CoStar Group, Inc. (CSGP) Q4 2025 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to the Q4 and year-end 2025 CoStar Group Earnings Conference Call. [Operator Instructions] Please be that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Rich Simonelli, Head of Investor Relations.

Hello, and thank you for joining us to discuss the full year and fourth quarter 2025 results of CoStar Group. Before I turn the call over to Andy Florance, CoStar's CEO and Founder; and Chris Lown, our CFO, I'd like to review our safe harbor statement. Certain portions of the discussion today may contain forward-looking statements, including the company's outlook and expectations for the first quarter, full year 2026 and beyond. These statements are based on current beliefs and assumptions, and forward-looking statements involve many risks, uncertainties, assumptions, estimates and other factors that could 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 press release issued earlier today and in our filings with the SEC, including our annual report on Form 10-K and quarterly reports on Form 10-Q included under the heading Risk Factors in these filings as well as other filings with the SEC available on the SEC's website. All forward-looking statements are based on the information available to CoStar on the date of this call. CoStar assumes no obligation to update these statements, whether as a result of new information, future events or otherwise, except as required by applicable law. Reconciliation to the most directly comparable GAAP measure or of any non-GAAP financial measure discussed on this call as shown in detail in our press release issued today, along with the definitions of those terms. Press release is available on our website located at costargroup.com under Press Room. Please refer to the press release on how to access the replay of this call. So remember, it's one question during the Q&A session, so make it a good one. Be good. And with that, I'd like to turn the call over to our Founder and CEO, Andy Florance.

I think today, we're going to do 2 questions. Nice. Good afternoon, everybody. Revenue for the fourth quarter rose 27% year-over-year to $900 million. That's an increase of $191 million from $709 million of revenue in the fourth quarter of '24. Revenue for '25 was $3.2 billion, up 19% from $2.7 billion in 2024. This is our 59th consecutive quarter of double-digit revenue growth. Adjusted EBITDA of 2025 was $442 million, up 83% from $241 million in 2024. This result positions us well to achieve our guidance range of $740 million to $800 million full year adjusted EBITDA in 2026. With the heavy lifting of Homes.com national brand launch behind us, we are entering a phase of significant EBITDA expansion. We delivered our strongest year ever for annualized net new sales bookings in 2025, reaching $308 million, up 23% from 2024. Fourth quarter net new bookings were up 42% year-over-year. We consider CoStar, LoopNet, Real Estate Manager, Ten-X, BizBuySell and elements of Matterport as commercial real estate-related businesses and their operations are connected and related. These commercial businesses as a group grew 20% year-over-year and generated $471 million of revenue in the fourth quarter of '25. For the full year, the commercial business grew 18% to reach $1.79 billion for the full year of 2025. The U.S. commercial real estate market is showing good recovery from the extraordinary headwinds that experienced in the COVID years. After years of massive negative absorption of office space, it has now turned positive in the past 2 quarters, and -- it's been positive for the past 2 quarters and vacancies are clearly dropping. After the ultra-low COVID vacancy rates, industrial vacancy rates are normalizing. With the leasing fundamentals stabilizing, commercial sales volumes have climbed 30% year-over-year and in fact, now are above long-term averages. This year economy is shifting from headwind to tailwind. For our disclosures moving forward, we have combined CoStar with what we've previously referred to as Information Services. Any reference to CoStar now includes our Information Services products. As the CRE economy improves and we continue to expand the product offering, CoStar Group has -- CoStar has generated 7 consecutive quarters of accelerating growth. Net new bookings in Q4 '25 were up 54% year-over-year. CoStar revenues grew 10% year-over-year, generating $325 million in the fourth quarter of '25. We have grown the CoStar sales team 20% year-over-year to 492 reps and believe that will support further revenue acceleration. We ended 2025 with our NPS at an all-time high of 70, and our quarterly renewal rate rose to 94%. CoStar now has more than 300,000 subscribers up 26% year-over-year in Q4. Total searches in CoStar climbed 14% year-over-year to 422 million. CoStar Canada is solidly profitable and revenues grew 21% year-over-year. Canadian CoStar is French-English bilingual. CoStar U.K. is solidly profitable, is enjoying a 92% renewal rate and has gained significant competitive share in 2025. A primary U.K. competitor, EG Radius, shut down their operations in December 2025. We have onboarded 166 of their reported 150 clients. So I think we got most of them, with 75% of them on 3-year deals. EG Radius has passed between various ownership groups through time, but it descends from Estates Gazette, which was the clear major market leader in the U.K. when we entered that market 21 years ago. We have built out the software and data sets for CoStar France, and expect to release in the second quarter and expect to have similar successes there. We are now well underway in staffing our CoStar research and photography capabilities in Australia with over 50 people already in place. These teams are instrumental in generating a depth of proprietary data and visual assets that's not currently available in Australia. In just over 6 weeks, we've added thousands of listings, and we expect to release CoStar for Australia in late '26. In a typical year, there are about 1 million new single-family homes and condos built in the U.S. with a combined value of just under $0.5 trillion. The developers and lenders behind these projects need reliable information on supply absorption, prices, land comps and model mixes because 300-plus developers are feeding us data to market their new homes for sale on Homes.com, we can release a new homes information module in CoStar in the third quarter of '26. With the wealth of residential land valuation analytic information already in CoStar, we can build a very competitive offering. We expect demand for new homes information is a $200 million to $300 million revenue opportunity for CoStar. In December, we launched our coverage of nearly 4,000 data centers worldwide. For each property, we have data on capacity, redundancy and resilience attributes and how well it fits in the broader build-out of the power grid infrastructure. The product also provides visibility into substation locations, transmission lines, their peak capacity, and retail utility providers. Our data set includes over 1,600 individual center with sales value exceeding $43 billion and over 29 gigawatts of power capacity. In an increasingly AI-centric global economy, our rapidly growing data set will prove an invaluable day-to-day tool for center developers, operators and owners. As discussed on previous earnings calls, we're developing a rent benchmark product, which we expect to deliver in Q2. Built upon the industry's largest collection of lease deals, CoStar rent benchmark uses AI to extract starting rents, TI allowances, rent concessions, escalations and more from the actual legal leasing document. After abstraction, leases are anonymized and aggregated to deliver the industry's only net effective rent product, allowing the user to understand the true cost of occupancy. Corporate occupiers, owners and brokers alike will reap tremendous value from being able to tap into the largest source of verified lease information to inform their leasing decisions and more effectively manage their real estate portfolios. In January 2026, we added more than 110 million residential parcels into our CoStar information product, providing our users with public record information across every parcel in America. For STR, Q4 capped off a record-breaking 2025, delivering the highest net new revenue in the company's history there. 25% of that net new revenue came from owner and management companies. Q4 also marked the completion of a major client migration, ultimately bringing 98,000 new users into the CoStar platform with the STR Benchmark feature serving as their entry point. Q4 was equally pivotal from a product development perspective, culminating in a major release this week. Yesterday, STR announced the launch of a profitability benchmarking giving hotel owners and operators a fully integrated view of top line and bottom line performance. With this release, CoStar with STR Benchmark, becomes the only hotel benchmarking solution to integrate revenue, expenses, profits, and full property life cycle insights into one place. We have rebranded our lender product to CoStar Debt Solutions to better reflect the breadth of customers we serve, including banks, credit unions, private lenders, insurers, agency lenders and debt funds, CMBS investors and regulators. CoStar Debt Solutions has surpassed $100 million in annual run rate revenue, and we see a clear path to $1 billion plus opportunity as we expand our debt product with benchmarking, loan origination and residential solutions. We expect to launch debt benchmarking in the second half of this year with loan origination in the first quarter of 2027. Having had a chance to look at some of the features of the debt benchmarking, it's really remarkable, and I think it will be an incredibly strong product. CoStar Real Estate Manager had an exceptionally strong fourth quarter with net new bookings in the quarter up 48% year-over-year and up 211% quarter-over-quarter. Revenues now exceed $120 million. We extended our reach into the Fortune 50 in 2025 with a new client win that's our largest initial contract ever for Real Estate Manager. We also won business from 1 of the top 3 real estate service providers in our industry who will sunset their legacy in-house lease management technology in favor of outsourcing the Real Estate Manager. I'm pleased with the progress we're making on our product road map to consolidate Real Estate Manager, Visual Lease, CoStar and our Transaction Manager into one best-in-class corporate real estate solution. In combination with AI-powered lease abstraction benchmarking, I believe we can take very significant share in this category over the next several years. LoopNet had an outstanding 2025, generating $312 million in revenue. Q4 '25 was the fastest growth at LoopNet since 2021, ending at 17% year-over-year. All of this was driven by a record in net new sales, which tripled for the full year of '25 compared to '24. We intend to build on these extremely valuable games by rapidly expanding the LoopNet sales team. We ended '25 with 177 sales reps, and we plan to hire 80 more reps in '26, a 43% increase. Over '22 to '24, LoopNet had overindexed on depth advertising expense of coverage and to some extent, to the expense of a predictable advertiser ROI. I'm pleased that our focus has changed that 93% of this record net new bookings in 2025 came from silver listings, which tend to have consistent higher renewal rates. Consequently, paid listings increased by 9% in the U.S., 42% in Canada, and 156% in the U.K. In fact, LoopNet offers more listings and therefore, more searcher choice now in 90% of the U.S. markets versus last year, including every top 10 market in the U.S. In addition, our asset price -- our asset-based pricing tests now have thousands of transactions across multiple U.S. markets and the results are in. The strategy of looking price to the value of space being advertised is working. We intend to launch this new pricing model broadly across the U.S. market and expect that it will continue to deliver material incremental growth in 2026. We're building out the first and only global commercial real estate marketplace with LoopNet. At the beginning of '25, LoopNet was only present in Canada, the U.S. and U.K. During the year, we launched in Spain and France, increasing the number of listings in Europe 4x to over 130,000. In 2026, we will continue expanding LoopNet coverage by launching in Australia and then Germany. As we grow, the network effects of LoopNet are increasing. In 2026, we delivered over 400,000 leads and inquiries and 633 million total listing impressions. We are investing in Matterport sales force in '26, growing the team from 30 to 90 over the course of the year. This will enable us to expand our customer base to accelerate revenue growth in a wide range of segments, including residential, commercial, architecture, construction, insurance and manufacturing. We eliminated approximately $120 million in cash and equity costs from the business in '25, mostly from duplicative public company costs. The market-leading Pro3 camera has been the workhorse for our customers for the past few years. It's a wonderful camera. We will make it more accessible going forward for a wide range of customers by introducing a subscription-based pricing model in the future, which is a little bit more of a razor blade model. We're currently hard at work on developing the next-generation camera, the Pro4, which we expect will launch next year. The very popular defurnish feature launched last year, which allows customers to remove objects such as furniture and clutter from spaces. We are developing the furnish feature, which uses generative AI to virtually stage or imagine different uses for rooms. One result of this development is that we're gaining better semantic understanding of the space. We glean property data from this process that we can include in our centralized source of truth that could be leveraged across all CoStar products. As part of Matterport Exteriors, we're developing X-ray functionality that will allow users to remove elements of the building such as the roof or an entire floor to better understand the space in the context of the surroundings. We are integrating these capabilities into a seamless fly-through experience. This high fidelity transition from exterior to interior creates a sophisticated narrative for the property, significantly elevating its market appeal and utility. BizBuySell generated $36 million revenue in 2025 and growing EBITDA 19% over '24, while delivering a 37% EBITDA margin. More than $143 billion in businesses for sale assets were marketed on the platform during the year, including $34 billion in commercial real estate. We are also steadily expanding the value of the platform through business comp, data and workflow automation. Edge subscription revenue grew 35% in '25 as customers increasingly rely on our benchmarks to price with greater confidence. At the same time, we are introducing features to streamline deal execution through deal accelerator. Adoption of deal accelerator continues to build with 14% of broker members now using the product by year-end, capturing 10,000 qualified buyer profiles. CoStar Group's residential businesses aggregate consumer demand from homes for rent or sale or apartments from rent or sale and we sell in market -- and sell marketing and leads to the agents owners, landlords, property management companies that need to market these properties to those consumers we aggregate. CoStar's residential business includes Apartments.com, Homes.com, Domain Residential, OnTheMarket and Land.com. CoStar's Group's residential revenue was $429 million in the fourth quarter of '25, up 35% year-over-year. For the full year 2025, revenue was $1.46 billion, up 20% year-over-year. Our residential business is projected to be profitable in 2026 and we believe that it will eventually reach 50% margins. Apartments.com generated $308 million of revenue in the fourth quarter for an 11% increase year-over-year. Full year '25 revenue was $1.25 billion. Apartments.com delivered 841 million renter visits during the year and those renters took 152 million Matterport 3D tours. They viewed over 16 billion photos, drove 16 million clicks directly to our customer community websites, and they submitted over 1 million applications directly from Apartments.com, 1 million applications. That's good. Apartment owners and managers realize that Apartments.com is the #1 site recognized by apartment seekers with our 67% brand awareness in December, up 4 points from Q3 '25, while in contrast, the second rental competitor fell 5 points to 36%. We were thus able to accelerate our paying property count significantly in '25 by adding almost 14,000 properties to our network to end the year at 89,275 properties. That's the largest number of properties we've ever added in a year. We won many of these new properties from Rent.com after Redfin "sold" those clients to Zillow. We estimate that Redfin had about 4,500 apartment properties, marketing on their platform that were not already on Apartments.com. We signed approximately 1,200 of them to Apartments at just over about $1,000 a month, and we didn't have to acquire anything or end up with a legal thing. This increase in properties, coupled with our 99% monthly renewal rate and 92 NPS confirms that property owners and managers understand the value of the Apartments.com site built specifically for the apartment industry. This is further reinforced by our #1 ranking 82% of the time for the core 10,000 multifamily SEO keywords and the most comprehensive SEM program in the industry. In 2025, our marketing campaign delivered over 12 billion media impressions, reaching 90% of U.S. households. As you saw in our Super Bowl ad, we've begun to co-brand apartments with Homes.com, a place to find a place. The campaign featuring Jeff Goldblum and Heidi Gardner, who have excellent chemistry together, kicked off with the Super Bowl, which had a total audience of 125 million and the highest peak viewership in U.S. media history. According to comScore, visits to Apartments.com network were up 14% year-over-year in January. Our growth is in contrast with comScore's data that showed that Zillow's rental traffic was down 48% year-over-year, and Zillow's partner Redfin rentals, was down 46% year-over-year. Zillow's expanded rental network, Zillow, Realtor, Redfin, was down 29% year-over-year in January. Zillow's rental revenue fell sequentially in the fourth quarter compared to the third quarter as the rental traffic was falling. With traffic falling, our closest competitor is now doing something called shotgunning leads. That's encouraging potential renters to contact not just the person you intend to contact but all the competitors' properties. And while this increases and distorts the number of pure leads, it significantly lowers the quality of the leads and therefore, hurts ROI and lead to lease conversion rate. Poor leads create more work for the apartment community as they sort through these leads to ultimately produce less leases. This behavior by our closest competitor, their drop in brand awareness, coupled with our traffic having declines and in site visits year-over-year every single month in '25 according to comScore, makes us feel that our position within the multifamily industry is very solid. We currently have the largest and most active sales force in the industry. We had over 100 field and mid-market sales reps in '25 and ended the year with 522 total sales reps. These reps conducted 750,000 quality meetings in '25 with over 350,000 of them in person. Our newer sales reps will continue to contribute more as our experience has been that the reps that have been with us for a year, add more net new revenue for us each year of experience they gain until those reps with 5 years of experience are contributing 2 to 3x what they did in year 1. We will continue to grow this sales team in '26 as the opportunity in front of us is indeed massive. We still have approximately 460,000 prospects, 5 units or larger, and 22 million prospects under 5 units to sell to with a total TAM of $10 billion. Apartment owners and managers need us now more than ever. They're operating in a macro environment with overall vacancy rates still rising in the fourth quarter to 8.5%, while vacancy in 4- or 5-star buildings were close to 12% and new supply, while lower in '24 -- than in '24 continued to exceed demand. The use of concessions continues to climb. In January, we saw almost half of all apartment buildings offering some type of concession, and that's up from 13% a year earlier. In just 2 years, Homes.com has become the fastest-growing residential portal in the U.S. In '25, the Homes.com network had over 2.1 billion views and 100 million average monthly unique visitors to the network. Our January '26 organic traffic increased 134% year-over-year and 21% month-over-month hitting an all-time high. We feel we have achieved a good balance between SEM, SEO and direct traffic. This allows us to optimize SEM for quality traffic and leads, not just pure quantity. Average session duration rose from 3 minutes and 36 seconds in January '25 to 4 minutes, 33 seconds in January '26. Our page sessions rose from 3.4 to 6.9 in the same year-over-year time period. Our bounce rate fell from 63% in January '25 to 41% in January '26. Lead volume rose 48% from January '25 to January '26. Member lead volume rose 187% from January '25 to January '26. Rental lead volume rose 54% from January '25 to January '26. Homes.com subscribers paid to promote 216,000 active listings, representing 9.4% of 2.3 million homes for sale in the U.S. in Q4 '25. We now have over 31,000 agent subscribers generating $100 million in annualized revenue run rate with 76% of them on annual contracts. For CoStar, this group -- this is the fastest organic revenue build we've ever had for a new product, and we've achieved this revenue level faster than our U.S. competitors, years faster. We have built a dedicated sales force of 600 sales reps to reach the top 750,000 agents in the business. We've achieved and climbed to an excellent NPS score of 42 in less than 2 years and it's still improving. Our your listing, your lead principle and our market the home and win more listings model is now clearly resonating with agents. Homes.com is the only real estate portal in the United States whose core business model is to use the power of the Internet to help real estate agents market their listings to potential homebuyers. The Homes.com business model is the global best practice for real estate portals, and it's utilized by REA Group, idealista, Rightmove, Scout24, Hemnet, Domain, and many, many others. If you normalize these portals financials from their home countries to the U.S. on a GDP basis, they would be generating $4 billion to $21 billion in revenue in the U.S. and $1.5 billion to $11 billion of EBITDA in the U.S., which is orders of magnitude more than anyone's ever that generated in the United States. We believe we can generate $4.75 billion of revenue and $2.85 billion of EBITDA with Homes.com inside the next 13 years. Apartments.com has a very similar business model to Homes.com and grew revenue initially at a measured pace, but now over 13 years has reached $1.2 billion of revenue run rate with very high margins. The growth of apartments and homes looks very similar at this point. Apartment real estate in the U.S. is worth $6 trillion, while single-family homes and condos are worth almost 10x as much at $56 trillion, so $6 trillion for apartments, $56 trillion for homes. In that context, it's very credible to believe that Homes.com can generate $5 billion of revenue over the next dedicate or so. Homes has a clear empirical potential for a very high IRR similar to high IRRs ranging from 17% to 53% we've generated on our other major investments like CoStar Apartments, LoopNet Real Estate Manager, Land, BizBuySell and STR. We have a clear path to accelerate top line growth and drive profitability. Thus, we've reduced our net investment in Homes.com by $300 million in '26 over '25 and continued -- to continue reducing the investment each year with discipline until we reach run rate profitability in '29 and full year profitability in 2030. Competing U.S. real estate portals suffer from a lack of profitability and low growth, not because there's MLS in the U.S., but because they have chosen an inferior business model. In contrast to Homes.com, our U.S. competitors primary business model is to sell lower value buyer agency leads to a much smaller audience rather than marketing the valuable homes. Selling buyer agency leads became their primary business model when their iBuying businesses -- iBuying business models failed spectacularly. Last week, we launched the game-changing Homes AI, which we believe is the best-in-class and first fully integrated proprietary vertical real estate application built upon the best strengths of the leading LLMs. One of the unique aspects of this product is that the UX is completely aware of the AI, and the AI is completely aware of the UI and they work together seamlessly and beautifully. We strongly believe Homes AI will drive higher engagement, support significant growth in organic traffic and contribute to a meaningful increase in agent subscriptions. Homes AI is either conversational or text interface with a highly artificial -- with a highly intelligent artificial intelligence real estate expert that guides the homebuyer through the search exploration, comparison of homes, communities and valuations. Homes AI is like having a conversation with a knowledgeable real estate adviser who knows everything about all the properties rather than spending your time doom scrolling through a static website searching with filters. It's the perfect example of extraordinary discontinuous innovation. The most common reaction we get from people who see it for the first time is, wow. A Homes.com member named Kim Owen said, that's amazing. "I'm just flabbergasted. I think this is probably the one of the best investments we've ever made." Stephanie Calinoff, another Homes.com member said "Freaking amazing. Seriously, thank you. I love it. I could totally see my clients chosing on this, and I think it's great for us as well. Like, it's really easier than searching MLS. Seriously. It's really terrific." Yet another Homes.com member, Susan Reres gushed, "You have just absolutely floored me. I cannot believe this. I mean, truly, this is -- what? What did you call it? Homes AI." In the first week post release, Homes AI is having a huge impact on user engagement. Site visitors that hit the AI mode are on the site for 16 minutes, 50 seconds as opposed to 4 minutes, 24 seconds for nonusers. AI users do nearly 4x as many searches, favorite 7x as many properties, look at 4x as many properties, and submit 7x as many e-mail leads. This transformative home search experience is powered by Microsoft Azure OpenAI advanced AI models, integrated with several other large and small models including some models from AWS as well as our own proprietary AI model. Using multiple models gives us tremendous flexibility and keeps token costs down. Using dynamic example injection, queries that originally consumed 2,000 tokens have been optimized to just 20 tokens. Unlike other AI implementations, Homes AI data remains entirely within the Homes.com proprietary ecosystem and is never used to train or find external AI models, giving us a real advantage as we build out the best-in-class real estate AI. While we're launching the capability of Homes.com, we plan to deploy it to Apartments.com, CoStar, LoopNet, Land, BizBuySell as soon as possible. I believe that our deployment of this advanced AI software will result in substantial competitive advantage for CoStar Group for years to come. Homes.com is already and will become an even more important strategic part of Apartments.com's strategic success. While the Apartments.com brand is optimized to institutional rentals, Homes.com is optimized to single-family home and rental condos. With tens of millions of single-family rentals in the U.S., we believe that it represents at least half of the rental market in the U.S., and it's a $5 billion TAM. Homes.com is our essential gateway to reach the single-family rental market. In addition, just over half of all renters begin their home shopping journey open to renting or buying. Apartments.com needs Homes.com in order to bring those considering buying into the top of the rental funnel on one of our platforms. Our Homes.com's rentals traffic, which grew 25% year-over-year, is robust and important, and Homes.com is second only to Apartments.com as the top rentals traffic contributor to our network of 10 rental brands. In Q4 '25, Homes.com rentals traffic already accounted for 10% of the apartments network traffic, and we anticipate that it will grow very significantly. Our residential business achieved a record of 642,000 paid single-family rental listings in '25, up 49% over the prior year. 400,000 new independent owners used our rental tools in '25, we made the processing of over $5.5 billion in rents faster, allowing independent owners to receive 60% of their rent payments faster through Express Pay. In '26, we will complete the process of offering all of the tools for the individual owner trying to manage rentals that you find on Apartments.com, it will be available on Homes.com allowing those owners to rent their house, condo, townhouse on either platform. We began selling enhanced exposure on Homes.com to new homebuilders in August of '25. In Q3, we delivered 524,000 annualized net new bookings for new construction. In Q4, we generated $1.2 million in annualized net new bookings a 125% quarter-over-quarter increase. In just 4 months, this resulted in a total of $1.7 million in annualized net new bookings. Our Domain residential platform in Australia. In Q4, our residential marketplace domain had revenue of USD 73 million, which was well ahead of our expectations. Domain residential marketplace is profitable, delivering approximately 28% margins in '25. Domain will become a part of Homes.com within a year to 18 months. In the fourth quarter, we had exceptional audience momentum resulting in Domain's strongest audience quarter on record with an average of 8 million monthly unique audience. In October, Domain delivered a record residential audience of 9 million, up from 6.6 million in July, the month prior to our acquisition. Domain added 6x more audience volume than its nearest competitor in Q4 '25 compared to Q3 '25. We did this through strategic increases in marketing investment, improved media mix and leveraging Homes.com technology capabilities to deliver improvements in product speed, latency and user experience. These results highlight our ability to realize global synergies that deliver a competitive advantage. As our audience grew, quality remains a key advantage, inquiry volumes grew 21% year-over-year. Last week, we announced the planned divestment of a number of noncore nonstrategic products at Domain so that we can sharpen our focus on the marketplace core businesses, which operate at excellent margin. This will temporarily eliminate some revenue, but will have a positive impact on profitability, and will allow the business to be more strongly focused on the key opportunities we see in commercial and residential in Australia. We are actively working on integrating the Domain residential platform into Homes.com and the Homes AI software platform. Doing so is essential to improving margins by limiting duplicative development efforts and creating a cost-efficient competitive edge in Australia. In U.K., we had an excellent year on the market. We ended '25 with our 20th consecutive month of positive net new bookings. We now have about the same number of listings as the #2 player in the United Kingdom, and we have new -- more new home listings than the #1 player, continuing to gain share there. We have achieved huge growth since our acquisition 2 years ago, growing sales leads by 94%, properties on site by 47%, increasing brand awareness by 54%, increasing time on site by 77%. Importing best practices from Homes.com on the market has dramatically improved the consumer experience with list and map view along with rich map layers, property alerts that become our largest source of leads. We plan to integrate OnTheMarket into Homes.com software platform environment in '27 after we've completed migrating domain into Homes.com. Our land business maximizes listings and brand exposure for American's top farm and lifestyle ranch brokerages. This is a $4.4 trillion asset class, and they're essentially homes. In '25, we had almost 9,000 member agents promoting 144,000 listings. Our addition to more agricultural-focused, AcreValue, strengthened our offering with aggregated nationwide farmland data such as soil surveys, flood hazards, crop productivity and sales. This powers Farmer Mac's Farmland Price Index and has created powerful automated valuation tools for use by lenders. CoStar Group is emerging as a clear winner in the artificial intelligence era. We're positioned to take transformative share with the advantage Homes AI gives us. We are using AI to cut significant costs and improve our product offerings and quality. We're launching new transformative products that would not have been feasible without our AI innovation. Finally, LLMs do not create information from thin air. Effective LLMs require massive amounts of accurate, accessible data, and no one has more proprietary real estate information than CoStar Group. CoStar information products are protected by strong authentication. We've accumulated over 2.4 trillion fields of data. Only about 25% of our data is available on CoStar Group marketing portals. That means that the CoStar Group information content is not available to LLM AI crawlers. LLMs do not have the rights and cannot display CSGP imagery, including Matterport photos and videos. Over 35 years, we've collected nearly 700,000 Matterports and billions of proprietary images. The agentic tagging of our photographs creates hundreds of billions of new searchable, displayable and model-ready data fields. We have massive proprietary information on 150 million properties. We receive direct leads of information from our clients that don't appear on the open Internet. Over 94,000 hotels provide us confidential performance data. More than 500 financial institutions provide us with detailed confidential loan data. Over 2,000 corporations, including half of the Fortune 500 provide us with millions of confidential lease documents. Hundreds of thousands of real estate brokers -- brokerages feed us millions of listings digitally, many of which do not appear on the open Internet. 280 homebuilders -- it's actually 300 homebuilders feed us details digitally on their communities and nearly 85,000 apartment managers give us direct digital access to extensive details about their properties. While there's a lot of accessible real estate data open to LLM crawlers, only CoStar has the massive, very difficult to replicate volumes of high-quality system of record proprietary real estate data. We believe that we will be competitively advantaged in building the most transformative AI-powered real estate solutions. So let me close with this. The results in the plan you heard today reflect what CoStar has always done, build durable platforms on proprietary data, run them with discipline and compound long-term shareholder value. We've strengthened our governance and capital allocation oversight, and we're matching strategy with clear financial priorities, profitable growth, expanding adjusted EBITDA and returns of capital. We're scaling Homes.com because it strengthens our entire real estate ecosystem globally and the completeness of our data. And we're doing it with a clear investment glide path. And on AI, we're not conceiving the future, we're productizing our proprietary information with experiences like you see in Homes AI, while driving efficiency across the company. So thank you for your trust and partnership. And I'll turn the call over to Mr. Chris Lown, our CFO.

Thank you, Andy. For the full year of 2025, revenue was $3.2 billion, a 19% year-over-year increase over 2024. This was ahead of consensus and above the high end of our full year revenue guidance range. Our revenue outperformance primarily came from higher-than-expected contributions from CoStar, Matterport and Domain. Full year adjusted EBITDA in 2025 also came in above expectations at $442 million, posting a 14% adjusted EBITDA margin. This also exceeded consensus in the high end of our guidance range. The combination of our revenue beat and lower-than-anticipated personnel costs drove the adjusted EBITDA beat for the year. As Andy mentioned in his remarks, we have revised our reporting segments into a Commercial segment and a Residential segment. The new presentation aligns with how we view and manage the business, and we believe it provides shareholders with the best understanding and representation of our financial performance. On this call, I will address our results under both our historical and new disclosure methodologies. Going forward, I will discuss business performance and expectations using our new segment and disaggregated revenue disclosures. Revenue from our Commercial segment totaled $1.79 billion, an 18% year-over-year increase from $1.52 billion in 2024. Our Commercial segment is comprised of what we previously disclosed to CoStar -- previously disclosed as CoStar and LoopNet, which also includes Domain's Commercial Marketplace, Information Services, Ten-X, BizBuySell and Matterport. Ten-X, BizBuySell and Matterport were previously included in other revenue. The 2025 acquisitions of Matterport and Domain contributed around 10 percentage points of this 18% revenue growth. Revenue from our Residential segment totaled $1.46 billion, a 20% increase year-over-year with an organic growth rate of 12%. The Residential segment includes Apartments.com, Homes.com, OnTheMarket, Land.com, and the residential revenue from Domain. Here's a breakdown of our revenue by product that is consistent with our prior guidance. Apartments.com revenue grew 11% for both the fourth quarter and full year of 2025, in line with our expectations. We continue to see significant opportunity across all the Apartments.com TAMs and saw a year-over-year rooftop growth of 18% to 89,275 at year-end 2025. We continue to invest in Apartments.com and expect to add an additional 50 salespeople in 2026 after adding nearly 100 in 2025. Residential revenue was $108 million in the fourth quarter and $218 million for the full year of 2025, above the high end of our guidance estimate. As a reminder, this revenue grouping included Homes, OnTheMarket and Domain residential. Revenue in 2025 included a $95 million contribution from Domain's residential revenue with Homes.com delivering an impressive 63% year-over-year growth rate. CoStar revenue grew 9% for the fourth quarter and 7% for the full year of 2025. This was at the high end of our guidance and a fantastic result as we are emerging from the worst commercial real estate crisis in recent memory. CoStar rep productivity increased every quarter in 2025 as this team delivered its highest sales year since 2022. At 94%, CoStar also saw its highest renewal rate since Q4 2022 with CoStar Debt Solutions and STR posting strong year-over-year growth. We are extremely excited about CoStar's pending product launches as we look to expand CoStar Debt Solutions capabilities into origination workflow solutions, expand STR's financial reporting modules and launch the groundbreaking lease benchmarking product. LoopNet revenue increased 17% in the fourth quarter and 11% for the full year of 2025, also at the high end of our guidance. Excluding the impact from the acquired Domain commercial marketplace revenue, LoopNet grew 11% for the quarter and 9% for the year. LoopNet delivered its highest ever sales year in 2025, and we expect to continue that momentum throughout 2026 as we create the only pan-European CRE market solution and launch LoopNet in Australia. Revenue from Information Services increased 15% for the fourth quarter and 19% for 2025, in line with our guidance. We are excited about the combination of Visual Lease and Real Estate Manager as we drive synergies across the combined platform, launch new products in 2026 and integrate these businesses into CoStar's unified tech platform, combining market data and analytics with applications for occupiers of real estate. Importantly, AI will feature prominently as we use it to extract rents, lease terms and other data from leases to create benchmark solutions, and we will also provide this functionality to our customers for automated lease abstraction and audit purposes. As you can see in the disaggregated revenue tables in the earnings release, the Information Services revenue has now been incorporated into CoStar revenue as we migrate these businesses into the CoStar platform as we successfully did with STR. Other revenue was $75 million for the fourth quarter and $272 million for the full year of 2025, above the high end of our guidance. This positive result reflects better-than-expected performance from Matterport, camera sales and capture services revenue. Company-wide, we delivered $7 million of net income in 2025, which is $25 million above the high end of our guidance range. Our full year adjusted EBITDA of $442 million also exceeded the high end of our guidance by $17 million. Our sales force at year-end was 2,175 people, which increased by nearly 800 in 2025, including the addition of 185 reps from our 2025 acquisitions. The majority of the increase was concentrated in our Homes.com residential business, which increased by more than 400 reps in the year. We expect to continue growing most of our sales forces in 2026 with a particular emphasis on growing the LoopNet and Matterport teams. Our contract renewal rate was 89% in the fourth quarter of 2025, and customers who have been subscribers for 5 years or longer have a 95% renewal rate. Subscription revenue on annual contracts was 71% for the fourth quarter of 2025. Domain does not operate using annual subscriptions, which has reduced this metric by 7 percentage points. Our other brands have remained relatively consistent with their subscription metrics. For full year 2025, we delivered $308 million of net new bookings, a record for CoStar, and 23% higher than 2024. Net new bookings for the fourth quarter were $75 million, a 42% year-over-year increase. During 2025, we completed our $500 million share buyback program announced in February 2025 and repurchased 7.1 million shares. We also recently announced that our Board has authorized a new $1.5 billion share repurchase program. We expect to repurchase a total of $700 million worth of shares in 2026 and plan to execute an accelerated share repurchase this quarter to repurchase $500 million worth of shares, followed by $200 million of open market repurchases throughout the rest of 2026. For 2026, we are affirming the guidance we provided on January 7. Specifically, we expect revenue of $3.78 billion to $3.82 billion, implying an annual growth rate of 16% to 18%. First quarter 2026 revenue is expected to range from $890 million to $900 million, representing an increase of 22% to 23% year-over-year at the midpoint. We are also affirming our 2026 full year adjusted EBITDA guidance range of $740 million to $800 million, reflecting an adjusted EBITDA margin of 20% to 21%. First quarter 2026 adjusted EBITDA is expected to range from $95 million to $115 million. Our adjusted EBITDA margins are expected to increase by roughly 5 percentage points each quarter throughout 2026. I want to say that again. Our adjusted EBITDA margins are expected to increase by roughly 5 percentage points each quarter throughout 2026. This margin expansion during the year reflects the timing of our marketing campaigns, which are heavily weighted to the first half of the year as well as the seasonality of revenue from Domain. As an aside, I would suggest you review 2024 and 2025 quarterly adjusted EBITDA numbers and margins, where you will see a similar seasonality pattern of rising margins throughout the year. For additional context on first quarter guidance, our marketing expenses tend to be the highest in the first and second quarters of the year and 2026 should follow that same pattern. Events such as the Super Bowl, Winter Olympics and the successful launch of Homes AI drive spend earlier in 2026. Additionally, Domain revenue is seasonally lower in the first quarter as Domain comes off its high selling season. As a point of reference, based on current exchange rates, revenue for Domain has dropped an average of USD 14 million sequentially from Q4 to Q1 over the past 2 years. Broken down by segment, we expect commercial revenue in 2026 of $1.955 billion to $1.975 billion, a 10% increase at its midpoint from 2025's revenue of $1.79 billion. For the first quarter, we expect commercial revenue of $470 million to $475 million, an increase of 16% at the midpoint from Q1 2025. Residential revenue is expected to range from $1.825 billion to $1.845 billion in 2026, a 26% increase year-over-year at the midpoint of the range. First quarter residential revenue is expected to range from $420 million to $425 million, an increase of 31% year-over-year at the midpoint of the range. We expect adjusted EBITDA margins for 2026 of 33% to 34% as we make a number of significant investments in the Commercial segment to drive future growth. These investments include building CoStar Australia and expanding in Europe, CoStar Debt Solutions origination workflow modules, the integration of Real Estate Manager and Visual Lease into CoStar, the revolutionary lease benchmarking product, a new homes information product, STR profitability modules, AI across our businesses, new Matterport technology and additional salespeople. For the Residential segment, we expect adjusted EBITDA margins of 5% to 7%. Our level of CapEx is expected to range from $175 million to $225 million in 2026 as we complete the build-out of our Richmond campus, which should be finished in the second quarter. In summary, I'm extremely proud of our 2025 results delivered during a year complicated by high interest rates, inflation and economic volatility. We remain focused on delivering on our strategic investments in the commercial and residential markets for our shareholders while producing record profit levels in our established businesses as we drive revenue and margin expansion in the coming years. I'll now turn the call back over to the operator for questions.

[Operator Instructions] And our first question comes from Stephen Sheldon with William Blair.

I think the 4Q bookings were a touch lighter than some had been expecting. So can you maybe talk some about the puts and takes in the quarter by business? And then secondarily, it sounds like you're planning to continue growing sales head count. So I just wanted to ask what you're seeing in the productivity ramp for those added in 2025 and whether that ramp has looked any different than what you've seen historically for added sales head count?

So I'll answer the second part of the question first, and I'll let Chris answer the first part. So in terms of sales ramp, we obviously are growing the sales force dramatically. And when you first bring people on, as we've done, as we brought a lot of people on in 2025, they're not at maximum productivity. So they're in line with what we've historically seen. But I think I commented during the call that they become 2 to 3x more productive in the fifth year than they were in the first year. So we manage them closely on a 9 box and make sure they're on trajectory, but we're seeing good initial results, but it is a large addition of salespeople.

Yes. And with regard to your first question, I'd point you into the investor deck, which we put on our website. Our Q4 net new was the second highest Q4 in our company's history. I repeat, it was the second highest Q4 in history, and I go back and look at it. So we feel great about our outcome. And as far as puts and takes, I think that the number speaks for itself.

Our next question comes from Ryan Tomasello with KBW.

Just following up on Apartments.com. If you can just help us understand how you're thinking about the growth for that business this year. And then with respect to the other half of residential with Homes.com, obviously, there's been a lot of upheaval lately in the industry regarding the role of the MLS and listing ownership. So just curious, Andy, how you're thinking about managing the home strategy around that fluid evolution of the industry and what opportunities that might unlock.

So the -- I guess there's 2 parts to that question. I'll handle the second part as usual. The -- yes, there is upheaval and there is some instabilities. I believe that the CEO of the largest brokerage firm made some statements to his staff in an all-hands call talking about the fact that if his agents did not want to belong to the major association, they wouldn't have to within 2 years. I think that reflects dissatisfaction with the industry with having their listings go into a system that then syndicates them out to real estate portals that divert the leads from their own listings to their competitors, and that's not in the interest of the homeowner. It's not in the interest of the listing agent. It's not even in the interest of the buyer. So I believe that, that instability does create opportunities for a platform that is resonant with the brokerages, the agents and the home seller. So it's difficult to see exactly how that will break, but I believe that would break in our favor.

Yes. And on your first question, I would just point you to the guidance we gave on the residential side. We feel -- you heard the stats that Andy talked about. We feel great about our position in Apartments.com and just point to the guidance we gave on the Residential segment.

Our next question comes from Brett Huff with Stephens.

Two quick questions for me. Can you talk again about the commercial EBITDA guidance? You all kind of articulated some of the things you're investing in. There was a long list, but I wonder if you could sort of give us the top few maybe that seem the biggest priority. And then the other question I had was, Andy, you mentioned some reductions in Matterport, and I didn't get the number, but it sounded like a large number. And can you just talk a little bit about that for us?

Sure. So again, answering the second part of the question first, and then throw the first question to Scott. I'm sorry, not Scott. We have a new CFO. He's only been here for 2 or 3 years, Chris. I'm sorry, Chris, if you ever forgive me. So yes, so in -- after we merged with Matterport, we eliminated a number of duplicative public company costs generally in the C-suite, and it was about $120 million of executive comp, both in cash and equity, some HR finance-related duplicative areas and made great progress towards improving the profitability of Matterport. And then we're focused on growing revenue at Matterport through adding salespeople and reaching more of our potential market. So yes, it's about $120 million duplicative public company costs.

Yes. And on the commercial adjusted EBITDA margin, I want to make sure also people remember the Commercial segment does not have Apartments.com, and that's obviously in the Residential segment. But then if we look at the primary investments that we're making in 2026, we have a de novo build to CoStar Australia. Obviously, we have the software and the technology. So we just have to fill in the data and information, and that team is well on its way and they're very excited. So that's a great result. But again, there's 200-ish-plus people that we sent -- that we hired down there to help us drive that information. In addition, we're expanding further in Europe. So that's an ongoing effort. Obviously, the business has been very successful, as Andy mentioned, in Canada and the U.K. We look forward to getting to those same success levels in Spain and France and Germany, et cetera, and Australia. As I mentioned, we're building out an origination workflow module for CoStar Debt Solutions. This has actually been driven by our clients who said, if you could give us workflows for originations, we'd love to tie it all together, and that creates a huge amount of proprietary data and information, which we're excited about. So we're moving aggressively on that. We also talked about integrating Real Estate Manager and Visual Lease into CoStar. So just so people fully understand, we are -- just like we did with STR, we're actually taking Real Estate Manager and Visual Lease, rewriting all the code into CoStar as we do with everything, creating a brand-new better platform embedded within CoStar, which also will have all the data and information around it. So that will be a fantastic and revolutionary capability. Alongside that will be the lease benchmarking product. That will be a first-time product that has never existed before. So we're investing on that. We have a new homes information product that we've launched and is already generating revenue, which is fantastic. We actually just launched, I believe, STR profitability modules. So that just -- those just came out, and that gives our customers an ability to understand their profitability on a gross profit basis, not on a per unit basis. So they're excited about that. As you've seen, we launched Homes AI very successfully, and it's been a great couple of weeks. We are going to take that capability across all our businesses, first in Apartments.com, but then quickly across all other businesses. So that is really exciting for us. Our Matterport team, the long ones, and it's all getting done. Our Matterport team is really excited about building a new camera. So there's work going on around building the new camera plus enhancing the technology they have. Andy talked about the furnish function, which is a real technology feat when they get it done, but also building a new camera, which is faster, better, et cetera. And finally, additional salespeople. So as you see, a meaningful amount of investment going into our commercial business, all great opportunities to grow revenue, to grow TAM, to grow margins. And so -- but that inevitably will have a minor impact in 2026.

Clearly, paying attention to and investing in the core.

Our next question comes from Pete Christiansen with Citi.

Andy, sorry, another AI disruption question. This time, a little bit more second order, the CRE broker space has kind of been under fire lately for concerns on disruption there. And I guess, if we were to think if the CRE broker space were to see a reduction, do you think CoStar would have the ability to change its pricing around? Do you see this as a potential disruption to the CoStar Suite business?

Sure. I have, gosh, spent 40 years working with commercial real estate brokers. And I think that it is missing some of the personal relationship sales nature of a commercial real estate broker. And so these are really relationship people. And so I'm somewhat puzzled at the level of AI fear in that sector. For sure, there are high volumes of people in some of those commercial real estate service companies, which will -- who will be disintermediated by AI, but they're not the revenue driver relationship people. I don't think they're going to go anywhere. And those are the core audience for our CoStar product. The 500 people building models in the background, they may disappear, but they're typically not our -- the property managers doing accounting and all the stuff, they're typically not the people buying seats. If I think that there is the ability to retain comparable prices with seat reduction, we've done that in the past successfully during downturns. So certainly, over the last 5 years, you saw a significant reduction in the number of people doing commercial real estate, yet we continue to grow revenues. So I do think that there's resilience there. And then remember that brokers only represent at this point, about 30%, 33% of our revenue. The majority of our revenue is banks and owners and institutions and CMBSs and government agencies, many of whom are not on a seat license basis.

Well, I'd also add to that, all the investment we're making is actually more geared towards those exact customers. And so we should expect to continue to see that percentage decrease as those investments bear fruit.

But who will tomorrow's AI fear be?

Our next question comes from Curtis Nagle with Bank of America.

Chris, maybe just one for you. I wanted to follow up just, I guess, trying to get the EBITDA guide for commercial, I think a slight decline on a dollar basis at the midpoint. Talk about some of the investments. I think the other thing, though, we'd love to get some help with this, I guess, could you disaggregate how much of that is due to the replatforming of shared costs right from Homes.com over the past few years? I think some of that's going back to commercial. Any commentary there to kind of help bridge that would be helpful or anything else I might have missed?

Yes. No, it's a great question. So obviously, again, first thing, and again, we're sort of apples to oranges a little bit about the old commercial. There was -- taking out apartments. Apartments was a very attractive margin business, that's A. B, we brought into this business inorganic companies in Matterport and Domain, and those have an impact on that margin, which we expect will grow back after we get through '26, but then is first -- in their first full year will have an impact. From an organic perspective -- margin perspective, when we look at this, the margin is roughly similar as with '25. Even with all this investment, it's roughly flat. And so what you really see is a little bit more of the inorganic side having the biggest impact on that margin in that period of time.

Our next question comes from Andrew Boone with Citizens.

Andy, I'd love to hear about early results from Homes AI. Can you help connect this, though, in terms of the model? Like, what are you expecting in terms of retention or driving more traffic? How do you do that within the context of marketing spend in a newer product where you have to drive awareness?

Okay. So in terms of marketing spend, we're shifting from top-of-funnel brand awareness to much more specific product feature marketing. Over the next week or 2, you'll see all that shifting to product functionality. The product functionality is so remarkable and so compelling that we want to basically simplify the marketing and highlight what it actually does because when people see it and use it, it's compelling. We are shifting some of our marketing budget closer to lower funnel, things like SEM, just because at this point, with the number of clients we've got, we want to deliver lead results. And you're seeing that with 187% year-over-year lead growth with members subscribe -- Homes members. The biggest impact here is engagement. As I mentioned, the engagement with the product goes up 4 to 7x when you're using the Homes AI interface. I believe that it's going to be something that a year from now, people are not going to be able to imagine the old way of interfacing with the website. It shifts a lot more time and attention in the search process from offline to online. And it has dramatic appeal even when you're out physically in the market. So when you're driving around and you can ask questions about the neighborhood and, like, are there any houses that are sold right around here and where are they? And the phone actually guides you to and you can drive over or I was talking to a commercial -- a residential broker the other day. And he said, yes, I was on the way to a listing presentation, which I had not prepared for. And as I was driving over to the listing presentation, I got my whole briefing and my CMA and everything from Homes.com talking as I was on my way. So it's a tool that's going to be adopted or is being adopted by both the agents and by the consumers, it's a much deeper experience than a filter and a result. One of the things I thought was kind of interesting, we have -- I think we've had -- we've reached out to 18,000 of our clients over the last week or so with Homes AI. And we use artificial intelligence to sort of map what the conversations are and what we're hearing. I think an odd element of this is that it is extracting agents from relying on the MLS as their primary information tool. We're getting a lot of folks saying, "Gosh, this is a lot easier to use than the MLS." but I hope that answers the question.

If I may add 2 additional points. Remember that AI agent will remember who you are, what school zone you want to be in, how many kids you have, if you like a house that's in the sunshine more than -- or has a view. So the learning of it and the results that you will get as a user are just going to exponentially get better, and it will know you as well as you know yourself or your spouse knows you. So I think that's a really important point. It's not like you go every time and it's a clean slate. It's building its knowledge and understanding to help you on your journey and provide you even better results, which, by the way, ends up being a much better lead for our subscribers, right? And that handoff, they have -- will have a lot more information. So I think that's really important. Now we also take that into Apartments.com. Say you own a building, you have people working in your building who are leasing agents or people who help. You are now going to have hundreds of AI leasing agents who are going to be following these customers, understanding they may spend more time on a 2-bedroom versus a 1-bedroom. So they're really more interest in 2-bedroom. They really want a view of the pool. They really want to be on the corner, on the outside, et cetera. So again, this -- the learning and the capability is going to be hugely beneficial and important to our customers, which is going to be almost irreplaceable. So I think it's just this multitude of growth. And once people realize that -- once our subscribers and our customers get that and understand that, it's just going to make such a better relationship with our customers and a better experience for them.

And the plan is to integrate all the platforms on this. So when Chris talks about the fact that we remember what the -- who the consumer is, what the shopper is or what their interests are, and where they work and where they play and what their needs are for education. That is persistent across Apartments.com, across CoStar, and will even be persistent across Illumina and eventually Homes and BizBuySell. So it's really quite powerful. And then our goal and our plan is to have the interface back to the lister, whether they be a property manager, real estate owner, real estate agent that's consistent. You'll have one sort of lead dashboard listing management tool in AI that has much higher quality leads across all these platforms. And as someone who manages billions of these visits across many, many sites, many, many hundreds of thousands, millions of leads, agents really struggle with managing the leads they get off these sites. I mean, the best of them respond to 50%, 60% of the leads in a timely fashion. The tools we're going to build here or are building here will dramatically change that equation and make it much more efficient for them to be able to handle these. But I think we're far, far away from your original question, so I'll shut up.

Our next question comes from Scott Wurtzel with Wolfe Research.

Just wanted to follow up from the bookings question at the beginning. I'm wondering if you can give any kind of commentary around Apartments and Homes.com bookings from the quarter, if it's -- not numbers, any sort of directional qualitative commentary relative to last quarter would be great.

Yes. We get a lot of requests for a lot of different information, et cetera. And I think what we feel is we provided new disclosure with new segments, and we've given you, again, the second highest net new bookings number in the company since 2015. And so the guidance is, like I said, I think Homes.com and Apartments.com, we still feel very -- we feel great about the businesses and the trajectory we're on. I'm going to leave it at that.

Our next question comes from Craig Huber with Huber Research Partners.

I wanted to ask about Apartments.com. It sounds like you think given the metrics you talked about that Apartments.com revenue this new year will accelerate. Maybe talk a little bit more about that, if that's the case. And what are you expecting for margins for Apartments.com for this year, flat or down slightly, maybe some extra marketing expenses? How should we think about how margins will play out there?

Yes. So we're not giving specific margins for any business, et cetera. I think what you could hold stock in is Andy's comments around how our business is performing versus what we can see publicly versus our #2 competitor, which is significantly behind ours. We're excited about what we're seeing in the opportunity. We're excited about bringing AI. Like I said, it was one of our -- was and continues to be one of our most attractive businesses. Andy has talked historically, there's been a little more investment in marketing, but that's just because we had sweated that equity down over a period of time. And so there was a little bit more marketing, but this isn't a meaningful amount. So we feel as good today about Apartments.com as we have been in the recent past.

I do not see any increase in marketing in Apartments.com that I'm aware of. It's basically predictable as it has been in the past. And what I was trying to communicate is I do believe there's a little bit of smoke and mirrors occurring in the industry with the apartment space and that we actually are in a much stronger position than the market realizes. So there's been some acquisition activity, and competitors are going to create some tough comparables year-over-year, and it's going to be tough to retain some of the acquired revenue, I believe. And you can already see that in our ability to take significant share from some of the folks that have been picked up or synthetically acquired. And in a way, to me, this is Groundhog Day. We've competed against -- so many times against some of the same players who fail repeatedly and recapitalize and then we compete again very successfully. So I just wanted to communicate in my remarks that I believe that Apartments.com is an incredibly strong franchise with continued strength that will become clearer and clearer over the quarters to come.

Our next question comes from Jeff Silber with BMO Capital Markets.

You talk a lot about the investments that you're doing in the different businesses, and I think we get that. Beyond that, can you just remind us what your capital allocation priorities are? And I'm specifically interested if you're going to continue to do M&A, what you think you're missing in the portfolio, either from a product or geographic segment?

Well, so listen, I think from a capital allocation, we obviously went through a capital allocation process. I think we all -- it was a great experience. Obviously, what came out of that was a buyback program. We looked at buybacks as a percentage of free cash flow and how to think about that going forward. I'll let Andy opine on sort of what he may see as opportunities for us within an M&A perspective. But I would say our ability to acquire companies and generate not only significant synergies from expense savings and also accelerating growth is really incredible in this company. And -- but I'll give it to Andy if he sees what opportunities he thinks about.

Yes. So from a capital allocation perspective, I love the concept that we are pursuing having fewer shares today than we did 2 years ago and retiring shares and having good capital discipline there. And I like the fact that we did the Matterport acquisition with a little bit of share dilution, but we actually retired those shares at a more favorable cost point in hopefully going forward. And -- but I hope you get the sense that we have an incredible amount of innovation going on here. We have a lot of intellectual firepower building really transformative products across the board, both in the commercial and the residential side. So we have a lot on our plate right now, and we want to focus on the things we've got on our plate. Now having said that, there are a lot of interesting acquisition opportunities, but we have so much going on organically right now that, that is a priority. And the business generates a lot of cash, we believe will generate a lot of cash and give us the ability to approach what we want to approach the time we want to approach it. We're not going to comment on any specific things, but there are dozens, if not 100 opportunities out there.

Yes. And just to add a finer point to that cash generation. With the completion of the Richmond campus and also our building in Arlington, you're actually going to see real acceleration of cash flow in '27 and really into '28. I'd also highlight one thing that we've talked about historically, don't forget, we built the Richmond campus and we acquired the Arlington building, and they're on our balance sheet. And when -- and we expect this to happen when rates come down and cap rates come down, there is a release of capital that we would expect to see. So an additional increase as a result of those sale-leaseback processes for those 2 buildings. So we're excited about the cash generation we're going to accelerate over the next 3 years.

Our next question comes from Jason Haas with Wells Fargo.

This is [indiscernible] on for Jason Haas. You guys are guiding to negative $45 million of EBITDA in 1Q for the resi segment and positive $105 million for the full year at the midpoint. I just want to better understand the timing of the profitability improvement through the year for resi as well as the key drivers behind it.

Well, we talked about the marketing aspect, which is really front-loaded in the first quarter and to a less extent, the second quarter. So that is a meaningful part of that acceleration and the underlying growth in revenue, both -- across both businesses, apartments and homes, both on a relatively fixed cost basis. And so that drives that acceleration over the 2026 period.

Our next question comes from George Tong with Goldman Sachs.

You mentioned Domain revenue came well ahead of expectations in 4Q and Matterport is also contributing inorganically. Can you outline what M&A contributions you expect for 2026? And what organic growth rates for commercial and residential are being embedded in the full year guide?

George, I don't have those numbers in front of me, but let me come back to you. I know what you're saying, let me come back to you. As far as additional M&A, we have -- all you really affect is the full year impact of the acquisitions we made in '25 into '26, right, that impact. But we obviously aren't in the midst of any M&A activity or closing anything that we're aware of.

Our next question comes from Nick Jones with BNP Paribas.

I guess, maybe going back to CoStar Suite and the moats you have there. I guess, can you speak to maybe how you're using AI to maybe enhance the moats or build out stronger data sets? And I guess, how confident are you that some of these maybe AI-driven solutions that are maybe coming in from the legal side can't maybe start to rapidly replicate a similar data set. Any clarity, I guess, on the threat and maybe what you guys are doing to basically take new technology and enhance the moat further?

Sure. So we are definitely creating new data sets from proprietary content at an accelerated pace, facilitated by AI. So what -- if you take a look at the corporate leases, which are not available to the general public, they're proprietary, and they require careful treatment, protecting confidentiality on the behalf of clients. That -- abstracting those leases pre our AI abstraction tools would have taken hundreds and hundreds of people, years and years and years to do. Now we can do it in a matter of weeks at a cost of less than a couple of hundred thousand dollars. So that is just one proof point of how we're actually growing our proprietary data sets much more rapidly than we could have in a non-AI world. I'm going to stress again that AI cannot create data from nothing. If it doesn't know something, it can't create something it does not know. That's a fact, right? And so it's not mythical magical. It's just a reality. So much of the data in our data moat is proprietary. And so like you're seeing with Homes AI, we are quite capable of building very powerful innovative products that -- where we have more data to put into our models than another player. And just a simple stand-alone AI can abstract some data sets off the Internet, but we can't -- we have more. We have significantly more, and we'll leverage that more. And we believe that the information begets information. That's been the nature of our business since the beginning of time. Because we have data, we can draw clients who give us more data and more data and more data. So it's a race, and it's a data begets data race, if I -- and you can see that's what STR is. That's what Real Estate Manager is doing. That's what Debt Solutions is doing. And that's 3 of them in just a matter of a couple of years that are these proprietary data generators that you can't get at the data unless you have the keys, and we have the keys.

And our last question comes from Ashish Sabadra with RBC Capital Markets.

I was just -- just wanted to follow up on the earlier question on Commercial segment margins. I understand the investment in '26, but how should we think about the commercial margins over your midterm targets?

Yes. I mean, you should see the segment grow from '26 to -- actually '27 to '30, right? You get through this investment phase in '26 and then you should expect them to grow '27 to '30. The full impact of the investments is happening as we speak, right? All those -- amazingly, all those investments are basically happening at the same time. And so we should -- a lot of them should be finalized by -- in 2026.

I think with that, we're going to wrap up the call. Thank you, everyone, for joining us on the call. We appreciate your time and attention and the opportunity to be working for you guys. And I guess, you guys are going to catch the city. We actually have a great view of the capital here from where we sit and are doing this call. So I guess, that's the next thing tonight.

Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.