The Next Giant of CoStar?
CoStar's Residential Competitors Facing Renewed Scrutiny
CoStar reported its Q2 2025 results last night. CEO Andy Florance gave his usual long remarks on nearly all facets of the business. I will give a quick update on financials, but my focus will be on the extremely interesting developments in the online residential real estate portal market. CoStar competitors in the U.S. and Australia are facing renewed regulatory and legal scrutiny, which could turn into a very positive boost for CoStar’s Homes.com in America and Domain in Australia. To cut to the chase, I increase the odds—ever so slightly—that Florance might have a shot at creating a new giant to take on Zillow and others.
CoStar Q2 2025 Highlights
CoStar Group Q2 Revenue Increases 15% Year-over-Year,
Achieves All-time High Quarterly Net New Bookings of $93 million and
Increases Homes.com Members 56% from Q1 2025
Adjusted EBITDA was $85 million in Q2 2025, an increase of 108% from Q2 2024
With another quarter of double-digit topline growth at CoStar, this was the 57th consecutive quarter of double-digit revenue growth for the company. Company-wide gross margins declined somewhat, but this is likely due to the inclusion of the Matterport since February. Since then, CoStar has shutdown one money-losing operation within Matterport, has just barely begun to increase Matterport’s salesforce from a paltry figure of “fewer than thirty”. Many other changes are on the way in the near future for Matterport.
EBITDA and cashflows increased greatly this quarter compared to a year ago.
Residential Real Estate Portals
Given CoStar’s handful of businesses and segments, there’s always a lot going on. However, the continuing investment behind its residential portal Homes.com remains in the spotlight. I believe CoStar continues to make good progress with Homes.
For the past several quarters, the most important activity has been investing in and training a dedicated force of sales reps to sell Homes.com subscriptions to real estate agents. As a result, NPS scores have vastly improved and sales rep productivity has increased. NPS has increased successively over the last three quarters: from a score of 4 in Q4 2024 to 38 in Q2 2025.
Investments in marketing will also continue to sustain and grow its monthly unique visitors to the Homes.com network. After CoStar initiated its enormous marketing campaign for Homes.com in early 2024, web traffic trailed off over the next several quarters. However, MAUs during Q2 2025 saw growth over the prior quarter, potentially signaling a trough and perhaps growing interest from real estate agents and home buyers.
In terms of revenues, CoStar’s residential segment grew 8% year over year this most recent quarter. For the trailing twelve months, the segment has earned revenues of $111 million.
Compass Lawsuit Against Zillow
Compass, the largest real estate brokerage in America, sued Zillow in June. According to the New York Times:
“In its suit that was filed in New York federal court on Monday morning, Compass claims that Zillow is engaged in an anticompetitive conspiracy to maintain a monopoly over digital home listings. Online real estate portals have become an integral part of the home-buying process, with nearly 100 percent of buyers now reporting that they use the internet in their home searches. And Zillow, which has a database with about 160 million properties and receives about 227 million unique visitors every month, is the undisputed giant of digital real estate sites.”
Compass filed its lawsuit after “Zillow announced that any home that was put on the market but not available for list on Zillow with within 24 hours would be forever banned from its site.” Whatever spin Zillow or Compass puts on this dispute, both are trying to protect their economic rights. You can download the Compass complaint right here:
Florance described the events giving rise to the lawsuit (emphasis mine):
“Zillow began questionably leveraging its market power by forcing agents to market listings on its platform within 24 hours of the listing being marketed or risk the listing being permanently banned. This tactic, we believe, raises serious antitrust concerns. Indeed, Compass has already filed a lawsuit against Zillow for such practices. Zillow banned its first listing despite it complying with Bright MLS and NAR regulations.
Zillow falsely labeled the property as off-market on their website, misleading buyers. Zillow demands agents listings immediately to avoid losing the opportunity to divert and sell leads from those listings. Given the recent relaxations and clear cooperation no commingling rules, Zillow appears concerned that agents may opt for more agent-friendly platforms like Homes.com, which do not divert leads.”
CoStar is currently taking advantage of the Compass lawsuit against Zillow to further increase the profile of Homes.com among real estate brokers. They are now offering a free advertising package to any home for sale that Zillow bans. Florance said on the recent call:
“Homes.com is offering a free Boost to any home for sale that Zillow bans. The first home ban that we’re aware of is in Montgomery County, Maryland. And with a Homes.com Boost, we’ve been able to serve it up to buyers 155,000 times in the first 12 days, it was on the market. 205 buyers have favorited the listing on Homes.com and 43 have shared it with a friend or family member. I visited that open house on that listing this weekend to support the agent, and there was good traffic.
The agent told me they’ve already had 30 showings. Homes.com provides a compelling agent-friendly alternative to Zillow’s aggressive tactics. Agents are liking what we are doing.”
REA Group and Realtor.com
Meanwhile, on the other side of the world in Australia, Florance informed us that REA Group is now under investigation by Australia’s antitrust regulator, the ACCC.
This is very good news for CoStar for two reasons.
First, CoStar recently agreed to acquire Domain, the number two residential real estate portal in Australia. What likely prompted the investigation into REA is that some real estate agents reported their monthly REA subscription fees increasing by up to 78%. One agent reported a 110% increase. Regulatory scrutiny and broker backlash could make it much easier for Domain to compete against REA and take market share.
Second, REA Group is searching for a new CEO. Given the Murdoch family owns both REA Group and U.S.-based Realtor.com, it might be Realtor.com’s CEO that replaces REA’s current CEO. “If that were to occur, it would mean two disruptive leadership changes in our favor in one move,” said Florance.
Summary
CoStar’s Homes.com is showing increasing promise. Declines in web traffic and MAUs seem to have stabilized and might be poised to grow from here. Homes.com plans to increase the number of dedicated sales reps from the 230 they had at the end of 2024 to 750 by the end of 2025. Finally, the outlook for Homes.com and Domain should improve due to increased scrutiny and user backlash against their primary competitors Zillow and REA.
Based on all the above, plus the addition of three new independent board members, I’m starting to feel a bit more confident that Homes.com has the potential to be a true competitor to Zillow rather that just a cash incinerator for CoStar.
Further Reading
If you’re interested in CoStar, please check on my past writings about the company.
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The Mighty Florance
It seems Andy Florance relishes a challenging battle. He defied tradition and the odds when he digitized commercial real estate listings beginning in 1987. Through perseverance, hard work, and a seeming joy of crushing competition on his way to being the best, CoStar is now the preeminent commercial real estate data …
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Data sources for all charts come from SEC filings, Koyfin, and other publicly available information.
Thanks für your summary. Also worth noting might be Hemnet from Sweden https://cosmiccapital.substack.com/p/saying-no-to-hemnet-hemst