CoStar Group Inc. (NASDAQ:CSGP)

Goodwill

Goodwill has shown a steady increase from 1,611,535 thousand US dollars in 2018 to a peak of 2,321,015 thousand US dollars in 2021, followed by a slight decrease to 2,314,759 thousand US dollars in 2022. This indicates significant acquisition or investment activity over the period, with a minor revaluation or impairment in the final year.

Acquired technology and data

This asset category increased moderately from 103,128 thousand US dollars in 2018 to 131,551 thousand US dollars in 2020, but then sharply declined to 41,979 thousand US dollars in 2021 and remained relatively stable at 40,422 thousand US dollars in 2022. This suggests a potential write-off or reclassification during the latter years.

Acquired customer base

The acquired customer base increased substantially from 339,574 thousand US dollars in 2018 to 569,666 thousand US dollars in 2021. However, this was followed by a noticeable reduction to 464,242 thousand US dollars in 2022, indicating possible impairment or a shift in valuation methods affecting this intangible asset.

Acquired trade names and other intangible assets

There was steady growth in these assets from 201,925 thousand US dollars in 2018 to 262,136 thousand US dollars in 2021, with a slight decline to 247,361 thousand US dollars in 2022. This reflects consistent investment in brand and other intangible assets with minor adjustments in the last year.

Intangible assets, gross

Gross intangible assets rose significantly from 644,627 thousand US dollars in 2018 to a high point of 926,659 thousand US dollars in 2020. Subsequently, there was a decline to 873,781 thousand US dollars in 2021 and further to 752,025 thousand US dollars in 2022, reflecting the trends observed in underlying components such as acquired technology and the customer base.

Accumulated amortization

Accumulated amortization grew in magnitude, moving from -355,716 thousand US dollars in 2018 to -499,914 thousand US dollars in 2020, indicating increased amortization expense over time. It then lessened in absolute terms to -438,119 thousand US dollars in 2021 and -422,719 thousand US dollars in 2022, which could indicate write-downs or reclassifications reducing the balance.

Intangible assets, net

Net intangible assets increased significantly from 288,911 thousand US dollars in 2018 to a peak of 435,662 thousand US dollars in 2021. This was followed by a notable decrease to 329,306 thousand US dollars in 2022, consistent with reductions in gross intangible assets and accumulated amortization adjustments.

Goodwill and intangible assets total

The combined total of goodwill and intangible assets showed a generally upward trend from 1,900,446 thousand US dollars in 2018 to 2,756,677 thousand US dollars in 2021. However, the total declined to 2,644,065 thousand US dollars in 2022, primarily due to reductions in intangible assets and stabilization or slight decrease in goodwill.

The analysis of the financial data over the five-year period reveals several notable trends in asset and equity levels, both on a reported basis and after adjustments for goodwill.

Total Assets

Reported total assets exhibit a consistent upward trend from 3.31 billion USD in 2018 to 8.40 billion USD in 2022, marking more than a 2.5-fold increase over the period. This suggests significant asset growth, likely driven by both operational expansion and acquisitions.

Adjusted total assets, which exclude goodwill, also demonstrate substantial growth, rising from approximately 1.70 billion USD in 2018 to 6.09 billion USD in 2022. This increase supports the view that underlying tangible and identifiable intangible asset bases have expanded robustly, albeit at a slightly lower scale than the reported figures due to the exclusion of goodwill.

Stockholders’ Equity

Reported stockholders' equity reflects a similar pattern of growth, increasing from roughly 3.02 billion USD at the end of 2018 to nearly 6.87 billion USD in 2022. This growth suggests strengthening shareholder value and possibly retained earnings accumulation in addition to equity issuance.

Adjusted stockholders' equity also rises significantly from about 1.41 billion USD to 4.56 billion USD over the same period. The upward trend confirms that equity growth is substantial even when goodwill is excluded, indicating real enhancements in net asset value.

Overall, the data indicates strong expansion and capital accumulation throughout the period. The difference between reported and adjusted figures highlights the impact of goodwill and intangible assets on the balance sheet. Despite this, adjusted measures still show significant asset and equity growth, emphasizing the company’s solid operational and financial foundation.

The data reveals several notable trends in both reported and goodwill adjusted financial metrics over the five-year period ending December 31, 2022. The analysis below outlines the key developments and patterns observed.

Total Asset Turnover

The reported total asset turnover ratio shows a declining trend, decreasing from 0.36 in 2018 and 2019 to a low of 0.24 in 2020 before slightly recovering to 0.27 in 2021 and settling at 0.26 in 2022. Adjusted total asset turnover, which accounts for goodwill, exhibits a similar pattern. It starts at 0.7 in 2018 and 0.71 in 2019, sharply drops to 0.35 in 2020, then modestly increases to 0.39 in 2021, but declines again to 0.36 in 2022. This reflects a notable decrease in asset efficiency following 2019, with partial recovery thereafter but remaining below early period levels.

Financial Leverage

Reported financial leverage shows a gradual increase from 1.10 in 2018 to 1.29 in 2020, before slightly declining to 1.27 in 2021 and further to 1.22 in 2022. The adjusted financial leverage is consistently higher than the reported figures, beginning at 1.21 in 2018 and rising to a peak of 1.49 in 2020, then decreasing to 1.46 in 2021 and 1.34 in 2022. This suggests increased reliance on debt or other liabilities during the period around 2020, with some deleveraging occurring in the subsequent years.

Return on Equity (ROE)

The reported ROE shows an increase from 7.89% in 2018 to 9.25% in 2019, followed by a sharp decline to 4.23% in 2020, then a gradual recovery to 5.38% by 2022. The adjusted ROE, which incorporates goodwill adjustments, follows a similar trajectory but at substantially higher levels: increasing from 16.90% in 2018 to 20.67% in 2019, plunging to 7.23% in 2020, and rebounding to 8.11% in 2022. Despite fluctuations, the adjusted ROE consistently surpasses the reported ROE, indicating that goodwill adjustments have a material impact on perceived profitability.

Return on Assets (ROA)

Reported ROA trends mirror those of ROE, with an increase from 7.19% in 2018 to 8.17% in 2019, a drop to 3.28% in 2020, followed by a gradual recovery reaching 4.40% in 2022. Adjusted ROA begins at a significantly higher level of 14.01% in 2018, rises to 15.97% in 2019, sharply decreases to 4.85% in 2020, and modestly increases to 6.07% in 2022. The downward shift in 2020 across both reported and adjusted ROA ratios corresponds with the timing of the asset turnover and leverage changes, highlighting a period of reduced asset profitability.

Overall, the data illustrates a pattern of strong financial performance in 2018 and 2019, followed by a marked decline in 2020 across most metrics. This decline is partially attributed to decreased asset turnover and increased financial leverage during that period. Subsequent years show signs of recovery, although not reaching pre-2020 levels. Goodwill adjustments consistently raise the reported profitability and leverage metrics, indicating that intangible assets play a significant role in the company's financial profile.

Total Assets Growth

The reported total assets exhibit a consistent upward trend from 3,312,957 thousand US dollars in 2018 to 8,402,470 thousand US dollars in 2022. This represents a significant increase, more than doubling over the five-year period. Similarly, the adjusted total assets, which exclude goodwill, also show strong growth from 1,701,422 thousand US dollars in 2018 to 6,087,711 thousand US dollars in 2022. The steady rise in both reported and adjusted assets indicates expansion in the company's asset base over time.

Total Asset Turnover Ratios (Reported and Adjusted)

The reported total asset turnover ratio remains relatively stable at 0.36 in 2018 and 2019 but declines noticeably to 0.24 in 2020. A modest recovery ensues with ratios of 0.27 in 2021 and 0.26 in 2022. Despite this partial rebound, the turnover remains below the initial levels seen in 2018-2019, suggesting a decrease in the efficiency with which assets generate revenue based on reported values.

In contrast, the adjusted total asset turnover ratio, which factors out goodwill, starts notably higher at 0.7 in 2018 and maintains a similar level of 0.71 in 2019. However, it experiences a sharp decline to 0.35 in 2020, mirroring the trend seen in the reported ratio but starting from a higher base. Following this, there is a recovery to 0.39 in 2021 and a slight decrease to 0.36 in 2022. Although the adjusted ratio remains higher than the reported figures throughout the period, the decline and partial recovery pattern indicate fluctuating asset efficiency when intangible assets are excluded.

Insight Summary

The data indicates that while the total asset base, both reported and adjusted, has grown substantially, the ability of these assets to generate revenue has weakened around 2020, potentially reflecting wider market or operational challenges during that year. The higher adjusted turnover ratios compared to reported ones imply that goodwill significantly affects asset valuation and performance metrics. The recovery in turnover ratios after 2020 suggests some improvement in operational efficiency, yet the levels remain below those seen in the early years of the period analyzed.

Total Assets

Total assets reported a consistent upward trend from 3,312,957 thousand US dollars in 2018 to 8,402,470 thousand US dollars in 2022, showing substantial growth especially between 2019 and 2020. Adjusted total assets, which account for goodwill adjustments, similarly increased from 1,701,422 thousand US dollars in 2018 to 6,087,711 thousand US dollars in 2022, demonstrating a strong increase, particularly noticeable from 2019 to 2020.

Stockholders’ Equity

Reported stockholders’ equity showed a significant rise from 3,021,942 thousand US dollars in 2018 to 6,870,121 thousand US dollars in 2022, with major increments recorded each year, indicating increasing net worth from the shareholders' perspective. Adjusted stockholders’ equity followed a similar positive trend but with lower absolute values due to the goodwill adjustment, increasing from 1,410,407 thousand US dollars in 2018 to 4,555,362 thousand US dollars in 2022.

Financial Leverage

Reported financial leverage ratios remained relatively stable, starting at 1.10 in 2018, slightly increasing to a peak of 1.29 in 2020, and then modestly declining to 1.22 by 2022. The adjusted financial leverage, however, was consistently higher than the reported leverage, reflecting the impact of excluding goodwill from equity calculations. It increased from 1.21 in 2018 to a peak of 1.49 in 2020 before declining to 1.34 in 2022. This suggests a gradual reduction in reliance on debt or other liabilities relative to equity after 2020 when considering goodwill adjustments.

Insights

The overall asset base and equity of the company have expanded markedly over the period analyzed, indicating growth and possibly acquisitions contributing to the asset increase. The difference between reported and adjusted figures highlights the material impact of goodwill on asset and equity values. The financial leverage ratios indicate a moderate but manageable level of debt relative to equity, with adjustments painting a picture of slightly higher leverage when goodwill is excluded. The downward trend in leverage ratios after 2020, both reported and adjusted, points towards improving financial stability.

The analysis of the available financial data over the five-year period reveals several noteworthy trends regarding stockholders' equity and return on equity (ROE), both in reported and goodwill-adjusted terms.

Stockholders' Equity Trends

Reported stockholders' equity demonstrated a consistent upward trajectory from 2018 to 2022, increasing from approximately $3.02 billion to about $6.87 billion. This steady growth reflects an expanding equity base over the period.

Adjusted stockholders' equity, which accounts for goodwill adjustments, also exhibited growth across the same period, rising from about $1.41 billion in 2018 to approximately $4.56 billion in 2022. While the adjusted figures are lower than the reported ones, the upward trend is evident and indicates strengthening equity when intangible assets are netted out.

Return on Equity (ROE) Analysis

The reported ROE shows variability over the years, starting at 7.89% in 2018 and peaking at 9.25% in 2019. However, there was a noticeable decline to 4.23% in 2020, followed by slight recoveries in 2021 and 2022, reaching around 5.38%. This suggests fluctuating profitability relative to reported equity, with a significant dip coinciding with 2020.

Adjusted ROE, reflecting profitability against goodwill-adjusted equity, was considerably higher than the reported ROE in the initial years, at 16.9% in 2018 and 20.67% in 2019. Similar to the reported ROE, it experienced a sharp decline in 2020 to 7.23%, followed by modest improvements to 8.63% in 2021 and a slight decrease to 8.11% in 2022. Despite the declines, the adjusted ROE maintains a higher level of profitability compared to the reported ROE, indicating that excluding goodwill provides a clearer view of underlying returns.

Overall, the data reveals robust growth in stockholders' equity over the five-year period, both reported and adjusted for goodwill. However, the return on equity metrics indicate a period of reduced profitability beginning in 2020, likely influenced by external or internal challenges impacting earnings relative to equity. The adjusted figures consistently suggest higher profitability when excluding goodwill, providing insight into the company's operational performance excluding intangible asset considerations.

The financial data reveals several notable trends over the five-year period. Total assets, both reported and adjusted for goodwill, have shown significant growth. Reported total assets increased from approximately $3.31 billion in 2018 to about $8.40 billion in 2022, reflecting a steady upward trend. Similarly, adjusted total assets grew from roughly $1.70 billion to $6.09 billion, with a particularly sharp increase observed between 2019 and 2020.

Regarding return on assets (ROA), the reported ROA exhibited a decline during the period, dropping from 7.19% in 2018 to 3.28% in 2020, followed by a gradual recovery to 4.40% by 2022. The adjusted ROA mirrored this pattern but remained consistently higher than the reported ROA. It decreased from 14.01% in 2018 to 4.85% in 2020 and then increased to 6.07% by 2022. This disparity between reported and adjusted ROA suggests that goodwill adjustments have a significant impact on profitability measures, indicating that intangible assets may be influencing reported earnings.

Total Assets

Steady growth in both reported and adjusted figures, with reported assets more than doubling, indicating expansion in the company's asset base.

The adjusted total assets, which exclude goodwill, also increased substantially, highlighting growth in tangible or other adjusted asset categories.

Return on Assets (ROA)

Reported ROA declined sharply until 2020, likely reflecting challenges or investments during that period, followed by a partial recovery.

Adjusted ROA, while following a similar trend, remained higher, suggesting that excluding goodwill reveals a more favorable profitability picture.

This pattern may indicate that the company’s earnings relative to tangible assets performed better than when intangible assets are included.