CoStar Group (NASDAQ:CSGP) reported third-quarter results on Oct. 23. The leading provider of commercial real estate information, analytics, and online marketplaces is enjoying robust growth, fueled by a series of value-creating acquisitions.

CoStar Group results: The raw numbers

DATA SOURCE: COSTAR GROUP Q3 2018 EARNINGS RELEASE. YOY = YEAR OVER YEAR.

What happened with CoStar Group this quarter?

CoStar Suite revenue climbed 19% to $139 million, as the company continues to find success in enticing heavy users of its LoopNet commercial property marketplace to upgrade to its premium CoStar Suite research product.

"As we have seen time and again, since the LoopNet acquisition closed in 2012, LoopNet is a great source for identifying and refilling our lead list of commercial real estate professionals that we can sell CoStar Suite to," co-founder and CEO Andrew Florance said during a conference call with analysts.

Moreover, management sees long runways for additional growth.

"I still believe that over time we can generate hundreds of millions of incremental annual subscription revenue by upselling LoopNet users to CoStar Suite," Florance said.

Multifamily revenue rose an even more impressive 45%, to $105 million, boosted by the successful integration of recent acquisition ForRent.

"We completed the combination of the ForRent.com website with the CoStar database in September, making ForRent the fastest ILS [internet listing service] integration we have ever done," Florance said in a press release. "Our combined ForRent and Apartments.com sales team will now focus on expanding our Apartments.com customer base in the months ahead."

COSTAR GROUP'S ACQUISITION STRATEGY IS FEEDING ITS GROWTH. IMAGE SOURCE: GETTY IMAGES.

Better still, CoStar continues to become more profitable as it expands. Adjusted EBITDA -- which excludes stock-based compensation, acquisition-related charges, and certain other items -- increased 31%, to $110 million, as adjusted EBITDA margin improved to 36% from 34% in the year-ago quarter. And adjusted net income surged 70% to $79 million, or $2.16 per share.

Looking forward

These strong results prompted CoStar to lift its full-year financial forecast, which now includes:

• Revenue of $1.183 billion to $1.189 billion, signifying year-over-year growth of 23%, and changed from prior guidance of $1.180 billion to $1.192 billion
• Adjusted EBITDA of $404 million to $408 million, up from $395 million to $405 million
• Adjusted earnings per share of $7.95 to $8.03, up from $7.75 to $7.95

"Given our very strong margin performance, we are confident we will exceed our goal of 40% adjusted EBITDA margin for the fourth quarter of 2018, and are raising our earnings guidance for the full year of 2018," CFO Scott Wheeler said.

Additionally, CoStar highlighted the potential for another recent acquisition -- Realla -- to boost the company's growth in the years ahead. As the U.K.'s largest marketplace for commercial property, Realla is expected to further CoStar's European expansion.

"Across the world, marketing commercial properties is moving to digital marketplaces, away from wood-based products like magazines, flyers, and boards," Florance said. "Realla is the U.K.'s most comprehensive commercial property digital marketplace -- and when combined with the CoStar information solution it is expected to offer the best tools for marketing properties, valuations, and facilitating transactions."

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