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EXHIBIT 99.1
COSTAR GROUP, INC. ANNOUNCES STRONG SECOND QUARTER
REVENUE GROWTH OF 103% OVER SAME QUARTER LAST YEAR
COMPANY FOCUSED ON PATH TO PROFITABILITY
BETHESDA, Md., August 1, 2000 /PRNewswire/ -- CoStar Group, Inc. (Nasdaq: CSGP),
http://www.costargroup.com, the Internet based, leading provider of information
services to the U.S. commercial real estate industry, today reported financial
results for the second quarter of 2000. Revenues for the second quarter were
$14.6 million, an increase of 103 percent compared to $7.2 million for the
second quarter of 1999.
The net loss for the second quarter of 2000 was $13.1 million, or $0.85 per
share, compared to a net loss of $2.6 million, or $0.23 per share for the second
quarter of 1999. The net loss for the second quarter excluding purchase price
amortization and the related income tax benefit was $10.0 million, or $0.65 per
share.
Revenues for the six months ended June 30, 2000 were $25.9 million compared to
$13.3 million for the comparable period in 1999, an increase of $12.6 million or
95 percent. The net loss for the first six months of 2000 was $28.2 million, or
$1.91 per share, compared to a net loss of $4.8 million, or $0.45 per share for
the same period of 1999.
"We are extremely pleased to report another quarter of consistent and strong
revenue growth," said Andrew C. Florance, CEO of CoStar Group. "This quarter
marks the substantial completion of our infrastructure expansion required to
produce and distribute our current products nationally. During our path to
profitability, we expect our cost structure, including our headcount,
facilities, and other operating costs, to remain largely fixed. With continued
sequential quarterly revenue growth at an expected 7 to 10 percent, we believe
quarterly losses will decline at a rate that will enable the company to reach
positive cash basis earnings before the end of next year. The management team at
CoStar Group is aggressively focused on reaching overall profitability."
CoStar's Comps division revenues contributed $4.3 million to total revenues for
the second quarter 2000. During the quarter, CoStar continued to integrate the
recently acquired Comps business, and began to distribute Comps' products
through an integrated national sales force. CoStar continues to identify
additional resources dedicated to non-core products and eliminate or reposition
staff associated with those products. To realize its profitability goals, CoStar
expects to focus all its efforts on executing its current business plan and will
seek to form strategic alliances when vertical integration or expansion
opportunities occur. CoStar considers these partnerships valuable when the
Company can control and leverage its most valuable assets: research, database
content and client relationships.
CoStar Exchange(TM), officially launched in June 2000, has gained early
acceptance with CoStar customers because it offers subscribers a unique buying
and selling solution by increasing their efficiency, reducing transaction costs
and creating more value for every transaction. It is CoStar's first product that
uniquely integrates information from CoStar's other product lines: CoStar
Property(TM), CoStar Tenant(TM) and CoStar COMPS(TM) and ultimately provides
users with an unprecedented level of information on for-sale properties.
Additionally, sellers are recognizing the power of marketing their commercial
properties through CoStar Exchange(TM). The number of investment packages has
increased from 25,000 during beta testing to 44,000 at launch to 48,000 today,
valued at approximately $50.5 billion. Based on the historical sale transaction
volume tracked by CoStar COMPS(TM), CoStar estimates the inventory in CoStar
Exchange(TM)
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represents almost 60 percent of the total, current for-sale commercial real
estate market. With 450 beta users and 30 subscribers signed up in just six
weeks, CoStar ExchangeTM is demonstrating that subscribers easily find value in
this product.
Financial Highlights
CoStar Group, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2000 1999 2000 1999
(unaudited) (unaudited)
Revenues $14,572 $7,178 $25,944 $13,305
Cost of revenues (a) 7,730 3,068 13,707 5,662
-------------- ------------- ------------- -----------------
Gross Margin 6,842 4,110 12,237 7,643
Operating expenses
Selling and marketing 11,168 3,923 19,570 7,006
Software development 1,004 309 1,722 550
General and administrative 6,660 2,572 12,081 4,507
Purchase amortization 2,739 548 4,476 1,048
Acquired in-process development 0 0 5,812 0
-------------- ------------- ------------- -----------------
21,571 7,352 43,661 13,111
-------------- ------------- ------------- -----------------
Loss from operations (14,729) (3,242) (31,424) (5,468)
Loss on disposal of assets (182) 0 (182) 0
Other income, net 933 616 1,959 678
-------------- ------------- ------------- -----------------
Net loss before income taxes (13,978) (2,626) (29,647) (4,790)
Income tax benefit 845 0 1,410 0
-------------- ------------- ------------- -----------------
Net loss $ (13,133) $ (2,626) $ (28,237) $ (4,790)
============== ============== ============= =================
Net loss per share $ (0.85) $ (0.23) $ (1.91) $ (0.45)
============== ============== ============= =================
Weighted average common shares 15,391 11,510 14,822 10,572
============== ============== ============= =================
(a) Includes purchase amortization of $1,277 and $187 for the three
month periods and $2,121 and $390 for the six month periods ended
June 30, 2000 and 1999, respectively
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Costar Group, Inc.
Condensed Consolidated Balance Sheet
(in thousands)
June 30, December 31,
2000 1999
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 64,258 $ 94,074
Accounts receivable, net 7,612 2,841
Prepaid and other current assets 1,660 2,458
-------------- -----------------
Total current assets 73,530 99,373
Property and equipment, net 17,146 5,882
Intangible and other assets 90,292 31,222
Deposits 587 428
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Total assets $ 181,555 $ 136,905
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 13,710 $ 7,585
Deferred revenue 8,503 2,635
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Total current liabilities 22,213 10,220
Long term liabilities 1,906 0
Deferred taxes 11,100 6,988
Stockholders' equity 146,336 119,697
-------------- -----------------
Total liabilities and stockholders' $ 181,555 $ 136,905
equity ============== =================
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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. For more information, please visit
http://www.costargroup.com.
This news release includes "forward-looking statements," which involve many
risks and uncertainties that could cause actual results to differ materially
from these statements. Important 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 and those stated in CoStar's Form S-3
filed June 16, 2000. In addition to these statements, there can be no assurances
that CoStar's revenues will continue to grow at the rates specified herein, that
CoStar's losses will decline, that CoStar's cost structure will not increase, or
that CoStar will have positive cash basis earnings in 2001.
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SOURCE CoStar Group, Inc.