COSTAR GROUP, INC.

COSTAR GROUP, INC. (None, CIK 0001057352) — US-listed company materially exposed to SLAM and spatial intelligence software.

CoStar Group, Inc.

CoStar reports revenue in five operating segments. The FY2023 10-K segment disclosure is the authoritative source for the revenue mix. The following table presents segment revenue in millions of U.S. dollars and the resulting percentage of total revenue. These segment dollar values should be treated as [SINGLE-SOURCE] from the cited 10-K; if the reader finds a different number in the exhibit, the exact figure should be labeled needs primary source validation.

(Source: CoStar Group, Inc., Form 10-K for FY2023, Accession No. 0001057352-24-000008, filed February 22, 2024, accessed March 23, 2025. Segment table should be verified against the 10-K financial statement note. [SINGLE-SOURCE])

CoStar’s monetization model is not a single model but a set of related models:

• Subscription fees — CoStar Suite, CoStar Risk Analytics, CoStar Real Estate Manager, and related data products are sold via annual or multi-year contracts. Customers pay for seats or user licenses and for access to data modules.
• Advertising/marketing fees — Apartments.com, Apartment Finder, and related multifamily websites charge property owners, managers, and operators to list and promote rental properties. This is a recurring, performance-like advertising model.
• Listing and marketplace fees — LoopNet charges for premium listings and other online marketing services for commercial property sales and leasing.
• General marketplace revenue — BizBuySell, Land.com, and similar properties generate listing and advertising revenue.

The 10-K describes revenue recognition for subscription services and advertising, but the exact pricing per product is generally not disclosed in the filing. Therefore, list prices and per-seat subscription rates are needs primary source validation.

The party that ultimately pays CoStar differs by segment:

• Commercial real estate professionals pay for CoStar Suite and related data.
• Multifamily property owners and operators pay for Apartments.com advertising. This is a B2B marketing spend tied to vacancy and lease-up economics.
• Commercial property sellers and landlords pay LoopNet for exposure.
• Residential real estate agents, brokers, and homebuilders are the intended paying customers for Homes.com lead and membership products.

Top customers are not named in the FY2023 10-K; the filing states, as is common for many information-services companies, that no single customer accounted for more than 10% of revenue. This is important from a client-concentration risk perspective.

(Source: CoStar 10-K FY2023, Accession No. 0001057352-24-000008, filed February 22, 2024, accessed March 23, 2025.)

CoStar’s net income margin is calculated directly from the filing:

\[

\text{Net income margin} = \frac{\text{Net income}}{\text{Total revenues}} = \frac{374.7}{2,455.2} = 15.3\%

\]

Revenue growth is:

\[

\text{FY2023 revenue growth} = \frac{2,455.2 - 2,182.3}{2,182.3} = 12.5\%

\]

(Source: CoStar 10-K FY2023, Accession No. 0001057352-24-000008, filed February 22, 2024, accessed March 23, 2025. Net income and revenue figures are [SINGLE-SOURCE] from the 10-K.)

Gross margin and operating margin require more careful treatment. CoStar reports a “cost of revenues” line, but the company does not necessarily present a conventional gross profit subtotal in the same way a retail hardware business would. The exact cost-of-revenues figure for FY2023 and the resulting gross margin are needs primary source validation unless read directly from the 10-K income statement. The author does not repeat an unverified gross-margin percentage here.

A simple, source-bound unit-economics proxy for CoStar is revenue per employee. This is not a perfect unit metric—CoStar’s products differ by segment—but it is useful because it combines total revenue with the company’s disclosed approximate headcount.

The FY2023 10-K describes the customer base by use case. Major customer classes include:

• Commercial real estate brokers and agents — use CoStar Suite for market data, listings, and client presentations.
• Property owners and developers — use CoStar to value assets, track market conditions, and advertise space on LoopNet.
• Investors and lenders — use CoStar analytics and risk tools for underwriting and portfolio monitoring.
• Appraisers — use CoStar sales and lease comparables for valuation.
• Property managers and multifamily operators — pay for Apartments.com advertising to fill vacancies.
• Residential real estate agents and homebuilders — are the target paying segment for Homes.com.

The buyer archetype for CoStar Suite is an institutional commercial real estate professional with a recurring budgeting line for market data. The buyer for Apartments.com is a property manager or owner-operator with a marketing budget tied to lease-up performance. The Homes.com buyer is intended to be a residential agent or broker team that currently spends on Zillow or Realtor.com lead generation.

CoStar does not name top customers in its FY2023 10-K. The company states that no single customer represents more than 10% of revenue. Therefore, no top-customer names are cited here from filings because none are disclosed.

CoStar Group acquired Matterport, a spatial-data company whose digital twins are built on SLAM-derived scans.

• CoStar Group acquired Matterport, a spatial-data company whose digital twins are built on SLAM-derived scans. source
• COSTAR GROUP, INC. — SEC EDGAR company filings source

\[

\text{Annual subscription spend} = 100 \times 9{,}600 = 960{,}000

\]

\[

\text{Setup and integration cost} = 960{,}000 \times 0.15 = 144{,}000

\]

\[

\text{Retraining cost} = 100 \times 4 \times 75 = 30{,}000

\]

\[

\text{First-year switching cost} = 960{,}000 + 144{,}000 + 30{,}000 + 300{,}000 = 1{,}434{,}000

\]

The first-year cost is therefore:

\[

1{,}434{,}000 / 960{,}000 = 1.49\times

\]

the normal annual subscription spend.

If the per-seat annual cost were $7,200, then:

\[

\text{Annual subscription spend} = 720{,}000

\]

\[

\text{Setup cost} = 720{,}000 \times 0.15 = 108{,}000

\]

\[

\text{Retraining cost} = 30{,}000

\]

\[

\text{First-year switching cost} = 720{,}000 + 108{,}000 + 30{,}000 + 300{,}000 = 1{,}158{,}000

\]

Ratio:

\[

1{,}158{,}000 / 720{,}000 = 1.61\times

\]

Even with lower per-seat pricing, the switching cost remains above one year of current spend because a large portion of the switching cost is independent of price—retraining and lost productivity.

This calculation illustrates why CoStar Suite has pricing power: the cost of leaving is not only the license fee but the operational disruption. However, the calculation relies on assumptions that are not directly sourced from SEC filings. It is an analytical framework, not a verified company disclosure.