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☒			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2020

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Delaware						52-2091509
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

1331 L Street, NW
Washington,			DC			20005

Title of each class			Trading Symbol			Name of each exchange on which registered
Common Stock ($0.01 par value)			CSGP			Nasdaq Global Select Market

Securities registered pursuant to section 12(g) of the Act: None

Yes x No o

Yes o No x

Large accelerated filer			x			Accelerated filer			o
Non-accelerated filer			o			Smaller reporting company			☐
						Emerging growth company			☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

PART I
Item 1.			Business			5
Item 1A.			Risk Factors			19
Item 1B.			Unresolved Staff Comments			30
Item 2.			Properties			30
Item 3.			Legal Proceedings			30
Item 4.			Mine Safety Disclosures			30
PART II
Item 5.			Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			31
Item 6.			Selected Financial Data			33
Item 7.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			34
Item 7A.			Quantitative and Qualitative Disclosures about Market Risk			50
Item 8.			Financial Statements and Supplementary Data			51
Item 9.			Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			51
Item 9A.			Controls and Procedures			51
Item 9B.			Other Information			52
PART III
Item 10.			Directors, Executive Officers and Corporate Governance			52
Item 11.			Executive Compensation			52
Item 12.			Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			52
Item 13.			Certain Relationships and Related Transactions, and Director Independence			52
Item 14.			Principal Accountant Fees and Services			52
PART IV
Item 15.			Exhibits and Financial Statement Schedules			54
Item 16.			Form 10-K Summary			57
			Signatures			58
			Index to Consolidated Financial Statements			F-1

We manage our business geographically in two operating segments, with our primary areas of measurement and decision-making being North America, which includes the U.S. and Canada, and International, which primarily includes Europe, Asia-Pacific and Latin America. On October 22, 2019, we acquired STR, Inc. and STR Global, Ltd. (together with STR, Inc., "STR"), which provides benchmarking and analytics for the hospitality industry. On June 24, 2020, we acquired Ten-X Holding Company, Inc. and its subsidiaries ("Ten-X"), which operate an online auction platform for commercial real estate. On October 26, 2020, we acquired Emporis GmbH, a Germany-based provider of international commercial real estate data and images, and on December 22, 2020, we acquired Homesnap. See Notes 5 and 9 to the accompanying Notes to the Consolidated Financial Statements included in Part IV of this Annual Report on Form 10-K for further discussion of the Homesnap acquisition.

Our primary brands include CoStar®, LoopNet®, Apartments.comTM, STR®, Ten-X®, BizBuySell®, LandsofAmericaTM, and HomeSnap®, which are accessible via the Internet and through our mobile applications. Our subscription-based services consist primarily of CoStar Suite® services, which include information, analytics and online marketplace services offered to the commercial real estate industry and related professionals. CoStar Suite® is sold as a platform of service offerings consisting of CoStar Property Professional®, CoStar COMPS Professional® and CoStar Tenant®, and is our largest service offering in our North America and International operating segments.

LoopNet® is the flagship brand in our network of commercial real estate marketing sites, which also includes Cityfeet.com and Showcase.com. Our LoopNet online marketplace enables commercial property owners, landlords, and brokers to advertise properties for-sale or for-lease and to submit detailed information about property listings. Commercial real estate agents, buyers, investors, and tenants use LoopNet extensively to search for available property listings that meet their criteria. LoopNet offers unique, subscription-based advertising solutions for different segments within the industry and delivers value across its constituent networks. The LoopNet network leverages CoStar’s commercial real estate database to provide in-depth and accurate information across all commercial property types, including office, industrial, retail, restaurant, shopping center, multifamily, specialty, health care, hospitality, sports and entertainment, land, and residential income. Investors and tenants are also able to consume industry news developed by our in-house editorial team.

We have expanded and continue to expand the coverage and depth of our information, analytics and online marketplace services. In addition to organic growth, we have grown our business through strategic acquisitions. Most recently, on June 24, 2020, we acquired Ten-X, which operates an online auction platform for commercial real estate; on October 26, 2020, we acquired Emporis GmbH, a Germany-based provider of international commercial real estate data and images, which we subsequently merged into another of our German subsidiaries; and on December 22, 2020, we acquired Homesnap, which operates an online mobile software platform for residential real estate agents and brokers. We continue to integrate our recent acquisitions and the services they offer into our CoStar network. See Notes 5 and 9 to the accompanying Notes to the Consolidated Financial Statements included in Part IV of this Annual Report on Form 10-K for further discussion of these acquisitions.

•			Sales and leasing brokers			•			Government agencies
•			Property owners			•			Mortgage-backed security issuers
•			Property managers			•			Appraisers
•			Design and construction professionals			•			Pension fund managers
•			Real estate developers			•			Reporters
•			Real estate investment trust managers			•			Tenant vendors
•			Investment and commercial bankers			•			Building services vendors
•			Mortgage bankers			•			Communications providers
•			Mortgage brokers			•			Insurance companies’ managers
•			Retailers			•			Institutional advisors
•			Hospitality owners			•			Investors and asset managers
•			Real estate agents

The commercial real estate and related business community historically operated in an inefficient marketplace because of the fragmented approach to gathering and exchanging information within the marketplace. Various organizations, including hundreds of brokerage firms, directory publishers and local research companies, collected data on specific markets and developed software to analyze the information they independently gathered. This highly fragmented methodology resulted in duplication of efforts in the collection and analysis of information, excessive internal cost and the creation of non-standardized data containing varying degrees of accuracy and comprehensiveness, resulting in a formidable information gap.

Data and Image Providers. We license a small portion of our data and images from public record providers and third-party data sources. Licensing agreements with these entities allow us to use a variety of commercial real estate information, including property ownership, tenant information, demographic information, maps, aerial photographs and 3D virtual apartment tours of apartment communities, all of which enhance various CoStar services. These license agreements generally grant us a non-exclusive license to use the data and images in the creation and supplementation of our information, analytics and online marketplaces.

Management and Quality Control Systems. Our research processes include automated and non-automated controls to ensure the integrity of the data collection process. A large number of automated data quality tests check for potential errors, including occupancy date conflicts, available square footage greater than building area, typical floor space greater than land area and expired leases. We also monitor changes to critical fields of information to ensure all information is kept in compliance with our standard definitions and methodology. Our non-automated quality control procedures include:

•Calling our information sources on recently updated properties to re-verify information;

•Performing periodic research audits and field checks to determine if we correctly canvassed buildings;

•Providing training and retraining to our research professionals to ensure accurate and standardized data compilation; and

•Compiling measurable performance metrics for research teams and managers for feedback on data quality.

•CoStar Property® provides a comprehensive inventory of office, industrial, retail, multifamily and student housing properties and land. We also provide for-lease and for-sale listings, historical data, property analytics, building photographs, demographics, maps and floor plans. Commercial real estate professionals use CoStar Property to identify available space for-lease, evaluate leasing and sale opportunities, value assets and position properties in the marketplace. Our clients also use CoStar Property to analyze market conditions by calculating current vacancy rates, absorption rates or average rental rates, and forecasting future trends based on user selected variables. CoStar Property provides subscribers with powerful map-based search & reporting capabilities.

•CoStar COMPS® is the industry’s most comprehensive database of comparable commercial real estate sales transactions and is designed for professionals who need to research property comparables, identify market trends, expedite the appraisal process and support property valuations. CoStar COMPS offers subscribers numerous fields of property information, access to support documents (e.g., deeds of trust) for new comparables, demographics and the ability to view for-sale properties alongside sold properties plotted on a map or aerial image or in a table format.

•CoStar Market Analytics provides owners, investors, brokers property managers, lenders, appraisers and other commercial real estate professionals the ability to view and report on aggregated market and submarket trends, including leasing, vacancy, rental rates, construction, investment sales activity and overall economic conditions that affect commercial real estate markets. CoStar Market Analytics covers all major real estate sectors including office, industrial, retail, multifamily and student housing, and provides quantitatively driven and economist curated forecasts of supply, demand, vacancy, and rent at the submarket level, and job growth and asset pricing at the market level.

•CoStar Tenant® is a detailed online business-to-business prospecting and analytical tool providing commercial real estate professionals with the most comprehensive commercial real estate-related tenant information available in our North American markets. CoStar Tenant profiles tenants occupying space in commercial buildings and provides updates on lease expirations - one of the service’s key features - as well as occupancy levels, growth rates and numerous other facts. Delivering this information via the Internet allows users to target prospective clients quickly through a searchable database that identifies only those tenants meeting certain criteria.

•CoStar Lease Comps provides subscribers comprehensive data regarding CoStar researched lease transactions and a software tool to capture, manage and maintain their own user-entered lease data. In addition, CoStar Lease Comps

•CoStar Lease Analysis® is a workflow tool that allows subscribers to incorporate CoStar data with their own data to perform in-depth lease analyses and share those analyses with other subscribers or non-subscribers. CoStar Lease Analysis can be used to produce an understandable cash flow analysis as well as key metrics about any proposed or existing lease. It combines financial modeling with CoStar’s comprehensive property information, enabling the subscriber to compare lease alternatives, either from a landlord or tenant perspective.

•CoStar Public Record is CoStar’s newest commercial real estate servicing offering. It provides access to a searchable database of nearly 38 million commercially-zoned parcels in the U.S. Users can search for property attributes, sale transaction, loan, lien and tax assessments information. Information in this module is sourced from numerous counties and jurisdictions that provide this data for ownership, title and property tax assessment purposes.

CoStar Risk Analytics® is a trusted partner to many of the largest commercial real estate lenders and commercial mortgage-based securities (CMBS) market participants, providing timely data, advanced analytics, time proven models and extensive experience to support regulatory examinations, risk management and strategic decision making. The CoStar Risk Analytics COMPASS credit default model has been used by commercial real estate lenders, CMBS participants and regulators for over 15 years to estimate required loss reserves, stress test portfolios, generate risk ratings, calculate capital adequacy, underwrite loans, target lending opportunities and price CMBS bonds. Our clients rely on CoStar Risk Analytics for model validations and reporting to support regulatory examinations. Additionally, CoStar Risk Analytics solutions connect client loan and CMBS loan portfolios to CoStar’s industry leading commercial real estate data, research, analytics and the COMPASS credit model, updated daily, for more informed decision making, portfolio strategy and surveillance. Clients of CoStar Risk Analytics solutions include many of the largest banks, life insurance companies, asset managers, hedge funds, government agencies and regulators.

STAR Report is STR’s data analytics report. It provides hospitality benchmarking, measuring a hotel’s performance against a self-selected aggregated competitive set. STR's confidential data reports enable customers to understand their market position based on trends and indices. Reports are provided on a monthly, weekly or daily basis and provide insights about key metrics such as occupancy, average daily rate (ADR) and revenue per available room (RevPAR). STAR Reports are only available to industry participants who provide data to STR -- typically hotel brands, third party management companies and owners. STR also offers ad hoc reports with a customizable data set providing aggregated hotel performance data for a bespoke set of hotels or standardized industry segments (e.g. market or submarket).

•ApartmentFinder® provides lead generation, advertising and Internet marketing solutions to property managers and owners through its main site, ApartmentFinder.com.

•ForRent.com® provides digital advertising through a network of four multifamily websites - which includes ForRent.com, AFTER55.com, CorporateHousing.com and ForRentUniversity.com.

•ApartmentHomeLiving.comTM provides renters with another national online apartment rental resource that showcases apartments for rent with official prices, pictures, floor plans and detailed information on each apartment.

•Apartamentos.comTM provides Spanish speaking renters with an online apartment rentals resource offered exclusively in Spanish, with the same primary features found on Apartments.com.

•Westside Rentals® specializes in Southern California real estate rentals.

•Off Campus Partners provides student housing marketplace content and technology to U.S. universities, simplifying the off-campus housing search process for universities, property managers, and students.

LoopNet Premium Lister® is designed for commercial real estate professionals and other customers who seek the broadest possible exposure for their listings, access to leads lists, and advanced marketing and searching tools. LoopNet Premium Lister provides subscribers with the ability to market their listings to all LoopNet.com visitors, as well as numerous other features. LoopNet Premium Lister is available for a quarterly or annual subscription.

LoopNet Diamond, Platinum and Gold Ads are designed for commercial real estate professionals and other customers who seek the broadest possible exposure for their listings, access to leads lists, and advanced marketing and searching tools. These LoopNet Ads provide subscribers with full access to three of the industry’s top commercial real estate marketplaces, LoopNet®, Cityfeet® and Showcase.com®, as well as online newspaper websites including the Wall Street Journal. LoopNet Ads are available for a six-month or annual subscription.

BizBuySell®, BizQuest® and FindaFranchise BizBuySell.com, BizQuest.com and FindaFranchise.com are leading online marketplaces for operating businesses and franchises for-sale. Business sellers pay a fee to list their operating businesses for-sale, and interested buyers can search the respective sites' listings for free. The BizBuySell, BizQuest and FindaFranchise Franchise Directories allow interested business buyers to search hundreds of franchise opportunities, and franchisors can list their availabilities in the directory on a cost per lead basis.

HomeSnap® is an industry-leading online and mobile software platform that provides user-friendly applications to optimize residential real estate agent workflow and reinforce the agent-client relationship.

•Quality and depth of the underlying databases;

•Quality and quantity of leads and leases delivered;

•Ease of use, flexibility and functionality of the software;

•Intuitiveness and appeal of the user interface;

•Timeliness of the data, including listings;

•Breadth of geographic coverage and services offered;

•Completeness and accuracy of content;

•Client service and support;

•Perception that the service offered is the industry standard;

•Price;

•Effectiveness of marketing and sales efforts;

•Proprietary nature of methodologies, databases and technical resources;

•Vendor reputation;

•Brand loyalty among customers; and

•Capital resources.

•Online marketing services, websites or data exchanges targeted to commercial real estate brokers, buyers and sellers of commercial real estate properties, insurance companies, mortgage brokers and lenders, such as Reed Business Information Limited and its Estates Gazette and Radius Data Exchange products, SquareFoot, officespace.com, Brevitas, Catylist (now a part of Moody's), 42Floors, Altus Group (Commercial Property Search), Digsy, Quantum Listing, RealNex MarketPlace, TenantWise, Rofo, BuildingSearch.com, CIMLS, CompStak, Rightmove, Yardi (PropertyShark and CommercialCafe), CREXi, TotalCommercial.com, DebtX, Real Capital Markets, and VTS;

•Publishers and distributors of information, analytics and marketing services, including regional providers and national print publications, such as CBRE Economic Advisors, Marshall & Swift, REIS Network (part of the Moody's Analytics Accelerator), Real Capital Analytics, Real Capital Markets, Reonomy, Yardi Matrix, RealPage and its Axiometrics business, Altus Insight and Altus RealNet (Canada);

•Search engine and Internet listing services featuring apartments for rent, such as Google, Bing, Facebook Marketplace, ApartmentGuide.com, Rent.com, Rentals.com, Zillow Rentals, Trulia Rentals, StreetEasy, NakedApartments.com, HotPads.com, MyNewPlace.com, Zumper, PadMapper, Craigslist, ApartmentList.com, Move.com, Realtor.com, Adobo, RadPad, RentJungle, RentCafe.com, RentHop, RentBerry, and ApartmentRatings;

•Hospitality benchmarking and analytics services, such as Lodging Econometrics, Kalibri Labs, Travelclick, HotStats and Shigi Group (SnapShot);

•Online and mobile software application providers in the residential real estate industry, including Zillow, Redfin and Realtor.com, as well as agent marketing platforms and workflow providers;

•Locally controlled real estate boards, exchanges or associations sponsoring property listing services and the companies with whom they partner, such as Catylist, the National Association of Realtors, CCIM Institute, Society of Industrial and Office Realtors, the Commercial Association of Realtors Data Services and AIR CRE;

•Real estate portfolio management software solutions, such as Cougar Software, MRI Software, Altus, RealPage, AppFolio and SiteCompli;

•Real estate lease management and administration software solutions, such as Accruent, Tririga, Manhattan Software, Tango Analytics, Lease Accelerator, Visual Lease, Sequnetra, Lease Harbor and AMT Direct;

•In-house research departments operated by commercial real estate brokers; and

•Public record providers.

•Trade secret, misappropriation, unfair competition, copyright, trademark, computer fraud, database protection and other laws;

•Registration of copyrights and trademarks;

•Nondisclosure, noncompetition and other contractual provisions with employees and consultants;

•License agreements with customers;

•Patent protection; and

•Technical measures.

We may not be able to compete successfully against existing or future competitors in attracting advertisers, which could harm our business, results of operations and financial condition. We may not be able to compete successfully against existing or future competitors in attracting advertisers, which could harm our business, results of operations and financial condition. We compete to attract advertisers. Our competitors may have greater brand recognition or more direct sales personnel than we have and may generate more web traffic than we do, which may provide them with competitive advantages. To compete successfully for advertisers, we must continue to invest resources in developing our advertising platform and proving the effectiveness and relevance of our advertising services. Pressure from competitors seeking to acquire a greater share of our advertisers’ overall marketing budget could adversely affect our pricing and margins, lower our revenue, and increase our research and development and marketing expenses. If we are unable to compete successfully against our existing or future competitors, our business, results of operations or financial condition could be adversely affected.

Our business and results of operations have been and will be, and our financial condition may be, impacted by the COVID-19 pandemic and such impact could be materially adverse and continue for an unknown period of time. The global spread of COVID-19 has created significant economic volatility, uncertainty and disruption around the world. The extent to which COVID-19 will further impact our business, operations and financial results, including the duration and magnitude of such impact, is uncertain and will depend on numerous rapidly evolving factors that we cannot accurately predict including, among others:

•the length and severity of the pandemic;

•the availability of vaccines to our employees and clients;

•the negative impact on global and regional economies, credit markets and economic activity;

•governmental, business and individual actions taken in response to the pandemic and the impact of those actions on global economic activity;

•the impact of business disruptions and reductions in employment levels and the level of consumer confidence in the economy on our clients and the resulting impact on their demand for our services and solutions;

•business consolidations or failures among businesses that we serve;

•our clients’ ability to pay for our services and solutions and our ability to collect payment for services provided;

•our ability to market, develop, provide, and train clients on the use of our services and solutions, including as a result of our employees or our clients’ employees working remotely, worker absenteeism or decreased productivity, quarantines, social distancing or other travel or health-related restrictions;

•the pace and extent of economic recovery following the COVID-19 pandemic, including recovery in the real estate industry in particular;

•increased costs of additional safety procedures and increased technology-related expenses to provide for business continuity; and

•increased cyber security risk, data accessibility concerns and susceptibility to communication disruptions because our employees and employees of our clients are working remotely.

If we are unable to hire qualified persons for, or retain and continue to develop, our sales force, or if our sales force is unproductive, our revenues could be adversely affected. In order to support revenues and revenue growth, we need to continue to develop, train and retain our sales force. Our ability to build and develop a strong sales force may be affected by a number of factors, including: our ability to attract, integrate and motivate sales personnel; our ability to effectively train our sales force; the ability of our sales force to sell an increased number and different types of services; our ability to manage effectively an outbound telesales group; the length of time it takes new sales personnel to become productive; the competition we face from other companies in hiring and retaining sales personnel; our ability to effectively structure our sales force; and our ability to effectively manage a multi-location sales organization, including field sales personnel. If we are unable to hire qualified sales personnel and develop and retain our sales force, including sales force management, or if our sales force is unproductive, our revenues or growth rate could decline and our expenses could increase.

We may be unable to increase awareness of our brands, including CoStar, LoopNet, Apartments.com, BizBuySell, LandsofAmerica, STR, Ten-X and Homesnap, which could adversely affect our business. We rely heavily on our brands, which we believe are key assets of our company. Awareness and differentiation of our brands are important for attracting and expanding the number of users of, and subscribers to, our online marketplaces, such as LoopNet, the Apartments.com network of rental websites, CoStar Showcase, and the Land.com network of rural lands for-sale. We expect to continue to invest in sales and marketing in 2021 as we seek to grow the numbers of subscribers to, and advertisers on, our marketplaces. Our methods of advertising may not be successful in increasing brand awareness or, ultimately, be cost-effective. If we are unable to maintain or enhance user and advertiser awareness of our brands, or if we are unable to recover our marketing and advertising costs through increased usage of our services and increased advertising on our websites, our business, results of operations and financial condition could be adversely affected.

Our internal and external investments may place downward pressure on our operating margins. To increase our revenue growth, we continue to invest in our business, including internal investments in product development to expand the breadth and depth of services we provide to our customers and external investments in sales and marketing to generate brand awareness. Our operating margins may experience downward pressure in the short term as a result of these investments. Furthermore, our investments may not produce the expected results. If we are unable to successfully execute our investment strategy, we may experience decreases in our revenues and operating margins.

If Internet search engines do not prominently feature our websites on the search engine results page, traffic to our websites would decrease and, if we are unable to maintain or increase traffic to our marketplaces, our business and operating results could be adversely affected. Our ability to generate revenues from our marketplace business depends, in part, on our ability to attract users to our websites. Google, Bing, DuckDuckGo and other Internet search engines drive traffic to our websites, including CoStar.com, the Apartments.com network of rental websites, the LoopNet.com network of commercial real estate websites, Ten-X.com, the BizBuySell.com network of business for-sale websites and the Land.com network of land for-sale websites. For example, when a user enters in a search query for an apartment building name or address into an Internet search engine, the Internet search engine’s ranking of our Apartments.com webpages will determine how prominently such webpages are displayed on the search engine results page. Our ability to maintain prominent search result rankings and positioning is not entirely within our control. Our competitors’ Search Engine Optimization (SEO) and Search Engine Marketing (SEM) efforts may result in webpages from their websites receiving higher rankings than the webpages from our websites. Internet search engines could revise their algorithms and methodologies in ways that would adversely affect our search result rankings. Internet search engine providers could form partnerships or enter into other business relationships with our competitors resulting in competitors’ sites receiving higher search result rankings. Internet search engines are increasingly placing alternative search features (such as featured snippets, local map results and other immersive experiences) on the search engine results page above or more prominently than search engine results. If our search result rankings are not prominently displayed, traffic to our websites may decline which could slow the growth of our user base. Our websites have experienced fluctuations in search result rankings in the past, and we anticipate similar fluctuations will occur in the future. If we experience a material reduction in the number of users directed to our websites through Internet search engines or otherwise fail to maintain or increase traffic to our marketplaces, our ability to acquire additional subscribers or advertisers and deliver leads to and retain existing subscribers and advertisers could be adversely affected. As a result, our business, results of operations and financial condition could be adversely affected. Our marketing expenses may increase in connection with our efforts to maintain or increase traffic to our websites. Increases in our operating expenses could negatively impact our operating results if we are unable to generate more revenues through increased sales of subscriptions to our marketplace products.

If real estate professionals or other advertisers reduce or cancel their advertising spending with us and we are unable to attract new advertisers, our operating results would be harmed. Our marketplace businesses, including LoopNet, the Apartments.com network of rental websites, and the Land.com network of rural lands for-sale, depend on advertising revenues generated primarily through sales to persons in the real estate industry, including property managers and owners and other advertisers. Our ability to attract and retain advertisers, and ultimately to generate advertising revenue, depends on a number of factors, including:

•Increasing the number of unique visitors to, and users of, our websites and mobile applications;

•The quantity and quality of the leads that we provide to our advertisers;

•The success of any marketing and product development efforts directed at attracting additional users and advertisers to our marketplaces;

•Keeping pace with changes in technology and with our competitors; and

•Offering an attractive return on investment to our advertisers for their advertising dollars spent with us.

We are subject to an FTC consent order, which is publicly available on the FTC's website at http://www.ftc.gov/, that, among other things, requires us to give the FTC advance notice of certain acquisitions. Compliance with this order could prevent us from closing certain acquisitions or add significant time and cost to such acquisitions, ultimately making an acquisition prohibitive or preventing us from realizing its anticipated benefits.

As a result of our acquisitions, we had approximately $2.7 billion of goodwill and intangibles as of December 31, 2020. Future acquisitions may increase this amount. If we are required to recognize goodwill and intangibles impairment charges in the future, this would negatively affect our financial results in the periods of such charges, which may reduce our profitability.

Cyberattacks and security vulnerabilities could result in serious harm to our reputation, business, and financial condition. As stated above, our business involves the collection, storage, processing and transmission of customers’ personal data. We also collect, store and process employee personal data. An increasing number of organizations, including large merchants, businesses, technology companies and financial institutions, as well as government institutions, have disclosed breaches of their information security systems, some of which have involved sophisticated and highly targeted attacks, including on their websites, mobile applications, and infrastructure.

Our operating results and revenues are subject to fluctuations and our quarterly financial results may be subject to market cyclicality, each of which could negatively affect our stock price. The real estate market may be influenced by general economic conditions, economic cycles, seasonality and many other factors, which in turn may impact our financial results. The different sectors of the large and fragmented industry, such as office, industrial, retail, multifamily, single family and others, are influenced differently by different factors, and have historically moved through economic cycles with different timing. As such, it is difficult to estimate the potential impact of economic cycles and conditions or seasonality from year-to-year on our overall operating results. We generally see higher sales of Apartments.com listing services during the peak summer rental season and higher CoStar Suite sales towards the end of the year, however sales fluctuate from year-to-year and may fluctuate more widely when there are changes in general economic conditions or the industry, such as changes resulting from the COVID-19

•Rates of subscriber adoption and retention;

•Timing of our sales conference or significant marketing events;

•Changes in our pricing strategy and timing of changes;

•The timing and success of new service introductions and enhancements;

•The shift of focus from, or phase out of services that overlap or are redundant with other services we offer;

•The amount and timing of our expenses and capital expenditures;

•The amount and timing of non-cash stock-based charges;

•Acquisition-related costs or impairment charges associated with such investments and acquisitions;

•Competition;

•Changes or consolidation in the real estate industry;

•Interest rate fluctuations;

•Execution of our expansion and integration plans;

•The development of our sales force;

•Foreign currency and exchange rate fluctuations;

•Inflation; and

•Changes in client budgets.

Fluctuating foreign currencies may negatively impact our business, results of operations and financial position. A portion of our business is denominated in foreign currencies. We translate sales and other results denominated in foreign currency into U.S. dollars for our financial statements. During periods of a strengthening U.S. dollar, our reported international sales and earnings could be reduced because foreign currencies may translate into fewer U.S. dollars. Foreign currency exchange rates have fluctuated and may continue to fluctuate. Significant foreign currency exchange rate fluctuations may negatively impact our international revenue, which in turn affects our consolidated revenue. Currently, we are not party to any hedging transactions intended to reduce our exposure to exchange rate fluctuations. We may seek to enter into hedging transactions in the future, but we may be unable to enter into these transactions successfully, on acceptable terms or at all. We cannot predict whether we will incur foreign exchange losses in the future. Further, significant foreign exchange fluctuations resulting in a decline in the respective local currency may decrease the value of our foreign assets, as well as decrease our revenues and earnings from our foreign subsidiaries, which would reduce our profitability and adversely affect our financial position.

Changes in tax laws, regulations or fiscal and tax policies or the manner of their interpretation or enforcement could adversely impact our financial performance. New laws or regulations, or changes in existing laws or regulations, or the manner of their interpretation or enforcement, could increase our cost of doing business. For example, in December 2017, the United States enacted The Tax Cuts and Jobs Act (the "Tax Act"), and various provisions of the new law may adversely affect us. Certain aspects of Tax Reform are unclear and may not be clarified for some time. During 2018, the Department of the Treasury issued certain guidance in the form of notices and proposed regulations with respect to several provisions of the new legislation. We expect that additional regulations or other guidance may be issued with respect to the Tax Act in subsequent years. We continue to examine the impact this tax reform legislation may have on our business. In addition, if federal, state, local or

We may not be able to successfully halt the operation of websites that aggregate our data, as well as data from other companies, or copycat websites that may misappropriate our data. Third parties may misappropriate our data through website scraping, robots or other means and aggregate and display this data on their websites. In addition, “copycat” websites may misappropriate data on our website and attempt to imitate our brands or the functionality of our website. We may not be able to detect all such websites in a timely manner and, even if we could, technological and legal measures available to us may be insufficient to stop their operations and the misappropriation of our data. Any measures that we may take to enforce our rights could require us to expend significant financial or other resources.

If we are unable to obtain or retain listings from real estate brokers, agents, property owners and apartment property managers, our marketplace services, could be less attractive to current or potential customers, which could reduce our revenues. The value of our real estate marketplace services to our customers depends on our ability to increase the number of property listings provided and searches conducted. As the number of listings increases, so does the utility of a marketplace's search, listing and marketing services. We depend substantially on brokers, agents, property owners and, in the case of apartment rentals, property managers to submit listings to our marketplaces. If these parties choose not to continue their listings with us, or choose to list them with a competitor, our CRE marketplace services could be less attractive to other real estate industry transaction participants, resulting in reduced revenue. Similarly, the value and utility of our other marketplaces, including the BizBuySell.com network of business for-sale websites, are also dependent on attracting and retaining listings.

The economic effects of “Brexit” may affect relationships with existing and future customers and could have an adverse impact on our business and operating results. On June 23, 2016, the U.K. held a referendum in which British citizens approved an exit from the European Union (“E.U.”), commonly referred to as “Brexit.” On January 31, 2020, the U.K. officially withdrew from the E.U, beginning a transition period of negotiations between the British government and the E.U. and other governments. On December 24, 2020, the E.U. and the U.K. announced they had entered into a post-Brexit deal on certain aspects of trade and other strategic and political issues. The impact of Brexit, the December 2020 post-Brexit agreement and the future relationship between the E.U. and the U.K., including terms not addressed in the December 2020 agreement, remain uncertain. Such uncertainty could cause political and economic uncertainty in the U.K. and the rest of Europe, which could harm our business and financial results. In particular, Brexit caused and could continue to cause significant volatility in global equity markets, currency exchange rates and other asset prices, including those related to real property. Brexit may also lead to divergent national laws and regulations as the U.K. determines which E.U. laws to replace or replicate, and compliance with those laws and regulations may be cumbersome, difficult or costly. Further, Brexit may lead other E.U. member countries to consider referendums regarding their E.U. membership. We cannot yet predict the future implications of Brexit, including whether it could increase our cost of doing business or otherwise adversely affect our financial condition or results of operations. The impact to us from Brexit may affect not only our U.K. operations but operations in other parts of the E.U.

2023. The full impact of any transition away from LIBOR remains unclear. We may need or seek to negotiate with our lenders for an alternative rate. We may not be able to agree with our lenders on a replacement reference rate that is as favorable as LIBOR, which may increase in the cost of our borrowings under the 2020 Credit Agreement.

Dividend Policy. We have never declared or paid any dividends on our common stock. We do not anticipate paying any dividends on our common stock during the foreseeable future, but intend to retain any earnings for future growth of our business.

Recent Issues of Unregistered Securities. We did not issue any unregistered securities during the year ended December 31, 2020.

Month, 2020						Total Number of Shares Purchased									Average Price Paid per Share						Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs						Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
October 1 through 31						1,724									$	848.63					—						—
November 1 through 30						2,097									835.61						—						—
December 1 through 31						967									879.64						—						—
Total						4,788			(1)						$	849.19					—						—
__________________________________________

(1) The number of shares purchased consists of shares of common stock tendered by employees to the Company to satisfy the employees' minimum tax withholding obligations arising as a result of vesting of restricted stock grants under the Company’s 2016 Stock Incentive Plan, as amended, which shares were purchased by the Company based on their fair market value on the trading day immediately preceding the vesting date. None of these share purchases were part of a publicly announced program to purchase common stock of the Company.

•An equal investment in the Standards & Poor's Stock 500 (“S&P 500”) Index; and

•An equal investment in the S&P 500 Internet Services & Infrastructure Index.

Company / Index						12/31/15						12/31/16						12/31/17						12/31/18						12/31/19						12/31/20
CoStar Group, Inc.						$	100					$	91.19					$	143.67					$	163.21					$	289.47					$	447.18
S&P 500 Index						100						111.96						136.40						130.42						171.49						203.04
S&P 500 Internet Services & Infrastructure Index						100						105.18						148.04						135.52						182.22						211.53
__________________________

Item 6.    Selected Financial Data

The following table provides selected consolidated financial data for the five years ended December 31, 2020. The consolidated statements of operations data shown below for each of the three years ended December 31, 2020, 2019 and 2018 and the consolidated balance sheet data as of December 31, 2020 and 2019 are derived from audited consolidated financial statements that are included in this report. The consolidated statements of operations data for each of the years ended 2017 and 2016 and the consolidated balance sheet data as of December 31, 2018, 2017 and 2016 shown below are derived from audited consolidated financial statements for those years that are not included in this report. Information about prior period acquisitions and the adoption of recent accounting pronouncements that may affect the comparability of the selected financial information presented below are included in "Item 1. Business" and Note 2 to the Notes to the Consolidated Financial Statements included in Part IV of this Annual Report on Form 10-K. The total assets and total long-term liabilities reported in the consolidated balance sheet data have been reclassified to conform to our current presentation as a result of the retrospective application of the authoritative guidance to simplify the presentation of debt issuance costs.

			Year Ended December 31,
Consolidated Statements of Operations Data:			2016						2017						2018						2019						2020
Revenues			$	837,630					$	965,230					$	1,191,832					$	1,399,719					$	1,659,019
Cost of revenues			173,814						220,403						269,933						289,239						308,968
Gross profit			663,816						744,827						921,899						1,110,480						1,350,051
Operating expenses			518,911						571,011						648,335						746,933						1,060,849
Income from operations			144,905						173,816						273,564						363,547						289,202
Interest (expense) income			(9,244)						(5,669)						10,539						16,742						(17,395)
Other (expense) income			1,001						(3,089)						(88)						10,660						(827)
Income before income taxes			136,662						165,058						284,015						390,949						270,980
Income tax expense			51,591						42,363						45,681						75,986						43,852
Net income			$	85,071					$	122,695					$	238,334					$	314,963					$	227,128
Net income per share — basic			$	2.64					$	3.70					$	6.61					$	8.67					$	5.97
Net income per share — diluted			$	2.62					$	3.66					$	6.54					$	8.60					$	5.93
Weighted average shares outstanding — basic			32,167						33,200						36,058						36,310						38,073
Weighted average shares outstanding — diluted			32,436						33,559						36,448						36,630						38,326

			As of December 31,
Consolidated Balance Sheet Data:			2016						2017						2018						2019						2020
Cash, cash equivalents and long-term investments			$	577,175					$	1,221,533					$	1,110,486					$	1,080,801					$	3,755,912
Working capital			472,545						1,141,269						1,059,139						992,109						3,557,662
Total assets			2,185,063						2,873,441						3,312,957						3,853,986						6,915,420
Total long-term liabilities			375,904						75,525						136,856						241,337						1,209,211
Stockholders’ equity			1,654,213						2,651,250						3,021,942						3,405,593						5,375,359

Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Information services. We provide real estate and lease management technology solutions, including lease administration, lease accounting and abstraction services, through our CoStar Real Estate Manager® service offerings, as well as portfolio and debt analysis, management and reporting capabilities through our CoStar Investment Analysis and CoStar Risk Analytics® service offerings. On October 22, 2019, we acquired STR and we now also provide STR’s complementary benchmarking and analytics services to the hospitality industry. STR sells the majority of its services on a subscription basis, but also receives one-time or ad hoc transaction fee revenues. We provide information services internationally, through our Grecam, Belbex and Thomas Daily businesses in France, Spain and Germany, respectively. The growth rates of information services increased in 2020 compared to 2019 primarily due to the STR acquisition. The hospitality industry has been severely impacted by COVID-19, as a result, revenue for STR declined in the second quarter of 2020 and increased moderately during the remainder of the year. We anticipate STR revenue and overall information services growth rates to moderate during 2021.

Multifamily. Apartments.comTM is part of our network of apartment marketing sites, which primarily includes ApartmentFinder®, ForRent.com®, ApartmentHomeLiving.comTM, Apartamentos.comTM, Westside Rentals, and Off Campus Partners, LLC ("OCP"). Our network of subscription-based advertising services provides property management companies and landlords with a comprehensive advertising destination for their available rental units and offers renters a platform for searching for available rentals. During 2020, multifamily revenue growth rates generally continued to increase relative to 2019 revenue growth rates as tenants, property owners and landlords continued to transact in our digital environment.

In connection with the shift to work from home, we incurred and may continue to incur expenses to help employees perform their jobs effectively and securely. In preparation for an eventual return to work in the office, we have also incurred and expect to continue to incur expenses to help protect the health and safety of our employees and visitors. In response to the COVID-19 pandemic, we have taken steps to manage our costs, including minimizing hiring to essential positions, restricting business travel and canceling in-person marketing events. We expect to continue to minimize travel and restrict in-person marketing events during the first half of 2021. Overall, the increased direct spend related to the COVID-19 pandemic, including office reconfiguration, has not been material to date and has had minimal impact on our financial position and operating results as these expenses have been generally offset by the cost savings described above. As the situation evolves, we may implement additional cost reductions.

Current general economic conditions in the U.S. and the world as a result of the COVID-19 pandemic are negatively affecting business operations for our clients and are expected to result in business consolidations and, in certain circumstances, failures. In general, customers are seeking to reduce expenses as a result of current economic conditions. The extent and duration of any future continued weakening of the global economy is unknown. There can be no assurance that any of the governmental or private sector initiatives designed to strengthen the U.S. and other economies will ultimately be successful or available to us and our customers, and, if successful, when the benefits will be available or seen. Because of the rapidly evolving nature of the COVID-19 pandemic and responses to it by, and the impact on, global economies, our revenue or earnings forecasts may not prove to be accurate. Any expected changes in financial results discussed in this report, including any expected impact of COVID-19, are based on our current observations and experience and involve estimates and assumptions. As the extent and duration of the impacts from COVID-19 remain unclear, our estimates and assumptions may evolve as conditions change. Our current observations and past experience and results may not be an indicator of ongoing trends or future results, and actual results could differ significantly from our estimates and expectations.

financial performance. Such effects may include, among others, a decrease in new customer sales and increases in customer cancellations, suspensions, service reductions and failures to pay or delays in payments of amounts owed to us. We are more likely to incur asset impairment charges or restructuring charges, or further increase our allowance for credit losses, as a result of this crisis and related economic downturn, which could adversely affect our results of operations. The amount and frequency of such actions will be affected by the severity and duration of the COVID-19 pandemic. We experienced a decrease in net new bookings of subscription-based services and an increase in customer requests for cancellations and suspensions towards the end of the first quarter of 2020 that continued through May 2020; however, those requests have eased since then, and sales related to marketplace service offerings have returned to pre-pandemic levels. During 2020, we increased the allowance for credit loss as a result of increased write-off trends and increased the forecasted credit loss estimate on high credit risk customers to reflect the uncertainty around the duration and speed of an economic recovery in the first three quarters of 2020. However, the credit loss expense normalized in the fourth quarter of 2020. Due to the uncertainty associated with the COVID-19 pandemic, we will continue to monitor customer behavior and its impact on our results of operations. See Note 3 in this Annual Report on Form 10-K for further discussion.

We strengthened our liquidity position through an equity offering of common stock in May 2020 and an offering of Senior Notes and amendment and restatement of our credit facility in early July 2020. See Note 11 and Note 15 in this Annual Report on Form 10-K for further discussion of our recent equity and Senior Notes offerings and our 2020 Credit Agreement. The effects of the pandemic have not affected our ability to date to access funding on reasonably similar terms as were available to us prior to March 2020. We discuss the current and potential impact of select provisions of the CARES Act (defined below) in our liquidity discussion.

•Integrating and developing service offerings of recently completed acquisitions, including STR, Ten-X and Homesnap, with our business operations. We are consolidating STR data and services with CoStar Suite to create an integrated platform. We expect that the combination of STR's and CoStar's offerings will allow us to create valuable new and improved tools for industry participants. We plan to drive international expansion, in part, through STR's global operations and to apply STR's benchmarking expertise to other commercial real estate segments we serve. We are working on integrating the Ten-X platform with both LoopNet and CoStar, to expand the audience for Ten-X auctions to include our online commercial real estate users. To increase exposure, we have upgraded LoopNet listings for properties to be auctioned on Ten-X and are allocating banner space on both our CoStar and LoopNet sites to Ten-X to

•Continuing to invest in the LoopNet marketplace and the Ten-X auction platform. We are enhancing the content on LoopNet.com (including high-quality imagery), seeking targeted advertisements, providing premium listing services (such as LoopNet Diamond, Platinum, and Gold Ads) that increase a property listing’s exposure, and adding more content for premium listings to better meet the needs of a broader cross section of the commercial real estate industry. We have started recruiting and developing a dedicated sales team to help support and grow the business. To support the LoopNet marketplace, we implemented training and incentive programs for our sales team to increase sales of LoopNet Ads, with a focus on brokers and property owners. We plan to expand the Ten-X sales force during 2021 and focus on increasing the number of qualified bidders and the number of owners bringing properties to the site. To generate brand awareness and site traffic for the LoopNet.com network and Ten-X, we plan to significantly increase our investment in marketing and utilize a multi media marketing campaign, reinforced with search engine optimization efforts. We will continue to work to determine the optimal level of marketing investment for each of these services for future periods.

•Continuing to invest in CoStar Suite, including capabilities that allow us to broaden the reach of CoStar Suite internationally by offering multiple languages and currencies on the platform. We plan to enhance CoStar Suite by making additional investments in analytical and service capabilities focused on lenders and owners of commercial real estate. We also recently acquired Emporis GmbH, a Germany-based provider of international commercial real estate data and images that we are integrating into CoStar. In addition, we plan to invest in the technology and infrastructure of our other existing service offerings and the backend systems that support our offerings.

•Continuing to develop, improve and market our Apartments.com service offerings that focus on creating the best and most comprehensive consumer rental search experience as well as continuing to advance the digital rental experience that allows renters to apply for leases and make rent payments, and for landlords to run tenant credit and background checks, all online through a single platform. We seek user feedback as we work to improve our services and continue to aggressively market our multifamily listing services in an effort to provide more value to consumers and, in turn, to attract advertisers. Our Apartments.com marketing investment is focused on enhanced brand awareness and search engine marketing. As we continue to assess the success and effectiveness of our marketing campaign, we will continue to work to determine the optimal level and focus of our marketing investment for our services for future periods and may adjust our marketing spend and focus as we deem appropriate.

Agreement provides for a $750 million revolving credit facility with a term of five years and a letter of credit sublimit of $20 million from a syndicate of financial institutions as lenders and issuing banks. On July 1, 2020, we repaid the outstanding borrowings under our existing $750 million revolving credit facility pursuant to the 2017 Credit Agreement using the proceeds from the issuance of the Senior Notes. Funds drawn down on the revolving credit facility pursuant to the 2020 Credit Agreement may be used for working capital and other general corporate purposes. The 2020 Credit Agreement, along with the proceeds from the May equity offering, the July Senior Notes offering and cash generated by our business are expected to support our continued growth and give us flexibility to act on strategic acquisition opportunities that may arise. See Notes 11 and 15 in this Annual Report on Form 10-K for further discussion of our recent equity and Senior Notes offerings and our 2020 Credit Agreement.

We prepare and publicly release quarterly unaudited financial statements prepared in accordance with generally accepted accounting principles (“GAAP”). We also disclose and discuss certain non-GAAP financial measures in our public releases, investor conference calls and filings with the Securities and Exchange Commission. The non-GAAP financial measures that we may disclose include net income before interest (expense) income and other (expense) income, loss on debt extinguishment, income taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income and non-GAAP net income per diluted share. EBITDA is our net income before interest (expense) income and other (expense) income, loss on debt extinguishment, income taxes, depreciation and amortization. We typically disclose EBITDA on a consolidated and an operating segment basis in our earnings releases, investor conference calls and filings with the Securities and Exchange Commission. Adjusted EBITDA is different from EBITDA because we further adjust EBITDA for stock-based compensation expense, acquisition- and integration-related costs, restructuring costs and settlements and impairments incurred outside our ordinary course of business. Adjusted EBITDA margin represents adjusted EBITDA divided by revenues for the period. Non-GAAP net income is determined by adjusting our net income for stock-based compensation expense, acquisition- and integration-related costs, restructuring costs, settlement and impairment costs incurred outside our ordinary course of business and loss on debt extinguishment, as well as amortization of acquired intangible assets and other related costs, and then subtracting an assumed provision for income taxes. Non-GAAP net income per diluted share is a non-GAAP financial measure that represents non-GAAP net income divided by the number of diluted shares outstanding for the period used in the calculation of GAAP net income per diluted share.

•Amortization of acquired intangible assets in cost of revenues may be useful for investors to consider because it represents the diminishing value of any acquired trade names and other intangible assets and the use of our acquired technology, which is one of the sources of information for our database of commercial real estate information. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure.

•Amortization of acquired intangible assets in operating expenses may be useful for investors to consider because it represents the estimated attrition of our acquired customer base. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure.

•Depreciation and other amortization may be useful for investors to consider because they generally represent the wear and tear on our property and equipment used in our operations. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure.

•The amount of interest (expense) income and other (expense) income we generate and incur may be useful for investors to consider and may result in current cash inflows and outflows. However, we do not consider the amount of interest (expense) income and other (expense) income to be a representative component of the day-to-day operating performance of our business.

•Income tax expense may be useful for investors to consider because it generally represents the taxes which may be payable for the period and the change in deferred income taxes during the period and may reduce the amount of funds

•The amount of loss on our debt extinguishment may be useful for investors to consider because it generally represents losses from the early extinguishment of debt. However, we do not consider the amount of the loss on debt extinguishment to be a representative component of the day-to-day operating performance of our business.

•Stock-based compensation expense may be useful for investors to consider because it represents a portion of the compensation of our employees and executives. Determining the fair value of the stock-based instruments involves a high degree of judgment and estimation and the expenses recorded may bear little resemblance to the actual value realized upon the future exercise or termination of the related stock-based awards. Therefore, we believe it is useful to exclude stock-based compensation in order to better understand the long-term performance of our core business.

•The amount of acquisition- and integration-related costs incurred may be useful for investors to consider because such costs generally represent professional service fees and direct expenses related to acquisitions. Because we do not acquire businesses on a predictable cycle, we do not consider the amount of acquisition- and integration-related costs to be a representative component of the day-to-day operating performance of our business.

•The amount of settlement and impairment costs incurred outside of our ordinary course of business may be useful for investors to consider because they generally represent gains or losses from the settlement of litigation matters or impairments on acquired intangible assets. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure.

•The amount of restructuring costs incurred may be useful for investors to consider because they generally represent costs incurred in connection with a change in a contract or a change in the makeup of our properties or personnel. We do not consider the amount of restructuring related costs to be a representative component of the day-to-day operating performance of our business.

			Year Ended December 31,
			2020						2019						2018
Net income			$	227,128					$	314,963					$	238,334
Amortization of acquired intangible assets in cost of revenues			25,675						21,357						20,586
Amortization of acquired intangible assets in operating expenses			62,457						33,995						30,881
Depreciation and other amortization			28,812						25,813						26,276
Interest (expense) income			17,395						(16,742)						(10,539)
Other (expense) income			827						(10,660)						88
Income tax expense			43,852						75,986						45,681
EBITDA			$	406,146					$	444,712					$	351,307
Net cash flows provided by (used in)
Operating activities			$	486,106					$	457,780					$	335,458
Investing activities			$	(464,163)					$	(483,753)					$	(448,001)
Financing activities			$	2,662,297					$	(4,154)					$	2,744

The following table provides our selected consolidated results of operations for the indicated periods (in thousands and as a percentage of total revenue):

			Year Ended December 31,
			2020												2019												2018
Revenues			$	1,659,019					100		%				$	1,399,719					100		%				$	1,191,832					100		%
Cost of revenues			308,968						19						289,239						21						269,933						23
Gross profit			1,350,051						81						1,110,480						79						921,899						77
Operating expenses:
Selling and marketing (excluding customer base amortization)			535,778						32						408,596						29						359,858						30
Software development			162,916						10						125,602						9						100,937						8
General and administrative			299,698						18						178,740						13						156,659						13
Customer base amortization			62,457						4						33,995						2						30,881						3
Total operating expenses			1,060,849						64						746,933						53						648,335						54
Income from operations			289,202						17						363,547						26						273,564						23
Interest (expense) income			(17,395)						(1)						16,742						1						10,539						1
Other (expense) income			(827)						—						10,660						1						(88)						—
Income before income taxes			270,980						16						390,949						28						284,015						24
Income tax expense			43,852						3						75,986						5						45,681						4
Net income			$	227,128					14		%				$	314,963					23		%				$	238,334					20		%

The following table provides our revenues by type of service (in thousands and as a percentage of total revenue):

			Year Ended December 31,
			2020												2019												2018
Information and analytics(1)
CoStar Suite			$	664,735					40		%				$	617,798					44		%				$	545,195					46		%
Information services			130,070						8						88,446						6						67,624						6
Online marketplaces(1)
Multifamily			598,555						36						490,631						35						405,795						34
Commercial property and land			265,659						16						202,844						15						173,218						14
Total revenues			$	1,659,019					100%						$	1,399,719					100%						$	1,191,832					100%
__________________________

(1) For further discussion of our Company, strategy and products, see our business overview set forth in "Item 1. Business" in this Annual Report on Form 10-K.

			2020						2019						Increase (Decrease) ($)						Increase (Decrease) (%)
Revenues
CoStar Suite			$	664,735					$	617,798					$	46,937					8%
Information services			130,070						88,446						41,624						47
Multifamily			598,555						490,631						107,924						22
Commercial property and land			265,659						202,844						62,815						31
Total revenues			1,659,019						1,399,719						259,300						19
Cost of revenues			308,968						289,239						19,729						7
Gross profit			1,350,051						1,110,480						239,571						22
Operating expenses:
Selling and marketing (excluding customer base amortization)			535,778						408,596						127,182						31
Software development			162,916						125,602						37,314						30
General and administrative			299,698						178,740						120,958						68
Customer base amortization			62,457						33,995						28,462						84
Total operating expenses			1,060,849						746,933						313,916						42
Income from operations			289,202						363,547						(74,345)						(20)
Interest (expense) income			(17,395)						16,742						(34,137)						NM
Other (expense) income			(827)						10,660						(11,487)						NM
Income before income taxes			270,980						390,949						(119,969)						(31)
Income tax expense			43,852						75,986						(32,134)						(42)
Net income			$	227,128					$	314,963					$	(87,835)					(28)%
__________________________
NM - Not meaningful

Revenues. Revenues increased to $1.7 billion in 2020, from $1.4 billion in 2019. The $259 million increase was primarily attributable to an $108 million, or 22%, increase in multifamily revenue. The multifamily increase was due to upsells of existing customer packages to higher value advertising packages, and higher sales volume due to an increase in property listings as a result of recent investments in marketing. Commercial property and land revenue increased $63 million, or 31%, due to revenue of $32 million from the acquisition of Ten-X, and growth in our LoopNet online marketplace services of $30 million as a result of stronger site traffic, driving sales of higher value advertisements. CoStar Suite revenues increased $47 million, or 8%, primarily due to renewal price increases from prior periods and, to a lesser extent, higher sales volume due to an increase in subscribers. Information services revenue increased $41 million, or 47%, primarily due to $44 million from the acquisition of STR, partially offset by a decrease of $2 million in revenue for our CoStar Real Estate Manager service offerings.

Customer Base Amortization Expense. Customer base amortization expense increased to $62 million in 2020, from $34 million in 2019, and increased as a percentage of revenues to 4% in 2020, compared to 2% in 2019. The increase in customer base amortization expense was primarily due to the STR and Ten-X acquisitions.

Interest (Expense) Income. Interest (expense) income was a net expense of $17 million in 2020, as compared to net income of $17 million in 2019. The change from the prior year was due to an increase in interest expense of $19 million, of which, $5 million was related to the $745 million draw on the 2017 Credit Agreement in the first quarter of 2020 and $14 million related to our Senior Notes issued on July 1, 2020, respectively. In addition, there was a decrease of $15 million in interest income caused by lower rates of return on our cash and cash equivalent balances compared to the prior year.

Other (Expense) Income. Other (expense) income was a net expense of $1 million in 2020, as compared to net income of $11 million in 2019. The change was primarily due to $11 million in legal settlement proceeds received in 2019.

Income Tax Expense. Income tax expense decreased to $44 million in 2020, from $76 million in 2019. The decrease was primarily due to lower income before income taxes for 2020, as well as an increase in excess tax benefits. The effective tax rate for 2020 was 16%, compared to 19% in 2019 and lower than the statutory rates due to research and development credits as well as excess tax benefits.

Segment Revenues. North America revenues increased to $1.6 billion for the year ended December 31, 2020, from $1.4 billion for the year ended December 31, 2019. The increase in North America revenues was primarily due to a $108 million increase in multifamily revenues driven by upsells of existing customer packages to higher value advertising packages and higher sales volume as a result of recent investments in marketing. Commercial property and land revenues increased $63 million primarily due to the acquisition of Ten-X, as well as growth in our LoopNet service offering. Costar Suite revenues increased $44 million primarily due to price increases upon renewal of subscriptions in the past year, and to a lesser extent, higher sales volume. Information services increased $27 million due to the acquisition of STR. International revenues increased

Segment EBITDA. North America EBITDA decreased to $411 million for the year ended December 31, 2020, from $452 million for the year ended December 31, 2019. The decrease in North America EBITDA was due primarily to the $52 million break fee and $8 million in extension payments that we were contractually obligated to pay under the Asset Purchase Agreement with RentPath, which we terminated in December 2020. Additionally, increases in personnel, general and administrative, and marketing costs were offset by an increase in revenue. International EBITDA increased to a loss of $5 million for the year ended December 31, 2020 from a loss of $7 million December 31, 2019 primarily as a result of increased revenue, offset by increases in personnel and general and administrative costs.

The following tables present our unaudited consolidated results of operations on a quarterly basis for the indicated periods (in thousands, except per share amounts, and as a percentage of total revenues). These tables should be read in conjunction with the consolidated financial statements and related notes included in this Annual Report on Form 10-K. The quarterly results of historical periods are not necessarily indicative of quarterly results for any future period.

			2020																								2019
			Mar. 31						Jun. 30						Sep. 30						Dec. 31						Mar. 31						Jun. 30						Sep. 30						Dec. 31
Revenues			$	391,847					$	397,159					$	425,620					$	444,393					$	328,425					$	343,760					$	352,808					$	374,726
Cost of revenues			78,909						74,040						77,865						78,154						71,153						71,918						71,172						74,996
Gross profit			312,938						323,119						347,755						366,239						257,272						271,842						281,636						299,730
Operating expenses			237,074						241,800						270,946						311,029						163,780						197,042						187,367						198,744
Income from operations			75,864						81,319						76,809						55,210						93,492						74,800						94,269						100,986
Interest (expense) income			1,651						(3,596)						(7,537)						(7,913)						4,212						4,677						4,414						3,439
Other (expense) income			841						(474)						(338)						(856)						1						539						240						9,880
Income before income taxes			78,356						77,249						68,934						46,441						97,705						80,016						98,923						114,305
Income tax expense			5,563						16,889						10,748						10,652						12,536						16,768						20,304						26,378
Net income			$	72,793					$	60,360					$	58,186					$	35,789					$	85,169					$	63,248					$	78,619					$	87,927
Net income per share — basic			$	2.00					$	1.61					$	1.49					$	0.91					$	2.35					$	1.74					$	2.16					$	2.42
Net income per share — diluted			$	1.98					$	1.60					$	1.48					$	0.91					$	2.33					$	1.73					$	2.15					$	2.39

			2020																								2019
			Mar. 31						Jun. 30						Sep. 30						Dec. 31						Mar. 31						Jun. 30						Sep. 30						Dec. 31
Revenues			100		%				100		%				100		%				100		%				100		%				100		%				100		%				100		%
Cost of revenues			20						19						18						18						22						21						20						20
Gross profit			80						81						82						82						78						79						80						80
Operating expenses			61						61						64						70						50						57						53						53
Income from operations			19						20						18						12						28						22						27						27
Interest (expense) income			—						(1)						(2)						(2)						2						1						1						1
Other (expense) income			—						—						—						—						—						—						—						3
Income before income taxes			19						19						16						10						30						23						28						31
Income tax expense			1						4						2						2						4						5						6						7
Net income			18		%				15		%				14		%				8		%				26		%				18		%				22		%				24		%

Net cash provided by financing activities for the year ended December 31, 2020 was $2.7 billion compared to net cash used in financing activities of $4 million for the year ended December 31, 2019. This $2.7 billion increase is primarily due to proceeds from our May 2020 equity offering, net of transaction costs, of $1.7 billion, as well as, proceeds from the issuance of our July 1, 2020 Senior Notes, net of transaction costs, of $983 million. We expect to use the proceeds from these transactions to fund all or a portion of the costs of any strategic acquisitions we pursue in the future, to finance the growth of our business and for working capital and other general corporate purposes. The increased cash position allows for greater financial flexibility in light of ongoing uncertainty in the global markets resulting from the COVID-19 pandemic. See Notes  11 and 15 to the accompanying Notes to the Consolidated Financial Statements included in Part IV of this Annual Report on Form 10-K for further discussion.

Our future capital requirements will depend on many factors, including, among others, our operating results, expansion and integration efforts, and our level of acquisition activity or other strategic transactions. To date, we have grown in part by acquiring other companies, and we expect to continue to make acquisitions. On February 11, 2020, our wholly owned subsidiary entered into a purchase agreement to acquire all of the equity interests of reorganized RentPath, following an internal restructuring pursuant to a chapter 11 plan of reorganization, for $588 million in cash. The purchase agreement required us to deposit a $59 million termination fee into an escrow account in the event the purchase agreement is terminated prior to closing under specified circumstances. In December 2020, the sellers gave notice of termination of the purchase agreement and we commenced an adversary proceeding against the sellers seeking a declaratory judgment that RentPath was in breach of the agreement and that we were not obligated to pay the termination fee. In February 2021, we and the sellers settled the adversary proceeding and agreed that we would pay $52 million of the $59 million contractual termination fee. See Note 13 to the accompanying Notes to the Consolidated Financial Statements included in Part IV of this Annual Report on Form 10-K for further discussion.

			Total						2021						2022-2023						2024-2025						Thereafter
Long-term debt principal payments			$	1,000,000					$	—					$	—					$	—					$	1,000,000
Long-term debt principal interest			281,089						29,089						56,000						56,000						140,000
Operating leases			148,975						37,013						69,726						38,888						3,348
Purchase obligations (1)			65,403						30,938						28,413						6,052						—
Total contractual principal cash obligations			$	1,495,467					$	97,040					$	154,139					$	100,940					$	1,143,348
__________________________

(1) Amounts do not include (i) contracts with terms of twelve months or less, (ii) multi-year contracts that may be terminated by a third-party or us, or (iii) employment agreements. Amounts do not include income taxes payable due to uncertainty regarding the timing of future cash payments.

•Long-lived assets, intangible assets and goodwill

•Income taxes

•Revenue recognition

•Business combinations

•Significant underperformance relative to historical or projected future operating results;

•Significant changes in the manner of our use of the acquired assets or the strategy for our overall business;

•Significant negative industry or economic trends; or

•Significant decline in our market capitalization relative to net book value for a sustained period.

Item 15.    Exhibits and Financial Statement Schedules

The table below details the activity of the allowance for doubtful accounts and sales credits (1) for the years ended December 31, 2019 and 2018 (in thousands):

						Balance at Beginning of Year						Charged to Expense												Reductions						Balance at End of Year
Year ended December 31, 2018						$	6,469					$	6,542											$	7,302					$	5,709
Year ended December 31, 2019(2)						$	5,709					$	10,978											$	11,590					$	5,097
__________________________