"Under the leadership of CEO Andy Florance, CoStar has continued to dedicate disproportionate attention and resources to its unprofitable Homes.com business. This continued investment, despite repeated failures to meet projections, has eroded the company's once-enviable margins and driven a significant decline in CoStar's stock price, despite positive momentum in the core businesses, the letter states. As a consequence, today every shareholder who has purchased CoStar's stock in the last five years has lost money."
"Despite this significant and, for CoStar, unprecedented level of investment, Homes.com has generated just $80 million in annual revenue and over $2 billion of cumulative losses, a far cry from the $700 million to $1 billion in revenue and substantial profits that CoStar had projected its investment would generate by 2027, and far less than what is required to generate an acceptable return on investment within a reasonable time frame."
Under CEO Andy Florance, CoStar allocated disproportionate attention and resources to its unprofitable Homes.com business. The company diverted the majority of core-business earnings over the last four years to fund Homes.com, amounting to more than $3 billion in investment by year-end. Homes.com has generated approximately $80 million in annual revenue and incurred over $2 billion in cumulative losses. Homes.com fell far short of projections of $700 million to $1 billion in revenue with substantial profits by 2027. The heavy subsidy eroded CoStar's margins and contributed to five consecutive years of stock price declines, leaving recent shareholders with losses.
Read at www.housingwire.com
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