CoStar Group Inc. (NASDAQ:CSGP)

The financial data over the five-year period shows a consistent growth trend in revenues, increasing from approximately $1.19 billion in 2018 to about $2.18 billion in 2022. This steady increase reflects a strong top-line expansion.

Cost of revenues also rose in line with revenues, moving from roughly $270 million in 2018 to $414 million in 2022, but at a slower rate than revenues, which contributed to improving gross profit. Gross profit nearly doubled, growing from approximately $922 million in 2018 to nearly $1.77 billion in 2022, indicating improved operational efficiency or favorable margin dynamics.

Operating expenses increased substantially, rising from $648 million in 2018 to about $1.32 billion in 2022. Key components such as selling and marketing expenses, software development, general and administrative expenses, and customer base amortization all showed notable growth. Selling and marketing expenses increased by approximately 90%, software development expenses more than doubled, while general and administrative expenses fluctuated, showing a significant spike in 2020 and 2022. Customer base amortization also more than doubled from 2018 to 2022.

Despite the increase in operating expenses, income from operations displayed overall growth from $274 million in 2018 to $451 million in 2022, albeit with some volatility, including a dip in 2020. This suggests that the company managed to control its operating costs relative to revenue growth sufficiently to maintain profitability at the operational level.

Interest income varied considerably, peaking at $64 million in 2022 after generally lower levels in prior years. Conversely, interest expense increased markedly, particularly from 2020 onward, reflecting higher borrowing costs or increased debt levels. The net interest income turned negative in 2020 and 2021 but reverted to a positive figure in 2022, mainly due to the spike in interest income.

Other income (expense), net showed erratic behavior with positive values in some years, notably in 2019 and 2021-2022, and negative figures in other periods, though the amounts were relatively small compared to other line items.

Income before income taxes mirrored trends in operating income and net interest income, with a decrease in 2020 followed by recovery and growth, reaching $486 million in 2022. Income tax expense followed a less consistent pattern but remained a significant outflow, increasing in absolute terms over the years and roughly aligning with pre-tax income increases.

Net income experienced fluctuations, reaching a low point in 2020 at $227 million before rising again to $369 million in 2022. This indicates the company faced some challenges in 2020, possibly due to external factors, but exhibited resilience and recovery in subsequent years.

Overall, the company demonstrated robust revenue growth and expanding gross profit, supported by substantial investments in operating expenses, especially in sales, marketing, and product development. Profitability measures recovered after a dip in 2020, reflecting effective cost management and improved financial performance by 2022. The changes in interest income and expense suggest dynamic financing activities influencing net interest results. The tax burden increased proportionally with pre-tax income, while net income growth underscored the company's ability to improve bottom-line profitability amidst rising costs.

Revenues

Consistent growth from $1.19 billion to $2.18 billion (2018-2022).

Cost of revenues

Increased but at a slower rate, supporting gross profit growth.

Gross profit

Almost doubled, indicating improving margins.

Operating expenses

Substantial increase driven by selling and marketing, software development, and administrative expenses.

Income from operations

Generally increased despite expense growth, with a dip in 2020.

Interest income (expense), net

Volatile, negative in 2020-2021, sharply positive in 2022 due to increased interest income.

Income before income taxes

Declined in 2020, then steadily increased to $486 million in 2022.

Income tax expense

Increased in line with income before taxes, remaining significant.

Net income

Fluctuated, lowest in 2020, rebounded to highest in 2022 at $369 million.