Continuing the fun with LoopNet numbers, let’s make some LoopNet revenue guesstimates for their agent/brokerage product line taking numbers from their Premium Listing pitch and other numbers I found around the web. Something to keep in mind as you’re reading this – The CoStar Group is aiming to generate $1 billion in revenue by 2018.
Money for Search
As mentioned last week, there could be as many as 140,000 people paying for search. The best deal is to pay $245 a month for search on the annual plan, though they offer a day rate of $167 and shorter term monthly rates ranging from $255 – $265. Let’s assume half are on the annual plan paying $240 per month and the other half are one day searchers. The about $213 million a year in revenue would account for over a quarter of CoStar Group’s 2015 annual $712 million in revenue.
However, LoopNet is no longer pushing paid search at visitors. They’ve removed those greyed out listings which made it clear that you had to pay to view. That’s probably in part to stop annoying visitors and to strong arm agents to hop on the Premium Listing bandwagon because, thanks to the new design, it’s not unrealistic for visitors to think that all they see is all that’s available.
Still, annually paying searchers will continue to be a steady revenue stream unless CoStar opens up free search to all…like they do on Apartments.com. (Pause for laughter….)
Money for Premium Listings
As LoopNet puts in bold on their website, at this time, there are 800,000 listings available. Let’s say half (which is the figure they’ll give you if you press them) of those are Premium/free to view. The brokerage rate per listing per month ranges from $10 to $25 per listing per month. The individual agent rate ranges from $25 (package of 10/annual contract) – $85 for a single listing per month (single listing/short term contract).
Mash up all those price levels and say they’re getting $25 per listing for 400,000 listings each month. That’s $120 million in revenue per year.
Adding it Up
If we add up the guestimates for LoopNet search and Premium Listings, it provides $333 million in revenue. That leaves CoStar’s data services and apartment, land and business sale sites plus any revenue from their advertising plans (some on LoopNet) to make up the $379 million difference.
Apartments.com has over 10 million registered members with millions of listings (2, 3, 4 million or more…who knows?) from over 400K properties in the US. Though no prices are posted, a paid listing on Apartments.com is said to start at around $80 per month. No search fees so no revenue there…yet. And no idea of how many landlords upgrade from free to paid listings…though I’m sure CoStar will figure out a way to make it a necessity.
So we need to figure out revenue another way. In 2014, revenue from Apartments.com was reported to be about $159 million (which, if there were 2M listings, would mean each one paid generated the $80 at least once…). ApartmentFinder.com was expected to bring in at least $30 million. For each, there was a reported 30% rise in revenue for 2015 bringing the total revenue for both to an estimated $216 million.
Add up LoopNet and the apartment “groups” revenue, and that leaves CoStar’s data product and all its other properties to account for the $163 million difference in 2015.
CoStar says it’s data product subscriber base is growing, but it’s likely cannibalizing LoopNet agent searchers and will eventually flatline (save for price increases…). Obviously, CoStar is looking for growth in its commercial and apartment listing portals.
So how do they get to $1 billion in revenue by the end of 2018? They’re projecting almost 20% revenue growth for 2016 bringing them to their $830-840 million projection (and I have to say, their projections are usually very good…). Total growth rate can slow to an average of 9% between 2017 and 2018 for them to make their $1 billion in revenue target with LoopNet likely providing over a third. I thank you all on CoStar’s behalf for making it possible.