CSGP Is Using M&A To Offset Declining Bookings
CoStar’s ( CSGP 0.00%↑) effort to ramp-up M&A is understandable as its bookings activity has significantly slowed. While it typically makes sense for companies to acquire new products and services that drive customer value, I can’t help but be skeptical that a significant part of CSGP’s recent M&A effort is to offset dramatically slower bookings activity. Slower bookings activity portends slower subscription revenue growth. The addition of acquired revenue will help CSGP show better on investor screens (revenue growth is always preferable to slow growth or no growth).
Here is a list of CSGP’s recent acquisitions:
OnTheMarket: On December 12, 2023, CoStar 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 £94.0 million ($117.9 million).
Matterport: On April 21, 2024, CSGP entered into an Agreement and Plan of Merger with Matterport ( MTTR 0.00%↑) to acquire all outstanding shares of Matterport in a cash and stock transaction valued at $5.50 per share reflecting an enterprise value of approximately $1.6 billion. Matterport is a 3D spatial mapping company that is currently headquartered in Sunnyvale, California. The company was founded in 2011 as a private startup and subsequently merged with a special-purpose acquisition company in 2021.
Visual Lease: On October 22nd, CSGP announced that it intends to acquire Visual Lease for $273 million. Visual Lease will be combined with CoStar's data and analytics database to boost integration opportunities with technology players and improve relationships with accounting service and real estate firms. "Visual Lease and CoStar Real Estate Manager are driven by the same mission of integrating all lease management portfolio functions into one user-friendly platform. Bringing Visual Lease into the CoStar Group family will allow us to create the best possible experience for our customers.” - CSGP Founder & CEO Andy Florance.
