BETHESDA, Md., Feb. 18, 2009 (GLOBE NEWSWIRE) -- CoStar Group, Inc. (Nasdaq:CSGP), the number one provider of information/marketing services to the commercial real estate industry, today announced that net income for the year ended December 31, 2008 increased 144.9% to $24.6 million, or $1.26 per diluted share, compared to $10.1 million, or $0.52 per diluted share for 2007, excluding 2007's one-time gain on a lease settlement. EBITDA (earnings before interest, taxes, depreciation and amortization) for the year ended December 31, 2008 was $56.6 million, an increase of 114.5% compared to EBITDA of $26.4 million for the year ended December 31, 2007, excluding 2007's one-time lease settlement gain.
Revenues for the year ended December 31, 2008 were $212.4 million, an increase of 10.2% over revenues of $192.8 million for the year ended December 31, 2007. Revenues in the fourth quarter 2008 increased approximately $125,000 from the third quarter of 2008, excluding the unfavorable impact of foreign exchange rate fluctuations on International revenue.
As of December 31, 2008, the company had $224.6 million in cash, cash equivalents, short-term and long-term investments, an increase of $37.2 million since December 31, 2007, and no long-term debt.
Year 2007-2008 Quarterly Results - Unaudited
(in millions, except per share data)
2007
--------------------------
Q1 Q2 Q3 Q4
--------------------------
U.S. Revenues $40.2 $41.9 $43.5 $44.7
International Revenues
(in British pounds) 2.4 3.0 2.9 3.0
Total Revenues $44.8 $47.8 $49.3 $50.8
EBITDA 5.0 4.2 8.0 16.8
Net income 1.8 1.2 3.3 9.7
Net income per share - diluted 0.09 0.06 0.17 0.50
Weighted average outstanding
shares - diluted 19.2 19.3 19.5 19.5
2008
--------------------------
Q1 Q2 Q3 Q4
--------------------------
U.S. Revenues $46.4 $47.5 $48.0 $48.2
International Revenues
(in British pounds) 3.0 3.1 3.0 3.0
Total Revenues $52.3 $53.5 $53.8 $52.9
EBITDA 11.5 12.8 15.5 16.7
Net income 5.0 5.4 6.6 7.5
Net income per share - diluted 0.26 0.28 0.34 0.38
Weighted average outstanding
shares - diluted 19.4 19.5 19.6 19.5
"CoStar Group completed another very successful year in 2008, delivering the earnings growth we projected by focusing on cost containment and earnings leverage," said CoStar Group CEO Andrew C. Florance. "I was especially pleased that in the fourth quarter of 2008 we attained our longstanding goal of a company-wide EBITDA margin of 30%. Moreover, we doubled earnings year over year excluding 2007's one-time lease settlement gain, and we added more than $37 million to cash and investments to maintain our company's strong financial position despite challenging economic conditions."
Revenues for the fourth quarter of 2008 were $52.9 million, a 4.1% increase compared to the same period a year ago. Fourth quarter 2008 revenue reflected the impact of unfavorable foreign currency exchange rates, declining non-subscription-based revenue combined with slower revenue growth for subscription-based services during the quarter. Subscription-based revenue accounts for more than 95% of the company's total revenue.
Excluding the unfavorable impact from year-over-year changes in exchange rates throughout the quarter, revenues for the fourth quarter of 2008 would have grown 6.9% compared with the fourth quarter of 2007. In the fourth quarter of 2008 alone, the unfavorable impact from quarter-over-quarter changes in exchange rates totaled approximately $1 million. On a functional currency basis, U.S. revenues in the fourth quarter of 2008 totaled $48.2 million, as compared to $48.0 million in the third quarter of 2008, and international revenues totaled GBP 3.0 million in the fourth quarter of 2008, consistent with the third quarter of 2008.
Net income increased to $7.5 million, or $0.38 per diluted share, for the fourth quarter of 2008 compared to net income of $3.8 million, or $0.20 per diluted share, for the fourth quarter of 2007, excluding the one-time lease settlement gain in the fourth quarter of 2007. EBITDA was $16.7 million for the fourth quarter of 2008 compared to $9.2 million for the fourth quarter 2007, excluding the one-time lease settlement gain in the fourth quarter of 2007.
"As we reported last quarter, the current economic environment and continued financial instability have had an adverse effect on our near-term revenue growth," said Florance. "Certainly, we expect 2009 will present difficult challenges for many businesses. However, with our strong balance sheet and industry-leading market position, we fully expect to manage through the current environment and to capitalize on our subscription-based business model."
"In addition, CoStar Showcase, the innovative new Internet marketing service we launched last May, has proven to be a major hit with our clients and we believe has the potential to be a significant contributor to revenue," added Florance.
At the end of the fourth quarter 2008, CoStar had 89,712 paying subscribers to the company's subscription-based information services, an increase of 961 compared to the end of the fourth quarter 2007. The 12-month trailing customer renewal rate for CoStar's subscription-based services was approximately 89%.
2009 Outlook
"For the first quarter of 2009, we expect fully diluted net income per share of approximately $0.28 to $0.30," stated CoStar Group Chief Financial Officer Brian J. Radecki. "For the full year of 2009, we expect fully diluted net income per share of approximately $1.00 to $1.05, which includes approximately $5.5 million in pre-tax, non-cash equity compensation charges related to the vesting of restricted stock and stock option grants. For 2009, we also anticipate our overall effective tax rate to be approximately 45%, and the interest rate for interest income to be approximately 0.5% to 0.8%."
"Given the uncertainties surrounding foreign exchange rate fluctuations, we are providing revenue guidance separately for our U.S. and International operations. In the U.S., we expect first quarter of 2009 quarterly revenue in the range of $47.0 to $48.0 million, and International revenue in the range of GBP 2.7 to GBP 2.9 million. For the full year 2009, we expect U.S. revenue in the range of $185.0 to $190.0 million and International revenue in the range of GBP 11.5 to GBP 12.0 million," said Radecki.
In this press release, we include disclosure of net income, excluding 2007's one-time lease settlement gain, and EBITDA, excluding 2007's one-time lease settlement gain, which are non-GAAP financial measures. We believe these numbers provide useful information to investors as they provide a means for a more accurate comparison of our results of operations over historical periods. We also believe these measures provide more meaningful insight into the company's performance, as they exclude a non-recurring item that is not considered by management to be directly related to on-going business operations.
Management will conduct a conference call to discuss earnings results for the fourth quarter and full year ended December 31, 2008, and the financial outlook for the first quarter of 2009 at 11:00 a.m. EST on Thursday, February 19, 2009. The audio portion of the conference call will be broadcast live over the Internet at http://www.costar.com/corporate/investor/. To join the conference call by telephone, please call (800) 398-9386 from within the United States and Canada, or (612) 288-0340 from outside the United States and Canada. Refer to Conference reservation number 984704. A replay of the conference call will be available approximately one hour after the live call concludes and remain available through midnight on March 5, 2009. The replay telephone number is (800) 475-6701 within the United States and Canada, or (320) 365-3844 outside the United States and Canada. Refer to Conference reservation number 984704. The replay will also be available over the Internet at http://www.costar.com/corporate/investor/ 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 Year
Ended Dec. 31, Ended Dec. 31,
2008 2007 2008 2007
--------- --------- --------- ---------
Revenues $ 52,929 $ 50,840 $212,428 $192,805
Cost of revenues 17,733 20,009 73,408 76,704
--------- --------- --------- ---------
Gross margin 35,196 30,831 139,020 116,101
Operating expenses:
Selling and marketing 8,375 12,025 41,705 51,777
Software development 3,082 3,087 12,759 12,453
General and
administrative 9,814 9,743 39,888 36,569
Gain on lease
settlement, net -- (7,613) -- (7,613)
Purchase amortization 1,157 1,256 4,880 5,063
--------- --------- --------- ---------
22,428 18,498 99,232 98,249
--------- --------- --------- ---------
Income from operations 12,768 12,333 39,788 17,852
Interest and other
income, net 782 2,220 4,914 8,045
--------- --------- --------- ---------
Income before income taxes 13,550 14,553 44,702 25,897
Income tax expense, net 6,049 4,841 20,079 9,946
--------- --------- --------- ---------
Net income $ 7,501 $ 9,712 $ 24,623 $ 15,951
========= ========= ========= =========
Net income per share -
basic $ 0.39 $ 0.51 $ 1.27 $ 0.84
========= ========= ========= =========
Net income per share -
diluted $ 0.38 $ 0.50 $ 1.26 $ 0.82
========= ========= ========= =========
Weighted average
outstanding shares - basic 19,451 19,148 19,372 19,044
========= ========= ========= =========
Weighted average
outstanding shares -
diluted 19,544 19,498 19,550 19,404
========= ========= ========= =========
Reconciliation of Non-GAAP
Financial Measures with
Net Income
Net income $ 7,501 $ 9,712 $ 24,623 $ 15,951
Purchase amortization in
cost of revenues 512 783 2,284 2,170
Purchase amortization in
operating expenses 1,157 1,256 4,880 5,063
Depreciation and other
amortization 2,263 2,401 9,637 8,914
Interest income, net (782) (2,220) (4,914) (8,045)
Income tax expense, net 6,049 4,841 20,079 9,946
--------- --------- --------- ---------
EBITDA $ 16,700 $ 16,773 $ 56,589 $ 33,999
========= ========= ========= =========
CoStar Group, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
Dec. 31, Dec. 31,
2008 2007
--------- ---------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 159,982 $ 57,785
Short-term investments 35,268 129,641
Accounts receivable, net 12,294 10,875
Deferred income taxes 2,036 2,716
Prepaid and other current assets 2,903 4,661
--------- ---------
Total current assets 212,483 205,678
Long-term investments 29,340 --
Deferred income taxes 3,392 2,233
Property and equipment, net 16,876 24,045
Intangible and other assets, net 70,749 87,565
Deposits and other assets 1,544 2,322
--------- ---------
Total assets $ 334,384 $ 321,843
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 19,694 $ 27,863
Deferred revenue 9,442 10,374
--------- ---------
Total current liabilities 29,136 38,237
Deferred income taxes 132 1,801
Income taxes payable 1,695 --
Stockholders' equity 303,421 281,805
--------- ---------
Total liabilities and stockholders' equity $ 334,384 $ 321,843
========= =========
CoStar Group, Inc.
Results of Segments-Unaudited
(in thousands)
For the Three Months For the Year
Ended Dec. 31, Ended Dec. 31,
2008 2007 2008 2007
---------- ---------- ---------- ----------
Revenues
United States $ 48,187 $ 44,733 $ 190,075 $ 170,298
International 4,742 6,107 22,353 22,507
---------- ---------- ---------- ----------
Total Revenues $ 52,929 $ 50,840 $ 212,428 $ 192,805
========== ========== ========== ==========
EBITDA
United States $ 16,629 $ 11,861 $ 58,813 $ 32,872
International* 71 4,912 (2,224) 1,127
---------- ---------- ---------- ----------
Total EBITDA $ 16,700 $ 16,773 $ 56,589 $ 33,999
========== ========== ========== ==========
International Revenue
in British pounds 3,004 2,985 12,042 11,231
========== ========== ========== ==========
* International EBITDA includes a corporate allocation of approximately
$222,000 and $390,000 for the three months ended December 31, 2008
and 2007, respectively, and $1,110,000 and $2,590,000 for the year
ended December, 2008 and 2007, respectively.
Reconciliation of Non-GAAP Financial Measures with 2007-2008
Quarterly Results
(in millions)
2007 2008
-------------------------- --------------------------
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
-------------------------- --------------------------
Net income $ 1.8 $ 1.2 $ 3.3 $ 9.7 $ 5.0 $ 5.4 $ 6.6 $ 7.5
Purchase
amortization 1.6 1.8 1.8 2.0 1.8 1.9 1.8 1.7
Depreciation
and other
amortization 2.0 2.1 2.3 2.5 2.5 2.5 2.4 2.3
Interest
income, net (1.9) (1.9) (2.1) (2.2) (1.9) (1.3) (0.9) (0.8)
Income tax
expense, net 1.5 1.0 2.7 4.8 4.1 4.3 5.6 6.0
----- ----- ----- ----- ----- ----- ----- -----
EBITDA $ 5.0 $ 4.2 $ 8.0 $16.8 $11.5 $12.8 $15.5 $16.7
===== ===== ===== ===== ===== ===== ===== =====
Reconciliation of Fourth Quarter and Full-year 2007 Results,
excluding Gain on lease settlement
(in thousands)
For the Three For the Year
Months Ended Ended
Dec. 31, 2007 Dec. 31, 2007
------------- -------------
EBITDA $ 16,773 $ 33,999
Gain on lease settlement, net (7,613) (7,613)
------------- -------------
EBITDA, excluding gain $ 9,160 $ 26,386
============ =============
Net Income $ 9,712 $ 15,951
Gain on lease settlement, net (7,613) (7,613)
Income tax expense, net 1,718 1,718
------------- -------------
Net Income, excluding gain $ 3,817 $ 10,056
============ =============
Net income, excluding gain,
per share - diluted $ 0.20 $ 0.52
============ =============
About CoStar Group, Inc.
CoStar Group, Inc. (Nasdaq:CSGP) is the number one provider of information/marketing services to commercial real estate professionals in the United States as well as the United Kingdom. CoStar's suite of services offers customers access via the Internet to the most comprehensive database of commercial real estate information throughout the U.S. as well as in the United Kingdom and France. Headquartered in Bethesda, MD, CoStar has approximately 1,300 people working for the company worldwide, including the largest professional research organization in the industry. For more information, visit http://www.costar.com.
This news release includes "forward-looking statements" including, without limitation, statements regarding CoStar's expectations, beliefs, intentions or strategies regarding the future. These statements are subject to many risks and uncertainties that could cause actual results to differ materially from these statements. More information about potential factors that could cause actual results to differ materially from those discussed in the forward-looking statements include, but are not limited to, those stated in CoStar's filings from time to time with the Securities and Exchange Commission, including CoStar's Form 10-K for the year ended December 31, 2007 and CoStar's Form 10-Q for the quarter ended September 30, 2008, under the heading "Risk Factors." In addition to these statements, there can be no assurance as to what effect the current economic environment and continued financial instability will have on CoStar's revenue and earnings growth; that 2009 will present difficult challenges for the company and many other businesses; that CoStar Showcase will be a significant contributor to CoStar's revenue; that CoStar will be able to manage through the current environment and to capitalize on its subscription-based business model; that fully diluted net income for the first quarter of 2009 and full year 2009 will be as stated in this press release; that the equity compensation charges for full year 2009 will be as stated in this press release; that the overall effective tax rate and the interest rate for our interest income for 2009 will be as stated in this press release; and that quarterly revenue for the first quarter 2009 and revenue for the full year 2009 will be as stated in this press release. All forward-looking statements are based on information available to CoStar on the date hereof, and CoStar assumes no obligation to update such statements.