Close

Not a member yet? Register now and get started.

lock and key

Sign in to your account.

Account Login

Forgot your password?

CoStar Group’s Apartments.com Idea Proposal (CSGP)

CoStar Group’s Apartments.com Idea Proposal (CSGP)
 

Is Apartments.com the best platform for advertising and returns for property managers?

 

Report Available:November 17, 2016

 

Blueshift’s initial research shows Apartments.com outperforming the competition and building its salesforce for continued growth. Site visits and bookings continue to increase and revenue is on the rise. Still, the company disappointed with its recent guidance leaving questions as to whether its growth is sustainable.

 

Observations

  1. CSGP reported Q3 earnings of $1.11 per share and revenue of $213 million represented an increase of 12.5% compared to the same period last year. Both EPS and revenue beat Wall Street expectations and the company increased its full-year earnings guidance by $0.55 from its initial 2016 guidance. The company is growing the sales team and investing in research, but declined to give detailed guidance for 2017, noting that it expected to see minimal margin expansion compared to 2016, which was met with disappointment.
  2. CSGP’s Apartments.com, a platform helping renters find apartments, homes and condos, has about 30% penetration in its core target of apartments with 50 units or more. The company is emphasizing growth of its salesforce, with most focused on existing clients and customer service, while a portion will be dedicated to developing new business. There was high churn in sales reps earlier this year, with many new hires of late that have not contributed materially to new sales, but who are expected to ramp up shortly. In Q3, 76% of total revenue came from annual subscriptions, up from 64% the prior year. The company now has 61% of its apartments advertising on an annual subscription, and overall renewal rate is at 90.7%, the highest level in the past six quarters.
  3. According to comScore, Apartments.com is the most visited Internet rental search site, averaging 21 million visits per month with unique visitors up 28%. Total visits were up year to year, while the nearest competitor’s site visits were down 10% over the same period.
  4. CSGP was recognized in Fortune magazine’s 100 Fastest Growing Companies list at No. 81. In June, the company was ranked 11 on the Forbes Most Innovative Growth Companies list for 2016. It is the third year the company has been named to the list. Also, CSGP announced the selection of Richmond, VA for its research operations headquarters. The company plans to hire 730 researchers and software developers and will become a top 10 employer in the city.
  5. Blueshift’s June 23, 2015 report found CSGP’s investment in Apartments.com was producing some lead quality and ROI improvements, however, growth outside the rental market’s high-end would be challenged by pricing and competition for at least the near-term. Corporate property managers noted an uptick in Apartments.com’s lead flow and ROI since the website was relaunched earlier in 2015. Still, these sources’ spending on the service largely was projected to be flat to up slightly year to year. Midtier property managers reported enthusiasm for the new site, but they saw no change in ROI or in plans to increase spending on Apartments.com. Managers of single apartment buildings saw little value or ROI in listing with the site. The company’s market intelligence reports were considered superior to other industry resources.

 

What trends exist with property manager spending on Apartments.com? Are property managers satisfied with lead flow and quality from Apartments.com? Are they pleased with the ROI? What other online apartment search sites do they use? Which platform gives the best returns? What is the value of market intelligence reports from Apartments.com? To answer these and other questions on Apartments.com and the rental listing search space, Blueshift will gather data and issue a market research report from independent sources in the following areas: Property managers/owners, Competitors, Industry specialists.

 

Companies: CoStar Group (CSGP), Zillow (Z), Facebook (FB), News Corp. (NWS)

 

Research Begins: Oct. 31, 2016