CoStar Group, Inc.

CoStar Group, Inc. is a leading provider of online real estate marketplaces, information, analytics, and 3D digital twin technology, generating $3.25 billion in revenue in fiscal 2025 across commercial and residential property markets. Founded by Andrew Florance in 1987, the company has spent nearly four decades building what is widely considered the most comprehensive commercial real estate database in the industry, and since 2024 has mounted the most ambitious challenge to residential real estate portal incumbents the United States has ever seen.

This is a story about a deeply profitable commercial real estate information franchise funding an expensive, unproven, and strategically logical assault on the residential portal market. The commercial business generates roughly $672 million in segment adjusted EBITDA; the residential segment has been burning hundreds of millions annually to build Homes.com into a credible competitor to Zillow. The file turns on a single question: whether the residential investment reaches sustained profitability and meaningful scale before the competitive window closes — or whether it becomes a permanent drag on a business that would otherwise be a cash-compounding machine.

The market has rendered a preliminary verdict. CoStar shares traded above $97 in mid-2025 and changed hands at $29.83 on the last trading day before this report, a decline of roughly 69% from the high, compressing the market capitalization to approximately $12.1 billion even as revenue grew 19% year-over-year to a record $3.25 billion and the company acquired two important assets in Matterport and Domain. The market is no longer pricing CoStar as the sum of a durable commercial franchise and an option on residential disruption. It is pricing the company as though the residential investment has already failed, while the commercial business quietly continues compounding.