Name: CoStar Group Inc. (NASDAQ:CSGP) | Common-Size Income Statement
Creator: Stock Analysis on Net

Common-Size Income Statement

CoStar Group Inc., common-size consolidated income statement

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Revenues	100.00%	100.00%	100.00%	100.00%	100.00%
Cost of revenues	-18.97%	-18.38%	-18.62%	-20.66%	-22.65%
Gross profit	81.03%	81.62%	81.38%	79.34%	77.35%
Selling and marketing, excluding customer base amortization	-31.35%	-31.99%	-32.29%	-29.19%	-30.19%
Software development	-10.12%	-10.34%	-9.82%	-8.97%	-8.47%
General and administrative	-15.52%	-13.20%	-18.06%	-12.77%	-13.14%
Customer base amortization	-3.37%	-3.85%	-3.76%	-2.43%	-2.59%
Operating expenses	-60.37%	-59.39%	-63.94%	-53.36%	-54.40%
Income from operations	20.66%	22.24%	17.43%	25.97%	22.95%
Interest income	2.95%	0.04%	0.27%	1.38%	1.12%
Interest on outstanding borrowings	-1.28%	-1.44%	-1.12%	0.00%	0.00%
Amortization of Senior Notes discount and issuance costs	-0.11%	-0.12%	-0.10%	-0.06%	-0.08%
Commitment fees and other	-0.09%	-0.10%	-0.10%	-0.12%	-0.16%
Interest expense	-1.48%	-1.66%	-1.31%	-0.19%	-0.24%
Interest income (expense), net	1.47%	-1.63%	-1.05%	1.20%	0.88%
Other income (expense), net	0.16%	0.17%	-0.05%	0.76%	-0.01%
Income before income taxes	22.29%	20.78%	16.33%	27.93%	23.83%
Income tax expense	-5.36%	-5.73%	-2.64%	-5.43%	-3.83%
Net income	16.93%	15.05%	13.69%	22.50%	20.00%

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

An analysis of the common-size income statement from 2018 to 2022 reveals a period of gross margin expansion offset by rising operating expenditures, leading to volatility in net profitability.

Gross Profitability Trends: Gross profit margins demonstrated consistent growth, rising from 77.35% in 2018 to 81.03% in 2022. This improvement was driven by a steady reduction in the cost of revenues, which decreased from 22.65% of total revenues in 2018 to 18.97% by 2022, suggesting enhanced efficiency in direct service delivery or pricing power.
Operating Expense Analysis: Operating expenses as a percentage of revenue increased overall, moving from 54.40% in 2018 to 60.37% in 2022. A significant spike was observed in 2020, where expenses reached 63.94%. This increase was primarily influenced by a peak in general and administrative costs (18.06% in 2020) and a gradual rise in software development investments, which grew from 8.47% in 2018 to 10.12% in 2022. Selling and marketing expenses remained relatively stable, fluctuating between 29.19% and 32.29% throughout the period.
Operating and Net Income Margins: Income from operations experienced a decline from a peak of 25.97% in 2019 to 20.66% in 2022. The most pronounced contraction occurred in 2020, when the operating margin fell to 17.43% due to the aforementioned rise in operating expenses. Net income margins mirrored this volatility, peaking at 22.50% in 2019, dropping to 13.69% in 2020, and recovering to 16.93% by 2022.
Non-Operating Items and Taxation: Net interest income showed significant variability. Positive contributions were noted in 2018 (0.88%) and 2019 (1.20%), followed by a shift to net interest expenses in 2020 (-1.05%) and 2021 (-1.63%), likely reflecting increased borrowing. A sharp reversal occurred in 2022, with net interest income rising to 1.47%, supported by a substantial increase in interest income to 2.95% of revenues. Income tax expenses remained relatively contained, fluctuating between 2.64% and 5.73% of revenues over the five-year period.

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