CoStar Group Earnings 2020-06-30

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

csgp-20200630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission file number 0-24531

CoStar Group, Inc.

(Exact name of registrant as specified in its charter)


Delaware						52-2091509
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

1331 L Street, NW

Washington,

20005

(Address of principal executive offices) (Zip Code)

(202) 346-6500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock ($0.01 par value)	CSGP	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	x	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

As of July 24, 2020, there were 39,367,098 shares of the registrant’s common stock outstanding.

COSTAR GROUP, INC.

FORM 10-Q

TABLE OF CONTENTS

PART I

FINANCIAL INFORMATION

Item 1.

Financial Statements

Condensed Consolidated Statements of Operations

Condensed Consolidated Statements of Comprehensive Income

Condensed Consolidated Balance Sheets

Condensed Consolidated Statements of Changes in Stockholders’ Equity

Condensed Consolidated Statements of Cash Flows

Notes to Condensed Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

PART II

OTHER INFORMATION

Item 1.

Legal Proceedings

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

Item 5.

Other Information

Item 6.

Exhibits

Signatures

PART I — FINANCIAL INFORMATION

Item 1.Financial Statements

COSTAR GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Revenues	$	397,159	$	343,760	$	789,006	$	672,185
Cost of revenues	74,040		71,918		152,949		143,071
Gross profit	323,119		271,842		636,057		529,114

Operating expenses:
Selling and marketing (excluding customer base amortization)	130,461		119,075		255,568		207,169
Software development	39,001		28,455		80,611		56,383
General and administrative	57,403		42,337		116,276		82,413
Customer base amortization	14,935		7,175		26,419		14,857
	241,800		197,042		478,874		360,822
Income from operations	81,319		74,800		157,183		168,292
Interest (expense) income	(3,596)		4,678		(1,945)		8,890
Other (expense) income	(474)		538		367		539
Income before income taxes	77,249		80,016		155,605		177,721
Income tax expense	16,889		16,768		22,452		29,304
Net income	$	60,360	$	63,248	$	133,153	$	148,417



Net income per share - basic	$	1.61	$	1.74	$	3.60	$	4.09
Net income per share - diluted	$	1.60	$	1.73	$	3.57	$	4.06

Weighted-average outstanding shares - basic	37,524		36,310		36,998		36,273
Weighted-average outstanding shares - diluted	37,734		36,627		37,256		36,597

See accompanying notes.

COSTAR GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

(unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Net income	$	60,360	$	63,248	$	133,153	$	148,417
Other comprehensive income (loss), net of tax
Foreign currency translation adjustment	863		(767)		(12,086)		(387)
Unrealized gain on investments	—		—		189		—
Reclassification adjustment for realized loss on investments included in net income	—		—		541		—
Total other comprehensive income (loss)	863		(767)		(11,356)		(387)
Total comprehensive income	$	61,223	$	62,481	$	121,797	$	148,030

See accompanying notes.

COSTAR GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(unaudited)


	June 30, 2020		December 31, 2019
ASSETS
Current assets:
Cash, cash equivalents and restricted cash	$	3,548,405	$	1,070,731

Accounts receivable	127,030		96,788
Less: Allowance for credit losses	(13,363)		(4,548)
Accounts receivable, net	113,667		92,240



Prepaid expenses and other current assets	28,576		36,194

Total current assets	3,690,648		1,199,165

Long-term investments	—		10,070
Deferred income taxes, net	4,372		5,408
Property and equipment, net	104,316		107,529
Lease right-of-use assets	112,641		115,084
Goodwill	2,009,117		1,882,020
Intangible assets, net	437,550		421,196
Deferred commission costs, net	91,712		89,374
Deposits and other assets	13,868		9,232
Income tax receivable	14,806		14,908

Total assets	$	6,479,030	$	3,853,986
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:

Accounts payable	$	26,864	$	7,640
Accrued wages and commissions	56,748		53,087
Accrued expenses	45,726		38,680

Income taxes payable	22,764		10,705

Lease liabilities	30,905		29,670
Deferred revenue	80,358		67,274
Total current liabilities	263,365		207,056

Long-term debt	745,000		—


Deferred income taxes, net	93,934		87,096
Income taxes payable	20,738		20,521
Lease and other long-term liabilities	131,672		133,720
Total liabilities	1,254,709		448,393



Total stockholders' equity	$	5,224,321	$	3,405,593
Total liabilities and stockholders’ equity	$	6,479,030	$	3,853,986

See accompanying notes.

COSTAR GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands)

(unaudited)


	Common Stock					Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings			Total Stockholders’ Equity
	Shares	Amount










































Balance at December 31, 2019	36,668	$	366	$	2,473,338	$	(8,585)	$	940,474		$	3,405,593


Net income	—	—		—		—		72,793			72,793
Other comprehensive loss	—	—		—		(12,219)		—			(12,219)
Exercise of stock options	41	1		9,232		—		—			9,233
Restricted stock grants	83	1		(1)		—		—			—
Restricted stock grants surrendered	(56)	(1)		(30,144)		—		—			(30,145)
Stock-based compensation expense	—	—		15,006		—		—			15,006
Employee stock purchase plan	4	—		2,550		—		—			2,550
Balance at March 31, 2020	36,740	$	367	$	2,469,981	$	(20,804)	$	1,013,267		$	3,462,811
Net income	—	—		—		—		60,360			60,360
Other comprehensive income	—	—		—		863		—			863
Exercise of stock options	11	—		2,924		—		—			2,924
Restricted stock grants	11	—		—		—		—			—
Restricted stock grants surrendered	(17)	—		(3,509)		—		—			(3,509)
Stock-based compensation expense	—	—		8,609		—		—			8,609
Employee stock purchase plan	4	—		2,292		—		—			2,292

Stock issued for equity offering, net of transaction costs	2,634	26		1,689,945		—		—			1,689,971
Balance at June 30, 2020	39,383	$	393	$	4,170,242	$	(19,941)	$	1,073,627		$	5,224,321

See accompanying notes.

COSTAR GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands)

(unaudited)


	Common Stock					Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount













































Balance at December 31, 2018	36,446	$	364	$	2,419,812	$	(11,688)	$	613,454	$	3,021,942
Cumulative effect of adoption of new accounting standard, net of tax	—	—		—		—		12,057		12,057
Balance at January 1, 2019	36,446	$	364	2,419,812		(11,688)		625,511		3,033,999
Net income	—	—		—		—		85,169		85,169
Other comprehensive income	—	—		—		380		—		380
Exercise of stock options	79	1		10,637		—		—		10,638
Restricted stock grants	132	1		(1)		—		—		—
Restricted stock grants surrendered	(43)	—		(18,679)		—		—		(18,679)
Stock-based compensation expense	—	—		12,034		—		—		12,034
Management stock purchase plan	—	—		3,491		—		—		3,491
Employee stock purchase plan	4	—		1,582		—		—		1,582


Balance at March 31, 2019	36,618	$	366	$	2,428,876	$	(11,308)	$	710,680	$	3,128,614
Net income	—	—		—		—		63,248		63,248
Other comprehensive loss	—	—		—		(767)		—		(767)
Exercise of stock options	15	—		3,001		—		—		3,001
Restricted stock grants	4	—		—		—		—		—
Restricted stock grants surrendered	(17)	—		(5,546)		—		—		(5,546)
Stock-based compensation expense	—	—		13,706		—		—		13,706

Employee stock purchase plan	4	—		1,815		—		—		1,815
Balance at June 30, 2019	36,624	$	366	$	2,441,852	$	(12,075)	$	773,928	$	3,204,071

See accompanying notes.

COSTAR GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Six Months Ended June 30,
	2020		2019
Operating activities:
Net income	$	133,153	$	148,417
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	52,235		38,413

Amortization of deferred commissions costs	29,662		25,550
Amortization of debt issuance costs	508		438
Realized loss on investments	541		—
Non-cash lease expense	12,400		10,859

Stock-based compensation expense	24,053		25,845
Deferred income taxes, net	3,569		6,359
Credit loss expense	15,688		5,224
Foreign currency, net	(789)		—

Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	(37,364)		(10,898)
Income taxes payable	12,328		(5,577)
Prepaid expenses and other current assets	4,371		1,751
Deferred commissions	(

Price	594.58	EPS	8
Shares	37	P/E	70
MCap	21,793	P/FCF	62
Net Debt	-1,390	EBIT	389
TEV	20,403	TEV/EBIT	52
TTM 2019-09-30, in MM, except price, ratios

10-Q	2020-06-30	Filed 2020-07-29
10-Q	2020-03-31	Filed 2020-04-29
10-K	2019-12-31	Filed 2020-02-26
10-Q	2019-09-30	Filed 2019-10-23
10-Q	2019-06-30	Filed 2019-07-24
10-Q	2019-03-31	Filed 2019-04-24
10-K	2018-12-31	Filed 2019-02-28
10-Q	2018-09-30	Filed 2018-10-24
10-Q	2018-06-30	Filed 2018-07-25
10-Q	2018-03-31	Filed 2018-04-25
10-K	2017-12-31	Filed 2018-02-23
10-Q	2017-09-30	Filed 2017-10-26
10-Q	2017-06-30	Filed 2017-07-27
10-Q	2017-03-31	Filed 2017-04-27
10-K	2016-12-31	Filed 2017-02-24
10-Q	2016-09-30	Filed 2016-10-27
10-Q	2016-06-30	Filed 2016-07-28
10-Q	2016-03-31	Filed 2016-04-28
10-K	2015-12-31	Filed 2016-02-26
10-Q	2015-09-30	Filed 2015-10-29
10-Q	2015-06-30	Filed 2015-07-30
10-Q	2015-03-31	Filed 2015-04-30
10-K	2014-12-31	Filed 2015-02-26
10-Q	2014-09-30	Filed 2014-10-30
10-Q	2014-06-30	Filed 2014-07-25
10-Q	2014-03-31	Filed 2014-04-24
10-K	2013-12-31	Filed 2014-02-20
10-Q	2013-09-30	Filed 2013-10-24
10-Q	2013-06-30	Filed 2013-07-24
10-Q	2013-03-31	Filed 2013-04-25
10-K	2012-12-31	Filed 2013-03-01
10-Q	2012-09-30	Filed 2012-10-25
10-Q	2012-06-30	Filed 2012-07-26
10-Q	2012-03-31	Filed 2012-04-27
10-K	2011-12-31	Filed 2012-02-23
10-Q	2011-09-30	Filed 2011-10-27
10-Q	2011-06-30	Filed 2011-07-28
10-Q	2011-03-31	Filed 2011-04-29
10-K	2010-12-31	Filed 2011-02-25
10-Q	2010-09-30	Filed 2010-10-22
10-Q	2010-06-30	Filed 2010-07-23
10-Q	2010-03-31	Filed 2010-04-23
10-K	2009-12-31	Filed 2010-02-26

8-K	2020-07-28	Earnings, Exhibits
8-K	2020-07-01	Enter Agreement, Off-BS Arrangement, Exhibits
8-K	2020-06-24
8-K	2020-06-03
8-K	2020-05-26
8-K	2020-05-13
8-K	2020-04-29
8-K	2020-04-28
8-K	2020-03-25
8-K	2020-02-25
8-K	2020-02-11
8-K	2019-12-12
8-K	2019-10-22
8-K	2019-09-30
8-K	2019-09-30
8-K	2019-07-23
8-K	2019-06-05
8-K	2019-04-23
8-K	2019-02-26
8-K	2018-10-23
8-K	2018-07-24
8-K	2018-06-06
8-K	2018-04-23
8-K	2018-02-21
8-K	2018-01-17

EX-31.1	csgp-06302020xex311.htm
EX-31.2	csgp-06302020xex312.htm
EX-32.1	csgp-06302020xex321.htm
EX-32.2	csgp-06302020xex322.htm

CSGP 10Q Quarterly Report

CoStar Group Earnings 2020-06-30