CoStar Group may have recorded its 62nd consecutive quarter of double-digit annual revenue growth in the third quarter of 2026, but CEO and founder Andy Florance wants more.
Company-wide, net new bookings came in at $37 million for the quarter, below expectations.
“Our renewal rates remained high, but with a growing multibillion-dollar subscription base, we need to continue to grow high ROI sales force headcount,” Florance, the 2026 HousingWire Vanguard award winner, said on his firm’s Q3 2026 earnings call with investors and analysts Tuesday night. “Our sales team met with hundreds of thousands of clients and prospects, but they lack the scale to reach the hundreds of thousands of additional prospects we have.”
According to Florance, CoStar currently has roughly 2,000 sales professionals on staff, down roughly 10% compared to a year ago. Looking ahead, Florance said CoStar is focused on making changes to the Homes.com sales team, which originally launched with a large, centralized inside sales team based out of the company’s headquarters in Richmond, Virginia.
“We’ll continue to build the Richmond team, but we are shifting most of our growth effort to the field sales professionals with prior real estate and sales experience in our top cities,” Florance said. “Field reps who meet with clients face-to-face are, on average, much more productive than inside sales and having visited prospects and clients with our home field sales teams at the agents’ open houses and offices.”
For the quarter, Homes.com generated $7 million of annualized net new bookings, despite reducing inside sales reps from a peak of 655 a year ago to 267 today.
“When we demo Homes membership to an agent, we consistently achieved close rates above 40%,” Florance said. “The objective is more demos and expanding our field sales team is how we get in front of more agents.”
This performance comes a little over six months after activist investor campaigns called on CoStar to divest its Homes.com assets.
Overall, CoStar’s residential real estate segment generated $460 million in revenue, up from $373 million a year ago. In total, the company generated $952 million in revenue for the quarter, up 14% annually. Additionally, CoStar Group reported $74 million in net income, up $105 million from a year prior.
As CoStar looks to continue to maintain its profitability, executives noted that the firm had achieved $150 million in cost efficiencies so far this year, noting the ongoing expense reviews have identified potential additional savings of at least $200 million, which the firm expects to realize over the next 12 to 18 months.
Acquisitions performing well
CoStar also called out the performance of some of its recent acquisitions during the call, noting that Matterport’s subscription revenue was up 11%, direct sales bookings was up 14% and new enterprise customers was up 46% year-over-year during the quarter. Executives added that they expect Matterport to be profitable by the end of 2027.
In addition to this, executives also highlighted Zonda’s performance. CoStar closed its $815 million acquisition of Zonda in late August. According to CoStar, Zonda’s pro forma third quarter revenue was $42 million, roughly 75% of which was subscription, which grew 4% despite a difficult new homes market.
The company also announced its agreement to acquire survey-grade aerial imagery program Vexcel Group for roughly $730 million in cash. CoStar said it expects the deal, which will be funded with cash on hand and CoStar’s existing revolving credit facility, to close during the first quarter of 2027.
Vexcel operates a global aerial imagery and geospatial data program that captures more than 60 million images a year across millions of square kilometers. Its coverage spans more than 45 countries, 320 major global metros and 99.6% of the U.S. population. The firm refreshes major U.S. metros as often as three times per year and flies disaster zones within 24 hours of an event for catastrophe assessment and response.
“Rapid technology advances in aerial photography and lidar are enabling Vexcel to produce extremely high-resolution images and survey-grade measurements of land, houses, office buildings, industrial properties, retail properties, apartment buildings, construction sites and other infrastructure in the built environment,” Florance said in the announcement.
Following closing, Vexcel will continue to operate its data program under the Vexcel brand and serve its existing customers and partners. CEO Erik Jorgensen and the current leadership team are expected to remain in place.
For CoStar, which owns Homes.com, Apartments.com, LoopNet and other marketplaces, Vexcel’s imagery and derived data could support richer listing content, more accurate property attributes, improved lead qualification and new data products for lenders, investors and government clients.
