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CoStar Group Announces 95% Year-over-Year Increase in Quarterly Sales Bookings and 58% Apartments.com Annualized Growth Rate

WASHINGTON, July 29, 2015 (GLOBE NEWSWIRE) -- CoStar Group, Inc. (NASDAQ:CSGP), the leading provider of commercial real estate information, analytics and online marketplaces, announced today that revenue for the second quarter of 2015 was $170.7 million, an increase of approximately 16% over revenue of $147.7 million for the second quarter of 2014.

"Our strategic investments in the Apartments.com re-launch, our national advertising campaign and the National Apartment Association exposition in June have clearly paid off by fueling a dramatic acceleration of sales in the second quarter 2015," said Andrew C. Florance, Founder and Chief Executive Officer of CoStar Group. "This quarter yielded our best sales result ever and June was our best sales month ever. Based on the last four months, Apartments.com sales are growing at an annualized pace of 58%. Company-wide net bookings in the second quarter 2015 were $34 million, up 66% compared to first quarter 2015 net bookings of $21 million and nearly double our net bookings of $17.5 million in the second quarter 2014. Net new sales on annual subscriptions were $25 million in the second quarter 2015 versus $16 million in the same quarter last year, an increase of 59%. The advertising campaign is driving significant traffic to our websites while our superior content and innovative user-friendly technology are engaging renters."

Florance continued. "For the fourth month in a row, Apartments.com is the most visited apartment listings site according to each of the leading web traffic authorities - comScore, Experian Hitwise, Amazon Alexa and Compete. In the second quarter of 2015, Apartments.com experienced a 70% year-over-year increase in unique visitors according to comScore. Consumer engagement on Apartments.com is very strong. In June 2015, Apartments.com had more than three times the number of page views than our next closest apartments site competitor, according to Compete. Total time spent on Apartments.com was more than 50% higher than our closest apartments site competitor, as reported by comScore."

Year 2014-2015 Quarterly Results - Unaudited
(in millions, except per share data)
2014 2015
Q1 Q2 Q3 Q4 Q1 Q2
Revenues $119.1 $147.7 $153.1 $156.1 $159.0 $170.7
EBITDA 27.0 37.6 43.7 43.0 14.3 (1.5)
Net income (loss) 9.7 8.2 13.0 13.9 (6.1) (15.0)
Net income (loss) per share - diluted 0.34 0.28 0.40 0.43 (0.19) (0.47)
Weighted average outstanding shares - diluted 28.8 29.5 32.1 32.1 31.8 31.9
Adjusted EBITDA 37.0 45.3 51.8 54.3 23.8 11.3
Non-GAAP Net Income 19.8 23.5 27.9 29.8 10.8 2.4
Non-GAAP Net Income per share - diluted 0.69 0.80 0.87 0.93 0.34 0.08

"We closed the Apartment Finder acquisition in June and we have already increased visits to that site by 135% year-over-year according to comScore," stated Florance. "Apartment Finder is benefiting from our Apartments.com advertising campaign as we retarget Apartments.com visitors to ApartmentFinder.com, initiate aggressive digital marketing, and cross-sell our apartment listing sites --Apartments.com, ApartmentFinder.com and ApartmentHomeLiving.com -- along with our information service CoStar Market Analytics."

Including the impact of investments in marketing for Apartments.com as well as costs associated with the Apartment Finder acquisition, adjusted EBITDA (defined below) was $11.3 million in the second quarter of 2015 versus $45.3 million in the second quarter of 2014. EBITDA in the second quarter of 2015 was $(1.5) million compared to $37.6 million in the second quarter of 2014. Non-GAAP net income (defined below) in the second quarter of 2015 was $2.4 million or $0.08 per diluted share compared to $23.5 million in the second quarter of 2014. Net income in the second quarter of 2015 was ($15.0) million or ($0.47) per diluted share compared to net income of $8.2 million or $0.28 per diluted share in the second quarter of 2014.

As of June 30, 2015, the Company had approximately $367.8 million in cash, cash equivalents and long-term investments. Short and long-term debt outstanding totaled approximately $375.0 million as of June 30, 2015. On June 1, 2015 the Company paid approximately $170.0 million in cash in connection with the acquisition of Apartment Finder.

2015 Outlook

"Our continued strong sales performance is contributing to top-line revenue growth," stated Brian J. Radecki, Chief Financial Officer of CoStar Group. "We are raising our full year 2015 revenue outlook range to $707 million to $712 million." The top-end of the Company's annual revenue guidance range is now $52 million higher than our initial 2015 guidance forecast. The Company continues to expect Apartment Finder to contribute $40 million to $43 million in 2015 along with an additional $9 million to $12 million from organic growth resulting from outstanding sales results in the first half of 2015. For the third quarter of 2015, the Company expects revenue of approximately $187 million to $189 million.

Radecki added, "We had tremendous results from the Apartments.com marketing campaign in the second quarter of this year and have shifted a small amount of the marketing investment into the third quarter to support the recently announced Free Rent for Life Campaign." The Company expects non-GAAP net income per diluted share (defined below) of approximately $0.42 to $0.45 for the third quarter and $0.79 to $0.84 for the fourth quarter of 2015. Marketing expenses are expected to trend downward following the peak 2015 apartment rental season which is reflected in the quarterly earnings outlook. For the full year of 2015, the Company expects non-GAAP net income per diluted share in a range of $1.62 to $1.70, an increase of $0.03 at the midpoint compared to the Company's prior guidance.

The preceding forward-looking statements reflect CoStar Group's expectations as of July 29, 2015, including forward-looking non-GAAP financial measures on a consolidated basis. We are not able to forecast with certainty whether or when certain events, such as acquisition-related costs, the exact amounts or timing of investments, transition, de-emphasis or discontinuation of services, restructuring, settlements or impairments will occur in any given quarter. Given the risk factors, uncertainties and assumptions discussed above, actual results may differ materially. Other than in publicly available statements, the Company does not intend to update its forward-looking statements until its next quarterly results announcement.

Reconciliation of EBITDA, adjusted EBITDA, non-GAAP net income and non-GAAP net income per diluted share and all of the disclosed non-GAAP financial measures to their GAAP basis results are shown in detail below, along with definitions for those terms.

Non-GAAP Financial Measures

For information regarding the purpose for which management uses the non-GAAP financial measures disclosed in this release and why management believes they provide useful information to investors regarding the Company's financial condition and results of operations, please refer to the Company's latest periodic report.

EBITDA is a non-GAAP financial measure that represents GAAP net income attributable to CoStar Group before (i) interest income (expense), (ii) provision for income taxes, and (iii) depreciation and amortization.

Adjusted EBITDA is a non-GAAP financial measure that represents EBITDA before (i) stock-based compensation expense, (ii) acquisition and integration related costs, (iii) restructuring charges and related costs, and (iv) settlements and impairments incurred outside the Company's normal business operations.

Non-GAAP net income is a non-GAAP financial measure that represents GAAP net income attributable to CoStar Group before (i) purchase amortization and other related costs, (ii) stock-based compensation expense, (iii) acquisition and integration related costs, (iv) purchase accounting adjustments, (v) restructuring charges and related costs, and (vi) settlements and impairments. From this figure, we then subtract an assumed provision for income taxes to arrive at non-GAAP net income. The company assumes a 38% tax rate in order to approximate our long-term effective corporate tax rate.

Non-GAAP net income per diluted share (also referred to as non-GAAP EPS) 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.

Earnings Conference Call

Management will conduct a conference call at 11:00 AM EDT on Thursday, July 30, 2015 to discuss earnings results for the second quarter of 2015, the acquisition of Apartment Finder and the Company's outlook including the impact of the acquisition. The audio portion of the conference call will be broadcast live over the Internet at http://www.CoStargroup.com/investors.aspx. To join the conference call by telephone, please dial (800) 230-1096 (from the United States and Canada) or (612) 288-0337(from all other countries) and refer to conference code 364170. An audio recording of the conference call will be available for replay approximately one hour after the call's completion and will remain available for a period of time following the call. To access the recorded conference call, please dial (800) 475-6701 (from the U.S. and Canada) or (320) 365-3844 (from all other countries) using access code 364170. The webcast replay will also be available in the Investors section of CoStar Group's website for a period of time following the call.

CoStar Group, Inc.
Condensed Consolidated Statements of Operations-Unaudited
(in thousands, except per share data)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2015 2014 2015 2014
Revenues $170,657 $147,708 $329,677 $266,784
Cost of revenues 44,634 39,481 90,030 73,124
Gross margin 126,023 108,227 239,647 193,660
Operating expenses:
Selling and marketing 92,434 40,889 161,912 68,634
Software development 16,844 15,143 31,992 27,494
General and administrative 29,909 26,250 55,272 51,147
Purchase amortization 6,965 9,036 14,107 12,335
146,152 91,318 263,283 159,610
Income (loss) from operations (20,129) 16,909 (23,636) 34,050
Interest and other income 137 62 431 199
Interest and other expense (2,354) (3,753) (4,697) (5,368)
Income (loss) before income taxes (22,346) 13,218 (27,902) 28,881
Income tax expense (benefit), net (7,380) 4,969 (6,809) 10,892
Net income (loss) $ (14,966) $ 8,249 $ (21,093) $ 17,989
Net income (loss) per share - basic $ (0.47) $ 0.28 $ (0.66) $ 0.63
Net income (loss) per share - diluted $ (0.47) $ 0.28 $ (0.66) $ 0.62
Weighted average outstanding shares - basic 31,991 29,061 31,911 28,667
Weighted average outstanding shares - diluted 31,991 29,486 31,911 29,163
CoStar Group, Inc.
Reconciliation of Non-GAAP Financial Measures-Unaudited
(in thousands, except per share data)
Reconciliation of Net Income (Loss) to Non-GAAP Net Income
For the Three Months For The Six Months
Ended June 30, Ended June 30,
2015 2014 2015 2014
Net income (loss) $ (14,966) $ 8,249 $ (21,093) $ 17,989
Income tax expense (benefit), net (7,380) 4,969 (6,809) 10,892
Income (loss) before income taxes (22,346) 13,218 (27,902) 28,881
Purchase amortization and other related costs 13,541 16,916 27,030 23,092
Stock-based compensation expense 8,415 6,380 15,857 14,259
Acquisition and integration related costs 2,936 1,357 3,560 2,471
Settlements and impairments 1,376 -- 2,778 1,053
Non-GAAP income before income taxes 3,922 37,871 21,323 69,756
Assumed rate for income tax expense, net * 38% 38% 38% 38%
Assumed provision for income tax expense, net (1,491) (14,391) (8,103) (26,507)
Non-GAAP net income $ 2,431 $ 23,480 $ 13,220 $ 43,249
Net income (loss) per share - diluted $ (0.47) $ 0.28 $ (0.66) $ 0.62
Non-GAAP net income per share - diluted $ 0.08 $ 0.80 $ 0.41 $ 1.48
Weighted average outstanding shares - basic** 31,991 29,061 31,911 28,667
Weighted average outstanding shares - diluted** 32,286 29,486 32,229 29,163
* A 38% tax rate is assumed in order to approximate the Company's long-term effective corporate tax rate.
** For periods with GAAP net losses, the basic weighted-average outstanding shares are used to calculate the GAAP net loss per share as including the effect of the potentially dilutive securities would have an anti-dilutive effect. For periods with Non-GAAP net income, the diluted weighted-average outstanding shares are used to calculate Non-GAAP net income per share in order to reflect the impact of potentially dilutive securities.
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA
For the Three Months For The Six Months
Ended June 30, Ended June 30,
2015 2014 2015 2014
Net income (loss) $ (14,966) $ 8,249 $ (21,093) $ 17,989
Purchase amortization in cost of revenues 6,576 7,880 12,923 10,757
Purchase amortization in operating expenses 6,965 9,036 14,107 12,335
Depreciation and other amortization 5,133 3,754 9,457 7,429
Interest income (137) (62) (431) (199)
Interest expense 2,354 3,753 4,697 5,368
Income tax expense (benefit), net (7,380) 4,969 (6,809) 10,892
EBITDA $ (1,455) $ 37,579 $ 12,851 $ 64,571
Stock-based compensation expense 8,415 6,380 15,857 14,259
Acquisition and integration related costs 2,936 1,357 3,560 2,471
Settlements and impairments 1,376 -- 2,778 1,053
Adjusted EBITDA $ 11,272 $ 45,316 $ 35,046 $ 82,354
CoStar Group, Inc.
Condensed Consolidated Balance Sheets - Unaudited
(in thousands)
June 30, December 31,
2015 2014
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 351,781 $ 527,012
Accounts receivable, net 54,382 38,694
Deferred and other income taxes, net 28,509 20,007
Income tax receivable 1,027 1,027
Prepaid expenses and other current assets 11,351 9,736
Debt issuance costs, net 3,298 3,335
Total current assets 450,348 599,811
Long-term investments 16,049 17,151
Property and equipment, net 85,442 73,753
Goodwill 1,246,789 1,138,805
Intangible assets, net 263,831 241,622
Deposits and other assets 3,243 2,676
Debt issuance costs, net 8,245 9,864
Total assets $ 2,073,947 $ 2,083,682
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 82,133 $ 61,287
Current portion of long-term debt 20,000 20,000
Deferred revenue 39,185 38,003
Total current liabilities 141,318 119,290
Long-term debt, less current portion 355,000 365,000
Deferred gain on sale of building 22,501 23,762
Deferred rent 30,131 27,032
Deferred income taxes, net 14,069 30,349
Income taxes payable 4,775 4,703
Stockholders' equity 1,506,153 1,513,546
Total liabilities and stockholders' equity $ 2,073,947 $ 2,083,682
CoStar Group, Inc.
Results of Segments-Unaudited
(in thousands)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2015 2014 2015 2014
Revenues
North America $164,486 $141,849 $317,503 $255,175
International
External customers 6,171 5,859 12,174 11,609
Intersegment revenue * 13 36 21 36
Total International revenue 6,184 5,895 12,195 11,645
Intersegment eliminations (13) (36) (21) (36)
Total revenues $170,657 $147,708 $329,677 $266,784
EBITDA
North America ** $ (1,854) $ 37,090 $ 11,823 $ 63,458
International *** 399 489 1,028 1,113
Total EBITDA $ (1,455) $ 37,579 $ 12,851 $ 64,571
*Intersegment revenue recorded during 2015 was attributable to services performed for the Company's wholly owned subsidiary, CoStar Portfolio Strategy by Grecam S.A.S. ("Grecam"), a wholly owned subsidiary of CoStar Limited, the Company's wholly owned U.K. holding company.
**North America EBITDA includes an allocation of approximately $336,000 and $383,000 for the three months ended June 30, 2015 and 2014, respectively. North America EBITDA includes an allocation of approximately $538,000 and $736,000 for the six months ended June 30, 2015 and 2014, respectively. This allocation represents costs incurred for International employees involved in development activities of the Company's North America operating segment.
***International EBITDA includes a corporate allocation of approximately $69,000 and $58,000 for the three months ended June 30, 2015 and 2014, respectively. International EBITDA includes a corporate allocation of approximately $126,000 and $138,000 for the six months ended June 30, 2015 and 2014, respectively. This allocation represents costs incurred for North America employees involved in management and expansion activities of the Company's International operating segment.
Reconciliation of Non-GAAP Financial Measures with 2014-2015 Quarterly Results - Unaudited
(in millions, except per share data)
Reconciliation of Net Income (Loss) to Non-GAAP Net Income
2014 2015
Q1 Q2 Q3 Q4 Q1 Q2
Net income (loss) $ 9.7 $ 8.2 $ 13.0 $ 13.9 $ (6.1) $ (15.0)
Income tax expense (benefit), net 5.9 5.0 7.8 7.3 0.6 (7.4)
Income (loss) before income taxes 15.6 13.2 20.8 21.2 (5.5) (22.4)
Purchase amortization and other related costs 6.2 17.0 16.1 15.5 13.5 13.5
Stock-based compensation expense 7.9 6.3 6.7 7.4 7.4 8.4
Acquisition and integration related costs 1.1 1.4 0.7 0.6 0.6 2.9
Restructuring and related costs -- -- -- 2.0 -- --
Settlements and impairments 1.0 -- 0.7 1.3 1.4 1.4
Non-GAAP income before income taxes 31.8 37.9 45.0 48.0 17.4 3.9
Assumed rate for income tax expense, net * 38% 38% 38% 38% 38% 38%
Assumed provision for income tax expense, net (12.0) (14.4) (17.1) (18.2) (6.6) (1.5)
Non-GAAP net income $ 19.8 $ 23.5 $ 27.9 $ 29.8 $ 10.8 $ 2.4
Non-GAAP net income per share - diluted $ 0.69 $ 0.80 $ 0.87 $ 0.93 $ 0.34 $ 0.08
Weighted average outstanding shares - basic** 28.3 29.1 31.7 31.8 31.8 32.0
Weighted average outstanding shares - diluted** 28.8 29.5 32.1 32.1 32.2 32.3
* A 38% tax rate is assumed in order to approximate the Company's long-term effective corporate tax rate.
** For periods with GAAP net losses, the basic weighted-average outstanding shares are used to calculate the GAAP net loss per share as including the effect of the potentially dilutive securities would have an anti-dilutive effect. For periods with Non-GAAP net income, the diluted weighted-average outstanding shares are used to calculate Non-GAAP net income per share in order to reflect the impact of potentially dilutive securities.
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA
2014 2015
Q1 Q2 Q3 Q4 Q1 Q2
Net income (loss) $ 9.7 $ 8.2 $ 13.0 $ 13.9 $ (6.1) $ (15.0)
Purchase amortization 6.2 17.0 16.1 15.5 13.5 13.5
Depreciation and other amortization 3.7 3.7 4.1 4.2 4.3 5.1
Interest income (0.1) (0.1) (0.0) (0.3) (0.3) (0.1)
Interest expense 1.6 3.8 2.7 2.4 2.3 2.4
Income tax expense (benefit), net 5.9 5.0 7.8 7.3 0.6 (7.4)
EBITDA $ 27.0 $ 37.6 $ 43.7 $ 43.0 $ 14.3 $ (1.5)
Stock-based compensation expense 7.9 6.3 6.7 7.4 7.4 8.4
Acquisition and integration related costs 1.1 1.4 0.7 0.6 0.6 2.9
Restructuring and related costs -- -- -- 2.0 -- --
Settlements and impairments 1.0 -- 0.7 1.3 1.4 1.4
Adjusted EBITDA $ 37.0 $ 45.3 $ 51.8 $ 54.3 $ 23.7 $ 11.2
CoStar Group, Inc.
Reconciliation of Forward-Looking Guidance-Unaudited
(in thousands, except per share data)
Reconciliation of Forward-Looking Guidance, Net Income (Loss) to Non-GAAP Net Income
Guidance Range Guidance Range Guidance Range
For the Three Months For the Three Months For the Twelve Months
Ended September 30, 2015 Ended December 31, 2015 Ended December 31, 2015
Low High Low High Low High
Net income (loss) $ (5,300) $ (2,700) $ 5,400 $ 10,600 $ (21,000) $ (13,200)
Income tax expense (benefit), net (3,500) (2,000) 3,100 6,000 (7,200) (2,800)
Income (loss) before income taxes (8,800) (4,700) 8,500 16,600 (28,200) (16,000)
Purchase amortization and other related costs 17,200 17,200 14,100 14,100 58,300 58,300
Stock-based compensation expense 10,000 9,000 12,100 9,100 38,000 34,000
Acquisition and integration related costs 2,500 1,500 1,400 400 7,500 5,500
Restructuring and related costs 1,000 500 5,000 3,500 6,000 4,000
Settlements and Impairments -- -- -- -- 2,800 2,800
Non-GAAP income before income taxes 21,900 23,500 41,100 43,700 84,400 88,600
Assumed rate for income tax expense, net * 38% 38% 38% 38% 38% 38%
Assumed provision for income tax expense, net (8,300) (8,900) (15,600) (16,600) (32,100) (33,700)
Non-GAAP net income $ 13,600 $ 14,600 $ 25,500 $ 27,100 $ 52,300 $ 54,900
Net income (loss) per share - diluted $ (0.17) $ (0.08) $ 0.17 $ 0.33 $ (0.66) $ (0.41)
Non-GAAP net income per share - diluted $ 0.42 $ 0.45 $ 0.79 $ 0.84 $ 1.62 $ 1.70
Weighted average outstanding shares - basic** 32,000 32,000 32,400 32,400 32,000 32,000
Weighted average outstanding shares - diluted** 32,300 32,300 32,100 32,100 32,300 32,300
* A 38% tax rate is assumed in order to approximate the Company's long-term effective corporate tax rate.
** For periods with GAAP net losses, the basic weighted-average outstanding shares are used to calculate the GAAP net loss per share as including the effect of the potentially dilutive securities would have an anti-dilutive effect. For periods with Non-GAAP net income, the diluted weighted-average outstanding shares are used to calculate Non-GAAP net income per share in order to reflect the impact of potentially dilutive securities.
Reconciliation of Forward-Looking Guidance, Net Income (Loss) to Adjusted EBITDA
Guidance Range Guidance Range Guidance Range
For the Three Months For the Three Months For the Twelve Months
Ended September 30, 2015 Ended December 31, 2015 Ended December 31, 2015
Low High Low High Low High
Net income (loss) $ (5,300) $ (2,700) $ 5,400 $ 10,600 $ (21,000) $ (13,200)
Purchase amortization and other related costs 17,200 17,200 14,100 14,100 58,300 58,300
Depreciation and other amortization 5,800 5,800 6,400 6,400 21,700 21,700
Interest and other expense (income), net 2,200 2,200 2,300 2,300 8,700 8,700
Income tax expense (benefit), net (3,500) (2,000) 3,100 6,000 (7,200) (2,800)
Stock-based compensation expense 10,000 9,000 12,100 9,100 38,000 34,000
Acquisition and integration related costs 2,500 1,500 1,400 400 7,500 5,500
Restructuring and related costs 1,000 500 5,000 3,500 6,000 4,000
Settlements and impairments -- -- -- -- 2,800 2,800
Adjusted EBITDA $ 29,900 $ 31,500 $ 49,800 $ 52,400 $ 114,800 $ 119,000

About CoStar Group, Inc.

CoStar Group (NASDAQ:CSGP) is the leading provider of commercial real estate information, analytics and online marketplaces. Founded in 1987, CoStar conducts expansive, ongoing research to produce and maintain the largest and most comprehensive database of commercial real estate information. Our suite of online services enables clients to analyze, interpret and gain unmatched insight on commercial property values, market conditions and current availabilities. LoopNet is the most heavily trafficked commercial real estate marketplace online with more than 9.8 million registered members. Apartments.com, ApartmentFinder.com and ApartmentHomeLiving.com form the premier online apartment resource for renters seeking great apartment homes and provide property managers and owners a proven platform for marketing their properties. CoStar Group operates websites with over 23.6 million unique monthly visitors in aggregate as of June 2015. Headquartered in Washington, DC, CoStar maintains offices throughout the U.S., in Europe and Toronto with a staff of approximately 2,900 worldwide, including the industry's largest professional research organization. For more information, visit www.costargroup.com.

This news release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about CoStar's financial expectations, the Company's plans, objectives, expectations and intentions and other statements including 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. Such statements are based upon the current beliefs and expectations of management of CoStar and are subject to significant risks and uncertainties. Actual results may differ materially from the results anticipated in the forward-looking statements. The following factors, among others, could cause or contribute to such differences: the risk that the trends stated or implied by this release cannot or will not be sustained at the current pace, including trends related to sales, earnings, revenue, and investments (including marketing); the risk that the Company's investment and marketing plans and expected amounts to support growth and development of our apartment listing sites, or the timing of any such investments, may change and that such investments do not produce the expected results; the risk that expected investments in the Apartment Finder website and increased search engine marketing, or the timing of any such investments, may change; the risk that the Company is unable to sustain current growth rates or increase them; the risk that the businesses of Apartments.com, Apartment Finder and CoStar may not be combined successfully or in a timely and cost-efficient manner; the risk that business disruption relating to the Apartment Finder acquisition may be greater than expected; the risk that revenues for the third quarter and full year 2015 will not be as stated in this press release; the risk that the Apartment Finder and the Company's organic revenue results will not be as stated in this press release; the risk that net income for the third quarter, fourth quarter and full year 2015 will not be as stated in this press release; the risk that non-GAAP net income and non-GAAP net income per diluted share for the third quarter, fourth quarter and full year 2015 will not be as stated in this press release; the risk that Adjusted EBITDA for the third quarter, fourth quarter and full year 2015 will not be as stated in this press release; the risk that the impact of investments on earnings will differ from current expectations; and the risk that synergies from the acquisitions of Apartments.com and Apartment Finder will not be as expected, may not be fully realized, may take longer to realize than expected or may not drive revenue and earnings growth as expected. Additional factors that could cause results to differ materially from those anticipated in the forward-looking statements can be found in CoStar's Annual Report on Form 10-K for the year ended December 31, 2014, and Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, each of which is filed with the SEC, including in the "Risk Factors" section of those filings, and the Company's other filings with the SEC available at the SEC's website (www.sec.gov). CoStar assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

CONTACT: Brian J. Radecki Chief Financial Officer (202) 336-6920 bradecki@costargroup.com Richard Simonelli Vice President, Investor Relations (202) 346-6394 rsimonelli@costargroup.com

Source:CoStar Group, Inc.