Morningstar | CSGP Report
CoStar Group built its business by providing commercial real estate data to institutional clients. After achieving pre-eminence in this space, it acquired LoopNet in 2012 and Apartments.com in 2014. These two deals, among several smaller acquisitions, marked CoStar’s entry to the fragmented online real estate listing marketplace business. Over the past several years, the company has continued to achieve impressive revenue and profitability growth. We think it is poised to continue this growth trajectory by taking share in the apartment search industry and upselling current LoopNet users to its CoStar Suite platform. CoStar has four main business lines, CoStar Suite, Commercial Property and Land, Multifamily, and Information Services. Despite the company’s slight shift in focus as it pursues additional growth opportunities, CoStar Suite remains the largest business line, contributing about half of revenue as of year-end 2017. This flagship product contains proprietary data that is sold to institutional players such as brokers via annual subscriptions. We expect future growth to derive from above inflation price increases, successful efforts to curb password sharing behavior, and the continued upselling of previous LoopNet users to the CoStar Suite offering. CoStar’s second largest business line is multifamily, contributing about 30% of revenue. This business contains apartment listing platforms such as Apartments.com, ForRent.com, and Apartmentfinder.com among several others. The LoopNet Premium Lister, BizBuySell, LandsofAmerica, and other related brands are contained within the commercial property and land business line, which is 15% of companywide revenue. Much like the multifamily platforms, CoStar derives its revenue by charging tiered yearly subscription packages in exchange for preferential advertising placement on its platforms. Information services, which contributes less than 10% of revenue, consists of the legacy LoopNet Premium Searcher, CoStar Real Estate Manager, and various other miscellaneous products.CoStar Group provides information, analytics and online marketplace services to the commercial real estate and related business community through its database of commercial real estate information covering the U.S., the U.K., and parts of Canada, Spain, Germany and France. The company provides online marketplaces for commercial real estate, apartment rentals, lands for sale and businesses for sale. The company operates within two operating segments, North America and International, and its services are distributed to its clients under subscription-based license agreements that renew automatically, a majority of which have a term of one year.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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