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Key takeaways from the call include:
CoStar Group aims to strengthen its position in the U.K. property market by acquiring OnTheMarket, the third most trafficked residential property portal in the U.K. The company believes that the integration of its commercial property site and technology platform with OnTheMarket’s agent network will create the number-one property portal in the U.K.
During the earnings call, CoStar Group also provided updates on the performance of their other businesses, including Apartments.com, LoopNet, STR, and Ten-X. Despite challenging conditions in the real estate market, the company expressed confidence in the long-term growth potential of these businesses.
CoStar’s Ten-X platform brought in $1.1 billion in assets and achieved a trade rate of 51% in the third quarter. However, high bid-ask spreads led to only 35% of potential assets moving through auctions. The company emphasized the value of digital transaction platforms for real estate and their focus on improving technology tools.
CoStar Group CEO, Andy Florance, discussed plans to continue investing in the residential market into next year, leveraging its technology and experience to disrupt the U.K. market. He also mentioned the potential for consolidation in the European market.
Regarding commission lawsuits in the U.S., Florance expressed confidence in Homes.com’s ability to succeed regardless of the outcome. He also highlighted the potential future role of Ten-X in facilitating transactions. CFO Scott Wheeler confirmed that increased spending on Homes.com was the primary reason for the change in consolidated EBITDA guidance.
The company’s international growth strategy involves evaluating and acquiring portals in different markets. CoStar Group prefers to build traffic on a portal rather than acquiring the number one position, as it can be more cost-effective. The company is also exploring opportunities outside of Europe, emphasizing the importance of technology in digital portals and the similarities between markets.
The next earnings call for CoStar Group (NASDAQ: CSGP) is scheduled for February 20th.
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