In a continuation of the company’s acquisition strategy as of late, CoStar announced another is in the works as it recorded another strong quarter of financials.

In the company’s Q3 earnings call, Founder and CEO Andy Florance announced that CoStar is in the process of acquiring another company to add to its portfolio: aerial-imagery program operator Vexcel, whose cameras produced the aerial imagery behind Bing maps at Microsoft.

The company only recently closed on its high-profile acquisition of Zonda—a provider of new home construction data, homebuilder software and residential real estate marketplaces—during Q3, and is already expecting it to positively contribute to financials in Q4. CoStar also closed another high-profile acquisition last year when it bought 3D camera and property mapping company Matterport, which has been contributing to growth for the company since then.

As for the intention behind acquiring Vexcel, Florance explained that the company “collects data from 45 countries in more than 320 major global metros and sees hundreds of millions of buildings and houses clearly from the air.”
“It took us 4 decades to inspect several million properties,” he continued. “With Vexcel and AI, we believe we can observe and capture valuable data on hundreds of millions of properties in 24 months.”

Florance also explained that the deal will operate in a similar format to Matterport, where the company “continues to grow as a standalone product” while also “accelerating growth in (CoStar’s) core products.”

As for the portal end of the business, Apartments.com remains a strong focus for CoStar as the focus for Homes.com shifts. 

Florance noted that Homes.com saw its lead flow into Apartments.com grow 450%, a rate the company expects to keep “growing and growing,” and see the “combined solution” as “quite valuable.”

The commercial end of CoStar’s business also continues to outperform residential, although the residential market is definitely picking up pace with the company’s renewed focus on Apartments.com.

When asked about high mortgage rates potentially being a barrier to further residential growth, Florance explained that the current negative impacts to home sales “actually has two sides to it.”

“We provide the only real marketing product that is trying to market the house instead of the marketing buyer agents. So, in a time when it’s hard to sell a house, we think we’ll see a little pick up there,” he said. “But, we’re not seeing anything specifically in CoStar that is clearly negative on interest rate rises at this point.”

Also diving into AI and how consumers may be using personal AI agents to search for housing options, Florance explained that LLMs are “bringing people back into Apartments.com to do the transaction.”

“People do build agents, but it does lead them into the source sites where the content, the imagery, the Matterport, the ability to do the actual transaction applications is in our site,” he continued. “That is working, and we are seeing our integration with ChatGPT, we are seeing good results there.”

The numbers

CoStar reported $952 million in revenue for Q3 2026, up about 2.9% from $925 million in Q2 and up 14% year-over-year. Commercial revenue totaled $492 million, up about 2.3% from $481 million last quarter and up 6.7% year-over-year. Residential revenue clocked in at $460 million, up 3.6% from $444 million last quarter and up a whopping 23% year-over-year.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) came out to $229 million, beating out the company’s initial predictions of $190 million to $210 million.

Notably, Florance said that the Q3 EBITDA “exceeded the high end of our guidance range,” without even including the “positive impact of Zonda.”

Due to strong returns both last and this quarter—as well as new and soon-to-be acquisitions to the business in Zonda and Vexcel—CoStar noted that it has expanded its expected guidance for the full year of 2026.

Back in Q2, the company said it expected $780 million to $820 million in adjusted EBITDA for the full year, but now it is growing that expectation to a midpoint of $830 million. Long-term, the goal is an adjusted EBITDA of $1.25 billion at the end of 2028.

“As we’ve done repeatedly over the past 4 decades after completing an investment period, we focus on generating strong multi-year increases in adjusted EBITDA,” said Florance. “We’re generating strong margin expansion while simultaneously investing aggressively in high potential future revenue drivers.”

The increase in expectations for 2026 also factors in Zonda’s contribution to the business, not yet counted as of Q3. Florance said that the company expects Zonda to contribute about $60 million to the expected financials by the end of the year.

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