CoStar's core data business is a durable monopoly
The bull case for CoStar Group is that its core commercial real estate data platform, CoStar Suite, operates as an essential, high-margin monopoly with a virtually replicable data moat.
The argument
The discussion highlighted that CoStar has spent over $5 billion and 37 years building a proprietary, boots-on-the-ground database of commercial properties. This has created an industry-standard 'Bloomberg terminal of commercial real estate' with nearly 50% profit margins and 59 consecutive quarters of double-digit revenue growth.
The thesis, stress-tested
✓ What validates it
- ✓Continued double-digit revenue growth in the core B2B segment
- ✓Successful expansion and data collection in international markets like Europe
▸ Risks discussed
- ▸Aggressive pricing strategies have created a love-hate relationship with customers
- ▸High structural overhead costs from maintaining thousands of physical field researchers
Hear it yourself
"It's so boring that most investors have probably never heard of CoStar Group, and yet, it's a company that just reported its fifty ninth consecutive quarter of double digit revenue growth through COVID and through the 2022 rate hike cycle that crushed commercial real estate and transaction volumes."
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