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EXHIBIT 99.1
[COSTAR GROUP LOGO]
FOR IMMEDIATE RELEASE
CONTACTS:
Pamela Silberman
Vice President, Investor and Public Relations
CoStar Group, Inc. (301) 280-3808
[email protected]
COSTAR GROUP, INC. ANNOUNCES THIRD QUARTER 2000 RESULTS; REVENUES GROW 96%
OVER THIRD QUARTER OF 1999
COMPANY MOVES CLOSER TO PROFITABILITY
COMPS, INC. DIVISION NEAR CASH FLOW BREAK EVEN
BETHESDA, Md., October 25, 2000 -- /PRNewswire/ -- CoStar Group, Inc. (Nasdaq:
CSGP), the Internet based, leading provider of information services to the U.S.
commercial real estate industry, today reported financial results for the third
quarter of 2000. Revenues for the third quarter were $15.7 million, an increase
of 96 percent compared with $8.0 million for the third quarter of 1999.
The pro forma net loss for the third quarter of 2000 excluding purchase price
amortization and the related income tax benefit was $8.5 million or $0.55 per
share, improving by $1.5 million or $0.10 per share from $10.0 million or $0.65
per share for the second quarter of 2000.
Revenues for the nine months ended September 30, 2000 were $41.7 million
compared with $21.3 million for the comparable period in 1999, an increase of
$20.4 million or 95 percent.
"Our results this quarter demonstrate further that the Company is on a path to
profitability. These results were principally driven by 7.9% sequential
quarterly revenue growth combined with attaining optimal staffing of national
sales and research operations, realizing the benefit from non-recurring
marketing costs related to the launch of CoStar Exchange(TM) and continuing the
successful integration of Comps, Inc., which is nearly cash flow break even,"
said Andrew C. Florance, CEO of CoStar Group. "We expect the fourth quarter
sequential revenue growth rate to be consistent with that of the third quarter
and we expect a fourth quarter improvement in pro forma earnings of as much as
$0.10 per share. We believe that if the Company is successful in achieving its
goal of entering 2001 with a quarterly pro forma loss per share of less than
$0.50, the Company should be in position to accomplish our 2001 goals. We
continue to expect sequential quarterly revenue growth for 2001 of between 7 and
10%, and believe CoStar is on track to reach positive pro forma earnings before
the end of 2001."
CoStar's results this quarter demonstrate the Company's focus on revenue growth
and cost reduction to achieve profitability. Product revenues continue to grow
over what is now a relatively fixed cost base for product research. With the
addition of Larry Dressel as Chief Operating Officer to CoStar's senior
management team, profit and loss responsibility for company operations,
including product development, sales, marketing, and customer service, is under
increased scrutiny. Additionally, the Comps, Inc. operation is approaching cash
flow break even, resulting from steps taken by management to eliminate a burn
rate for Comps that exceeded $2.0 million per month at the time of the February
acquisition. CoStar expects the Comps, Inc. division to be cash flow positive in
the first quarter of 2001. During the third quarter of 2000, Comps, Inc.
contributed $4.5 million to revenues.
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Furthermore, significant marketing costs associated with CoStar Exchange(TM) are
non-recurring as the product moves from a full-scale launch to selling and
distribution. Revenues from CoStar Exchange(TM), a web-enabled for-sale
marketplace, are growing. CoStar Exchange(TM), officially launched in June 2000,
now has 93 subscribing firms, an increase from 30 firms at the end of the second
quarter. CoStar Exchange(TM) now has an annual revenue run rate of $600,000. The
number of investment packages listed have increased to a total of 52,300 with a
value of $59.0 billion as of September 30, 2000, an increase from 45,400
listings, or $50.5 billion as of June 30, 2000. Based on the historical sale
transaction volume tracked by CoStar COMPS(R), CoStar estimates the inventory in
CoStar Exchange(TM) represents over 65 percent of the total, current for-sale
U.S. commercial real estate market.
CoStar has announced plans to offer customers CoStar Connect(TM), a service that
will license CoStar's technology and content to commercial real estate firms to
market their property listings on their corporate web sites. CoStar Connect(TM),
which is expected to be released in the first quarter 2001, will be a
cost-effective outsourcing solution for brokers and property owners that will
allow them to significantly reduce the time and expense of building the property
listing functionality into their corporate web sites. Backed by CoStar's 700
researchers and team of program developers, CoStar Connect(TM) will host and
deliver the most comprehensive, up-to-date commercial real estate content
available for brokers and building owners' web sites. This product demonstrates
CoStar's ability to use its national research operation, massive database and
technological expertise to deliver value-added services to its clients. With
CoStar's research, program development team and sales infrastructure
substantially in place, significant incremental investment was not required to
develop this product. The Electronic Media Sales Team led by Mark Klionsky will
add this to their product offerings and license the subscriptions to CoStar
Connect(TM).
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Financial Highlights
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CoStar Group, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2000 1999 2000 1999
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenues $15,717 $8,021 $41,661 $21,326
Cost of revenues (a) 8,356 3,616 22,063 9,278
-------- -------- -------- --------
Gross Margin 7,361 4,405 19,598 12,048
Operating expenses
Selling and marketing 9,441 4,847 29,011 11,853
Software development 1,085 289 2,807 838
General and administrative 7,376 3,174 19,457 7,682
Purchase amortization 2,359 588 6,835 1,636
Acquired in-process development 0 0 5,812 0
-------- -------- -------- --------
20,261 8,898 63,922 22,009
-------- -------- -------- --------
Loss from operations (12,900) (4,493) (44,324) (9,961)
Loss on disposal of assets 0 0 (182) 0
Other income, net 807 1,234 2,766 1,912
-------- -------- -------- --------
Net loss before income taxes (12,093) (3,259) (41,740) (8,049)
Income tax benefit 523 0 1,933 0
-------- -------- -------- --------
Net loss $(11,570) $ (3,259) $(39,807) $ (8,049)
======== ======== ======== ========
Net loss per share $ (0.75) $ (0.25) $ (2.65) $ (0.71)
======== ======== ======== ========
Pro forma net loss (b) $ (8,457) $ (2,496) $(25,695) $ (5,848)
======== ======== ======== ========
Pro forma net loss per share $ (0.55) $ (0.19) $ (1.71) $ (0.52)
======== ======== ======== ========
Weighted average common shares 15,411 12,823 15,020 11,331
======== ======== ======== ========
</TABLE>
(a) Includes purchase amortization of $1,277 and $175 for the three month
periods and $3,398 and $565 for the nine month periods ended September
30, 2000 and 1999, respectively
(b) Pro forma net loss excludes purchase amortization, the related income tax
benefit, and acquired in-process development
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CoStar Group, Inc.
Condensed Consolidated Balance Sheet
(in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 55,771 $ 94,074
Accounts receivable, net 5,607 2,841
Prepaid and other current assets 1,186 2,458
-------- --------
Total current assets 62,564 99,373
Property and equipment, net 17,292 5,882
Intangible and other assets 79,587 31,222
Deposits 553 428
-------- --------
Total assets $159,996 $136,905
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 13,441 $ 7,585
Deferred revenue 7,244 2,635
-------- --------
Total current liabilities 20,685 10,220
Long term liabilities 962 0
Deferred taxes 3,388 6,988
Stockholders' equity 134,961 119,697
-------- --------
Total liabilities and stockholders' equity $159,996 $136,905
======== ========
</TABLE>
There will be a conference call at 11:00 a.m. EDT on Thursday, October 26, 2000
to discuss CoStar Group's third quarter 2000 earnings results. This conference
call will be broadcast live over the Internet at
www.costargroup.com/corporate/investor. If you would like to join by telephone,
please dial (800) 377-4467 within the United States and (816) 650-0774 outside
the United States. A replay of the conference call will be available
approximately one hour after the call concludes on Thursday, October 26, 2000
through midnight on November 2, 2000. The replay telephone number is (800)
252-6030 within the United States and (402) 220-2491 outside the United States.
Refer to conference ID number 7254558.
ABOUT COSTAR GROUP, INC.
Headquartered in Bethesda, MD, CoStar Group, Inc. (Nasdaq: CSGP), is the leading
provider of information services to the U.S. commercial real estate industry.
CoStar's suite of products offers customers access via the Internet to the most
comprehensive, verified database of commercial real estate information in over
50 U.S. markets. The company has more than 1,000 employees and contractors
nationally, including over 700 highly trained commercial real estate research
professionals in 27 offices.
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This news release includes "forward-looking statements," which involve many
risks and uncertainties that could cause actual results to differ materially
from these statements. Factors that could cause or contribute to such
differences include, but are not limited to, successful adoption of the
Company's products, increased competition,
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changes in the commercial real estate industry, managerial execution,
development of CoStar's sales force, employee retention, and ability to adapt to
technological changes. More information about potential factors that could cause
actual results to differ materially include, but are not limited to, those
stated in CoStar's Form 10-K for the year ended December 31, 1999 under the
headings "Risk Factors" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and those stated in CoStar's Form S-3 filed
June 16, 2000 under the heading "Risk Factors". In addition to these statements,
there can be no assurance that CoStar's revenues will grow at the rates
specified herein, that CoStar's pro forma earnings will continue to improve,
that CoStar will have positive pro forma earnings in 2001, that the Comps
division will be cash flow positive in 2001, that CoStar Exchange(TM) revenues
will continue to increase, that CoStar will launch CoStar Connect(TM) or that
CoStar Connect(TM) will be successful. All forward-looking statements are based
on information available to CoStar on the date hereof, and the Company assumes
no obligation to update such statements.
