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spk09: Continue to elevate the LoopNet brand and increase brand awareness. While the campaign targets tenants, we're really actually targeting owners and brokers as a pass-through audience. We believe the striking high-end architectural imagery will resonate with owners of ultra-high-value properties and position LoopNet as a brand-appropriate channel for high-end, high-dollar property advertising. all this so i can tell scott that our asp per ad is going up we have we have put in place many foundational elements for lube net to succeed this year and in the years to come we can clearly see the enormous scale of this opportunity though we're crossing a 200 million revenue run rate milestone our penetration rate is still only a low single digit number There are tens of thousands of very high-value opportunities out there for us and hundreds of thousands of valuable opportunities overall, and we're focused on winning those opportunities and growing this business. 10X delivered another solid quarter and continues to benefit from the CoStar and LoopNet driving potential buyers to 10X. 10X unique monthly visitors rose 45% quarter over quarter. On a year-over-year basis, overall account creations increased 61%, with CoStar LoopNet source creations up over 1,000% from 330 to 3,700. Average registered bidders per property rose from 5 to 13, a 160% increase, and average live bidders per property increased from 2.5 to 4, a 68% increase. The growth in the number of bidders is key because when there are three or more bidders at an auction, there's an 85% probability of transacting. That's an excellent number that draws properties to our network. As a result, in March, the trade rate, the percentage of properties that came to auction and sold hit an all-time high of 81%. These strong metrics are excellent proof points of the network effect from combining 10X with the CoStar platforms. During the first quarter this year, we grew our 10X sales teams by 39%, launched a best-in-class six-week sales training program and lead generating training program, and capitalizing on this growing momentum by launching a new national marketing campaign called starring comedian Keegan-Michael Key. Great, great actor. We believe this campaign will further establish 10X as a leading brand for online commercial real estate transactions, drive market awareness that there's no faster or more certain way to exchange commercial real estate, and that 10X as a part of the CoStar network will become an exponentially better way for buyers and sellers and brokers to exchange commercial real estate. As the campaign says, why just buy it or sell it when you can 10X it? The successful vaccine rollout across the U.S., combined with fiscal stimulus, high household savings rates, relaxed COVID restrictions, and warmer weather, have boosted consumer sentiment and spending, helping the labor markets, retail sales, restaurants, service industries, and travel. The office sector struggled in Q1. setting a record for the largest single quarter of negative net absorption. Overall leasing activity remains depressed. Many companies are still evaluating their workplace strategies, but in-person tours are restarting. I'm doing one first thing in the morning. And vaccinated workers are gradually returning to in-person environments. For multifamily, the defining trend of 2020 was weak demand in the densely populated urban centers and strength out in the suburbs. While the first quarter couldn't be described as a reversal of that trend, demand has recovered to normal levels in urban centers while staying strong in the suburbs. Record search activity at apartments.com reflects continued strong multifamily demand. Fiscal stimulus and improving health conditions are helping the retail sector, especially the service sector tenants that have struggled with lower foot traffic over the past year. Hotel occupancies continue to improve by leisure travel and are hurt by continued weak business travel. The industrial sector continues to outperform and set new quarterly leasing volume records driven by the double-digit acceleration of e-commerce. Despite the wave of new construction in the industrial sector, vacancies there ticked down in Q1 and remain near all-time lows. The capital markets have rebounded on the back of strong portfolio trading activity and a return of large national buyers. With record levels of dry powder, investors are on the lookout for distressed opportunities. So far, concentrated on hotels with expectation for distressed retail assets to follow. We just need to make sure they 10x those opportunities instead of just buying them. Last March, as you know, we quickly evacuated all of our offices and our staff moved to safely work from home. Our team did an outstanding job, and though it was difficult, they all made it work for our clients, our shareholders, and one another. With safe and effective vaccines now widely available, and with the help of a number of CoStar Group-organized vaccine clinics on site, more and more of our staff are now vaccinated. I believe it's the majority. Employees are now safely returning to our offices by the hundreds. While it's early days, it feels like we're moving towards a more normal and productive, 3D, real, face-to-face, collaborative workplace we used to enjoy. I believe that companies with teams that are able to work together face-to-face will always out-compete remote, dispersed teams. Our offices feel like a return to a college campus after a long, long summer break. I see thrilled colleagues smiling behind their masks when they run into close colleagues they've not seen in ages. It's really quite nice to see. At this point, I'm going to hand the call over to my face-to-face real 3D presence sitting right here next to me, at-work colleague, our CFO, Scott Wheeler.
spk10: Thank you, Andy. I'll be using my 3D voice today, so hopefully you'll notice the difference, all of you who are listening. It's 2D from the last year I used my 3D. 2D voice. But, yeah, I think that last part is the best news of all, of everything you talked about, going back to our offices, rolling out vaccines to protect our teams and their families, and getting to welcome our friends and our team members back to our offices every day. It really is super fun. And we had a great first quarter financially. I'll call it hitting for the cycle with double-digit growth in sales bookings, revenue, adjusted EBITDA, and non-GAAP EPS. We included HomeSnap, currently in their rookie season with CoStar, in our financial results for the first time this quarter, and they were great. And we also signed up a strategically important prospect in the online residential spaces, homes.com. So, on to the results. Revenue in the first quarter, 2021, increased 17% over the first quarter of 2020, which was above the high end of our guidance range. The organic revenue growth in the first quarter, which excludes HomeSnap and 10X, was a strong 11% year-over-year as we come around to one year after the start of the pandemic. Going forward, we expect organic revenue growth to improve to approximately 12% to 13% for the second quarter and for the remainder of the year. CoStar Suite revenue grew 4% in the first quarter of 2021 versus first quarter 2020 at the high end of our expectations. As we begin to lap the low sales months that began in March 2020 as a result of the pandemic, we expect to see CoStar Suite revenue growth improve sequentially. CoStar Suite sales in the first quarter of 2021, along with contract renewal rates, returned to pre-pandemic levels. So this is certainly very encouraging and is a much faster recovery than what occurred in the last recession for CoStar Suite. We expect CoStar Suite revenue growth in the 5% to 6% range for the second quarter of 2021. Our outlook for the full year has improved to approximately 6%, with 7% to 8% growth rates expected in the second half of the year for CoStar Suite. Revenue and information services grew 7% year-over-year in the first quarter of 2021 to $35 million. Both the real estate manager and STR turned in strong double-digit subscription revenue growth in the first quarter, with real estate manager subscription revenue up 19%, and STR subscription revenue up 15% compared to the first quarter of 2020. The strong subscription revenue growth was moderated somewhat by that drop in transaction revenue, which is a one-time revenue in STR, that drop which occurred at the first part of the pandemic in the first quarter of last year. Overall, we expect revenue growth from information services to improve sequentially to a rate of 12% to 14% in the second quarter of 2021, and we continue to expect growth of 10% to 12% for the full year. Multifamily revenue growth for the first quarter remains strong at 21% compared to the first quarter of 2020, which is at the high end of our expectations. The number of properties advertising with us was up 10% in the first quarter, with growth in the average rate per property also up around 10%, as properties continue to upgrade their advertising packages and increase their exposure. The mid-market revenue growth rate was up over 35% in the first quarter, as Andy mentioned, with growth balanced pretty evenly between the growth in number of paying properties and growth in the revenue per property. We expect revenue from multifamily to grow at the rate of approximately 18% to 19% in the second quarter of 2021 compared to the second quarter of 2020. Commercial property and land revenue grew 48% year-over-year in the first quarter, in line with our expectations. This includes the impact of the 10X and HomeSnap acquisitions. Organic growth was 11% year-over-year in the first quarter. We expect the reported commercial property and land revenue growth rate to be approximately 55% to 60% for the second quarter of 2021. Organically, we expect growth of approximately 18% to 20% for the second quarter, with improved growth across all of the marketplaces in this sector as we lap the initial pandemic impact from last year. Within commercial property and land, LoopNet revenue showed solid growth in the first quarter, increasing 14% compared to the first quarter of 2020, just a touch below our expected range of 15-16%, as it's been difficult to effectively onboard and trade additional sales resources to sell LoopNet during the pandemic, as Andy referenced. We expect LoopNet revenue growth to improve sequentially and grow approximately 19-20% in the second quarter. Our gross margin came in at 81% in the first quarter of 2021, in line with our expectations. We expect gross margins to continue at that level in the second quarter, with gradual improvement throughout the end of the year. Our profitability was strong in the first quarter, with net income, adjusted EBITDA, and non-GAAP EPS results all ahead of the guidance we issued in February. Net income was 74 million in the first quarter, with an effective tax rate of 20% for this quarter. Now, the first quarter effective tax rate was higher this year compared to the first quarter of last year, and that's due to fluctuations in the amount and the timing of share-based payment deductions. Those wacky share-based payment deductions, you just never know what they're going to do. First quarter adjusted EBITDA was $160 million, up 29% from the first quarter of last year, and came in approximately $15 million above the high end of our guidance range. The improved adjusted EBITDA was primarily the result of higher revenue, lower personnel expenses, and timing variances in the number of operating expense categories across the P&O. The operating expense favorability is primarily timing, and we expect to incur some of those expenses later in the year. The resulting adjusted EBITDA margin of 35% in the first quarter was 320 basis points above the first quarter of last year. Now we'll talk about some of the performance metrics for the quarter. At the end of first quarter, our sales force totaled approximately 835 people, which is lower than the sales force number reported at the end of 2020 by approximately 65. Part of this reduction is actually a modification of how we count direct sales, so a little bit of a restatement, if you would. We moved approximately 25 positions out of the sales count in the first quarter, positions that are focused on account management or managerial responsibilities that don't really directly impact sales. So the remaining decline in sales headcount sequentially of around 40 people is from first quarter attrition in the CoStar and LoopNet sales teams primarily, which from a timing perspective was not replaced in the first quarter given the difficulty of hiring and training new sales resources while we work remotely. We expect to not only replace but to increase the size of both the CoStar and LoopNet sales teams this year. The renewal rate on annual contracts for the first quarter of 2021 was 90%, unchanged from the fourth quarter of 2020. and the renewal rate for the quarter for customers who've been subscribers for five years or longer was 96%, a slight improvement from the renewal rate of 95% in the fourth quarter of 2020. Subscription revenue on annual contracts accounts for 78% of our revenue in the first quarter, which was in line with the last quarter. Before I talk about the second quarter and our revised outlook, let me say a few comments about the pending Homes.com acquisition, which we have not included in our outlook for 2021. Today, Homes.com generates approximately $10 million in revenue per quarter, and it's not profitable. Subject to the deal closing, which we expect to happen by the end of the second quarter this year, we intend to evaluate existing product revenues and discontinue certain services that are inconsistent with our strategy. As we wind down these services and record typical acquisition accounting adjustments, we expect to record approximately $5 to $10 million in revenue for Homes.com in the second half of this year. We're too early in the process to providing specific guidance on the profit impact to our business, but at a high level, I would expect the transaction to be just modestly dilutive to earnings in the second half of the year as we work through integration. I'll now talk through our outlook for the full year and the second quarter of 2021. We expect full year revenue in a range of $1,930,000,000 to $1,945,000,000 for 2021, which implies an annual growth rate of 17% at the midpoint for the year. On an organic basis, excluding the impact of the HomeSnap and 10X acquisitions, we expect growth of approximately 12% to 13% for the full year 2021. For the second quarter, we expect revenue range of $465 million to $470 million, representing revenue growth of 18% year-over-year at the midpoint of the range. For the full year 2021, we are raising our outlook for adjusted EBITDA to a range of $645 to $655 million, which implies an adjusted EBITDA margin of 33.5% at the midpoint of the range. We expect adjusted EBITDA of approximately $130 to $135 million in the second quarter of 2021 for an adjusted EBITDA margin of between 28% and 29%. Our marketing campaigns for Apartments.com, LoopNet, and 10X all accelerate in the second quarter, which results in the lower sequential margins, which isn't the case in most years. Our marketing spend in the third quarter is expected to remain at or near second quarter levels before dropping back down into the fourth quarter. So overall, it was a great start to the year and even better. I'm fully vaccinated. Andy's fully vaccinated. We're very excited to see 3D people here in our office. But Bill here, he's still in 2D. Flat Stanley? He still looks like Flat Stanley. We're going to call him Flat Billy. All right. Flat Billy, back to you. We're going to let you open it up for questions from the flat analysts on the call.
spk07: Well, thank you very much, Scott. Thanks. So for everyone out there, One question per participant, please, so make it an exceptionally insightful one but not a multi-part one. Gabriel, would you please assemble the questioners for the queue?
spk14: Absolutely. Again, just as a reminder, in order to ask a question, you'll need to press star 1 on your telephone keypad. If you wish to withdraw a question, press the found key. Your first question will come from Andrew Jeffrey of Truist Securities. Please go ahead.
spk04: Thank you very much. I guess I'm going to have to accept being 2D for now. Thanks, Andrew. Andy, residential obviously has grabbed a lot of attention, right, this last quarter to what with CoreLogic and all. Could you elaborate, I guess, a little bit beyond the relatively small deals you've done, albeit of importance, you know, in terms of how you intend to build that out, do you need to buy data? Do you need to buy a database? Are you going to build a database? Just trying to think about how you get from point A to point B in that big tan.
spk09: Yeah, so we already have a – HomeSnap already gives us a very solid seat at the table. It connects us with hundreds of thousands of important players, also leaders in the industry who – can set up the access we need. We already subscribe to a wide array of residential information sources, but we think we can work with HomeSnap and Homes and put together a very interesting strategy. And we think we'll get a lot of support from market participants for that strategy. So, you know, the first-generation models operate at scale for an extended period of time, and they never really ever produced any meaningful profits. We think there's the ability to actually build much more profitable lower-risk models by adopting a different business model, not trying to take the agent fees, but actually facilitating the power of the Internet and the reach of the Internet to find buyers with greater certainty and greater speed. So we're going to develop that plan a bit over the months to come. You know, we're beginning to do retreats around that and build out that business plan, and we'll be rolling that out later in the year. I'm, you know... there's not a specific additional company we need to buy today to execute that strategy. I'm sure that things will come up that will help and support our strategy. We are, you know, I think we are comfortable with what we're doing without any involvement in the, you know, for the CoreLogic acquisition. And And I don't want you to worry that if that deal were on the table today, the CoreLogic shareholders would be getting $101. We're not reinstituting that. There's nothing happening there. We're happy with the strategy we have with a very affordable homes.com. Though we did overpay for it, Rusty. That's a joke. That's just to the guy at the cellar. Negotiating with them all the time is tough to negotiate with.
spk14: Your next question will come from Sterling Audi of JP Morgan. Please go ahead. Yeah, thanks. Hi, guys.
spk06: Hi, how are you doing? I'm well. You outlined a lot of growth initiatives in your prepared remarks, and I guess what I need to better understand is or help me better understand is How do each of those ramp in the timing? Because it seems like there's a lot of opportunity where I think investors are going to wonder, are you going to accelerate that organic growth to the extent and over what time frame?
spk09: Yeah, so, you know, a lot of this stuff is – somewhat dependent. I know you have kids. Some have probably been homeschooling for a while, not as effective as actual in-person schooling, especially not when you're starting a new school. It's been hard to build sales forces effectively during this whole thing. And as we start to get back to a little bit more normal, I'm very much looking forward to being able to effectively build so many sales forces. So the opportunity to accelerate growth in apartments has been there. We've got the marketing engine that's just cranking. We have the opportunity at the middle and lower end that's really proving effective, and just it needs some more sales resources behind it. The LoopNet product is proving effective, and it can accelerate growth with more resources. It's already accelerating growth, but it can accelerate more with some more sales resources. I'm very excited about... this sort of centralized, advanced, virtual selling opportunities, what we can do with technology, so on and so forth. I think that's going to be pretty cool. The CMBS launch is out there. The global launch is going to start hitting next quarter, meaningfully next quarter. The apartment launch is out there. I mean, the hospitality launch is out there. 10X is also, you know, we nailed the demand side. We're seeing what we want to see there. We're getting those 13 registered bidders up from five or four or five, whatever it was. We're getting the flow there. And now what we need to do is bring more supply. That's where the more revenue comes from. We've begun to train the researchers on generating those leads, and we've got an excellent training program in place. And we're going to build out the sales force there, which should bring an acceleration to that one. So, you know... it's all sort of coming together here as we, you know, come to the middle of the year. And I love Pfizer. I love Moderna. I love JJ, you know, just getting back to getting back to actually, uh, growing the teams to support this effort. So, uh, Scott, is there anything that's like a missing in terms of when these, I mean, I think that the one thing that is not this year is, uh, CoStar Lender, excellent product there, excellent product potential, great product team there. John Vecchione is running that group. That'll be a great product. In the script, it said fourth quarter of 2021. I bumped it to first quarter of 2022. It's a complicated product, but it's pretty cool. I think it'll be very compelling. So that one's more of a 2022.
spk14: Our next question will come from George Tong of Goldman Sachs. Please go ahead.
spk01: Hi, thanks. Good afternoon. CoStar Suite had its best sales quarter since 2019, and that was helped by new product enhancements. Can you talk about what the sales strength reflects in terms of whether it's new institutional customers that are being brought on versus penetration among brokers versus increases in pricing that's coming back?
spk09: Yeah, so I don't believe there's any material impact of pricing increases. There are no pricing increases occurring right now. Going forward later into the year, I think there will be not price increases, but there will be average purchasing amount increases. So people, I believe, will step up from one module to three modules as they go to the global suite. So that's effectively more revenue per customer. But so far what it is is higher renewal rates. People aren't, you know, the cancellation rate coming down has a big impact as people feel more secure about their businesses and they see a light at the end of the tunnel. And then it is I think more seats from some existing institutional owner players. The CMBS data is now really valuable in our product. The STR data is extremely popular with anybody who is doing work in hospitality. Our rationale for acquiring STR was... We could see it was a great product valued by the actual operators of hospitality, investors in hospitality, but we could see that STR did not have a distribution channel into those people appraising and brokering hotel sales and developing hotels, and we could bring their product to market quickly, and that's been a big benefit to us, bringing STR data in there. Would you want to add anything to that?
spk10: Yeah, I think, George, when you look at the stats on CoStar usage right now, as far as subscriber numbers, this is the first quarter we went over 160,000 subscribers. So certainly after the dip in the second quarter last year, it's been coming back well. And as Andy said, clients are adding seats and adding users, particularly to take advantage of some of the new information. When you look at the number of sites that are using CoStar, that's also at a high level now that we hadn't hit before, over 38,171 sites. It's right up at the top of where we've been. And then when you look at the number of new subscribing firms coming on, This quarter was as big as it was right after we did Accelogen. Which is amazing. Accelogen bankruptcy. It's like the second quarter of 2018 after that first peak. We had some pretty high levels, but now we're adding again at those levels at average contract sizes that are probably 30% higher than what they were back then. So you just kind of look at whether it's sites, whether it's subscribers, whether it's users, all of them are rising across these different customer sets.
spk14: Our next question will come from Pete Christensen of Citi. Please go ahead.
spk11: Good evening, guys. Thanks for the question and really nice trends here. Andy, I really appreciated the homes.com, apartments.com comparison. I thought that was pretty interesting. But, you know, certainly looking back to that era, apartments.com required, you know, a ton of marketing investment. I think it was $150 million in its first year.
spk00: Should we expect that type of?
spk09: I, you know, we are not in a place today where we have, you know, any sort of specific plan of that nature. You know, there's nothing on Scott Wheeler's desk that analyzes those sorts of investments. We obviously are exploring the broad opportunity. I'll tell you that looking at the residential opportunity for me feels an awful lot like rinse and repeat. You know, we've got a bunch of these information back ends that support a front end marketplace in real estate. And we've been doing this for a number of years. And as LoopNet crosses over 200 million, as apartments becomes the biggest market, uh segment of our business it is sort of like what we've been doing for a while here and as you do do that you do make investments in marketing so right now you know if you're watching squawk bikes you might see a 10x ad shortly thereafter you see a loop net ad you know that evening after you switch over to peacock you might see apartments.com I think that's part of our formula, and you do usually invest in the marketing. You do invest in the marketing ahead of revenue. So, you know, as we go after an opportunity, which I believe could generate over time billions of dollars of incremental additional EBITDA, it does take our shareholders' capital to open up that wonderful opportunity. So it's possible we might use the weapons our shareholders have given us someday. But it's a multi-year effort, and the first component is generally software, which doesn't really show up as anything terribly visible to the analysts or shareholders.
spk14: Our next question will come from David Chu of Bank of America. Please go ahead.
spk15: Hi. Thanks, guys. So you mentioned that signature ads were up about 50% in the quarter. I think that was about similar to 2020. So do you expect the new marketing campaign and the step up in the Salesforce to accelerate growth this year? And I'm just wondering, besides the marketing campaign and the Salesforce additions, what are the other key levers to accelerate this?
spk09: Yeah, so we do expect that LubeNet year-over-year sales number to start moving around the 20% zone again pretty quickly. And if we're more successful with adding salespeople that know how to do it, and if the trend with the existing large CRE sales force, they keep on selling both CoStar and LubeNet, yeah, we'll get some good acceleration. I think that we are... getting real buy-in from the high-end folks. They used to view LoopNet as being something where people predominantly marketed lower-end properties, suburban properties, industrial properties for sale. these marketing campaigns really don't leave those smaller properties behind, but really sort of focus on branding super high-end billion-dollar properties. And I think that will open up a lot of opportunities at the high end, which is really where we're trying to go. Because if I take our high-target prospects, 50-some thousand high-target prospects who are multi-thousand-a-month opportunities – we're only 3.8% penetrated into that segment. And moving that number up to 20% on some sales force growth and marketing that talks to that audience, I think would have a huge impact on revenue acceleration. So we have a winner. It's just sort of tuning the different components.
spk14: Our next question will come from .
spk13: Please go ahead. In addition to margins, given the investment priorities and the growth initiatives, what are some of the levers you have to increase margins and get that 40 percent targeted goal by 2023? And has your thinking changed in terms of that target and how you even get there, given the change in the cost structure in the midst of the pandemic?
spk10: Yeah, so as we go forward to 2023, we've got organic growth coming back up primarily with CoStar hitting its low quarter, first quarter, and then rising the rest of the year. So organic revenue growth would increase. We'll continue to add revenue in modest places as we have with acquisitions. And then our cost profile right now is pretty well – a decision, investment decision profile every year. So we can still grow our costs, you know, 8, 10 or a little more percent over the next couple of years. And that revenue growth will just bring that margin up. So it's all about the fixed cost leverage, maintaining that organic and increasing that organic revenue growth, which is, you know, the investments we put in place over the last year and then in this year. that are creating these opportunities. So we've got the right fuel in there to get that revenue growth up. And then it's a matter of monitoring that cost growth, again, between the 8% to 12% range over the next couple of years. And we'll hit that 40%. which is nice. We've been able to increase this year big ad campaigns for 10X and LoopNet. Last year we did it for apartments. But still, even with big increases in marketing every year, we can still grow our margins. So the scale of the business and the leverage profile of the business now is really helping us do things that in the current and future environment years ago would be scary and take a lot of our profit. Now they don't impact it nearly as much, and it gives us a lot of firepower in all these sectors we're in.
spk14: Our next question will come from Ryan Tomasello of KBW. Please go ahead.
spk03: Thanks for taking the questions. Just in terms of M&A, it's hard to ignore the cash balance and the balance sheet. So, you know, you said publicly recently that you intend to focus on acquisitions in areas which CoStar does not directly compete meaningfully today. And it's clear that residential is going to be a part of that playbook, but maybe you can elaborate on other areas of the business that you see as potentially being synergistic with the broader CoStar portfolio. For example, I believe in the past you've referenced areas like workflow and facilities management software as examples.
spk09: Sure. So I guess we are three deals in this year, roughly. Yeah, so we've done three. And I anticipate we'll continue to, like, we are constantly evaluating deals that are out there, and they do come from a range of different sectors. Facilities, sure, that's a zone we look at. You know, we're looking at a range of different things in residential. Most of them are domestic. Of course, there was a small exception to that. And, you know, these things are generally sort of tough to discuss specifics before they happen, and lately they've been relatively smaller deals. So there are things out there that we're probably talking about 20 deals at any given moment. There are 20 things on the radar screen at any given moment, but – Just the last couple we've done have been small. There was one you may have noticed that was potentially massive. But, you know, we're resetting and focusing on a lot of opportunities. So there's zero chance the CoStar won't continue what it's done consistently for 30 years. And there will be similar to what we've done before, which is – closely related to what we're already doing, but generally strategically additive to some broader theme we're trying to pursue. And as you go into residential, that's a pretty big theme with a lot of opportunities. I have to tell you that the flow of deals is absurd at this point. I think I probably have three of my LinkedIn a day. But, you know, more of the same, more measured, continued flow there. Do you want to add anything to that? Not really.
spk10: As you say, the residential pipeline is throwing everything at us right now. You still see things coming in the apartment sector. quite frequently. And commercial real estate. And commercial real estate and small information plays. There will still be others internationally that are coming at us. So all the things we've talked about before are still very active. But residential has just added another dimension and higher volumes. A lot to sift through.
spk14: Our next question will come from Mario Cortolacci of Jefferies. Please go ahead.
spk12: Hi, guys. Thanks for the time. I wanted to talk about I want to talk about the new salespeople you're adding, and maybe you can just talk about the timing to productivity for these new salespeople. You're building out the middle market team, the LoopNet team, 10X. I mean, we've heard other companies within the information services space talk about, say, a three-year timeline until they hit their max productivity. Do you guys have an idea of what that looks like for these new hires? And then also, because of what we're seeing in the labor market with the government support and stimulus, there's been commentary from a lot of other companies saying that it's been hard to hire, basically competing against the government. Is that a concern of yours at all? And does that create any type of of wage inflation or an increased labor expense or comp expense for you?
spk09: Yeah, well, your observation on competition with the government for employees is accurate. That tends to be a little bit more in the restaurant industry and some of the service industries where, yes, I hear about folks who can't hire because they earn more not working for the government, but whatever. Yeah, there's definitely... So in terms of hiring, I am definitely focused on particular, I'm focused on the centralized sales effort. We have a great field sales team with apartments. We have a great field sales team with CoStar, the CRE team there. For the 10X effort and for the mid-market apartments effort and for the LoopNet effort, I am looking at a centralized effort. I have been able to recruit some very experienced trainers and leaders to Richmond, where we think that we have the ability to compete aggressively for talent there. And our training, you know, we're investing a little bit more in our training programs than ever before. So we are looking at six- and 12-week training programs, but expecting a much higher success rate of deployment. On LoopNet, we believe that people can get on the boards and start selling within three months. With 10X, it might be six months. With apartments, we think it's three months. And then in terms of peak efficiency, you know, they probably start to get up to, I think that Louvnet Apartments probably we would expect them to climb up at about 18 months to sort of full production level, and 10X might be 24 months. But if we can get them on the boards in the first three to six months, we have a good idea of what that ROI looks like for those salespeople, and it's strong. And the situation we have here is this is a – We have the prospects in our database. We know what their economic need for marketing is. There are many, many, many of them. There are more of them than we can reach with the existing team we have. So we have the benefit of, and there's not a lot of competition for what we're selling. So our offering is highly differentiated. Our intelligence on who to sell to is excellent. So, yeah, I think that answers that. But I would, I do look forward to the time when there's less competition from the government to the sales force.
spk07: Great, thank you.
spk09: Yeah.
spk14: Your next question will come from Stephen Sheldon of William Blair.
spk02: Please go ahead. Hi, thanks. On the CoStar suite, the global platform, I guess, what percentage of your CoStar suite subscriber base do you think could be interested in this? And what could the revenue uplift potentially look like over the next few years if you're able to drive meaningful adoption?
spk09: Yeah, so there's two things happening there. There's three things happening there. One is... for the first time really focusing on module upsells. So someone buying just information on the properties, getting the tenant, the comps, and more functionality overall for the city they're already operating in. That is thousands and thousands of upsell opportunities. The next one is someone operating, getting the data. The most common thing is someone just getting the data for the city they operate in. At this point, the way commercial real estate works, that's kind of silly because 30-40 percent of your clients are coming in from out of town. You really should know what they're doing outside your market. That one's pretty straightforward. Going up to, when you go to global, that's going to move more into private equity firms, institutions, and investors who are cross-border. So if I'm looking at New York or London, if I look at institutional properties, 50% plus of the capital for those bigger and higher-end properties are crossing borders. We think we'll be able to offer that group a unique offering. So it's like from the small all the way up to the gigantic, and I think it also is something. So, you know, it's, you know, hundreds of millions of potential revenue, but it's also a transformational positioning of CoStar Group where today if I am a, commercial real estate professional in London or Toronto or Madrid. I sort of look at these, our current solutions as being a London solution. I might even, yeah, a London solution as opposed to even a UK solution. I'm just used to thinking of it as how we service our local needs. I don't think it'll be that hard for us to build out a fairly robust pan-European product, and I think that pan-European product will change the game as to how people view our product at the local level. And I think that'll be pretty powerful. If I go back 10 or 20 years and I think about how 20 years ago, how people viewed CoStar when we were really just servicing a handful of U.S. cities, our value proposition might have been a 50 on a scale of 100. Once we were serving all the major U.S. markets, we went to 100. There was an exponential value growth to the consumer, the professional user, when we covered their entire investment footprint, which is generally multinational. So we're focusing heavily on investment, sales tools, selling tools, comparable sales tools, news on international. And I think that will change the way we're viewed and how we're positioned. So I don't know if I answered your question at all, but I threw out a random stream of consciousness on international and suite upsell. It's exciting. It's pretty cool.
spk14: Next question will come from Jeff Mueller-Baird. Please go ahead.
spk05: Yeah, thanks. It sounds like a lot of the consolidated net bookings growth was in suite. I caught a lot of metrics on apartments, traffic, and lead quality and revenue, but I don't think I caught a apartments net bookings trend, so would love some detail on that, or if not, maybe just a random stream of consciousness on something else.
spk06: Sorry, I'm sorry. You want to do a random stream of consciousness?
spk10: Yeah, it's my turn. Okay. yeah we didn't talk uh specifically about apartment sales but i mean you can you can do the math on our you know total sales numbers and kind of assume if costar goes up quite a bit we're going to have other sectors that will come down a bit uh you know loop net stayed strong information services stayed strong and i'll say the volatility in apartments is within the range of volatility it does every quarter so it happened to be down a bit this quarter But if you look back over the last 10 quarters of apartments sales, which I appreciate, Jeff, we don't give these numbers because of this fact, because they are volatile, apartments net bookings move up and down on an average $5 million between each quarter. So you'll see this kind of up and down in the pattern, but over time the growth obviously is there because we're still pushing the thing at 20% revenue growth. So we had such good quarters, mid to late 2020 in apartments. I think property owners had used a lot of budget then. They trimmed them back a little bit in the first quarter, waiting for the second quarter season mostly, and then seeing where they're going to be positioned when we come back to these moratoriums, the eviction moratorium. So you saw a little hesitancy, I think, in in property owners in the first quarter, which moderated the apartment side a bit. But CoStar picked up the slack.
spk09: And to be clear, Apartments.com is rocking it. We have like January is not the most exciting time for renting apartments out there. It never has been. Historically, it was probably before we owned Departments.com. It was a period in which the revenue actually fell very often. But the eviction moratorium is also a wet blanket. So we anticipate there will be much more enthusiasm coming into the spring and summer. And, again, I think, you know, the marketing campaign we've got going right now, when we're the only ones really doing it, is just super strong. And then it's firing up the mid-market. So the fluctuation Scott talks about is there and goes up, goes down, but overall it goes up, up, up.
spk14: And we have a last question from Joe Goodwin of JMP Securities. Please go ahead.
spk08: Great. Thank you guys for taking the question. On the payments, the rental payments that are occurring through Apartments.com, can you just talk about the economics that CoStar gets from those payments? And then, you know, will that develop into a larger opportunity? Is that more of just the tool set that you're offering to these folks? Thank you.
spk09: Yeah, do you want to hit this? It's like a credit card we're getting.
spk10: Yeah, we get, you know, a few small percentages off of the – Off the cards, we don't get anything off the ACH type payments. So, you know, you get a little bit of margin off of the payment tools. And it keeps people on the platform, you know, month to month, which is what's really important when they've filled up their units. It's not intended to be a primary revenue driver for us, but one of the tools that drives the advertising and the other services.
spk09: As it gets up into tens of billions or to 100 billion, it would become much more meaningful. We do offer an ACH acceleration that has a fee on it too, but only a portion of the audience takes that. The real value there for us, by a mile, the real value for us is these folks, the owners who are liking our applications and our payments and our renewal tools, tend to open up their wallet to purchase a $200, $300 online ad to get higher up in the presentation, and that tends to dwarf the credit card or any sort of ACH acceleration piece. So that revenue potential of them buying the overall bundle of all the services we offer the independent owner is a multi-billion dollar revenue opportunity at high margin. So that's where we're focused. Not to not to dismiss the revenue potential of that significant growing payment, but we're really trying to get the membership, the overall membership in our platform going. And it also... feeds content. So the more participation we get in the marketplace, the more robust that marketplace is, which brings more renters in, which brings more advertisers in. So it's part of the whole cycle. We long ago felt we needed to provide a broad range of services that independent owner, which does not have the scale to really serve, you know, to really do it in-house or implement things in-house. So...
spk14: We have no further questions at this time. I'll turn the call back over to the presenters for closing remarks.
spk09: Well, we appreciate you joining us for this first quarter 2021 earnings call, and we look forward to updating you on our progress. We obviously have a lot of stuff going on, and I think we may be appearing optimistic, and that is how we are. So thank you very much for joining us. We look forward to talking to you again.
spk14: That concludes today's conference call. Thank you for joining. You may now disconnect.
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