CoStar Group reported an 18% year-over-year revenue increase for the second quarter ended June 30 — reaching $925 million compared to $781 million in the same period last year.
Leaders said growth was driven by major technological expansions, increased platform engagement and significant operational efficiency across residential and commercial and real estate marketplaces.
The real estate technology company logged $69 million in net new bookings during the quarter, a 3% gain over the first quarter of 2026.
Net income reached $55 million, while adjusted EBITDA rose 116% year-over-year to $184 million.
Operating cost growth was held to 2%, contributing to the company’s 61st consecutive quarter of double-digit revenue growth, CoStar CEO and founder Andy Florance said during CoStar’s Q2 earnings call.
“What we’ll do is continue to optimize the go-to-market, and I feel very good about being able to go out there and bring out the depth advertising for the first time,” he said. “I think we have a strong offering. Our clients are seeing a very strong [return on investment] that is demonstrable and that shows up in really good renewal rates and very low cancellation rates now.
“We’re achieving a lot of our goals, and I feel very good about where we are and getting very good feedback from clients.”
Residential segment reaches profitability milestone
For the first time, CoStar’s residential portfolio turned adjusted EBITDA positive, generating $12 million in profit and marking a $41 million improvement over the first quarter of 2026.
The positive trajectory follows new artificial intelligence (AI) product developments designed to boost property exposure and agent workflow.
Following the launch of Homes.com Ai earlier in the year, CoStar introduced Apartments.com Ai in June.
Within weeks of release, users logged more than 500,000 AI sessions on Apartments.com. Users averaged 20 minutes per session — roughly 2.8 times longer than non-AI users — and viewed twice as many listings, leaders said.
“What that demonstrates is obviously a strong continued interest and desire to be part of the Apartments.com network [and to] use the capability,” said CoStar Chief Financial Officer Chris Lown. “We face a competitive environment. We’ve shrunk down to basically two primary competitors. Even in light of that, we saw one of the best sales months in the company’s history. It gives us a lot of confidence in the road ahead.”
Additionally, usage of 3D digital twin tours jumped 224%, and traffic-to-lead conversion rates increased 256%.
Florance said these AI capabilities will be expanded across core platforms, including commercial portal LoopNet and international operations.
Residential revenue was $444 million in Q2, up 33% year-over-year, while Homes.com revenue grew 66% year-over-year to $28.5 million.
Commercial gains momentum
CoStar’s commercial portfolio generated $481 million of revenue in Q2, up 8% year-over-year.
The company’s platform revenue was $337 million, up 9% year-over-year, with total platform subscribers expanding 19% to 327,000.
Commercial renewal rates held strong at 93%.
The quarter brought four significant feature updates to the flagship CoStar platform. Among them was the release of CoStar Rent Benchmark, a feature built using AI to abstract key data points from 4 million actual lease agreements.
Additionally, CoStar Debt Solutions logged a record quarter with over $4 million in net new monthly bookings, bringing together data from 300 lender clients across $1.2 trillion in active debt.
The company also expanded its geographic reach during the quarter by launching core CoStar services in France — covering Paris, Lyon, Marseille, and over 290,000 properties.
Outlook for remainder of 2026
Company leaders emphasized that active expense management and operational discipline helped accelerate earnings ahead of targets.
“The outperformance in adjusted EBITDA overall was driven by actions to reduce personnel costs and continued operating efficiencies,” said Lown. “We are particularly pleased that we delivered a 20% adjusted EBITDA margin, a full quarter ahead of our expectations. Proactive expense management from the first half of the year has established a new baseline for expenses that will continue to benefit us moving forward.”
Looking ahead, CoStar Group revised its full-year 2026 revenue guidance to a range of $3.715 billion to $3.755 billion — representing an expected annual growth rate of 15% at the midpoint.
“Our revised revenue outlook reflects a series of recent operating decisions designed to drive profitable growth over the long term,” Lown added. “Taken together, these actions moderated near-term revenue growth, but we believe they position our businesses to generate increased revenue growth over time, leading to better long-term profitability.”
For the third quarter of 2026, the company projects revenue between $935 million and $945 million, representing approximately 13% year-over-year growth.
Third-quarter adjusted EBITDA is expected to land between $190 million and $210 million, reflecting an anticipated operating margin of 21% at the midpoint.
Full-year adjusted EBITDA expectations were affirmed in a range of $780 million to $820 million.
This article was written by Jonathan Delozier and generated with the assistance of HousingWire Automation.
