CoStar Group is striking back after hedge fund Third Point escalated its campaign against the company, which owns UK property portal OnTheMarket through a subsidiary. The investor accused CoStar’s board and CEO Andy Florance of destroying shareholder value through years of poor governance and costly bets on a failed residential property strategy.
In a letter earlier this week, Third Point said it plans to take “concrete actions” to protect its investment, including nominating new directors to CoStar’s board. The hedge fund claims the company’s leadership has failed to rein in spending, particularly on the residential expansion via Homes.com.
CoStar has rejected the accusations, emphasising its focus on profitable growth and long-term shareholder value.
A CoStar Group spokesperson has provided the following statement to EYE in response to a letter from Third Point:
The CoStar Group Board of Directors and management team are taking decisive action to prioritize profitable growth and increase long-term value for all stockholders. Over the last nine months, the CoStar Group Board and management team have conducted extensive engagement with holders of a vast majority of the Company’s outstanding shares, including Third Point. The feedback from these engagements has informed the meaningful steps we have taken to extend our track record of stockholder value creation, including:
+ Adding three new independent directors to the Board – including two designated by Third Point and D.E. Shaw. As a result, 50% of the CoStar Group directors have been appointed in the last three years.
+ Announcing a new independent Board Chair alongside the retirement of our prior independent Chair and two other independent directors.
+ Forming a Capital Allocation Committee to support the Board’s and management’s comprehensive review of the Company’s capital structure, capital allocation priorities, and financial targets, including for significant investments in the Company’s major brands such as CoStar, Apartments.com, LoopNet, and Homes.com.
+ Moderating investment in Homes.com as we scale revenue upon the completion of the investment phase and successful launch of Homes.com. We are reducing net investment by $300 million in 2026 and $100+ million annually thereafter to achieve breakeven profitability for the platform exiting 2029.
+ Accelerating the completion of our $500 million share repurchase program initiated in 2025 and authorizing a new $1.5 billion repurchase program in January 2026.
+ Deploying AI technology initiatives across the entire CoStar Group organization to drive revenue growth and realize meaningful efficiencies.
+ Investing to enhance and expand our commercial product offerings including real estate lease benchmarking, a loan origination module, new homes construction information and analytics, hospitality profit/loss benchmarking, and international expansion. Many of these initiatives would not have been feasible without Homes.com and AI technology.
+ Approving a redesigned executive compensation program for 2026. The updated program features more rigorous and quantitative goals, enhanced transparency, and a simplified structure, underscoring our commitment to aligning executive compensation with the interests of all stockholders.
Third Point appears intent on spinning a yarn of Board complacency and “quixotic” investment. Their story is completely detached from reality. Following a review process that Third Point and D.E. Shaw suggested with participation from their Board nominees, the Board unanimously recommended a plan involving accelerated profitability for Homes.com, additional investments in our core platforms, incremental capital return, stockholder-aligned executive compensation, and greater investor transparency. Unhappy with the conclusions of the independent Board they helped pick, Third Point, like a child with a board game, wants to throw the pieces off the board.
Significant Progress to Enhance and Evolve Core Platforms While Implementing Proven Playbook for Homes.Com
Third Point’s demand that we abandon Homes.com reflects their complete misunderstanding of our business, industry, and the strong progress we are making. Third Point would have you believe that Homes.com could be jettisoned or shut down with no negative impact on our business or competitive positioning.
Providing comprehensive digital solutions to the world’s real estate markets – the foundation of our proven value-creation strategy – would not be possible without residential data, information, and marketplaces. The reality is that the single-family residential market is the largest segment of the real estate industry. Homes.com complements and meaningfully expands our residential portfolio alongside Apartments.com, Domain, OnTheMarket, and Land.com, significantly increasing our global addressable market to more than $100 billion. Without Homes.com, we would lose a critical partner for Apartments.com and key component of our digital ecosystem.
The Homes.com platform is demonstrating strong momentum, with subscribers increasing 337%, since Q1 2024. With the investment phase now complete, we expect to rapidly scale the platform while lowering its capital intensity.
We are confident in our ability to deliver on these objectives at Homes.com because we have done so numerous times before. Our strategy is grounded in our proven playbook of broadening our reach in existing and adjacent markets through disciplined acquisitions and organic investments.
Over the last 15 years, we have acquired more than 40 businesses for approximately $7.3 billion, generating IRRs between 17% — 39% on our major investments. This is the strategy we are successfully repeating with Homes.com.
Our 2026 guidance demonstrates our ability to continue to advance our core platforms as we scale Homes.com and enhance our commercial products. At the midpoint of our 2026 guidance, we expect revenue of $3.8 billion, an 18% increase over 2025. Adjusted EBITDA is expected to increase 83% from 2025 to $770 million, a 20% margin versus 13% in 2025.
Entering a New Chapter of Accelerated, Profitable Growth and Stockholder Returns
Consistent with previous investment cycles, we’re now entering our next margin expansion phase, and we are well positioned to accelerate revenue growth and drive profitability as evidenced by our 2026 outlook. Our Adjusted EBITDA range represents the highest Adjusted EBITDA in CoStar Group’s history. Longer term, we expect to achieve Adjusted EBITDA of $2.3 billion with Adjusted EBITDA margin of 35% by 2030.
Our strong and durable free cash flow and fortress balance sheet will allow us to continue to invest in growth while building on our track record of delivering stockholder returns. We are confident that the continued execution of our key strategic initiatives in our core platform, the implementation of our proven playbook at Homes.com, and our capital allocation and investment priorities will allow us to build on our long track record of driving total stockholder return outperformance. This includes:
+ Achieving superior trailing five-year period total stockholder return performance compared to the S&P 500 in ~85% of the years since 1999;
+ Delivering ~290% total stockholder returns over the last 10 years, ~90 percentage points more than the median of its Real Estate Marketplace peers ; and
+ Driving total stockholder returns that outperform the median of relevant peer groups over the past year.
Investors should carefully consider the source of their advice – Third Point has consistently underperformed relative to the Russell 3000 in nine out of the last ten years .
CoStar Group has always grown by investing with long-term vision. The investment periods, whether for CoStar, Apartments.com, LoopNet, or our other platforms always took time, and we asked investors to trust that we have the expertise to make the vision a reality. We have never failed before in realizing the vision, and we won’t now. One thing we know for certain is that abandoning Homes.com now that the investment phase is tapering would be a certain way to destroy long-term value for stockholders.
The CoStar Group Board and management team look forward to continuing to engage with stockholders as we advance our proven strategy to unlock the tremendous value of our digital real estate ecosystem for their benefit.
Goldman Sachs & Co. LLC is serving as financial advisor to CoStar Group, Inc. and Latham & Watkins LLP is serving as legal counsel. Joele Frank, Wilkinson Brimmer Katcher is serving as CoStar Group, Inc.’s strategic communications advisor.
Major investor challenges OnTheMarket’s holding company group over loss-making performance
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