CoStar Group Inc (CSGP) 2015 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the CoStar Group second-quarter earnings conference call. (Operator Instructions) As a reminder, this conference is being recorded.

I'd now like to turn the conference over to your host, Mr. Rich Simonelli. Please go ahead.

Thank you, operator, and good morning, everyone. Welcome to CoStar Group's second-quarter 2015 conference call.

Before I turn the call over to Andy, I want to have a second to talk to you about some really important facts. Certain portions of this discussion contain forward-looking statements which involve many risks and uncertainties 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 our July 29, 2015, press release on our second-quarter results and in CoStar's filings with the SEC, including our most recent annual report on Form 10-K and quarterly report on Form 10-Q, under the heading Risk Factors. All forward-looking statements are based on information available to CoStar on the date of this call, and CoStar assumes no obligation to update these statements, whether as a result of new information, future events, or otherwise.

As a reminder, today's call is being broadcast live and in color over the Internet at www.costargroup.com, where you can also find our Investor Relations page. A replay will be available approximately one hour after the call today and will be available for approximately 30 days thereafter. To listen, call 800-475-6701 within the US or Canada or 320-365-3844 outside the US. The access code is 364170. It will be available within an hour.

So I'd like to turn the call over to Andy Florance.

Good morning and thank you for joining us today for our second-quarter earnings call. I'm sorry for the slight delay in getting going this morning, but the city began jack-hammering outside my office right at five of 11, so we'll keep it moving. And as you know, I always keep these calls very short.

So as we reach the midpoint of the year, I feel that we can say that our expanded focused investment into the multifamily sector is clearly succeeding. In fact, while our acquisition of LoopNet was widely heralded as a major success, I believe that we are potentially having an even greater success meeting the marketing and information needs of the multi-trillion dollar multifamily industry.

In a relatively short period of time, we have changed the competitive apartment Internet services landscape for both the companies seeking to provide marketing solutions and for the companies seeking to provide information analytics solutions. I believe we have brought a greater level of commitment and conviction than our competitors have. We are using the playbook we capitalized on with the LoopNet-CoStar merger, integrating and leveraging a powerful information solution to build a superior marketing platform, and vice versa. And accordingly, we are achieving dramatic selling success.

To price optimally, the multifamily owner needs daily competitive rental information, which none of the legacy information providers are adequately supplying. With the benefit of our research and technical expertise in our Apartments.com marketplace, we are providing the users deep content with daily pricing on tens of thousands of apartment communities.

To minimize vacancy losses, the multifamily owner needs a steady stream of qualified leads, and to achieve that, they need to reach the largest possible audience of renters. By leveraging our technology and content and by initiating the first-ever significant business consumer apartment marketing campaign, reaching tens of millions of potential renters, we have built the most heavily trafficked apartment website. We believe we have the best-in-class information and marketing solutions, and by packaging them together, we offer the most compelling, lowest-cost solution. With that powerful combination, we are taking a lot of business from a range of competitors.

We hit the ball out of the park on second-quarter sales. We achieved our highest sales quarter, with $34 million in Company-wide net bookings. That's a 95% year-over-year increase in net bookings over the second quarter of 2014, and we're up 66% sequentially over net bookings of $21 million in the first quarter of 2015. This marks two consecutive quarters in which we have achieved tremendous sales levels.

Net new sales on annual subscription contracts were $25 million for the second quarter of 2015, up 59% over the second quarter 2014. This was by far our strongest quarter of annual subscription sales in our Company's history.

Our revenue increased 16% year over year to $171 million in the second quarter 2015 compared to $148 million in the second quarter of 2014. Our annual subscription business continues to enjoy a very high trailing 12-month renewal rate of 91%.

We closed the acquisition of Apartment Finder on June 1. Like Apartments.com, Apartment Finder is one of the leading digital marketplaces serving millions of renters looking to connect with apartments. Apartment Finder's service offerings include digital advertising on ApartmentFinder.com, with approximately 13,400 properties advertised on its website. Apartment Finder's core marketplace revenue was approximately $68 million to $70 million for the fiscal year ending in March 2015.

Apartment Finder will remain a distinct, complementary brand to Apartments.com, with a unique user interface, but will be similarly powered by CoStar's information. The brand will focus on the sizable component of renters who are focused primarily on finding the best financial deal possible, and these are people at all different sorts of income levels.

We know from various studies that most apartment hunters use the Internet to look for an apartment, and most of those renters visit multiple sites in their search for an apartment. By offering multiple online marketing solutions, we believe property managers and owners will get more exposure for the listings -- more leads cast a wider net.

CoStar expects by the end of this year to have integrated the back ends of Apartments.com, CoStar, and Apartment Finder, thereby leveraging the same research systems, support, and sales platform to power Apartments.com, ApartmentHomeLiving, CoStar, and ApartmentFinder.com. We anticipate that this will create cost synergies and greater operating efficiencies. Work on this integration is well underway, and we expect to complete it this year.

Apartment Finder has approximately 110 field sales representatives located across the United States. CoStar has combined its sales forces, and already the advertising sales forces are cross-selling all of our apartment marketing solutions. I've had the opportunity to spend a significant amount of time with the Apartment Finder sales force, and I feel that they are a very valuable addition to our sales force with tremendous selling capabilities and customer relationships.

As previously mentioned on other calls, we are in the process of eliminating the print component of Apartment Finder. Print is a less and less effective way to market apartments nowadays. Print produces a very small percentage of Apartment Finder's leads and is disproportionately laborious and expensive. We plan to eliminate these costs, or those costs, this year, and invest an equivalent amount into digital marketing to drive greater digital traffic to the Finder site.

During the process of converting those Apartment Finder clients that are buying a combination of print and digital marketing, as we move them into pure digital, we will be carrying the expense of both print and the replacement digital investment. This is to be able to show the clients that we have more than replaced the leads lost from print with the enhanced digital marketing.

In the first full month that our sales team has been converting these combination accounts into pure digital, we have converted 15% of the business, or over 1,000-some contracts. This will be one of our sales team's highest priorities this year, and I believe it's a manageable task.

We're keenly focused on expanded online marketing efforts for Apartment Finder, and it is working. In just our first month of owning Apartment Finder, a combined team of existing Finder staff and CoStar staff have successfully driven significant increases in traffic to Apartment Finder, accelerating visits to the site an astounding 135% year over year. And that's just for June of 2015. This was exceptional progress, considering that Apartment Finder visits grew in the single digits year over year in April and May. Additionally, Apartment Finder unique visitors increased 64% year over year in June of 2015.

In order to offer a simple but powerfully compelling value proposition, we're marketing our digital apartment marketplace offerings as one apartment network. An apartment manager who had been advertising on Apartment Finder earlier this year would have received the benefits of a site that generated about 2 million unique visitors a month and a print distribution of 1,000 books, a couple thousand books, in a market.

Once they're converted into a pure digital contract, their apartment ad will run on Apartment Finder, Apartments.com, ApartmentHomeLiving. Then the advertiser will receive the benefit of three sites with combined unique monthly visitors of approximately 14 million. That is approximately a 700% traffic increase for those converted advertisers. We believe that with this sort of unparalleled exposure, we will convert the majority of Apartment Finder's combination print and digital business to pure digital by year's end. As we achieve this goal, we also expect to achieve significant cost savings.

Okay, at this point, I'm going to put my glasses on, which should help. And of course, we're sitting here in a conference room that is LEED Platinum certified, which means it has no light. (laughter) Okay, back to the call.

Apartment Finder offered a social media marketing service called FinderSocial. The service was not profitable, and in fact, was indirectly competitive with our profitable products. After careful consideration and review, we have decided to eliminate FinderSocial and its associated significant costs. We believe the ultimate best value we can provide our clients is delivering the best network of digital apartment marketing websites and the highest-quality leads that turn into leases. We believe that once we have eliminated non-core Apartment Finder products and have achieved integrated operating efficiencies, Apartment Finder will be very profitable.

We used the National Apartment Association Exposition held in Las Vegas in June to announce our acquisition of Apartment Finder and showcase the tremendous value proposition our network of apartment sites and CoStar marketing analytics can offer. The NAA event was attended by 9,000 multifamily professionals, a record for the event and our prime target audience.

We created an enormous amount of buzz and brand recognition. We hosted a never-to-forget client party at the event, with 4,500 clients and prospects attending. Well more than 3,200 attendees visited our booth on the exhibit floor. We gave hundreds of product demonstrations of our integrated multifamily offering and spoke to thousands of clients and prospects. It was really exciting to see our salespeople processing signed contracts well past the end of each day's session after the rest of the conference vendors had left the exposition hall. In just two days, we signed 350 new communities. Even better was that our salespeople came out of NAA event with multiple follow-up meetings for June and July, which have also resulted in sales.

In combination, our websites are now generating more than 24 million unique visitors each month. That's the equivalent of every person Down Under in Australia visiting our websites last month. It's quite some traffic.

For the fourth month in a row, Apartments.com is the undisputed, number one, most visited apartment listing site, according to each of the four leading traffic authorities -- comScore, Experian, Hitwise, Amazon Alexa, and Compete. We are just four months into the relaunching and marketing campaign of Apartments.com, and we have established Apartments.com as an absolute leader.

Apartments.com has experienced a 70% year-over-year increase in unique visitors and a 65% year-over-year increase in total visits in the second quarter of 2015, according to comScore. In June 2015, we significantly increased the year-over-year traffic to Apartments.com, with over 14 million visits and 6 million unique visitors. Our own internal Google Analytics numbers show much higher traffic numbers.

Even more impressive than the traffic numbers is the behavior of consumers once they come to our sites. Apartments.com is engaging consumers, as shown by time spent on site and page views. According to Compete, we had more than three times the number of page views on our site in June than Apartment Guide, which was the closest competitor. According to comScore, we also had 50% more time spent on our site than Apartment Guide in June.

Clearly, customers like what they're seeing on Apartments.com. We are very pleased with our success and continue to grow traffic for our advertisers. We believe that with more traffic than any of our legacy apartment competitors, many of whom are charging more for less traffic, we can take significant share from our top competitors, who combined have nearly $0.5 billion in revenue. We are already seeing good success in moving advertisers from Apartment Guide, Rent.com, and ForRent into our platform.

We're not taking our early successes for granted, and we're working hard to move Apartments.com even further ahead. One of CoStar's strengths is collecting and building content. No competitor is matching us at providing the depth of data that our team of researchers, writers, field researchers, sales force, economists, and analysts are able to generate. We know that on the Internet content is king, and we're taking a number of innovative steps to increase quality and breadth of content on our site, and therefore consumer engagement traffic and, we believe, eventually sales.

Our market research indicates that renters place an extremely high value on apartment reviews when they're searching for a new apartment. We know from other successful consumer sites, sites like Yelp and TripAdvisor, that users really like to provide feedback about their experience, and other users want to be able to read what consumers like them are saying. Consumer ratings matter, and just recently, Harvard Business Report published a study that found a one-star rating increase for restaurants on Yelp correlated to revenue gains of up to 9%. So reviews are really important for folks when they're looking at these apartments.

In July we launched an innovative -- in fact, the 21st -- we launched an innovative campaign to encourage renters to provide quality reviews of their apartments. Apartments.com will give away free rent for a year to 12 weekly winners. Renters who write reviews that are rated as helpful will also be eligible for a Free Rent for Life grand prize drawing, which will take place October of this year. We expect that this promotion will draw many renters to our websites and drive more value for our advertisers.

We are combining the subjective consumer ratings with our objective, fact-based scoring system driven by the data collected by our researchers. By combining facts and opinions, objective data and subjective experiences, we can create a rating system that we believe renters want -- one they can count on to inform them for one of the most important decisions they have to make.

As part of our previously announced marketing budget, we have also initiated a national marketing campaign to promote the newly released review functionality on Apartments.com. We're promoting this campaign on national and local television, cable TV, digital, local radio, and social media. Our advertising customers have been given tools and resources to promote the campaign within their own communities.

Prior to the campaign, it took Apartments.com three years to collect 12,000 reviews. We surpassed that number in the first 36 hours of this new campaign. At this very early stage of the campaign, we have 35,000 reviews submitted. I've read through them, and many of them are really quite good. And the cost per review, I estimate, is running about $20 to $30, which is a really good value.

In another technology innovation in the apartment space, we have been adding immersive 3D virtual tours for apartments to Apartments.com site with a technology known as Matterport. It's great technology. Renters can virtually walk through the apartment and get a true feeling for the space in a unique way that pictures and floor plans do not capture. Property managers and renters love them. We now have over 20,000 Matterport 3D images on the Apartments.com website, and we're adding approximately 1,500 per week. We have almost reached 2 million renter views of these 3D immersive apartment walk-throughs, so they're really working.

Accurately advising our clients on new construction that will bring new supply and competition to the market is an important value proposition for CoStar Market Analytics. And additionally, we generally derive $6,000 or more per year for each property in the critical marketing phase post-construction around initial lease-up.

While tracking new construction has always been a strength of ours, we are working to build an even more accurate picture by flying over US cities to monitor new construction in a way not possible with Google Maps, commercial satellites, or ground-based researchers. We have expanded our field research fleet to include a Cessna aircraft equipped with a seriously state-of-the-art augmented-reality computer, software, and camera systems. It will help us survey commercial real estate in a way that has never been done before.

In the first 10 days, we've completed four test markets. During these 10 days, we discovered and added over 100 new construction properties, 8.6 million square feet of new construction, and 2,375 new multifamily units to the CoStar database. Clearly, this will add to the depth and richness of our database and provide valuable information about upcoming supply in the marketplace. Several of our clients and prospects were given demo flights at NAA, and even one was moved to sign a contract worth several hundred thousands of dollars in the plane, up in the air. The great thing is it was a researcher that asked for the business, not the salesperson.

Our advertising agency, RPA, and a third-party independent research firm has been providing us with detailed analysis from the first four months of Apartments.com's national campaign. Through the end of June, the campaign has created over 3 billion impressions, including 1.9 billion digital impressions, and 7.2 million social media ad engagements. As of June 2015 compared to February 2015, our awareness is up more than 50%, with a quarter of the respondents listing Apartments.com in the top four mentions.

In June, Apartments.com was ahead of all other apartment listing sites in awareness, with only craigslist edging us out. In several key markets like Philadelphia, Houston, Los Angeles, and Phoenix, we experienced 100% growth in awareness. Three of four competitor apartment listing sites declined significantly in awareness over the last four months.

Equally as impressive is the growth of intentions for Apartments.com, which nearly doubled from 11% in February to 21% in June. The perception of Apartments.com as a leader surpassed key competitors and ranks in the top three, based on this same study, with the strengths being characterized as smart, an ally, honest, and trustworthy. Ultimately, the best judge of success of the campaign, though, is sales. And clearly, the second quarter of 2015 and June were all-time highs in sales, casting a vote of confidence for the effort.

In addition to the work done by our agency, each of the past three years, Apartments.com has commissioned an independent national study that surveys multifamily professionals across the country about their use and attitudes about leading apartment listing services. This year's survey period covers the first 60 to 90 days after our national advertising campaign began, so it captured the trade's initial reactions to the new Apartments.com website. Nonetheless, we learned a lot of interesting things, and I want to share some of those highlights with you.

We asked apartment listing sites trade professionals, when we asked folks which sites they were familiar with, the survey showed that Apartments.com is now tied for first place with craigslist. Aided awareness for Apartments.com was 94%, up 200 basis points from the prior year, while craigslist was down 200 basis points. All three of our largest competitors by revenue saw declining awareness. 30% of survey respondents selected Apartments.com as the most effective source of quality prospects, while 24% selected Apartment Guide, 22% selected craigslist, and 4% selected Rent.com.

Apartments.com achieved a positive net most effective score of 22% when survey respondents were asked to select the most effective advertising platform for delivering quality prospects. Craigslist's net effective score was the worst, at negative 14% because of low quality of leads. Zillow, Trulia, Rent.com all were negative as well. Our net value score climbed into the number-one position at 19%, while craigslist and Apartment Guide came in at 7%. All other primary competitors, including Rent.com, were in negative territory.

If you look at trends on net value, it really points to how well we're doing. Craigslist's net value dropped from 31% in 2013 to 7% in 2015. Apartments increased from 5% in 2013 to 19% in 2015. Our marketing campaign has been very effective in reaching potential clients, with 93% of survey respondents indicating they had very high awareness of the campaign. Can't drown it out.

Since the launch of our new multifamily services, cross-sales of our Apartments.com and our multifamily debt and equity information analytics product, CoStar Market Analytics, shows similar potential to the success we had in cross-selling between CoStar and LoopNet. CoStar Market Analytics has been significantly contributing to driving sales of Apartments.com. The insights provided by CoStar Market Analytics are extremely popular with apartment managers and owners, and we're able to help them identify rental trends more quickly and with better accuracy. Year to date, and since the launch of the new services four months ago, we have sold $8 million of annual subscription combined packages of Apartments.com and CoStar Market Analytics -- $8 million of cross-selling activity.

With a full four months behind us, we are more confident than ever about our strategy and execution in apartments rentals marketplace. Sales are growing as a result of providing an excellent destination and positive consumer experience for renters, which in turn is causing property managers and owners to advertise their properties with us.

A quick update on LoopNet. LoopNet marketplace remains vibrant, as we rapidly approach 10 million registered LoopNet members. Average monthly searches are up 30% year over year. During the quarter, sales increased just over $6 million in annualized value of new businesses on LoopNet. There was a component of that that is connected with an accounting change, but the revenue continues to grow.

After we complete the software integration of Apartment Finder late this fall, we plan to move to integrating the LoopNet land and CoStar back end databases together. We believe this will allow us to significantly reduce research costs, improve data quality, and position us to most effectively migrate remaining LoopNet Premium Searchers to the CoStar platform. In preparation for that migration, we continue to seek and are achieving higher prices per user in an effort to reduce internal competition and cannibalization. Year over year, our average new selling price per premium user has increased 45%, from $98 to $142.

On July 1, CoStar completed the acquisition of a Madrid, Spain-based commercial real estate information provider called Belbex. Though very small and young, Belbex is the leading commercial real estate data service in Madrid, and we believe that with time, we can grow it to become a significant business for our European operations.

Madrid is both the third-largest city and metropolitan area in Europe, so it is a valuable chess piece in a longer-run strategy. We plan to invest in the business, but that is not expected to have a material impact on our overall financials. The new company will be managed out of our London office and will be led in Spain by Belbex General Manager, Juan Menduina. Because of the scale of the market as well as our leadership team in both London and Spain, I'm very optimistic about the business potential of our growing European operations.

Finally, I want to share a few recognitions our team has recently earned. For the second year in a row, CoStar Group has been recognized by Forbes magazine as one of the most innovative growth companies in the world. Citing our rate of innovation is sustained to appeal to investors, Forbes ranked CoStar number 15 in the annual ranking of the Top 100 Most Innovative Companies, up from, I believe, the 27th position, and ranked us among the Top 10 Most Innovative Companies in the Software and Services category.

Jon Coleman and our legal team have been included in the National Law Journal's annual roundup of Washington legal departments of the year, recognizing the Company's superior in-house legal team. Our legal team was winner in the Big Deals category and recognized for successfully supporting the Company through several major recent acquisitions.

Finally and most importantly, CoStar Group was named by the Washington Post as one of the best places to work in the greater Washington area. We were recognized in the Large Company category of the Post's prestigious Top Workplaces 2015 list. The top workplaces are based solely on employee feedback with a survey conducted by WorkplaceDynamics, an independent research company. Factors considered include employee satisfaction with benefits, their job, and corporate leadership.

The economic strength of the US and its real estate, especially compared with international options, drove an exceptionally large flow of capital to the US commercial real estate sector in the first half of 2015, specifically $208 billion in sales in that time was 27% higher than a year earlier. It's the highest since 2007.

Fundamentals in the market continue to be strong, and occupancy rates for all the major property types are at the highest level since 2008. Corresponding to strong occupancy rates, rental rates grew well over inflation, ranging from 2.6% for retail to 5.1% for logistics. Year-over-year gains for office and logistic rents hit their highest point in this recovery. In response to stronger rents and occupancies, new construction has increased, especially in apartment, office, and warehouse. So far, demand is still growing faster than supply. However, with the exception of the apartment market, we believe most markets should see declining occupancy rates over the next year.

The apartment sector performed solidly. Net absorption was up 11% in the first half of 2015 from a year earlier. A high number of household formations drove the demand for apartments and allowed vacancy rates to decline to a real estate cycle low of 3.7%. And year-over-year rent growth of 3.8% is up from 2.8% one year earlier.

In the office sector, net absorption of 38 million square feet in the first half of 2015 was up 4% from a year earlier, the highest net absorption rate of this real estate cycle. The 60-basis-point decline in vacancy to 11.2% over the past year allowed office rent growth to hit 4%, as a 35% increase in office sales has been especially good for commission-based brokerage clients.

This story of strong demand, high occupancy, and high investment sales volumes is similar for other real estate sectors, including retail, logistics, light industrial, hospitality, and specialty. The broad-based strength in both fundamentals and sales has helped support increased demand for CoStar products and services.

I'm very pleased with what we've achieved in the first half of 2015. The second quarter of 2015 was exceptionally strong, as our powerful sales team is driving all-time high sales. Congratulations to Max and his team.

We are well on our way to $1 billion in revenue and 40% margins for 2018, and we'll continue to actively grow our powerful commercial real estate platform. We believe we are exceptionally positioned for strong growth and financial success for many years to come.

I'll turn it over to Brian Radecki, our Chief Financial Officer.

Thank you, Andy.

As Andy mentioned, we're very pleased with the performance in the second quarter of 2015. The investments we're making in marketing are showing great results, with all-time high sales numbers, increases in traffic leads, all the while the CoStar Group's core business continues to grow at solid top line.

We just closed the Apartment Finder acquisition last month and are aggressively integrating the business while providing our sales force with another service to sell to our multifamily customers. In the second quarter of 2015, the Company reported $170.7 million of revenue, an increase of 16% compared to the second quarter of 2014. Gross margins was $126 million for the second quarter of 2015, or 73.8% of revenue, the highest gross margin reported in the Company's history. So the continued margin expansion shows the leverage and strength of our business model, even with the research investments we've made in Canada and in multifamily. So the highest-ever gross margins, which we believe will continue to climb.

Adjusted EBITDA of $11.3 million for the second quarter of 2015, and non-GAAP net income in the second quarter was $2.4 million, or $0.08 per diluted share, both of which were impacted by the investments in marketing for Apartments.com, as well as expenses for the Apartment Finder acquisition. Net income in the second quarter of 2015 was a loss of $15 million.

Reconciliation of non-GAAP net income, EBITDA, adjusted EBITDA, and all non-GAAP financial measures discussed on this call, so the GAAP basis results are shown in detail, along with definitions for those terms, in our press release issued yesterday, and are available on our website at www.costar.com.

Cash and investments were $367.8 million, along with short-term and long-term debt outstanding of $375 million as of June 30, 2015.

Now I'd like to give some additional color and a few metrics to highlight the strong performance in the second quarter. As Andy mentioned, we achieved $25.5 million in annualized net sales of subscription services on annual contracts in the second quarter of 2015, an all-time high, an increase of 58.9% over the second quarter of 2014. This is an outstanding performance from our entire sales force and reflects the impact of our marketing investments. We have been providing this metric consistently each quarter, this key metric, and it shows the strong results of our continual efforts to move customers to long-term contracts.

As of June 30, 2015, we had approximately 624 salespeople across the Company, which includes the addition of approximately 110 reps that came to us from the Apartment Finder deal. We are actively working to integrate our sales force resources and ensure that the field sales teams are appropriately sized and managed in each of the markets.

Revenue from subscription services and annual contracts was $110.9 million in the second quarter of 2015, or 65% of total revenue. For the trailing 12 months, subscription revenue from annual contracts totaled $420.1 million, up 17.4% from the 12-month period ended 2014, reflecting our continued success in growing the annual subscriptions faster than the non-subscription services. We expect to continue to grow revenue from subscription services on annual contracts back up into the 70s range in the near term and eventually back up into the 80% and 90% range of our total revenue.

Renewal rates for annual subscription revenue remained high during the quarter. The 12-month trailing renewal rate for CoStar subscription-based services was 90.6% in the second quarter of 2015, while the 12-month trailing renewal rate for customers who have been with us for five years or longer was 97%. As we discussed in our last call, this metric ticked down slightly in the quarter as GE, a long-time subscriber, sold its real estate portfolio.

Now I'll discuss the outlook for the third quarter and the full year 2015. Full year 2015, we expect revenues of approximately $707 million to $712 million. Based on our strong second-quarter 2015 sales results, we're happy to be able to raise the full-year 2015 revenue guidance again, despite the fact I just announced an increase on June 8. At this point, the top end of our annual guidance range is now $52 million higher than our initial 2015 guidance range. Apartment Finder contributes $40 million to $43 million of that increase, while the remaining upside is organic revenue growth resulting from the outstanding sales results in the first half of 2015. For the third quarter 2015, we expect revenue of approximately $187 million to $189 million.

We expect non-GAAP net income per diluted share in the range of $1.62 to $1.70 for the full year of 2015, which is up $0.03, at the midpoint from the range we provided you in June. For the third quarter, we expect non-GAAP net income per diluted share of approximately $0.42 to $0.45, which includes the impact of shifting some spending from the second quarter into the third quarter to support the recently announced Rent for Life campaign. For the fourth quarter 2015, we expect the range to increase to approximately $0.79 to $0.84 per diluted share. Investments associated with the marketing campaign are expected to trend down as we get past the peak rental season for 2015, and we expect that trend to be reflected in our quarterly earnings later this year.

The sales results have been impressive in the short time since we launched the new Apartments.com website in February 2015 and the start of the national consumer marketing campaign in March of 2015. However, please remember that it's only been four months. Our models moving forward do not reflect continued sales growth at 50-plus percent rates on Apartments revenue forever. I'd like a few more data points before people start modeling and extrapolating out four months of sales results into their model for every quarter going forward, but obviously, we're extremely happy with where we are.

At this point, I'd like to talk about the growth trajectory for the business. As we still see the core business growing annually in the 11%, 12%, 13% range moving forward, and as we previously discussed, we have a target for Apartments.com growth rate of 25% to 30% going into 2016. Based on the strong early results I'm seeing, I think we'll be at the high end or slightly above that range. As we integrate Apartment Finder, our expectation is to add about $70 million-ish of revenue in 2016 as we discontinue the non-core products and transition Apartment Finder away from print and into all-digital.

We continue to believe that we can reduce the cost base of our combined Apartments business as we integrate Apartment Finder, and we still expect the Apartment Finder acquisition to be accretive to the bottom line in 2016 and beyond. As we've consistently stated, we'll be evaluating the effectiveness of our 2015 Apartments marketing campaign as we get close to the end of the peak rental season and begin planning for next year. I think it's clear that the campaign is achieving our goals of expanding consumer awareness, driving traffic and leads to our clients, and supporting a very strong sales momentum. I look forward to updating investors on our plans for 2016 as we finalize those next quarter.

In summary, I am very pleased with CoStar's financial result for the second quarter of 2015, and we're off to a great start with the Apartments.com traffic and sales in the first half of the year. We believe our historic sales results keep us well positioned to achieve our stated financial goals of $1 billion of revenue and 40% adjusted margins exiting 2016, and our new goal of $1.5 billion revenue run rate with 45% to 50% adjusted margins exiting 2020. As always, we look forward to sharing our progress with you on these goals in the upcoming quarters.

Now, before I open up the call for questions, I have some additional news on a decision I have made. After 18 spectacular years at CoStar, I've decided to take a sabbatical for the next year to spend more time with my family. Now, I know this sounds very cliche, but the simple fact is, I'd really like to spend more time with my family. As much as I love my job, I love my family much more. For anyone who knows me, it's been almost always on, day or night, for CoStar, and it has been nearly nonstop work since the beginning. And unfortunately, with my all-or-nothing personality, striking the right balance between work and personal life has been a struggle for me.

Truthfully, I enjoy working. I enjoy working really hard, and all of CoStar's success has made it very easy for me to keep doing what I like doing. Quite frankly, I have the best CFO job in the world, even if it means working long hours. To be the best, there has been a lot of late nights and weekends. Spending more time with my family has been something I've thought about for years, but like most of us, it's been elusive for me because work has always been crazy or we've been in the middle of something exciting or about to close the next big deal.

But over the past few years, time seems to have accelerated, and the thought of one of my two high-school kids leaving for college next August has had my head spinning. How much time have I spent with them? Has it been enough? Have I been the best father or husband I can be? I could pretty much go on and on.

While contemplating these thoughts and talking to a good friend of mine, he simply advised me to list out what was important to me, what I should be doing and not doing, stack-rank it and go for it. So needless to say, when I do this, it's pretty crystal-clear. Health and family comes first, and everything else, including the work I love, comes after that.

So let's be clear -- I'm not going anywhere for a few months. I'll be at CoStar, working with Andy and the team as long as it takes to have a smooth transition. Therefore, I'll see many of you at various conferences, including next week, that we'll be attending during the quarter. I'll also be working closely with Scott Yinger, our VP of Finance for the past five years, whom most of you know. Scott will be the interim CFO while the Company interviews both internal and external candidates for the position. He's been in the trenches with me every step of the way, so the Company will be well served during this period.

Really, it's been impossible for me to sum up the words CoStar has meant to me, but I want to thank all the truly incredible people I've worked with for all that you have done for both me personally and professionally. CoStar and everyone I've worked with side by side through all these years has really been a second family to me. So again, thank you all.

But mostly, I can't thank Andy enough. He is truly one of a kind -- special in many ways, a real visionary and a good friend of mine. He's been amazing, and as usual, we are both on the same page. I couldn't be more excited about what we've accomplished to date, building a great Company which grew from a $14 million valuation when I started to nearly $7 billion today, resulting in 1,800% shareholder return, over 10 times the NASDAQ average, since our IPO. Wow, that's some serious shareholder returns.

But even with all we've done, I'm still even more excited about the massive opportunity that lies ahead for the Company, and I have no doubt we'll dominate everything we turn our attention to. I realize this decision may be surprising to some, but I know in my heart it's the right thing for me today, and I look forward to spending more time with my family and reconnecting.

At the end of the prepared remarks, we'll only be taking work-related questions in the Q&A, so I'd appreciate keeping my private life exactly that -- private. If you still have questions related to my sabbatical, feel free to contact me directly.

So let's take some questions on the fantastic quarter we had and the outstanding future of the Company. Au revoir, Gopher. Andy?

Okay, so on behalf of CoStar's Board of Directors, our investors, and all of Brian's colleagues, and most especially myself, I want to express our deepest appreciation and respect for all of Brian's achievements and contributions over his 18 years with CoStar. I must say 18 chronological years is a deception. Though Brian started 18 years ago, he's worked not a minute less than the equivalent of 45 years.

I clearly remember when Frank Carchedi, our EVP for Operations, hired Brian back when Frank was our CFO. The week Brian started, Frank and I headed off to New York City to meet with venture capital, and we left Brian in Washington to run the shop. We left him with a bank statement, on his first day of work, with $0.50 in it. We let him know payroll was $150,000 on Friday, and we encouraged him to get collecting. I know he called his wife that day and told her that he thought he might have made a mistake leaving his stable job. We made payroll that week, and with Brian at center stage, we have built an exceptional business that positively impacts tens of millions of people, employs thousands, and has generated great returns. And we'll thrive for a very, very long time.

This quarter, when opportunity arose to make an opportunistic investment, like acquiring Apartment Finder for $170 million, or a non-material multi-million-euro company in Madrid, we can do that from cash on hand. That is thanks to how far Brian has brought us from that $0.50 bank balance.

Rest assured, Brian's greatest accomplishment is the strength and depth of the finance team he built. We will not miss a beat in transition with a team like Charlie Colligan, Dawn Wilson, Mark Zebra, Matthew Green, Tim Clutter, Rich Simonelli, especially Scott Yinger and so many more. Scott Yinger, our VP of Finance, already leads the team, and with the highest qualifications, he will step into the interim CFO role as we transition to a new permanent CFO. As Brian stated, he will remain onboard on a reduced schedule to assist in a smooth transition. We have retained Russell Reynolds, and the search for a new CFO is underway.

I owe Brian more than I can ever repay him for. He's been a close colleague, a genius, a fighter and, most importantly, a friend. The truth is, he's spent more time with me over the last eight years than he did with his family. That's a mistake, because he has a wonderful family and time is too short.

The best I can do to repay him is to wish him well as he heads off on a well-deserved sabbatical, and I hope he gets busy making new memorable, wonderful experiences with his family. He will always have a big office waiting for him here at CoStar.

At this point, I'll turn the call over to questions. I would reiterate Brian's request that we focus questions on the business and respect Brian's privacy. Questions?

Thank you. (Operator Instructions) Andre Benjamin, Goldman Sachs.

My question is actually not on Apartments, but the core CoStar suite. I was wondering if you could confirm what the organic growth rate was just for core CoStar and the LoopNet platforms for this quarter ex Apartments, and then more deeply, how you're trending with just that core broker customer.

Sure, I'll start and then hand it over to Andy. Thanks, Andre 3000. So the core platform, the major brands that people think about -- CoStar, LoopNet, and all that -- they're all growing in the 11%, 12%, 13% rate the last few quarters. So I think they're still growing fairly strong. Obviously, there's a lot of focus around this recent release the last four months. But as we talked about on prior calls, we devised the commission structure for people to be filling up the three major buckets on commissions. So we think over time that will still continue to be a strong area of growth.

And with that, the reality is, is that we are seeing good growth in the core business, but there is an unusually strong opportunity for our entire sales force in the Apartment opportunity. And that, for good reasons, diverts salespeople attention to those big commission dollars on the Apartments side. So with so much growth over there, I'm very impressed that we're maintaining those double-digit growth rates in the core business.

Sara Gubins, Bank of America Merrill Lynch.

Brian, thanks for your comments, and I feel a little bit petty about asking a couple numbers questions, but I'll do it anyway.

That will make it easier on me. Please do. I want the numbers.

I'll throw them all in here. Could you help us break down revenue from Apartment Finder and Apartments.com in the quarter? Was there any revenue to speak of for Apartment FinderSocial that you'll be shutting down? And just a broader question on Apartments.com, if you're seeing any competitive reaction.

Yes, I'll talk the numbers and Andy loves talking about competition, so I'll leave that piece to him. So yes, so in the quarter, for the year, I think we said -- I'll go back and look at the transcript, but I think it's $40 million to $43 million. It's plus-or-minus $6 million in the quarter. So that's all in the quarter. I think we disclosed all that for Apartment Finder.

Their core business is a net $68 million to $70 million, so there's probably about $10 million of revenue that we are currently shutting down. So as you approach the end of the year for the conversion, it's about $10 million that are going to go into next year that you'll lose. So I think I just mentioned we'll expect about $70 million-ish. I'm not giving guidance for next year, but just so people can start gauging their numbers for Apartment Finder for next year.

So obviously, once we get through all those conversions, we get rid of the print, we get rid of the social and all the stuff that we have going on, we convert to the new website and we start selling it, then, obviously, we think we can grow that longer term at corporate rates, mid-teens or so. But it's going to take the next 12 months to get through all that transition and then start getting the engine going on the sales there. And competition?

And really, elimination of Social will increase profitability, without a doubt.

Correct, correct.

So the competitive situation, frankly -- Brian's right, I like competition. This may come as a surprise to people. And the competitive front has been a lot of fun. There were a lot of players in the apartment space as we entered it. We have moved into number one. There have been reactions here and there.

Our single largest competitor, RentPath, has for the first time begun to do some advertising to try to brand in reaction to our marketing campaign, national marketing campaigns. They've made some interesting choices. The vast majority of their revenue is on Apartment Guide. They decided to spend their marketing on Rent.com, which is the minority of their revenue. Our survey showed that Rent.com is less popular with apartment owners and managers. Apartment Guide is more popular.

Watching Alexa, it would appear that there was spending really ahead of the NAA conference and no material traffic movement at Rent.com, which would look like, to me, initially -- who knows where it goes -- looks like a somewhat ineffective response. The CEO of that organization was replaced last month, or this month, so I think that also might be an indication. And then I feel like we're in a very strong position with some of the other players that we're up against there.

On the information side, I think we're taking a lot of share from some of those smaller players providing multifamily information. I took a quick glance on the iPhone at a red light on the way down to the office this morning at the only other publicly traded company providing multifamily market information, and it would appear that their subscription revenue was absolutely flat for the first time in years and that their revenue growth was all from consulting. And those of you who track -- have heard the term zombie company -- it's when you move to consulting instead of leveraged revenue. So I think that shows that we're taking a lot of share there.

And then folks who are in the space but not directly competitive, folks providing general real estate websites that begin with a Z and end with a W, they're pretty busy right now on a lot of other issues. And we are not seeing any share movement one way or another with them. So they have very little revenues in the space and don't appear to be a big factor.

So I have to say it's been really rewarding to come in, and with our team, build a really strong product offering, join up with the Finder folks and the Apartments.com folks, ApartmentHomeLiving folks, and take a tremendous amount of share right now from everybody.

So if you want to get back in line and ask the same question again, I'd love it.

Sterling Auty, JPMorgan.

Yes, thanks. Brian, congratulations on an excellent tenure, and enjoy the sabbatical.

On to the business stuff. Can you give us an update in terms of -- you talked about coming into the year, the elimination of, I think, the Premium Searcher with LoopNet? Where are you in the process, and is there a chance that you end up doing the same thing with FinderSocial, where maybe it's kind of a wind-down and not a complete elimination?

Okay, yes, I'll start it and Andy can jump in. So I think LoopNet, again, we keep pulling the levers. I think it's the same as we talked about on prior calls. We've jacked up the price significantly, and we are losing some people on the searching side. I mean, again, overall LoopNet's growing a little bit less this year. We've got a little bit less revenue this year than growth in the last year, still in that 10%, 11%, 12%, 13% range. But we're essentially getting the effect of what we wanted, and I'll let Andy talk about them. Eventually, we will move all those people off of there and make it a pure marketing site.

On the social thing, there will be zero chance, and Andy can obviously overrule me, zero chance that we will not eliminate that revenue and zero chance that we will not shut down the print. That is an absolute. We're already starting the process. And obviously, we want to get to pure digital play in those areas. And we're feeling great about where we are in a little over a month on this.

Yes, so the folks who were prior doing the social and printer, actually, have been given their warn notice, and we are actually moving people into other job opportunities, and that is a fait accompli.

The only thing delaying the Premium Searcher is Apartments.com and then Apartment Finder and the fact that we're working, really focusing on that. And again, the price when we acquired LoopNet for a Premium Searcher was roughly $30-some. Today, it's roughly $300, yet it continues to grow. By taking it up there and moving it towards parity with CoStar Property, it will make the transition easier as we do that. But again, it continues to grow. And we really want to have the back ends integrated between LoopNet and CoStar Group so that there is a 100% clear upgrade path for all customers, and that if a customer wants to use the CoStar content inside the LoopNet interface, they'll be able to do that as well.

So we'll make progress on that this year, but again, it's just delayed by Finder and Apartments.com successes.

And just to add one thing on that, we've got about 120 people or so that we've given notices to. Most of them will be here through the end of the year, some a little bit going into the first quarter of next year. So we're well underway. As most people know, CoStar moves at light speed, and we've done lots of very, very successful integrations and acquisitions. And so I think we're well underway, maybe better than ever.

Andrew Jeffrey, SunTrust.

Brian, I hope your sabbatical doesn't mean we have boring conference calls for the next four quarters. (laughter)

I'll see you in Boston next week with Andy; don't worry.

I need more entertainment in my life, apparently. Could you talk a little bit about the growth strategy in Apartments, both Apartments.com and Finder vis-a-vis price? I wonder how much of the blow-out sales growth is a function of underpricing the competition, and at what point do you start to price for value, integrate data, and start to drive some greater yield, or if today and for the foreseeable future, share is your primary consideration?

Well, in acquiring Apartments.com, one of the considerations was we looked at all of the other players and looked at their price points they were charging people. And we have experience, though decades and decades ago, of converting from a print advertising medium to a digital information platform, or digital marketing platform. And it's common that when someone converts from a print ad solution to a digital ad solution, they maintain the cost structure of the -- just religiously maintain the cost structure of the print platform, which has ink, Heidelberg presses, and trucks involved. And that always -- that isn't always the right solution.

You can actually, when you have no direct costs for acquiring additional ad other than the sales commission, it's possible to very profitably go for volume and leave a player who's charging print prices vulnerable, so you can go for higher profitability at higher volume. And clearly, the renters have told us they care about higher volume. And so that's the strategy we're going after. And the fun thing is, it's hard for the competitor who's set a strategy on high price-low volume to respond to that quickly.

So I'm very comfortable with the prices we're charging. Again, we have these differentiated scales, so we have silver, gold, platinum, diamond. We're intentionally bringing people in on level 3 and leaving open the ability to move them to level 2 and 1 over time, buildings moving into lease-up or with vacancy problems move into -- will pay dramatically more. They'll pay more than twice or three times as much to go into the top position with the most prominent ad.

I believe that if you get some softness with over-construction in some market areas, we'll get a lot more share, and that people move into that 2 and 1 position to get greater marketing exposure.

And then the other thing is we just have a cost advantage here. We're already collecting all this content about the buildings. We don't have to hire people to collect that content in connection with the sale of an ad. So our costs are being distributed across the advertising platform and the information platform.

So I feel very comfortable where we are right now, and I just think we're lucky as heck to have a cost advantage and to not be afraid to be a little bit bold and changing the business model up a little bit. So does that answer your question? Okay, I'll assume it did.

Brett Huff, Stephens Inc.

Yes, this is Jim Rutherford in for Brett. I just wanted a quick update on hearing what multifamily owners are saying about lead quality and if there's been any change there, and then on the volume that they -- volumes of leads they're getting after switching to Apartments.com from other vendors.

Sure, happy to. I met with a lot of owners recently with NAA in Vegas and was extremely pleased with the feedback I received. So across the board, the most senior principals of firms and then the marketing leadership across the board, everybody I spoke to, acknowledged that they were happy with and were seeing a material improvement in lead quality and quantity from Apartments.com over prior year. And in particular, one of our strategy differences from other competitors has been we are not focused on maximum lead volume; we're focused on lead quality. So a lead is a cost item, a lease is a revenue item, and the industry got into a game where it was drive leads to the telephone of the leasing office, regardless of whether or not that lead was even remotely qualified.

So specifically, you don't tell the person if the apartment, the one-bedroom is available or not. You have them call the leasing office to find out. That's a waste of the leasing office's time. So what we've done is we're telling people, "There's no one-bedroom available here. Don't bother calling unless you're really, really desperate." And that brings lead volume down a little bit. The marketing and the traffic brings lead volume up, but it's more qualified leads.

And so we're getting held -- I was really pleased with what we heard. And I think now, especially for the 13,000 communities that have been advertising with Apartment Finder, I believe we're going to blow their minds. I think we're going to give them an increase of leads like they can't believe, when you go from 2 million unique visitors to 14 million unique visitors and you go from, again, this murky lead shotgun game to really qualified, high-quality leads. I think it will work really well.

Bill Warmington, Wells Fargo.

And so I heard a rumor that, Brian, you were trying out for the Washington Capitals and you were going to go on the ice, that it could be pro this time.

Trying out? I already got a spot.

I'm behind. Anyway, so congratulations on that, and we're going to miss you.

Thanks, Bill.

So I have a question for you on the sales force structure. I know you gave out the number of 624 and that that included 110 coming in from Finder. But maybe it would be helpful if you could sketch that out for us now, how the sales force is actually organized across all the different products and how we should think about that in terms of how it's organized.

Okay, so to oversimplify --

It can't be too simple for a sell-side analyst.

So if I extract out inside sales selling LoopNet in tertiary markets and I extract out verticals and real estate manager and things like that, these are little sales teams of just smaller sales teams, which are nice -- there's probably 100-some people there -- and I focus on the core businesses, it really breaks into a CoStar information-oriented and commercial real estate-oriented sales force, and then an apartment marketing-oriented sales force.

One of my big concerns this time last year was that I did not have as big an Apartments marketing sales force as my competitors did, and that was one of our disadvantages. So I was pushed to move the CoStar information salespeople in to supplement what we had in the Apartments side. So the Apartment Finder acquisition really solves a hole and has been exceeding expectations for the result.

And especially, something that's different about this apartment business than from the office-industrial-retail business is that the smallest cities in America play an outsized role. So Greensboro and Biloxi and Baton Rouge, Albany, Buffalo -- they actually generate material revenue in these apartment sectors. So we did not have strong offices or personnel in those really, really small cities, and Apartment Finder brought that to us. So it was complementary geographic distribution between where the Apartment Finder folks were strong and where the Apartments.com people were strong.

The tenure of the Apartment Finder people we're bringing on is excellent. It's not atypical that it's eight years, 12 years, 14 years. At NAA, as I moved from little group to, at the party, from a little group of clients with a salesperson, a little group of clients with a salesperson, I heard several times that this salesperson was in this client's wedding party. So that's fantastic. And what that's done is given us real strength in the tertiary markets and good relationships.

And then also some strength in the primary market. So, for instance, Apartments.com had six salespeople in Los Angeles, and Apartment Finder had six people in Newport Beach. So they told me that no one had really managed salespeople down there before because you can't go from Newport to Santa Barbara and effectively sell. And by bringing those two groups together, you actually begin to be able to assign out LA in a realistic territory pattern.

The thing that's key is the teaming between the information salesperson and the marketing salesperson. That's working like a home run. People are teaming up, and they end up getting a lot more revenue and taking a lot more share when they go in the combined offering.

And then the other nice thing about that is historically, the marketing people were gate kept at the leasing office of the community, so they were often selling one community at a time to the leasing manager of the community. When you bring in the CoStar rep's information, they're used to selling to the C-suite of the organization, and that group has an interest in it. So they're bringing the marketing person up to the C-suite, and now it's not atypical we're getting a lot of deals that are 20 communities at once, which was prior unheard of, which is allowing us to move so much share so quickly.

And anecdotally, I would hypothecate that our -- maybe six or seven competitors we're dealing with right now, I would guess that many of them are down 10% of their revenues this year. Again, I'd look carefully at our public, I'd look carefully at the subscription base for our public information competitor. I think that this teaming in the sales force is working incredibly effectively, moving thousands of communities to us.

So there's some overlap in some areas, but we want to grow that sales force. There's an unlimited need to grow that marketing sales force on the LoopNet side in the field, and the Lands of America, which is still a very promising, vibrant business with a great future.

So I know you're not supposed to look at an acquisition and say that the sales force was like a real linchpin. You wouldn't spend that much money for just a sales force. But we did get a fantastic set of sales forces here, and I am personally thrilled to finally look at like a Charlotte office and see real strength, see like 15 or 16 solid salespeople and a real CoStar presence in that community, so that we're really a meaningful member of that business community.

So that's happening all over the country and I'm very thrilled with it. It will be a competitive strength.

Michael Huang, Needham and Company.

Brian, so have fun with family and good luck with everything. It's been great working with you. This is just a quick one here. So I appreciate the comments around not extrapolating from the strong bookings performance that you've been seeing here. I was wondering, was there anything one-time in nature that benefited the quarterly bookings? And I guess, as you think about the year, I know that you're not going to be extrapolating aggressively here. What should we be assuming around bookings source for the year? Should that tail off a little bit, or is there a way you could walk us through that?

Yes, I'll talk about it. So I'm going to focus on the annualized contracts bookings number, the $25 million number. The other number's a good number, too. There's a lot of monthly stuff that comes in and out of there. Obviously all Finder stuff is monthly now. We're moving most of Apartments to annual, but there's still a lot of monthly stuff there and a lot of monthly and three-month stuff at LoopNet.

So on the annualized number, which is really to me the key metric that we're tracking, that's obviously up fairly significantly. And that's a number -- I don't try to guide to it, because I'll tell you quite frankly, we're in uncharted territories here. And that's why I say it's four months into this, and I don't want to extrapolate things. I think after -- I've always said this the last few calls, like let's get through one full year of the marketing campaign and the sales stuff and then really know what the trajectory is.

Do I think we can grow that number and continue to grow it at 50-plus percent for the next 50 years? No. But can we continue to grow it at that rate? Possibly. We've never done it before, so we're the fourth month in, and I just think it's a spectacular number. Now, obviously, as we keep getting more experience each quarter, then we will continually update that number.

So in the annualized bookings number, there's nothing, as far as I'm aware, that's one-time in nature. So I think we'll just have to see how that plays out. Obviously, there's NAA. There's a lot of big-bang things upfront, so I think you have to get through a full 12-month cycle to see where you go on that.

Peter Lowry, JMP Securities.

It sounds like the synergies in between the recent acquisitions and the information on the analytics side of the business may be going better than expected. You mentioned the revenue synergies in terms of how the territories lay out, but is there anything else that's been surprising on that front?

When you say surprising about it, do you mean in terms of specifically the synergies?

Like worked out better than expected.

Yes. We initially thought that the focus would be on selling the information product to the asset manager at the owner or at the property management firm, where property management's also involved in acquiring and disposing for their clients. So we thought we were selling more of an asset management tool with our product. And what surprised us was that often, the very same person who would make the most senior decision on the marketing was also the person that had the greatest need for tactical rental information.

So you go meet with somebody, and sure, the asset manager's in there, and they're kind of interested. But the VP of Leasing has to manage and understand, every day, what all of their competitors are charging for rent and need to watch where people are raising or lowering their rents. And that same person is responsible for lead generation.

So what thrilled us was that person, when you can solve a problem that no one else can solve, because no one else is solving this problem we're solving here. There are other people that provide information on apartment buildings, but they are updating a very small set of properties, realistically, with a very, very small staff, and they're doing it on a bimonthly basis, typically, or a quarterly basis. And we are updating more properties and their rental information each day than I believe any of our competitors update all year long, like update quarterly. So we're providing these people with really good pricing, competitive intelligence, and that is really compelling to them. And the great thing is they control a massive budget for marketing the properties.

And then the other little secret there is that they -- it's appropriate; there's nothing wrong with it -- but they have a big budget for marketing these 30 buildings they manage, but the marketing budget goes directly into the partnerships on the buildings. And if they can get packages that allow them to get discounts on information based on the spend at the building, they can get very low-cost information at the general partnership, and they really like that. And you could make an argument that you could allocate information costs against the limited partnership that the buildings sit in, but we do that for them.

So in many cases, if somebody moves their substantial advertising budget for 20 or 30 properties from a competitor to Apartments.com, they can get free information to manage their rentals and their asset management, their underwriting -- the whole nine yards. And I really enjoyed the other day, listening to a sales pitch from a direct competitor, where it was quite clear at the end of the presentation that the CoStar Market Analytics was a better product and was free, because of their marketing. And the competitive salesperson just shrugged and disappeared. So that's the surprise. Thank you.

So I believe at this point we have no more questions, so thank you all for joining us on this call, and we look forward to those of you who are going to be up in New York for the Needham conference. And for those we're going to see up in Boston the day following that, we look forward to seeing you. Again, thank you very much, and look forward to hearing from you all next quarter, and look forward to Scott leading the call next quarter and Brian making comments from the peanut gallery. Thank you very much.

Thank you. Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation. You may now disconnect.