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CoStar Group Inc. Reports Operating Results (10-Q)

July 26, 2012 | About:
10qk

10qk

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CoStar Group Inc. (CSGP) filed Quarterly Report for the period ended 2012-06-30.

Costar Group, Inc. has a market cap of $2.03 billion; its shares were traded at around $82.489 with a P/E ratio of 83.6 and P/S ratio of 8.1. Costar Group, Inc. had an annual average earning growth of 2.7% over the past 5 years.

Highlight of Business Operations:

Segment Revenues. CoStar Property Professional, CoStar Tenant, and CoStar COMPS Professional are generally sold as a suite of similar services and comprise our primary service offering in our U.S. operating segment. U.S. revenues increased to $80.5 million in the second quarter of 2012 from $57.5 million in the second quarter of 2011. This increase in U.S. revenue was primarily due to the additional revenue of approximately $13.2 million from our April 2012 acquisition of LoopNet as well as further penetration of our subscription-based information services, and successful cross-selling of our services to our customers in existing markets, combined with continued high renewal rates. FOCUS is our primary service offering in our International operating segment. International revenues slightly increased to $4.8 million in the second quarter of 2012 from $4.6 million in the second quarter of 2011. Intersegment revenue increased to approximately $423,000 in the second quarter of 2012, compared to approximately $224,000 in the second quarter of 2011. Intersegment revenue is attributable to services performed for our wholly owned subsidiary, PPR, by Property and Portfolio Research Ltd., a wholly owned subsidiary of PPR. Intersegment revenue is recorded at an amount we believe approximates fair value. Intersegment revenue is eliminated from total revenues.

Segment EBITDA. U.S. EBITDA increased to $10.4 million in the second quarter of 2012 from $8.3 million in the second quarter of 2011. The increase in U.S. EBITDA was due primarily to an increase in revenues in the second quarter of 2012 from the second quarter of 2011. International EBITDA decreased to a higher loss of approximately $2.2 million in the second quarter of 2012 from a loss of approximately $1.1 million in the second quarter of 2011. This higher loss was primarily due to increased personnel costs for the second quarter of 2012 compared to the second quarter of 2011. International EBITDA includes a corporate allocation of approximately $1.4 million and $100,000 for each of the three months ended June 30, 2012 and 2011, respectively. The corporate allocation represents costs incurred for U.S. employees involved in international management and expansion activities.

Gross Margin. Gross margin increased to $101.3 million for the six months ended June 30, 2012, from $76.8 million for the six months ended June 30, 2011. The gross margin percentage increased to 65.9% for the six months ended June 30, 2012, from 63.1% for the six months ended June 30, 2011. The increase in the gross margin amount and percentage was due to an increase in revenue partially offset by an increase in cost of revenues. Cost of revenues increased to $52.5 million for the six months ended June 30, 2012, from $45.0 million for the six months ended June 30, 2011. The increase in the cost of revenues was principally due to the additional cost of revenues of approximately $5.3 million from our 2011 and 2012 acquisitions as well as an increase in research personnel costs of approximately $2.5 million.

Selling and Marketing Expenses. Selling and marketing expenses increased to $35.6 million for the six months ended June 30, 2012, from $27.5 million for the six months ended June 30, 2011, and increased as a percentage of revenues to 23.1% for the six months ended June 30, 2012, compared to 22.6% for the six months ended June 30, 2011. The increase in the amount and percentage of selling and marketing expenses was primarily due to the additional selling and marketing expenses of approximately $5.2 million from our 2011 and 2012 acquisitions as well as an increase in sales personnel costs of approximately $2.7 million.

Segment Revenues. U.S. revenues increased to $144.5 million for the six months ended June 30, 2012, from $112.6 million for the six months ended June 30, 2011. This increase in U.S. revenue was primarily due to further penetration of our subscription-based information services, and successful cross-selling of our services to our customers in existing markets, combined with continued high renewal rates as well as the additional revenue of approximately $13.2 million from our April 2012 acquisition of LoopNet. FOCUS is our primary service offering in our International operating segment. International revenues slightly increased to $9.4 million for the six months ended June 30, 2012 from $9.2 million for the six months ended June 30, 2011. Intersegment revenue increased to approximately $766,000 for the six months ended June 30, 2012, compared to approximately $478,000 for the six months ended June 30, 2011. Intersegment revenue is attributable to services performed for our wholly owned subsidiary, PPR, by Property and Portfolio Research Ltd., a wholly owned subsidiary of PPR. Intersegment revenue is recorded at an amount we believe approximates fair value. Intersegment revenue is eliminated from total revenues.

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