CoStar First Quarter 2013 Revenue Grows 52% Year-Over-Year; Organic Growth Rate of LoopNet Core Business Surges 219% Since

CoStar First Quarter 2013 Revenue Grows 52% Year-Over-Year; Organic Growth
Rate of LoopNet Core Business Surges 219% Since Acquisition; Company Raises
Revenue and Earnings Guidance

WASHINGTON, April 24, 2013 (GLOBE NEWSWIRE) -- CoStar Group, Inc.
(Nasdaq:CSGP), commercial real estate's leading Internet provider of
information, analytics and marketing services, announced today that revenue
for the first quarter of 2013 was $104.0 million versus $68.6 million in the
first quarter of 2012, which represents an increase of 52% year-over-year.

"I am very pleased with the progress we have made since closing the LoopNet
acquisition a year ago," said Andrew C. Florance, Founder and Chief Executive
Officer of CoStar. "We had a record $13.8 million in annualized net new sales
in the first quarter of 2013, which is up 27% from last quarter. In March
2013, we recorded our best sales month ever."

Florance stated: "We achieved all-time high quarterly revenue for LoopNet
Premium Membership in the first quarter of 2013 and increased the organic
revenue growth rate for Premium Membership by 219%, from 5.2% in the first
quarter of 2012 to 16.6% in the first quarter of 2013. Also, we increased the
average new sales price 32% on Premium Membership from $57 to $75
year-over-year. In March 2013, 51% of all new Premium Membership subscribers
signed up for annual contracts, up from almost no annual contracts before the
acquisition."

"Total revenue synergies from the acquisition through the end of the first
quarter of 2013 increased to $18.4 million, including $12.4 million of CoStar
information sales to LoopNet members and approximately $2.0 million in LoopNet
marketing services to CoStar clients. I expect we will achieve our goal of a
$500 million revenue run rate and 30-35% adjusted EBITDA margins as we exit
2014," said Florance.

Year 2012-2013 Quarterly Results - Unaudited
(in millions, except per share data)
                                             2012                      2013
                                             Q1    Q2     Q3    Q4     Q1
                                                                   
Revenues                                      $68.6 $85.2  $96.0 $100.1 $104.0
EBITDA                                       11.9  8.2    19.6  20.5   7.6
Net income (loss)                             5.1   (6.7)  6.8   4.7    (2.4)
Net income (loss) per share - diluted         0.20  (0.25) 0.24  0.17   (0.09)
Weighted average outstanding shares - diluted 25.5  26.5   27.7  27.7   27.4
                                                                   
Adjusted EBITDA                               15.3  20.4   25.6  25.1   25.7
Non-GAAP Net Income                           8.2   10.5   13.1  12.6   13.0
Non-GAAP Net Income per share - diluted       0.32  0.39   0.47  0.46   0.47

Adjusted EBITDA (which excludes stock-based compensation and other items as
defined below) was $25.7 million for the first quarter of 2013 compared to
$15.3 million in the first quarter of 2012, which is an increase of 68%
year-over-year.

In February 2012, the Compensation Committee of the Board of Directors of
CoStar approved grants of performance-based restricted stock that would vest
upon the achievement of $90 million of cumulative EBITDA over a period of four
consecutive quarters. These awards support the Committee's goals of aligning
management's incentives with increasing long-term stockholder value through
increased earnings.

Based on continued strong performance, the accelerated pace and success of the
LoopNet integration and management's increased confidence that it is probable
the earnings goals will be achieved during 2014, the Company recorded a
cumulative catch-up of stock-based compensation expense in the first quarter.

EBITDA in the first quarter of 2013 was $7.6 million and was impacted by $15.1
million of higher stock-based compensation expense compared to last year,
mainly related to the performance-based restricted stock awards.

Non-GAAP net income (defined below) in the first quarter of 2013 was $13.0
million or $0.47 per diluted share, which represents an increase of $4.8
million or 59% year-over-year. Net income in the first quarter of 2013 was
($2.4) million or ($0.09) per diluted share and includes the impact of the
additional stock-based compensation expense.

As of March 31, 2013, the Company had approximately $189.1 million in cash,
cash equivalents, short-term and long-term investments.This represents an
increase of $11.3 million from the fourth quarter of 2012.Short and long-term
debt associated with the LoopNet acquisition totaled approximately $166.3
million as of March 31, 2013.

2013 Outlook

"Based on the ongoing success of our cross-selling initiatives, as well as the
continued strength of our core information, analytics and marketing services,
we are raising both our revenue and earnings estimates for 2013," stated Brian
J. Radecki, Chief Financial Officer of CoStar.For the second quarter of 2013,
the Company expects revenue in the range of approximately $105 million to $107
million, and approximately $428 million to $432 million for the full year
2013, an increase of $4.0 million compared to the Company's prior guidance.

For the second quarter of 2013, the Company expects non-GAAP net income per
diluted share (defined below) in the range of approximately $0.50 to
$0.53.For the full year of 2013, the Company currently expects non-GAAP net
income per diluted share in a range of approximately $2.12 to $2.22, an
increase of $0.04 compared to the Company's previous guidance. 

The annual revenue and earnings outlook includes the impact of de-emphasizing
or eliminating certain services.

The adjusted EBITDA and non-GAAP earnings per diluted share in the Company's
outlook do not include stock-based compensation expense and other items.In
each of the remaining quarters of 2013, the company expects to record
approximately $7.5 million to $8.5 million per quarter of total stock
compensation expense, which includes both normal ongoing stock-based
compensation awards and the performance-based awards expense.

The preceding forward-looking statements reflect CoStar's expectations as of
April 24, 2013, including forward-looking non-GAAP financial measures on a
consolidated basis – including LoopNet and related costs. We are not able to
forecast with certainty whether or when certain events, such as
acquisition-related costs, restructuring, settlements or impairments will
occur in any given quarter. Given the risk factors, uncertainties and
assumptions discussed above, actual results may differ materially. Other than
in publicly available statements, the Company does not intend to update its
forward-looking statements until its next quarterly results announcement.

Reconciliation of non-GAAP net income, EBITDA, adjusted EBITDA and all of the
disclosed non-GAAP financial measures to their GAAP basis results are shown in
detail below, along with definitions for those terms.

Non-GAAP Financial Measures

For information regarding the purpose for which management uses the non-GAAP
financial measures disclosed in this release and why management believes they
provide useful information to investors regarding the Company's financial
condition and results of operations, please refer to the Company's latest
periodic report.

EBITDA is a non-GAAP financial measure that represents GAAP net income
attributable to CoStar Group, Inc. before (i) interest income (expense), (ii)
provision for income taxes, and (iii) depreciation and amortization.

Adjusted EBITDA is a non-GAAP financial measure that represents EBITDA before
(i) stock-based compensation expense, (ii) acquisition and integration related
costs, (iii) restructuring charges and related costs, (iv) costs related to
the acquisition and transition of the Company's corporate headquarters, and
(v) settlements and impairments incurred outside the Company's normal business
operations.

Non-GAAP net income is a non-GAAP financial measure that represents GAAP net
income attributable to CoStar Group, Inc. before (i) purchase amortization and
other related costs, (ii) stock-based compensation expense, (iii) acquisition
and integration related costs, (iv) purchase accounting adjustments, (v)
restructuring charges and related costs and (vi) settlements and impairments.
From this figure, we then subtract an assumed provision for income taxes to
arrive at non-GAAP net income. We assume a 38% tax rate in order to
approximate our long-term effective corporate tax rate.

Non-GAAP net income per diluted share (also referred to as non-GAAP EPS) is a
non-GAAP financial measure that represents non-GAAP net income divided by the
number of diluted shares outstanding for the period used in the calculation of
GAAP net income per diluted share.

Earnings Conference Call

Management will conduct a conference call to discuss earnings results for the
first quarter of 2013 and the Company's outlook for 2013 at 11:00 a.m. EDT on
Thursday, April 25, 2013. The audio portion of the conference call will be
broadcast live over the Internet at http://www.costar.com/investors.aspx. To
join the conference call by telephone, please dial (800) 230-1074 (from the
United States and Canada) or (612) 288-0329 (from all other countries) and
refer to conference code 287842. An audio recording of the conference call
will be available approximately one hour after the live call concludes and
remain available for a period of time following the call. To access the
recorded call, please dial (800) 475-6701 (from the U.S. and Canada) or (320)
365-3844 (from all other countries) using access code 287842. The webcast
replay will also be available in the Investors section of CoStar's web site
for a period of time following the call.

CoStar Group, Inc.
Condensed Consolidated Statements of Operations-Unaudited
(in thousands, except per share data)
                                                       
                                             For the Three Months
                                             Ended March 31,
                                             2013       2012
                                                       
                                                       
Revenues                                      $104,033 $68,629
Cost of revenues                              33,606     24,334
Gross margin                                  70,427     44,295
                                                       
Operating expenses:                                     
Selling and marketing                        26,978     15,550
Software development                         12,102     5,015
General and administrative                   29,820     14,494
Purchase amortization                        4,125      634
                                             73,025     35,693
                                                       
Income (loss) from operations                 (2,598)    8,602
Interest and other income                     104        250
Interest and other expense                    (1,755)    --
Income (loss) before income taxes             (4,249)    8,852
Income tax expense (benefit), net             (1,839)    3,720
Net income (loss)                             $(2,410) $5,132
                                                       
Net income (loss) per share - basic           $(0.09)  $0.20
Net income (loss) per share - diluted         $(0.09)  $0.20
                                                       
Weighted average outstanding shares - basic   27,428     25,128
Weighted average outstanding shares - diluted 27,428     25,528


CoStar Group, Inc.
Reconciliation of Non-GAAP Financial Measures-Unaudited
(in thousands, except per share data)
                                                             
                                                             
Reconciliation of Net Income (Loss) to Non-GAAP Net Income
                                                             
                                            For the Three Months
                                            Ended March 31,
                                            2013              2012
                                                             
Net income (loss)                            $(2,410)        $5,132
Income tax expense (benefit), net            (1,839)           3,720
Income (loss) before income taxes            (4,249)          8,852
Purchase amortization and other related      7,152            1,056
costs
Stock-based compensation expense             17,326           2,187
Acquisition and integration related costs    505              1,170
Restructuring and related costs              271              --
Non-GAAP income before income taxes          21,005           13,265
Assumed rate for income tax expense, net *   38%               38%
Assumed provision for income tax expense,    (7,982)          (5,041)
net
Non-GAAP net income                          $13,023         $8,224
                                                             
Net income (loss) per share - diluted        $(0.09)         $0.20
Non-GAAP net income per share - diluted      $0.47           $0.32
                                                             
Weighted average outstandingshares -        27,896           25,528
diluted**
                                                             
* A 38% tax rate is assumed in order to approximate the Company's long-term
effective corporate tax rate.
** For periods with GAAP net losses, the basic weighted-average outstanding
shares are used to calculate the GAAP net loss per share as including the
effect of the potentially dilutive securities would have an anti-dilutive
effect.For periods with Non-GAAP net income, the diluted weighted-average
outstanding shares are used to calculate Non-GAAP net income per share in
order to reflect the impact of potentially dilutive securities.
                                                             
                                                             
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA
                                                             
                                            For the Three Months
                                            Ended March 31,
                                            2013              2012
                                                             
Net income (loss)                            $(2,410)        $5,132
Purchase amortization in cost of revenues    3,027             422
Purchase amortization in operating expenses  4,125             634
Depreciation and other amortization          3,014             2,264
Interest income                              (104)             (250)
Interest expense                             1,755             0
Income tax expense (benefit), net            (1,839)           3,720
EBITDA                                       $7,568          $11,922
Stock-based compensation expense             17,326            2,187
Acquisition and integration related costs    505              1,170
Restructuring and related costs              271              --
Adjusted EBITDA                              $25,670         $15,279


CoStar Group, Inc.
Condensed Consolidated Balance Sheets - Unaudited
(in thousands)
                                                      
                                          March 31,    December 31,
                                          2013         2012
                                          (Unaudited)  
ASSETS                                                 
Current assets:                                        
Cash and cash equivalents                 $167,394   $156,027
Short-term investments                    --         37
Accounts receivable, net                  24,420       16,392
Deferred income taxes, net                19,201       9,256
Income tax receivable                     1,796        5,357
Prepaid and other current assets          9,769        9,560
Debt issuance costs, net                  2,885        2,934
Total current assets                       225,465      199,563
                                                      
Long-term investments                      21,675       21,662
Property and equipment, net                48,653       46,308
Goodwill                                   716,569      718,078
Intangible and other assets, net           163,672      170,632
Deposits and other assets                  1,900        2,274
Debt issuance costs, net                   5,924        6,622
Total assets                               $1,183,858 $1,165,139
                                                      
LIABILITIES AND STOCKHOLDERS' EQUITY                   
Current liabilities:                                   
Accounts payable and accrued expenses     $43,565    $51,590
Current portion of long-term debt         17,500      17,500
Deferred revenue                          36,654       32,548
Total current liabilities                  97,719       101,638
                                                      
Long-term debt, less current portion       148,750      153,125
Deferred gain on sale of building          28,178      28,809
Deferred rent                              19,357      17,305
Deferred income taxes, net                 36,359      34,071
Income taxes payable                       2,844        2,818
Other long-term liabilities                --         1,030
                                                      
Stockholders' equity                       850,651      826,343
Total liabilities and stockholders' equity $1,183,858 $1,165,139


CoStar Group, Inc.
Results of Segments-Unaudited
(in thousands)
                                                          
                                      For the Three Months
                                      Ended March 31,
                                      2013                 2012
Revenues                                                   
United States                          $99,296            $63,985
International                                              
External customers                    4,737               4,644
Intersegment revenue *                116                 343
Total international revenue            4,853               4,987
Intersegment eliminations              (116)               (343)
Total revenues                         $104,033            $68,629
                                                          
EBITDA                                                     
United States                          $9,286             $13,225
International **                       (1,718)             (1,303)
Total EBITDA                           $7,568             $11,922
                                                          
*Intersegment revenue is attributable to services performed for the Company's
wholly owned subsidiary, Property and Portfolio Research, Inc ("PPR"), by
Property and Portfolio Research Ltd., a wholly owned subsidiary of PPR.
Intersegment revenue is recorded at an amount the Company believes
approximates fair value. U.S. EBITDA includes a corresponding cost for the
services performed by Property and Portfolio Research Ltd. for PPR.
                                                          
** International EBITDA includes a corporate allocation of approximately
$100,000 and $800,000 for the three months ended March 31, 2013 and March 31,
2012, respectively.


Reconciliation of Non-GAAP Financial Measures with 2012-2013 Quarterly Results
- Unaudited
(in millions, except per share data)
                                                               
Reconciliation of Net Income (Loss) to Non-GAAP Net Income
                                                               
                          2012                                     2013
                          Q1        Q2         Q3        Q4        Q1
                                                               
Net income (loss)          $5.1    $(6.7)   $6.8    $4.7    $ (2.4)
Income tax expense         3.7      5.6       0.4      3.5      (1.8)
(benefit), net
Income (loss) before       8.8      (1.1)     7.2      8.2      (4.2)
income taxes
Purchase amortization and  1.0      5.8       7.9      7.6      7.1
other related costs
Stock-based compensation   2.2      2.7       3.7      3.6      17.3
expense
Acquisition and            1.2      9.5       2.3      1.0      0.5
integration related costs
Restructuring and related  --      --       --      --      0.3
costs
Non-GAAP income before     13.2     16.9      21.1     20.4     21.0
income taxes
Assumed rate for income    38%       38%        38%       38%       38%
tax expense, net *
Assumed provision for      (5.0)    (6.4)     (8.0)    (7.8)    (8.0)
income tax expense, net
Non-GAAP net income        $8.2    $10.5    $13.1   $12.6   $13.0
                                                               
Non-GAAP net income per    $0.32   $0.39    $0.47   $0.46   $0.47
share - diluted
                                                               
Weighted average
outstandingshares -       25.5     26.9      27.7     27.7     27.9
diluted**
                                                               
* A 38% tax rate is assumed in order to approximate the Company's long-term
effective corporate tax rate.
** For periods with GAAP net losses, the basic weighted-average outstanding
shares are used to calculate the GAAP net loss per share as including the
effect of the potentially dilutive securities would have an anti-dilutive
effect.For periods with Non-GAAP net income, the diluted weighted-average
outstanding shares are used to calculate Non-GAAP net income per share in
order to reflect the impact of potentially dilutive securities.
                                                               
                                                               
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA
                                                               
                          2012                                     2013
                          Q1        Q2         Q3        Q4        Q1
                                                               
Net income (loss)          $5.1    $(6.7)   $6.8    $4.7    $ (2.4)
Purchase amortization      1.0      5.8       7.9      7.6      7.1
Depreciation and other     2.3      2.4       2.8      3.0      3.0
amortization
Interest income            (0.2)    (0.1)     (0.1)    (0.1)    (0.1)
Interest expense           --      1.2       1.8      1.8      1.8
Income tax expense         3.7      5.6       0.4      3.5      (1.8)
(benefit), net
EBITDA                     $11.9   $8.2     $19.6   $20.5   $7.6
Stock-based compensation   2.2      2.7       3.7      3.6      17.3
expense
Acquisition and            1.2      9.5       2.3      1.0      0.5
integration related costs
Restructuring and related  --      --       --      --      0.3
costs
Adjusted EBITDA            $15.3   $20.4    $25.6   $25.1   $25.7


Reconciliation of Forward-Looking Guidance, Net Income to Non-GAAP Net Income
(in thousands, except per share data)
                            Guidance Range          Guidance Range
                            For the Three Months    For the Twelve Months
                            Ended June 30, 2013     Ended December 31, 2013
                            Low          High       Low          High
                                                              
Net income                   $4,100     $5,500   $13,000    $17,600
Income tax expense, net     2,900        4,000      8,700        11,800
Income before income taxes   7,000       9,500     21,700      29,400
Purchase amortization and    6,900       6,900     27,000      27,000
other related costs
Stock-based compensation     7,500       7,000     42,000      40,000
expense
Acquisition and integration  100         --        650         550
related costs
Restructuring and related    1,000       500       4,000       3,000
costs
Non-GAAP Income before       22,500      23,900    95,350      99,950
income taxes
Assumed rate for income tax  38%          38%        38%          38%
expense, net *
Assumed provision for income (8,550)     (9,082)   (36,233)    (37,981)
tax expense, net
Non-GAAP Net Income          $13,950    $14,818  $59,117    $61,969
                                                              
Net Income per share -       $0.15      $0.20    $0.47      $0.63
diluted
Non-GAAP Net Income per      $0.50      $0.53    $2.12      $2.22
share - diluted
                                                              
Weighted average             27,900      27,900    27,900      27,900
outstandingshares - diluted
                                                              
* A 38% tax rate is assumed in order to approximate the Company's long-term
effective corporate tax rate.

About CoStar Group, Inc.

CoStar Group (Nasdaq:CSGP) is commercial real estate's leading provider of
information, analytics and marketing services. Founded in 1987, CoStar
conducts expansive, ongoing research to produce and maintain the largest and
most comprehensive database of commercial real estate information. Our suite
of online services enables clients to analyze, interpret and gain unmatched
insight on commercial property values, market conditions and current
availabilities. Through LoopNet, the Company operates the most heavily
trafficked commercial real estate marketplace online with more than 7 million
registered members. CoStar operates websites that have approximately 10
million unique monthly visitors in aggregate. Headquartered in Washington, DC,
CoStar maintains offices throughout the U.S. and in Europe with a staff of
approximately 2,000 worldwide, including the industry's largest professional
research organization. For more information, visit www.costar.com.

This news release contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Such statements include,
but are not limited to, statements about CoStar's financial expectations, the
company's plans, objectives, expectations and intentions and other statements
including words such as "hope," "anticipate," "may," "believe," "expect,"
"intend," "will," "should," "plan," "estimate," "predict," "continue" and
"potential" or the negative of these terms or other comparable terminology.
Such statements are based upon the current beliefs and expectations of
management of CoStar and are subject to significant risks and uncertainties.
Actual results may differ materially from the results anticipated in the
forward-looking statements. The following factors, among others, could cause
or contribute to such differences: the risk that the trends stated or implied
by this release cannot be sustained at the current pace, including trends
related to sales, earnings, and revenue growth; the risk that the company does
not achieve its earnings goals when and as stated in this release; the risk
that revenues for the second quarter of 2013 and full year 2013 will not be as
stated in this press release; the risk that the company is unable to replace
or exceed revenues from eliminated or de-emphasized services; the risk that
non-GAAP net income per diluted share for the second quarter of 2013 and full
year 2013 will not be as stated in this press release; the risk that the
amount and timing of any stock-based compensation incurred and recorded will
not be as stated in this release; the risk that the integration of LoopNet
will not continue to result in anticipated cost savings or synergies; the risk
that the combination of CoStar and LoopNet does not result in or create the
anticipated benefits for CoStar; and the risk that the businesses of LoopNet
and CoStar may not be combined successfully or in a timely and cost-efficient
manner.Additional factors that could cause results to differ materially from
those anticipated in the forward-looking statements can be found in CoStar's
Annual Report on Form 10-K for the year ended December31, 2012, filed with
the SEC, including in the "Risk Factors" section of that filing, and the
company's other filings with the SEC available at the SEC's website
(www.sec.gov).CoStar assumes no obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.

CONTACT: Brian J. Radecki
         Chief Financial Officer
         (202) 336-6920
         bradecki@costar.com
        
         Richard Simonelli
         Director Investor Relations
         (202) 346-6394
         rsimonelli@costar.com
 
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