CoStar Group, Inc. (NASDAQ: CSGP), the leading provider of commercial real estate information, analytics and online marketplaces, announced today that it has reached an agreement to acquire Homesnap, Inc. for $250 million in cash.
Homesnap is an industry-leading online and mobile software platform that provides user-friendly applications to optimize residential real estate agent workflow and reinforce the agent-client relationship. Over 300,000 agents nationwide use the application an average of 30 times each month. Those 300,000 agents are also the nation’s most productive, selling the majority of homes in the US. The platform enjoys high growth and engagement as the number of active monthly users has grown at a compounded annual growth rate of over 40% since 2016, while marketing product sales have risen over 75% per year over that same period. Supported by a consortium of hundreds of the country’s largest multiple listing services (MLSs), over 1.1 million real estate agents have access to Homesnap Pro. These agents represent over 90% of the residential real estate agents and listings in the United States. With the support of this impressive consortium, Homesnap’s public residential real estate portal showcases 1.3 million active property listings. Tens of millions of home shoppers use the Homesnap website and app to look for a home.
“The acquisition of Homesnap will enable us to enter a new space and expand the total addressable markets in which we can compete,” said CoStar Group founder and CEO, Andy Florance. “The estimated value of commercial real estate assets in the U.S. is $16 trillion. With the new addition of clients and information covering 90% of the estimated $27 trillion dollar U.S. residential real estate market we are almost tripling the size of our addressable markets. Over the past thirty years, CoStar has become the leading real estate technology platform by working in partnership with commercial real estate brokers to serve their needs for data, analytics and advertising exposure for their property listings. Similarly, Homesnap works in very close partnership with residential agents to serve their needs for data, analytics and advertising exposure for their property listings. We will continue to differentiate our residential real estate portal and solutions by working solely to help agents market their listings and their brands, which is in sharp contrast to other portals that increasingly advertise on top of agent listings and offer brokerage services directly.”
The addition of Homesnap’s complementary offerings will quadruple the number of professional, paying brokers and active agent users on the CoStar Group U.S. platforms from approximately 100,000 today to over 400,000. The number of U.S. property listings available across CoStar’s brands will double from approximately 1.35 million today to over 2.6 million.
“Homesnap has great relationships, data, software, and tools for residential real estate professionals that are complementary to our existing offerings,” continued Florance. “The tools and functionality developed by Homesnap for residential property agents, such as lead generation, client collaboration, and digital advertising, have direct applicability to commercial brokers. Our goal is to make these enhanced capabilities available to all of our audiences. Combining forces with Homesnap is also expected to enable us to expand and deepen our collaboration with MLSs nationwide. A very large percentage of CoStar’s clients such as investors, banks, government agencies, appraisers, suppliers, and brokerage firms are active in both commercial and residential real estate, so we believe that they would welcome a more comprehensive solution for their needs across all real estate segments.”
“Homesnap has spent years building tools that reinforce the agent-client relationship and arm both home buyers and agents with the data and software they need to find homes and do their jobs,” said John Mazur, CEO of Homesnap. “In addition, residential property agents spend an estimated $10 billion every year on software and marketing, while influencing a further $21 billion of spending in adjacent markets, such as lending, insurance and relocation services. We are excited to join CoStar Group and leverage their 30 years of knowledge and experience in property data, software and marketing to take advantage of this significant growth opportunity.”
Homesnap is also headquartered in the Washington, D.C. area, employs approximately 150 people and is projected to achieve approximately $40 million of revenue for the full year 2020, representing revenue growth of approximately 45% compared to the full year 2019. The transaction is expected to close in 2020, subject to customary closing conditions and regulatory review.
The preceding forward-looking statements reflect CoStar Group’s expectations as of November 22, 2020. We are not able to forecast with certainty whether or when certain events, such as acquisition-related costs, the exact timing of the closing of the acquisition, or the exact amounts or timing of any investments related to the acquisition will occur. Given the risk factors, uncertainties and assumptions discussed above, actual results may differ materially. Other than in publicly available statements, CoStar Group does not intend to update its forward-looking statements until its next quarterly results announcement.
About CoStar Group, Inc.
CoStar Group, Inc. (NASDAQ: CSGP) is the leading provider of commercial real estate information, analytics and online marketplaces. Founded in 1987, CoStar conducts expansive, ongoing research to produce and maintain the largest and most comprehensive database of commercial real estate information. Our suite of online services enables clients to analyze, interpret and gain unmatched insight on commercial property values, market conditions and current availabilities. STR provides premium data benchmarking, analytics and marketplace insights for the global hospitality sector. Ten-X provides a leading platform for conducting commercial real estate online auctions and negotiated bids. LoopNet is the most heavily trafficked commercial real estate marketplace online with over 7 million monthly unique visitors. Realla is the UK’s most comprehensive commercial property digital marketplace. Apartments.com, ApartmentFinder.com, ForRent.com, ApartmentHomeLiving.com, Westside Rentals, AFTER55.com, CorporateHousing.com, ForRentUniversity.com and Apartamentos.com form the premier online apartment resource for renters seeking great apartment homes and provide property managers and owners a proven platform for marketing their properties. CoStar Group’s websites attracted an average of approximately 69 million unique monthly visitors in aggregate in the third quarter of 2020. Headquartered in Washington, DC, CoStar Group maintains offices throughout the U.S. and in Europe, Canada and Asia with a staff of over 4,300 worldwide, including the industry’s largest professional research organization. For more information, visit www.costargroup.com.
Based in Bethesda, MD, Homesnap was founded in 2012 to provide residential real estate agents and consumers with an intuitive technology that facilities buying and selling homes. Homesnap’s flagship product, Homesnap Pro, is a free software application for real estate agents to view and manage property listings, communicate with clients, receive market alerts and schedule showings on their mobile devices. Homesnap collects data from over 500 data sources and has subscription service agreements with approximately 240 MLSs who provide data and subscription revenue to Homesnap in exchange for free agent access to Homesnap Pro. Homesnap also provides marketing products through its mobile application that agents can use to promote their listings, as well as a premium product called Homesnap Pro+, which provides agents with enhanced functionality and business intelligence through individual subscription agreements. The Homesnap platform contains approximately 1.3 million active property listings, including residential, commercial, land and other property types, covering approximately 90% of active listings. The company also aggregates information on property taxes, mortgages, individual property parcels, neighborhood schools and other property data elements.
This news release and the Company’s conference call contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about CoStar Group’s plans, objectives, expectations, beliefs and intentions and other statements including words such as “hope,” “anticipate,” “may,” “believe,” “expect,” “intend,” “will,” “should,” “plan,” “estimate,” “predict,” “continue” and “potential” or the negative of these terms or other comparable terminology. Such statements are based upon the current beliefs and expectations of management of CoStar and are subject to many risks and uncertainties. Actual results may differ materially from the results anticipated in the forward-looking statements and the assumptions and estimates used as a basis for the forward-looking statements. The following factors, among others, could cause or contribute to such differences: the possibility that the acquisition of Homesnap does not close when expected or at all; the possibility that the parties are unable to obtain regulatory approval, or the risk that any actions required to be taken in order to receive regulatory approval may impact the expected benefits of the transaction; the risk that the businesses of Homesnap and CoStar may not be combined successfully or in a timely and cost-efficient manner; the risk that business disruption relating to the Homesnap acquisition may be greater than expected; the risk that the acquisition does not produce the expected benefits or results for CoStar, Homesnap or their customers and advertisers, including expanded and deeper collaboration with MLSs nationwide and as otherwise stated in this release; the risk that Homesnap revenues and revenue growth for 2020 will not be as stated in this press release; the risk that the combination and integration of Homesnap will disrupt CoStar Group’s or Homesnap’s operations or result in the loss of customers or key employees; uncertainty surrounding the impact of the COVID-19 pandemic, including volatility in the international and U.S. economy, worker absenteeism or decreased productivity, quarantines or other travel or health-related restrictions; the length and severity of the COVID-19 pandemic; the pace of recovery following the COVID-19 pandemic; and government and private actions taken to control the spread of COVID-19. Additional factors that could cause results to differ materially from those anticipated in the forward-looking statements can be found in CoStar Group’s filings from time to time with the Securities and Exchange Commission, including in CoStar Group’s Annual Report on Form 10-K for the year ended December 31, 2019, and CoStar Group’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020, June 30, 2020 and September 30, 2020, each of which is filed with the SEC, including in the “Risk Factors” section of those filings, as well as CoStar Group’s other filings with the SEC available at the SEC’s website (www.sec.gov). All forward-looking statements are based on information available to CoStar Group on the date hereof, and CoStar Group assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.