30, 2025 was primarily due to $1,061 million of net cash used in investing activities and net cash used in financing activities of $98 million partially offset by cash provided by operating activities of $200 million.

Net cash provided by operating activities for the six months ended June 30, 2025 was $200 million compared to $198 million for the six months ended June 30, 2024. The $2 million increase in net cash provided by operating activities was primarily driven by a decrease in working capital of $24 million and a decrease in net income.

Net cash used in investing activities for the six months ended June 30, 2025 was $1,061 million compared to $478 million for the six months ended June 30, 2024, primarily driven by the Matterport Acquisition and the purchase of equity securities, partially offset by proceeds from the sale and settlement of investments and a decrease in purchases of property, equipment, and other assets for new campuses.

Net cash used in financing activities for the six months ended June 30, 2025 was $98 million compared to $15 million for the six months ended June 30, 2024. The increase was primarily driven by repurchases of the Company's outstanding common stock under the Stock Repurchase Program and repurchases of restricted stock to satisfy tax withholding obligations.

Critical Accounting Estimates

The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures. 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 accounting for the following matters to contain critical accounting estimates:

• Intangible assets and goodwill,

• Income taxes, 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 2024 Form 10-K and Note 2 of the Notes to Condensed Consolidated Financial Statements included in Part I of this Report. During the six months ended June 30, 2025, there were no material changes to our critical accounting estimates from those described in the 2024 Form 10-K.

Recent Accounting Pronouncements

See Note 2 of the Notes to Condensed Consolidated Financial Statements included in Part I of this Report.

Cautionary Statement Concerning Forward-Looking Statements

We have made forward-looking statements in this Report and make forward-looking statements in our other reports filed with the SEC, press releases, and conference calls that are subject to risks and uncertainties. Forward-looking statements include information that is not purely historic fact.

Our forward-looking statements are also identified by words such as “hope,” “anticipate,” “may,” “likely,” “might,” “believe,” “expect,” “observe,” “consider,” “think,” “intend,” “envision,” “will,” “should,” “could,” “would,” “plan,” “target,” “estimate,” “predict,” “continue,” “commit,” 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” in Item 1A of Part I of our 2024 Form 10-K and “Risk Factors” in Item 1A of Part II of this Report 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:

• the risks related to the specific timing, price, and size of repurchases under the Stock Repurchase Program, including that the Stock Repurchase Program may be suspended or discontinued at any time at the Company’s discretion;

• our inability to attract and retain new clients;

• our inability to successfully develop and introduce new or updated online marketplace services, information, and analytics;

• our inability to compete successfully against existing or future competitors in attracting advertisers and in general;

• the effects of fluctuations and market cyclicality;

• the effects of global economic uncertainties and downturns or a downturn or consolidation in the real estate industry;

• our inability to hire qualified persons for, or retain and continue to develop, our sales force, or unproductivity of our sales force;

• our inability to retain and attract highly capable management and operating personnel;

• the downward pressure that our internal and external investments may place on our operating margins;

• our inability to increase brand awareness;

• our inability to maintain or increase internet traffic to our marketplaces, and the risk that the methods, including Google Analytics, that we use to measure average monthly unique visitors to our portals may misstate the actual number of unique persons who visit our network of mobile applications and websites for a given month or may differ from the methods used by competitors;

• our inability to attract new advertisers;

• our inability to successfully identify, finance, integrate, and/or manage costs related to acquisitions;

• our inability to complete certain strategic transactions if a proposed transaction is subject to review or approval by regulatory authorities pursuant to applicable laws or regulations;

• our inability to realize the benefits of the Matterport Acquisition;

• the effects of cyberattacks and security vulnerabilities, and technical problems or disruptions;

• the significant costs associated with undertaking a large infrastructure project;

• our inability to generate increased revenues from our current or future geographic expansion plans;

• the risks related to acceptance of credit cards and debit cards and facilitation of other customer payments;

• the effects of climate-related events and other events beyond our control;

• the effects related to attention to climate-related risk and opportunities;

• our inability to obtain and maintain accurate, comprehensive, or reliable data;

• our inability to obtain and maintain stable data feeds, or disruption of our data feeds;

• our inability to enforce or defend our ownership and use of intellectual property;

• the effects of use of new and evolving technologies, including AI, on our ability to protect our data and intellectual property from misappropriation by third parties;

• our inability to defend against potential legal liability for collecting, displaying, or distributing information;

• our inability to obtain or retain listings from real estate brokers, agents, property owners, and apartment property managers;

• our inability to maintain or establish relationships with third-party listing providers;

• our inability to comply with the rules and compliance requirements of MLSs;

• the risks related to international operations;

• the effects of foreign currency exchange rate fluctuations;

• our indebtedness;

• the effects of a lowering or withdrawal of the ratings assigned to our debt securities by rating agencies;

• the effects of any actual or perceived failure to comply with privacy or data protection laws, regulations, or standards;

• the effects of changes in tax laws, regulations, or fiscal and tax policies;

• the effects of third-party claims, litigation, regulatory proceedings, or government investigations;

• the risks related to return on investment;

• the inability of third-party suppliers upon which Matterport relies to fulfill its needs;

• the risks related to our equity investments;

• the risks associated with the ability to consummate the Domain Transaction and realize the benefits of the Domain Transaction; and

• the risks related to open source software.

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 Report. 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, except as required by applicable law. Additionally, certain information disclosed herein or elsewhere (such as our website) is informed by various stakeholder expectations and third-party frameworks. Such information is not necessarily material for purposes of our SEC reporting, even if we use “material” or similar language. Particularly with respect to climate-related risks and opportunities, materiality is subject to various definitions that differ from, and are often more expansive than, the definition under U.S. federal securities laws.