Real estate data provider CoStar Group (NASDAQ: CSGP) reported Q4 CY2025 results beating Wall Street’s revenue expectations, with sales up 26.9% year on year to $900 million. On the other hand, next quarter’s revenue guidance of $895 million was less impressive, coming in 0.6% below analysts’ estimates. Its non-GAAP profit of $0.31 per share was 13.8% above analysts’ consensus estimates.

Is now the time to buy CoStar? Find out by accessing our full research report, it’s free.

“With our 59th consecutive quarter of double-digit revenue growth and Adjusted EBITDA surging 83% year-over-year, CoStar Group is entering a period of significant earnings acceleration,” said Andy Florance, Founder and Chief Executive Officer of CoStar Group.

Company Overview

With a research department that makes over 10,000 property updates daily to its 35-year-old database, CoStar Group (NASDAQ: CSGP) provides comprehensive real estate data, analytics, and online marketplaces for commercial and residential properties in the U.S. and U.K.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years.

With $3.25 billion in revenue over the past 12 months, CoStar is a mid-sized business services company, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale. On the bright side, it can still flex high growth rates because it’s working from a smaller revenue base.

As you can see below, CoStar’s sales grew at an exceptional 14.4% compounded annual growth rate over the last five years. This shows it had high demand, a useful starting point for our analysis.

Long-term growth is the most important, but within business services, a half-decade historical view may miss new innovations or demand cycles. CoStar’s annualized revenue growth of 15% over the last two years aligns with its five-year trend, suggesting its demand was predictably strong.

This quarter, CoStar reported robust year-on-year revenue growth of 26.9%, and its $900 million of revenue topped Wall Street estimates by 0.9%. Company management is currently guiding for a 22.2% year-on-year increase in sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 17.3% over the next 12 months, an improvement versus the last two years. This projection is eye-popping and suggests its newer products and services will spur better top-line performance.

Software is eating the world and there is virtually no industry left that has been untouched by it. That drives increasing demand for tools helping software developers do their jobs, whether it be monitoring critical cloud infrastructure, integrating audio and video functionality, or ensuring smooth content streaming. Click here to access a free report on our 3 favorite stocks to play this generational megatrend.

Operating Margin

Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after subtracting all core expenses, like marketing and R&D.

CoStar was profitable over the last five years but held back by its large cost base. Its average operating margin of 8.7% was weak for a business services business.

Looking at the trend in its profitability, CoStar’s operating margin decreased by 24.5 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. CoStar’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

In Q4, CoStar generated an operating margin profit margin of 5.4%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for CoStar, its EPS declined by 2.7% annually over the last five years while its revenue grew by 14.4%. This tells us the company became less profitable on a per-share basis as it expanded.

We can take a deeper look into CoStar’s earnings to better understand the drivers of its performance. As we mentioned earlier, CoStar’s operating margin was flat this quarter but declined by 24.5 percentage points over the last five years. Its share count also grew by 6.5%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For CoStar, its two-year annual EPS declines of 16.2% show it’s continued to underperform. These results were bad no matter how you slice the data.

In Q4, CoStar reported adjusted EPS of $0.31, up from $0.26 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects CoStar’s full-year EPS of $0.86 to grow 52.4%.

Key Takeaways from CoStar’s Q4 Results

It was good to see CoStar beat analysts’ EPS expectations this quarter. We were also happy its revenue narrowly outperformed Wall Street’s estimates. On the other hand, its full-year EPS guidance missed and its EPS guidance for next quarter fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded down 4.2% to $47.10 immediately after reporting.

CoStar underperformed this quarter, but does that create an opportunity to invest right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).