Operator: Good day, and thank you for standing by. Welcome to the Q2 2026 CoStar Group Earnings Conference Call. Please be advised that today's conference is being recorded. After the speakers' presentation there will be a question-and-answer session. I would now like to hand the conference over to your speaker today, Rich Simonelli, Head of Investor Relations.

Richard Simonelli: Thank you, Josh, and hello, and thank you all for joining us to discuss the second quarter 2026 results of the CoStar Group. Before I turn the call over to Andy Florance, CoStar's CEO and Founder; and Chris Lown, our CFO, I'd like to review our safe harbor statement. Certain portions of the discussion today may contain forward-looking statements. The company's outlook and expectations are based on current beliefs and assumptions. Forward-looking statements involve many risks, uncertainties, assumptions, estimates and other factors that can cause actual results to differ materially from such statements. Important factors that can cause actual results to differ include, but are not limited to, those stated in CoStar Group's press release issued earlier today and in our filings with the SEC. All forward-looking statements are based on the information available to CoStar on the date of this call. CoStar assumes no obligation to update these statements, whether because of new information, future events or otherwise. Reconciliation to the most directly comparable GAAP measure of any non-GAAP financial measure discussed on this call are shown in detail in our press release, along with the definitions for those terms. Press release is available on our website located at costargroup.com under Press Room. You've joined us via webcast. Please refer to the press release today to see how to access the replay of this call. Remember, we want to give everybody a chance to ask questions, so please limit your question to one question to start off, and you can requeue and, time permitting, ask a second question. And with that, I'd like to turn the call over to our Founder and CEO, Andy Florance. Andy?

Andrew Florance: Again, thank you for joining us today. Our second quarter 2026 financial results marked a profitability inflection point for CoStar Group as adjusted EBITDA more than doubled year-over-year to $184 million. This is the second highest quarterly level in company history. We generated $925 million of revenue in the second quarter, an 18% increase year-over-year. That is our 61st consecutive quarter of double-digit revenue growth. Net income increased by 817% and EBITDA rose 441%. We held our increase in operating costs to just 2% year-over-year, all while continuing to invest in numerous long-term growth initiatives. We expect to deliver the highest full year adjusted EBITDA in CoStar Group's history in '26, and we're confirming our full year guidance range of $780 million to $820 million. Along the way, we expect to deliver two consecutive quarters of our highest ever adjusted EBITDA. Net new bookings for the quarter were $69 million, up 3% from the first quarter. Our commercial real estate business generated $481 million of revenue in Q2, an increase of 8% year-over-year and it generated adjusted EBITDA of $172 million up 7% year-over-year. CoStar revenue was $337 million, up 9% year-over-year, and net new bookings accelerate up 24%. Renewal rates remained an impressive 93% and NPS held historically strong at 68%. Net new bookings to brokers increased 48% year-over-year, including a multiyear renewal of our largest brokerage client. Subscribers on the CoStar platform grew 19% year-over-year to 327,000. That subscriber base creates a powerful demand for commercial property sale and lease listings, and it makes the platform extremely valuable to the brokers and owners who list with us. CoStar Debt Solutions delivers differentiated risk analytics to commercial real estate lenders by intelligently combining CoStar's information resources with each lender's own proprietary loan data. It delivered its best quarter ever with over $4 million in net new monthly bookings, up 96% year-over-year. We are now applying the benchmarking expertise we developed with STR to Debt Solutions. 300 lender clients are contributing information on over 100,000 active loans, over $1.2 trillion in outstanding debt, and this is on an anonymized and aggregated basis. The product will give lenders unprecedented visibility to improve decisions across origination, portfolio risk and compliance. As an example of this value, lender might discover his office, his or her office loan book is at 80% loan-to-value ratio, while peers are at a more conservative 60%. That insight would provide and prompt the consideration of a significant risk premium or perhaps a shift to a more conservative lending policy going forward. Clearly, it's a game changer in the lending world. Overall, commercial revenue accelerating growth was partly offset by Ten-X, where we have been restructuring the business for future growth and cost control and enabled us to reduce costs by $7 million year-to-date. During this restructuring, revenue declined by $4 million. Going forward, Ten-X will be separated from LoopNet with dedicated sales, marketing and leadership to more effectively drive growth. We launched four major product initiatives on the core CoStar platform in the second quarter. First, in June, we released CoStar Rent Benchmark, a first-of-its-kind data set built from 4 million AI abstracted actual leases and lease documents. Rather than using less reliable asking rents or broker report information, this is real data. Today, we present actual rents' benchmark data and over time, we plan to add modeled rents derived from that information. We have plans to build similar high-quality rent solutions in Australia and the United Kingdom. Secondly, we launched CoStar in France in Q2, building on our BureauxLocaux and Business Immo acquisitions and significant proprietary local research. The platform covers office, logistics and hospitality across Paris, Lyon, Marseille and more than 290,000 properties, 385,000 commercial tenants, 90,000 availabilities and 75,000 lease and sales comparables. It is one of the deepest CRE databases in the country. Over the next two years, we plan to migrate and upgrade roughly 1,100 Business Immo subscribers to CoStar. Early customer response has been very encouraging. Within days of launch, we signed our first major global brokerage customer's French business. And a major global investor told us this was their first time they had ever been able to get an absorption number for Paris. That's a KPI their investment Board requires that until now was not readily available in France. For our third CoStar product launch in Q2, we launched public record search in the U.K., providing extensive transparency into 6.9 million freehold and leasehold ownership titles and 6.8 million properties and parcel groups. Fourth, we extended our AI-powered lease abstraction engine into CoStar Real Estate Manager. It converts complex lease documents into structured audible records and significantly reduces the time clients spend onboarding and managing leases. We remain focused on launching CoStar in Australia in the second half of this year. We now have 124 researchers and photographers deployed on the ground in Australia, covering 30,000 listings, 23,000 property profiles and more than 10,000 sale and lease transactions. Matterport performed well in the second quarter. Subscription revenue grew 16% year-over-year. and we achieved Matterport's all-time best month of enterprise customer acquisition in June. Tomorrow, we will deploy a new pricing plan that reduces the price of the Matterport 3 camera and shifts more of the revenue into SaaS. We believe this will accelerate both adoption and subscription revenue growth. We continue to advance the product road map. We fully released E57 import, strengthening Matterport's position as a unified platform for storing, managing and using multiple sources of 3D spatial data in one spot. The team also released a more powerful digital twin experience. It presents a home's exterior through a Gaussian splat lets viewers rotate and fly around the house and then move seamlessly inside to experience the home in high-resolution panoramas or they can virtually remove the floor in various floors for a true dollhouse view of the home from the sky. This capability was on our acquisition rationale road map, and it's really exciting to see it successfully deliver. The Matterport 3 camera has proven a highly efficient, reliable capture device. And post acquisition, we have restarted hardware development. We have now produced the first prototypes of the next-generation Matterport 4, which offers higher measurement location accuracy and higher resolution panoramas, which is particularly valuable to architecture and construction uses. We anticipate delivering the Matterport 4 in late '27. LoopNet generated $87 million of revenue in Q2, up 14% year-over-year. Paid listings increased 9% year-over-year in the U.S. to 220,000 and grew 24% in Canada and 52% in the U.K. year-over-year. We expanded the LoopNet sales force to 225 reps, up from 191 a year ago. Asset-based pricing is driving adoption among lower-value listings while capturing more value from higher-value listings. This is contributing to sequential acceleration of net new bookings from Q1 to Q2. LoopNet's European revenue grew 10% year-over-year with average monthly unique visitors up 88%. Our investment of Wikicasa in Italy creates the opportunity to add Italian coverage to LoopNet. We are now partnered with dozens of Italy's largest brokerage firms, and Wikicasa lists over 100,000 commercial real estate listings from more than 12,000 broker branches. Our Australian CRE marketing platform, commercialrealestate.com.au continues to grow with Q2 visits up 76% year-over-year. We have decided to shift the release of LoopNet in Australia to late 2027, prioritizing instead releasing residential integration first to achieve significant potential margin enhancements sooner. STR delivered a strong Q2 with nearly 70% of its net new revenue coming from brand-new logo sales, a clear signal that growth is being driven by market expansion, not just pricing. We landed 261 new logos globally with U.S. headliners, Nobu Hospitality and Baywood Hotels alongside a standout Japan cohort in Kajima and UDS. Even with the Iran conflict weighing on the Middle East, we continued expanding with Alistithmar in Saudi Arabia and secured a significant Indian win with Samhi Hotel Investments. BizBuySell revenue grew a moderate 5% year-over-year. We're expanding the business with benchmarking tools that help buyers and sellers understand business value and evaluate opportunities while partnering with SBA lenders to embed financing into the marketplace. Nearly one in three buyers now complete a robust buyer profile of BizBuysell and an NDA to speed the deal process. There's over 32,000 profiles in total, including 8,700 added in Q2 alone. Residential revenue was $440 million in Q2, up 33% year-over-year. Second quarter adjusted EBITDA grew $41 million over the first quarter, bringing our residential segment to a positive adjusted EBITDA in Q2. Apartments.com delivered $318 million of revenue in the second quarter, up 9% year-over-year. June's gross sales were the third highest sales month in Apartments.com history. Apartments ended the quarter with nearly 93,000 paid properties, up 12% year-over-year, sustaining 18 months of adding approximately 1,000 paid properties each month with monthly renewal rates holding strong at 99%. Average revenue per property was largely flat, just down about 3.6% year-over-year. The decline was primarily due to a mix change in sales to smaller communities, which carry a lower average pricing. We're holding firm on price integrity while a competitor discounts aggressively to buy share because their quality gap is measurable. PERQ, a leading digital marketing analytics firm analyzed lead-to-lease conversion across more than 1,000 properties and found that Apartments.com leads convert at 2.5x the rate of the next closest competitor. Entrata data shows apartments lead-to-lease conversion rose 14% year-over-year through May and a leading national property manager reports an 18% improvement. We believe that the ROFR product will win out over the medium term. Our sales organization, the largest and most active in the industry, conducted 196,000 quality meetings in Q2 and maintained an industry-leading Net Promoter Score of 88. Apartments.com delivered more than 228 million highly engaged renter visits in the quarter with traffic up 7% year-over-year in June according to Google Analytics. By contrast, comScore reports that June visits to Zillow's network declined 35% year-over-year. Apartments.com remains the most recognizable brand in apartment search with 66% unaided consumer awareness among apartment seekers as 25 points ahead of our nearest competitor according to Dynata. We have continued to grow despite competitive distortions in the multifamily rental marketplace. The FTC and multiple state attorney generals have sued Zillow for allegedly entering an unlawful agreement that reduced competition in multifamily rental advertising and CoStar Group has separately sued Zillow for the unauthorized use of tens of thousands of CoStar-owned copyright apartment photographs that it used to build its rental marketplace. While these cases are pending, together, they raise a broader question, whether Zillow's rental expansion was built through lawful competition or through shortcuts that regulators and rights holders are now challenging in court, conduct that may result in significant setbacks for them. At June's NAA Apartmentalize, the multifamily industry's largest event, we confirmed our leadership position and innovation road map. Our team conducted 728 sales appointments and welcomed more than 3,000 visitors to our booth with 1,500 attendees visiting the Apartments.com Innovation Lab for demonstration of Apartments.com Ai, Matterport and our ChatGPT app. To date, the sales leads generated from the conference resulted in more than $7 million in new annualized sales, up $1 million from last year. Leveraging our successful Homes AI technology, we introduced Apartments.com Ai at the event, an immersive conversational search experience that help renters find, understand, compare and contact properties through natural dialogue or text. It supports the full apartment search journey and combines AI with Apartments.com's unmatched property data and media, so renters arrive better informed and more prepared when they reach out to leasing teams. Early engagement has been extremely encouraging. In just a few weeks, users completed approximately 0.5 million AI sessions Apartments.com AI users spend 3x longer in the site than non-AI renters, averaging 20 minutes per session. They viewed twice as many listings and spend 40% more time on each listing. 3D tour usage is up 225% and traffic to lead conversion is up 256%. Based on these early results, we expect AI to meaningfully improve lead-to-lease conversion over time. Homes.com rentals were showcased at the all-new Homes.com rental experience at Apartmentalize. Homes.com is the natural place to find a single-family home townhouse or condominium to rent and has become an important extension of the Apartments.com network. Through Q2, Homes.com rentals drove more than 11% of Apartments.com's traffic, making Homes.com its largest single syndication partner. And leads from Homes.com to Apartments.com increased 162% year-over-year. By the end of '26, we expect every tool that independent owners use on Apartments.com to also be available on Homes.com. We just released upgraded native Apartments.com apps for both iOS and Android. Apartments.com is the industry's highest-rated rental app, and both these apps are off to a strong start with leads up 10% year-over-year in the first month. Our Q2 marketing generated more than 2.2 billion media impressions co-branded Homes.com campaigns produced approximately 11 million views across YouTube and other outlets and targeted digital campaigns, including World Cup YouTube placements. In April, Apartments.com launched a ChatGPT partnership in 100 markets and have since expanded to 500. According to Criteo, Apartments.com has greater visibility in ChatGPT than any other competitor. The U.S. multifamily market is stressed and continues to work through elevated supply, making owners more price sensitive Q2 absorption remained strong at approximately 139,000 units, down 3% year-over-year, while 2026 deliveries are projected to decline 23%. The concessions remain widespread with roughly 40% of communities offering incentives. In this environment, property owners are increasingly focused on lead quality and leasing efficiency exactly where Apartments.com differentiates. Homes.com revenue grew 66% year-over-year to $28.5 million in Q2, and the annualized run rate reached $116 million at the quarter end, up 78% year-over-year. We now have over 36,000 agent subscribers, up 107% from a year ago. 12-month trailing ARPU is approximately $265 and the average subscriber price rose to $305 in June. We expect average pricing to continue to rise as we use learnings from our growing subscriber base to optimize pricing. Subscribers paid to promote close to 305,000 active listings in Q2. That's 9.3% of the 3.2 million homes for sale in the U.S. and homes member agents listings increased 92% year-over-year. We believe agent subscribers are earning an 11x return on investment based on the first year commission data we shared last quarter. That positive result shows up in lower cancellations. Our monthly cancel rate dropped again to just 2.4% in June, our lowest yet, down from 6.5% in June of '25. Homes.com organic traffic is up 115% year-to-date. Average session duration hit an all-time high in Q2, up 52% year-over-year in June. Bounce rates hit an all-time low of 34%. In the third quarter, we plan to roll out our platinum marketing tier, Homes.com's first step advertising offering. Platinum listings will receive enhanced placement and search results and across key neighborhood and community pages, enhanced social marketing and the full range of Homes.com still in drone photography and Matterport tours. We expect Platinum ads to be priced at multiples over standard listings. Most revenue on most real estate portals around the world comes not from the base subscriptions we've sold to date, but from enhanced depth advertising sales we're about to begin selling. 70% of Apartments.com customers buy depth advertising and 91% of Domain's total revenue is generated by it. We believe that in the future, the majority of Homes.com revenue will be generated by depth advertising. So it's an important milestone to begin selling it this upcoming quarter. Homes AI continues to drive exceptional engagement. Homes AI users spend more than 17 minutes on site. They conduct 3x as many searches, favorite 5x as many properties, share listings 6x more often or 48% more likely to return to Homes.com within the week. Consistent with managing our Homes.com investment, we are optimizing our sales force for efficiency and productivity, reducing inside sales reps from 660 at the end of Q4 '25 to about 400 today, while retaining the top producers who generate an outsized share of the revenue. We always believe that a field organization would be the most productive, consistent with our experience at Apartments.com, LoopNet and CoStar, but it takes years to build a good one. So we initially built an inside team for speed to market. It worked as we achieved over $100 million of organic revenue in the first two years. But as expected, our small field team is delivering higher productivity. So we're expanding that field team to 50 reps focused on five major metros, Washington D.C., Tampa, Atlanta, Dallas and Chicago and plan to expand further as successful performance warrants. Even as we reduced the sales force, Homes.com net new bookings were consistent with Q1 and production per rep increased 19%. Domain in Australia delivered a strong Q2, growing revenue 9% year-over-year on a pro forma basis. Strong agent engagement with Domain's growing audience, the rollout of Matterport-enabled premium packages and increased industry presence drove record upgrade activity. Core residential revenue, excluding developers, agent solutions and print, increased 15% year-over-year on higher listing volumes. We launched Matterport integrated with Domain in Australia on July 1. We've had very positive response in the first several weeks, driving significant uptake of Platinum ads on Domain. We believe Domain is Australia's fastest-growing property brand with average monthly visits reaching 41 million in Q2, up 35% year-over-year. We are narrowing the audience gap to historically defined this market by delivering a differentiated better user experience. Our program to divest noncore software assets in Australia is progressing as expected, which will enable management to concentrate on the most important residential and commercial objectives and will improve overall profitability. We expect to finalize all divestitures by the end of 2026. Q2 was another strong quarter for on the market, our U.K. residential portal. Total property inventory increased 12%, surpassing Zoopla and now for the first time, making on market the second largest property portal in the U.K. by inventory. We achieved our 26th consecutive month of positive net new bookings with leads up 14% in the first half. Average engagement increased 43% year-over-year in Q2. pages viewed per active user rose 64% and total time on the site grew 16%. Turning to Land.com. Revenue grew 9% year-over-year. First half sales net new bookings increased 22% and signature ads grew 55% year-over-year. This month, we delivered our consolidated headquarters campus in Richmond, Virginia, on schedule and under budget. A decade ago, we chose Richmond for its ability to attract and retain in a low-cost market, the highly skilled talent needed to build and scale CoStar's business. The new campus consolidates nearly a dozen scattered spaces and buildings into one facility and allows us to scale from 2,500 employees today to 4,000 with limited capital cost and no additional construction. The campus pairs a premier 21-story office tower with a mass timber amenity building and our original nine-story office building. It's LED embed glazing displays a generative AI art by Refik Anadol built from our own real estate data and imagery, appropriately keeping us focused on our AI future. The campus is tracking toward LEED Platinum and WELL Platinum certifications and slated to achieve net zero through 100% renewable energy. Financially, this is a highly strategic deployment of capital. Centralizing operations eliminates fragmented lease costs and directly enhances employee efficiency, accelerating product cycle sales and client retention. Because we own this premier trophy asset entirely on our balance sheet, we have created substantial equity value and position ourselves for a future sales leaseback that could unlock hundreds and hundreds of millions in liquid capital for acquisitions or share buybacks, while retaining uninterrupted operational control. We hope to replicate the playbook from our former D.C. headquarters where we achieved 145% value gain than in one year. In May, we announced our agreement to acquire Zonda, a leading provider of new home construction data, analytics software and online marketplaces. Zonda's comprehensive data set covers land development, construction activity, home sales, community performance and builder operations, serving more than 3,000 builders, developers, lenders, manufacturers and suppliers across North America. We expect the transaction to close in the second half of this year. At this point, I'll turn the call over to our CFO, Mr. Christian Lown.

Christian Lown: Thank you, Andy. For the second quarter of 2026, we generated revenue of $925 million, an 18% increase year-over-year and in line with our guidance range. Adjusted EBITDA was $184 million for the quarter, above the high end of our guidance range and represented a 20% adjusted EBITDA margin. This is an impressive 900 basis point increase year-over-year. Commercial revenue was $481 million, up 8% year-over-year and in line with our guidance. Residential revenue was $444 million, up 33% year-over-year and also within our guidance range. Adjusted EBITDA for the Commercial segment was $172 million, up 7% year-over-year and above the high end of guidance with a 36% adjusted EBITDA margin. Our Residential segment generated a record adjusted EBITDA of $12 million, marking its first quarter of profit since we launched Homes in Q1 2024. We expect this to continue to grow as we focus on monetizing our investments and driving profitable growth and margin expansion. The outperformance in adjusted EBITDA overall was driven by actions to reduce personnel costs and continued operating efficiencies. We are particularly pleased that we delivered a 20% adjusted EBITDA margin, a full quarter ahead of our expectations. Net new bookings in the second quarter of 2026 were $69 million. Within our Commercial segment, CoStar revenue grew 9% year-over-year in the second quarter to $337 million. Subscriber counts increased an impressive 19% versus the second quarter of 2025, and CoStar Debt Solutions delivered its second consecutive record sales quarter. LoopNet revenue increased 14% to $87 million, supported by continued momentum in paid listings as we continue to build the only global commercial real estate marketplace. Other commercial revenue was $57 million, down 5% year-over-year. This was primarily driven by lower transaction volumes at 1x. Matterport continued to outperform with subscription revenue growth rates in the high teens versus high single-digit growth prior to the acquisition. Residential revenue was $444 million, up 33% year-over-year and up $19 million sequentially. The sequential growth primarily resulted from continued strong revenue from Domain as well as increases in apartments and homes that exceeded their sequential increases in Q1 2026. Adjusted EBITDA increased 39% sequentially from $132 million in 1Q 2026 to $184 million this quarter. Our focus on disciplined expense management, particularly in personnel and operating expenses as well as continued efficiency gains across the business, including early benefits from AI and other expense initiatives contributed to the increased profitability in Q2 2026. Importantly, proactive expense management from the first half of the year has established a new baseline for expenses that will continue to benefit us moving forward. Year-to-date, revenue was $1.82 billion, up 20% year-over-year, with approximately half of the revenue growth coming organically. Commercial revenue was $953 million, up 11% year-over-year, and residential revenue was $869 million, up 32% year-over-year. Turning to operational metrics. Sales headcount at June 30 was 1,975, up 8% year-over-year and roughly flat on an organic basis. Increases in LoopNet and apartment sales staff were offset by the strategic reduction of home sales reps as we focus on productivity and efficiency at Homes.com. Our contract renewal rate remains strong at 89%, with customers of five years or more renewing at 94% Subscription revenue on annual contracts was 72% for the second quarter, consistent with post-domain acquisition subscription rates. We repurchased 2.4 million shares for $82.1 million in the second quarter, which brings our total share repurchases in 2026 to 13.75 million shares for a total cost of $587 million. Since the beginning of 2025, we have repurchased nearly 21 million shares for approximately $1.1 billion. We expect to continue our open market repurchases throughout the remainder of 2026 and expect a total of $700 million in share repurchases for 2026. For Zonda, we are still in the regulatory approval process. We are excited to welcome the talented Zonda team to CoStar Group and expect to close in the second half of 2026. We will provide an update on the accretive financial impact of this transaction in the earnings release after the deal closes. Turning to guidance. To be clear, we have not included any financial impact from the expected closing of the Zonda acquisition in our 2026 guidance. For the third quarter of 2026, we are guiding revenue to range between $935 million and $945 million, representing a 13% year-over-year increase at the midpoint. Commercial revenue is expected to range from $489 million to $494 million, 7% growth at the midpoint, with residential revenue expected to range from $446 million to $451 million, a 20% increase at the midpoint. Adjusted EBITDA is expected to range from $190 million to $210 million and adjusted EBITDA margin of 21% at the midpoint. This is over 700 basis points higher than Q3 2025's adjusted EBITDA margin. We are guiding commercial adjusted EBITDA to range between $162 million and $172 million with residential adjusted EBITDA of $28 million to $38 million. We are providing adjusted EPS guidance of $0.31 to $0.34 for the third quarter, which assumes 403 million weighted average shares outstanding. For the full year of 2026, we are revising our previous revenue guidance range to $3.715 billion to $3.755 billion, representing a 15% year-over-year increase at the midpoint. Commercial revenue is expected to range from $1.94 billion to $1.96 billion, a 9% increase at the midpoint while residential revenue is expected to range from $1.775 billion to $1.795 billion, a 22% year-over-year increase at the midpoint. Our revised revenue outlook reflects a series of recent operating decisions designed to drive profitable growth over the long term. The key drivers of the revision include Ten-X, where we restructured the business to improve profitability; Homes.com, where we optimized our sales organization for productivity, reducing average sales headcount by 21% sequentially while still delivering similar total net new bookings compared to Q1; and Apartments.com, where we chose to retain price integrity based on our confidence that we deliver the best ROI to our customers. Taken together, these actions moderated near-term revenue growth, but we believe they position our businesses to generate increased revenue growth over time, leading to better long-term profitability. As a result of our stringent focus on expense management, we are affirming the adjusted EBITDA guidance that we provided last quarter, which calls for adjusted EBITDA to range from $780 million to $820 million. This is an increase at the midpoint of $30 million from our 2026 guidance provided on our February earnings call. We are also affirming our full year adjusted EPS guidance range of $1.32 to $1.39. This range is $0.08 or 6% higher than our guidance provided in February of this year, and we remain committed to achieving our long-term range EBITDA targets laid out earlier this year. With that, I'll turn the call back over to Andy Fores.

Andrew Florance: Thank you, Chris. As announced, this is Chris' last earnings call in our CFO seat. On behalf of the Board of Directors and our colleagues, I want to thank him deeply for his many contributions to the company over the past two years. We wish him Godspeed as he heads to Allstate to take the CFO seat there. Allstate will be in good hands. As Chris departs, we congratulate Robin Rossmann on his promotion to CoStar Group's new Chief Financial Officer. Robin brings more than two decades of financial, operational and strategic leadership, including over a decade at Deloitte and more than a decade successfully running CoStar Group's businesses around the world. He has proven it can drive margin expansion and profitable growth. Over the past two years, he dramatically improved the margins of our European business, eliminating approximately $50 million in cost, roughly 25% of the European cost structure while still delivering double-digit revenue growth. And there last week, Robin and I enjoyed dinner with CoStar Group's three former CFOs, Carchedi, who served nine years enjoying 890 -- I'm sorry, a 489% stock appreciation; Radecki, who served for eight years with only a 270% stock increase and Wheeler who served eight years with a solid 300% stock appreciation. They each challenge Robin to beat their stellar performances. Given the fact that Robin's got talent, it should be no problem. Chris could have given these guys a run for their money if Allstate hadn't recruited him, but Robin's up at bat. On behalf of our shareholders, our Board and our 8,000 colleagues, welcome Robin. In conclusion, CoStar Group is off to a strong start in '26 with solid revenue and EBITDA growth. During the roadshow earlier this year, where I met with most of our investors and analysts, I emphasize that we're fully committed to adjusted EBITDA targets we provided for '26 through '30. This year, we have reduced our projected '26 expense base by roughly $100 million. This gives active cost -- I'm sorry, this active cost management gives us a head start on delivering our '26 through '30 adjusted EBITDA targets. With that, we'll turn the call over to questions.

Operator: [Operator Instructions] Our first question comes from George Tong with Goldman Sachs.

Keen Fai Tong: Net new bookings were $69 million in the quarter. That was up 3% sequentially, but down roughly 26% year-over-year. Given the reduction in the revenue guide for the full year, can you help us understand the primary drivers of the year-over-year decline in bookings? Was the softness concentrated in any particular product line or end market? And what gives you confidence that bookings growth can improve from here?

Christian Lown: Thanks, George. I think a couple of things. As was mentioned, we gave you a net new bookings for Homes.com. We continue to scale that business. We made a very strategic decision to drive efficiencies and improve profitability and performance of that sales force. So that will continue to grow. And I think as Andy mentioned, we're very excited about the metrics we're seeing and the uptake and the launch of depth advertising there. The commercial side performed well, and we feel good about those businesses. We talked about Ten-X. I mean Ten-X is a transactional business, and it's a business we continue to work on and focus on. We're making some changes, but that did represent roughly 25% of the revenue guidance change. And then on apartments, I think what you saw there is strong continued performance, a great NAA event, but we continue to face competition. But I think what you see is when the market looks -- when our customers look at our ROI, we get through the 1-year anniversary of the transaction they did that gave them the benefits that they have seen, we believe we will continue to win the day purely based on our performance and the superior product that we have.

Andy, anything else you'd add?

Andrew Florance: I would concur with that, and we continue to invest on optimized sales force growth. I mean, obviously, we've gone from a 0 to a 600 and some 660-person sales team. We are now focusing more on the productivity of each of these salespeople, including shifting to more field salespeople in both homes and apartments, which we think will have a benefit. And again, to reiterate what Chris said, the -- as we move into depth advertising, it's a pretty important new offering in Homes.com, which we think will drive some good revenue pickup there. So we do remain confident that we can accelerate revenue.

Christian Lown: And George, I'd add two other things as I kind of thought through the question. One, we're excited about additional product launches and the investments we've made on the commercial side primarily that are coming in the next four to six quarters. So we think those -- the take-up will be fantastic. So we're excited by that. And we continue to expand our sales force. While some of our sales forces have reached our objectives, we're still a little behind in some of them. So we think that as we catch up with those sales forces and drive productivity, we'll be able to get that as well. So I think both of those also give us a lot of comfort in being able to achieve our growth objectives.

Operator: Our next question comes from Stephen Sheldon with William Blair.

Stephen Sheldon: Can you talk some about what the updated revenue guidance assumes in terms of organic growth in the back half of the year? I think the full year guide was assuming close to 10% organic revenue growth before. I should we be thinking it's more like 8% organic for the full year now and it's below that in the back half? And then just given what you're seeing in the booking trajectory, and I know it's early, you're not -- you're still ways away from giving guidance for next year. But just with the trends that we're seeing here, I guess, what does this imply about the pace of revenue growth heading into 2027?

Christian Lown: Yes. On your second question, as you know, we don't give guidance for net bookings, and we haven't given out a 2027 forecast. So nothing to add on that question. Remind me what your first question was?

Stephen Sheldon: The pace of -- just as you think about the back half of the year, what the organic revenue growth looks like that you're embedding in the updated guidance?

Christian Lown: You have the roll forward, you know the net bookings. So -- and as we mentioned, we said that it was 10% organic growth for the first half. So somewhere inside of that by 1, 1.5 points is sort of what we're looking at.

Stephen Sheldon: And is that for the full year, just to be clear? Or is that...

Christian Lown: No, that's for the second half of the year second half of the year. That was your question, right, the second half of the year?

Operator: Our next question comes from Ryan Tomasello with KBW.

Ryan Tomasello: On multifamily, the growth deceleration there suggests pressure on pricing per community, which I know you've called out mix shift to smaller rooftops. But the extent of the decline also seems to suggest pressure on outright tier downgrades. So can you talk about to what extent that that's been a factor and how you would weigh the tier downgrade pressure between macro-driven budget tightening versus competition? If there's any signs of that downgrade pressure abating, that would be helpful.

Andrew Florance: Yes. So I think that it's a combination of both the macro environment. You're in an elevated vacancy environment, and that is stressful to the apartment owners and property managers making them more price sensitive. And then there is enhanced competition with a competitor trying to buy share with pricing, with really low pricing. We're maintaining our pricing integrity successfully. You see us maintaining the average ARPU roughly at about the same level, including with a share mix. And what we see is that with a 2.5x lead to lease conversion rate, we recapture a lot of business that cycles away choosing -- chasing a lower price point. They tend to come back through time, but it just puts a lot more work on the sales force to cycle through it. So there's nothing wrong with competition. We've had a lot of competition through time. We started out with 8, 10 competitors in the space. We're now down to two that the FTC thinks there should be more than two, two or three maybe. And we feel very good about where we are and the advantages we offer in ROI, and we continue to lead with the best lead to lease quality.

Christian Lown: Yes. Add on top of that, property growth was up 12% year-over-year. So we continue to grow rooftops at an attractive level, and we held pricing basically flat at the package level. So, bring on the competition, but we continue to grow and expand our business, which we're excited about.

Operator: Our next question comes from Pete Christiansen with Citi.

Peter Christiansen: Andy, with the productivity efficiency change there on the residential side, just curious if it's changed your time to scale expectations? Or I mean, is this initiative effectively lengthening that? Or do you still think you can reach your internal expectations longer term to scale this business with these new efficiency measures?

Andrew Florance: Yes, I think it remains very similar. So the -- as I said, you really would prefer to have people in the field meeting with your clients. We see higher -- about 2x the productivity with Apartments.com field staff to inside sales staff. With CoStar, we see a similar significant advantage for field staff to inside. And the same thing is true typically with LoopNet. So -- but you don't have that choice when you're starting out a major new sales force because in order to build a sales force quickly, you really have to keep them concentrated in one location. Now in fact, we have -- now we're two years in or really a year into having a full size scale sales force, we have the optionality to now begin to put more people in the field. And we'll be cycling through that over -- through time over the next couple of years, probably takes several years to build out a full national field sales team. And then we're also -- the inside sales team continues to mature and get better. I mean, remember, this is a very rooky sales team at this point, but you saw fewer people sell the same amount with about -- just about a 20% productivity increase by focusing on the better sellers. So what we'll do is continue to optimize and optimize the go-to-market. And I feel very good about being able to go out there and bring out the depth advertising for the first time. So I think we have a strong offering. Our clients are seeing a very strong ROI that is demonstrable, and that shows up in really good renewal rates and very low cancellation rates now. So we're achieving a lot of our goals, and I feel very good about where we are and getting very good feedback from clients.

Operator: Our next question comes from Surinder Thind with Jefferies.

Surinder Thind: Just following up on the Homes.com strategy at this point. Is the idea like where we were at the beginning of the year and how you thought you were going to move forward with the sales force and everything, is the idea that there's just a certain level of productivity or end market demand that you can fulfill right now in the marketplace. And so that's why we kind of have the size of the sales force that we do and then ultimately, the realization that, I guess, you need a field sales force. And does that raise the cost of customer acquisitions with more field sales force? Like where does that balance kind of shake out? And how did your assumptions change over the course of the last six months, I guess?

Andrew Florance: Well, yes. So I'd say the fundamental strategy remains the same. And the way you optimize from quarter-to-quarter, you don't want to lock yourself into an assumption that you had one time period and dogmatically not change from it. So we're looking at as you build -- so first of all, it's a huge opportunity. There is no one -- we're not competing with anybody for these clients. We're the only people providing this service that provides a high ROI. No one else is providing marketing listings the way we do. Our perceived competitors sell are basically lead brokers, which is very different. So, going to market, it's a massive audience of real estate agents across the United States. And initially, as you scale up the sales force, you really have to go inside sales because it's not possible to train salespeople in 50 cities simultaneously, having done this a couple of times. So you start out with the inside team and through time, you evaluate the productivity of the various folks on that team. Some are very productive and doing a great job. Others are not doing a great job, and you don't want to dogmatically carry them along. And what we're seeing is we had a very small sales team in the field, and those folks are producing at a much higher level, which is not a surprise to us. We would expect people in the field to produce more. There is not a material cost differential between the folks in a centralized and in the field. We already have field offices, conference rooms in most of these major cities. We have a lot of infrastructure out there. It's just a question of being methodical, cycling up five cities, 50 salespeople, letting that set, building additional management going to the next wave of cities, letting that set go in the next wave and not getting ahead of getting over your skis. So it's also a shift from prioritizing revenue growth and revenue growth as the first priority to committing to hitting our EBITDA goals. So we're not going to sacrifice one for hitting the EBITDA goals through time.

Operator: Our next question comes from Curtis Nagle with Bank of America.

Curtis Nagle: Maybe just talk through the bridge to get to the resi EBITDA guide for the year. I understand that things like the sales force, but it does imply a fairly steep step-up between 3Q to 4Q, lower revenues, I think, on the quarter there. But just walk through the -- if you could, the pieces. And again, just what's driving that inflection between the two quarters?

Christian Lown: Let us come back to you. I just -- I don't have that bridge in front of me, so we'll come back to you.

Andrew Florance: You're on mute.

Christian Lown: Apologies. Let us come back to you. I don't have that bridge in front of you, but we'll come back to you in the calls after.

Curtis Nagle: All right. That's a follow-up. And just for the other CRE segment X -- Ten-X, it looks like you strip that out, it implies basically flat growth. So just kind of what's going on there?

Christian Lown: Well, actually, if you strip it out, it's the primary delta between the change in guidance. So like I said, we still feel really good about the growth in those businesses and where they're heading, especially with the launch of the new products. So we feel good about the business. The change in guidance really was primarily driven by Ten-X, which as you know, is a transaction business.

Andrew Florance: And the core business is accelerating.

Christian Lown: It's growing for sure. I mean CoStar continues to grow. And so like I said, we're excited about what we see ahead of us.

Operator: Our next question comes from Brett Huff with Stephens.

Brett Huff: Welcome, Robin. Nice to speak with you. Question, a follow-up on the residential business, less about the numbers and just more about how the sales sort of pitch is going. Given the really strong, I think you said 10 or 11x ROI, which is super compelling. What's our rate-limiting step in getting folks to kind of believe or understand that? How -- is it like pushing a rope -- or is it education? Or how do we -- just given how you're rejiggering the sales force, can you just give us a kind of bridge between those 2 things would be helpful.

Andrew Florance: Yes. So, in June, our demo to close rate, I believe, was 45% number I saw. So that's an incredible close rate. And so the story is very compelling. People that listen to that story are subscribing. And those that subscribe are renewing now. So we're getting lower and lower cancellation rates, ergo higher and higher renewal rates. That's the most important number to me. Those two numbers are very important. But having hundreds and hundreds of folks in inside sales team centralized is challenging to get the demos, the presentations, the at bats that you want. You have an advantage when you're in the field because you go to industry events, you show up at open houses, you drop in on residential offices to visit one customer and you come across other customers. So through time, that's why you see 2x the productivity in a field sales force that you tend to see or we have seen an inside sales force. So it's really getting more at bats. But we remain very confident that the numbers you really care about, like close rate and renewal rate are good, you want more at bats. And just anecdotally, as I talk to clients that encounter here and there, we're getting positive referrals now, and that's a big help. And so the combination of performance management inside and moving to the field, I think will keep us on the track we want to be on and will give us good results.

Operator: Our next question comes from Faiza Alwy with Deutsche Bank.

Faiza Alwy: I wanted to follow up on the apartments question and your desire to kind of maintain pricing or your ability to maintain pricing. I guess are you seeing some of the macro pressures and the competitive pressures sort of build over time? Or I guess, what phase are we in, in terms of both of those things? And how confident are you that you can sort of maintain your price integrity?

Andrew Florance: Yes. So we are maintaining our price integrity because third-party sources show us at about 2.5x the lead to lease conversion. And that's because if you have a dedicated -- if you have a site that's identified as being a rental site with a lot of high-quality information and a good experience, you get a higher conversion rate, which makes it more valuable to your customers. That is something you have to communicate again, again, again. And we're doing that. And so having been through 100 competitive situations over the last four decades, they do have patterns to them. This one is combined with adverse market conditions. So it's not a helpful market environment. There is stress in the market for multifamily owners. Everyone is probably aware of that. But typically, in a competitive game like this, you have a run and you've had a period where they have acquired a company that the FT said was an illegal merger. And -- whether or not they can keep that company or not, who knows. It creates some headwinds on the comps through time. And then as well, there is the need for them to have to be able to deliver the lead to lease conversion through time, which is likely challenging. And ultimately, the value we provide is worth the pricing we charge, so we're able to maintain that. And again, I think the evidence is in the numbers. You're looking at roughly the same ARPU despite fast growth at the lower end. So we're doing quite well there. And we're retaining the clear leadership position with all the major players.

Christian Lown: Well, Andy, I think that's also highlighted by June was the third best month in Apartments.com's history on gross sales. So what that demonstrates is obviously a strong continued interest and desire to be part of the Apartments.com network, use the capability. And so we face a competitive environment. We shrunk down to basically two primary competitors. But even in like that, we saw one of the best sales months in the company's history. So it gives us a lot of confidence in the road ahead.

Operator: Our next question comes from Andrew Boone with Citizens.

Andrew Boone: I wanted to go back to Homes.com again and ask about advertising spend. Andy, I understood the optimization of the sales force. But can you help us understand how you guys are thinking about marketing? What happened in 2Q? And then what's the expectation for the back half of the year?

Andrew Florance: Yes. So I'd say there's a -- you've seen a couple of shifts occurring in the marketing for Homes.com. One, you've probably noticed a shift away from very expensive celebrity production. We think we're getting a better result from some of the newer marketing advertising, brand advertising we're doing. We get more into what is the actual functionality of the product and the advantage it offers, particularly when we believe we have the clear-cut strongest AI solutions in search with great advantages there. So you've seen some of those newer ads, which will, through time, be much less expensive to produce. But then also, we are less than thrilled with results that we've seen through time on linear TV and some of the streaming, and we're finding -- and we're shifting a little bit more to SEM and digital. We're maintaining an aggressive SEM profile and will through the rest of the year. But we're going further down the funnel. We're not working the upper brand identity as much, and we're more looking for marketing vehicles that are down the funnel that transition to leads more directly. And that's one of the core reasons for that is that we have a pretty solid customer base right now. We're running about 9% of all listings in the United States marketed on the platform or enhanced on the platform. 36,000 customers in just two years. And you see by focusing on the ROI on those customers, you see the renewal rates going up and up and up. So we believe it's working. And then we'll be looking for more tactics and strategies around getting our sales force at bats for demos over the next year with B2B.

Christian Lown: It's also important to remind everyone, and I think this also bridges back to the question asked before is that there's seasonality. And so we have lower marketing spend in our resi marketplaces in the second half of the year. And all this is within our plan. And so we just continue along our plan, but there is lower marketing spend in the resi marketplaces from seasonality in the second half.

Operator: Our next question comes from Scott Wurtzel with Wolfe Research.

Scott Wurtzel: Just on the kind of the change in the sales force in Homes.com. I'm wondering if you can talk about just kind of how long you would expect it to take for these new field sales reps to sort of ramp in productivity, how that may compare to the ramp time on some of your stronger inside sales reps? Any color there would be appreciated.

Andrew Florance: I'm going to -- I would [ hypothecate ] that the ramp time is similar, though the profile we're able to hire in the field, I believe, is better suited to the task. So when you're hiring hundreds and hundreds, when you're hiring 1,000 people in Richmond, you're not able to hire people with the experience profile you want to get. So you're not going to get that real estate experience that you would love to see or that B2B marketing sales or sort of marketplace sales experience. When you're trying to hire 10 folks in Dallas or 20 folks in Washington, D.C., you could actually get the real estate background. You can get portal experience, you can get advertising sales, you can get some with five years of sales experience. So I personally have been looking at every resume that's coming into that field sales team, and it is a much higher profile of salesperson. In Richmond, when you're hiring that many people at a market like that, really last year and in the first quarter, you're often hiring people right out of college. And some of them can be very successful. Our #1 salesperson is in her first year out of college. And -- but many others turns out it's just not -- it's not the stick. So, in the field, you can actually hire folks with a better profile and more experience. Now the other thing is at a certain point, when we were scattered all over Richmond in multiple buildings and some odd shapes and sizes in the hot places, and it was hard to find anybody. We purposely slowed down recruiting until we were in the new facility. And I think we have -- in the new facility, I think we can out-recruit just about any company. So we'll begin a more measured pace of growth inside while we're also doing field sales, which is our ultimate preference to build a robust field sales force. But again, it takes time.

Operator: Our next question comes from Nick Jones with BNP Paribas.

Nicholas Jones: I guess maybe on AI initiatives. Can you talk about how you're balancing AI investments as you target kind of your midterm EBITDA 2030 EBITDA targets? And as you deploy this out to more users, I mean, are token costs something we should be thinking about as you try to drive more and more engagement and maintain this kind of AI platform you deployed?

Andrew Florance: Yes. So, so far, and I'll let Chris follow up and correct me. But so far, I believe we have more cost savings from AI than we have cost increases from tokens. So when you're looking at something like releasing the rent benchmarking or the real estate manager lease ingestion, you're saving a ton of money on labor, and we expect to save even more money on labor. And then we also see going forward, the opportunity to generate a lot of content by using our proprietary content using expert models, but do it in a way in which we can resell the token we've used to generate that expert knowledge off of proprietary data to many, many, many people. So the sort of business model we've had through time where we invest to collect a piece of information and then sell it across a broad audience, thereby driving the -- having a very high gross margin of the information you're selling -- the same thing exists in a proprietary information token world where you generate a piece of combined expertise with proprietary data and then you sell it across a very broad audience and thereby have a very small per unit cost or high gross margin. We're not seeing anything that is unpleasant on the token consumption on the platforms we've got right now. For sure, we're getting significant coding efficiencies through the LLMs we're using for coding. And we are seeing the providers there trying to shift off of a la carte to token pricing. But I feel reasonably comfortable that, that has to come with efficiency gains in labor or it doesn't make a lot of sense. But I did notice that it's a competitive market because I went down to the cafeteria today, and I was -- a bunch of the tables were blocked out, and I couldn't sit in them because one of the major LLM providers was serving meals to all of our developers trying to win them over. So there should be some token competition there.

Christian Lown: Yes, I'd add a couple of other things. We're actually below budget on what we had forecast for token consumption cost in 2026, even in light of the initiatives we've undertaken. So we're excited about that. We've talked previously about creating optimization engines within our AI infrastructure to seek out the best pricing on tokens as we go down that route. I'm sure you're all keeping abreast of token pricing and the advent of additional frontier models and the massive cost differentiation that exists. So I actually think we're probably in a better position than we were. I'd also highlight, we really haven't taken into account a lot of cost savings that we know are going to accrue to us across all of our businesses as we drive more AI within the business. I would say we're relatively agnostic on that. And as we continue to go day-to-day, I see a lot of opportunity across all of our businesses, research included to drive down costs with AI. So I actually think it's a real positive story for us. We're on the cusp of it and costs are under budgeted, and I think that's likely to continue given pricing trends, given how we've optimized the business and given what we're planning on doing. So Andy took a very measured approach and focused approach in doing that. And I think it's actually proving to be the right outcome.

Andrew Florance: Did we mention that Robin Rossmann is just an LLM model?

Operator: Our next question comes from Jason Haas with Wells Fargo.

Jason Haas: I'm curious if you could talk a little bit more about the Apartments.com ChatGPT partnership and just how this is a mutually beneficial relationship. And I'm curious if you're considering launching something like that for Homes.com and maybe even for CoStar Suite. Curious to hear your thoughts there.

Andrew Florance: Yes. So, starting from the back forward, I have been seeing some of the implications of CoStar AI, and it's got a lot of potential because you have a lot more data there and a lot more modules. And so the ability to query across multiple data sets and then merge the content together and answer is pretty powerful. I don't see that being something that makes sense to put out on a -- in a module on a ChatGPT because that's not who the customer is. They're really looking for something much more in depth. With Homes.com, we are very prevalent on ChatGPT. I've heard that we are more prevalent than just about anybody else on there for actual -- for generative optimization. We think actually the experience of the full going into Homes.com and the full AI integration at the UX level is more powerful than a module in ChatGPT. With Apartments.com, we're hitting both the integrated UX AI, Agentic AI, along with the module on ChatGPT. However, the story is still -- the traffic is not coming from that source. You're still single digit right now. So it's more of a window dressing than a reality, but we'll keep an eye on it, and we think it will be one of many options for where you create the front door and bring traffic in.

Operator: Our next question comes from Ashish Sabadra with RBC Capital Markets.

Ashish Sabadra: I just had a quick clarifying question on the residential guidance. The updated guidance, which is $50 million is below the prior guidance. I just wanted to better understand how much of it was due to Homes.com versus multifamily? Any color there?

Christian Lown: As I mentioned, around 1/4 of it came -- you're talking on the revenue side, I think, is -- came from Ten-X and then the remainder from -- on the residential side where the primary participants. And like I said, we don't give out net new guidance by each segment, but we did mention that Q2 net new bookings for Homes.com was similar to the first quarter. So I think you can kind of come to some conclusions based on that math.

Operator: I would now like to turn the call back over to Andrew Florance for any closing remarks.

Andrew Florance: Well, I think we did a decent job of keeping the prepared remarks section reasonably brief and having an extended Q&A question. Thank you, everyone, for joining. Thank you for joining us, and we look forward to updating you in the next quarter.

Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.