10-K – 2026-02-26 – csgp-20251231.htm

The cash paid for this asset acquisition was included in the caption purchases of property, equipment, and other assets for new campuses in the consolidated statement of cash flows. The Company records the third-party rental activity from this building's operations and leases, including building depreciation and operating expenses for space occupied by tenants, as other income (expense), net in the consolidated statements of operations.
In October 2024, the Company and a building tenant modified a lease agreement to reduce the leased space and extend the lease term of a portion of the remaining space. Among other provisions, the modified lease agreement required the tenant to make a $ 48  million buyout payment, in two equal installments which were received in the fourth quarter of 2024 and the second quarter in 2025. The buyout payments are recognized in other income (expense), net in the consolidated statements of operations ratably over the modified lease term. The tenant surrendered certain space concurrently with the execution of the modified lease agreement and the Company has outfit this space to host its employees.
Deferred lease income as of December 31, 2025 and December 31, 2024 was as follows (in millions):

Balance
Balance Sheet Caption
December 31, 2025
December 31, 2024

Current portion
Other current liabilities
$
6  

$
5  

Non-current portion
Lease and other long-term liabilities
35  

18  

Total deferred lease income
$
41  

$
23  

Lease income includes base rent each tenant pays in accordance with the terms of its respective lease and is reported on a straight-line basis over the non-cancellable term of the lease, which includes the effects of periodic step-ups in rent and rent abatements under the lease. When a renewal option is included within the lease, the Company assesses whether the option is reasonably certain of being exercised against relevant economic factors to determine whether the option period should be
F-20

COSTAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

included as part of the lease term. Further, lease income includes tenant reimbursement amounts for the recovery of the operating expenses and real estate taxes. Tenant reimbursements, which vary each period, are non-lease components that are not the predominant activity within the contract. The Company has elected the practical expedient that allows it to combine certain lease and non-lease components of operating leases. Non-lease components are recognized together with fixed base rent in “ lease income ,” as variable lease income in the same period as the related expenses are incurred. Variable lease income was not material for the years ended December 31, 2025 and December 31, 2024. Components of other income (expense), net related to leasing operations for the years ended December 31, 2025 and December 31, 2024 were as follows (in millions):

Year Ended December 31,

2025
2024

Lease income (1)
$
17  

$
22  

Less:

Property operating expenses
6  

9  

Depreciation and amortization expense
17  

19  

Other expense from leasing operations
$
( 6 )

$
( 6 )

__________________________

(1) Includes $ 4 million and $ 10 million of amortization expense of above-market leases for the years ended December 31, 2025 and December 31, 2024, respectively.

The following is a maturity analysis of the annual undiscounted cash flows of operating lease payments to be received as of December 31, 2025 (in millions):

Operating Leases

2026
$
11  

2027
13  

2028
9  

2029
8  

2030
7  

Thereafter
26  

Total undiscounted cash flows
$
74  

Building depreciation and operating expenses for space occupied by the Company are allocated between cost of revenue, selling and marketing (excluding customer base amortization), software development, and general and administrative expenses on the consolidated statement of operations based on the headcount of the respective departments occupying the building.

Debt Issuance Costs
Costs incurred in connection with the issuance of long-term debt are deferred and amortized as interest expense over the term of the related debt using the effective interest method for term debt and on a straight-line basis for revolving debt. The Company made a policy election to classify deferred issuance costs on the revolving credit facility as a long-term asset on its consolidated balance sheets. Upon a refinancing or amendment, previously capitalized debt issuance costs are expensed and included in loss on extinguishment of debt if the Company determines that there has been a substantial modification of the related debt. If the Company determines that there has not been a substantial modification of the related debt, any previously capitalized debt issuance costs are amortized as interest expense over the term of the new debt instrument.
See Note 10 for further discussion of the Company's accounting for its outstanding debt, revolving credit facility, and related issuance costs.

Business Combinations
The Company includes the results of operations of the businesses that it acquires from the date of acquisition. The Company generally allocates the purchase consideration to the tangible assets acquired and liabilities assumed and intangible assets acquired based on their estimated fair values on the date of the acquisition. The purchase price is generally determined based on the fair value of the assets transferred, liabilities assumed, and equity interests issued, after considering any transactions that are separate from the business combination. The excess of the fair value of purchase consideration, the fair
F-21

COSTAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

value of any NCI in the acquiree and the fair value of any previous equity interest in the acquiree over the fair values of these identifiable assets and liabilities is recorded as goodwill. In a business combination achieved in stages, the Company shall remeasure its previously held equity interest in the acquiree at its acquisition-date fair value and recognize the resulting gain or loss, if any, in results of operations. The Company applies significant assumptions, estimates, and judgments in determining the fair value of assets acquired and liabilities assumed on the acquisition date, especially with respect to intangible assets and contingent liabilities. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired customer bases, acquired technology and acquired trade names, useful lives, royalty rates, and discount rates. Estimates of fair value are based on assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Any adjustments to provisional amounts that are identified during the measurement period, not to exceed one year from the date of acquisition, are recorded in the reporting period in which the adjustment amounts are determined. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.
The Company has elected the practical expedient provided under ASC 805, Business Combinations , which allows for contract assets and liabilities acquired or assumed in an acquisition to be measured in accordance with the accounting framework for revenue from contracts with customers as if the Company had originated the acquired contract. This is an exception to the general requirement to measure assets acquired and liabilities assumed at their fair value on the acquisition date.
For a given acquisition, the Company may identify certain pre-acquisition contingencies as of the acquisition date and may extend its review and evaluation of these pre-acquisition contingencies throughout the measurement period in order to obtain sufficient information to assess whether the Company includes these contingencies as a part of the fair value estimates of assets acquired and liabilities assumed and, if so, to determine their estimated amounts.
If the Company cannot reasonably determine the fair value of a pre-acquisition contingency (non-income tax related) by the end of the measurement period, which is generally the case given the nature of such matters, the Company will recognize an asset or a liability for such pre-acquisition contingency if: (i) it is probable that an asset existed or a liability had been assumed at the acquisition date and (ii) the amount of the asset or liability can be reasonably estimated. Subsequent to the measurement period, changes in the Company's estimates of such contingencies will affect earnings and could have a material effect on its results of operations and financial position.
In addition, uncertain tax positions and tax-related valuation allowances assumed in connection with a business combination are initially estimated as of the acquisition date. The Company reevaluates these items based upon facts and circumstances that existed as of the acquisition date with any adjustments to its preliminary estimates being recorded to goodwill, provided that the Company is within the measurement period. Subsequent to the measurement period, changes to these uncertain tax positions and tax-related valuation allowances will affect the Company's provision for income taxes in its consolidated statements of operations and comprehensive income and could have a material impact on its results of operations and financial position.
Transaction costs associated with business combinations are expensed as incurred, and are included in general and administrative expenses in the consolidated statements of operations.

Recent Accounting Pronouncements
Recently Adopted Accounting Pronouncements
The Company adopted ASU No. 2023-07 (Topic 280), Improvements to Reportable Segment Disclosures effective January 1, 2024. This guidance requires enhanced disclosures about significant segment expenses. Additionally, it requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The adoption resulted in expanded segment reporting disclosures, with no impacts to the Company's financial condition and results of operations.
In December 2023, the FASB issued ASU No. 2023-09 (Topic 740), Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as an expansion of other income tax disclosures. The ASU is effective on a prospective basis for annual reporting periods beginning
F-22

COSTAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

after December 15, 2024. The adoption of this standard impacted our disclosures only and did not affect the Company's financial position or the results of its operations.
Recent Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40). The ASU requires incremental disclosures about specific expense categories, including but not limited to, purchases of inventory, employee compensation, depreciation, amortization, and selling expenses. The amendments are effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted and the amendments may be applied either prospectively or retrospectively. Management is currently evaluating this ASU to determine its impact on the Company's disclosures.
In May 2025, The FASB issued ASU No. 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity . The ASU revises current guidance for determining the accounting acquirer for a transaction effected primarily by exchanging equity interests in which the legal acquiree is a VIE that meets the definition of a business. The amendments differ from current U.S. GAAP because, for certain transactions, they replace the requirement that the primary beneficiary of a VIE is always the acquirer with an assessment that requires an entity to consider the factors to determine which entity is the accounting acquirer. Under the amendments, acquisition transactions in which the legal acquiree is a VIE will, in more instances, result in the same accounting outcomes as economically similar transactions in which the legal acquiree is a voting interest entity. The ASU does not change the accounting for a transaction determined to be a reverse acquisition or a transaction in which the legal acquirer is not a business and is determined to be the accounting acquiree. The new guidance will become effective for interim and annual reporting periods beginning on January 1, 2027, will require a prospective transition method for business combinations that occur after the initial adoption date, and early adoption is permitted. Management is currently evaluating this ASU to determine its impact on the Company's disclosures.
In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets . The ASU provides a practical expedient for estimating expected credit losses on current accounts receivable and current contract assets arising from transactions accounted for under ASC 606. Under the expedient, entities may assume that current conditions as of the balance sheet date do not change for the remaining life of the asset when developing reasonable and supportable forecasts as part of estimating expected credit losses. The ASU is effective for annual reporting periods beginning after December 15, 2025 and interim reporting periods within those annual reporting periods. Early adoption is permitted, and the amendments should be applied prospectively. We do not expect the adoption of ASU 2025-05 to have a material impact on our consolidated financial statements and related disclosures.
In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The ASU eliminates all references to prescriptive and sequential software project stages throughout Subtopic 350-40. An entity is required to begin capitalizing software costs when both of the following occur: (1) management has authorized and committed to funding the software project and (2) it is probable that the project will be completed and the software will be used to perform the function intended (referred to as the “probable-to-complete recognition threshold”). The ASU is effective for annual reporting periods beginning after December 15, 2027 and interim reporting periods within those annual reporting periods. Entities may adopt the new guidance using a prospective transition approach, a modified transition approach that is based on the status of the project and whether software costs were capitalized before the date of adoption, or a retrospective transition approach. Early adoption is permitted as of the beginning of an annual reporting period. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements and related disclosures.
In December 2025, the FASB issued ASU No. 2025‑12, Codification Improvements . The ASU provides technical corrections and clarifications to various Topics, including diluted earnings per share, the transfer of receivables from contracts with customers, among other improvements. The ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual periods. Early adoption is permitted in an interim or annual period in which financial statements have not yet been issued or made available for issuance. The Company is currently evaluating the impact this ASU will have on its consolidated financial statements and related disclosures.
F-23

COSTAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3.     REVENUE FROM CONTRACTS WITH CUSTOMERS
Disaggregated Revenue
Revenue by operating segment and type of service consist of the following (in millions):

Year Ended December 31,

2025
2024
2023

Commercial Real Estate

CoStar
$
1,259  

$
1,156  

$
1,096  

LoopNet
312  

282  

265  

Other Commercial Real Estate
216  

77  

82  

Total Commercial Real Estate
1,787  

1,515  

1,443  

Residential Real Estate
1,460  

1,221  

1,012  

Total revenue
$
3,247  

$
2,736  

$
2,455  

    
We have recast certain prior period disclosures to align with the way we internally manage our business. See Note 2 for additional information.
The Company is domiciled in the U.S. and revenue earned outside the U.S. were $ 350 million, $ 162 million, and $ 106 million for years ended December 31, 2025, 2024, and 2023, respectively.
Deferred Revenue
Deferred revenue as of December 31, 2025 and 2024 was as follows (in millions):

December 31,

Balance
Balance Sheet Caption
2025
2024

Current portion
Deferred revenue
$
205  

$
137  

Non-current portion
Lease and other long-term liabilities
1  

—  

Total deferred revenue
$
206  

$
137  

Changes in deferred revenue for the period were as follows (in millions):

Balance at December 31, 2024
$
137  

Revenue recognized in the current period from the amounts in the beginning balance
( 127 )

New deferrals, net of amounts recognized in the current period (1)
194  

Effects of foreign currency
2  

Balance at December 31, 2025
$
206  

__________________________

(1) This balance includes $ 46 million of net new deferrals from the acquisitions completed in 2025. See Note 4 for further discussion of acquisitions.
Contract Assets
Contract assets are generated when contractual billing schedules differ from revenue recognition timing and represent a conditional right to consideration for satisfied performance obligations that becomes a receivable when the conditions are satisfied. Contract assets as of December 31, 2025 and 2024 were as follows (in millions):

December 31,

Balance
Balance Sheet Caption
2025
2024

Current portion
Prepaid expenses and other current assets
$
7  

$
6  

Non-current portion
Deposits and other assets
3  

6  

Total contract assets

$
10  

$
12  

F-24

COSTAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Revenue was reduced by a net of $ 2 million from contract assets for the years ended both December 31, 2025 and 2024.
Unsatisfied Performance Obligations
Remaining contract consideration for which revenue had not been recognized due to unsatisfied performance obligations was $ 527 million at December 31, 2025, which the Company expects to recognize over the next four years . This amount does not include contract consideration for contracts with a duration of one year or less.
Commissions
Commissions expense is included in selling and marketing expense (excluding customer base amortization) in the Company's consolidated statements of operations. Commissions expense activity for the years ended December 31, 2025, 2024, and 2023, was as follows (in millions):

Year Ended December 31,

2025
2024
2023

Commissions incurred
$
226  

$
180  

$
174  

Commissions capitalized in the current period
( 152 )

( 120 )

( 120 )

Amortization of deferred commissions costs
141  

117  

95  

Total commissions expense
$
215  

$
177  

$
149  

The Company did not recognize any impairment losses on commissions as of both December 31, 2025 and 2024.

4.     ACQUISITIONS
Domain
In February 2025, in connection with the Domain Proposal, the Company acquired approximately 17 % of the ordinary shares of Domain, one of Australia's leading property marketplaces, at A$ 4.20 per share for a total purchase price of A$ 452  million ( $ 285  million ). In May 2025, the Company entered into an agreement to acquire the remaining issued capital of Domain not previously held by CoStar Group by way of Scheme of Arr angement. In August 2025, the Company completed the Domain Acquisition pursuant to which (i) the Company spent A$ 2.5 billion ( $ 1.6 billion ) to acquire the remaining 83 % of Domain's ordinary shares; and (ii) Domain shareholders received total cash consideration of A$ 4.43 per Domain ordinary share, less a one-time special dividend of A$ 0.088 per share declared and paid by Domain prior to closing. The Domain Acquisition positions the Company to leverage Domain's portfolio of property brands in Australia and CoStar's technology, scale, and innovation to improve customer experience, value, and access to CoStar's brands and product offerings.
As of the closing of the Domain Acquisition, the fair value of the Company's 17 % investment was approximately A$ 465 million ($ 300 million), measured based on the fair value implied by the consideration transferred. The acquisition was completed as a step-acquisition, and the Company recognized a gain of $ 14 million, inclusive of dividend income, as a result of remeasuring its previously held equity interest for the year ended December 31, 2025 . The gains were recorded in other income (expense), net , in the consolidated statements of operations.
The total purchase consideration for the Domain Acquisition was $ 1.6 billion, which consisted of the following (in millions):

Amount

Cash
$
1,472  

Settlement of existing debt
139  

Fair value of cash settled equity awards related to pre-combination services
1  

Total purchase consideration
1,612  

Fair value of previously held equity interests
300  

$
1,912  

F-25

COSTAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the amounts recorded for acquired assets and assumed liabilities recorded at their fair value as of the closing date of the Domain Acquisition (in millions):

Preliminary: August 27, 2025
Measurement Period Adjustments
Updated Preliminary: August 27, 2025

Cash and cash equivalents
$
15  

$
— 

$
15  

Accounts receivable
35  

— 

35  

Intangible assets
944  

( 13 )

931  

Accrued expenses
( 27 )

—  

( 27 )

Deferred revenue
( 14 )

— 

( 14 )

Deferred tax liability
( 235 )

4  

( 231 )

Other assets and (liabilities), net
( 8 )

6  

( 2 )

Fair value of identifiable net assets acquired
710  

( 3 )

707  

Fair value of NCI in Domain’s partially-owned subsidiaries
( 8 )

( 31 )

( 39 )

Goodwill
1,210  

34  

1,244  

$
1,912  

$
—  

$
1,912  

Generally, the net assets of Domain were recorded at their estimated fair values upon initial consolidation and the NCI was recorded to fair value as measurement period adjustments. In valuing the acquired assets, assumed liabilities and NCI, fair value estimates were based primarily on future expected cash flows, market rate assumptions for contractual obligations, and appropriate discount rates. The key assumptions used in the valuation include discount rates, royalty rates, projected revenue growth rates, customer attrition rates, and profit margins.
The purchase price allocation is preliminary and subject to change during the measurement period as additional information is obtained about the facts and circumstances that existed at closing. Any material adjustments to provisional amounts identified during the measurement period will be recognized and disclosed in the reporting period in which the adjustment amounts are determined. The primary areas that remain subject to additional information include certain tax matters, the fair value of acquired intangibles, and contingencies.
The following table summarizes the fair values (in millions) of the identifiable intangible assets acquired in the Domain Acquisition, their related estimated useful lives (in years) and their respective amortization methods. The intangible assets were included in the Company's International operating segment prior to the reallocation described in Note 2:

Estimated Fair Value
Estimated Useful Life
Amortization Method

Customer relationships
$
625  

20
Accelerated

Brand and trade names
190  

5 - 15
Straight-line

Software
116  

2 - 5
Straight-line

Total intangible assets
$
931  

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Specifically, the goodwill recorded as part of the Domain Acquisition includes, but is not limited to: (i) the expected synergies and other benefits that the Company believes will result from combining Domain's operations with the Company's operations and (ii) any intangible assets that do not qualify for separate recognition, such as the assembled workforce. Of the $ 1,244 million of goodwill recorded as part of the Domain Acquisition, $ 994 million was allocated to Residential Real Estate and $ 250 million to Commercial Real Estate, of which none is expected to be deductible for income tax purposes. Transaction costs associated with the Domain Acquisition were $ 20 million for the year ended December 31, 2025 and consist primarily of advisory, legal, accounting, and other professional service costs. These costs are included within general and administrative expenses on the consolidated statements of operations.
F-26

COSTAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Matterport
On February 28, 2025, the Company completed the Matterport Acquisition. Matterport is a leader in the digitization and datafication of the built world. Matterport’s pioneering technology has set the standard for digitizing, accessing, and managing buildings, spaces, and places online. Matterport’s platform, comprised of innovative software, spatial data-driven data science, and 3D capture technology, has broken down the barriers that have kept the largest asset class in the world, buildings and physical spaces, offline and underutilized for so long. The Company intends to integrate Matterport's 3D digital twin technology with its information service products and online marketplaces to allow buyers, sellers, and renters to explore properties with greater depth and insight.
Pursuant to the terms and conditions of the Matterport Merger Agreement, the Company acquired Matterport, with each share of Matterport Common Stock outstanding immediately prior to the closing of the Matterport Acquisition exchanged for (i) 0.03552 of a CoStar Group Share, the Matterport Merger Exchange Ratio and (ii) $ 2.75 in cash (the "Matterport Acquisition Consideration"), with fractional shares of CoStar Group Shares paid in cash.
As part of the Matterport Acquisition, the Company issued certain rollover equity awards to the employees of Matterport, which included approximately 2.3 million shares of restricted stock units and approximately 1.8 million stock option awards. The total fair value of the rollover equity awards was $ 273 million, of which the portion attributable to services performed prior to the acquisition date was allocated to purchase consideration. The remaining fair value was allocated to future services and will be expensed over the remaining service periods as share-based compensation.
The total purchase consideration for the Matterport Acquisition was $ 1.9  billion, which consisted of the following (in millions):

Amount

Cash
$
902  

CoStar Group Shares ( 11.7 million shares)
881  

Fair value of rollover awards
144  

Total
$
1,927  

The following table summarizes the amounts recorded for acquired assets and assumed liabilities recorded at their fair value as of the closing date of the Matterport Acquisition (in millions):

Preliminary: February 28, 2025
Measurement Period Adjustments
Updated Preliminary: February 28, 2025

Cash and cash equivalents
$
55  

$
— 

$
55  

Restricted cash
97  

— 

97  

Accounts receivable
13  

— 

13  

Available for sale investments
204  

— 

204  

Deferred tax assets, net of valuation allowance
25  

43  

68  

Goodwill
1,136  

( 30 )

1,106  

Intangible assets
527  

— 

527  

Deferred revenue
( 32 )

— 

( 32 )

Litigation accrual
( 95 )

( 4 )

( 99 )

Other assets and (liabilities), net
( 3 )

( 9 )

( 12 )

Fair value of identifiable net assets acquired
$
1,927  

$
—  

$
1,927  

Generally, the net assets of Matterport were recorded at their estimated fair values. In valuing the acquired assets and assumed liabilities, fair value estimates were based primarily on future expected cash flows, market rate assumptions for contractual obligations, and appropriate discount rates. The key assumptions used in the valuation include discount rates, royalty rates, projected revenue growth rates, customer attrition rates, and profit margins.
F-27

COSTAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The purchase price allocation is preliminary and subject to change during the measurement period as additional information is obtained about the facts and circumstances that existed at closing. Any material adjustments to provisional amounts identified during the measurement period will be recognized and disclosed in the reporting period in which the adjustment amounts are determined. During the year ended December 31, 2025, the Company reassessed its estimates and inputs as new information about facts and circumstances that existed as of the acquisition date became known. As a result, the Company recorded a $ 30 million reduction in goodwill as a result of measurement period adjustments. The reduction to goodwill consists primarily of adjustments relating to deferred tax assets for net operating losses. The primary areas that remain subject to additional information are the Company's assessment contingencies, including those discussed in Note 11 and fair value assessment of certain acquired intangibles.
The following table summarizes the fair values (in millions) of the identifiable intangible assets acquired in the Matterport Acquisition, their related estimated useful lives (in years), and their respective amortization methods. The intangible assets were included in the Company's North America operating segment prior to the reallocation described in Note 2:

Estimated Fair Value
Estimated Useful Life
Amortization Method

Developed technology
$
295  

9
Straight-line

Customer relationships
140  

5
Accelerated

Trade names
92  

15
Straight-line

Total intangible assets
$
527  

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Specifically, the goodwill recorded as part of the Matterport Acquisition includes but is not limited to: (i) the expected synergies and other benefits that the Company believes will result from combining Matterport's operations with the Company's operations and (ii) any intangible assets that do not qualify for separate recognition, such as the assembled workforce. The $ 1.1 billion of goodwill recorded as part of the Matterport Acquisition was associated with the Company's North America operating segment prior to the reallocation described in Note 2, of which none is expected to be deductible for income tax purposes. Transaction costs associated with the Matterport Acquisition were $ 18 million during the year ended December 31, 2025 and consist primarily of legal, accounting, and other professional service costs. These costs are included within general and administrative expenses on the consolidated statements of operations.
Visual Lease
In November 2024 CoStar acquired Visual Lease for total consideration of $ 277 million, in accordance with the terms under the Visual Lease Merger Agreement. Visual Lease is the operator of a SaaS platform for integrated lease management and lease accounting.
The following table summarizes the amounts recorded for acquired assets and assumed liabilities recorded at their fair value as of the closing date of the acquisition (in millions):

Final: November 1, 2024

Cash and cash equivalents
$
5  

Accounts receivable
4  

Deferred tax assets
6  

Goodwill
150  

Intangible assets
136  

Deferred revenue
( 22 )

Other assets and (liabilities), net
( 2 )

Fair value of identifiable net assets acquired
$
277  

The net assets of Visual Lease were recorded at their estimated fair values. In valuing the acquired assets and assumed liabilities, fair value estimates were based primarily on future expected cash flows, market rate assumptions for contractual
F-28

COSTAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

obligations, and appropriate discount rates. The key assumptions used in the valuation include discount rates, projected revenue growth rates, customer attrition rates, and profit margins.
The following table summarizes the fair values (in millions) of the identifiable intangible assets acquired in the Visual Lease Acquisition, their related estimated useful lives (in years), and their respective amortization methods. The intangible assets were included in the Company's North America operating segment prior to the reallocation described in Note 2:

Estimated Fair Value
Estimated Useful Life
Amortization Method

Customer base
$
119  

15
Accelerated

Trade name
1  

5
Straight-line

Software technology
2  

3
 Straight-line

Database technology
14  

7.5
 Straight-line

Total intangible assets
$
136  

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Specifically, the goodwill recorded as part of the Visual Lease Acquisition includes but is not limited to: (i) the expected synergies and other benefits that the Company believes will result from combining its operations with our CoStar Real Estate Manager operations and (ii) any intangible assets that do not qualify for separate recognition, such as the assembled workforce. The $ 150 million of goodwill recorded as part of the acquisition is associated with the Company's North America operating segment prior to the reallocation described in Note 2, of which $ 133 million is expected to be deductible for income tax purposes. Transaction costs associated with the Visual Lease Acquisition were $ 7 million.
OnTheMarket
On December 12, 2023, CoStar UK acquired OnTheMarket, the operator of onthemarket.com, a U.K. residential property portal. At the time of closing, CoStar UK acquired all of the then issued ordinary share capital of OnTheMarket for cash consideration of 110 pence per share or £ 94  million ($ 118  million). OnTheMarket had certain share option contracts that had not been exercised at the time of closing for which CoStar UK has established a liability for £ 2  million ($ 3  million). This resulted in total consideration of £ 96 million ($ 120 million). Certain shares outstanding at the time of the closing resulted from contracts held by employees of OnTheMarket or its subsidiaries that required OnTheMarket to withhold income and employment taxes of £ 4  million ($ 5  million) which represented consideration payable at December 31, 2023 and were remitted in January 2024.
The following table summarizes the amounts recorded for acquired assets and assumed liabilities recorded at their fair value as of the closing date of the acquisition (in millions):

Final: December 12, 2023

Cash and cash equivalents
$
18  

Accounts receivable
2  

Goodwill
62  

Intangible assets
55  

Accrued expenses
( 12 )

Accrued wages and commissions
( 2 )

Deferred income taxes, net
( 3 )

Other assets and liabilities
—  

Fair value of identifiable net assets acquired
$
120  

The net assets of OnTheMarket were recorded at their estimated fair values. In valuing the acquired assets and assumed liabilities, fair value estimates were based primarily on future expected cash flows, market rate assumptions for contractual obligations, and appropriate discount rates. The estimated fair value of the customer base assets incorporated significant
F-29

COSTAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

assumptions that had a material impact on the estimated fair value, such as discount rates, projected revenue growth rates, customer attrition rates, and profit margins.
The following table summarizes the fair values (in millions) of the identifiable intangible assets acquired in the OnTheMarket Acquisition, their related estimated useful lives (in years) and their respective amortization methods. The intangible assets were included in the Company's International operating segment prior to the reallocation described in Note 2:

Estimated Fair Value
Estimated Useful Life
Amortization Method

Customer base
$
42  

8
Accelerated

Trade name
10  

15
 Straight-line

Technology
3  

2
 Straight-line

Total intangible assets
$
55  

Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Specifically, the goodwill recorded as part of the OnTheMarket Acquisition includes, but is not limited to: (i) the expected synergies and other benefits that the Company believes will result from combining its operations with international operations and (ii) any intangible assets that do not qualify for separate recognition, such as the assembled workforce. The $ 62 million of goodwill recorded as part of the acquisition is associated with the Company's International operating segment prior to the reallocation described in Note 2, of which none is expected to be deductible for income tax purposes. Transaction costs associated with the OnTheMarket Acquisition were $ 11 million.
Pro Forma Financial Information (unaudited)
The unaudited pro forma financial information presented below reflects the consolidated results of operations of the Company assuming both the Domain Acquisition and Matterport Acquisition had taken place on January 1, 2024, Visual Lease Acquisition had taken place on January 1, 2023 and OnTheMarket Acquisition had taken place on January 1, 2022. The material pro forma adjustments primarily consist of incremental amortization expense based on the preliminary fair value of the intangible assets acquired, increased compensation expense relating to the issuance of certain equity plans in connection with the acquisitions, accounting policy alignment adjustments, and the income tax impact of the aforementioned pro forma adjustments. The unaudited pro forma financial information, as presented below, is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisitions had not taken place on the dates listed above.
The unaudited pro forma financial information, in the aggregate, was as follows (in millions):

Year Ended December 31,

2025
2024
2023

Revenue
$
3,448  

$
3,205  

$
2,530  

Net income (loss)
$
1  

$
( 187 )

$
355  

The impact of the Domain Acquisition on the Company's revenue and net income in the consolidated statements of operations from August 27, 2025 through December 31, 2025 was an increase of $ 105 million and a decrease of $ 28 million, respectively. The impact of the Matterport Acquisition on the Company's revenue and net income in the consolidated statements of operations from February 28, 2025 through December 31, 2025 was an increase of $ 147 million and a decrease of $ 146 million respectively. The impact of the Visual Lease Acquisition on the Company's revenue and net income in the consolidated statements of operations from November 1, 2024 through December 31, 2024 was not material. The impact of the OnTheMarket Acquisition on the Company's revenue and net income in the consolidated statements of operations from December 12, 2023 through December 31, 2023 was not material.

5.     INVESTMENTS AND FAIR VALUE MEASUREMENTS
The Company categorizes assets and liabilities recorded or disclosed at fair value on the consolidated balance sheets based upon the level of judgment associated with inputs used to measure their fair value. The categories are as follows:
F-30

COSTAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Level 1 - Observable inputs such as quoted prices in active markets for identical assets or liabilities.
Level 2 - Inputs other than quoted prices in active markets that are either directly or indirectly observable.
Level 3 - Unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions.
The Company's financial assets comprised Level 1 cash equivalents with original maturities of three months or less in the amount of $ 1.4 billion and $ 4.5 billion as of December 31, 2025 and 2024, respectively. The Company had no Level 2 or Level 3 financial assets measured at fair value as of December 31, 2025 and 2024.
Available-for-sale Debt Securities
In connection with the Matterport Acquisition, the Company acquired $ 204  million of available-for-sale debt securities, inclusive of $ 2  million of accrued interest. These securities were sold for net proceeds of $ 203  million resulting in a negligible realized loss in the first quarter of 2025.
Other Financial Instruments
The Company holds other financial instruments, including cash deposits, accounts receivable, accounts payable, accrued expenses, and Senior Notes. The carrying value for such financial instruments, other than the Senior Notes, each approximated their fair values as of December 31, 2025 and 2024. The estimated fair value of the Company's outstanding Senior Notes using quoted prices from the over-the-counter markets, considered Level 2 inputs, was $ 900 million as of both December 31, 2025 and 2024.

6.     LEASES
The Company has operating and finance leases for its office facilities, data centers, and certain vehicles. The Company's leases have remaining terms up to nine years . The leases contain various renewal and termination options. The period that is subject to an option to extend the lease is included in the lease term if it is reasonably certain that the option will be exercised. The period that is subject to an option to terminate the lease is included if it is reasonably certain that the option will not be exercised.
Lease costs related to the Company's operating and finance leases included in the consolidated statements of operations were as follows (in millions):

 
Year Ended December 31,

 
2025
2024
2023

Operating lease costs:
 
 
 

Cost of revenue
$
10  

$
10  

$
10  

Selling and marketing (excluding customer base amortization)
16  

15  

16  

Software development
7  

9  

6  

General and administrative
6  

7  

4  

Total operating lease costs
39  

41  

36  

Finance lease costs:

Amortization of ROU assets
3  

5  

1  

Interest on lease liabilities
1  

1  

—  

Total finance lease costs
4  

6  

1  

Total lease costs
$
43  

$
47  

$
37  

Finance lease costs primarily relate to vehicles used by the Company's research teams, and the amortization of the ROU assets are recorded to cost of revenue in the consolidated statements of operations. The impact of lease costs related to short-term leases was not material for the years ended December 31, 2025, 2024, and 2023.
F-31

COSTAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Supplemental balance sheet information related to operating leases was as follows (in millions):

Year Ended December 31,

Balance
Balance Sheet Location
2025
2024

Operating lease liabilities
$
161  

$
139  

Less: imputed interest
21  

18  

Present value of lease liabilities

140  

121  

Less: current portion of lease liabilities
Lease liabilities
23  

27  

Long-term lease liabilities
Lease and other long-term liabilities
$
117  

$
94  

Weighted-average remaining lease term in years
5.3
5.6

Weighted-average discount rate

4.7
%
4.4
%

ROU Assets
Lease right-of-use assets
$
123  

$
103  

Finance lease liabilities
$
12  

$
17  

Less: imputed interest
1  

2  

Present value of lease liabilities

11  

15  

Less: current portion of lease liabilities
Lease liabilities
5  

5  

Long-term lease liabilities
Lease and other long-term liabilities
$
6  

$
10  

Weighted-average remaining lease term in years
2.0
3.0

Weighted-average discount rate
6.3
%
6.4
%

ROU Assets
Property and equipment, net
$
13  

$
16  

Supplemental cash flow information related to leases was as follows (in millions):

Year Ended December 31,

2025
2024
2023

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows used in operating leases
$
36  

$
47  

$
45  

Operating cash flows used in finance leases
$
1  

$
1  

$
—  

Financing cash flows used in finance leases
$
5  

$
5  

$
1  

ROU assets obtained in exchange for new lease obligations:

Operating leases
$
47  

$
57  

$
29  

Finance leases
$
1  

$
7  

$
14  

F-32

COSTAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7.     PROPERTY AND EQUIPMENT
Property and equipment consists of the following (in millions):

 
December 31,

 
2025
2024

Leasehold improvements
$
91  

$
81  

Furniture, office equipment, and vehicles
70  

73  

Computer hardware and software
65  

54  

Aircraft
63  

67  

Land
70  

70  

Construction in progress
739  

432  

Buildings
371  

373  

Property and equipment, gross
1,469  

1,150  

Accumulated depreciation and amortization
( 146 )

( 135 )

Property and equipment, net
$
1,323  

$
1,015  

Depreciation expense for property and equipment was approximately $ 64 million, $ 57 million and $ 34 million, for the years ended December 31, 2025, 2024, and 2023, respectively. For the years ended December 31, 2025 and 2024, the Company removed $ 55 million and $ 27 million, respectively, of property and equipment that was fully depreciated from property and equipment, gross and accumulated depreciation and amortization, which had no impact on the Company's financial results.
Included in the table above are $ 263 million and $ 266 million of buildings and improvements and $ 27 million and $ 13 million of accumulated depreciation and amortization related to assets which are partially rented out as operating leases where the Company is the lessor as of December 31, 2025 and 2024, respectively. Materially all of our property and equipment is located in North America.

8.     GOODWILL
During the fourth quarter of 2025, the Company realigned our business segments. The table below (in millions) presents the changes in the carrying amount of goodwill by operating segment prior to the realignment and the recast of goodwill under the new segments. See Note 2 for additional information:

 
North American
International
Total

Goodwill, December 31, 2023
$
2,149  

$
237  

$
2,386  

Acquisitions, including measurement period adjustments (1)
148  

( 1 )

147  

Effect of foreign currency translation
—  

( 5 )

( 5 )

Goodwill, December 31, 2024
2,297  

231  

2,528  

Acquisitions, including measurement period adjustments (2)
1,108  

1,244  

2,352  

Effect of foreign currency translation
—  

64  

64  

Goodwill, December 31, 2025 prior to reallocation
$
3,405  

$
1,539  

$
4,944  

Commercial Real Estate

Residential Real Estate
Total

Goodwill, December 31, 2025 after reallocation
$
1,955  

$
2,989  

$
4,944  

(1) North America goodwill generated during the year ended December 31, 2024 from the Visual Lease Acquisition was $ 150 million.
(2) North America goodwill generated during the year ended December 31, 2025 from the Matterport Acquisition was $ 1.1 billion. International goodwill generated during the year ended December 31, 2025 from the Domain Acquisition was $ 1.2 billion.
F-33

COSTAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company expects $ 133  million of goodwill generated from acquisitions completed in 2024 to be deductible for tax purposes. Goodwill generated from acquisitions completed in 2025 and 2023 were no t deductible for tax purposes.
No impairments of the Company's goodwill were recognized during each of the years ended December 31, 2025, 2024, and 2023.

9.     INTANGIBLE ASSETS
Intangible assets consist of the following (in millions, except amortization period data):

 
December 31,
Weighted- Average Amortization Period (in years)

 
2025
2024

Acquired technology and data
$
471  

$
48  

8

Accumulated amortization
( 55 )

( 25 )

 

Acquired technology and data, net
416  

23  

 

Acquired customer base
1,330  

557  

15

Accumulated amortization
( 403 )

( 304 )

 

Acquired customer base, net
927  

253  

 

Acquired trade names and other intangible assets
524  

241  

14

Accumulated amortization
( 146 )

( 142 )

 

Acquired trade names and other intangible assets, net
378  

99  

 

Acquired above-market leases
42  

41  

9

Accumulated amortization
( 14 )

( 9 )

Acquired above-market leases, net
28  

32  

Acquired in-place leases
31  

32  

9

Accumulated amortization
( 9 )

( 6 )

Acquired in-place leases, net
22  

26  

Intangible assets, net
$
1,771  

$
433  

 

Amortization expense for intangible assets was approximately $ 199 million, $ 90 million, and $ 74  million for the years ended December 31, 2025, 2024, and 2023, respectively. For the years ended December 31, 2025, 2024, and 2023, the Company removed $ 62 million, $ 92 million, and $ 7 million, respectively, of intangible assets that were fully amortized from the acquired intangible assets and accumulated amortization, which had no impact on the Company's financial results.
In the aggregate, the Company expects the future amortization expense for intangible assets existing as of December 31, 2025 to be approximately $ 252 million, $ 219 million, $ 193 million, $ 179 million, and $ 147 million for the years ending December 31, 2026, 2027, 2028, 2029, and 2030, respectively.
Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. No impairments of the Company's intangible assets were recognized during each of the years ended December 31, 2025, 2024, and 2023.
F-34

COSTAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10.     LONG-TERM DEBT
The table below presents the components of outstanding debt (in millions):

December 31,

2025

2024

2.800 % Senior Notes due July 15, 2030
$
1,000  

$
1,000  

2024 Credit Agreement, due May 24, 2029
—  

—  

Total face amount of long-term debt
1,000  

1,000  

Senior Notes unamortized discount and issuance costs
( 7 )

( 8 )

Long-term debt, net
$
993  

$
992  

Senior Notes
On July 1, 2020, the Company issued $ 1.0  billion aggregate principal amount of 2.800 % Senior Notes due July 15, 2030. The Senior Notes were sold to a group of financial institutions as initial purchasers who subsequently resold the Senior Notes to non-U.S. persons pursuant to Regulation S under the Securities Act, and to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act at a purchase price equal to 99.921 % of their principal amount. Interest on the Senior Notes is payable semi-annually in arrears on January 15 and July 15. The Senior Notes may be redeemed in whole or in part by the Company (a) at any time prior to April 15, 2030 at a redemption price equal to 100 % of the principal amount of the Senior Notes, plus the Applicable Premium (as calculated in accordance with the indenture governing the Senior Notes), and any accrued and unpaid interest, if any, on the principal amount of Senior Notes being redeemed to, but excluding, the redemption date, and (b) on or after April 15, 2030 at a redemption price equal to 100 % of the principal amount of the Senior Notes, plus any accrued and unpaid interest, if any, on the principal amount of Senior Notes being redeemed to, but excluding, the redemption date. The Company’s obligations under the Senior Notes are guaranteed on a senior, unsecured basis by the Company’s domestic wholly owned subsidiaries and the indenture governing the Senior Notes contains covenants, events of default, and other customary provisions with which the Company was in compliance as of December 31, 2025.
Revolving Credit Facility
On May 24, 2024, the Company entered into the 2024 Credit Agreement, which provides for a $ 1.1 billion revolving credit facility with a term of five years (maturing May 24, 2029), and a letter of credit sublimit of $ 20  million from a syndicate of financial institutions and issuing banks. The 2024 Credit Agreement replaces the Company's 2020 Credit Agreement.
Borrowings bear interest at a floating rate, which can be, at the Company’s option, either (a) an alternate base rate plus an applicable rate ranging from 0.125 % to 0.750 % or (b) a Term SOFR, SONIA rate, or EURIBOR for the specified interest period plus an applicable rate ranging from 1.125 % to 1.750 %, in each case depending on the Company’s Debt Rating (as defined in the 2024 Credit Agreement).
The 2024 Credit Agreement contains customary affirmative covenants for transactions of this type, including, among others, the provision of financial and other information to the administrative agent, notice to the administrative agent upon the occurrence of certain material events, preservation of existence, maintenance of properties, and compliance with laws, including environmental laws, subject to certain exceptions. The 2024 Credit Agreement contains customary negative covenants, including, among others, restrictions on the ability of the Company and its subsidiaries to merge and consolidate with other companies, restrictions on the ability of certain subsidiaries to incur indebtedness, and restrictions on the ability of the Company and certain subsidiaries to grant liens or security interests on assets, subject to certain exceptions. The 2024 Credit Agreement contains a financial maintenance covenant that requires the Company to maintain a Total Leverage Ratio (as defined in the 2024 Credit Agreement) of less than or equal to 4.50 to 1.00, tested at the end of each fiscal quarter. The 2024 Credit Agreement also provides for a number of customary events of default, including, among others: payment defaults to the Lenders, voluntary and involuntary bankruptcy proceedings, covenant defaults, material inaccuracies of representations and warranties, cross-acceleration to other material indebtedness, certain change of control events, material money judgments, and other customary events of default. The occurrence of an event of default could result in the acceleration of obligations and the termination of lending commitments under the 2024 Credit Agreement. The Company was in compliance with the covenants in the 2024 Credit Agreement as of December 31, 2025. As of December 31, 2025, the Company had no amounts drawn under this facility.
F-35

COSTAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company had $ 3 million and $ 4 million of deferred debt issuance costs related to the revolving credit facility as of December 31, 2025 and 2024, respectively. These amounts are included in deposits and other assets on the Company's consolidated balance sheets.
The Company recognized interest expense as follows (in millions):

Year Ended December 31,

2025
2024
2023

Interest on outstanding borrowings
$
28  

$
28  

$
28  

Amortization of Senior Notes discount and issuance costs
2  

3  

2  

Interest capitalized for construction in progress
( 14 )

( 6 )

( 2 )

Commitment fees and other
3  

2  

3  

Total interest expense
$
19  

$
27  

$
31  

F-36

COSTAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11.     INCOME TAXES
The components of the provision for income taxes attributable to operations consist of the following (in millions):

 
Year Ended December 31,

 
2025
2024
2023

Current:
 

 
 

Federal
$
( 14 )

$
91  

$
126  

State
1  

28  

37  

Foreign
1  

2  

1  

Total current
( 12 )

121  

164  

Deferred:
 
 

Federal
44  

( 42 )

( 32 )

State
5  

( 8 )

( 3 )

Foreign
( 14 )

—  

( 2 )

Total deferred
35  

( 50 )

( 37 )

Total provision for income taxes
$
23  

$
71  

$
127  

The components of deferred tax assets and liabilities consist of the following (in millions):

 
December 31,

 
2025
2024

Deferred tax assets:
 
 

Allowance for credit losses
$
7  

$
5  

Accrued compensation
15  

13  

Stock compensation
28  

15  

Net operating losses
169  

50  

Accrued reserve and other
43  

20  

Lease liabilities
38  

26  

Capitalized research and development costs
109  

140  

Research and development credits
36  

5  

Total deferred tax assets, prior to valuation allowance
445  

274  

Valuation allowance
( 49 )

( 33 )

Total deferred tax assets, net of valuation allowance
396  

241  

Deferred tax liabilities:
 
 

Deferred commission costs, net
( 46 )

( 43 )

Lease right-of-use assets
( 19 )

( 16 )

Prepaid expenses
( 5 )

( 5 )

Property and equipment, net
( 3 )

( 10 )

Intangible assets, net
( 514 )

( 144 )

Total deferred tax liabilities
( 587 )

( 218 )

Net deferred tax assets (liabilities)
$
( 191 )

$
23  

For both the years ended December 31, 2025 and 2024, the Company has not recognized deferred tax liabilities for temporary differences related to investments in foreign subsidiaries that were deemed permanently reinvested. Determination of the amount of unrecognized deferred income tax liabilities on these earnings is not practicable because such liability, if any, depends on certain circumstances existing if and when remittance occurs. A deferred tax liability will be recognized if and when the Company no longer plans to permanently reinvest these undistributed earnings.
F-37

COSTAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of both December 31, 2025 and 2024, a valuation allowance has been established for certain deferred tax assets due to the uncertainty of realization. The valuation allowance as of both December 31, 2025 and 2024 includes an allowance for acquired net operating losses and foreign deferred tax assets.
The Company established the valuation allowance because it is more likely than not that a portion of the deferred tax asset for certain items will not be realized based on the weight of available evidence. A valuation allowance was established for the foreign deferred tax assets due to the cumulative loss in recent years in those jurisdictions. The Company has not had sufficient taxable income historically to utilize the foreign deferred tax assets, and it is uncertain whether the Company will generate sufficient taxable income in the future to utilize the deferred tax assets. The Company established a valuation allowance for capital losses held by Domain. Capital losses can only offset capital gains in Australia. The Company has established a valuation allowance for certain acquired net operating losses where Section 382 limitations will impact the ability of the Company to utilize the net operating losses before they expire.
The Company’s change in valuation allowance was an increase of approximately $ 16 million for the year ended December 31, 2025 and an increase of approximately $ 24 million for the year ended December 31, 2024. The increase for the year ended December 31, 2025 was due to capital losses acquired in the Domain Acquisition and increases in foreign net operating losses. The increase for the year ended December 31, 2024 was primarily due to increases in foreign net operating loss deferred tax assets for which a full valuation allowance has been established.
The Company had U.S. income before income taxes of approximately $ 122 million, $ 294 million, and $ 527 million for the years ended December 31, 2025, 2024, and 2023, respectively. The Company had foreign losses before income taxes of approximately $ 92 million, $ 84 million, and $ 25 million for the years ended December 31, 2025, 2024, and 2023, respectively.
The table below provides the updated requirements of ASU 2023-09 for 2025. See Note 2 for additional details on the adoption of ASU 2023-09.
The effective income tax rate for the year ended December 31, 2025 differs from the statutory federal income tax rate as follows (in millions, except percentages):

 
Year Ended December 31, 2025

Amount

Percentage

Expected federal income tax provision at statutory rate
$
6  

21
%

State income taxes, net of federal benefit (1)
6  

20  

Foreign Tax Effects

United Kingdom

Statutory tax rate difference between United Kingdom and United States
( 2 )

( 7 )

Changes in valuation allowances
13  

43  

Research credits
( 1 )

( 3 )

Australia

Statutory tax rate difference between Australia and United States
( 4 )

( 13 )

Foreign exchange loss
3  

10  

Other
( 2 )

( 7 )

Tax Credit

Research credits
( 21 )

( 70 )

Nontaxable or Nondeductible Items

Nondeductible Compensation
18  

60  

Transaction Costs
9  

29  

Stock Based Compensation
( 3 )

( 10 )

Other
( 1 )

( 4 )

Changes in Unrecognized Tax Benefits
2  

7  

Income tax expense, net
$
23  

77
%

(1) State taxes in CA, DC, IL, NJ, NY, NYC, TX and VA made up the majority (greater than 50 percent) of the tax effect in this category.
F-38

COSTAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As previously disclosed for the years ended December 31, 2024 and 2023, prior to the adoption of ASU 2023-09, the Company’s provision for income taxes resulted in effective tax rates that varied from the statutory federal income tax rate as follows (in millions):

Year Ended December 31,

2024
2023

Expected federal income tax provision at statutory rate
$
44  

$
105  

State income taxes, net of federal benefit
18  

27  

Increase (decrease) in valuation allowance
22  

2  

Foreign tax rate differential
( 3 )

( 1 )

Research credits
( 29 )

( 20 )

Excess tax benefit
( 2 )

( 6 )

Tax reserves
7  

4  

Nondeductible compensation
9  

9  

Other adjustments
5  

7  

Income tax expense, net
$
71  

$
127  

The disaggregation of the income taxes paid (net of refunds) consist of the following (in millions):

Year Ended December 31,

2025

Federal
$
40  

State
15  

Foreign
18  

Total income taxes paid
$
73  

Income taxes paid (net of refunds) exceeded 5 percent of total income taxes paid (net of refunds) in the following jurisdictions (in millions):

Year Ended December 31,

2025

Federal

US
$
40  

State

Other States
$
15  

Foreign

Australia
$
15  

The Company has net operating loss carryforwards for international income tax purposes of approximately $ 173 million that do not expire. The Company has federal net operating loss carryforwards of approximately $ 503 million that begin to expire in 2028 and federal income tax credit carryforwards with a tax value of approximately $ 19 million primarily relating to federal research and development credits that begin to expire in 2032, state net operating loss carryforwards with a tax value of approximately $ 21 million that begin to expire in 2032 and state income tax credit carryforwards with a tax value of approximately $ 19 million primarily relating to state research and development credits and the D.C. qualified high technology company tax credit that began to expire in 2026. The Company realized a cash benefit relating to the use of its tax loss carryforwards of approximately $ 1 million, $ 3 million, and $ 6 million in December 31, 2025, 2024, and 2023, respectively.
F-39

COSTAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the activity related to the Company’s unrecognized tax benefits (in millions):

Unrecognized tax benefit as of December 31, 2022
$
16  

Increase for current year tax positions
4  

Increase for prior year tax positions
2  

Expiration of the statute of limitation for assessment of taxes
( 2 )

Unrecognized tax benefit as of December 31, 2023
20  

Increase for current year tax positions
6  

Increase for prior year tax positions
5  

Expiration of the statute of limitation for assessment of taxes
( 4 )

Unrecognized tax benefit as of December 31, 2024
27  

Increase for current year tax positions
5  

Increase for prior year tax positions
2  

Expiration of the statute of limitation for assessment of taxes
( 4 )

Unrecognized tax benefit as of December 31, 2025
$
30  

Approximately $ 30 million and $ 27 million of the unrecognized tax benefits as of December 31, 2025 and 2024, respectively, would favorably affect the annual effective tax rate if recognized in future periods. The increase for current year tax positions of $ 5 million and increase for prior year tax positions of $ 2 million for the year ended December 31, 2025 were primarily attributable to research credits. The decrease for expiration of the statute of limitation of $ 4 million for the year ended December 31, 2025 was attributable to research credits. The Company recognized $ 1 million, $ 1 million, and $ 1 million for interest and penalties in its consolidated statements of operations for the years ended December 31, 2025, 2024, and 2023, respectively. The Company had liabilities of $ 3 million, $ 2 million, and $ 1 million for interest and penalties in its consolidated balance sheets as of December 31, 2025, 2024, and 2023, respectively. The Company does not anticipate the amount of the unrecognized tax benefits will change significantly over the next 12 months.
The Company is subject to taxation in the U.S. federal jurisdiction and various states and foreign jurisdictions. The Company’s federal income tax returns for tax years 2022 through 2024 remain open to examination. Most of the Company’s state income tax returns for tax years 2022 through 2024 remain open to examination. For states that have a four-year statute of limitations, the state income tax returns for tax years 2021 through 2024 remain open to examination. The Company’s U.K. income tax return for tax year 2024 remains open to examination. The Company believes that an adequate provision has been made for any adjustments that may result from tax examinations.
F-40

COSTAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12.     COMMITMENTS AND CONTINGENCIES
The following summarizes the Company's significant contractual obligations, including related payments due by period, as of December 31, 2025 (in millions):

Year Ending December 31,
Operating lease obligations
Finance lease obligations

Long-term debt principal payments
Long-term debt interest payments

2026
$
29  

$
6  

$
—  

$
28  

2027
33  

5  

—  

28  

2028
33  

1  

—  

28  

2029
24  

—  

—  

28  

2030
19  

—  

1,000  

28  

Thereafter
23  

—  

—  

—  

Total
$
161  

$
12  

$
1,000  

$
140  

The Company leases office facilities under various non-cancelable operating leases, as well as data centers and vehicles under finance lease arrangements. The leases contain various renewal options.
See Note 6 for further discussion of the Company's lease commitments.
Litigation
Currently, and from time to time, the Company is involved in litigation incidental to the conduct of its business. The Company records a provision for a liability when it is both probable that a liability has been incurred and the amount can be reasonably estimated. While it is reasonably possible that an unfavorable outcome may occur as a result of one or more of the Company’s current litigation matters, at this time, management has concluded that the resolutions of these matters are not expected to have a material effect on the Company's consolidated financial position, future results of operations, or liquidity. Legal defense costs are expensed as incurred, except as set forth below.
Matterport-Related Matters
On July 23, 2021, plaintiff William J. Brown, a former employee and a stockholder of Matterport, sued Matterport, Gores Holdings VI, Inc. (now known as Matterport, Inc.), Maker Merger Sub Inc., Maker Merger Sub II, LLC, and Matterport directors R.J. Pittman, David Gausebeck, Matt Bell, Peter Hebert, Jason Krikorian, Carlos Kokron and Michael Gustafson (collectively, the “Brown Defendants”) in the Court of Chancery of the State of Delaware (the “Chancery Court ”). Brown claimed that the Brown Defendants imposed invalid transfer restrictions on his shares of Matterport stock in connection with the Gores Merger transactions (the "Gores Transaction" and the Agreement and the Plan of Merger thereunder, the "Gores Merger Agreement") between Matterport, Inc. and Legacy Matterport (the “Transfer Restrictions”), and that Matterport’s Board of Directors violated their fiduciary duties in connection with a purportedly misleading letter of transmittal. An expedited trial regarding the facial validity of the Transfer Restrictions took place in December 2021. On January 11, 2022, the court issued a ruling that the Transfer Restrictions did not apply to Brown. Separate proceedings regarding Brown's remaining claims, including the amount of any damages suffered by Brown were the subject of the second phase of the case. Legacy Matterport's position was that Brown did not suffer any damages as he would have sold his shares as soon as possible after the Gores Transaction closed had Legacy Matterport not prevented him from trading based on its application of the Transfer Restrictions. Trial was held in November 2023, and a post-trial hearing was held on February 22, 2024. On May 28, 2024, the court ruled that Matterport had a reasonable basis to deny the plaintiff’s November 2021 demand that the transfer restrictions be removed from his shares and that the plaintiff lacked standing as to whether the transfer restrictions complied with Delaware law. However, the court awarded Brown $ 79  million plus pre- and post-judgment interest as damages for losses caused by Matterport’s initial refusal to issue freely transferable shares (the “Brown Judgment”). On July 29, 2024, a notice of appeal to the court's ruling to the Delaware Supreme Court was filed. Brown filed a notice of cross-appeal on August 12, 2024. Oral argument on the appeal was heard on February 26, 2025. On April 22, 2025, the Delaware Supreme Court substantially affirmed the Chancery Court's $ 79  million damages award but reversed and remanded for additional proceedings on the manner in which post-judgment interest was calculated.
The Company has estimated a litigation accrual of $ 99 million as of December 31, 2025, considering the substantially-affirmed damages award and the Company's estimate of the expected interest award using the Chancery Court's previously
F-41

COSTAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

determined interest methodology. This estimated litigation accrual is reflected in the purchase price allocation for the Matterport Acquisition and is subject to change based on the Chancery Court's revised ruling. The Company anticipates the revised ruling will occur by the first half of 2026. The Company estimated additional interest of up to approximately $ 17  million could be awarded if the Chancery Court followed the methodology Brown previously argued, and which was rejected. Subsequent to the Brown Judgment, on August 14, 2024, a litigation bond was posted, and Matterport transferred $ 95  million in cash as collateral into a designated insured interest-bearing account, which is classified as restricted cash on the Company’s consolidated balance sheet as of December 31, 2025.
Since the Brown judgment in May 2024, other former Legacy Matterport stockholders have filed complaints (the “Post-Brown Complaints”) in the Chancery Court alleging that they were prevented from trading their Matterport shares through invalid transfer restrictions. These complaints were filed as follows: on July 19, 2024 by Damien Leostic and William Schmitt; on August 16, 2024 by Greg Coombe; on September 19, 2024 by Build Legacy LLC, Build the Future Trust under agreement dated November 16, 2023, Penchant Capital LLC, Penchant Trust, and iRobot Corporation. On September 16, 2024, Kimberly Burdi-Dumas, a former Matterport employee, filed a putative class action complaint on behalf of all persons or entities who were stockholders of Legacy Matterport as of July 21, 2021, and who, pursuant to the Gores Transaction, were thereafter issued and held Matterport shares that were improperly restricted from being sold until January 18, 2022. On November 26, 2024, Schmitt amended his complaint to bring a class action on behalf of former members of Matterport who did not receive their shares immediately following the closing of Gores Transaction. On December 6, 2024, the Burdi-Dumas complaint was amended to include a second plaintiff, Janet Day, and additional claims. These cases have now been consolidated and coordinated.
The Company monitors developments in these legal matters that could affect the estimate the Company may have previously accrued. As of December 31, 2025, there were no amounts accrued that the Company believes would be material to its financial position, except as noted above. Further, the range of reasonably possible losses in excess of accrued liabilities currently cannot be reasonably estimated, except as noted above.

13.     SEGMENT REPORTING
Segment Information
The Company manages its business by product portfolios in two operating segments and two reportable segments, with the primary areas of measurement and decision-making being Commercial Real Estate and Residential Real Estate. Segment reporting is aligned with the internal reporting used by the CODM, which is the Company’s Chief Executive Officer. The CODM relies on a management reporting process that provides operating segment revenue, EBITDA, and Adjusted EBITDA for making decisions and assessing performance as the source of the Company’s reportable segments. EBITDA and Adjusted EBITDA are used by management internally to measure operating and management performance and to evaluate the business. The CODM does not review any information regarding total assets by operating segment.
Operating results by segment include items that are directly attributable to each segment and shared expenses such as IT expenses, corporate infrastructure costs including facilities, finance, and legal. Shared expenses are allocated based on revenue and headcount. There are no intersegment transactions. The impact of certain items that are not normal, recurring, cash operating expenses necessary to run the operating segment are removed to determine Adjusted EBITDA and include stock based compensation, acquisition and integration costs, restructuring and related costs, and settlements and impairments.
F-42

COSTAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

We have recast certain prior period disclosures to align with our reportable segments. See Note 2 for additional information.
Summarized EBITDA and Adjusted EBITDA information by operating segment consists of the following (in millions):

Commercial Real Estate
Residential Real Estate
Total

Year Ended December 31, 2025

Revenue (1)
$
1,787  

$
1,460  

$
3,247  

Less:

Personnel
861  

696  

1,557  

Marketing
77  

771  

848  

General and administrative (2)
369  

303  

672  

EBITDA
480  

( 310 )

170  

Stock-based compensation expense
151  

43  

194  

Acquisition and integration related costs
36  

27  

63  

Restructuring and related costs
4  

2  

6  

Settlements and impairments
1  

8  

9  

Adjusted EBITDA
$
672  

$
( 230 )

$
442  

Year Ended December 31, 2024

Revenue (1)
$
1,515  

$
1,221  

$
2,736  

Less:

Personnel
622  

577  

1,199  

Marketing
64  

795  

859  

General and administrative (2)
310  

245  

555  

EBITDA
519  

( 396 )

123  

Stock-based compensation expense
55  

34  

89  

Acquisition and integration related costs
29  

—  

29  

Restructuring and related costs
—  

1  

1  

Settlements and impairments
( 1 )

—  

( 1 )

Adjusted EBITDA
$
602  

$
( 361 )

$
241  

Year Ended December 31, 2023

Revenue (1)
$
1,443  

$
1,012  

$
2,455  

Less:

Personnel
608  

429  

1,037  

Marketing
92  

468  

560  

General and administrative (2)
266  

202  

468  

EBITDA
477  

( 87 )

390  

Stock-based compensation expense
56  

29  

85  

Acquisition and integration related costs
—  

13  

13  

Restructuring and related costs
3  

1  

4  

Adjusted EBITDA
$
536  

$
( 44 )

$
492  

___________________

(1) See Note 3 for revenue by segment.

(2) Excludes personnel costs.

F-43

COSTAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The reconciliation of Adjusted EBITDA and EBITDA to income before income tax expense consists of the following (in millions):

Year Ended December 31,

 
2025

2024
2023

Adjusted EBITDA
$
442  

$
241  

$
492  

Stock-based compensation expense
( 194 )

( 89 )

( 85 )

Acquisition and integration related costs
( 63 )

( 29 )

( 13 )

Restructuring and related costs
( 6 )

( 1 )

( 4 )

Settlements and impairments
( 9 )

1  

—  

EBITDA
170  

123  

390  

Amortization of acquired intangible assets in cost of revenue
( 74 )

( 30 )

( 32 )

Amortization of acquired intangible assets in operating expenses
( 118 )

( 44 )

( 42 )

Depreciation and other amortization
( 50 )

( 44 )

( 34 )

Interest income, net
110  

213  

214  

Other income (expense), net (1)
( 8 )

( 8 )

6  

Income before income taxes
$
30  

$
210  

$
502  

__________________________

(1) Includes 21 million and 29 million of depreciation and amortization expense, including above-market lease amortization, associated with lessor activities for the years ended December 31, 2025 and 2024, respectively.

14.     STOCKHOLDERS' EQUITY
Share Repurchase Program
Prior Stock Repurchase Program and Accelerated Share Repurchase Agreement
In February 2025, the Board of Directors approved the Prior Stock Repurchase Program which authorized the repurchase of up to $ 500  million of CoStar Group Shares. Prior to November 6, 2025, the Company purchased $ 138 million of CoStar Group Shares pursuant to a 10b5-1 Plan.

On November 6, 2025, the Company entered into an ASR agreement with a financial institution counterparty to repurchase $ 300 million of its outstanding common stock. The Company repurchased 4.5 million CoStar Group Shares during the term of the ASR Agreement based on the volume-weighted average price, net of discount, of $ 66.98 per share over the duration of the program, which was completed in November 2025. The share repurchases were recorded as a reduction to stockholders’ equity.
During the year ended December 31, 2025 , the Company repurchased a total of 7.1 million CoStar Group Shares for an aggregate cost of $ 500 million under the Prior Stock Repurchase Program and ASR Agreement . As a result, no balance remained available for repurchases under that program. The aggregate purchase price of CoStar Group Shares is recorded as Treasury Stock and presented as a reduction to stockholders' equity.
New Stock Repurchase Program
In December 2025, the Board of Directors approved a Stock Repurchase Program which authorizes, but does not obligate, the repurchase of up to $ 1.5  billion of CoStar Group Shares. Stock repurchases may be effected through open market repurchases in compliance with Rule 10b-18 under the Exchange Act or through a trading plan adopted in accordance with Rule 10b5-1 of the Exchange Act. Repurchases may be made from time to time at management's discretion, and the timing and amount of any such repurchases will be determined based on share price, market conditions, legal requirements, and other relevant factors. The program has no time limit and can be discontinued at any time at the Company’s discretion.
No shares were repurchased under the Stock Repurchase Program during the year ended December 31, 2025. As of December 31, 2025 , $ 1.5  billion remains available for repurchases under the Stock Repurchase Program.
Shares of common stock repurchased under the share repurchase program become treasury shares and are accounted for when the transaction is settled. Direct costs incurred to acquire the shares are included in the total cost of the shares.
F-44

COSTAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Preferred Stock
The Company has 2.0 million shares of preferred stock, $ 0.01 par value, authorized for issuance. The Board of Directors may issue the preferred stock from time to time as shares of one or more classes or series.
Common Stock
The Company has 1.2  billion shares of common stock authorized for issuance. Dividends may be declared and paid on the common stock, subject in all cases to the rights and preferences of the holders of preferred stock and authorization by the Board of Directors. In the event of liquidation or winding up of the Company and after the payment of all preferential amounts required to be paid to the holders of any series of preferred stock, any remaining funds shall be distributed among the holders of the issued and outstanding common stock.

15.     EARNINGS PER SHARE
The following table sets forth the calculation of basic and diluted earnings per share (in millions, except per share data):

 
Year Ended December 31,

 
2025
2024
2023

Numerator:
 

 
 

Net income
$
7  

$
139  

$
375  

Denominator:

Denominator for basic earnings per share — weighted-average outstanding shares
416.8  

406.3  

405.3  

Effect of dilutive securities:

Stock options, restricted stock awards and restricted stock units
3.9  

1.5  

1.6  

Denominator for diluted earnings per share — weighted-average outstanding shares
420.7  

407.8  

406.9  

Earnings per share — basic
$
0.02  

$
0.34  

$
0.92  

Earnings per share — diluted
$
0.02  

$
0.34  

$
0.92  

The following table summarizes the shares underlying the unvested performance-based restricted stock and anti-dilutive securities excluded from the basic and diluted earnings per share calculations (in millions):

 
Year Ended December 31,

 
2025
2024
2023

Performance-based restricted stock awards
0.1  

0.1  

0.2  

Anti-dilutive securities
1.7  

0.8  

0.7  

16.     EMPLOYEE BENEFIT PLANS

Stock Incentive Plans
In April 2016, the Company’s Board of Directors adopted the CoStar Group 2016 Stock Incentive Plan (as amended, the “2016 Plan”), subject to stockholder approval, which was obtained on June 9, 2016. On April 28, 2025, the Board of Directors approved the CoStar Group, Inc. 2025 Stock Incentive Plan (the “2025 Plan”), subject to stockholder approval, which was obtained on June 26, 2025. All shares of common stock that were authorized for issuance under the 2016 Plan that, as of April 28, 2025, remained available for issuance under the 2016 Plan (excluding shares subject to outstanding awards) were rolled into the 2025 Plan and, following stockholder approval of the 2025 Plan, no further grants will be made under the 2016 Plan.
The 2025 Plan provides for the grant of stock options, restricted stock, restricted stock units, and stock appreciation rights to officers, employees, and directors of the Company and its subsidiaries. Stock options granted under the 2025 Plan may be non-qualified or may qualify as incentive stock options. Except in limited circumstances related to a merger or other acquisition, the exercise price for an option may not be less than the fair market value of the Company’s common stock on the date of grant. The vesting period for each grant of options, restricted stock, restricted stock units, and stock appreciation rights
F-45

COSTAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

under the 2025 Plan is determined by the Board of Directors or a committee thereof and is generally three to four years , subject to minimum vesting periods of at least one year . In some cases, vesting of awards under the 2025 Plan may be based on performance conditions. The Company initially reserved approximately 13.2  million shares of common stock for issuance under the 2025 Plan, which included shares of common stock that were authorized and remained available for issuance under the 2016 Plan as of April 28, 2025. Any shares of common stock subject to (a) outstanding awards under the 2016 Plan as of April 28, 2025 or (b) outstanding awards under the 2025 Plan that cease for any reason to be subject to such awards (other than by reason of exercise or settlement of the awards to the extent they are exercised or settled in vested and nonforfeitable shares) will become authorized and unissued under the 2025 Plan. Unless terminated sooner, the 2025 Plan will terminate in June 2035, but will continue to govern unexercised and unexpired awards issued under the 2025 Plan prior to that date. Approximately 9.7 million shares were available for future grant under the 2025 Plan as of December 31, 2025.
In connection with the Matterport Acquisition, the Company assumed Matterport's 2021 Incentive Award Plan and Matterport's Amended and Restated 2011 Stock Incentive Plan, including outstanding restricted stock units and stock options originally granted by Matterport under the Assumed Matterport Plans to continuing employees. These assumed awards will vest in accordance with their original terms, generally over four years . The Company does not intend to issue further grants under these plans. Shares forfeited due to employee termination or expiration are returned to the share pool. As of December 31, 2025, approximately 2.1 million shares remained available under the Assumed Matterport Plans.

As of December 31, 2025, there was approximately $ 247 million of unrecognized compensation cost related to stock incentive plans, net of estimated forfeitures, which the Company expects to recognize over a weighted-average-period of 2.5 years. The income tax benefit realized from stock-based compensation was $ 5  million, $ 2  million and $ 7  million for the years ended December 31, 2025, 2024 and 2023, respectively. See Notes 2 for further discussion of stock-based compensation expense.
Stock Options
Option activity was as follows:

 
Number of Shares

Weighted-Average Exercise Price

Weighted-Average Remaining Contract Life (in years)

Aggregate Intrinsic Value (in millions)

Outstanding at December 31, 2022
2,178,200  

$
41.79  

5.60

$
80  

Granted
140,800  

$
76.78  

Exercised
( 419,340 )

$
17.77  

Outstanding at December 31, 2023
1,899,660  

$
46.69  

5.53

$
72  

Granted
152,900  

$
82.47  

Exercised
( 122,736 )

$
58.03  

Canceled or expired
( 25,234 )

$
72.66  

Outstanding at December 31, 2024
1,904,590  

$
51.48  

4.80

$
44  

Assumed in Matterport Acquisition
1,799,170  

$
9.54  

Granted
212,700  

$
78.33  

Exercised
( 686,735 )

$
9.76  

Canceled or expired
( 26,000 )

$
91.98  

Outstanding at December 31, 2025
3,203,725  

$
38.32  

3.96
$
102  

Exercisable at December 31, 2023
1,571,105  

$
44.32  

4.93

$
68  

Exercisable at December 31, 2024
1,615,687  

$
46.75  

4.15

$
44  

Exercisable at December 31, 2025
2,849,289  

$
33.22  

3.38

$
102  

The aggregate intrinsic value of outstanding options is calculated as the difference between (i) the closing price of the common stock at the end of the period and (ii) the exercise price of the underlying awards, multiplied by the number of outstanding options as of the end of the period that had an exercise price less than the closing price on that date. The aggregate
F-46

COSTAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

intrinsic value of options exercised, determined as of the exercise date, was approximately $ 48 million, and $ 4 million, and $ 24 million for the years ended December 31, 2025, 2024 and 2023, respectively.
The Company estimated the fair value of each option granted on the date of grant using the Black-Scholes option-pricing model, using the assumptions in the following table:

 
Year Ended December 31,

 
2025

2024
2023

Dividend yield
0
%
0
%
0
%

Expected volatility
35
%
35
%
35
%

Risk-free interest rate
4.29
%
4.28
%
3.96
%

Expected life (in years)
5
5
5

Weighted-average grant date fair value
$
30.05  

$
31.57  

$
28.87  

The expected dividend yield is determined based on the Company's past cash dividend history and anticipated future cash dividend payments. The Company has never declared nor paid any dividends on its common stock and does not anticipate paying any dividends on its common stock during the foreseeable future, but intends to retain any earnings for future growth of its business. Expected volatility is calculated based on historical volatility of the daily closing price of the Company's common stock over a period consistent with the expected life of the options granted. The risk-free interest rate is based on the U.S. Treasury rate with terms similar to the expected life of the options granted. The expected life for the options is determined based on multiple factors, including historical employee behavior patterns of exercising options and post-employment termination behavior as well as expected future employee option exercise patterns.
The following table summarizes information regarding options outstanding at December 31, 2025:

 
 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

$ 4.73 - $ 9.59
1,051,854  

3.18
$
9.16  

1,051,854  

$
9.16  

$ 9.60 - $ 27.35
406,581  

1.69
$
19.47  

406,581  

$
19.47  

$ 27.36 - $ 53.24
697,090  

2.62
$
36.97  

697,090  

$
36.97  

$ 53.25 - $ 77.56
549,600  

5.38
$
69.05  

509,799  

$
68.44  

$ 77.57 - $ 91.98
498,600  

7.76
$
83.24  

183,965  

$
89.35  

3,203,725  

3.96
$
38.32  

2,849,289  

$
33.22  

Restricted Stock Awards
The Company grants restricted common stock to certain executive officers, directors, and employees of the Company which vest over a specific service period. Executive officers also receive restricted common stock that vests based on the achievement of certain operating performance goals over a three-year performance period. The grant of awards with performance conditions supports the Company’s goal of aligning executive incentives with long-term stockholder value and ensuring that executive officers have a continuing stake in the long-term success of the Company.
The vesting of restricted common stock is subject to continuing employment requirements. Certain performance-based restricted common stock awards are also subject to a market condition such that the actual number of shares that vest at the end of the respective three-year period is determined based on the Company’s achievement of performance goals and an established Company specific TSR factor relative to the S&P 500 Index over the same three-year performance period. At the end of the three-year performance period, if the performance condition is achieved at or above the pre-established threshold, the number of shares earned is further adjusted by a TSR payout percentage, which ranges between 80 % and 120 %, based on the Company’s TSR performance relative to that of S&P 500 Index over the respective three-year period.
F-47

COSTAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company estimates the fair value of its performance-based restricted stock awards with market conditions on the date of grant using a Monte-Carlo simulation valuation model. This pricing model uses multiple simulations to evaluate the probability of achieving the market condition to calculate the fair value of the awards. Expense is only recorded for awards that are expected to vest, net of estimated forfeitures. The assumptions used to estimate the fair value of performance-based restricted stock awards with market conditions were as follows:

 
Year Ended December 31,

 
2025

2024
2023

Dividend yield
0
%
0
%
0
%

Expected volatility
31
%
34
%
37
%

Risk-free interest rate
4.23
%
4.47
%
4.31
%

Expected life (in years)
3
3
3

Weighted-average grant date fair value
$
85.29  

$
86.96  

$
81.58  

The expected dividend yield is determined based on the Company's past cash dividend history and anticipated future cash dividend payments. The Company has never declared nor paid any dividends on its common stock and does not anticipate paying any dividends on its common stock during the foreseeable future, but intends to retain any earnings for future growth of its business. Expected volatility is calculated based on historical volatility of the daily closing price of the common stock of the companies within the S&P 500 Index over a period consistent with the expected life of the awards. The risk-free interest rate is based on the U.S. Treasury rate with terms similar to the expected life of the awards. The expected life is consistent with the performance measurement period of the awards.
As of December 31, 2025, the Company determined that it was probable that at least the minimum performance goals associated with restricted stock awards with performance and market conditions granted during 2025, 2024, and 2023 would be met by their forfeiture dates. The Company recorded a total of approximately $ 10 million, $ 7 million, and $ 14 million of stock-based compensation expense related to restricted stock awards with performance and market conditions for the years ended December 31, 2025, 2024, and 2023, respectively, As of December 31, 2025, the Company expects to record an aggregate stock-based compensation expense of approximately $ 24 million for performance-based restricted stock awards over the periods 2026, 2027, and 2028.
The following table presents unvested restricted stock awards activity for the year ended December 31, 2025:

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, 2024
2,554,989  

$
76.19  

733,200  

$
81.49  

Granted
2,316,296  

$
79.04  

435,120  

$
85.29  

Vested
( 898,926 )

$
74.47  

( 124,068 )

$
71.19  

Canceled
( 329,149 )

$
75.81  

( 48,252 )

$
71.19  

Unvested restricted stock awards at December 31, 2025
3,643,210  

$
78.32  

996,000  

$
84.93  

F-48

COSTAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Restricted Stock Units
The following table presents unvested restricted stock units activity for the year ended December 31, 2025:

 
Number of Units
Weighted-Average Grant Date Fair Value per Share

Unvested restricted stock units at December 31, 2024
23,532  

$
73.88  

Assumed in Matterport Acquisition
2,256,423  

$
75.63  

Granted
115,654  

$
78.57  

Vested
( 1,304,354 )

$
75.60  

Canceled
( 376,335 )

$
75.64  

Unvested restricted stock units at December 31, 2025
714,920  

$
76.09  

Management Stock Purchase Plan
The Board of Directors originally adopted the Company’s Management Stock Purchase Plan in December 2017 and the plan was subsequently amended and restated in December 2025. The intent of the MSPP is to provide select key employees of the Company and its subsidiaries, including the Company's executive officers, the opportunity to defer a portion of their cash incentive compensation and to align management and stockholder interests through awards of DSUs under the MSPP and awards of Matching RSUs issued under the Company's 2016 Plan and 2025 Plan. Under the MSPP, participants are permitted to elect to defer up to 90 % (or such other percentage determined by the Compensation Committee of the Board of Directors) of their annual incentive bonus or commissions earned during the year by submitting an irrevocable election in accordance with Section 409A of the Internal Revenue Code, as amended. On the date the incentive bonus or commission would otherwise be paid in cash (typically during the following calendar year), the Company awards the participant DSUs representing the number of shares of common stock with an aggregate fair market value on that date equal to the amount of compensation elected to be deferred under the MSPP. On the same date the DSUs are awarded, the participant receives a grant of Matching RSUs covering the number of shares of common stock equal up to 100 % of the DSUs granted. The expense related to the DSUs is recognized on a straight-line basis during the period that the related incentive bonus or commission is earned. The Company granted 95,936 and 57,498 DSUs during the years 2025 and 2024, respectively. The expense related to the Matching RSUs is recognized over the four-year vesting period following the grant date.
The following tables presents the Matching RSU activity for the year ended December 31, 2025:

 
Number of Matching RSU Shares
Weighted-Average Grant Date Fair Value per Share

Unvested MSPP restricted stock units at December 31, 2024
174,730  

$
72.17  

Granted
95,936  

$
77.60  

Vested
( 22,670 )

$
83.79  

Canceled
( 7,613 )

$
78.84  

Unvested MSPP restricted stock units at December 31, 2025
240,383  

$
73.03  

Employee 401(k) Plan
The Company maintains a 401(k) Plan as a defined contribution retirement plan for all eligible employees. The 401(k) Plan provides for tax-deferred contributions of employees’ salaries, limited to a maximum annual amount as established by the IRS. In addition to the traditional 401(k), effective January 1, 2015, eligible employees have the option of making an after-tax contribution to a Roth 401(k) plan or a combination of both. In each of 2025, 2024, and 2023, the Company matched 100 % of employee contributions up to a maximum of 4 % of total compensation. Amounts contributed to the 401(k) Plan by the Company to match employee contributions for the years ended December 31, 2025, 2024, and 2023 were approximately $ 33
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COSTAR GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

million, $ 26 million, and $ 26 million, respectively. The Company had no administrative expenses in connection with the 401(k) Plan for each of the years ended December 31, 2025, 2024, and 2023.
Employee Pension Plan
The Company maintains a GPP Plan for all eligible employees in the Company’s U.K. offices. The GPP Plan is a defined contribution plan. Employees are eligible to contribute a portion of their salaries, subject to a maximum annual amount as established by Her Majesty's Revenue and Customs. In each of 2025, 2024, and 2023, the Company's matching contribution was based on the percentage contributed by the employee, up to a maximum of 6 % of total compensation. Amounts contributed to the GPP Plan by the Company to match employee contributions for the years ended December 31, 2025, 2024, and 2023, were approximately $ 2 million, $ 2 million, and $ 1 million, respectively.
Employee Stock Purchase Plan
As of August 1, 2006, the Company introduced an ESPP, pursuant to which eligible employees participating in the plan authorize the Company to withhold specified amounts from the employees’ compensation and use the withheld amounts to purchase CoStar Group Shares at 90 % of the market price. Participating employees are able to purchase common stock under this plan during each offering period. An offering period begins the second Saturday before each of the Company’s regular pay dates and ends on each of the Company’s regular pay dates. On June 2, 2021, the Company’s stockholders approved an amendment to the ESPP to increase the number of shares available for purchase under the ESPP by 9.7 million shares. The Company registered the issuance of these additional shares under the ESPP pursuant to the registration statement filed on July 28, 2021. There were 292,559 and 544,587 shares available for purchase under the ESPP as of December 31, 2025 and 2024, respectively, and approximately 252,028 and 237,741 CoStar Group Shares were purchased under the ESPP during 2025 and 2024, respectively.  

17.     SUBSEQUENT EVENTS
The Company has evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the consolidated financial statements were issued. Based upon this review, the Company did not identify any material subsequent events that required adjustment or disclosure in the consolidated financial statements.
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