CoStar Group, Inc.

Good day and thank you for standing by. Welcome to the Q1 2025 CoStar Group Earnings Conference Call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. I would now like to hand the conference over to your speaker today, Rich Simonelli, head of investor relations.

Thank you so much, operator. And hello and thank you all for joining us to discuss the first quarter 2025 results of the CoStar Group. Before I turn the call over to Andy Florence, CoStar CEO and founder, and Chris Lown, our CFO, I would like to review our safe harbor statement. Certain portions of the discussion today may contain forward-looking statements, including the company's outlook and expectations, for the second quarter and full year of 2025 based on current beliefs and assumptions. Forward-looking statements involve many risks, uncertainties, assumptions, estimates, and other factors that can cause actual results to differ materially from such statements. Important factors that can cause actual results to differ include, but are not limited to, those stated in CoStar Group's press release issued earlier today and in our filings from time to time, with the SEC, including our annual reports on Form 10-K and quarterly reports on Form 10-Q, included under the heading risk factors in those filings, as well as other filings with the SEC available at the SEC's website. All forward-looking statements are based on the information available to COSTAR at the time of this call. COSTAR assumes no obligation to update these statements, whether as a result of new information, future events, or otherwise, except as required by applicable law. Reconciliations of the most directly comparable gap measure of any non-gap financial measure discussed on this call are shown in detail in our press release issued earlier today, along with the definitions for these terms. Press release is available on our website under thecoastargroup.com under Press Room. As a reminder, today's conference call is being webcast and you're on it, and so the link is also available on our website under Investors. Please refer to today's press release on how to access the replay of this call. And with that, I'd like to turn the call over to our founder and CEO, Andy Florence. Andy?

Good day, and thank you for joining CoStar Group's first quarter 2025 earnings call. We posted another strong quarter with Q1 25 revenue coming in at $732 million, a 12% increase year over year. This was our 56th consecutive quarter of double-digit revenue growth. Q1 revenue exceeded consensus and was at the top end of our guidance range. Adjusted EBITDA was $66 million, a 429% increase over Q1 2024. Adjusted EBITDA also exceeded consensus and was at the top end of our guidance range. We achieved a very strong 43% profit margin in our Q1 2025, commercial real estate and information marketplace businesses. That includes CoStar Apartments, LoopNet, STR, Real Estate Manager, Land, and BizBuy sell in aggregate, coming in at a 43% profit margin. Company net new bookings were $56 million in the first quarter of 2025, up 6% sequentially from the fourth quarter of 2024. Our international businesses have achieved three consecutive quarters of all-time net new bookings, reaching over 5 million ARR in Q125, representing 56% year-over-year growth. We had 130 million average unique visitors to our global websites in Q125, according to Google Analytics. CoStar achieved 265 million in revenue in Q125. Revenue was up 6% year-over-year, while annualized net new bookings reached their highest level since Q3 23, generating 68% year-over-year growth. This was the fourth consecutive quarter of increasing net new bookings as we continue to generate strong sales with banks, institutional investors, and owners. STR's integration to CoStar contributed to its best quarter ever for net new bookings, up 17% year-over-year. This increase was driven by a significant rise in sales to owner-operators, who were 40% of STR's net new bookings in Q1. We grew the number of CoStar subscribers in Q1 17% year-over-year, largely driven by the migration of STR to the CoStar platform. CoStar for Lenders, led by Mr. John Vacchione, achieved its best-ever quarter of net new bookings, up 116% year-over-year. Today, Lender is used by 385 institutions to manage risk on $1 trillion of CRE debt. In less than three years, it has achieved $80 million in annual revenue run rate. We have several product enhancements that will roll out in the course of the next few years that can take the total addressable market for lender well above a billion. CoStar remains a mission-critical tool for our clients across all segments. Logins to CoStar were up 21% year-over-year, and our subscribers averaged 100 million activities each month. the highest level of activity in the past nine quarters. Our quarterly renewal rate remains strong at 92%. During the past few years and through today, we're operating in one of the worst commercial state environments in decades. Looking at investment grade office, although absorption is improving, we're still seeing historic high vacancy rate of about 16%. Real asking rents of 3664 sit at a 30 year low, Real sales price per square foot is a decadal low of $257 per square foot. Market cap rates are at a high point of 9.17%. Sales volume while recovering is about one-third of normal levels. In industrial, we're seeing record lows for absorption and a 6% year-over-year decline in real asking rents. In retail, real asking rents are 10-year lows. But I want to be clear, we see clear signs that the cycle is improving. Vacancy rates have hit their zenith and are beginning to fall. Availability rates have fallen 60 basis points. Sublet rents are beginning to rise. We expect that as market conditions improve over the next few years, the headwinds we've experienced will shift to tailwinds and CoStar will return to double-digit growth. LoopNet turned in an outstanding quarter as annualized net new booking skyrocketed 200% year-over-year. This was LoopNet's highest quarter of annualized net new booking since Q3 22. In the quarter, per rep productivity was twice as high as Q1 24. This great sales performance was a result of changing our go-to-market sales strategy. Our sales team is focused on selling a broad subscription package to owners and brokers to get all their properties on the platform, rather than focusing on selling a few high-value signature ads that only address a small portion of the portfolio. Tans begin their search online, and LoopNet's the largest commercial estate marketplace in the world, so it's far more valuable to the owner to have exposure for all their properties, rather than have robust exposure for one or two of their properties. This strategy will grow the number of paid properties on the platform, which increases the choice available on LoopNet for consumers and gives our sales team the opportunity to upsell silver ads to signature depth ads in the future. We're now also implementing asset-based pricing as silver ads come up for renewal. Our renewal rates on these ads remain strong at 97% as our customers understand it is important to tie the price of any given LoopNet ad to the value of the property being advertised. Our pricing will reflect that a billion-dollar five-star office building in Manhattan derives more value from LoopNet than does a $100,000 two-star retail building in Montana. Ultimately, it is our goal to implement asset-based pricing across all ad tiers on both new sales and renewals. CoStar Real Estate Manager and Visual Lease attained annualized subscription revenue growth nearing double digits. In Q1 2025, we move forward with a consolidation of leadership and operations across the brands, positioning the leases businesses for integration in the greater CoStar data offering. This combined with other identified cost savings resulted in 50% year-over-year EBITDA growth for the combined brands. Both brands continue to take market share from lease management competitors, many of whom are falling short on product innovation and focus on customers. The leases product team is now focused on combining the value of its portfolio management applications with CoStar's data and analytics Matterport and LoopNet offerings to create an unrivaled solution for occupiers for real estate. CoStar continues to develop a data set of leases from both anonymized customer data from the lease brands and publicly available sources like the SEC and UK Land Registry with the goal of providing full transparency on rent concessions and tenant improvements to real estate professionals. Q1 brought additional growth of customers electing to share data on an aggregated and anonymized basis. For the quarter, land.com net new bookings increased 58%. Land.com continues integrating with homes.com. Today, over 8,000 homes.com members are syndicating over 22,000 applicable listings to land.com. Soon, land.com members will receive a similar benefit on homes.com, increasing value and opportunities for both sites. In mid-March, PharmaMac released the PharmaMac Farmland Price Index, powered by our recently acquired acre value. PharmaMac said the introduction of the FPI marks a significant advancement in tracking farmland price trends with greater precision and timeliness. We agree and look forward to providing greater, more timely insight into farmland markets. Biz by Cell revenue reached $8.7 million in the first quarter, representing a 10% increase year-over-year. Net new bookings increased 85% year-over-year, driven by strong growth in both business owner and business buyer subscriptions. Subscription revenue from Biz by Cell Edge, which offers entrepreneurs advanced tools and market insights, grew 48% year-over-year. Buyer demand continues to strengthen with website visits up 22% and lead volume increasing 33% year over year. Apartments.com turned in another strong quarter with revenue of $282 million, an increase of 11% over Q1 24. Apartments.com sales team was very active in the first quarter. They conducted over 166,000 quality interactions with clients and prospects in the quarter and increased their face-to-face meetings by 65% year-over-year. The increase in quality interactions is paying off as we added 4,300 new communities in Q1, the most properties we've added to Apartments.com in a single quarter in almost 10 years. We're benefiting from the shutdown of Redfin of their rent period business, as we target those properties that were formerly on rent period, not apartments. We launched marketing campaigns to owners specifically comparing our traffic leads and leases to rent period with face-to-face follow-up with these communities with much success. We now have 80,000 multifamilies on apartments.com. The sales team maintained a 94 net promoter score during the quarter. We see a $2.6 billion opportunity in the 20-unit and above building space and is our intention to grow the sales team 23% this year to keep up with this potential. Since 2019, we've grown our apartments revenue 118%, but only grown our sales reps in production by 56%. So we'll continue to accelerate our sales growth to keep up with this opportunity. We've added 56 sales professionals so far this year with an additional 24 sales professionals that started training this week. I'm especially excited to welcome our 37 new sales team members that have come to us from rent period. I believe that we have added more salespeople from rent period than Zillow did despite Zillow spending a lot of money to acquire assets from Redfin. These individuals average 10 years of multifamily sales experience and are already producing good results. Our 2025 Apartments.com marketing campaign is in full swing and features the most content we've ever developed to reach the largest audience possible. In Q1, our five new TV spots were featured in March Madness, the National Women's Soccer League, And for you NFL fans, you probably saw us last week on the NFL Draft. Our campaign will also be featured throughout other profile shows and during the Major League Baseball, NHL, and NBA seasons. We have increased our paid search efforts in the first quarter and will continue to do so throughout the year to attract more potential runners to our advertisers communities by generating five times more number one positions than Zillow in the top 50 U.S. rental markets. Our unaided awareness among apartment seekers remains higher than all of our competitors combined at 65%, and our closest competitor is 30 percentage points below us. Among industry professionals, our unaided brand awareness is now at an all-time high of 86%, a 26% increase over 2024. Industry professionals tell us that delivering high-quality leads to convert to more leases is the most important thing we do. In 2025, a brand study conducted by GovX, 47% of owners and operators surveyed said Apartments.com had a completely or very effective lead-to-lease conversion rate that's 38% more than Zillow's and 160% more than rent periods. The Apartments.com network had 38 million average monthly unique visitors in the first quarter, ComScore has released their March data and has us ahead of Zillow in visits in March by 5%, with 90 million visits, and has the apartments network up 7% year-over-year for the first quarter, while Zillow is showing down 27% for the same period. Very importantly, our lead flow to our customers continues to increase and is up 17% year-over-year. According to the most recent analysis by Entrata, Through March of this year, Apartments delivered 1.8 times more leads than other rental networks. Apartments.com also delivers by far the highest quality of leads, converting 2.7x better than other rental networks, and ultimately delivers more leases than other rental networks, 5.1 times more to be exact. Our Apply Now leads, our highest converting lead type, are up 814% over Q1 of last year. as more and more properties enable this feature. In the first quarter, we added a record of a high of 142,000 single family rentals posted on the platform and assisted our independent owner clients by collecting 1.4 billion in rental payments. We continue to see success from the utilization of Matterport on our rental sites with potential renters viewing Matterports 53 million times in the quarter, up 59% year-over-year, while spending 71% more time on listings detail pages with a Matterport. Apartments.com is also benefiting from the increased traffic on Homes.com, as Apartments.com paid advertisers also get exposure over at Homes.com's rental area. Apartments.com Canada revenue grew 350% year-over-year with all-time highs in March for visitors, visits, and leads. According to recent data from DashIQ, Apartments.com now delivers more leads and leases than any other ILS in Canada. Fourteen months ago, CoStar Group launched the new Homes.com with a marketing blitz at Super Bowl LIV. The newhomes.com offers a completely different business model than do competing U.S. residential portals in the U.S. The newhomes.com is based on the premise that the most important thing a portal can do is to market a property for sale. This is in harmony with all the most successful and highly profitable portals around the world outside the U.S., which are all based upon this market the property, not an agent lead gen business model. The legacy competing unprofitable U.S. property portals are based upon lead diversion business models. These lead diversion models divert leads from the potential home buyers away from the listing agent and into the hands of a buyer agent willing to split their commission with a portal. Our research shows that these lead diversion models are very unpopular with home sellers, buyers, and agents. These lead diversion sites are not designed to solve for the most important task, which is to sell the home. The new homes.com is a clean, fast site offering a wealth of valuable content on neighborhood schools that home shoppers cannot find on competing sites. Based upon a wealth of consumer and agent feedback, we believe that homes.com offers a vastly superior user experience and is preferred by home shoppers. To build a massive audience for home sellers and listing agents, we launched one of the largest marketing campaigns ever in real estate. Using RPA, the same firm we successfully used to create the Apartments.com brand, we recruited talent like Dan Levy, Heidi Gartner, O. Morgan Freeman, Lil Wayne, and Jeff Goldblum to create memorable and effective spots for the new Homes.com. We have run 32,000 commercials and digital placements, generating approximately 80 billion impressions. In Q1 alone, we generated 6 billion brand impressions across the Many of the biggest events in America include the Super Bowl, the College Football Championship, and March Madness. To be successful, for homes.com to be successful, home shoppers need to be aware of homes.com and have intention to use it. Our target audience of several hundred million home shoppers is massive. Before we launched in February 24, only 4% of that target audience when asked top of mind What home shopping websites can you think of? Repliedhomes.com. In 14 months of marketing campaign, we have steadily increased our unaid awareness nine times to 36%. So we're now at 36% unaid awareness. Early last year, our unaid awareness surpassed Trulia. Last summer, we surpassed Redfin's unaid awareness. And last month, we crossed Realtor.com. When we began, Zillow was 64 points above our unaid awareness. We've closed the gap to 24 points and are still improving. Our unaided intention or the percentage of people surveyed that say they intend to use our site has grown from single digit to 26%. We've also crossed Realtor, Redfin, and Trulia on unaided intent. Zillow and Realtor have been trending down while we've been growing. I have consistently set the expectation that building a B2C brand takes three to five years. To reach this level of unaided awareness and unaided intent in an audience of hundreds of millions in 14 months is excellent progress. I feel that over the next two to four years, we can take a solid and very valuable leadership position in the industry. With a superior product and aggressive marketing campaign and both growing unaided awareness and intent, we're seeing very strong audience and traffic growth on the Homes.com network. In just 14 months, we've built a Q1 24 audience of 104 million average monthly unique visitors. That's according to Google Analytics. This now makes the homes.com network one of the top two residential portals based upon monthly unique visitors, according to the latest available public securities filings of our peer portals or near peer portals. We remain well ahead of Redfin and Realtor.com's traffic. With such a wide lead over these two, we've shifted our traffic acquisition strategy away from pure volume to targeting quality engaged traffic. Our bounce rate has approved 45 percentage points, our session duration is up 200%, and the number of page visits per visit has more than doubled. We're monetizing homes.com by selling memberships to agents, giving their listings priority placements on homes.com, which brings more buyer views, more leads, and on average enables them to sell the property faster and for more money. Members listings sort to the top of their market, generally the first page where 90% of all buyers click through to listings. We present their listings with our neighbor at the school content on competing listings and suggestion emails on our homepage. With a billion visits to homes.com in the past 12 months, we have unique insights in the market to buy a new home. We retarget members' listings across thousands of websites to keep their listings top of mind. We also provide members with a Matterport and floor plan for their listings so that potential buyers can tour their listings 24-7. It is a comprehensive digital real estate marketing package no one else is offering. In a time where home sales are getting a little tougher to achieve, I think we're well positioned and in the right place at the right time of the cycle. One of the most important events for a real estate agent is the listing presentation where they meet with a home seller and try to win a listing to sell their home. Homes.com members use the marketing benefits we offer through membership to differentiate themselves from competing agents and win more listing presentations. We track the listing win rate advantage for members closely, and it's steadily climbing. and now member agents are winning 61% more listings than before membership. Since the average value of winning a new listing is $15,000 and monthly membership fee is less than $500, the ROI is outstanding. Last February, when we launched the new homes.com, we faced several hurdles. At launch, we only had a very small dedicated homes.com sales force of about 50 reps to sell to more than a million agents. We were offering a completely new value proposition to an agent customer base with very negative feelings about the business models of legacy real estate portals in our space. There was a bit of undeserved guilt by association. Last May, just after launch, our first net promoter score was disappointing at negative 42. Many early members did not understand our new value proposition and believed that homes.com, like Zillow, was a lead diversion site and were disappointed we were not diverting other agents' leads to them to generate buyer agency business. That had never been our intent. Our out-of-cycle early cancellation rate or failed payment at the time was high at 10% monthly. By late summer to early fall 24, our value proposition was better understood and our NPS turned positive, and moved into the good classification in the low single digits, and our early cancellation dropped significantly to 6%. In the last few months, our net promoter scores have been surging upwards and have reached 43, which is at the great classification, and our early cancel or failed payment rate has dropped to between a quarter of a point and 2.5% per month. Great progress. Since we launched a completely new product concept in the U.S. in February 24, the early cancellation rate on 12-month contracts has plummeted 65%. Since last May, our net promoter score has soared over 85 points to sit in the great classification. Under the very strong leadership of our Senior Vice President of Sales, Andy Stearns, we've grown that small initial team of 50 dedicated sales reps 600% over the last four months to 314 reps in production. Those reps with four months of production are turning in a steady 1,612 monthly net new revenue, which implies our straight lines to 232,000 in billings per average rep at the end of 12 months or 1.1 million billings per rep at the end of five years, if you're counting. The sales force is still growing very rapidly with 64 more in training and with offers out to an additional 214 salespeople. In Q4, we anticipate we'll have 500 salespeople with four months of experience selling homes.com. That would suggest we could be adding over 800,000 a month new billing each month by Q4. We have recently optimized our pricing strategy to better align the price of our product with the stronger benefits listing agents and rental agents receive as Homes.com members. The first iteration of our pricing strategy determined membership price based on equal weighting of buyer and seller agency deals. Now we largely pace price based on seller listings. In April month to date, our demo to close rate is 56%. So something's going right there. This is the highest monthly growth rate I've ever seen for any CoStar brand. With one day left in April, the DedicatedHomes.com sales team is currently positioned to close 240,000 monthly net new bookings. They're still selling past some of the sales from the prior year that the general sales force did, but they're solidly into positive territory. This is the dedicated sales team's best net new bookings month to date. and a 420,000 positive swing from the prior month. With improving NPS scores, our projected cancellations for May are falling approximately 70%. At the same time, our gross sales are climbing as we bring on more salespeople and they gain experience. I believe that by year end, our Homes.com sales team will be our largest and will be turning in the most net new revenue of any product or in CoStar Group with a regular 1 million net new months for Homes.com. We recently released a new purchase option for homes.com called Boost, which is a marketing option for a single listing. For agents with unpredictable income and not yet ready to commit to an annual membership, they can boost one listing via e-commerce. Just like membership, once boosted, their listing sorts the top of search results, receives a Matterport, and is retargeted across the internet. This is a low-risk purchase option for an agent because they can go into a listing presentation, use the Boost as a differentiator, but they only have to pay for it when they win the listing and have offsetting commission revenue. From our perspective, Boost is a great way for agents to get their foot in the door, and we will be funneling Boost purchases as leads into our sales team to call upon for up sales to membership. We're also offering the Boost option directly to home sellers. These are home sellers with agents, but often home sellers want, you know, we've seen in Australia, It's really successful where home sellers regularly add marketing tailwinds to their home for sale, purchasing tens of thousands of dollars worth of boosts from portals to market their home for sale online. We tested the boost option with home sellers and listing agents and focus groups in Southern California recently. The feedback was universally positive, with almost all participants saying they would purchase a boost for their home or listing at about the $500 price point. In July, we expect to launch a new homes, homes.com marketing offering for home builders. There's an attractive market for us to enter because new construction represents approximately 20% of all homes sold in any given year. Yet there's no great single place for a consumer to go and find all the available new communities. Building a site with full inventory of available new homes would be very valuable option for both consumers and the industry. And it would allow Homes.com to capture a piece of the estimated $3 billion annual marketing spend by America's home builders. We've already secured listing feeds representing 60% of the total available inventory, and I expect this number will grow as we approach July. Initial feedback from builders has been overwhelmingly positive. As we meet with them, builders tell us they're thrilled that a portal is finally delivering a beautifully designed, robust new home search experience. We are carefully controlling expenses generally and with Homes.com specifically. In the first quarter, we released over 50 million in annualized savings, mostly through cost reduction initiatives in our Homes.com investment. Overall, we reduced headcount in the company by 423 in Q1. Zillow recently announced an aggressive new policy of permanently banning homes that have been privately marketed for over 24 hours. pretty aggressive. With the post-NAR lawsuit industry changes around clear cooperation, no commingling rules, I believe that our lurid diversion competitors are getting anxious that brokers with more choice may increasingly choose to market their properties away from those lead diversion platforms. If a home is not listed on Zillow, they'll lose the opportunity to use the listing to sell or buy our agency leads and take 40% of the buyer agent's commission. Where still for them is that If more and more listing agents stay off their platforms, then the listing count will fall, and they could lose audience and fall into a downward spiral. We view this move not only as anti-competitive, but also shows a bit of desperation. I authored an open letter last week to the industry making sure everyone was watching the power grab Zillow was attempting. My communication surprisingly reached an estimated 50 million impressions across email, LinkedIn, and earned media coverage. The reaction from agents was approximately 10 to 1 positive to us. In those most recent focus groups, one agent said, well, everyone hates Zillow, buyers, sellers, agents, and brokers. The word that many use describes Zillow as predatory. Through the decades of mistreatment, agents are desperate for a viable alternative, and they now have one at homes.com. My favorite quote of the evening was, homes.com brings us a lot, and they're going to surpass Zillow very soon. The moderator asked where they're hearing that, and the agent replied by saying, quote, got everyone at my brokerage meetings, lawyers, brokers, commercial agents, everyone, end quote. At the end of the one-year marks as we kicked off our sales efforts, I'm confident Homes.com is a winning product. We're seeing excellent momentum in sales. If you look around the world at successful real estate portals that use our business model of marketing the real estate, not lead diversion, the EBIT opportunity is really impressive. The EBITDA normalized to the size of the U.S. GDP of market leaders like REA Group, Scout, Rightmove, Domain, Hemnet, and Edialista for the United States ranges between 1 billion of potential EBITDA to 9 billion of potential EBITDA in the U.S., suggesting that that residential portal opportunity in the United States is a lot larger than the 79 million adjusted EBITDA number one of our competitors turned in in 2024. about 100 times larger than that. On the market, over the United Kingdom, had another strong quarter. 11 straight months, we've seen net new bookings growth equivalent to 7.2 million annualized revenue. We are delivering fantastic ROI to agents that subscribed on the market. Lead volume increased 17% year over year. We increased listings by 23% year over year. The audience is engaged as we saw page views and time on site grow by 99% and 81% respectively year over year. In February 2025, we made an all-cash offer for Domain Holdings, one of Australia's two largest real estate portals and one of the 10 largest real estate marketplaces in the world. Domain is very profitable, growing, and is in a market with great dynamics for real estate portals with vendor or owner paid models. 2024 annual revenue was 250 million using today's conversion rate and EBIT of 88 million. Australia's real estate portals use the vendor paid advertising model unlike the competing US portals which have lead gen models for buyer agents. Australian portals generate revenue through marketing and real estate. Home sellers are regularly paying companies like Domain and REA anywhere from $3,000 on up to $50,000 to market their home for sale online. And that'd be 5,000 Australian, 50,000 Australian. One element from Domain that will benefit Homes.com and on the market is depth advertising. Similar to signature ads for Apartments.com and LoopNet, Domain offers four tiers of advertising that offer increasing levels of exposure as you move up their ad tiers. by utilizing sort order, larger search placards, social notification, and retargeting. We will be adopting the best practices of Domain in the US and in the United Kingdom. We see numerous opportunities to create additional value for Domain following the potential acquisition. Domain's majority owner today is a media business, which historically under invests in the product. Simultaneously, REA Group's market dominance has not incentivized Innovate to improve their product. Both sites pale in comparison to the product we built with homes.com. We will bring what we built in homes.com to Australia and the United Kingdom to win over consumers. Domain is also a strong entry point into Australia's commercial real estate market. They operate commercialrealestate.com.au, a top two CRE marketplace in Australia. With thousands of listings, we can migrate into LoopNet. Adding Australian listings to LoopNet would provide great value to multinational owners and brokers that list on LoopNet and the multinational tenants that are searching the site. Domain's inventory commercial listings lays a strong foundation for building CoStar covering Australia. The Board of Domain's majority shareholder, Nine Entertainment, has backed our offer and we're in the process of conducting due diligence. Of course, there's no guarantee that our proposal will result in a transaction. We closed the acquisition of Matterport at the end of February, and we have been longtime users of Matterport, and I'm very excited to have the opportunity to work with RJ, Gauspec, and the entire Matterport team on the next phase of their impressive journey. The Matterport technology will be an incredible asset for us. They have an impressive product roadmap, which will benefit our entire ecosystem. At the end of March, Matterport had created digital twins for an astounding 54 billion square feet of space. Over the past four years, Matterport has increased total spaces under management by more than 20% annual and total square footage by over 30% each year. Our new goal is to reach a trillion square feet of digital twins. That requires 35% year-over-year growth. Their sales success was achieved with a small sales team, but mighty at 47. We plan to grow both their R&D and sales team. With Matterport technology combined with CoStar's global scale and reach, the future is bright for both companies. I want to close by doing something important, thanking our board members, Mike Klein, Chris Nassetta, and Laura Kaplan, who are concluding their service on the CoStar board. Through the years, they have offered excellent counsel and have been extremely valuable in helping us build CoStar Group into the global organization it is, operating in 192 countries, with a $34 billion market cap. Mike Klein and David Bonderman, they co-founded the business with me in 1987. I still marvel at Mike Klein mortgaging his house to invest most all of his net worth or maybe 150% of his net worth into a 22-year-old's startup concept. Turns out he was a genius, he was a visionary, and his support and counsel was matchless. As part of the ongoing refreshment of our board, we made some important announcements earlier this month. Louise Sams, who's been a co-star board member since 2019, has been named chair of the board. She has strong international legal experience, having served as EVP and general counsel of Internal Broadcasting System Inc. for nearly two decades and president for nearly a decade. Louise is currently the board chair of Princeton University, which I hear is a good place. She has been an impactful board member and is the perfect person to chair our board. I'm looking forward to working with John Beresford, Rachel Glasser, and Christine McCarthy. They bring a wealth of business experience with strong track records at leading global companies. Christine is a recognized corporate finance leader with over 30 years of experience, most recently a CFO of the Walt Disney Company. John is an accomplished executive who most recently served as president of S&P Global Ratings. Rachel has extensive market experience as the former CFO of Etsy, and direct residential industry experience as the former CFO of Move, Inc. I'll be chairing our new board's Capital Allocation Committee, and John Christie and Robert Musselwhite will also serve on the committee. The board established the committee to review and make recommendations to the board regarding the company's capital structure, capital allocation priorities, and financial targets. The committee's review will also focus on operating for performance, including the setting of near-term, long-term financial targets for resource and capital allocation, The committee's charge is to continue the company's outstanding capital allocation track record that has resulted in the company's outperforming 98% of the NASDAQ companies since our IPO. And with my very brief remarks, I'm going to turn it over to Chris Lowe.