CoStar Group's shares rose 2.7% after the real estate marketplace operator published a response to a recent critical letter from Third Point LLC, reiterating its strategic priorities and its path to profitable growth.
In its reply, CoStar argued against Third Point's suggestion that the company abandon Homes.com, saying such a course would harm its business and competitive position. The company pointed to accelerating user adoption at Homes.com, noting subscriber growth of 337% since the first quarter of 2024, and described the platform as moving from an investment phase into a scaling phase with lower capital intensity.
Actions taken following shareholder engagement
CoStar said it has enacted several governance and capital-allocation measures after engaging with shareholders. The company reported that it has added three new independent directors and announced a new independent Board Chair. It also said it has formed a Capital Allocation Committee and is moderating investment in Homes.com.
As part of the moderation, CoStar plans to cut net investment in Homes.com by $300 million in 2026 and by more than $100 million annually thereafter. The company set a goal for Homes.com to reach breakeven profitability by the end of 2029.
Financial outlook reiterated
CoStar reiterated its 2026 guidance, forecasting revenue of $3.8 billion - an 18% increase over 2025 - and Adjusted EBITDA of $770 million, an 83% rise that would equate to a 20% margin versus 13% in 2025. The company also stated its expectation to reach $2.3 billion in Adjusted EBITDA with a 35% margin by 2030.
Third Point's position
Third Point, which manages approximately $24 billion in assets, has publicly criticized CoStar's residential strategy, asserting that it has consumed about $5 billion over five years with limited returns. With its standstill agreement with CoStar expired, Third Point indicated plans to nominate its own slate of directors.
The exchange in public filings and statements between CoStar and Third Point centers on the future of the company's residential marketplace efforts and how capital should be allocated going forward. CoStar's published changes and financial targets aim to address shareholder concerns while maintaining the company’s stated course for Homes.com to transition toward profitability.