Executive Summary#

The Execution Inflection#

CoStar Group's third-quarter earnings released October 28 delivered decisive operational validation of the competitive positioning narrative advanced just one week earlier when management enumerated five active legal proceedings against Zillow. Net new bookings surged 92 percent year-over-year to $84 million—an extraordinary acceleration that management subsequently raised full-year adjusted EBITDA guidance by $40 million at the midpoint, signaling conviction that the underlying momentum extends beyond a single quarter's outperformance. Revenue of $834 million increased 20 percent year-over-year, marking the company's 58th consecutive quarter of double-digit revenue growth while simultaneously achieving 51 percent adjusted EBITDA growth, a divergence that reveals management's disciplined capital allocation framework precisely when residential marketplace investment intensity might theoretically suppress consolidated profitability. For institutional investors reassessing CoStar's residential real estate commitment through the lens of October's competitive escalation narrative, the Q3 earnings deliver the operative evidence: Homes.com bookings rose 53 percent quarter-over-quarter to an annualized $16 million, up an extraordinary 1,225 percent year-over-year, demonstrating that the regulatory confidence messaging articulated in the October 21 Zillow rebuttal is translating into measurable agent subscription acceleration and sales force productivity gains. The combination of aggressive forward guidance revision and breakthrough bookings metrics transforms the residential investment thesis from theoretical conviction to demonstrated execution, establishing a critical inflection point by which institutional investors can assess management's probability of achieving sustainable monetization within the near-term planning horizon.