COSTAR GROUP, INC.
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(Exact name of registrant as specified in its charter)
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Delaware
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0-24531
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52-2091509
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(State or other jurisdiction of incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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1331 L Street, NW, Washington, DC
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20005
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(Address of principal executive offices)
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(Zip Code)
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Not Applicable
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(Former name or former address, if changed since last report.)
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COSTAR GROUP, INC.
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By:
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Date: October 26, 2011
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/s/ Brian J. Radecki
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Name: Brian J. Radecki
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Title: Chief Financial Officer
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Brian J. Radecki
Chief Financial Officer
(202) 336-6920
bradecki@costar.com
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Richard Simonelli
Director Investor Relations
(202) 346-6394
rsimonelli@costar.com
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·
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Achieves its highest quarter in Company history of annualized net new sales of $7.7 million
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·
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Posts eighth consecutive quarter of record revenue of $63.8 million
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·
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Raises revenue outlook for third time this year and earnings by $0.09 for full year 2011
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·
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The Company’s innovative iPad app CoStarGo™ drives strongest quarter of sales to existing customers
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Year 2010-2011 Quarterly Results - Unaudited
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(in millions, except per share data)
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2010
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2011
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|||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | ||||||||||||||||||||||
Revenues
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$ | 55.1 | $ | 55.8 | $ | 57.1 | $ | 58.2 | $ | 59.6 | $ | 62.1 | $ | 63.8 | ||||||||||||||
EBITDA
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8.8 | 7.8 | 9.4 | 10.4 | 10.5 | 7.1 | 6.0 | |||||||||||||||||||||
Net income
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2.9 | 3.3 | 3.4 | 3.8 | 4.5 | 2.6 | 2.3 | |||||||||||||||||||||
Net income per share - diluted
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0.14 | 0.16 | 0.16 | 0.18 | 0.22 | 0.12 | 0.09 | |||||||||||||||||||||
Weighted average outstanding shares - diluted
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20.6 | 20.6 | 20.7 | 20.9 | 21.0 | 22.4 | 25.3 | |||||||||||||||||||||
Adjusted EBITDA
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10.8 | 13.3 | 13.8 | 13.4 | 12.6 | 14.3 | 14.0 | |||||||||||||||||||||
Non-GAAP Net Income
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5.2 | 6.8 | 6.9 | 6.6 | 6.2 | 7.3 | 7.2 | |||||||||||||||||||||
Non-GAAP Net Income per share - diluted
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0.25 | 0.33 | 0.33 | 0.32 | 0.29 | 0.33 | 0.28 |
CoStar Group, Inc.
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Condensed Consolidated Statements of Operations-Unaudited
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(in thousands, except per share data)
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For the Three Months
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For the Nine Months
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|||||||||||||||
Ended September 30,
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Ended September 30,
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|||||||||||||||
2011
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2010
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2011
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2010
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Revenues
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$ | 63,829 | $ | 57,144 | $ | 185,574 | $ | 168,075 | ||||||||
Cost of revenues
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21,175 | 20,762 | 66,153 | 62,322 | ||||||||||||
Gross margin
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42,654 | 36,382 | 119,421 | 105,753 | ||||||||||||
Operating expenses:
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||||||||||||||||
Selling and marketing
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17,467 | 13,017 | 44,993 | 38,526 | ||||||||||||
Software development
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5,017 | 4,249 | 15,420 | 12,569 | ||||||||||||
General and administrative
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16,631 | 12,441 | 43,375 | 37,168 | ||||||||||||
Purchase amortization
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535 | 540 | 1,624 | 1,762 | ||||||||||||
39,650 | 30,247 | 105,412 | 90,025 | |||||||||||||
Income from operations
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3,004 | 6,135 | 14,009 | 15,728 | ||||||||||||
Interest and other income, net
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194 | 156 | 574 | 590 | ||||||||||||
Income before income taxes
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3,198 | 6,291 | 14,583 | 16,318 | ||||||||||||
Income tax expense, net
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887 | 2,909 | 5,103 | 6,796 | ||||||||||||
Net income
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$ | 2,311 | $ | 3,382 | $ | 9,480 | $ | 9,522 | ||||||||
Net income per share - basic
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$ | 0.09 | $ | 0.17 | $ | 0.42 | $ | 0.47 | ||||||||
Net income per share - diluted
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$ | 0.09 | $ | 0.16 | $ | 0.41 | $ | 0.46 | ||||||||
Weighted average outstanding shares - basic
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24,973 | 20,328 | 22,505 | 20,309 | ||||||||||||
Weighted average outstanding shares - diluted
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25,317 | 20,688 | 22,903 | 20,677 |
CoStar Group, Inc.
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Reconciliation of Non-GAAP Financial Measures-Unaudited
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(in thousands, except per share data)
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Reconciliation of Net Income to Non-GAAP Net Income
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For the Three Months
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For the Nine Months
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|||||||||||||||
Ended September 30,
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Ended September 30,
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|||||||||||||||
2011
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2010
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2011
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2010
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|||||||||||||
Net income
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$ | 2,311 | $ | 3,382 | $ | 9,480 | $ | 9,522 | ||||||||
Income tax expense, net
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887 | 2,909 | 5,103 | 6,796 | ||||||||||||
Income before income taxes
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3,198 | 6,291 | 14,583 | 16,318 | ||||||||||||
Purchase amortization and other related costs
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874 | 867 | 2,578 | 2,904 | ||||||||||||
Stock-based compensation expense
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1,845 | 1,781 | 6,110 | 5,727 | ||||||||||||
Acquisition related costs
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5,798 | - | 11,128 | - | ||||||||||||
Restructuring and related costs
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1,509 | 1,281 | 1,509 | 1,384 | ||||||||||||
Headquarters acquisition and transition related costs *
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- | 1,260 | - | 2,417 | ||||||||||||
Settlements and Impairments
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(1,207 | ) | - | (1,479 | ) | 2,825 | ||||||||||
Non-GAAP Income before income taxes
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12,017 | 11,480 | 34,429 | 31,575 | ||||||||||||
Assumed rate for income tax expense, net **
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40 | % | 40 | % | 40 | % | 40 | % | ||||||||
Assumed provision for income tax expense, net
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(4,807 | ) | (4,592 | ) | (13,772 | ) | (12,630 | ) | ||||||||
Non-GAAP Net Income
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$ | 7,210 | $ | 6,888 | $ | 20,657 | $ | 18,945 | ||||||||
Net Income per share - diluted
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$ | 0.09 | $ | 0.16 | $ | 0.41 | $ | 0.46 | ||||||||
Non-GAAP Net Income per share - diluted
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$ | 0.28 | $ | 0.33 | $ | 0.90 | $ | 0.92 | ||||||||
Weighted average outstanding shares - diluted
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25,317 | 20,688 | 22,903 | 20,677 | ||||||||||||
* Includes no building depreciation for the three months ended September 30, 2010, and approximately $459,000 for the nine months ended September 30, 2010
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** A 40% tax rate is assumed in order to approximate the Company's long-term effective corporate tax rate.
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Reconciliation of Net Income to EBITDA and Adjusted EBITDA
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For the Three Months
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For the Nine Months
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Ended September 30,
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Ended September 30,
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|||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Net income
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$ | 2,311 | $ | 3,382 | $ | 9,480 | $ | 9,522 | ||||||||
Purchase amortization in cost of revenues
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339 | 327 | 954 | 1,142 | ||||||||||||
Purchase amortization in operating expenses
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535 | 540 | 1,624 | 1,762 | ||||||||||||
Depreciation and other amortization
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2,129 | 2,440 | 7,065 | 7,357 | ||||||||||||
Interest income, net
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(194 | ) | (156 | ) | (574 | ) | (590 | ) | ||||||||
Income tax expense, net
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887 | 2,909 | 5,103 | 6,796 | ||||||||||||
EBITDA
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$ | 6,007 | $ | 9,442 | $ | 23,652 | $ | 25,989 | ||||||||
Stock-based compensation expense
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1,845 | 1,781 | 6,110 | 5,727 | ||||||||||||
Acquisition related costs
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5,798 | - | 11,128 | - | ||||||||||||
Restructuring and related costs
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1,509 | 1,281 | 1,509 | 1,384 | ||||||||||||
Headquarters acquisition and transition related costs ***
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- | 1,260 | - | 1,958 | ||||||||||||
Settlements and Impairments
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(1,207 | ) | - | (1,479 | ) | 2,825 | ||||||||||
Adjusted EBITDA
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$ | 13,952 | $ | 13,764 | $ | 40,920 | $ | 37,883 | ||||||||
*** Includes no building depreciation for the three months ended September 30, 2010, and does not include approximately $459,000 for the nine months ended September 30, 2010
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CoStar Group, Inc.
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Condensed Consolidated Balance Sheets
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(in thousands)
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September 30,
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December 31,
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|||||||
2011
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2010
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|||||||
(Unaudited)
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ASSETS
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||||||||
Current assets:
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||||||||
Cash and cash equivalents
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$ | 550,740 | $ | 206,405 | ||||
Short-term investments
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3,570 | 3,722 | ||||||
Accounts receivable, net
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18,909 | 13,094 | ||||||
Deferred income taxes, net
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8,906 | 5,203 | ||||||
Prepaid and other current assets
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6,404 | 5,809 | ||||||
Income tax receivable
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852 | 4,940 | ||||||
Total current assets
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589,381 | 239,173 | ||||||
Long-term investments
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28,414 | 29,189 | ||||||
Deferred income taxes, net
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11,455 | - | ||||||
Property and equipment, net
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36,780 | 69,921 | ||||||
Goodwill
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79,849 | 79,602 | ||||||
Intangible and other assets, net
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16,387 | 18,774 | ||||||
Deposits and other assets
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2,487 | 2,989 | ||||||
Total assets
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$ | 764,753 | $ | 439,648 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities:
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Accounts payable and accrued expenses
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$ | 38,161 | $ | 33,999 | ||||
Income taxes payable
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7,974 | - | ||||||
Deferred revenue
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18,471 | 16,895 | ||||||
Total current liabilities
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64,606 | 50,894 | ||||||
Deferred gain on sale of building
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31,964 | - | ||||||
Deferred rent
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16,701 | 4,032 | ||||||
Deferred income taxes, net
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- | 1,450 | ||||||
Income taxes payable
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1,792 | 1,770 | ||||||
Stockholders' equity
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649,690 | 381,502 | ||||||
Total liabilities and stockholders' equity
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$ | 764,753 | $ | 439,648 |
CoStar Group, Inc.
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Results of Segments-Unaudited
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(in thousands)
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For the Three Months
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For the Nine Months
|
|||||||||||||||
Ended September 30,
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Ended September 30,
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|||||||||||||||
2011
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2010
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2011
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2010
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|||||||||||||
Revenues
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United States
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$ | 59,192 | $ | 52,622 | $ | 171,768 | $ | 154,777 | ||||||||
International
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External customers
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4,637 | 4,522 | 13,806 | 13,298 | ||||||||||||
Intersegment revenue *
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327 | 299 | 805 | 990 | ||||||||||||
Total international revenue
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4,964 | 4,821 | 14,611 | 14,288 | ||||||||||||
Intersegment eliminations
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(327 | ) | (299 | ) | (805 | ) | (990 | ) | ||||||||
Total Revenues
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$ | 63,829 | $ | 57,144 | $ | 185,574 | $ | 168,075 | ||||||||
EBITDA
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United States
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$ | 6,828 | $ | 9,507 | $ | 26,451 | $ | 29,092 | ||||||||
International **
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(821 | ) | (65 | ) | (2,799 | ) | (3,103 | ) | ||||||||
Total EBITDA
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$ | 6,007 | $ | 9,442 | $ | 23,652 | $ | 25,989 | ||||||||
* Intersegment revenue is attributable to services performed by Property and Portfolio Research Ltd., a wholly owned subsidiary of Property and Portfolio Research, Inc. (PPR), for PPR. Intersegment revenue is recorded at what the Company believes approximates fair value. U.S. EBITDA includes a corresponding cost for the services performed by Property and Portfolio Research Ltd. for PPR.
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** International EBITDA includes a corporate allocation of approximately $100,000 for each of the three month periods ended September 30, 2011 and 2010, and approximately $200,000 and $400,000 for the nine months ended September 30, 2011 and 2010, respectively.
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Reconciliation of Non-GAAP Financial Measures with 2010-2011 Quarterly Results - Unaudited
|
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(in millions, except per share data)
|
||||||||
Reconciliation of Net Income to Non-GAAP Net Income
|
||||||||||||||||||||||||||||
2010
|
2011
|
|||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | ||||||||||||||||||||||
Net income
|
$ | 2.9 | $ | 3.3 | $ | 3.4 | $ | 3.8 | $ | 4.5 | $ | 2.6 | $ | 2.3 | ||||||||||||||
Income tax expense, net
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2.5 | 1.4 | 2.9 | 3.4 | 2.8 | 1.5 | 0.9 | |||||||||||||||||||||
Income before income taxes
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5.4 | 4.7 | 6.3 | 7.2 | 7.3 | 4.1 | 3.2 | |||||||||||||||||||||
Purchase amortization and other related costs
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1.2 | 0.8 | 0.9 | 0.9 | 0.8 | 0.8 | 0.9 | |||||||||||||||||||||
Stock-based compensation expense
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2.0 | 1.9 | 1.8 | 2.6 | 2.1 | 2.2 | 1.9 | |||||||||||||||||||||
Acquisition related costs
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- | - | - | - | 0.3 | 5.0 | 5.8 | |||||||||||||||||||||
Restructuring and related costs
|
- | 0.1 | 1.3 | - | - | - | 1.5 | |||||||||||||||||||||
Headquarters acquisition and transition related costs *
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0.1 | 1.0 | 1.2 | 0.3 | - | - | - | |||||||||||||||||||||
Settlements and Impairments
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- | 2.8 | - | - | (0.3 | ) | - | (1.2 | ) | |||||||||||||||||||
Non-GAAP Income before income taxes
|
8.7 | 11.3 | 11.5 | 11.0 | 10.2 | 12.1 | 12.1 | |||||||||||||||||||||
Assumed rate for income tax expense, net **
|
40 | % | 40 | % | 40 | % | 40 | % | 40 | % | 40 | % | 40 | % | ||||||||||||||
Assumed provision for income tax expense, net
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(3.5 | ) | (4.5 | ) | (4.6 | ) | (4.4 | ) | (4.0 | ) | (4.8 | ) | (4.9 | ) | ||||||||||||||
Non-GAAP Net Income
|
$ | 5.2 | $ | 6.8 | $ | 6.9 | $ | 6.6 | $ | 6.2 | $ | 7.3 | $ | 7.2 | ||||||||||||||
Non-GAAP Net Income per share - diluted
|
0.25 | 0.33 | 0.33 | 0.32 | 0.29 | 0.33 | 0.28 | |||||||||||||||||||||
Weighted average outstanding shares - diluted
|
20.6 | 20.6 | 20.7 | 20.9 | 21.0 | 22.4 | 25.3 | |||||||||||||||||||||
*Includes building depreciation
|
||||||||||||||||||||||||||||
** A 40% tax rate is assumed in order to approximate the Company's long-term effective corporate tax rate.
|
||||||||||||||||||||||||||||
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
|
||||||||||||||||||||||||||||
2010 | 2011 | |||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | ||||||||||||||||||||||
Net income
|
$ | 2.9 | $ | 3.3 | $ | 3.4 | $ | 3.8 | $ | 4.5 | $ | 2.6 | $ | 2.3 | ||||||||||||||
Purchase amortization
|
1.2 | 0.8 | 0.9 | 0.9 | 0.8 | 0.8 | 0.9 | |||||||||||||||||||||
Depreciation and other amortization
|
2.4 | 2.5 | 2.4 | 2.5 | 2.6 | 2.4 | 2.1 | |||||||||||||||||||||
Interest income, net
|
(0.2 | ) | (0.2 | ) | (0.2 | ) | (0.2 | ) | (0.2 | ) | (0.2 | ) | (0.2 | ) | ||||||||||||||
Income tax expense, net
|
2.5 | 1.4 | 2.9 | 3.4 | 2.8 | 1.5 | 0.9 | |||||||||||||||||||||
EBITDA
|
$ | 8.8 | $ | 7.8 | $ | 9.4 | $ | 10.4 | $ | 10.5 | $ | 7.1 | $ | 6.0 | ||||||||||||||
Stock-based compensation expense
|
2.0 | 1.9 | 1.8 | 2.6 | 2.1 | 2.2 | 1.9 | |||||||||||||||||||||
Acquisition related costs
|
- | - | - | - | 0.3 | 5.0 | 5.8 | |||||||||||||||||||||
Restructuring and related costs
|
- | 0.1 | 1.3 | - | - | - | 1.5 | |||||||||||||||||||||
Headquarters acquisition and transition related costs ***
|
- | 0.7 | 1.3 | 0.4 | - | - | - | |||||||||||||||||||||
Settlements and Impairments
|
- | 2.8 | - | - | (0.3 | ) | - | (1.2 | ) | |||||||||||||||||||
Adjusted EBITDA
|
$ | 10.8 | $ | 13.3 | $ | 13.8 | $ | 13.4 | $ | 12.6 | $ | 14.3 | $ | 14.0 | ||||||||||||||
*** Does not include building depreciation
|
Reconciliation of Forward-Looking Guidance, Net Income to Non-GAAP Net Income
|
||||||||||||||||
(in thousands, except per share data)
|
||||||||||||||||
Guidance Range
|
Guidance Range
|
|||||||||||||||
For the Three Months
|
For the Twelve Months
|
|||||||||||||||
Ended December 31, 2011
|
Ended December 31, 2011
|
|||||||||||||||
Low
|
High
|
Low
|
High
|
|||||||||||||
Net income
|
$ | 1,600 | $ | 3,500 | $ | 11,100 | $ | 13,000 | ||||||||
Income tax expense, net
|
1,000 | 2,100 | 6,100 | 7,200 | ||||||||||||
Income before income taxes
|
2,600 | 5,600 | 17,200 | 20,200 | ||||||||||||
Purchase amortization and other related costs
|
1,200 | 1,100 | 3,800 | 3,700 | ||||||||||||
Stock-based compensation expense
|
2,000 | 1,800 | 8,200 | 8,000 | ||||||||||||
Acquisition related costs
|
6,000 | 5,000 | 17,000 | 16,000 | ||||||||||||
Restructuring and related costs
|
- | - | 1,500 | 1,500 | ||||||||||||
Headquarters acquisition and transition related costs
|
- | - | - | - | ||||||||||||
Settlements and Impairments
|
- | - | (1,500 | ) | (1,500 | ) | ||||||||||
Non-GAAP Income before income taxes
|
11,800 | 13,500 | 46,200 | 47,900 | ||||||||||||
Assumed rate for income tax expense, net *
|
40 | % | 40 | % | 40 | % | 40 | % | ||||||||
Assumed provision for income tax expense, net
|
(4,720 | ) | (5,400 | ) | (18,480 | ) | (19,160 | ) | ||||||||
Non-GAAP Net Income
|
$ | 7,080 | $ | 8,100 | $ | 27,720 | $ | 28,740 | ||||||||
Net Income per share - diluted
|
$ | 0.06 | $ | 0.14 | $ | 0.47 | $ | 0.55 | ||||||||
Non-GAAP Net Income per share - diluted
|
$ | 0.28 | $ | 0.32 | $ | 1.18 | $ | 1.22 | ||||||||
Weighted average outstanding shares - diluted
|
25,300 | 25,300 | 23,500 | 23,500 | ||||||||||||
* A 40% tax rate is assumed in order to approximate the Company's long-term effective corporate tax rate.
|
||||||||||||||||
** Projections exclude impacts of the consolidation of LoopNet and related costs that are contingent on closing that transaction.
|
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