CoStar Group (NASDAQ:CSGP) shares rose 2.7% after the real estate data and marketplace company responded publicly to criticism from activist investor Third Point LLC, reaffirming its strategy and outlining steps aimed at driving long-term profitable growth.
The company rejected Third Point’s call to exit Homes.com, saying that such a move would weaken its competitive position. CoStar said the residential platform is gaining traction, with subscriber numbers up 337% since the first quarter of 2024, and noted that Homes.com is now moving out of its heavy investment phase and into a scaling period with lower capital requirements.
CoStar also detailed a series of governance and capital allocation changes made following shareholder engagement. These include the appointment of three new independent directors, the introduction of an independent board chair, the creation of a Capital Allocation Committee, and a decision to rein in spending on Homes.com. Net investment in the platform is expected to be reduced by $300 million in 2026 and by more than $100 million per year thereafter, with management targeting breakeven profitability by the end of 2029.
The company reiterated its 2026 outlook, forecasting revenue of $3.8 billion, up 18% from 2025, and adjusted EBITDA of $770 million, an 83% increase year on year. That would imply an adjusted EBITDA margin of 20%, compared with 13% in 2025. Looking further ahead, CoStar said it expects adjusted EBITDA to reach $2.3 billion by 2030, with margins expanding to around 35%.
Third Point, which oversees about $24 billion in assets, has been openly critical of CoStar’s push into residential real estate, arguing that the strategy has absorbed roughly $5 billion over the past five years with limited returns. The hedge fund has said it intends to nominate its own slate of directors now that its standstill agreement with CoStar has expired.