CoStar's third quarter was marked by a negative market response, despite revenue and non-GAAP profit surpassing Wall Street's expectations. Management attributed the disconnect to slower-than-anticipated net new bookings, which they linked primarily to economic headwinds and a reduction in sales force capacity. CEO Andy Florance acknowledged, “Our annualized net new bookings were below our expectations, coming in at $37 million for the third quarter.” He further cited workforce and recruiting challenges in scaling the sales team as a critical factor impacting growth across key product lines.
Is now the time to buy CSGP? Find out in our full research report (it’s free for active Edge members).
CoStar (CSGP) Q3 2026 highlights:
- Revenue $952 million vs S&P analysts’ estimates of $946 million (14.1% year-on-year growth, 0.6% beat)
- Adjusted EPS $0.38 vs S&P analysts’ estimates of $0.34 (12% beat)
- Adjusted EBITDA $229 million vs analyst estimates of $206.8 million (24.1% margin, 10.8% beat)
- Revenue guidance $986 million at the midpoint for Q4 2026, roughly in line with what analysts were expecting
- Adjusted EPS guidance Management raised its full-year adjusted EPS guidance to $1.40 at the midpoint, a 3% increase
- EBITDA guidance $830 million at the midpoint for the full year, above analyst estimates of $813.7 million
- Operating margin 8.8%, up from -6.1% in the same quarter last year
- Market capitalization $11.16 billion
While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our top 5 analyst questions from CoStar’s Q3 earnings call
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Sammy (Goldman Sachs): Asked about the extent of unmet demand due to sales force limitations. CEO Andy Florance responded that untapped demand exists and expanding sales capacity should reaccelerate growth, noting, “We do not need demand drivers to return in order to grow revenue as we grow sales force.”
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Peter Christiansen (Citi): Queried whether margin expansion or bookings growth will drive results next year. Florance and CFO Robin Rossmann said both are priorities, with cost efficiencies and targeted investments supporting revenue growth simultaneously.
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Alexei Gogolev (JPMorgan): Inquired about the Vexcel acquisition’s capital requirements and integration. Florance explained anticipated CapEx is modest and Vexcel will be sold both as a standalone and bundled with CoStar solutions, leveraging the existing sales force.
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Curtis Nagle (Bank of America): Asked for clarity on sales force attrition and capacity gaps by segment. Florance attributed most attrition to less experienced inside sales at Homes.com and emphasized the shift toward hiring seasoned field reps in top markets.
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Nicholas Jones (BNP Paribas): Sought detail on churn at Apartments.com. Florance noted churn is higher among small properties and that competitive pricing and owner-driven cost-saving initiatives contribute to customer turnover, though brand strength and service metrics remain robust.
Catalysts in upcoming quarters
In the coming quarters, the StockStory team is monitoring (1) progress on rebuilding and decentralizing the sales force, particularly in major city hubs, (2) realization of identified cost savings and their impact on margins, and (3) traction from new product launches and integration of acquisitions like Vexcel and Zonda. Execution on international expansion and AI-driven platform improvements will also be closely watched as potential drivers of bookings and revenue growth.
CoStar currently trades at $27.72, down from $32.01 just before the earnings. Is there an opportunity in the stock? Find out in our full research report (it’s free).
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