WASHINGTON, Feb. 17, 2015 (GLOBE NEWSWIRE) -- CoStar Group (Nasdaq:CSGP) announced today it has re-launched Apartments.com with a completely new website that dramatically improves the experience for renters searching online for apartments, condos and rental homes. The new Apartments.com has more apartments than any other website, and uniquely presents information on actual availabilities and rents to save renters valuable time in their search. The site offers innovative software tools to help renters find the apartments that best meet their needs.
The new website draws on CoStar's massive multifamily database, which contains detailed information on over 450,000 apartment properties, and the largest research effort ever conducted to document the apartment industry in the United States. CoStar is the commercial real estate industry's leading provider of information, analytics and online marketplaces and has three decades of experience collecting and curating real estate information. Over 1,000 researchers participated in collecting and verifying information, and visiting and photographing over 400,000 properties prior to re-launching Apartments.com. CoStar researchers and "secret shoppers" also make over 1 million calls per month to continually update available units, rents and other fees, while proprietary software checks approximately 40,000 apartment websites each day for new information. Apartments.com also integrates directly with property management companies' inventory systems.
"We believe Multifamily is a huge asset class valued at over $3 trillion," stated CoStar Group Founder and CEO Andrew C. Florance. "Over 100 million Americans live in a rental and approximately 30 million people move annually. We believe that within the next 10 years CoStar Group can achieve $550 million in annual revenue and $250 million in annual adjusted EBITDA with Apartments.com, meeting the online marketing and information needs of this enormous industry."
"Our market research indicates that renters are dissatisfied and frustrated with the current generation of apartment search websites," said Florance. "Consumers expect accurate, actionable and comprehensive information when they search online for anything from flights to dinner reservations, but when it comes to finding an apartment, the current apartment search websites fall short of these consumer expectations. Most apartment websites or ILSs primarily supply only the listings that property owners pay to advertise and often return results that don't match the renter's search criteria. These limited results generally do not even indicate if the rental is actually available, thereby requiring the renter to painstakingly contact each and every apartment," Florance continued.
The new Apartments.com website changes all that. With approximately 680,000 rental options across the U.S., we believe that Apartments.com provides the most comprehensive selection of rentals ever available on the internet. Landlords can list for free and the site includes not only apartment buildings, but condos, townhouses and single family home options. Apartments.com also offers in-depth information on neighborhoods, including restaurants, nightlife, history, schools and other important facts. The site is available on responsive mobile, iPad, iPhone and Android devices.
"We designed the new Apartments.com around the needs of the renter, and in doing so have created a site that we expect consumers will overwhelmingly prefer," stated Florance. "We recently showed our new site and our top competitors' sites to renters in focus groups across the country and they gave Apartments.com an average grade of A-, while they gave the competing sites an average grade of D."
CoStar Group believes that the new Apartments.com now provides renters with a vastly superior search experience and therefore has the opportunity to capture a significant share of the renter audience. The Company also believes that an aggressive consumer marketing campaign will accelerate the likelihood that the Company can capture the largest share of the rental audience and thereby increase the likelihood of achieving our long range earnings goal of $250 million in annual adjusted EBITDA from the apartment sector. In 2015, CoStar Group intends to make an incremental marketing investment of $75 million above Apartments.com's 2014 annualized marketing spend since the close of the acquisition. The Company plans to aggressively market the new Apartments.com with the largest consumer marketing campaign in the multifamily industry. Acclaimed actor Jeff Goldblum will star in the advertising campaign. The campaign, which is expected to reach 95% of all adults aged 18-49 via high profile TV spots running on primetime and late-night network television, local TV and radio advertising, online/digital advertising, social media, and out-of-home ads, is scheduled to kick off on March 1 and run throughout the year. The media campaign is reinforced by what we believe is the most aggressive Search Engine Marketing (SEM) program in the industry. "We believe this investment will generate massive brand awareness and site traffic for Apartments.com and quickly position Apartments.com as the #1 destination for renters," stated Florance.
"We believe that apartment owners will prefer to advertise on the most heavily trafficked apartment website. We also believe that apartment owners have a need for quality information to position their properties, and analytic solutions to understand critical market dynamics such as supply, demand, vacancy rates, rental rates and sale prices. We believe that CoStar is uniquely positioned to provide such information services to apartment owners and managers who may also buy lead generation from Apartments.com," Florance stated.
The Company is reiterating its overall goal of $1 billion in revenue with 40% adjusted EBITDA margin in 2018.
2014 Results
The Company will release financial results for the fourth quarter and year ended December 31, 2014, following market close on Wednesday, February 25, 2015, and expects that revenue and earnings for those periods will meet or exceed the top end of the guidance range previously communicated in its last quarterly earnings call held on October 30, 2014.
2015 Outlook
For the full year of 2015 the Company expects revenue of approximately $655 million to $660 million and approximately $157 million to $159 million for the first quarter of 2015. The Company's revenue guidance includes trends from the fourth quarter of 2014 as well as the estimated impact of the decision to deemphasize or discontinue certain non-core services totaling $14 million to $20 million in annualized revenue, as previously disclosed.
For the full year of 2015, the Company expects non-GAAP net income per diluted share in a range of $1.95 to $2.05. The outlook includes the impact of the increased marketing for Apartments.com as well as previously disclosed research investments. The 2015 impact of the Apartments.com marketing campaign is expected to be approximately $75 million of incremental investment, or approximately $1.45 in non-GAAP net income per diluted share, versus the annualized marketing expenditure run-rate since the close of the 2014 Apartments.com acquisition.
"The majority of the investment for the Apartments.com marketing and branding campaign is planned for the first and second quarters of 2015 to coincide with the prime rentals season," stated Brian Radecki, Chief Financial Officer of CoStar Group. "We expect that this investment will result in increased site traffic and quality leads for our advertisers. We believe this ultimately will lead to higher sales in the back half of 2015 and therefore accelerate revenue growth at Apartments.com to 25% to 30% in 2016 and beyond." These investments are expected to better position the Company to achieve its 2018 revenue and earnings goals.
For the first quarter of 2015, the Company expects non-GAAP net income per diluted share (defined below) of approximately $0.18 to $0.22. The Company expects the impact from the marketing investment on non-GAAP net income per diluted share to be approximately $0.60 in each of the first and second quarters of 2015. Seasonal expenses including the Company's annual sales conference and standard annual increases in personnel expenses in the first quarter of 2015 are expected to impact non-GAAP net income per share approximately $0.10 to $0.15, consistent with prior years.
The preceding forward-looking statements reflect CoStar Group's expectations as of February 17, 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 the exact amounts or timing of investments, transition, de-emphasis or discontinuation of services, acquisition-related costs, 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 non-GAAP net income 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. We assume 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.
Conference Calls
Management will conduct a conference call at 8:45 AM EST on Tuesday, February 17, 2015 to discuss. 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) 332-0342 (from all other countries) and refer to conference code 353862. 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 353862. The webcast replay will also be available in the Investors section of CoStar Group's website for a period of time following the call.
The Company still intends to conduct its previously scheduled call to discuss results for the fourth quarter and year-ended December 31, 2014, on Thursday, February 26, at 11:00 am.
Visit Apartments.com
View the Launch spot for Apartments.com featuring Jeff Goldblum
| CoStar Group, Inc. | ||||
| Reconciliation of Forward-Looking Guidance-Unaudited | ||||
| (in thousands, except per share data) | ||||
| Reconciliation of Forward-Looking Guidance, Net Income to Non-GAAP Net Income | ||||
| Guidance Range | Guidance Range | |||
| For the Three Months | For the Twelve Months | |||
| Ended March 31, 2015 | Ended December 31, 2015 | |||
| Low | High | Low | High | |
| Net income (loss) | $ (9,300) | $ (7,100) | $ 8,200 | $ 15,600 |
| Income tax expense, net | (5,800) | (4,500) | 5,000 | 9,600 |
| Income before income taxes | (15,100) | (11,600) | 13,200 | 25,200 |
| Purchase amortization and other related costs | 15,000 | 15,000 | 48,100 | 48,100 |
| Stock-based compensation expense | 8,500 | 7,500 | 38,000 | 33,000 |
| Acquisition and integration related costs | 1,000 | 500 | 1,000 | 500 |
| Restructuring and related costs | -- | -- | 1,500 | 500 |
| Non-GAAP income before income taxes | 9,400 | 11,400 | 101,800 | 107,300 |
| Assumed rate for income tax expense, net * | 38% | 38% | 38% | 38% |
| Assumed provision for income tax expense, net | (3,572) | (4,332) | (38,684) | (40,774) |
| Non-GAAP net income | $ 5,828 | $ 7,068 | $ 63,116 | $ 66,526 |
| Net income (loss) per share - diluted | $ (0.29) | $ (0.22) | $ 0.25 | $ 0.48 |
| Non-GAAP net income per share - diluted | $ 0.18 | $ 0.22 | $ 1.95 | $ 2.05 |
| Weighted average outstanding shares - diluted | 32,200 | 32,200 | 32,400 | 32,400 |
| * A 38% tax rate is assumed for 2014 in order to approximate the Company's long-term effective corporate tax rate. | ||||
| Reconciliation of Forward-Looking Guidance, Net Income to Adjusted EBITDA | ||||
| Guidance Range | Guidance Range | |||
| For the Three Months | For the Twelve Months | |||
| Ended March 31, 2015 | Ended December 31, 2015 | |||
| Low | High | Low | High | |
| Net income | $ (9,300) | $ (7,100) | $ 8,200 | $ 15,600 |
| Purchase amortization and other related costs | 15,000 | 15,000 | 48,100 | 48,100 |
| Depreciation and other amortization | 4,300 | 4,300 | 17,700 | 17,700 |
| Interest and other expense (income), net | 2,300 | 2,300 | 9,000 | 9,000 |
| Income tax expense, net | (5,800) | (4,500) | 5,000 | 9,600 |
| Stock-based compensation expense | 8,500 | 7,500 | 38,000 | 33,000 |
| Acquisition and integration related costs | 1,000 | 500 | 1,000 | 500 |
| Restructuring and related costs | 0 | 0 | 1,500 | 500 |
| Adjusted EBITDA | $ 16,000 | $ 18,000 | $ 128,500 | $ 134,000 |
About CoStar Group
CoStar Group, Inc. (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. Through LoopNet, the Company operates the most heavily trafficked commercial real estate marketplace online with more than 9 million registered members. Apartments.com is a premier online apartment resource for renters that matches apartment seekers with great apartment homes and provides property managers and owners a proven platform for marketing their properties. CoStar operates websites that have over 19 million unique monthly visitors in aggregate during January 2015. Headquartered in Washington, DC, CoStar maintains offices throughout the U.S. and in Europe and Toronto, Canada with a staff of over 2,400 worldwide, including the industry's largest professional research organization. For more information, visit www.costargroup.com.
About Apartments.com
Apartments.com (http://www.apartments.com) is a leading national apartment Internet listing service drawing on millions of rental units from CoStar Group's extensive database of commercial and multifamily properties, managed properties and user-submitted listings. By incorporating the most relevant information and services to renters, including current availabilities, rental rates and fees, rich neighborhood content, customizable search filters and tools, professional photography, walk-through videos and 3D tours, highly visible ads, powerful filters and search tools, Apartments.com creates easy access to its listings for 100 million renters searching online for great rental homes. Renters are able to access Apartments.com via a responsive website and iPad, iPhone and Android apps. Providing unmatched exposure for its advertisers through an intuitive name, strategic search engine placements and innovative emerging media, Apartments.com reaches millions of renters nationwide, driving both qualified traffic and highly engaged renters to leasing offices nationwide. Apartments.com also owns rental website Apartment Home Living (http://www.apartmenthomeliving.com), a leading social media apartment website distinguished by a "live for fun" community experience, proprietary lifestyle matching and local living guides to help renters find their perfect place to live.
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 number of renters who ultimately use the new site to find their new apartment differs from what is expected; the risk that the impact of the new site on the rental marketplace is not as expected, does not change consumers' preferences and does not result in the Company capturing a significant share of the renter audience; the risk that availabilities, rents, and other information change before the Company's researchers are able to update the information on Apartments.com; the risk that Apartments.com does not produce the expected annualized revenue and adjusted EBITDA in 10 years as stated in this release; the risk that the Company is unable to achieve its revenue and earnings goals as stated in this release; the risk that investments in the Company, including investments in marketing, research, sales, and product development, do not produce the expected results, including accelerating the likelihood that the Company can capture the largest share of the rental audience, increasing the likelihood of achieving the Company's earnings goal from the apartment sector, increased sales of, and accelerated revenue growth at, Apartments.com, increasing brand awareness, site traffic and quality leads, and positioning the Company as the number one destination for renters, all when expected and as stated in this release; the risk that current marketing plans and expected amounts, or the timing of any such investments, change; the risk that after completion of the 2014 audit the Company's revenue and earnings for fourth quarter of 2014 are not as stated in this release; the risk that revenues for the first quarter and full year 2015 will not be as stated in this press release; the risk that net income for the first quarter of 2015 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 first quarter of 2015 and full year 2015 will not be as stated in this press release; the risk that Adjusted EBITDA for the first quarter of 2015 and full year 2015 will not be as stated in this press release; and the risk that the impact of trends, management decisions regarding services, investments and seasonal expenses on financial results will not be as stated in this release.. 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, 2013, and Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, 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.