Ladies and gentlemen, thank you for standing by. Welcome to the CoStar Group First Quarter Earnings Conference Call. [Operator Instructions] Your Hosting Speaker, Director of Investor Relations, Rich Simonelli. Please go ahead, sir.

Thank you, operator, and good morning, everyone. Welcome to our first quarter 2014 conference call and we're delighted that you've joined us today. And we're delighted that you joined us today. Before I turn the call over to Andy, I have some really important information for you. I know many of you heard this before, but there a lot of new things that you want to pay close attention to. Certain portions of this discussion contains forward-looking statements, which involve many risks and uncertainties that can cause actual results to differ materially from such statements. Important factors that can cause actual results to differ include, but are not limited to, those stated in CoStar Group's April 23, 2014 press release on the first quarter results and with our filings with the SEC, including our Form 10-K for the period ended December 31, 2013, under the heading Risk Factors. All forward-looking statements are based on information currently available to us on this call, and we assume no obligation to update these statements whether as a result of new information, future events or otherwise. As a reminder, today's call is being broadcast live and in color on the Internet at costar.com. A replay will be available approximately 1 hour after the call concludes and will be available online for approximately 30 days. To listen to the replay, call (800) 475-6701 within the United States or Canada or (320) 365-3844 outside the U.S. The access code is 323568. I'll now turn the call over to Andy Florance.

Rich, maybe you can help me figure how the airplane seatbelt works.

You just clasp the buckle.

Welcome, and thank you for joining us. I'm very excited to talk with you today about the many positives we are experiencing at CoStar right now. We had a very strong first quarter of 2014. Revenue for the first quarter 2014 was $119 million. It's an increase of approximately 15% over the first quarter of 2013, as we continued to drive mid-teens organic growth. For the same period, EBITDA was $27 million, adjusted EBITDA was $37 million, which is an increase of 44% year-over-year and represents a margin of 31%. Our 12-month trailing renewal rate was a very high 93% and 98% for customers who've been with us for over 5 years. Our business is doing exceptionally well as sales continue to be strong across the United States, Canada and the United Kingdom. The investment we made in the expansion of our field sales force is beginning to yield results as we recorded our strongest ever net new sales month. During the first quarter of 2014, the United Kingdom continued its profitability and drive towards margin expansion. Our LoopNet team had a very strong first quarter of net new sales, and the LoopNet marketplaces experienced all-time traffic records during the quarter. Most importantly, I'm also very enthusiastic about the huge potential we have with Apartments.com and the amazing progress we're already making. The more I learn about Apartments.com, the more excited I am about the opportunity we have here. Our goal with Apartments.com is to help 10 million Americans each and every year, rent a better home. It's hard to believe that it's only been 3 weeks since the close of the transaction. It feels like we have accomplished more in 3 weeks than we typically accomplish in the first 90 days plus of an acquisition. We have leveraged CoStar,…

Thank you, Andy, I appreciate that, I guess. So the $0.5 billion, I guess, so when you look at the midpoint of next year's or next quarter's guidance, it's over $0.5 billion, so $476 million, so approaching $600 million already. So look at that. And the call, is not even over yet. We just upped the numbers. As Andy mentioned, we're very pleased with our performance in the first quarter of 2014. On the heels of an outstanding annual result in 2013, we reported 26% growth in annual revenues. 2014 is off to a great start the, growing organic revenue in the midteens, expanding EBITDA margins year-over-year and closing the Apartments.com acquisition. The company is clearly positioned for sustained, long-term growth. CoStar's information analytics and online marketplaces continue to show strong revenue growth and the ongoing success of the LoopNet integration an d cross selling efforts continue to be a big contributor to growth in both revenue and earnings. Today now, I'm going to primarily focus on the year-over-year comparisons for the first quarter of 2014, which is prior to the Apartments.com acquisition, and then I'll focus on our outlook for the remainder of 2014, which incorporates the Apartment.com business into our results. Starting with CoStar Group's results, for the first quarter 2014, the company reported $119.1 million of revenue, an increased of approximately 15% compared to $104 million last year. This revenue growth was driven by strong information services performance, strong revenue growth from LoopNet in all of our marketplaces. EBITDA increased $19.4 million to $27 million in the first quarter of 2014, up 7.6% or as my boss' favorite headline is, 255% from the prior year. He loves that stat, sorry. It kills me. We reported adjusted EBITDA of $37 million for the first quarter of 2014, which…

$1.25 each.

Now, as I've been here for 17-plus years going 18 years and we've done 20-some deals, we've obviously equated a little over a deal a year and we've obviously done a couple of deals in the past couple of years. So if you really want my personal opinion, I'd be shocked at 2018, in 5 years from now, if we haven't done other accretive acquisitions and we get to $1 billion sooner than that. And as you'll calculate from your models from my 2016 exit rate and the 2018 rate, that equates to midteens growth on a business that's getting much larger each year. So clearly, I'm confident in where we're going. And with that, I'd like to thank you all. We look forward to sharing our progress of these goals on you in the coming quarters, and I'll open it up for questions.

[Operator Instructions] And we do have a question from the line of Brandon Dobell, William Blair. Brandon Burke Dobell - William Blair & Company L.L.C., Research Division: A couple of things. First, our focus on, let's call it the core business, for a second, the net new sales figures you guys gave, maybe some color about what's driving that. Is it cross-sell for existing customers? Is it adding new customers? I guess I just want to understand, I guess, the basic components of that and how we should think about those major components contributing to increase net new sales as you work through the balance of this year?

It's actually across the board. We've had 1 or 2 months where virtually everything is performing well and we're getting contribution, both from the U.K., from Virtual Premise, from LoopNet, from CoStar. It's a blend of new and upsell accounts. Both U.K. and U.S. are in this mode of upgrading people from a low-end platform to a high-end platform. In the case of U.S., it's LoopNet information, CoStar information as in the in U.K., it's focused to CoStar Suite. So that's continuing. It's both -- it's in the brokerage area and the debt and equity area. There's a decent amount of inter brand-related sales like the Jones Lang LaSalle sale with Virtual Premise. One of interesting things we're seeing is that as we bring in these newer salespeople in the field, they are selling a disproportionately higher percentage of LoopNet. So they're selling the newer folks are looking at all the different things they can choose from to sell and they're selling about 50% more LoopNet per person than the traditional salespeople. So I like it -- I like what we see in terms of it being all cylinders and not one big driver. Brandon Burke Dobell - William Blair & Company L.L.C., Research Division: Maybe to take that last point there, Andy, one step further. Is there any concern among the team that, as you add more salespeople, they kind of find the path of least resistance to new customers, but that path entails a lower average selling price. So therefore, relative to the size of business, that you've got to run faster in sales force headcount to get the same incremental dollars added in that new sales because they're focusing on, again, the products that are $200, $500 a month, as opposed to the multi thousand dollar products in the core CoStar database?

No, I wouldn't say that. I don't think that's the case. So in that general sales force, they've always had the option to run the spectrum from $295 a month to count on up to these multi thousand dollar accounts. The bulk of sales have always occurred around that $500, $590 a month of sale. And as I mentioned, newer things like the broker ads, they're coming in exactly $590 a month. So we're seeing a lot of annual business coming into LoopNet and a lot of business pricing at the $590 at LoopNet and pricing of the $590 a month in the CoStar. So really, the only stuff that comes in consistently at a $1,000 of month is the -- officially $1,000 a month is debt in equity sales. Newer markets where you are bringing on a Jones Lang LaSalle Toronto, those come in about $1,000 a month or those bigger numbers. So it actually it's pretty good and overall productivity numbers are looking fairly solid and there's no discussion. I'm hearing zero discussion of anything that looks like salespeople struggling to find room to sell because of the growth of the sales force. There's -- they're not bumping into each other in any way, shape or form. And as we bring in Apartments.com, the size of that market -- if you look at the size of that potential market in year 1, we're really focusing on probably 6 or 7 markets we think have exceptional growth potential and we don't want to grow that sales force too quickly. But as we go into 2015, we will definitely be doing more integration between these sales forces and giving them even more in their toolkit to sell. And then we think all of these products are pretty good price points there -- the ROI on field salesperson across all these products looks really good. So we're happy with what it looks like and improving what these ROIs look like across these businesses by different approaches to how our packaging contracting and selling them. Brandon Burke Dobell - William Blair & Company L.L.C., Research Division: Okay. I know you had spoken of Apartments.com for a second. I think it's pretty clear to me how you guys can make their business better, like faster growth, more salespeople, better tech investment, those kinds of things. What do you view as the opportunity for what Apartments does well or does in general to make the core CoStar's side of the house or the LoopNet side of the house better? So that -- is there a 2-way flow of things that make both institutions or organizations better or is it you bringing CoStar competencies over to the Apartment side?

No. There's -- there is a couple of things that stand out from Apartments.com. I mean, I won't be able to list them all roughly back but there are some nuances in their marketplace designed things they focus on, and in a way they take that to their customers. So they really bring a lot of their marketplace strategy back to quantifying the actual leads deliver the way Google gives you a natural conversion rate on your SEM campaigns. So they really try to quantify for their customers the actual lead flow they're pulling in. I think that's very viable across all of our marketplace platforms and even useful for our peer brokerage, CoStar Property platform. The other thing I really like about the firm, that comes back our way is, I like their high touch, continual sort of customer connection on the advertising side. If you bring Brad Long's approach to a high-touch customer service into the LoopNet's side of the market, I think that will re-energize -- like now, like -- not like LoopNet needs to be reenergized. LoopNet's certainly doing great. But when you bring that sort of Apartments.com customer focus and high touch continuously, quantifying for the customer face-to-face, to kind of results they're getting for their marketing campaigns from us. When you bring that asset to and that culture to the LoopNet sales process, I think the LoopNet sales process lights up. So I think that's exciting. And then, there are -- these folks have been thinking a lot about how to improve their marketplace and there are some good ideas that they bring to the table. So it's a good mix. And CoStar, LoopNet and Apartments, they're very different organizations, and they historically, very different organizations. And if you can tap to the strengths of each, you'll end up with a pretty strong mixture. It's a nice melting pot. Brandon Burke Dobell - William Blair & Company L.L.C., Research Division: It's a nice melting pot. All right. Then final one for me, you mentioned the branding changes I think 30 down to a smaller number. With either from a technology point of view, sales point of view, and get -- maybe an organizational point of view, what's that going to look like for you internally? Is -- does the branding stuff make it easier for the sales guys to sell? Or does it allow you to reduce the number of platforms that you have to support internally? I guess I'm just trying to figure out that in what you guys would see internally, or what your employees would see internally versus what we're going to see externally.

Right. I think some of it is subtle but important so as the employees see these more logical naming of the products in connection to the product that reminds them that we're 1 team and that we have to put the customer first and then it's about delivering the best results to the customer, not maintaining the nuances of some old -- older brand or strategy that's now outdated, in the context of 1 unified company. So for instance, without a doubt a customer who is investing in apartment buildings, wants to be able to have 1 log in to access anything PPR can do for them, anything CoStar can do for them, anything LoopNet does for them and anything that Apartment.com does for them. So our -- we are on the central theme here is to eliminate limited software platform and get down to fewer and fewer software platforms, 1 password for the customer across the whole family, be it Virtual Premise, be it real estate manager, be it our CRM solutions across the whole premise. So the fewer platforms, more focused on the customer not the brand delivering the value and tighter integration between these different product areas and it does make it easier for the salesperson to increase the confidence of the salesperson that this is one of the products I carry and the salesperson may not be able to sell our risk analytics product to somebody with their level of experience or product expertise, but they have a good relationship with the prospect they can develop the interest than bringing a specialist. And I think having it all in one common brand gives them greater confidence in doing that. So I think they'll be -- it's an expensive process. I tell you, if you look at the rebranding, and you look at the different treatments visually and you look at the taglines, it's obvious. It couldn't be more obvious and I've been living in the new brand now for about 6 months even though it's not released and I go back and I'm proactive [ph] I'm confronted with what our reality is today. This what the new brand looks like, and I can't believe how bad but we have today looks compared to where we're going. So that's way too long answer for you. I apologize.

Next question is from the line of Brett Huff, Stephens, Inc.

One housekeeping question, Brian. You mentioned a metric 6% and 23% relative to Loop, and I just didn't understand what that metric was. Can you just reiterate, I apologize, to ask you to do that, you just reiterate what that meant?

6% and 23%?

Yes.

Was that talking about the -- I think I was talking about the adjusted margins increasing by 6% from 31% to -- 31.1% to 24.7%. So this is talking about the fact that adding 6.4% of EBITDA, $176 million run rate is a pretty large number year-over-year.

And then the -- I know that we're not calling out the Loop cross sales specifically anymore. But I do think there is a question that we've been asked a lot is, give us a sense of the Loop cross sale performance, whether it's -- the conversion rate still sort of mid-30s or just give us of maybe a qualitative view on -- should -- did that taper? that should ask the that taper in 1Q?

I don't fit believe it did taper. So to be honest with you, I did not have numbers from this month on that. But my sense of it is that it would not have tapered. It would've continued to increase. So we hit a point, maybe about 3 months ago, where I was seeing significant improvement in the sales force's ability to give this up upsell conversions. I think it's just part of the sales force culture now and it's north of that -- it's probably in the upper 30s on conversion rate. The interesting thing is, I also see them beginning to be good at going into a firm who's been using LoopNet very pleased peacefully, like there was a big firm in the big firm in Seattle who had a huge firm in -- not in Seattle, huge firm in Salt Lake City that had been purchasing LoopNet ad hoc, individual accounts for years and years and years across a hundred different brokers. And the salesperson went in there, and his first -- has successfully upsell them to a bigger purchasing plan on annual agreement across all the brokers in that firm and then they're already migrating into moving into, now moving them up to the CoStar information contracts. So I think they're actually getting better at it and the sales force is coin-operated in that if there's money to be gotten. That's where they go and there's clearly money there. And the -- we -- the bottom line is, we still only captured 25% -- 20% of that potential upsell and the opportunity that grows faster than we're capturing, which is good news, and that would be a specific example of the Salt Lake, where the first and first created the LoopNet sale in order to get the CoStar upsell. So it's going -- and that continues well.

Okay. And then, the -- on the $0.19 of sales and marketing spending on Apartments.com you all called out. I think one of the -- since you bought Apartments.com, I think many view that as a little more consumer-oriented than some of the other things you've done just because you're pitching to a renter to come to your site. Can you talk a little bit about the persistence of the need to spend on not -- building the brand or drawing people, drawing eyeballs to the site et cetera, and kind of how that fits in? Is that $0.19 kind of -- whatever that number is, is that ongoing kind of thing or what is the -- what are your thoughts on that. Is my question clear?

Yes, it is. So it is -- Apartments.com is more similar than dissimilar to what we're already doing. So all of your revenue is coming from very traditional commercial real estate professionals. And a huge piece of that incremental spend is connected with strengthening our relationships, increasing our sales force so we can reach out to more of these traditional folks who own, manage and operate thousands and thousands of these income-producing rental properties. So a lot of money is going to basically ramping up a level of underinvestment we saw in just selling the product B2B. There is some investments being made in increasing awareness of Apartments.com to the consumer audience and driving more traffic. I'd actually put that at a less than half -- Brian might have a better idea of exactly what it is. The more important changes, the much more important changes to reach in the consumer with Apartments.com are improving the consumer experience at the website. There's some low-hanging fruit to be achieved by improving SEL and some SEM strategies and crosslinking between the different sites. But the most important thing is building a better website with more content and giving the consumer better experience, which I think we're well positioned to do and that is not about massive, massive, massive continued budgets. So this is an asset that realistically, look at Apartments.com, who was owned by a consortium of well-known newspapers. And not surprisingly, those well-known big newspapers are focused on cash flow and the businesses run for cash flow sometimes at the cost of potential returns 18 months up. It's just -- there are a couple of pieces on that, too. So essentially Brad, I think what you're also asking is, yes, I mean, I think that's investment in the business. So if…

Great, that's helpful. And then last question is just another housekeeping, sorry. But you guys had called out, maybe sunsetting some loop revenue of $10 million to $12 million this year and also spending $0.10 to $0.12. I think mostly on 1Q, on supporting the launches in November, if I'm remembering right. What is the status of those? What was in the quarter? What was pushed out, et cetera?

Sure, it's Brian. So yes, I mean, I think a lot of it was basically branding and Andy, obviously talked pretty extensively about branding. So I think for the most part, we're sort of where we thought we were on the investments. I mean, I'd -- is there a couple of dollars that go between Q1 and Q2? Yes, possibly. But obviously, we've spent a lot of time on this branding project and a lot of money.

And there are 3 or 4 product areas there where we look and it and about 3 product areas where we look it when we think that will generate millions in revenue. We think ultimately, it's suppressing our earnings over an 18-month horizon out. And it's always difficult for any company to say, okay, going to give up this $3 million, I'm going to shoot those $3 million of revenue because each quarter comes around, I'm supposed to tell you about the maximum amount of revenue this quarter but clearly, these things or not the right investments. Now there's -- I don't want as you want to give any potential competitor anywhere, any kind of heads up on how they try to capture any of the revenue we're shooting. So I'm not going to go into detail on what we're shooting. But we're just doing that good character thing where you shoot the stuff that's not right for the company over 18 months or more.

And the next question is from the line of Andrew Jeffrey, SunTrust.

Just a couple of quick ones for me. I guess, we're in the afternoon now, I think. With regard to the sales organization, one of the things I didn't hear you necessarily call out today is the efforts you spent in the customer base beyond brokers into property owners and managers and, so forth. It sounds like you're asking the salespeople to do a lot of things, kind of walk and chew gum at the same time. Can you just talk about how as they come on and you train them and they sort of get their feet wet with CoStar with priorities are and perhaps some of the sort of end-market expansion efforts, they spend a lot of time talking about the last year or 2. Maybe, we're looking more into '15 to hear about traction there and this is more about a year of just ramping shelves host to get their productivity up on its core products?

Sure. So this is fairly dramatic and appropriate expense of sales force, bringing -- coming together at LoopNet just made it crystal clear. We can look at where LoopNet had success selling to commercial real estate professionals. We saw a complimentary and sort of inverse pattern. So we realized, like as example, that we had a West LA office and we had tremendous penetration downtown LA, Orange County, West LA, on up into up towards Santa Barbara. We didn't have an office in Inland Empire, LoopNet picked up 6,000 customers over in Inland Empire. It makes it obvious we should have an Inland Empire office and several salespeople there in the combined companies. So right off the bat, coming out of LoopNet, we knew we had to increase the number of territories. We could see, it was one of the great exhaust benefits of the LoopNet acquisition was getting a phenomenal transparency in how to optimize your sales force or where you should be investing for your sales force. So setting the goal of having this larger footprint of sales force and more field sales rather inside sales in your investment mix, we had to double the size of our management team, the sales management team. And we brought in some tremendous talents over the past year in the management team. So when I look at the experience set from companies like LexisNexis, Reuters, paychecks, all sorts of information, subscription, product areas, we've really added some horsepower to our the sales management team. I -- if you're on our sales management team, and you talked to one of these folks, you will hear that the CEO of our CoStar is maniacally focused on onboarding these salespeople and having these sales managers participating in the field, intensively, one-on-one with these new…

All right. And then, just to get a little more granular on the Apartments synergies and timing of marketing spend, could you give us a sense of when we're going to see that redesigned website and whether the marketing spend and sort of the associated revenue contributions that Brian laid out will be -- is that a second quarter event with the spend coming hard on the heels of the redesigning? What sort of the timing as far as Apartments beginning to contribute?

It spread across the year and there'll be incremental releases of -- incremental improvement releases throughout the year. And where the biggest impact of the release is in 2015. So smaller incremental releases in '14 and bigger impact in '15 and the spend relatively smooth throughout the year.

Yes, the spend is smooth but what I will say the spend is immediate. So we've owned them for 3 weeks and I think we have a class of 20-some salespeople that we've already hired for them. So we're already ramping up -- we've already made the immediate spend. I mean, like literally on Day 1 in the selling and marketing area, and that's why I have enough confidence to put in the revenue for this year and again, more than I had, more than we actually did in LoopNet in the first 9 months because obviously we have a blueprint and a game plan to follow and we feel very confident in that. So the spend is immediate whereas waited with LoopNet that ramped up a bit more. It's immediate and pretty consistent.

Okay. So the website redesign really need, as we look out to '15 and beyond, we got to start to get some of the more explicit advertising revenue perhaps that you anticipate from March?

Yes, correct.

Your next question is from the line of Bill Warmington, Wells Fargo.

Now I think I should note this just because it was over an hour ago that -- but I just wanted to compliment Rich on his dramatic reading of the Safe Harbor. And to thank him for those new legal tidbits. All right. So the -- I saw -- one of these I'd like to ask you to do is to talk about the kind of the normalized contribution from Apartments.com, on the EBITDA line in 2014. Because we had -- I think components -- you gave some of the components but it sounds like there were some other components there, too, that you didn't necessarily break out. If we look at the $15 million increase in the EBITDA guidance, and you have about $9 million coming for specific marketing expenses and then another -- I assume about $2 million for that $2 million to $3 million discontinued revenue and then probably another $5 million that you would then deduct from that because that was kind of your -- that was your beat in the first quarter, if you will, get you to around $20 million to $25 million -- $20 million to $21 million in what a normalized contribution from Apartments.com without all those special expenses in there would've been. Is that a fair way of looking at that?

Yes, I mean, I think that's pretty fair. I mean, again, Bill, I didn't get into the multitude of things where we are investing in. And then again, I mean, there's just a whole back-office operation in moving them. We're moving them into new space by the end of May. We've got new servers. And so there's a lot of detail in there but what I do was I broke out the big pieces, so after you get past these big pieces, it's 50,000 here, 200,000 there, 10,000 there, lots of it, such as increased travel. We've got -- at any given time, if you go to the JW Marriott in the loop, and you walk through the lobby, you will undoubtedly in the morning and it night see on the high top at least 5 to 7 CoStar people every single night. CoStar, LoopNet people. So I didn't go through a break a lot but the way you did it is about the right. I mean, I included upside for the CoStar business, I can go through all the different spending on the Apartments business but yes, generally, you're about right. If you took their EBITDA and you took 3 quarters of it, you're going to be around $20 million, $20 million, $21 million. So your sort of map is generally correct, plus or minus $1 million here, there.

All right. And then, I was very glad that you pointed out the -- or you set the EBITDA margin target exiting fourth quarter '16 at 40% or better. The question I have is, the second quarter guidance is more like, it's on the 30%. And so, how should we think about the progression in that EBITDA, not so much in '14 because I think you've given us that guidance but it implies -- how to think about that in '15.

Yes. And so, I mean, it's -- what I would say is, as we sort of talked about on the call, there's investments upfront here, right? And so we just talked about a lot of those. And then similar to CoStar, as you invest in their sales force this year, it will also be ramping up all the way through next year. So I think next year is -- and will be, again, incrementally releasing new releases on the development website, and as Andy said, more to come in '15. So I think that the steeper slope of the ramp is out in '16. But I expect nice steady growth through '15, also, but obviously, I believe, the steeper ramp both on revenue and earnings will be in '16 as you sort of start to see the results of that, right? So you start seeing results in early first half of '15 and as you move through '15, you'll then get those full year impact of those in '16, right? You're only to get partial of your impacts from upside of those. So I would say, we still expect nice growth, top and bottom line, obviously in '15 with the steeper ramp in '16.

And just to be clear, Bill, none of these investments were my idea. As Brian so incredibly bullish on the opportunity insist that I invest in it.

Does Brian get credit for the granola bars, too? $5,000 in granola bars?

That is clearly Andy because I'm the most unhealthy eater at the company. But just to remember, Bill, the easiest way for you to build your 5-year model is just e-mail Andy at costar.com. He will just send it over to you because he always let the cat out of the bag. I can't keep anything a secret.

Well, I wanted to ask on the revenue side. I needed to ask about March, because you did call it out as the strongest net new sales month that you've seen. And I just wanted to ask, we know it was a single month but I just want to know if you were to annualize that level, what kind of a number we'll will be looking at? We know it's better than $15. million. $20 million?

Yes, I mean, Bill, I'm not even going to go there and annualize 1 month. As we know, numbers go up and down from month-to-month. Obviously, we have a very new sales force again, half of the sales force that's experienced is spending a lot of time with half the sales force that's not. So, I believe, we will see a steady ramp this year with obviously someone's being better than others. It's obviously encouraging to us but I would -- I want to see how we do, obviously as we stream together a couple more quarters. And even with Apartments, I mean, if you look at it, I added it in the revenue. I added growth to them, I added synergies of to. I wasn't cheap on what I put in my model for them. And I would like since we've only -- it's only been 22 days since closed, I'd like to at least get a quarter or 2 behind me before sort of like -- even as we report Q2 and Q3, I hope people haven't people jacking up their '15 numbers and jacking up their '16 numbers because it's like, let's get a little experience. Clearly, I have a lot of confidence, or I wouldn't have done that. And clearly, when you look at the blueprint on LoopNet and we're using a lot of that blueprint on Apartments, we feel really confident in success here. So we're -- I mean, I can't wait for the next quarter and the following quarter number to report. I think it's going to be great.

One last question for you, then. Then, in terms of your total addressable market. Now that you've acquired Apartments.com, how would you size that and how -- the first is, how you would size that and then second is, how would you give us and proud brush strokes how you got there?

Well, without being terribly creative, I believe that the apartment communities who we researched, and identified over the last several years are already spending well over $1 billion in digital marketing. And with a very, very fragmented group of players. Some where exactly head-to-head competitors with Apartment.com. and then there's some variations of roll your own SEM strategies and the like. But it's unusual to look at a space like this and at this point, see well over $1 billion of actual spending and we're going to identify these various budgets. It is over $5 billion in marketing for apartment communities in total in all the different vehicles, concessions, direct spend, and the like, or locator fees, and the like. But if you put the market between $1 billion and $5 million, you're capturing the whole information side of the business, which is equally important to us. So massive underwriting. It's a multitrillion dollar asset class, lots of underwriting, lots of buying and selling these assets, the securitization of these assets. There's the REITs, there's the individual entrepreneurial owners. There's the larger institutional owners. And then there are, there's a whole broad ecosystem. There's some very large hard-quality companies that are producing software solutions for these same multifamily owners. So you definitely have a $10 billion space here. So if I look at just digital services to the apartment space, the direct spend is already probably approaching $2 billion. So it's a decent size space to plan. And the nice thing is, I like the fact that in a Apartments.com area, it's still highly fragmented.

Our next question is from the line of Peter Lowry, JMP Securities.

Just one quick question here. Andy, you mentioned that the more you learn, the more excited you are about the Apartments.com opportunity. Maybe you could share sort of how your view on that opportunity has changed or what you learned since you announced the acquisition?

Well, you're always going into an acquisition like this. You do all the research you possibly can. You -- we understand the market from a lot of our experiences at LoopNet and BizBuySell, Lands of America. We understand the multifamily space from the information side. As you get in there, and you get to work side-by-side with the management team, you actually explore some of details and nuances of what's occurring. You start to spot things that you've seen before. You see opportunities that -- anytime you have 1 management team in the company, running it for a decade or 15 years, that's easy for another management team with the difference of set of experience to come in and see opportunities. And so you just see just the whole plethora of financial opportunities to go after, that could be sales tactics, marketing tactics, pricing tactics, a lot of the upside we've got from LoopNet was just how you price the products more effectively to reach the customer's budget, how the customer wants to spend money. So that is certainly the case with Apartments.com. And then also, my own personal -- I'm a risk-averse individual and I don't like to mess these things up and the more you learn, and the more you see the teams working together, and you see more see people moving towards taking Apartments.com to the next level, you start to feel the risks are starting to fall away from me and I feel more confident about the potential here and that probably is an understatement about how a number folks feel about what could be built here with Apartments.com given the talents of the management team talents we've got across the spectrum. There are plenty of really good people here at CoStar to go execute something like this to make up for any shortcomings I have.

So with that, we're going to go ahead and wind up the call, and thank you very much for joining us and we'll look forward to speaking with you on next quarter's earnings call. Thank you very much and good job.

Thank you. Ladies and gentlemen, that does conclude your conference. We do thank you for joining while using AT&T executive teleconference. You may now disconnect. Have a good day.