Earnings

CoStar's New CFO Finds $200 Million More In Cuts: 'I'm Still Hunting'

Robin Rossmann's first call as CFO paired a trimmed revenue outlook with a bigger cost push and a reaffirmed 2028 profit target.

CoStar Group CFO Robin Rossmann said on his first earnings call Tuesday that a review of expenses has found about $200 million of further efficiencies, on top of roughly $150 million of savings expected this year. CoStar, which sells commercial and residential real estate data and runs sites such as Apartments.com and Homes.com, also trimmed its revenue outlook after weak bookings.

A Europe yardstick for savings

Rossmann said he found savings equal to about 25% of the cost structure when he ran CoStar's European operations, while revenue growth rose from 9% in 2024 to 14% over the last two years. "If you do the math, that is still well below the 25% we found in Europe. That would be $750 million. But this is early days, and I'm still hunting," he said.

The Europe exercise took two years, and a significant portion of the savings was reinvested, he said. He expects the group to use its efficiencies both to lift margin and to fund growth.

The $200 million splits into thirds, Rossmann said in answer to an analyst from William Blair: organizational efficiencies, integration synergies, and procurement plus better marketing returns. The company expects to realize it over the next 12 to 18 months. CEO Andy Florance said it is on top of the planned reduction in Homes.com losses.

Profit raised, revenue trimmed

Third-quarter revenue rose 14% to $952 million. Adjusted EBITDA hit a record $229 million, double the prior year, and adjusted operating costs fell 2%. Net income was $74 million, against a $31 million loss a year earlier.

Full-year adjusted EBITDA guidance now stands at $820 million to $840 million. Revenue guidance of $3.75 billion to $3.77 billion includes about $60 million from Zonda, the home-builder data business CoStar closed on for $815 million in August. Excluding Zonda, the outlook is $35 million, or 1%, below July's.

The reason is bookings. Annualized net new bookings were $37 million, down from $84 million a year earlier, which Florance blamed on economic pressure and a sales force of about 2,000, down about 10% from the prior year. Rossmann expects the third quarter to be the low point.

The 2028 target stays put

An analyst from Jefferies asked why the $1.25 billion 2028 adjusted EBITDA target was not raised. Rossmann said management has not run a new long-term planning cycle, will do so toward the end of this year, and has yet to decide how savings are split between margin and investment.

CoStar also agreed to buy aerial-imagery company Vexcel for about $730 million, funded from $500 million of cash and an undrawn $1.1 billion revolver. It is not in guidance. Florance said Vexcel has roughly $140 million of revenue over the last 12 months.

CoStar said it expects to complete its $700 million 2026 share buyback in the fourth quarter, with fourth-quarter revenue guided to $976 million to $996 million.