CoStar Reported Strong Q2 Results and Is Well Positioned for an Economic Slowdown

Wide-moat-rated CoStar Group reported strong results in the second quarter as the firm reported non-GAAP EPS of $0.28, 7.7% higher than the $0.26 in non-GAAP EPS during the second quarter of 2021. The shares of the company gained 12% in response to the quarterly results. Overall revenue increased 11.6% on a year-over-year basis and the adjusted EBITDA margin was recorded at 29.6% for the quarter. Annualized net new sales bookings, which is an indicator of the future revenue growth, came in at $84 million for the second quarter, a 66% increase over the same quarter in 2021. Management has also increased its revenue and adjusted EBITDA guidance on the back of strong results with updated full-year revenue guidance of $2.165 billion-$2.180 billion and adjusted EBITDA guidance of $610 million-$630 million representing an increase of $13 million and $20 million, respectively, at the midpoint of the range compared with previous guidance. We are maintaining our $73 fair value estimate for Costar Group after incorporating the second-quarter results.