CoStar Group Posts Record Q3 EBITDA and Announces $730 Million Vexcel Acquisition but Stock Drops 14%

CoStar Group reported record third-quarter 2026 results on October 27, with revenue of $952 million, up 14% year-over-year from $834 million, while non-GAAP EPS of $0.38 beat estimates by $0.04 but revenue missed consensus by roughly $7.4 million. Net income swung to $74 million, a $105 million improvement year-over-year, and adjusted EBITDA hit $229 million, doubling from a year earlier. The company also raised its full-year 2026 adjusted EBITDA guidance and reported net new bookings of $37 million for the quarter.

Alongside earnings, CoStar announced a definitive agreement to acquire Vexcel Group, Inc., the operator of one of the world's largest survey-grade aerial imagery programs, for approximately $730 million in cash. Vexcel generated more than $140 million in revenue over the prior twelve months, growing more than 30% year-over-year, on recurring multi-year data contracts, with an adjusted EBITDA margin of around 20%. The deal covers imagery across more than 45 countries, 320 major global metros, and 99.6% of the U.S. population, and CoStar said it would use the data to generate tens of billions of new AI-derived property data fields. The transaction remains subject to Hart-Scott-Rodino antitrust clearance and other customary regulatory conditions.

Despite the record profitability metrics, shares fell roughly 14% on October 28 as investors weighed the revenue miss, a $730 million cash acquisition, and ongoing concerns about weak residential portal profitability. Citizens reiterated its Market Outperform rating on the stock. Separately, the Apartments.com Q3 RentPulse Index released the same day showed the national apartment vacancy rate fell to 7.8%, signaling tighter markets, though renters retain meaningful bargaining power.