☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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52-2091509
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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1331 L Street, NW
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Washington,
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DC
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20005
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Title of each class
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Trading Symbol
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Name of each exchange on which registered
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Common Stock ($0.01 par value)
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CSGP
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Nasdaq Global Select Market
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Large accelerated filer
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x
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Accelerated filer
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o
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Non-accelerated filer
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o
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Smaller reporting company
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☐
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Emerging growth company
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☐
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PART I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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Item 16.
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Item 1.
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Business
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•
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Calling our information sources on recently updated properties to re-verify information;
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•
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Performing periodic research audits and field checks to determine if we correctly canvassed buildings;
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•
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Providing training and retraining to our research professionals to ensure accurate and standardized data compilation; and
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•
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Compiling measurable performance metrics for research teams and managers for feedback on data quality.
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•
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CoStar Property® and for-sale provide a comprehensive inventory of office, industrial, retail, multifamily and student housing properties and land. We also provide for-lease and for-sale listings, historical data, property analytics, building photographs, demographics, maps and floor plans. Commercial real estate professionals use CoStar Property to identify available space for-lease, evaluate leasing and sale opportunities, value assets and position properties in the marketplace. Our clients also use CoStar Property to analyze market conditions by calculating current vacancy rates, absorption rates or average rental rates, and forecasting future trends based on user selected variables. CoStar Property provides subscribers with powerful map-based search & reporting capabilities.
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•
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CoStar COMPS® is the industry’s most comprehensive database of comparable commercial real estate sales transactions and is designed for professionals who need to research property comparables, identify market trends, expedite the appraisal process and support property valuations. CoStar COMPS offers subscribers numerous fields of property information, access to support documents (e.g., deeds of trust) for new comparables, demographics and the ability to view for-sale properties alongside sold properties plotted on a map or aerial image or in a table format.
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•
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CoStar Market Analytics provides owners, investors, brokers property managers, lenders, appraisers and other commercial real estate professionals the ability to view and report on aggregated market and submarket trends, including leasing, vacancy, rental rates, construction, investment sales activity and overall economic conditions that affect commercial real estate markets. CoStar Market Analytics covers all major real estate sectors including office, industrial, retail, multifamily and student housing, and provides quantitatively driven and economist curated forecasts of supply, demand, vacancy, and rent at the submarket level, and job growth and asset pricing at the market level.
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•
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CoStar Tenant® is a detailed online business-to-business prospecting and analytical tool providing commercial real estate professionals with the most comprehensive commercial real estate-related tenant information available in our North American markets. CoStar Tenant profiles tenants occupying space in commercial buildings and provides updates on lease expirations - one of the service’s key features - as well as occupancy levels, growth rates and numerous other facts. Delivering this information via the Internet allows users to target prospective clients quickly through a searchable database that identifies only those tenants meeting certain criteria.
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•
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CoStar Lease Comps provides subscribers comprehensive data regarding CoStar researched lease transactions and a software tool to capture, manage and maintain their own user-entered lease data. In addition, CoStar Lease Comps provides subscribers the ability to analyze this combined lease dataset from an aggregate analytic perspective and generate various reports.
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•
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CoStar Lease Analysis® is a workflow tool that is part of CoStar Suite and allows subscribers to incorporate CoStar data with their own data to perform in-depth lease analyses and share those analyses with other subscribers or non-subscribers. CoStar Lease Analysis can be used to produce an understandable cash flow analysis as well as key metrics about any proposed or existing lease. It combines financial modeling with CoStar’s comprehensive property information, enabling the subscriber to compare lease alternatives, either from a landlord or tenant perspective.
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•
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CoStar Public Record is CoStar’s newest commercial real estate servicing offering. It provides access to a searchable database of nearly 38 million commercially-zoned parcels in the U.S. Users can search for property attributes, sale transaction, loan, lien and tax assessments information. Information in this module is sourced from numerous counties and jurisdictions that provide this data for ownership, title and property tax assessment purposes.
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•
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ApartmentFinder® provides lead generation, advertising and Internet marketing solutions to property managers and owners through its main site, ApartmentFinder.com.
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•
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ForRent.com® provides digital advertising through a network of four multifamily websites - which includes ForRent.com, AFTER55.com, CorporateHousing.com and ForRentUniversity.com.
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•
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ApartmentHomeLiving.comTM provides renters with another national online apartment rental resource that showcases apartments for rent with official prices, pictures, floor plans and detailed information on each apartment.
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•
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Apartamentos.comTM provides Spanish speaking renters with an online apartment rentals resource offered exclusively in Spanish, with the same primary features found on Apartments.com.
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•
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Westside Rentals® specializes in Southern California real estate rentals.
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•
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Off Campus Partners provides student housing marketplace content and technology to U.S. universities, simplifying the off-campus housing search process for universities, property managers, and students.
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•
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Quality and depth of the underlying databases;
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•
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Quality and quantity of leads and leases delivered;
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•
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Ease of use, flexibility and functionality of the software;
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•
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Intuitiveness and appeal of the user interface;
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•
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Timeliness of the data, including listings;
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•
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Breadth of geographic coverage and services offered;
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•
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Completeness and accuracy of content;
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•
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Client service and support;
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•
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Perception that the service offered is the industry standard;
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•
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Price;
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•
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Effectiveness of marketing and sales efforts;
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•
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Proprietary nature of methodologies, databases and technical resources;
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•
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Vendor reputation;
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•
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Brand loyalty among customers; and
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•
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Capital resources.
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•
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Online marketing services, websites or data exchanges targeted to commercial real estate brokers, buyers and sellers of commercial real estate properties, insurance companies, mortgage brokers and lenders, such as Reed Business Information Limited and its Estates Gazette and Radius Data Exchange products, RealMassive, officespace.com, 42floors, Brevitas, Catylist, Ten-X, RealNex MarketPlace, TenantWise, www.propertyshark.com, Rofo, BuildingSearch.com, CIMLS, CompStak, Rightmove, CommercialCafe, CREXi, Truss, TotalCommercial.com and DebtX;
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•
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Publishers and distributors of information, analytics and marketing services, including regional providers and national print publications, such as CBRE Economic Advisors, Marshall & Swift, Yale Robbins, REIS Network (part of the Moody's Analytics Accelerator), Real Capital Analytics, Real Capital Markets, Reonomy, The Smith Guide, Yardi Matrix, RealPage and its Axiometrics business and ReScour, Inc.;
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•
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Search engine and Internet listing services featuring apartments for rent, such as Google, Bing, Facebook Marketplace, ApartmentGuide.com, Rent.com, Rentals.com, Zillow Rentals, Trulia Rentals, StreetEasy, NakedApartments.com, HotPads.com, MyNewPlace.com, Zumper, PadMapper, craigslist, ApartmentList.com, Move.com, Realtor.com, Homes.com, Adobo, RadPad, RentJungle, RentCafe.com, RentHop, RentBerry, and ApartmentRatings;
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•
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Locally controlled real estate boards, exchanges or associations sponsoring property listing services and the companies with whom they partner, such as Catylist, the National Association of Realtors, CCIM Institute, Society of Industrial and Office Realtors, the Commercial Association of Realtors Data Services and AIR CRE;
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•
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Real estate portfolio management software solutions, such as Cougar Software, MRI Software, Altus, Intuit and SiteCompli;
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•
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Real estate lease management and administration software solutions, such as Accruent, Tririga, Manhattan Software, Tango Analytics, Lease Accelerator and AMT Direct;
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•
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In-house research departments operated by commercial real estate brokers; and
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•
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Public record providers.
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•
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Trade secret, misappropriation, unfair competition, copyright, trademark, computer fraud, database protection and other laws;
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•
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Registration of copyrights and trademarks;
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•
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Nondisclosure, noncompetition and other contractual provisions with employees and consultants;
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•
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License agreements with customers;
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•
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Patent protection; and
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•
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Technical measures.
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Item 1A.
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Risk Factors
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•
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Increasing the number of unique visitors to, and users of, our websites and mobile applications;
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•
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The quantity and quality of the leads that we provide to our advertisers;
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•
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The success of any marketing and product development efforts directed at attracting additional users and advertisers to our marketplaces;
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•
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Keeping pace with changes in technology and with our competitors; and
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•
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Offering an attractive return on investment to our advertisers for their advertising dollars spent with us.
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•
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Significant underperformance relative to historical or projected future operating results;
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•
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Significant changes in the manner of our use of acquired assets or the strategy for our overall business;
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•
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Significant negative industry or economic trends; or
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•
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Significant decline in our market capitalization relative to net book value for a sustained period.
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•
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Rates of subscriber adoption and retention;
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•
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Timing of our sales conference or significant marketing events;
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•
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A slow-down during the end-of-year holiday period;
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•
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Changes in our pricing strategy and timing of changes;
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•
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The timing and success of new service introductions and enhancements;
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•
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The shift of focus from, or phase out of services that overlap or are redundant with other services we offer;
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•
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The amount and timing of our operating expenses and capital expenditures;
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•
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Our ability to control expenses;
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•
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The amount and timing of non-cash stock-based charges;
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•
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Costs related to acquisitions of businesses or technologies or impairment charges associated with such investments and acquisitions;
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•
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Competition;
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•
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Changes or consolidation in the real estate industry;
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•
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Our investments in geographic expansion and to increase coverage in existing markets;
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•
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Interest rate fluctuations;
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•
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Successful execution of our expansion and integration plans;
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•
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The development of our sales force;
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•
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Foreign currency and exchange rate fluctuations;
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•
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Inflation; and
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•
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Changes in client budgets.
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Item 3.
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Legal Proceedings
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Item 4.
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Mine Safety Disclosures
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Item 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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Month, 2019
|
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Total Number of
Shares
Purchased
|
|
|
Average Price Paid
per Share
|
|
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
|
|
Maximum Number of
Shares that May Yet
Be Purchased Under
the Plans or
Programs
|
October 1 through 31
|
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1,609
|
|
|
$594.50
|
|
—
|
|
—
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November 1 through 30
|
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1,221
|
|
|
568.88
|
|
—
|
|
—
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December 1 through 31
|
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1,481
|
|
|
596.27
|
|
—
|
|
—
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Total
|
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4,311
|
(1)
|
|
$587.85
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—
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—
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__________________________
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|
•
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An equal investment in the Standards & Poor's Stock 500 (“S&P 500”) Index; and
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•
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An equal investment in the S&P 500 Internet Services & Infrastructure Index.
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Company / Index
|
|
12/31/14
|
|
12/31/15
|
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12/31/16
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12/31/17
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|
12/31/18
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12/31/19
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||||||||||||
CoStar Group, Inc.
|
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$
|
100.00
|
|
|
$
|
112.56
|
|
|
$
|
102.65
|
|
|
$
|
161.71
|
|
|
$
|
183.71
|
|
|
$
|
325.82
|
|
S&P 500 Index
|
|
100.00
|
|
|
101.38
|
|
|
113.51
|
|
|
138.29
|
|
|
132.23
|
|
|
173.86
|
|
||||||
S&P 500 Internet Services & Infrastructure Index (1)
|
|
100.00
|
|
|
133.32
|
|
|
140.22
|
|
|
197.36
|
|
|
180.67
|
|
|
242.93
|
|
||||||
__________________________
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Item 6.
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Selected Financial Data
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Year Ended December 31,
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||||||||||||||||||
Consolidated Statements of Operations Data:
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
||||||||||
Revenues
|
$
|
711,764
|
|
|
$
|
837,630
|
|
|
$
|
965,230
|
|
|
$
|
1,191,832
|
|
|
$
|
1,399,719
|
|
Cost of revenues
|
188,885
|
|
|
173,814
|
|
|
220,403
|
|
|
269,933
|
|
|
289,239
|
|
|||||
Gross profit
|
522,879
|
|
|
663,816
|
|
|
744,827
|
|
|
921,899
|
|
|
1,110,480
|
|
|||||
Operating expenses
|
511,424
|
|
|
518,911
|
|
|
571,011
|
|
|
648,335
|
|
|
746,933
|
|
|||||
Income from operations
|
11,455
|
|
|
144,905
|
|
|
173,816
|
|
|
273,564
|
|
|
363,547
|
|
|||||
Interest and other income
|
537
|
|
|
1,773
|
|
|
4,044
|
|
|
13,281
|
|
|
30,017
|
|
|||||
Interest and other expense
|
(9,411
|
)
|
|
(10,016
|
)
|
|
(9,014
|
)
|
|
(2,830
|
)
|
|
(2,615
|
)
|
|||||
Loss on debt extinguishment
|
—
|
|
|
—
|
|
|
(3,788
|
)
|
|
—
|
|
|
—
|
|
|||||
Income before income taxes
|
2,581
|
|
|
136,662
|
|
|
165,058
|
|
|
284,015
|
|
|
390,949
|
|
|||||
Income tax expense
|
6,046
|
|
|
51,591
|
|
|
42,363
|
|
|
45,681
|
|
|
75,986
|
|
|||||
Net income (loss)
|
$
|
(3,465
|
)
|
|
$
|
85,071
|
|
|
$
|
122,695
|
|
|
$
|
238,334
|
|
|
$
|
314,963
|
|
Net income (loss) per share — basic
|
$
|
(0.11
|
)
|
|
$
|
2.64
|
|
|
$
|
3.70
|
|
|
$
|
6.61
|
|
|
$
|
8.67
|
|
Net income (loss) per share — diluted
|
$
|
(0.11
|
)
|
|
$
|
2.62
|
|
|
$
|
3.66
|
|
|
$
|
6.54
|
|
|
$
|
8.60
|
|
Weighted average shares outstanding — basic
|
31,950
|
|
|
32,167
|
|
|
33,200
|
|
|
36,058
|
|
|
36,310
|
|
|||||
Weighted average shares outstanding — diluted
|
31,950
|
|
|
32,436
|
|
|
33,559
|
|
|
36,448
|
|
|
36,630
|
|
|
As of December 31,
|
||||||||||||||||||
Consolidated Balance Sheet Data:
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
||||||||||
Cash, cash equivalents and long-term investments
|
$
|
437,325
|
|
|
$
|
577,175
|
|
|
$
|
1,221,533
|
|
|
$
|
1,110,486
|
|
|
$
|
1,080,801
|
|
Working capital
|
337,452
|
|
|
472,545
|
|
|
1,141,269
|
|
|
1,059,139
|
|
|
992,109
|
|
|||||
Total assets
|
2,079,571
|
|
|
2,185,063
|
|
|
2,873,441
|
|
|
3,312,957
|
|
|
3,853,986
|
|
|||||
Total long-term liabilities
|
400,510
|
|
|
375,904
|
|
|
75,525
|
|
|
136,856
|
|
|
241,337
|
|
|||||
Stockholders’ equity
|
1,543,780
|
|
|
1,654,213
|
|
|
2,651,250
|
|
|
3,021,942
|
|
|
3,405,593
|
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Continue to develop, improve and market our recently launched Apartments.com service offerings that focus on the digital rental experience and enable renters to apply for-leases, and for landlords to run tenant credit and background checks and make rent payments, all online through a single platform. We plan to aggressively market our multifamily listing services in an effort to provide more value to advertisers and, in turn, to attract advertisers. As such, we plan to increase our investment in Apartments.com marketing in 2020 by approximately $100 million, which may reduce our margins and profitability while we invest in future growth. The increased investment is focused on search engine marketing and enhanced brand awareness. We also plan to continue to invest in our multifamily business by increasing the size of our sales force with a focus on increasing sales to midsize and smaller apartment communities.
|
•
|
Obtaining necessary bankruptcy court and regulatory approvals to close the pending acquisition of RentPath and integrating RentPath with the Apartments.com network post-closing. On February 11, 2020, a wholly owned subsidiary of the Company entered into an agreement to acquire for $588 million in cash all of the equity interests of RentPath Holdings, Inc., as reorganized following an internal restructuring pursuant to and under the joint chapter 11 plan of reorganization of RentPath and certain of its subsidiaries. Closing of the acquisition is subject to customary closing conditions, including the expiration or termination of any applicable waiting period under applicable antitrust laws and approval by the bankruptcy court. See Note 19 to the accompanying Notes to the Consolidated Financial Statements included in Part IV of this Annual Report on Form 10-K for further discussion.
|
•
|
Continue to invest in the LoopNet marketplace by enhancing the content on the site (including high-quality imagery), seeking targeted advertisements, providing premium listing services (such as LoopNet Signature Ads) that increase a property listing’s exposure, and adding more content for premium listings to better meet the needs of a broader cross section of the commercial real estate industry. Additionally, we initiated training and incentive programs for our sales team to increase sales of LoopNet Signature Ads, with a focus on property owners.
|
•
|
Integrating recently completed acquisitions, including STR, with CoStar’s business operations. We plan to consolidate STR data and services with CoStar Suite to create an integrated platform. We plan to drive international expansion, in part, through STR's global operations and to apply STR's benchmarking expertise to other commercial real estate segments served by CoStar.
|
•
|
Continue to invest in CoStar Suite, including capabilities that allow us to broaden the reach of CoStar Suite in Europe by offering multiple languages and currencies on the platform. We plan to enhance CoStar Suite by making additional investments in analytical capabilities focused on owners and lenders of commercial real estate. In addition, we plan to invest in integrating the technology and infrastructure from other existing service offerings into the CoStar Suite platform, including CoStar Real Estate Manager, in order to leverage data and technology across our platforms and provide customers with additional functionality.
|
•
|
Amortization of acquired intangible assets in cost of revenues may be useful for investors to consider because it represents the diminishing value of any acquired trade names and other intangible assets and the use of our acquired technology, which is one of the sources of information for our database of commercial real estate information. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure.
|
•
|
Amortization of acquired intangible assets in operating expenses may be useful for investors to consider because it represents the estimated attrition of our acquired customer base. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure.
|
•
|
Depreciation and other amortization may be useful for investors to consider because they generally represent the wear and tear on our property and equipment used in our operations. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure.
|
•
|
The amount of interest and other income and expense we generate and incur may be useful for investors to consider and may result in current cash inflows and outflows. However, we do not consider the amount of interest and other income and expense to be a representative component of the day-to-day operating performance of our business.
|
•
|
Income tax expense may be useful for investors to consider because it generally represents the taxes which may be payable for the period and the change in deferred income taxes during the period and may reduce the amount of funds otherwise available for use in our business. However, we do not consider the amount of income tax expense to be a representative component of the day-to-day operating performance of our business.
|
•
|
The amount of loss on our debt extinguishment may be useful for investors to consider because it generally represents losses from the early extinguishment of debt. However, we do not consider the amount of the loss on debt extinguishment to be a representative component of the day-to-day operating performance of our business.
|
•
|
Stock-based compensation expense may be useful for investors to consider because it represents a portion of the compensation of our employees and executives. Determining the fair value of the stock-based instruments involves a high degree of judgment and estimation and the expenses recorded may bear little resemblance to the actual value realized upon the future exercise or termination of the related stock-based awards. Therefore, we believe it is useful to exclude stock-based compensation in order to better understand the long-term performance of our core business.
|
•
|
The amount of acquisition- and integration- related costs for pending and completed acquisitions incurred may be useful for investors to consider because such costs generally represent professional service fees and direct expenses related to acquisitions. Because we do not acquire businesses on a predictable cycle, we do not consider the amount of acquisition- and integration- related costs for pending and completed acquisitions to be a representative component of the day-to-day operating performance of our business.
|
•
|
The amount of settlement and impairment costs incurred outside of our ordinary course of business may be useful for investors to consider because they generally represent gains or losses from the settlement of litigation matters or impairments on acquired intangible assets. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure.
|
•
|
The amount of restructuring costs incurred may be useful for investors to consider because they generally represent costs incurred in connection with a change in a contract or a change in the makeup of our properties or personnel. We do not consider the amount of restructuring related costs to be a representative component of the day-to-day operating performance of our business.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
$
|
314,963
|
|
|
$
|
238,334
|
|
|
$
|
122,695
|
|
Amortization of acquired intangible assets in cost of revenues
|
21,357
|
|
|
20,586
|
|
|
19,707
|
|
|||
Amortization of acquired intangible assets in operating expenses
|
33,995
|
|
|
30,881
|
|
|
17,684
|
|
|||
Depreciation and other amortization
|
25,813
|
|
|
26,276
|
|
|
26,252
|
|
|||
Interest and other income
|
(30,017
|
)
|
|
(13,281
|
)
|
|
(4,044
|
)
|
|||
Interest and other expense
|
2,615
|
|
|
2,830
|
|
|
9,014
|
|
|||
Loss on debt extinguishment
|
—
|
|
|
—
|
|
|
3,788
|
|
|||
Income tax expense
|
75,986
|
|
|
45,681
|
|
|
42,363
|
|
|||
EBITDA
|
$
|
444,712
|
|
|
$
|
351,307
|
|
|
$
|
237,459
|
|
|
|
|
|
|
|
||||||
Net cash flows provided by (used in)
|
|
|
|
|
|
|
|||||
Operating activities
|
$
|
457,780
|
|
|
$
|
335,458
|
|
|
$
|
234,703
|
|
Investing activities
|
$
|
(483,753
|
)
|
|
$
|
(448,001
|
)
|
|
$
|
(72,267
|
)
|
Financing activities
|
$
|
(4,154
|
)
|
|
$
|
2,744
|
|
|
$
|
480,430
|
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
Revenues
|
$
|
1,399,719
|
|
|
100
|
%
|
|
$
|
1,191,832
|
|
|
100
|
%
|
|
$
|
965,230
|
|
|
100
|
%
|
Cost of revenues
|
289,239
|
|
|
21
|
|
|
269,933
|
|
|
23
|
|
|
220,403
|
|
|
23
|
|
|||
Gross profit
|
1,110,480
|
|
|
79
|
|
|
921,899
|
|
|
77
|
|
|
744,827
|
|
|
77
|
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Selling and marketing (excluding customer base amortization)
|
408,596
|
|
|
29
|
|
|
359,858
|
|
|
30
|
|
|
318,362
|
|
|
33
|
|
|||
Software development
|
125,602
|
|
|
9
|
|
|
100,937
|
|
|
8
|
|
|
88,850
|
|
|
9
|
|
|||
General and administrative
|
178,740
|
|
|
13
|
|
|
156,659
|
|
|
13
|
|
|
146,128
|
|
|
15
|
|
|||
Customer base amortization
|
33,995
|
|
|
2
|
|
|
30,881
|
|
|
3
|
|
|
17,671
|
|
|
2
|
|
|||
Total operating expenses
|
746,933
|
|
|
53
|
|
|
648,335
|
|
|
54
|
|
|
571,011
|
|
|
59
|
|
|||
Income from operations
|
363,547
|
|
|
26
|
|
|
273,564
|
|
|
23
|
|
|
173,816
|
|
|
18
|
|
|||
Interest and other income
|
30,017
|
|
|
2
|
|
|
13,281
|
|
|
1
|
|
|
4,044
|
|
|
—
|
|
|||
Interest and other expense
|
(2,615
|
)
|
|
—
|
|
|
(2,830
|
)
|
|
—
|
|
|
(9,014
|
)
|
|
(1
|
)
|
|||
Loss on debt extinguishment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,788
|
)
|
|
—
|
|
|||
Income before income taxes
|
390,949
|
|
|
28
|
|
|
284,015
|
|
|
24
|
|
|
165,058
|
|
|
17
|
|
|||
Income tax expense
|
75,986
|
|
|
5
|
|
|
45,681
|
|
|
4
|
|
|
42,363
|
|
|
4
|
|
|||
Net income
|
$
|
314,963
|
|
|
23
|
%
|
|
$
|
238,334
|
|
|
20
|
%
|
|
$
|
122,695
|
|
|
13
|
%
|
|
Year Ended December 31,
|
|||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
Information and analytics
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
CoStar Suite (1)
|
$617,798
|
|
44
|
%
|
|
$545,195
|
|
46
|
%
|
|
$
|
463,185
|
|
|
48
|
%
|
||||
Information services (1)
|
88,446
|
|
|
6
|
%
|
|
67,624
|
|
|
6
|
%
|
|
72,618
|
|
|
8
|
%
|
|||
Online marketplaces
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Multifamily (1)
|
490,631
|
|
|
35
|
%
|
|
405,795
|
|
|
34
|
%
|
|
279,855
|
|
|
29
|
%
|
|||
Commercial property and land (1)
|
202,844
|
|
|
15
|
%
|
|
173,218
|
|
|
14
|
%
|
|
149,572
|
|
|
15
|
%
|
|||
Total revenues
|
$
|
1,399,719
|
|
|
100
|
%
|
|
$
|
1,191,832
|
|
|
100
|
%
|
|
$
|
965,230
|
|
|
100
|
%
|
__________________________
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
|
Increase (Decrease) ($)
|
|
Increase (Decrease) (%)
|
|||||||
Revenues
|
|
|
|
|
|
|
|
|||||||
CoStar Suite
|
$
|
617,798
|
|
|
$545,195
|
|
$
|
72,603
|
|
|
13
|
%
|
||
Information services
|
88,446
|
|
|
67,624
|
|
|
20,822
|
|
|
31
|
|
|||
Multifamily
|
490,631
|
|
|
405,795
|
|
|
84,836
|
|
|
21
|
|
|||
Commercial property and land
|
202,844
|
|
|
173,218
|
|
|
29,626
|
|
|
17
|
|
|||
Total revenues
|
1,399,719
|
|
|
1,191,832
|
|
|
207,887
|
|
|
17
|
|
|||
Cost of revenues
|
289,239
|
|
|
269,933
|
|
|
19,306
|
|
|
7
|
|
|||
Gross profit
|
1,110,480
|
|
|
921,899
|
|
|
188,581
|
|
|
20
|
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
||||
Selling and marketing (excluding customer base amortization)
|
408,596
|
|
|
359,858
|
|
|
48,738
|
|
|
14
|
|
|||
Software development
|
125,602
|
|
|
100,937
|
|
|
24,665
|
|
|
24
|
|
|||
General and administrative
|
178,740
|
|
|
156,659
|
|
|
22,081
|
|
|
14
|
|
|||
Customer base amortization
|
33,995
|
|
|
30,881
|
|
|
3,114
|
|
|
10
|
|
|||
Total operating expenses
|
746,933
|
|
|
648,335
|
|
|
98,598
|
|
|
15
|
|
|||
Income from operations
|
363,547
|
|
|
273,564
|
|
|
89,983
|
|
|
33
|
|
|||
Interest and other income
|
30,017
|
|
|
13,281
|
|
|
16,736
|
|
|
NM
|
|
|||
Interest and other expense
|
(2,615
|
)
|
|
(2,830
|
)
|
|
(215
|
)
|
|
(8
|
)
|
|||
Income before income taxes
|
390,949
|
|
|
284,015
|
|
|
106,934
|
|
|
38
|
|
|||
Income tax expense
|
75,986
|
|
|
45,681
|
|
|
30,305
|
|
|
66
|
|
|||
Net income
|
$
|
314,963
|
|
|
$
|
238,334
|
|
|
$
|
76,629
|
|
|
32
|
%
|
__________________________
|
|
|
|
|
|
|
|
|||||||
NM - Not meaningful
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
||||||||||||||||||||||||||||
|
Mar. 31
|
|
Jun. 30
|
|
Sep. 30
|
|
Dec. 31
|
|
Mar. 31
|
|
Jun. 30
|
|
Sep. 30
|
|
Dec. 31
|
||||||||||||||||
Revenues
|
$
|
328,425
|
|
|
$
|
343,760
|
|
|
$
|
352,808
|
|
|
$
|
374,726
|
|
|
$
|
273,718
|
|
|
$
|
297,018
|
|
|
$
|
305,525
|
|
|
$
|
315,571
|
|
Cost of revenues
|
71,153
|
|
|
71,918
|
|
|
71,172
|
|
|
74,996
|
|
|
62,477
|
|
|
67,136
|
|
|
72,072
|
|
|
68,248
|
|
||||||||
Gross profit
|
257,272
|
|
|
271,842
|
|
|
281,636
|
|
|
299,730
|
|
|
211,241
|
|
|
229,882
|
|
|
233,453
|
|
|
247,323
|
|
||||||||
Operating expenses
|
163,780
|
|
|
197,042
|
|
|
187,367
|
|
|
198,744
|
|
|
157,796
|
|
|
186,108
|
|
|
162,765
|
|
|
141,666
|
|
||||||||
Income from operations
|
93,492
|
|
|
74,800
|
|
|
94,269
|
|
|
100,986
|
|
|
53,445
|
|
|
43,774
|
|
|
70,688
|
|
|
105,657
|
|
||||||||
Interest and other income
|
4,945
|
|
|
5,913
|
|
|
5,358
|
|
|
13,801
|
|
|
2,987
|
|
|
2,652
|
|
|
3,035
|
|
|
4,607
|
|
||||||||
Interest and other expense
|
(732
|
)
|
|
(697
|
)
|
|
(704
|
)
|
|
(482
|
)
|
|
(690
|
)
|
|
(728
|
)
|
|
(717
|
)
|
|
(695
|
)
|
||||||||
Income before income taxes
|
97,705
|
|
|
80,016
|
|
|
98,923
|
|
|
114,305
|
|
|
55,742
|
|
|
45,698
|
|
|
73,006
|
|
|
109,569
|
|
||||||||
Income tax expense
|
12,536
|
|
|
16,768
|
|
|
20,304
|
|
|
26,378
|
|
|
3,511
|
|
|
1,863
|
|
|
14,247
|
|
|
26,060
|
|
||||||||
Net income
|
$
|
85,169
|
|
|
$
|
63,248
|
|
|
$
|
78,619
|
|
|
$
|
87,927
|
|
|
$
|
52,231
|
|
|
$
|
43,835
|
|
|
$
|
58,759
|
|
|
$
|
83,509
|
|
Net income per share — basic
|
$
|
2.35
|
|
|
$
|
1.74
|
|
|
$
|
2.16
|
|
|
$
|
2.42
|
|
|
$
|
1.46
|
|
|
$
|
1.22
|
|
|
$
|
1.63
|
|
|
$
|
2.31
|
|
Net income per share — diluted
|
$
|
2.33
|
|
|
$
|
1.73
|
|
|
$
|
2.15
|
|
|
$
|
2.39
|
|
|
$
|
1.44
|
|
|
$
|
1.20
|
|
|
$
|
1.61
|
|
|
$
|
2.29
|
|
|
2019
|
|
2018
|
||||||||||||||||||||
|
Mar. 31
|
|
Jun. 30
|
|
Sep. 30
|
|
Dec. 31
|
|
Mar. 31
|
|
Jun. 30
|
|
Sep. 30
|
|
Dec. 31
|
||||||||
Revenues
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
Cost of revenues
|
22
|
|
|
21
|
|
|
20
|
|
|
20
|
|
|
23
|
|
|
23
|
|
|
24
|
|
|
22
|
|
Gross profit
|
78
|
|
|
79
|
|
|
80
|
|
|
80
|
|
|
77
|
|
|
77
|
|
|
76
|
|
|
78
|
|
Operating expenses
|
50
|
|
|
57
|
|
|
53
|
|
|
53
|
|
|
58
|
|
|
63
|
|
|
54
|
|
|
45
|
|
Income from operations
|
28
|
|
|
22
|
|
|
27
|
|
|
27
|
|
|
20
|
|
|
14
|
|
|
22
|
|
|
32
|
|
Interest and other income
|
2
|
|
|
2
|
|
|
2
|
|
|
4
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
Income before income taxes
|
30
|
|
|
24
|
|
|
29
|
|
|
31
|
|
|
21
|
|
|
15
|
|
|
23
|
|
|
33
|
|
Income tax expense
|
4
|
|
|
5
|
|
|
6
|
|
|
7
|
|
|
1
|
|
|
1
|
|
|
5
|
|
|
8
|
|
Net income
|
26
|
%
|
|
19
|
%
|
|
23
|
%
|
|
24
|
%
|
|
20
|
%
|
|
14
|
%
|
|
18
|
%
|
|
25
|
%
|
|
Total
|
|
2020
|
|
2021-2022
|
|
2023-2024
|
|
Thereafter
|
||||||||||
Operating leases
|
$
|
165,542
|
|
|
$
|
34,976
|
|
|
$
|
64,698
|
|
|
$
|
53,635
|
|
|
$
|
12,233
|
|
Purchase obligations (1)
|
41,284
|
|
|
20,798
|
|
|
18,762
|
|
|
1,152
|
|
|
572
|
|
|||||
Total contractual principal cash obligations
|
$
|
206,826
|
|
|
$
|
55,774
|
|
|
$
|
83,460
|
|
|
$
|
54,787
|
|
|
$
|
12,805
|
|
__________________________
|
|
|
|
|
|
|
|
|
|
•
|
Long-lived assets, intangible assets and goodwill
|
•
|
Revenue recognition
|
•
|
Income taxes
|
•
|
Business combinations
|
•
|
Significant underperformance relative to historical or projected future operating results;
|
•
|
Significant changes in the manner of our use of the acquired assets or the strategy for our overall business;
|
•
|
Significant negative industry or economic trends; or
|
•
|
Significant decline in our market capitalization relative to net book value for a sustained period.
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 8.
|
Financial Statements and Supplementary Data
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Controls and Procedures
|
Item 9B.
|
Other Information.
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
Item 11.
|
Executive Compensation
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
Item 14.
|
Principal Accountant Fees and Services
|
Item 15.
|
Exhibits and Financial Statement Schedules
|
|
|
Balance at
Beginning
of Year
|
|
Charged to
Expense
|
|
Reductions
|
|
Balance at
End of Year
|
||||||||
Year ended December 31, 2017
|
|
$
|
6,344
|
|
|
$
|
5,690
|
|
|
$
|
5,565
|
|
|
$
|
6,469
|
|
Year ended December 31, 2018
|
|
$
|
6,469
|
|
|
$
|
6,542
|
|
|
$
|
7,302
|
|
|
$
|
5,709
|
|
Year ended December 31, 2019
|
|
$
|
5,709
|
|
|
$
|
10,978
|
|
|
$
|
11,590
|
|
|
$
|
5,097
|
|
__________________________
|
|
|
|
|
|
|
|
|
(1)
|
Additions to the allowance for doubtful accounts are charged to bad debt expense. Additions to the allowance for sales credits are charged against revenues.
|
Exhibit No.
|
|
Description
|
|
|
|
|
Third Amended and Restated Certificate of Incorporation (Incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed with the Commission on June 6, 2013).
|
|
|
Third Amended and Restated By-Laws (Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on September 24, 2013).
|
|
|
Specimen Common Stock Certificate (Incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-4 of the Registrant (Reg. No. 333-174214) filed with the Commission on June 3, 2011).
|
|
|
Description of the Registrant's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (filed herewith).
|
|
*10.1
|
|
CoStar Group, Inc. 2016 Stock Incentive Plan (Incorporated by reference to Exhibit 4.4 to the Registration Statement on Form S-8 of the Registrant (Reg. No. 333-212278) filed with the Commission on June 28, 2016).
|
*10.2
|
|
First Amendment to the CoStar Group, Inc. 2016 Stock Incentive Plan (Incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed April 25, 2018).
|
*10.3
|
|
CoStar Group, Inc. 2007 Stock Incentive Plan, as amended (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed June 8, 2012).
|
*10.4
|
|
CoStar Group, Inc. 2007 Stock Incentive Plan French Sub-Plan (Incorporated by reference to Exhibit 10.3 to the Registrant’s Report on Form 10-K filed February 29, 2008).
|
*10.5
|
|
Form of CoStar Group, Inc. 2016 Plan Restricted Stock Grant Agreement between the Registrant and certain of its officers, directors and employees (Incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed July 28, 2016).
|
*10.6
|
|
Form of CoStar Group, Inc. 2016 Plan Restricted Stock Grant Agreement for Service Awards between the Registrant and certain of its officers and employees (Incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q filed July 28, 2016).
|
*10.7
|
|
Form of CoStar Group, Inc. 2016 Plan Restricted Stock Unit Grant Agreement between the Registrant and certain of its officers and employees (Incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q filed July 28, 2016).
|
Exhibit No.
|
|
Description
|
*10.8
|
|
Form of CoStar Group, Inc. 2016 Plan Incentive Stock Option Grant Agreement between the Registrant and certain of its officers and employees (Incorporated by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q filed July 28, 2016).
|
*10.9
|
|
Form of CoStar Group, Inc. 2016 Plan Incentive Stock Option Grant Agreement between the Registrant and Andrew C. Florance (Incorporated by reference to Exhibit 10.7 to the Registrant’s Quarterly Report on Form 10-Q filed July 28, 2016).
|
|
Form of CoStar Group, Inc. 2016 Plan Nonqualified Stock Option Grant Agreement between the Registrant and certain of its officers, directors and employees (Incorporated by reference to Exhibit 10.8 to the Registrant’s Quarterly Report on Form 10-Q filed July 28, 2016).
|
|
|
Form of CoStar Group, Inc. 2016 Plan Nonqualified Stock Option Grant Agreement between the Registrant and Andrew C. Florance (Incorporated by reference to Exhibit 10.9 to the Registrant’s Quarterly Report on Form 10-Q filed July 28, 2016).
|
|
|
Form of 2007 Plan Restricted Stock Grant Agreement between the Registrant and certain of its officers, directors and employees (Incorporated by reference to Exhibit 99.1 to the Registrant’s Report on Form 8-K filed June 22, 2007).
|
|
|
Form of 2007 Plan Restricted Stock Unit Agreement between the Registrant and certain of its officers and employees (Incorporated by reference to Exhibit 10.8 to the Registrant's Report on Form 10-K filed February 20, 2014).
|
|
|
Form of 2007 Plan Incentive Stock Option Grant Agreement between the Registrant and certain of its officers and employees (Incorporated by reference to Exhibit 10.8 to the Registrant’s Report on Form 10-K filed February 24, 2009).
|
|
|
Form of 2007 Plan Incentive Stock Option Grant Agreement between the Registrant and Andrew C. Florance (Incorporated by reference to Exhibit 10.9 to the Registrant’s Report on Form 10-K filed February 24, 2009).
|
|
|
Form of 2007 Plan Nonqualified Stock Option Grant Agreement between the Registrant and certain of its officers and employees (Incorporated by reference to Exhibit 10.10 to the Registrant’s Report on Form 10-K filed February 24, 2009).
|
|
|
Form of 2007 Plan Nonqualified Stock Option Grant Agreement between the Registrant and certain of its directors (Incorporated by reference to Exhibit 10.11 to the Registrant’s Report on Form 10-K filed February 24, 2009).
|
|
|
Form of 2007 Plan Nonqualified Stock Option Grant Agreement between the Registrant and Andrew C. Florance (Incorporated by reference to Exhibit 10.12 to the Registrant’s Report on Form 10-K filed February 24, 2009).
|
|
|
Form of 2007 Plan French Sub-Plan Restricted Stock Agreement between the Registrant and certain of its employees (Incorporated by reference to Exhibit 10.10 to the Registrant’s Report on Form 10-K filed February 29, 2008).
|
|
|
CoStar Group, Inc. 2016 Cash Incentive Plan (Incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q filed July 28, 2016).
|
|
|
CoStar Group, Inc. Amended and Restated Employee Stock Purchase Plan (Incorporated by reference to Exhibit 4.4 to the Registrant’s Registration Statement on Form S-8 filed with the Commission on September 14, 2015).
|
|
|
CoStar Group, Inc. Management Stock Purchase Plan (Incorporated by reference to Exhibit 10.21 to the Registrant’s Report on Form 10-K filed February 23, 2018).
|
|
|
Summary of Non-Employee Director Compensation (Incorporated by reference to Exhibit 10.1 to the Registrant's Report on Form 10-Q filed on October 24, 2013).
|
|
|
Employment Agreement for Andrew C. Florance (Incorporated by reference to Exhibit 10.2 to Amendment No. 1 to the Registration Statement on Form S-1 of the Registrant (Reg. No. 333-47953) filed with the Commission on April 27, 1998).
|
|
|
First Amendment to Andrew C. Florance Employment Agreement, effective January 1, 2009 (Incorporated by reference to Exhibit 10.16 to the Registrant’s Report on Form 10-K filed February 24, 2009).
|
|
|
Form of Indemnification Agreement between the Registrant and each of its officers and directors (Incorporated by reference to Exhibit 10.1 to the Registrant’s Report on Form 10-Q filed on May 7, 2004).
|
|
|
Deed of Office Lease by and between GLL L-Street 1331, LLC and CoStar Realty Information, Inc., dated February 18, 2011, and made effective as of June 1, 2010 (Incorporated by reference to Exhibit 10.1 to the Registrant’s Report on form 10-Q filed on April 29, 2011).
|
|
|
Securities Purchase Agreement, dated as of September 30, 2019, among CoStar Group, Inc., CoStar Realty Information, Inc., CoStar Portfolio Strategy, LLC, STR, Inc., STR Global, Ltd., the seller parties thereto, and Randell Smith, in his capacity as Sellers’ Representative (Incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the Commission on October 2, 2019).
|
Exhibit No.
|
|
Description
|
|
Asset Purchase Agreement, dated as of the Petition Date (on or about February 12, 2020), among CSGP Holdings, LLC, CoStar Group, Inc. (solely for the specified purposes), RentPath Holdings, Inc. and the other Sellers named therein (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on February 13, 2020).
|
|
|
Subsidiaries of the Registrant (filed herewith).
|
|
|
Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm (filed herewith).
|
|
|
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|
|
|
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|
|
|
Certification of Principal Executive Officer pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|
|
|
Certification of Principal Financial Officer pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
|
|
101.INS
|
|
The following financial statements from the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, formatted in Inline XBRL: (i) Consolidated Statements of Operations; (ii) Consolidated Statements of Comprehensive Income; (iii) Consolidated Balance Sheets; (iv) Consolidated Statements of Cash Flows; and (v) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
104
|
|
The cover page from the Registrant's Annual Report on Form 10-K for the year ended December 31, 2019, formatted in Inline XBRL (included as Exhibit 101).
|
|
COSTAR GROUP, INC.
|
|
|
|
|
|
By:
|
/s/ Andrew C. Florance
|
February 26, 2020
|
|
Andrew C. Florance
|
|
|
President and Chief Executive Officer
|
Signature
|
|
Capacity
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
/s/ Michael R. Klein
|
|
Chairman of the Board
|
|
February 26, 2020
|
Michael R. Klein
|
|
|
|
|
|
|
|
|
|
/s/ Andrew C. Florance
|
|
Chief Executive Officer and
|
|
February 26, 2020
|
Andrew C. Florance
|
|
President and a Director
|
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Scott T. Wheeler
|
|
Chief Financial Officer
|
|
February 26, 2020
|
Scott T. Wheeler
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Michael J. Glosserman
|
|
Director
|
|
February 26, 2020
|
Michael J. Glosserman
|
|
|
|
|
|
|
|
|
|
/s/ John W. Hill
|
|
Director
|
|
February 26, 2020
|
John W. Hill
|
|
|
|
|
|
|
|
|
|
/s/ Laura Cox Kaplan
|
|
Director
|
|
February 26, 2020
|
Laura Cox Kaplan
|
|
|
|
|
|
|
|
|
|
/s/ Christopher J. Nassetta
|
|
Director
|
|
February 26, 2020
|
Christopher J. Nassetta
|
|
|
|
|
|
|
|
|
|
/s/ David J. Steinberg
|
|
Director
|
|
February 26, 2020
|
David J. Steinberg
|
|
|
|
|
|
|
|
|
|
/s/ Louise S. Sams
|
|
Director
|
|
February 26, 2020
|
Louise S. Sams
|
|
|
|
|
|
|
|
|
|
/s/ Robert W. Musslewhite
|
|
Director
|
|
February 21, 2020
|
Robert W. Musslewhite
|
|
|
|
|
Reports of Independent Registered Public Accounting Firm
|
|
Consolidated Statements of Operations
|
|
Consolidated Statements of Comprehensive Income
|
|
Consolidated Balance Sheets
|
|
Consolidated Statements of Changes in Stockholders’ Equity
|
|
Consolidated Statements of Cash Flows
|
|
Notes to Consolidated Financial Statements
|
|
|
Valuation of Acquired Intangible Assets
|
Description of the Matter
|
|
As described in Note 4 to the consolidated financial statements, during the year ended December 31, 2019, the Company completed the acquisition of STR, Inc. and STR Global, Ltd. (together with STR, Inc. referred to as “STR”) for $435 million in cash. The Company’s accounting for the acquisition included determining the fair value of the acquired intangible assets including customer relationships of $139 million.
Auditing the accounting for the acquired intangible assets of STR involved complex auditor judgment due to the estimation required in management’s determination of the fair value. The estimation was significant primarily due to the sensitivity of the respective fair values to the underlying assumptions, including discount rates, projected revenue growth rates, customer attrition rates and projected profit margins. These significant assumptions are forward-looking and could be affected by future economic and market conditions.
|
How We Addressed the Matter in Our Audit
|
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process for accounting for acquired intangible assets. For example, we tested controls over management’s review of the valuation model and significant assumptions used in the valuation as well as controls over the completeness and accuracy of the data used in the model and assumptions.
To test the fair value of these acquired intangible assets, our audit procedures included, among others, evaluating the Company's use of valuation methodologies, evaluating the significant assumptions, evaluating the prospective financial information and testing the completeness and accuracy of underlying data. We involved our valuation specialists to assist in testing certain significant assumptions used to value the acquired intangible assets. For example, we compared the significant assumptions to current industry and market trends, historical results of the acquired business and to other relevant factors. We also performed sensitivity analyses of the significant assumptions to evaluate the change in the fair value resulting from changes in the assumptions.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
Revenues
|
$
|
1,399,719
|
|
|
$
|
1,191,832
|
|
|
$
|
965,230
|
|
Cost of revenues
|
289,239
|
|
|
269,933
|
|
|
220,403
|
|
|||
Gross profit
|
1,110,480
|
|
|
921,899
|
|
|
744,827
|
|
|||
|
|
|
|
|
|
||||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|||
Selling and marketing (excluding customer base amortization)
|
408,596
|
|
|
359,858
|
|
|
318,362
|
|
|||
Software development
|
125,602
|
|
|
100,937
|
|
|
88,850
|
|
|||
General and administrative
|
178,740
|
|
|
156,659
|
|
|
146,128
|
|
|||
Customer base amortization
|
33,995
|
|
|
30,881
|
|
|
17,671
|
|
|||
|
746,933
|
|
|
648,335
|
|
|
571,011
|
|
|||
Income from operations
|
363,547
|
|
|
273,564
|
|
|
173,816
|
|
|||
Interest and other income
|
30,017
|
|
|
13,281
|
|
|
4,044
|
|
|||
Interest and other expense
|
(2,615
|
)
|
|
(2,830
|
)
|
|
(9,014
|
)
|
|||
Loss on debt extinguishment
|
—
|
|
|
—
|
|
|
(3,788
|
)
|
|||
Income before income taxes
|
390,949
|
|
|
284,015
|
|
|
165,058
|
|
|||
Income tax expense
|
75,986
|
|
|
45,681
|
|
|
42,363
|
|
|||
Net income
|
$
|
314,963
|
|
|
$
|
238,334
|
|
|
$
|
122,695
|
|
|
|
|
|
|
|
||||||
Net income per share — basic
|
$
|
8.67
|
|
|
$
|
6.61
|
|
|
$
|
3.70
|
|
Net income per share — diluted
|
$
|
8.60
|
|
|
$
|
6.54
|
|
|
$
|
3.66
|
|
|
|
|
|
|
|
||||||
Weighted-average outstanding shares — basic
|
36,310
|
|
|
36,058
|
|
|
33,200
|
|
|||
Weighted-average outstanding shares — diluted
|
36,630
|
|
|
36,448
|
|
|
33,559
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
|
$
|
314,963
|
|
|
$
|
238,334
|
|
|
$
|
122,695
|
|
Other comprehensive income (loss), net of tax
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustment
|
|
3,103
|
|
|
(2,668
|
)
|
|
3,901
|
|
|||
Net decrease in unrealized loss on investments
|
|
—
|
|
|
—
|
|
|
118
|
|
|||
Total other comprehensive income (loss)
|
|
3,103
|
|
|
(2,668
|
)
|
|
4,019
|
|
|||
Total comprehensive income
|
|
$
|
318,066
|
|
|
$
|
235,666
|
|
|
$
|
126,714
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,070,731
|
|
|
$
|
1,100,416
|
|
Accounts receivable, less allowance of $5,097 and $5,709 as of December 31, 2019 and December 31, 2018, respectively
|
92,240
|
|
|
89,192
|
|
||
Prepaid expenses and other current assets
|
36,194
|
|
|
23,690
|
|
||
Total current assets
|
1,199,165
|
|
|
1,213,298
|
|
||
|
|
|
|
||||
Long-term investments
|
10,070
|
|
|
10,070
|
|
||
Deferred income taxes, net
|
5,408
|
|
|
7,469
|
|
||
Lease right-of-use assets
|
115,084
|
|
|
—
|
|
||
Property and equipment, net
|
107,529
|
|
|
83,303
|
|
||
Goodwill
|
1,882,020
|
|
|
1,611,535
|
|
||
Intangible assets, net
|
421,196
|
|
|
288,911
|
|
||
Deferred commission costs, net
|
89,374
|
|
|
76,031
|
|
||
Deposits and other assets
|
9,232
|
|
|
7,432
|
|
||
Income tax receivable
|
14,908
|
|
|
14,908
|
|
||
Total assets
|
$
|
3,853,986
|
|
|
$
|
3,312,957
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable
|
7,640
|
|
|
6,327
|
|
||
Accrued wages and commissions
|
53,087
|
|
|
45,588
|
|
||
Accrued expenses
|
38,680
|
|
|
29,821
|
|
||
Deferred gain on the sale of building
|
—
|
|
|
2,523
|
|
||
Income taxes payable
|
10,705
|
|
|
14,288
|
|
||
Deferred rent
|
—
|
|
|
4,153
|
|
||
Lease liabilities
|
29,670
|
|
|
—
|
|
||
Deferred revenue
|
67,274
|
|
|
51,459
|
|
||
Total current liabilities
|
207,056
|
|
|
154,159
|
|
||
|
|
|
|
||||
Deferred gain on the sale of building
|
—
|
|
|
13,669
|
|
||
Deferred rent
|
—
|
|
|
31,944
|
|
||
Deferred income taxes, net
|
87,096
|
|
|
69,857
|
|
||
Income taxes payable
|
20,521
|
|
|
17,386
|
|
||
Lease and other long-term liabilities
|
133,720
|
|
|
4,000
|
|
||
Total liabilities
|
448,393
|
|
|
291,015
|
|
||
|
|
|
|
||||
Commitments and contingencies (Note 13)
|
|
|
|
|
|
||
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
|
|
||
Preferred stock, $0.01 par value; 2,000 shares authorized; none outstanding
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value; 60,000 shares authorized; 36,668 and 36,446 issued and outstanding as of December 31, 2019 and 2018, respectively
|
366
|
|
|
364
|
|
||
Additional paid-in capital
|
2,473,338
|
|
|
2,419,812
|
|
||
Accumulated other comprehensive loss
|
(8,585
|
)
|
|
(11,688
|
)
|
||
Retained earnings
|
940,474
|
|
|
613,454
|
|
||
Total stockholders’ equity
|
3,405,593
|
|
|
3,021,942
|
|
||
Total liabilities and stockholders’ equity
|
$
|
3,853,986
|
|
|
$
|
3,312,957
|
|
|
Common Stock
|
|
Additional
Paid-In Capital
|
|
Accumulated
Other
Comprehensive Loss
|
|
Retained
Earnings
|
|
Total
Stockholders’
Equity
|
|||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|
||||||||||||||
Balance at December 31, 2016
|
32,606
|
|
|
$
|
326
|
|
|
$
|
1,471,127
|
|
|
$
|
(13,039
|
)
|
|
$
|
195,799
|
|
|
$
|
1,654,213
|
|
Cumulative effect of adoption of new accounting standard
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,162
|
|
|
$
|
2,162
|
|
||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
122,695
|
|
|
122,695
|
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
4,019
|
|
|
—
|
|
|
4,019
|
|
|||||
Exercise of stock options
|
82
|
|
|
1
|
|
|
6,796
|
|
|
—
|
|
|
—
|
|
|
6,797
|
|
|||||
Restricted stock grants
|
187
|
|
|
2
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Restricted stock grants surrendered
|
(99
|
)
|
|
(1
|
)
|
|
(14,901
|
)
|
|
—
|
|
|
—
|
|
|
(14,902
|
)
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
38,921
|
|
|
—
|
|
|
—
|
|
|
38,921
|
|
|||||
Stock issued for equity offering
|
3,317
|
|
|
33
|
|
|
833,878
|
|
|
—
|
|
|
—
|
|
|
833,911
|
|
|||||
Employee stock purchase plan
|
14
|
|
|
—
|
|
|
3,434
|
|
|
—
|
|
|
—
|
|
|
3,434
|
|
|||||
Balance at December 31, 2017
|
36,107
|
|
|
361
|
|
|
2,339,253
|
|
|
(9,020
|
)
|
|
320,656
|
|
|
2,651,250
|
|
|||||
Cumulative effect of adoption of new accounting standard, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
54,464
|
|
|
54,464
|
|
|||||
Balance at January 1, 2018
|
36,107
|
|
|
361
|
|
|
2,339,253
|
|
|
(9,020
|
)
|
|
375,120
|
|
|
2,705,714
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
238,334
|
|
|
238,334
|
|
|||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,668
|
)
|
|
—
|
|
|
(2,668
|
)
|
|||||
Exercise of stock options
|
177
|
|
|
2
|
|
|
21,991
|
|
|
—
|
|
|
—
|
|
|
21,993
|
|
|||||
Restricted stock grants
|
160
|
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Restricted stock grants surrendered
|
(116
|
)
|
|
(1
|
)
|
|
(24,326
|
)
|
|
—
|
|
|
—
|
|
|
(24,327
|
)
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
40,889
|
|
|
—
|
|
|
—
|
|
|
40,889
|
|
|||||
Employee stock purchase plan
|
15
|
|
|
—
|
|
|
5,641
|
|
|
—
|
|
|
—
|
|
|
5,641
|
|
|||||
Stock issued for acquisitions
|
103
|
|
|
1
|
|
|
36,365
|
|
|
—
|
|
|
—
|
|
|
36,366
|
|
|||||
Balance at December 31, 2018
|
36,446
|
|
|
364
|
|
|
2,419,812
|
|
|
(11,688
|
)
|
|
613,454
|
|
|
3,021,942
|
|
|||||
Cumulative effect of adoption of new accounting standard, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,057
|
|
|
12,057
|
|
|||||
Balance at January 1, 2019
|
36,446
|
|
|
364
|
|
|
2,419,812
|
|
|
(11,688
|
)
|
|
625,511
|
|
|
3,033,999
|
|
|||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
314,963
|
|
|
314,963
|
|
|||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
3,103
|
|
|
—
|
|
|
3,103
|
|
|||||
Exercise of stock options
|
116
|
|
|
1
|
|
|
18,651
|
|
|
—
|
|
|
—
|
|
|
18,652
|
|
|||||
Restricted stock grants
|
168
|
|
|
2
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Restricted stock grants surrendered
|
(76
|
)
|
|
(1
|
)
|
|
(27,576
|
)
|
|
—
|
|
|
—
|
|
|
(27,577
|
)
|
|||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
51,818
|
|
|
—
|
|
|
—
|
|
|
51,818
|
|
|||||
Management stock purchase plan
|
—
|
|
|
—
|
|
|
3,491
|
|
|
—
|
|
|
—
|
|
|
3,491
|
|
|||||
Employee stock purchase plan
|
14
|
|
|
—
|
|
|
7,144
|
|
|
—
|
|
|
—
|
|
|
7,144
|
|
|||||
Balance at December 31, 2019
|
36,668
|
|
|
$
|
366
|
|
|
2,473,338
|
|
|
(8,585
|
)
|
|
940,474
|
|
|
3,405,593
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
314,963
|
|
|
$
|
238,334
|
|
|
$
|
122,695
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|||||
Depreciation and amortization
|
81,165
|
|
|
77,743
|
|
|
63,643
|
|
|||
Amortization of deferred commissions costs
|
53,421
|
|
|
48,313
|
|
|
—
|
|
|||
Amortization of debt issuance costs
|
876
|
|
|
876
|
|
|
2,303
|
|
|||
Non-cash lease expense
|
22,748
|
|
|
—
|
|
|
—
|
|
|||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
3,788
|
|
|||
Loss on disposal of property and equipment
|
105
|
|
|
73
|
|
|
129
|
|
|||
Stock-based compensation expense
|
52,255
|
|
|
41,214
|
|
|
39,030
|
|
|||
Deferred income taxes, net
|
8,220
|
|
|
3,666
|
|
|
(2,903
|
)
|
|||
Bad debt expense
|
10,978
|
|
|
6,542
|
|
|
5,690
|
|
|||
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
|
|
|
|||||
Accounts receivable
|
(5,014
|
)
|
|
(27,819
|
)
|
|
(17,524
|
)
|
|||
Prepaid expenses and other current assets
|
(14,244
|
)
|
|
(1,651
|
)
|
|
(3,672
|
)
|
|||
Deferred commissions
|
(66,688
|
)
|
|
(53,497
|
)
|
|
—
|
|
|||
Income tax receivable
|
—
|
|
|
(1,927
|
)
|
|
(12,981
|
)
|
|||
Accounts payable and other liabilities
|
17,751
|
|
|
(14,132
|
)
|
|
11,525
|
|
|||
Lease liabilities
|
(25,442
|
)
|
|
—
|
|
|
—
|
|
|||
Income taxes payable
|
(577
|
)
|
|
9,632
|
|
|
16,937
|
|
|||
Deferred revenue
|
7,911
|
|
|
7,879
|
|
|
6,004
|
|
|||
Other assets
|
(648
|
)
|
|
212
|
|
|
39
|
|
|||
Net cash provided by operating activities
|
457,780
|
|
|
335,458
|
|
|
234,703
|
|
|||
|
|
|
|
|
|
||||||
Investing activities:
|
|
|
|
|
|
|
|
||||
Purchases of property and equipment and other assets
|
(46,197
|
)
|
|
(29,632
|
)
|
|
(24,499
|
)
|
|||
Cash paid for acquisitions, net of cash acquired
|
(437,556
|
)
|
|
(418,369
|
)
|
|
(47,768
|
)
|
|||
Net cash used in investing activities
|
(483,753
|
)
|
|
(448,001
|
)
|
|
(72,267
|
)
|
|||
|
|
|
|
|
|
||||||
Financing activities:
|
|
|
|
|
|
|
|
||||
Payments of long-term debt
|
—
|
|
|
—
|
|
|
(345,000
|
)
|
|||
Payments of debt issuance costs
|
—
|
|
|
—
|
|
|
(3,467
|
)
|
|||
Repurchase of restricted stock to satisfy tax withholding obligations
|
(27,577
|
)
|
|
(24,327
|
)
|
|
(14,902
|
)
|
|||
Proceeds from equity offering, net of transaction costs
|
—
|
|
|
—
|
|
|
833,911
|
|
|||
Proceeds from exercise of stock options and employee stock purchase plan
|
25,080
|
|
|
27,071
|
|
|
9,888
|
|
|||
Other financing activities
|
(1,657
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash (used in) provided by financing activities
|
(4,154
|
)
|
|
2,744
|
|
|
480,430
|
|
|||
|
|
|
|
|
|
||||||
Effect of foreign currency exchange rates on cash and cash equivalents
|
442
|
|
|
(1,248
|
)
|
|
1,374
|
|
|||
Net (decrease) increase in cash and cash equivalents
|
(29,685
|
)
|
|
(111,047
|
)
|
|
644,240
|
|
|||
Cash and cash equivalents at beginning of year
|
1,100,416
|
|
|
1,211,463
|
|
|
567,223
|
|
|||
Cash and cash equivalents at end of year
|
$
|
1,070,731
|
|
|
$
|
1,100,416
|
|
|
$
|
1,211,463
|
|
|
|
|
|
|
|
Supplemental cash flow disclosures:
|
|
|
|
|
|
||||||
Interest paid
|
$
|
1,998
|
|
|
$
|
1,421
|
|
|
$
|
6,445
|
|
Income taxes paid
|
$
|
68,935
|
|
|
$
|
35,980
|
|
|
$
|
41,283
|
|
|
|
|
|
|
|
||||||
Supplemental non-cash investing and financing activities:
|
|
|
|
|
|
||||||
Stock issued in connection with acquisition - ForRent
|
$
|
—
|
|
|
$
|
36,366
|
|
|
$
|
—
|
|
Consideration owed for acquisitions
|
$
|
1,650
|
|
|
$
|
1,534
|
|
|
$
|
—
|
|
1.
|
ORGANIZATION
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Foreign currency translation adjustment
|
$
|
(7,855
|
)
|
|
$
|
(10,958
|
)
|
Net unrealized loss on investments
|
(730
|
)
|
|
(730
|
)
|
||
Total accumulated other comprehensive loss
|
$
|
(8,585
|
)
|
|
$
|
(11,688
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Cost of revenues (1)
|
$
|
9,273
|
|
|
$
|
7,688
|
|
|
$
|
4,971
|
|
Selling and marketing (excluding customer base amortization)
|
6,809
|
|
|
6,881
|
|
|
7,086
|
|
|||
Software development
|
8,985
|
|
|
7,454
|
|
|
7,071
|
|
|||
General and administrative
|
27,188
|
|
|
20,695
|
|
|
19,902
|
|
|||
Total stock-based compensation
|
$
|
52,255
|
|
|
$
|
42,718
|
|
|
$
|
39,030
|
|
__________________________
|
|
|
|
|
|
Leasehold improvements
|
|
Shorter of lease term or useful life
|
Computer hardware and software
|
|
Three to five years
|
Furniture and office equipment
|
|
Five to ten years
|
Vehicles
|
|
Five years
|
Aircraft
|
|
Ten to twenty years
|
|
Year Ended December 31,
|
||||||||||||||||||||||
|
2019
|
|
2018
|
||||||||||||||||||||
|
North America
|
|
International
|
|
Total
|
|
North America
|
|
International
|
|
Total
|
||||||||||||
Information and analytics
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
CoStar Suite
|
$
|
590,222
|
|
|
$
|
27,576
|
|
|
$
|
617,798
|
|
|
$
|
519,661
|
|
|
$
|
25,534
|
|
|
$
|
545,195
|
|
Information services
|
76,950
|
|
|
11,496
|
|
|
88,446
|
|
|
58,708
|
|
|
8,916
|
|
|
67,624
|
|
||||||
Online marketplaces
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Multifamily
|
490,631
|
|
|
—
|
|
|
490,631
|
|
|
405,795
|
|
|
—
|
|
|
405,795
|
|
||||||
Commercial property and land
|
202,264
|
|
|
580
|
|
|
202,844
|
|
|
173,137
|
|
|
81
|
|
|
173,218
|
|
||||||
Total revenues
|
$
|
1,360,067
|
|
|
$
|
39,652
|
|
|
$
|
1,399,719
|
|
|
$
|
1,157,301
|
|
|
$
|
34,531
|
|
|
$
|
1,191,832
|
|
Balance at December 31, 2018
|
$
|
51,459
|
|
Revenue recognized in the current period from the amounts in the beginning balance
|
(49,937
|
)
|
|
New deferrals, net of amounts recognized in the current period
|
68,814
|
|
|
Effects of foreign currency
|
284
|
|
|
Balance at December 31, 2019 (1)
|
$
|
70,620
|
|
__________________________
|
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Commissions incurred
|
$
|
87,043
|
|
|
$
|
72,899
|
|
Commissions capitalized in the current period
|
(66,688
|
)
|
|
(53,497
|
)
|
||
Amortization of deferred commissions costs
|
53,421
|
|
|
48,313
|
|
||
Total commissions expense
|
$
|
73,776
|
|
|
$
|
67,715
|
|
|
Preliminary:
October 22, 2019
|
||
Cash and cash equivalents
|
$
|
11,710
|
|
Accounts receivable
|
8,067
|
|
|
Lease right-of-use assets
|
7,306
|
|
|
Goodwill
|
261,436
|
|
|
Intangible assets
|
178,000
|
|
|
Lease liabilities
|
(7,306
|
)
|
|
Deferred revenue
|
(10,966
|
)
|
|
Deferred tax liabilities
|
(7,980
|
)
|
|
Other assets and liabilities
|
(4,815
|
)
|
|
Fair value of identifiable net assets acquired
|
$
|
435,452
|
|
|
North America
|
|
International
|
|
|
||||||||
|
Estimated Fair Value
|
|
Estimated Useful Life
|
|
Estimated Fair Value
|
|
Estimated Useful Life
|
|
Amortization Method
|
||||
Customer base
|
$
|
97,000
|
|
|
13
|
|
$
|
42,000
|
|
|
10
|
|
Accelerated
|
Trade name
|
24,000
|
|
|
15
|
|
|
|
|
|
Straight-line
|
|||
Other intangible assets
|
10,000
|
|
|
5
|
|
5,000
|
|
|
5
|
|
Straight-line
|
||
Total intangible assets
|
$
|
131,000
|
|
|
|
|
$
|
47,000
|
|
|
|
|
|
|
Final:
February 21, 2018
|
||
Cash and cash equivalents
|
$
|
59
|
|
Accounts receivable
|
8,769
|
|
|
Indemnification asset
|
5,443
|
|
|
Goodwill
|
266,595
|
|
|
Intangible assets
|
141,300
|
|
|
Deferred tax liabilities
|
(34,032
|
)
|
|
Contingent sales tax liability
|
(6,260
|
)
|
|
State uncertain income tax position liability
|
(2,047
|
)
|
|
Other assets and liabilities
|
(3,535
|
)
|
|
Fair value of identifiable net assets acquired
|
$
|
376,292
|
|
|
Year Ended
December 31, |
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenue
|
$
|
1,450,954
|
|
|
$
|
1,264,696
|
|
|
$
|
1,067,742
|
|
Net income
|
$
|
306,755
|
|
|
$
|
226,305
|
|
|
$
|
103,000
|
|
Net income per share - basic
|
$
|
8.45
|
|
|
$
|
6.28
|
|
|
$
|
3.09
|
|
Net income per share - diluted
|
$
|
8.37
|
|
|
$
|
6.21
|
|
|
$
|
3.06
|
|
Maturity
|
|
Fair Value
|
||
Due in:
|
|
|
||
2020
|
|
$
|
—
|
|
2021 — 2024
|
|
—
|
|
|
2025 — 2029
|
|
—
|
|
|
2030 and thereafter
|
|
10,070
|
|
|
Available-for-sale investments
|
|
$
|
10,070
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
||||||||
Auction rate securities
|
$
|
10,800
|
|
|
$
|
—
|
|
|
$
|
(730
|
)
|
|
$
|
10,070
|
|
Available-for-sale investments
|
$
|
10,800
|
|
|
$
|
—
|
|
|
$
|
(730
|
)
|
|
$
|
10,070
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
||||||||
Auction rate securities
|
$
|
10,800
|
|
|
$
|
—
|
|
|
$
|
(730
|
)
|
|
$
|
10,070
|
|
Available-for-sale investments
|
$
|
10,800
|
|
|
$
|
—
|
|
|
$
|
(730
|
)
|
|
$
|
10,070
|
|
|
December 31,
|
||||||||||||||
|
2019
|
|
2018
|
||||||||||||
|
Aggregate
Fair
Value
|
|
Gross
Unrealized
Losses
|
|
Aggregate
Fair
Value
|
|
Gross
Unrealized
Losses
|
||||||||
Auction rate securities
|
$
|
10,070
|
|
|
$
|
(730
|
)
|
|
$
|
10,070
|
|
|
$
|
(730
|
)
|
Investments in an unrealized loss position
|
$
|
10,070
|
|
|
$
|
(730
|
)
|
|
$
|
10,070
|
|
|
$
|
(730
|
)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
576,761
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
576,761
|
|
Auction rate securities
|
—
|
|
|
—
|
|
|
10,070
|
|
|
10,070
|
|
||||
Total assets measured at fair value
|
$
|
576,761
|
|
|
$
|
—
|
|
|
$
|
10,070
|
|
|
$
|
586,831
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Money market funds
|
$
|
590,567
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
590,567
|
|
Auction rate securities
|
—
|
|
|
—
|
|
|
10,070
|
|
|
10,070
|
|
||||
Total assets measured at fair value
|
$
|
590,567
|
|
|
$
|
—
|
|
|
$
|
10,070
|
|
|
$
|
600,637
|
|
|
Auction
Rate
Securities
|
||
Balance at December 31, 2017
|
$
|
10,070
|
|
Decrease in unrealized loss included in accumulated other comprehensive loss
|
—
|
|
|
Balance at December 31, 2018
|
10,070
|
|
|
Decrease in unrealized loss included in accumulated other comprehensive loss
|
—
|
|
|
Balance at December 31, 2019
|
$
|
10,070
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Operating lease costs:
|
|
|
|
|
|
|
|
|
|||
Cost of revenues
|
$
|
11,407
|
|
|
$
|
11,926
|
|
|
$
|
10,214
|
|
Software development
|
4,209
|
|
|
3,335
|
|
|
2,721
|
|
|||
Selling and marketing (excluding customer base amortization)
|
8,678
|
|
|
9,068
|
|
|
8,279
|
|
|||
General and administrative
|
3,299
|
|
|
3,789
|
|
|
4,467
|
|
|||
Total operating lease costs
|
$
|
27,593
|
|
|
$
|
28,118
|
|
|
$
|
25,681
|
|
Balance
|
Balance Sheet Location
|
December 31, 2019
|
||
Long-term lease liabilities
|
Lease and other long-term liabilities
|
$
|
120,153
|
|
|
|
|
||
Weighted-average remaining lease term in years
|
|
5.0
|
|
|
Weighted-average discount rate
|
|
4.0
|
%
|
|
December 31, 2019
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
||
Operating cash flows used in operating leases
|
$
|
30,287
|
|
|
|
||
ROU assets obtained in exchange for lease obligations:
|
|
||
Operating leases
|
$
|
22,629
|
|
January 1, 2020 - December 31, 2020
|
$
|
34,976
|
|
January 1, 2021 - December 31, 2021
|
33,760
|
|
|
January 1, 2022 - December 31, 2022
|
30,938
|
|
|
January 1, 2023 - December 31, 2023
|
29,663
|
|
|
January 1, 2024 - December 31, 2024
|
23,972
|
|
|
Thereafter
|
12,233
|
|
|
Total lease payments
|
165,542
|
|
|
Less imputed interest
|
(15,719
|
)
|
|
Present value of lease liabilities
|
$
|
149,823
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Leasehold improvements
|
$
|
73,918
|
|
|
$
|
65,332
|
|
Furniture, office equipment and vehicles
|
60,768
|
|
|
50,224
|
|
||
Computer hardware and software
|
80,947
|
|
|
74,742
|
|
||
Aircraft
|
27,657
|
|
|
2,796
|
|
||
Property and equipment, gross
|
243,290
|
|
|
193,094
|
|
||
Accumulated depreciation and amortization
|
(135,761
|
)
|
|
(109,791
|
)
|
||
Property and equipment, net
|
$
|
107,529
|
|
|
$
|
83,303
|
|
|
North America
|
|
International
|
|
Total
|
||||||
Goodwill, December 31, 2017
|
$
|
1,253,494
|
|
|
$
|
29,963
|
|
|
$
|
1,283,457
|
|
Acquisition
|
319,594
|
|
|
10,344
|
|
|
329,938
|
|
|||
Effect of foreign currency translation
|
—
|
|
|
(1,860
|
)
|
|
(1,860
|
)
|
|||
Goodwill, December 31, 2018
|
1,573,088
|
|
|
38,447
|
|
|
1,611,535
|
|
|||
Acquisitions
|
165,272
|
|
|
102,532
|
|
|
267,804
|
|
|||
Effect of foreign currency translation
|
—
|
|
|
2,681
|
|
|
2,681
|
|
|||
Goodwill, December 31, 2019
|
$
|
1,738,360
|
|
|
$
|
143,660
|
|
|
$
|
1,882,020
|
|
|
December 31,
|
|
Weighted- Average
Amortization Period
(in years)
|
||||||
|
2019
|
|
2018
|
|
|||||
Acquired technology and data
|
105,168
|
|
|
103,128
|
|
|
5
|
||
Accumulated amortization
|
(90,542
|
)
|
|
(85,344
|
)
|
|
|
||
Acquired technology, net
|
14,626
|
|
|
17,784
|
|
|
|
||
|
|
|
|
|
|
||||
Acquired customer base
|
487,532
|
|
|
339,574
|
|
|
11
|
||
Accumulated amortization
|
(233,202
|
)
|
|
(199,405
|
)
|
|
|
||
Acquired customer base, net
|
254,330
|
|
|
140,169
|
|
|
|
||
|
|
|
|
|
|
||||
Acquired trade names and other intangible assets
|
236,358
|
|
|
199,752
|
|
|
12
|
||
Accumulated amortization
|
(84,118
|
)
|
|
(68,794
|
)
|
|
|
||
Acquired trade names and other intangible assets, net
|
152,240
|
|
|
130,958
|
|
|
|
||
|
|
|
|
|
|
||||
Intangible assets, net
|
$
|
421,196
|
|
|
$
|
288,911
|
|
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
53,039
|
|
|
$
|
36,167
|
|
|
$
|
41,453
|
|
State
|
13,422
|
|
|
5,140
|
|
|
3,518
|
|
|||
Foreign
|
1,305
|
|
|
708
|
|
|
295
|
|
|||
Total current
|
67,766
|
|
|
42,015
|
|
|
45,266
|
|
|||
Deferred:
|
|
|
|
|
|
|
|
|
|||
Federal
|
6,881
|
|
|
6,576
|
|
|
(7,917
|
)
|
|||
State
|
2,424
|
|
|
(2,582
|
)
|
|
4,695
|
|
|||
Foreign
|
(1,085
|
)
|
|
(328
|
)
|
|
319
|
|
|||
Total deferred
|
8,220
|
|
|
3,666
|
|
|
(2,903
|
)
|
|||
Total provision for income taxes
|
$
|
75,986
|
|
|
$
|
45,681
|
|
|
$
|
42,363
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Deferred tax assets:
|
|
|
|
||||
Reserve for bad debts
|
1,312
|
|
|
1,457
|
|
||
Accrued compensation
|
4,297
|
|
|
4,803
|
|
||
Stock compensation
|
13,877
|
|
|
10,041
|
|
||
Net operating losses
|
20,555
|
|
|
26,349
|
|
||
Accrued reserve and other
|
4,177
|
|
|
1,773
|
|
||
Lease liabilities
|
36,472
|
|
|
—
|
|
||
Deferred rent
|
—
|
|
|
5,928
|
|
||
Deferred gain on the sale of building
|
—
|
|
|
4,140
|
|
||
Research and development credits
|
6,341
|
|
|
6,331
|
|
||
Total deferred tax assets, prior to valuation allowance
|
87,031
|
|
|
60,822
|
|
||
|
|
|
|
||||
Valuation allowance
|
(13,553
|
)
|
|
(14,246
|
)
|
||
Total deferred tax assets, net of valuation allowance
|
73,478
|
|
|
46,576
|
|
||
|
|
|
|
||||
Deferred tax liabilities:
|
|
|
|
|
|
||
Deferred commission costs, net
|
(22,612
|
)
|
|
(19,314
|
)
|
||
Lease right-of-use assets
|
(30,830
|
)
|
|
—
|
|
||
Prepaid expenses
|
(1,548
|
)
|
|
(2,204
|
)
|
||
Property and equipment, net
|
(8,891
|
)
|
|
(5,367
|
)
|
||
Intangible assets, net
|
(91,285
|
)
|
|
(82,079
|
)
|
||
Total deferred tax liabilities
|
(155,166
|
)
|
|
(108,964
|
)
|
||
|
|
|
|
||||
Net deferred tax assets (liabilities)
|
$
|
(81,688
|
)
|
|
$
|
(62,388
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
Expected federal income tax provision at statutory rate
|
$
|
82,099
|
|
|
$
|
59,643
|
|
|
$
|
57,770
|
|
State income taxes, net of federal benefit
|
14,884
|
|
|
10,312
|
|
|
4,776
|
|
|||
Foreign income taxes, net effect
|
1,515
|
|
|
(315
|
)
|
|
(3,540
|
)
|
|||
Increase (decrease) in valuation allowance
|
(693
|
)
|
|
1,214
|
|
|
3,624
|
|
|||
Tax rate changes
|
(13
|
)
|
|
141
|
|
|
(7,340
|
)
|
|||
Research credits
|
(12,188
|
)
|
|
(15,373
|
)
|
|
(20,547
|
)
|
|||
Excess tax benefit
|
(15,282
|
)
|
|
(14,227
|
)
|
|
(7,010
|
)
|
|||
Tax reserves
|
3,135
|
|
|
1,870
|
|
|
12,646
|
|
|||
Other adjustments
|
2,529
|
|
|
2,416
|
|
|
1,984
|
|
|||
Income tax expense
|
$
|
75,986
|
|
|
$
|
45,681
|
|
|
$
|
42,363
|
|
Unrecognized tax benefit as of December 31, 2016
|
$
|
1,843
|
|
Increase for current year tax positions
|
12,620
|
|
|
Decrease for prior year tax positions
|
(34
|
)
|
|
Expiration of the statute of limitation for assessment of taxes
|
(66
|
)
|
|
Unrecognized tax benefit as of December 31, 2017
|
14,363
|
|
|
Increase for current year tax positions
|
9,561
|
|
|
Decrease for prior year tax positions
|
(70
|
)
|
|
Expiration of the statute of limitation for assessment of taxes
|
(1,482
|
)
|
|
Unrecognized tax benefit as of December 31, 2018
|
22,372
|
|
|
Increase for current year tax positions
|
3,487
|
|
|
Increase for prior year tax positions
|
440
|
|
|
Expiration of the statute of limitation for assessment of taxes
|
(832
|
)
|
|
Unrecognized tax benefit as of December 31, 2019
|
$
|
25,467
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
EBITDA
|
|
|
|
|
|
|
|
|
|||
North America
|
$
|
451,699
|
|
|
$
|
358,036
|
|
|
$
|
236,906
|
|
International
|
(6,987
|
)
|
|
(6,729
|
)
|
|
553
|
|
|||
Total EBITDA
|
$
|
444,712
|
|
|
$
|
351,307
|
|
|
$
|
237,459
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net income
|
$
|
314,963
|
|
|
$
|
238,334
|
|
|
$
|
122,695
|
|
Amortization of acquired intangible assets in cost of revenues
|
21,357
|
|
|
20,586
|
|
|
19,707
|
|
|||
Amortization of acquired intangible assets in operating expenses
|
33,995
|
|
|
30,881
|
|
|
17,684
|
|
|||
Depreciation and other amortization
|
25,813
|
|
|
26,276
|
|
|
26,252
|
|
|||
Interest and other income
|
(30,017
|
)
|
|
(13,281
|
)
|
|
(4,044
|
)
|
|||
Interest and other expense
|
2,615
|
|
|
2,830
|
|
|
9,014
|
|
|||
Loss on debt extinguishment
|
—
|
|
|
—
|
|
|
3,788
|
|
|||
Income tax expense
|
75,986
|
|
|
45,681
|
|
|
42,363
|
|
|||
EBITDA
|
$
|
444,712
|
|
|
$
|
351,307
|
|
|
$
|
237,459
|
|
|
December 31,
|
||||||
|
2019
|
|
2018
|
||||
Property and equipment, net
|
|
|
|
||||
North America
|
$
|
103,383
|
|
|
$
|
79,493
|
|
International
|
4,146
|
|
|
3,810
|
|
||
Total property and equipment, net
|
$
|
107,529
|
|
|
$
|
83,303
|
|
|
|
|
|
||||
Goodwill
|
|
|
|
|
|
||
North America
|
$
|
1,738,360
|
|
|
$
|
1,573,088
|
|
International
|
143,660
|
|
|
38,447
|
|
||
Total goodwill
|
$
|
1,882,020
|
|
|
$
|
1,611,535
|
|
|
|
|
|
||||
Assets
|
|
|
|
|
|
||
North America
|
$
|
3,615,258
|
|
|
$
|
3,253,035
|
|
International
|
238,728
|
|
|
59,922
|
|
||
Total assets
|
$
|
3,853,986
|
|
|
$
|
3,312,957
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
|
|
||
North America
|
$
|
402,759
|
|
|
$
|
272,776
|
|
International
|
45,634
|
|
|
18,239
|
|
||
Total liabilities
|
$
|
448,393
|
|
|
$
|
291,015
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Numerator:
|
|
|
|
|
|
||||||
Net income
|
$
|
314,963
|
|
|
$
|
238,334
|
|
|
$
|
122,695
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|||
Denominator for basic net income per share — weighted-average outstanding shares
|
36,310
|
|
|
36,058
|
|
|
33,200
|
|
|||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|||
Stock options, restricted stock awards and restricted stock units
|
320
|
|
|
390
|
|
|
359
|
|
|||
Denominator for diluted net income per share — weighted-average outstanding shares
|
36,630
|
|
|
36,448
|
|
|
33,559
|
|
|||
|
|
|
|
|
|
||||||
Net income per share — basic
|
$
|
8.67
|
|
|
$
|
6.61
|
|
|
$
|
3.70
|
|
Net income per share — diluted
|
$
|
8.60
|
|
|
$
|
6.54
|
|
|
$
|
3.66
|
|
|
Year Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Performance-based restricted stock awards
|
60
|
|
|
53
|
|
|
58
|
|
Anti-dilutive securities
|
42
|
|
|
100
|
|
|
126
|
|
|
Number of
Shares
|
|
Range of
Exercise Price |
|
Weighted-
Average
Exercise
Price
|
|
Weighted-
Average
Remaining
Contract
Life (in years)
|
|
Aggregate
Intrinsic
Value
(in thousands)
|
|||||
Outstanding at December 31, 2016
|
440,158
|
|
|
$36.48 - $201.04
|
|
$
|
132.08
|
|
|
|
|
|
||
Granted
|
95,500
|
|
|
$204.91
|
|
$
|
204.91
|
|
|
|
|
|
||
Exercised
|
(81,815
|
)
|
|
$36.48 - $201.04
|
|
$
|
83.07
|
|
|
|
|
|
||
Outstanding at December 31, 2017
|
453,843
|
|
|
$36.73 - $204.91
|
|
$
|
156.24
|
|
|
|
|
|
||
Granted
|
82,500
|
|
|
$342.13
|
|
$
|
342.13
|
|
|
|
|
|
||
Exercised
|
(177,299
|
)
|
|
$36.73 - $204.91
|
|
$
|
125.16
|
|
|
|
|
|
||
Canceled or expired
|
(14,768
|
)
|
|
$182.75 - $342.13
|
|
$
|
261.20
|
|
|
|
|
|
||
Outstanding at December 31, 2018
|
344,276
|
|
|
|
|
$
|
212.28
|
|
|
|
|
|
||
Granted
|
48,300
|
|
|
$398.15
|
|
$
|
398.15
|
|
|
|
|
|
||
Exercised
|
(116,918
|
)
|
|
$54.51 - $342.13
|
|
$
|
159.52
|
|
|
|
|
|
||
Outstanding at December 31, 2019
|
275,658
|
|
|
$54.51 - $398.15
|
|
$
|
267.23
|
|
|
6.98
|
|
$
|
91,262
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Exercisable at December 31, 2017
|
278,239
|
|
|
$36.73 - $201.04
|
|
$
|
130.91
|
|
|
|
|
|
||
Exercisable at December 31, 2018
|
185,405
|
|
|
$54.51 - $204.91
|
|
$
|
165.31
|
|
|
|
|
|
||
Exercisable at December 31, 2019
|
147,620
|
|
|
$102.16 - $342.13
|
|
$
|
210.96
|
|
|
5.84
|
|
$
|
57,180
|
|
|
Year Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Dividend yield
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
Expected volatility
|
27
|
%
|
|
28
|
%
|
|
28
|
%
|
Risk-free interest rate
|
2
|
%
|
|
3
|
%
|
|
2
|
%
|
Expected life (in years)
|
5
|
|
|
5
|
|
|
5
|
|
|
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||
Range of
Exercise Price
|
|
Number of
Shares
|
|
Weighted-Average Remaining Contractual Life (in years)
|
|
Weighted-
Average
Exercise Price
|
|
Number of
Shares
|
|
Weighted-
Average
Exercise Price
|
||||||
$102.16 - $142.45
|
|
3,522
|
|
|
3.19
|
|
$
|
102.16
|
|
|
3,522
|
|
|
$
|
102.16
|
|
$142.46 - $188.22
|
|
36,600
|
|
|
6.19
|
|
$
|
182.75
|
|
|
36,600
|
|
|
$
|
182.75
|
|
$188.23 - $197.37
|
|
32,200
|
|
|
5.17
|
|
$
|
193.69
|
|
|
32,200
|
|
|
$
|
193.69
|
|
$197.38 - $202.98
|
|
33,600
|
|
|
4.16
|
|
$
|
201.04
|
|
|
33,600
|
|
|
$
|
201.04
|
|
$202.99 - $273.52
|
|
52,135
|
|
|
7.16
|
|
$
|
204.91
|
|
|
23,066
|
|
|
$
|
204.91
|
|
$273.53 - $370.14
|
|
69,301
|
|
|
8.16
|
|
$
|
342.13
|
|
|
18,632
|
|
|
$
|
342.13
|
|
$370.15 - $398.15
|
|
48,300
|
|
|
9.10
|
|
$
|
398.15
|
|
|
—
|
|
|
$
|
—
|
|
|
|
275,658
|
|
|
|
|
$
|
267.23
|
|
|
147,620
|
|
|
$
|
210.96
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Dividend yield
|
0
|
%
|
|
0
|
%
|
|
0
|
%
|
|||
Expected volatility
|
27
|
%
|
|
28
|
%
|
|
28
|
%
|
|||
Risk-free interest rate
|
2
|
%
|
|
2
|
%
|
|
2
|
%
|
|||
Expected life (in years)
|
3
|
|
|
3
|
|
|
3
|
|
|||
Weighted-average grant date fair value
|
$
|
398.15
|
|
|
$
|
342.13
|
|
|
$
|
218.59
|
|
|
Restricted Stock Awards — without Market Condition
|
|
Restricted Stock Awards — with Market Condition
|
||||||||||
|
Number of
Shares
|
|
Weighted-Average
Grant Date
Fair Value per Share
|
|
Number of
Shares
|
|
Weighted-Average
Grant Date
Fair Value per Share
|
||||||
Unvested restricted stock awards at December 31, 2018
|
304,161
|
|
|
$
|
272.95
|
|
|
76,320
|
|
|
$
|
193.44
|
|
Granted
|
115,722
|
|
|
$
|
456.51
|
|
|
36,000
|
|
|
$
|
429.63
|
|
Vested
|
(134,361
|
)
|
|
$
|
241.65
|
|
|
(23,040
|
)
|
|
$
|
184.97
|
|
Canceled
|
(18,303
|
)
|
|
$
|
315.39
|
|
|
—
|
|
|
$
|
—
|
|
Unvested restricted stock awards at December 31, 2019
|
267,219
|
|
|
$
|
365.27
|
|
|
89,280
|
|
|
$
|
290.87
|
|
|
Number of
Units
|
|
Weighted-Average
Grant Date
Fair Value per Share
|
|||
Unvested restricted stock units at December 31, 2018
|
852
|
|
|
$
|
228.86
|
|
Granted
|
413
|
|
|
$
|
459.41
|
|
Vested
|
(411
|
)
|
|
$
|
221.08
|
|
Canceled
|
—
|
|
|
$
|
—
|
|
Unvested restricted stock units at December 31, 2019
|
854
|
|
|
$
|
344.10
|
|
|
Number of Matching RSU
Shares
|
|
Weighted-Average
Grant Date
Fair Value per Share
|
|||
Unvested MSPP restricted stock units at December 31, 2018
|
—
|
|
|
$
|
—
|
|
Granted
|
7,441
|
|
|
469.13
|
|
|
Vested
|
—
|
|
|
—
|
|
|
Canceled
|
(275
|
)
|
|
469.13
|
|
|
Unvested MSPP restricted stock units at December 31, 2019
|
7,166
|
|
|
$
|
469.13
|
|
|
2019
|
||||||||||||||
|
Mar. 31
|
|
Jun. 30
|
|
Sep. 30
|
|
Dec. 31
|
||||||||
Revenues
|
$
|
328,425
|
|
|
$
|
343,760
|
|
|
$
|
352,808
|
|
|
$
|
374,726
|
|
Cost of revenues
|
71,153
|
|
|
71,918
|
|
|
71,172
|
|
|
74,996
|
|
||||
Gross profit
|
257,272
|
|
|
271,842
|
|
|
281,636
|
|
|
299,730
|
|
||||
Operating expenses
|
163,780
|
|
|
197,042
|
|
|
187,367
|
|
|
198,744
|
|
||||
Income from operations
|
93,492
|
|
|
74,800
|
|
|
94,269
|
|
|
100,986
|
|
||||
Interest and other income
|
4,945
|
|
|
5,913
|
|
|
5,358
|
|
|
13,801
|
|
||||
Interest and other expense
|
(732
|
)
|
|
(697
|
)
|
|
(704
|
)
|
|
(482
|
)
|
||||
Income before income taxes
|
97,705
|
|
|
80,016
|
|
|
98,923
|
|
|
114,305
|
|
||||
Income tax expense
|
12,536
|
|
|
16,768
|
|
|
20,304
|
|
|
26,378
|
|
||||
Net income
|
$
|
85,169
|
|
|
$
|
63,248
|
|
|
$
|
78,619
|
|
|
$
|
87,927
|
|
Net income per share — basic
|
$
|
2.35
|
|
|
$
|
1.74
|
|
|
$
|
2.16
|
|
|
$
|
2.42
|
|
Net income per share — diluted
|
$
|
2.33
|
|
|
$
|
1.73
|
|
|
$
|
2.15
|
|
|
$
|
2.39
|
|
|
2018
|
||||||||||||||
|
Mar. 31
|
|
Jun. 30
|
|
Sep. 30
|
|
Dec. 31
|
||||||||
Revenues
|
$
|
273,718
|
|
|
$
|
297,018
|
|
|
$
|
305,525
|
|
|
$
|
315,571
|
|
Cost of revenues
|
62,477
|
|
|
67,136
|
|
|
72,072
|
|
|
68,248
|
|
||||
Gross profit
|
211,241
|
|
|
229,882
|
|
|
233,453
|
|
|
247,323
|
|
||||
Operating expenses
|
157,796
|
|
|
186,108
|
|
|
162,765
|
|
|
141,666
|
|
||||
Income from operations
|
53,445
|
|
|
43,774
|
|
|
70,688
|
|
|
105,657
|
|
||||
Interest and other income
|
2,987
|
|
|
2,652
|
|
|
3,035
|
|
|
4,607
|
|
||||
Interest and other expense
|
(690
|
)
|
|
(728
|
)
|
|
(717
|
)
|
|
(695
|
)
|
||||
Income before income taxes
|
55,742
|
|
|
45,698
|
|
|
73,006
|
|
|
109,569
|
|
||||
Income tax expense
|
3,511
|
|
|
1,863
|
|
|
14,247
|
|
|
26,060
|
|
||||
Net income
|
$
|
52,231
|
|
|
$
|
43,835
|
|
|
$
|
58,759
|
|
|
$
|
83,509
|
|
Net income per share — basic
|
$
|
1.46
|
|
|
$
|
1.22
|
|
|
$
|
1.63
|
|
|
$
|
2.31
|
|
Net income per share — diluted
|
$
|
1.44
|
|
|
$
|
1.20
|
|
|
$
|
1.61
|
|
|
$
|
2.29
|
|
•
|
authorize our board of directors to establish one or more series of undesignated preferred stock, the terms of which can be determined by our board of directors at the time of issuance;
|
•
|
do not authorize cumulative voting;
|
•
|
authorize our board of directors to alter, amend or repeal any bylaw;
|
•
|
provide that, except as otherwise provided in our Certificate of Incorporation or by Delaware law, special meetings of our stockholders may be called only by our board of directors in a resolution approved by a majority of the board of directors or by the Chairman of our board of directors or the President of CoStar;
|
•
|
provide that our stockholders may take action only at a duly called meeting and not by written consent;
|
•
|
in connection with stockholder meetings, provide an advanced written notice procedure with respect to stockholder nominations for directors and bringing other business; and
|
•
|
provide that our directors may fill any vacancies on our board of directors, including newly created board seats resulting from an increase in the authorized number of directors and vacancies resulting from death, resignation, or other cause.
|
•
|
our board of directors approved the business combination or the transaction in which the person became an interested stockholder prior to the date the person attained this status;
|
•
|
upon consummation of the transaction that resulted in the person becoming an interested stockholder, the person owned at least 85% of our voting stock outstanding at the time the transaction commenced, excluding shares owned by persons who are directors and also officers and issued under employee stock plans under which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
|
•
|
on or subsequent to the date the person became an interested stockholder, our board of directors approved the business combination and the stockholders other than the interested stockholder authorized the transaction at an annual or special meeting of stockholders by the affirmative vote of at least two-thirds of the outstanding stock not owned by the interested stockholder.
|
•
|
any merger or consolidation involving us and the interested stockholder;
|
•
|
any sale, transfer, pledge or other disposition involving the interested stockholder of 10% or more of our assets;
|
•
|
in general, any transaction that results in the issuance or transfer by us of any of our stock to the interested stockholder;
|
•
|
any transaction involving us that has the effect of increasing the proportionate share of our stock owned by the interested stockholders; and
|
•
|
the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges, or other financial benefits provided by or through us.
|
(1
|
)
|
Registration Statement Number 333-135709 on Form S-8 pertaining to the CoStar Group, Inc. Employee Stock Purchase Plan,
|
(2
|
)
|
Registration Statement Number 333-206929 on Form S-8 pertaining to the CoStar Group, Inc. Amended and Restated Employee Stock Purchase Plan,
|
(3
|
)
|
Registration Statement Number 333-143968 on Form S-8 pertaining to the CoStar Group, Inc. 2007 Stock Incentive Plan, as amended,
|
(4
|
)
|
Registration Statement Number 333-167424 on Form S-8 pertaining to the CoStar Group, Inc. 2007 Stock Incentive Plan, as amended,
|
(5
|
)
|
Registration Statement Number 333-182377 on Form S-8 pertaining to the CoStar Group, Inc. 2007 Stock Incentive Plan, as amended,
|
(6
|
)
|
Registration Statement Number 333-212278 on Form S-8 pertaining to the CoStar Group, Inc. 2016 Stock Incentive Plan,
|
(7
|
)
|
Registration Statement Number 333-220607 on Form S-3 of CoStar Group, Inc. and
|
(8
|
)
|
Registration Statement Number 333-223230 on Form S-8 pertaining to the CoStar Group, Inc. Management Stock Purchase Plan
|
1.
|
I have reviewed this annual report on Form 10-K of CoStar Group, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
2/26/2020
|
By:
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/s/ Andrew C. Florance
|
|
|
|
Andrew C. Florance
|
|
|
|
President and Chief Executive Officer
|
|
|
|
(Principal Executive Officer and Duly Authorized Officer)
|
1.
|
I have reviewed this annual report on Form 10-K of CoStar Group, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
2/26/2020
|
By:
|
/s/ Scott T. Wheeler
|
|
|
|
Scott T. Wheeler
|
|
|
|
Chief Financial Officer
|
|
|
|
(Principal Financial and Accounting Officer and Duly Authorized Officer)
|
1)
|
such Annual Report on Form 10-K of CoStar Group, Inc., for the year ended December 31, 2019, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o (d)); and
|
2)
|
the information contained in such Annual Report on Form 10-K of CoStar Group, Inc., for the year ended December 31, 2019, fairly presents, in all material respects, the financial condition and results of operations of CoStar Group, Inc.
|
|
By:
|
/s/ Andrew C. Florance
|
|
|
Andrew C. Florance
|
|
|
President and Chief Executive Officer
|
|
|
(Principal Executive Officer and Duly Authorized Officer)
|
1)
|
such Annual Report on Form 10-K of CoStar Group, Inc., for the year ended December 31, 2019, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o (d)); and
|
2)
|
the information contained in such Annual Report on Form 10-K of CoStar Group, Inc., for the year ended December 31, 2019, fairly presents, in all material respects, the financial condition and results of operations of CoStar Group, Inc.
|
|
By:
|
/s/ Scott T. Wheeler
|
|
|
Scott T. Wheeler
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial and Accounting Officer and Duly Authorized Officer)
|