CSGP

ANALYST NOTE: CSGP (CoStar Group, Inc.) Date: 2026-06-13 Current Price: $30.12

1. Structural Readiness

State: Forming Aggressive/Pre-Breakout Entry: N/A (Current price is within the consolidation range) Breakout Level: Not yet defined (Requires price to close decisively above the established coil high). Current Price: $30.12 Extension: N/A (Price is within the coil, not extended above entry). ATR Context: Current ATR is 5.2% (High). This indicates elevated volatility within the consolidation, which is consistent with a "forming" state where price is testing boundaries before a directional move.

2. Thesis Layer

Thesis Status: Tactical / Setup-Led Macro Thesis: None named at this date. Assessment: This is a tactical, setup-led name. There is no named secular macro thesis driving the immediate setup. The conviction must be derived entirely from the quality of the structural setup (the forming coil) and the underlying business fundamentals as reported by management. We do not invent a thesis; we judge the setup quality and the strength of the evidence provided in the earnings and filings.

3. The Business

Company Overview: CoStar Group, Inc. is a leading provider of online real estate marketplaces, information, analytics, and 3D digital twin technology in the property markets. The company operates based on the number of unique visitors and site visits per month, offering more information and marketing services than many competitors. It maintains the most comprehensive commercial real estate database in the industry. Business Model: The company operates on a subscription-based license agreement model. Services are typically distributed under agreements that generally renew automatically, with the majority having a term of at least one year. Key Segments & Performance (as of Q1 2026):

• Commercial Real Estate: The company expects revenue growth for the year ending December 31, 2026, to moderate compared to 2025 due to the lack of benefit from the Matterport Acquisition realized in 2025.
• Residential Real Estate: The company expects revenue growth for the year ending December 31, 2026, to accelerate compared to 2025. This acceleration is attributed to a full year's benefit of the Domain Acquisition (completed August 2025) and an increase in Homes.com members.
• User Growth: CoStar users grew 22% year-over-year to 317,000.
• Bookings: Q1 net bookings were $67 million, up 20% year-over-year. Annualized net new bookings for subscription services were $67 million for the three months ended March 31, 2026, compared to $56 million in the prior year period.
• Retention: Contract renewal rates for existing company-wide subscription services (term ≥1 year) were approximately 89%, with cancellation rates of 11%.
• Guidance (Management Expectations):
• Revenue: Reaffirmed full-year 2026 guidance of $3.78 billion to $3.82 billion (16% to 18% annual growth).
• EBITDA: Expect adjusted EBITDA to range from $780 million to $820 million.
• Profitability: The Residential segment is expected to reach profitability in Q2 2026.
• Backlog: Remaining contract consideration for unsatisfied performance obligations was approximately $519 million at March 31, 2026, expected to be recognized over the next five years.

4. Archetype and Conviction

Archetype: Growth Leader Fit: The company fits the "Growth Leader" archetype due to its 60th consecutive quarter of double-digit revenue growth, strong user acquisition (22% YoY), and accelerating growth expectations in the Residential segment. The business model is supported by high retention (89%) and a large backlog of recognized revenue ($519M), providing visibility into future performance. Valuation Context: The financial spine indicates a forward consensus EPS of $1.3623 for FY1 and $1.778 for FY2. Conviction Stack:

• Thesis Strength: Low (Tactical/Setup-led only).
• Evidence Quality: High. Multiple primary sources (earnings transcripts, SEC filings) confirm strong growth metrics, clear guidance, and successful integration of recent acquisitions (Domain, Matterport).
• Setup Readiness: Partial. The setup is "Forming," meaning the structure is in place but the breakout has not fired. This is a positive but incomplete signal.
• Rerating Potential: Moderate. The transition of the Residential segment to profitability and the acceleration of growth in that segment could drive a re-rating, provided the commercial segment's moderation does not drag down overall sentiment.

5. Invalidations, Strengths, and Gaps

What Would Strengthen the Case:

• Continued acceleration in Residential bookings and user growth beyond the 22% YoY reported.
• Confirmation that the Residential segment achieves profitability in Q2 2026 as guided.
• Extension of the 60-quarter streak of double-digit revenue growth into Q2 2026.

What Would Invalidate the Case:

• A significant miss on the full-year 2026 revenue guidance ($3.78B-$3.82B) or EBITDA guidance ($780M-$820M).
• A deterioration in the 89% renewal rate or a spike in cancellation rates.
• Failure of the Residential segment to reach profitability in Q2 2026.

Gaps in Evidence:

• Commercial Segment Specifics: While the Commercial segment is expected to moderate, specific revenue figures for the segment in Q1 2026 are not detailed in the provided evidence, only the growth rate expectation.
• Margin Details: While EBITDA guidance is provided, specific operating margin percentages for the Residential segment prior to profitability are not explicitly detailed in the evidence block.

PRIVATE ANALYST CALL

Judgment: Speculative Confidence: medium Key evidence: 60th consecutive quarter of double-digit revenue growth; Q1 net bookings up 20% YoY to $67M; Residential segment expected to reach profitability in Q2 2026; 89% contract renewal rate. Key risks: Commercial Real Estate revenue growth expected to moderate in 2026; setup is in "forming" state with no confirmed breakout; high ATR (5.2%) indicates elevated volatility; reliance on acquisition integration (Domain/Matterport) for growth. Sizing hint: Position size should be conservative given the "forming" status and lack of confirmed breakout; treat as a partial setup signal. Expected path: Management expects Residential growth to accelerate and Commercial to moderate; price likely to consolidate further before a directional move if the forming coil resolves. Expected horizon: 3 to 6 months for the coil to resolve into a confirmed breakout or invalidation.