CoStar Group (CSGP) Q2 2025: Net New Bookings Jump 65% as Sales Force Expansion Drives Record Growth
CoStar Group’s Q2 2025 delivered a record $93 million in net new bookings, surging 65% sequentially and spotlighting the payoff from aggressive sales force expansion and product-led innovation across its property marketplaces. Segment momentum, especially in Apartments.com and Homes.com, underscores the company’s strategic focus on penetration and recurring revenue, while integration of Matterport and international acquisitions set the stage for further scale. Guidance raise and margin resilience position CSGP for continued double-digit growth, even as competitive and pricing dynamics evolve in the real estate tech landscape.
Summary
- Sales Force Expansion: CoStar’s accelerated hiring strategy is fueling record net new bookings and broadening market reach.
- Marketplace Penetration: Apartments.com and Homes.com are capturing share through high renewal rates and differentiated product offerings.
- Profit Leverage Ahead: Integration of Matterport and international platforms positions CSGP for long-term margin and growth upside.
Performance Analysis
CoStar Group posted a 15% revenue increase year over year, with total revenue reaching $781 million in Q2 2025. Adjusted EBITDA more than doubled to $85 million, as both top and bottom line exceeded guidance and consensus. The standout metric was net new bookings, which hit a company record of $93 million, up 65% from the prior quarter and 38% YoY, reflecting the impact of a 43% YoY increase in sales headcount to 1,800 reps.
Segment detail reveals broad-based strength: Apartments.com delivered 11% revenue growth and a 99% monthly renewal rate, with net new bookings up 20% YoY. Homes.com rebounded from Q1 churn to post 8% revenue growth and a 56% jump in net new members, aided by product innovation and marketing. LoopNet revenue accelerated to 8% growth, with the pivot to asset-based pricing and portfolio packages driving higher monetization per listing. Matterport contributed $44 million in revenue, above expectations, though the company is winding down unprofitable legacy operations to focus on integration and profitability.
- Bookings Acceleration: Net new bookings set an all-time high, driven by sales force expansion and improved sales productivity.
- Marketplace Stickiness: Renewal rates remain robust across key platforms, with Apartments.com at 99% and CoStar at 93%.
- Margin Resilience: Commercial information and marketplace brands delivered a 43% margin, excluding Homes.com, OnTheMarket, and Matterport.
Momentum is broad-based, with international, residential, and commercial segments all contributing to growth, while cost discipline and targeted investments underpin margin expansion and future scalability.
Executive Commentary
"Net new bookings totaled 93 million, a remarkable 65% increase over the previous quarter. This sets a new record as the highest quarterly net new bookings in CoStar Group's history. We're seeing strong performance across all our business segments driven by strategic investments and expanding our sales force and innovative product development."
Andy Florence, Founder and CEO
"We have made great progress on bolstering our sales force, which has reached 1,800 reps at quarter end. This is an increase of more than 400 salespeople since the beginning of the year and a 43% increase in reps year over year. While sales headcount has increased the most at homes.com, we are delivering sales rep growth in all our major brands."
Chris Lown, Chief Financial Officer
Strategic Positioning
1. Marketplace Model Focus and Penetration
CoStar’s business model centers on subscription and advertising-based digital marketplaces for commercial and residential real estate, leveraging scale, data, and network effects. Apartments.com and Homes.com are prioritized for penetration over near-term pricing, with management emphasizing the “participation game” at low penetration rates and the opportunity to upsell higher-value products as the platforms mature. This approach is evident in Homes.com’s rapid member growth and evolving pricing tiers, as well as Apartments.com’s ability to add new rooftops without resorting to discounting.
2. Sales Force Investment as Growth Lever
The company is executing on sales force expansion as its primary growth lever, increasing headcount by 43% YoY and tripling the Homes.com sales team. This investment is driving record bookings and improved sales productivity, particularly in underpenetrated segments. The focus on sales-led growth is also being extended to newly acquired Matterport, where a historically small sales team will be scaled using CoStar’s established go-to-market engine.
3. Product Innovation and Integration
CoStar is differentiating its platforms through product innovation, notably the integration of Matterport’s 3D digital twin technology and AI-powered search features. The rollout of Matterport Max packages and plans for next-gen cameras (Pro 4) aim to deepen engagement and increase renewal rates. AI voice search and enhanced fee transparency are positioned as competitive differentiators for Apartments.com and Homes.com. The company’s ability to cross-sell and integrate technology across its portfolio is a key component of long-term strategy.
4. International Expansion and M&A
International growth is accelerating, with four consecutive quarters of record net new bookings and the pending acquisition of Domain Holdings in Australia. The company is leveraging its playbook from U.S. platforms to scale OnTheMarket in the UK and LoopNet across Europe, targeting pan-European and Asia-Pacific real estate markets. The Domain deal and regulatory scrutiny of competitors (e.g., REA Group in Australia) present market share opportunities abroad.
5. Pricing Power and Monetization Strategy
Asset-based pricing and depth advertising are emerging as key monetization levers, especially for LoopNet and Homes.com. Management is deliberately prioritizing share gains and profitable penetration at low ASPs (average selling prices), with plans to introduce higher-value advertising products as platforms mature. This approach is designed to maximize lifetime value and margin over time, rather than chasing short-term price increases.
Key Considerations
Q2 2025 marks a decisive inflection in CoStar’s ability to convert sales force investment into tangible bookings and revenue growth, while laying groundwork for future operating leverage across its digital real estate platforms.
Key Considerations:
- Sales Productivity Surge: Six consecutive months of improved rep productivity, highest since Q3 2023, signals sales model scalability.
- Platform Stickiness: High net promoter scores (NPS) and renewal rates suggest entrenched customer value and recurring revenue durability.
- Integration Execution: Matterport’s transition from product-led to sales-driven B2B model is a pivotal test for cross-platform synergy realization.
- International Leverage: UK and European expansion, along with Domain acquisition, provide optionality and risk diversification beyond U.S. property cycles.
- Competitive Dynamics: Aggressive tactics from Zillow and REA Group, as well as regulatory scrutiny, create both risk and opportunity for platform differentiation.
Risks
Competitive intensity remains high, with rivals leveraging pricing and exclusivity tactics to defend market share, potentially impacting customer acquisition costs and pricing power. Integration of acquisitions, especially Matterport and Domain, introduces execution risk and margin dilution in the near term. Regulatory actions against industry peers could alter competitive dynamics, while macroeconomic or CRE market volatility may affect transaction-driven segments.
Forward Outlook
For Q3 2025, CoStar guided to:
- Revenue of $800 million to $805 million (16% YoY growth at midpoint)
- Adjusted EBITDA of $75 million to $85 million
For full-year 2025, management raised guidance:
- Revenue of $3.135 billion to $3.155 billion (15% growth)
- Adjusted EBITDA of $370 million to $390 million
Management emphasized that guidance excludes the pending Domain acquisition and incorporates timing shifts in growth initiative spend, with residential revenue growth expected to exceed 20% and international momentum continuing into the back half of the year.
- Sales force expansion and product launches remain top priorities
- Integration of Matterport and Domain expected to unlock new revenue streams and margin opportunities
Takeaways
CoStar’s Q2 results validate its sales-led, platform-centric strategy, with record bookings and renewed guidance supporting a durable growth narrative.
- Sales Acceleration: Booking records and improved productivity confirm sales force leverage, with penetration gains across major platforms.
- Product and Platform Differentiation: Matterport integration and AI-driven features provide a competitive moat and expand addressable market.
- International and M&A Optionality: Domain and European expansion offer growth vectors, but will require disciplined integration and execution.
Conclusion
CoStar’s Q2 2025 performance showcases the scalability of its marketplace and subscription model, with sales force expansion and product innovation fueling both near-term bookings and long-term platform value. As the company integrates acquisitions and navigates competitive and regulatory headwinds, execution on penetration and monetization will be critical for sustaining its double-digit growth trajectory.
Industry Read-Through
CoStar’s results signal strong demand for digital real estate platforms and data-driven marketing solutions, even as legacy transaction volumes remain volatile. The success of sales-led expansion and high renewal rates highlight the importance of recurring revenue and customer engagement in proptech. Competitive maneuvering by incumbents like Zillow, and regulatory scrutiny in international markets, suggest ongoing disruption and margin pressure for less differentiated platforms. Cross-platform integration of advanced technologies (such as Matterport’s digital twin) is emerging as a key differentiator, with implications for other data, marketplace, and SaaS providers in real estate and adjacent sectors.