What Drove CoStar Group (CSGP)’s Strong Year-On-Year Growth?

Lakehouse Capital, an investment management company, released its “Lakehouse Global Growth Fund” October 2022 monthly letter. A copy of the same can be downloaded here. October was a busy month for the fund, and it returned 3.4% net of fees and expenses compared to a 6.6% return for the MSCI All Country World Index. In addition, please check the fund’s top five holdings to know its best picks in 2022.

Lakehouse Capital discussed stocks like CoStar Group, Inc. (NASDAQ:CSGP) in the October 2022 monthly letter. Headquartered in Washington, the District of Columbia, CoStar Group, Inc. (NASDAQ:CSGP) provides information, analytics, and marketplace services to commercial real estate. On November 14, 2022, CoStar Group, Inc. (NASDAQ:CSGP) stock closed at $82.21 per share. One-month return of CoStar Group, Inc. (NASDAQ:CSGP) was 12.08%, and its shares lost 2.20% of their value over the last 52 weeks. CoStar Group, Inc. (NASDAQ:CSGP) has a market capitalization of $33.434 billion.

Lakehouse Capital made the following comment about CoStar Group, Inc. (NASDAQ:CSGP) in its Q3 2022 investor letter:

“CoStar Group, Inc. (NASDAQ:CSGP) delivered another impressive result with revenue and EBITDA growing 12% and 6% year-on-year, respectively. Annualised net new sales bookings, which are an indicator of future revenue growth, were up 62% year-on-year, which marked their second-best quarter on record. The company’s core business, the CoStar Suite, continues to grow at above-trend rates with revenue up 16% compared to midsingle-digits 18-months ago. In similar fashion to previous quarters, strength was driven by multiple factors, including CoStar’s upsell program, high renewal rates, new product and information capabilities and the return of annual price increase for renewals, which had been temporarily put on hold during the pandemic. It was also pleasing to see contract renewal rates tick up to 93% from 91% last quarter, implying a very healthy customer life of ten-plus years.

When it comes to CoStar’s online marketplaces, namely Apartment.com and LoopNet, core metrics were resilient and both platforms continue to cement their leadership positions. For Apartments.com, net new bookings increased 192% year-on-year and management is now confident that they have turned the corner with respect to last year’s high occupancy headwinds. Apartment vacancy rates increased for the fourth straight quarter and are now at 6.1% compared to their all-time low of 5.1% experienced a year ago. Management believes the market environment will only continue to improve over the next several quarters, which is in stark contrast to the broader economy. They expect Apartments.com will be able to return to the roughly 20% pre-pandemic annualised growth rate. Overall, business momentum is strong and we remain excited about CoStar’s future and believe that the company’s scale and market leadership will drive growth for many years to come.”

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CoStar Group, Inc. (NASDAQ:CSGP) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 47 hedge fund portfolios held CoStar Group, Inc. (NASDAQ:CSGP) at the end of the second quarter, which was 44 in the previous quarter.

We discussed CoStar Group, Inc. (NASDAQ:CSGP) in another article and shared Weitz Investment Management’s views on the company. In addition, please check out our hedge fund investor letters Q3 2022 page for more investor letters from hedge funds and other leading investors.


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Disclosure: None. This article is originally published at Insider Monkey.

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