Richard Simonelli - Vice President-Investor Relations Andrew C. Florance - President, Chief Executive Officer & Director Scott Wheeler - Chief Financial Officer.

Andre Benjamin - Goldman Sachs & Co. Sara Rebecca Gubins - Bank of America Merrill Lynch William A. Warmington - Wells Fargo Securities LLC Darren R. Jue - JPMorgan Securities LLC Andrew Jeffrey - SunTrust Robinson Humphrey, Inc. Michael S. Huang - Needham & Co. LLC Brett Huff - Stephens, Inc. Peter C. Lowry - JMP Securities LLC.

Ladies and gentlemen, thank you for standing by and welcome to the CoStar Group Fourth Quarter Earnings Conference. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will be given at that time. And as a reminder, today's conference is being recorded.

I would now like to turn the conference over to our host, Vice President of Investor Relations, Mr. Rich Simonelli. Please go ahead, sir..

Thank you, operator, and good morning, everyone. Welcome to CoStar Group's fourth quarter and year-end 2015 conference call. Thanks for joining us. Before I turn the call over to Andy Florance and Scott Wheeler, I have a few important facts for you.

Certain portions of this discussion contains 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 CoStar Group's February 24, 2016 press release on our fourth quarter and year-end results and in our 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 on www.costargroup.com, where you can also find our CoStar's Investor Relations page. A replay will be available approximately one hour after the call concludes and will be available for approximately 30 days.

To listen to this replay, please call 800-230-1074 within the United States or Canada, or 612-288-0329 outside the U.S. The access code is 385-653. In the Q&A section, just as a reminder, please limit yourself to one question and we'll have you rejoin the queue if you have additional questions. So, I'd like to turn the call over now to Andy Florance.

Andy?.

unique visitors, total visits, total page views, total time on site, average time on site, lowest bounce rate, consumer engagement, unaided awareness, search engine optimization, search engine marketing, and the number of apartment buildings offered and the handsomest. Apartments.com – that last part was a joke – comScore does not report on that.

Apartments.com finished the year with 60% more page views than our number one competitor, and 350% more page views than our number two competitor. Our most recent focus groups tells us that our website provides the best renter experience among our competitors. Revenue from Apartments.com was up approximately 30% year-over-year in the fourth quarter.

Total Apartment related revenue in the fourth quarter of 2015 was $53.4 million, up 108% over $25.7 million in the fourth quarter of 2015. We achieved outstanding growth in the fourth quarter of 660% year-over-year in net new sales on Apartment's annual subscriptions.

We believe that the sales success stands in stark contrast to our significant competitors in the space, who we believe have shown little revenue growth over the past year. According to Moody's, RentPath revenue is essentially flat since May 2012.

In October 2015, Moody's reported a downgrade report that RentPath generated approximately $250 million of revenue for the 12 months ended June 30, 2015.

Back in May 2012, Moody's reported that RentPath generated approximately $246 million of revenue in 2012, including approximately seven months of revenues from Rent.com following the acquisition close.

2015 was a particularly difficult year for RentPath's CEOs, as three different individuals have held the position since our relaunch at the NAA industry conference in June. We further believe that we are offering marketing opportunities to apartment communities with up to 10 times the exposure of major competitors at a price point 20% below theirs.

That is driving significant share shift to us. In November of 2015, we announced our exclusive agreement with Move, Inc. to power 50-unit plus apartment community listings on Move's network of websites which includes Realtor.com, Move.com and Doorsteps.com.

We now promote our advertisers' communities across six major apartment websites with a single point of contact at prices we believe are below the largest providers in the market apartment listings space.

So far, the results have been very good with over 0.25 million leads generated for our apartments' customers since their listings went live on Realtor.com's site in December. We expect that in February, the Move partnership will be responsible for 10% of leads to our advertisers.

In March 2015, we embarked on an unprecedented marketing campaign complete with national advertising to promote Apartments.com. There are 110 million renters in the U.S. spending just under $0.5 trillion a year on rent. That compares to automobiles at roughly the same level. And that is approximately five times what people spend on beer each year.

The market for apartment renters is growing rapidly and spending on rentals increased by $100 billion since 2010. This is one of the largest consumer segments in the U.S. Since the beginning of the campaign in March last year through the end of December, we generated over 7.9 billion impressions for our ads.

Most of you have seen the television campaign featuring Jeff Goldblum; it was responsible for 2 billion impressions. We also generated over 3.4 billion impressions digitally, over 2.2 billion impressions for out-of-home and radio, while social media added another 190 million impressions.

As we've previously stated, we expect to lower our 2016 marketing spend by approximately $20 million below our 2015 budget levels. With that budget, we were still able to begin 2016 with a bang as we initiated a comprehensive marketing campaign using Super Bowl 50 as the vehicle.

In addition to continuing to build the Apartments.com brand, we demonstrated to property managers and owners that we're committed to the apartment space as we move into 2016. The earned media opportunity around our Super Bowl ad was very successful, achieving a publicity value of more than $14 million.

On Tuesday before the Super Bowl, CBS showcased Apartments.com in a special primetime sneak preview feature alongside other top brands including Audi, Coca-Cola, Buick and Budweiser.

Also leading up to the game, The Wall Street Journal announced that Apartments.com would be advertising the Super Bowl, reaching our key client constituency of owners and property managers.

The Moving On Up campaign featured Jeff Goldblum, Lil Wayne and saturated Super Bowl headlines with the inclusion of our Moving Day ad in 15 top commercial rankings in national news and entertainment publications, beating out well-known players like Mountain Dew, Honda and my favorite, Skittles.

Our Moving Day commercial broke into leading Super Bowl polls, ranked number one in The Wall Street Journal poll for best Super Bowl commercial and top star power. I do have to say I voted twice in the Wall Street Journal poll.

USA TODAY Ad Meter included the spot as one of the six finest Super Bowl commercials and we were the only tech company to take TiVo's top 10 list, coming in at number seven for most consumer engagement.

Apartments.com was also widely recognized in the entertainment sector, earning inclusion as one of the best commercials in Super Bowl 50 in Rolling Stone, US Weekly, Entertainment Tonight and more.

We appeared in seven national broadcast features including CBS Super Bowl's greatest commercials, the Today show, Mornings with Maria Bartiromo and Squawk Box.

We secured coverage in 50 print publications including The New York Times, The Wall Street Journal, USA TODAY newspapers, and we're covered in over digital features including The Wall Street Journal, Advertising Age, The Washington Post and Sports Illustrated.

Additionally, we appeared in over 700 digital roundups including the Business Insider, San Francisco Chronicle, Boston Herald, The Chicago Tribune and Yahoo! Finance. We garnered over 143 broadcast mentions including Good Day DC, EyeOpener Dallas, Extra, Good Day New York and ABC World News Now. And Al Roker selected us as his favorite ad.

So Super Bowl is a highly visible venue and important branding opportunity. But our Super Bowl ad represents a small component of our 2016 advertising budget. The major component for 2016 is the half a dozen new spots we've just completed filming with Jeff Goldblum this week.

And we think these spots will evolve and extend the brand when combined with our digital initiatives. I feel that we have an open field ahead of us right now, and I'm very excited about the opportunity we have this year to further distance the Apartments.com brand from our competitors.

In the fourth quarter of 2015, we completed the rebuild and launched the completely new ApartmentFinder.com site filled with rich CoStar information and current availabilities.

We have integrated the back ends of Apartments.com, CoStar and Apartment Finder, thereby leveraging the same system, support, research content, sales platform to power our entire apartments network consisting of Apartments.com, Apartment Home Living, Apartment Finder, the three websites owned by Move, as well as CoStar Market Analytics.

We have positioned Apartment Finder as a place for great deals and great apartments. We believe we have dramatically improved the site experience and I encourage you all to go visit Apartment Finder and see for yourself.

It's a really great Web site and consumers are getting good deals as we highlight apartments that have recently lowered their price or who are offering deals like free rent for a month. The Apartment Finder print services are now gone and all of our contracts have been converted to digital advertising.

Our Apartment Finder sales team is now free to go out and sell rather than convert, which I believe will increase our overall sales of apartment rental marketing services in 2016. We have now achieved Apartment Finder cost synergies of approximately $20 million within seven months after close of the acquisition.

The Apartment Finder acquisition has been a great success to-date and brings a great new team to CoStar Group. And I believe it will continue to help us transform our apartment listing services. CoStar Market Analytics service is very closely related to Apartments.com in that each product is a key piece to the rent maximization puzzle.

We often cross-sell the two services together. We believe we are the only company providing a comprehensive bundle of services that addresses the need for lead generation services, as well as information services. The information component of our apartment sector products, CoStar Market Analytics, generated very strong sales growth in 2015.

This new service added nearly $22 million of net new subscription sales to the core CoStar offering in the 11 months from March 2015 launch through January of 2016.

We believe that at $22 million in revenue, we have penetrated less than 10% of the market opportunity, and we have the potential to add hundreds of millions of dollars of information and analytics sales in the multifamily vertical.

We believe CoStar Market Analytics has even greater potential financial benefit to CoStar because it can help us extend penetration beyond apartment clients only into valuable customer verticals such as banks, institutional owners and owners who demand comprehensive commercial real estate information coverage for all the major sectors they invest in, and they want to find it in one place.

These clients typically have more risk exposure, greater potential upside, and larger budgets from which to draw for our services than do our traditional brokerage clients. Our annual subscription services continue to enjoy high thrilling 12-month renewal rates of 90%. Our core U.S.

CoStar information renewal rates remain very steady at an extraordinary 94%. The LoopNet and Apartments marketplace services historically have lower renewal rates, and the blend with CoStar information services brings the overall rate down to 90%.

But at the same time, we've been working hard to move both Apartments and LoopNet to generally annual contracts with a goal to significantly increase their ultimate renewal rates. So good news in the renewal rate area. I want to take a few minutes to discuss what we're seeing in commercial real estate market economics. Fundamentals are very healthy.

Annual rent growth increased for each of the four main property types to an average 3.3% in 2015, and vacancy rates declined slightly by 30 basis points, while net absorption and construction levels rose. Geographically, the vast majority of U.S. metros reported improving fundamentals.

For example, within the office market, 64% of submarkets record a quarter-over-quarter improvement in occupancy, which is a market cycle high. 56% of the 54 major metros now have occupancy rates above the 2006-2007 peak. In the last commercial real estate downturn, that indicator fell dramatically 18 months before the downturn occurred.

So, I look at it as one of the best leading indicators for a commercial real estate downturns, and right now, it's solidly in positive territory. While conditions are strong, there's a great deal of room to run.

Office, retail and industrial construction is on the rise, but in all of these property types, construction is still well, well below 2000 levels and long-term averages. As is often typical, some markets aren't following this exceptionally positive national trend and not surprisingly, metro Houston is the best example due to energy prices.

But even there where real estate demand has slowed, net absorption has remained positive for every quarter and every property type with the exception of apartments in the fourth quarter. The demand for real estate investment has been broadly based with double-digit sales gains last year for every major property type.

In 2015, we saw a record-breaking $637 billion in commercial real estate sales, up 20% from one year ago and 15% over the prior 2007 peak. The fourth quarter of 2015 achieved a record $180 billion. And though property sales pricing is rising, it remains rational.

Cap rates across property types are maintaining a 70 to 140 basis points spread over risk-free rates such as the 10-year treasury. This is unlike the period of 1999 and 2007 when cap rates irrationally pushed well below the 10-year rate. We see a broad base of strength in the major property sectors.

For office, all fundamental metrics hit market-cycle highs in 2015 with net absorption up 8%, completions up 40%, occupancy up 50 basis points and rent growth up 60 basis points to a 4.4% annual rate. The strongest office markets continue to be technology-dominated metros with double-digit rent gains still coming out of the San Francisco Bay area.

We're also find that the flight-to-quality space is very strong with four-star and five-star office properties, achieving net absorption rates twice as high as their fair market share. The apartment sector performed solidly and rents grew 6% year-over-year.

Apartment net absorption matched 2014's market-cycle high of 209,000 units which is 40% over the 2010-2013 average. Net completions of 214,000 units in 2015 exceeded net absorption slightly for the first time in this cycle and were up 7% from 2014.

With this robust construction activity, vacancy rates moved up 35 basis points in the later part of the year from record lows and rents began to fall from record highs. Still, the vacancy rates were extraordinarily low, so as they come up a bit, they're still extraordinarily low.

And the rents have moved to extraordinarily high as they come down a little bit, they're still extraordinarily high. So, but we believe an uptick in vacancy rate would have a very positive impact on our business. We are focused on winning advertising business with approximately 53,050-unit-plus market rate properties in the U.S.

that do not currently advertise on Apartments.com. 23,000 of these 50-unit-plus properties are essentially fully leased with occupancy rates at or above 98%. Fully leased properties obviously are more difficult to sell advertising to.

If vacancy rates move up a few basis points or a few points, it's likely that a significant share of these 23,000 full-leased properties would move more into a more active marketing phase, thereby dramatically increasing our size of opportunity. So, a little bit of increase in vacancy rates is a good thing for Apartments.com.

We had another excellent year in fourth quarter in the United Kingdom. Revenue, EBITDA and net profit targets for the UK were all exceeded. Revenue increased by approximately 14% and EBITDA growth was well into double-digits in local currency.

We had several major CoStar Suite migration wins at the end of the year including JLO and Cushman & Wakefield, as we welcome back the former DTZ users to CoStar.We also secured the commitment of the Scottish government to use CoStar Suite. CoStar UK is expected to complete the migration from legacy focused platform at the end of March.

These conversions were made in average price increase of 34%. We have migrated all the large brokerages in the United Kingdom, except one whose contract in England expires at the end of March. Every single major firm in Scotland has migrated.

Our new acquisition in Spain is progressing in line with expectations and we expect to have more to talk about this as the year progresses. All these numbers are a testament to our strong leadership in the UK and the potential global appeal of the CoStar service offering.

The LoopNet Marketplace remains vibrant as we have over 10 million registered LoopNet members. As I mentioned earlier, LoopNet net new sales on annual subscriptions in the fourth quarter accelerated significantly with an 80% increase sequentially from the third quarter of 2015 and 52% growth over the fourth quarter 2014.

With our larger combined Apartments.com and Apartment Finder sales force up to speed, our CoStar sales team can begin to return focus back on LoopNet and CoStar sales. As you know, we're in the midst of making substantial upgrades to LoopNet. A few weeks ago, we launched a new Web site with a cleaner user interface.

We have also begun a tiered advertising structure on the LoopNet website offering diamond and platinum packages that give brokers and owners the ability to pay more, to sort higher, enjoy a larger ad and most importantly cross market across the CoStar platform and audience.

Our single-highest priority in 2016 is to complete the integration of the back ends of CoStar and LoopNet. We expect this will have a significant positive effect on our revenues, reduce our costs and increase our EBITDA.

Tens of thousands of brokers and owners consistently enter and maintain good quality information on hundreds of thousands of properties in LoopNet. In fact, we often see higher quality information in LoopNet from some brokers and even many brokers, then we see through the CoStar research process.

Currently, the LoopNet information does not flow automatically in to CoStar, so we collect it through our research process at material and significant expense. With two separate databases, our clients also incur the unnecessary expense of maintaining information in both systems. The LoopNet and CoStar databases are typically significantly different.

So, in theory, each is less than perfect. We believe that when we create one common back end and the structure forces continuous reconciliation, we'll have a dramatically higher quality database. We believe we can identify those that digitally submit reliable content to us and begin to flow their additions and changes into our systems automatically.

This is expected to reduce our required research head count while giving us more timely and complete information. In addition to merging the building listing and comps databases, we also plan to merge the contact or people databases of the two companies.

We expect that this will again reduce our cost of maintaining information and improve our marketing and sales intelligence.

Once we have merged the databases, we'll be able to consistently differentiate the amount of information that the lower-paying LoopNet information subscribers benefit from versus the amount of information advantage higher paying customers benefit from.

Most importantly, we'll be able to automate a clear, continuous comparison of the datasets to our users to better facilitate up sells to our more robust information products. While we complete this integration, we expect to launch the second phase of CoStar and LoopNet cross-selling.

In the first phase, we generated more than $80 million of additional CoStar subscription revenue while reducing our cost more than $20 million. I believe that this next phase has greater potential. I expect the second phase will be approximately a two-year up sell process after integration is complete.

Currently, there are 130,000 active LoopNet members that log into LoopNet in the last 12 months and conducted more than 100 searches each. In addition, 300,000 visitors to the site conducted more than 100 searches each in the past 12 months.

This pool of 430,000 potential users is the target up-sell audience for CoStar over the next few years and it is very large. After the integration is complete, we plan to convert all new LoopNet information sales to enterprise sales only.

Meaning that when a firm wants to buy, all the brokers need to be licensed, not just one to prevent password sharing. We plan to offer an intermediate product between LoopNet and CoStar that the users access through LoopNet.com at a price point between LoopNet and CoStar with a clear value upgrade over the legacy LoopNet information product.

It will have twice as many listings as LoopNet currently offers but will not have the breadth of information and analytics that CoStar offers. We expect our sales team to work to up-sell LoopNet legacy information users to this new product, as well as to CoStar. One of either. One of the two.

In addition, we will eventually up-sell from the new LoopNet product, again, up to CoStar. I believe there is a potential to up-sell net $50 million to $250 million in subscription revenue. About a quarter of all CoStar cancels currently come from clients that use LoopNet as an alternative.

We believe that the CoStar cancels will go down after we integrate the two back-ends. Eventually, we would expect to eliminate legacy LoopNet information products to focus our efforts into building industry-leading marketing services on the LoopNet platform.

In 2015, we focused the majority of our resources on taking the leading position in multi-family information and marketing. We were successful in adding over $100 million in revenue in the space and have created a wide-mode platform that we believe can generate higher margin, double-digit growth for years to come.

In 2016, our top priority is capturing what we believe is a huge opportunity to drive strong double-digit growth in our core information products for many years to come.

Any concern with the trade-off we made to take the lead position $0.5 trillion apartment business for approximately 20 basis points reduction on our core information services reminds me of a story from my childhood.

My mother came home one day from the store with two new shirts and told me to take them upstairs, try them on and come back down and show them to her. I put the first one and came back downstairs. She looked at me crestfallen and said, what you didn't like the other shirt? Of course, nothing was wrong with the other shirt.

I just could not wear them both efficiently at precisely the same time. We believe both that our Core and the Apartments products can grow at strong double-digit growth rates for many years to come. We may though temporarily shift resources from time-to-time for strategic reasons, generally for brief periods of time to pursue the big picture.

We're proud to exit 2015, having achieved 24% top-line revenue growth with a 65% year-over-year increase in net income. We will remain committed to reaching our goal of $1 billion of revenue and 40% adjusted EBITDA margin exiting 2018 as I believe I've mentioned.

Our $100 million of annualized net new sales in 2015 indicate that our sales and marketing efforts are working exceptionally well, and that our advancements in our service offerings are being well-received by users and clients alike.

A number of you have commented that you like the new margins growth and expansion that we're showing with our new CFO, Scott Wheeler. So, hey, great hire. So, I'll turn the call over to our outstanding new CFO, Scott Wheeler, for his maiden earnings call cruise..

Wonderful. Thank you very much, Andy. We have to call you Captain Florance going forward. But thanks for the warm welcome, Andy and team, and good morning, everyone. I do want to say that my first four to six weeks here with the group has been pretty eventful. I've had a chance to meet with a number of investors who I'm sure are on the phone.

Also, I got to meet with our sales folks as they came in for annual sales conference. Last week, I was in Atlanta getting to meet with clients and hear from them directly. And of course, my favorite was getting to watch Lil Wayne kick a football for our commercial.

Anyway, who would have expected that when you start at a new business? But over the numbers, as Andy mentioned, we're very pleased with our performance for the fourth quarter and for the full year of 2015.

The relaunch of Apartments.com, the related marketing investments, the acquisition and relaunch of the Apartment Finder, and our Core information businesses all drove strong sales results throughout the year and they're expected to contribute to the top-line revenue growth, as well as continue margin expansion in 2016 and beyond.

In the fourth quarter of 2015, the company reported $193 million of revenue, an increase of 24% compared to the fourth quarter of 2014. Full-year 2015 revenues were $712 million, an increase of $136 million or approximately 24% over the full year of 2014.

Full-year revenue growth for our core CoStar Suite business is in the 11% to 13% range as expected. Our gross margin was $148 million for the fourth quarter, or 76.6% of revenue compared to 72.5% of revenue in the fourth quarter of 2014. That is a very strong increase against both prior year and the Q3 gross margin.

We've completed the aggressive transition away from print at Apartment Finder and this now starts to show up in the improved gross margins, a margin which I expect to increase as our business continues its growth throughout 2016.

Adjusted EBITDA was $65 million or 34% of revenues for the fourth quarter of 2015, an increase of 20% from the $54 million in the fourth quarter of 2014. Non-GAAP net income in the fourth quarter was $35 million or $1.10 per diluted share, an increase of 19% compared to the $30 million in the fourth quarter of 2014.

Net income in the fourth quarter of 2015 was $23 million or $0.71 per diluted share, an increase of 65% compared to the fourth quarter of 2014. Now, in the fourth quarter we really started to see these impacts of our cost management efforts come through in the stronger EBITDA performance.

Personnel costs were very favorable as we focused on integrating our Apartments businesses and we slowed hiring across the company.

In addition, we tightened up on a number of discretionary expense areas and we were able to achieve our outstanding marketing results that Andy mentioned with slightly lower spending, an effective (36:43) improvement in our ROI on marketing.

Reconciliation of our non-GAAP net income, EBITDA, adjusted EBITDA and all the other non-GAAP financial measures discussed on this call with their GAAP basis results are show in detail along with the definitions for these terms in our press release issued yesterday and they're available on our website at www.costargroup.com.

Cash investments, $437 million as of December 31, 2015, an increase of $46 million from the end of the third quarter. Short and long-term debt outstanding, net of debt issuance expenses, totaled $355 million at year-end. Cash flow generated from operating activities totaled $131 million for the 12 months ended December 31, 2015.

You can see we closed out the year in a very strong cash position, which provides us great flexibility to take advantage of growth opportunities in the year ahead, a flexibility that many of our competitors just don't enjoy. Now I'd like to give some additional color on a few metrics to highlight our strong performance in the fourth quarter of 2015.

At the end of the fourth quarter, we had approximately 535 salespeople across the company, which represents a decline of around 60 people from the end of Q3, resulting primarily from continued integration and alignment of the multi-family sales force.

Despite this reduction, we still delivered very strong and impressive business orders and sales results. With Apartment Finder integration and the realignment efforts now behind us, we plan to increase the number of salespeople throughout 2016. Throughout this, the information sales force remained relatively stable throughout the fourth quarter.

Revenue from subscription services on annual contracts was $136 million for the fourth quarter of 2015 or 70% of total revenue. And this is up from 64% in the prior quarter. We made tremendous progress converting more of the Apartments customer base to annual contracts and expect this trend to continue going forward.

For the trailing 12 months ended December 31, 2015, subscription revenue from annual contracts totaled $475 million, up 22% from the $390 million for the 12-month period ended December 31, 2014, once again reflecting our continued success in growing these annual subscriptions.

Renewal rates, as Andy mentioned, for annual subscriptions revenue remained high during the fourth quarter. The 12-month trailing rate for CoStar subscription revenue was stable at 90.4%, while the 12-month trailing renewal rate for customers that have been with us for five years or longer was 96.3%, roughly in line with the last quarter.

So, now let's look at the outlook for the full year and for the first quarter of 2016. For the full year of 2016, we expect revenue of approximately $830 million to $840 million, or 17% to 18% year-over-year growth versus our 2015 results. On a pro forma basis, revenue is expected to grow 13% to 14%.

Our pro forma calculation assumes the total revenue of $735 million for 2015, which includes the revenue from Apartment Finder for the full year and excludes the revenue from the businesses that we discontinued, such as Finder Social (39:56).

The core business, again, as Andy mentioned, is expected to continue its double-digit growth of approximately 11% to 13% underpinned by our investment in CoStar marketing analytics and the refocused efforts of our sales forces post-integration.

The combined Apartments business, including both Apartments.com and Apartment Finder, is expected to grow in a range of 20% to 25%. This growth range represents the combined growth of the Apartments.com business that grew at approximately 30% in the fourth quarter, along with the acquired Apartment Finder revenue base, going forward.

We expect revenue for the first quarter of 2016 in the range of $196 million to $198 million, representing top-line growth of around 24% to 25%.

In terms of earnings for the full year 2016, we expect non-GAAP net income per diluted share of approximately $3.62 to $3.72 based on 32.8 million shares, an increase of approximately 80% year-over-year at the midpoint.

For the full year, we expect adjusted EBITDA in the range of $227 million to $232 million with a margin of approximately 27% at the midpoint, an increase of 8 full points compared to 2015. We expect to see strong margin growth in the second half of 2016 and exit the year with margins in the mid-30% range.

This increase in margin demonstrates the high degree of leverage in our business model, with approximately 75% of the 2016 revenue increase converting to adjusted EBITDA. We expect first quarter 2016 fully diluted non-GAAP net income per share of approximately $0.66 to $0.70 based on 32.7 million shares.

As Andy discussed, we expect our marketing costs to be down year-over-year, with advertising spend more heavily weighted in the first half as we resume our national advertising campaign ahead of the peak rental season.

Also, as in prior years, other costs are expected to be seasonally higher in Q1 including payroll taxes and our annual sales conference. So, in summary, I'm very pleased with CoStar's financial results for the fourth quarter and for the full year of 2015.

The relaunch of Apartments.com, the addition of Apartment Finder, the continued investment in our information and analytics products will continue to prove our growth trajectory into 2016. We're also very focused on efficiency and cost management as we drive this strong top-line growth.

We will continue to streamline the combined Apartments businesses and identify other areas for efficiencies throughout the company.

We believe the current sales trends and the sustained focus on expense management will keep us well positioned to achieve our stated financial goals of $1 billion of revenue in 2018 and exiting that year with 40% adjusted EBITDA margins. So, having said all that, we can now open up the call to questions..

It would appear that we're going to do $1 billion of revenue someday, that's our goal..

Someday..

40% margin..

That's right..

2018 exiting. Great. Part of our new cost saving initiatives, Rich, would you put another quarter in the phone? Yeah, we are ready to open up for questions..

Thank you. First, we'll go to the line of Andre Benjamin with Goldman Sachs. Please go ahead..

Thanks. Good morning, guys..

Good morning, Andre..

Good morning..

So, you gave a ton of numbers. I guess I was wondering how you're thinking about the growth in the Core platform in 2016 embedded in the guidance, given the puts and takes in the CRE market these days? How you are thinking about the broker versus institutional side? I guess specifically, I'm trying to make sure my math is right.

If I add up all the pieces that you gave us, the Apartment growth implies about deceleration for the Core business to about 7% in the fourth quarter? So, I guess we'd like get this back up in next year and is the slowdown more driven by pricing or users? I only have one question, so I had to throw a bunch in there..

No worries. So, we don't get the same numbers on that. We show the Core business completely stable at roughly at 12.5% year-over-year growth rate in the fourth quarter. So, it's been hovering at that 12.7%, 12.5%, 12.3% number consistently.

And we would expect improvement overall in 2016 that number simply mechanically because in 2015, we borrowed a lot of sales people to supplement the Apartments.com sales force to sell apartment-related products. As we go – and then we merged with Apartment Finder in 2015 mid-year.

And that entire team did nothing, but appropriately did nothing but convert people from print to digital for the second half of the year. And that was a large, 100-some-person team.

So, as we move into 2016, those folks have completed that task, those Apartment people have completed that task for Apartment Finder and they're now available to do, they focus 100% of their energy on selling Apartments-related business, which gives us the size of scale of the Apartment sales force we want, and that allows us to bring some of the traditional CoStar people back to focusing on the Core.

So, while we only saw a few basis points of reduction in growth that we accelerated in the fourth quarter in the Core, we should – as we bring more experienced sales people back into focusing on the Core product see continued robust growth.

And then, the initiatives I talked about where we integrate the CoStar and LoopNet back-ends, I believe that is a powerful accelerant. But I believe that we'll see more of that in the later part of the year, so we'll talk about that as we approach delivery on that kind of product. I think that is a multi-year powerful accelerant.

So, it could be that when you're doing the math, you're seeing FX effects, you might be seeing discontinuation of a couple of little products that may be small numbers, but from quarter-to-quarter, so there's some products like our product Resolve that we no longer sell that product because it is not scalable, it's basically software consulting services.

We like the technology we pulled from it, but we're not going to continue to sell it. It's not going to be a profitable scalable business. So, that one is going backwards a little bit, and that could make the numbers look – it could be interpreted as something in (47:04) the Core. But the Core is 12.5%, which is at the upper end of our 11% to 13%.

Now to answer the question on will accelerating in the Core – the other thing in the Core which is not Core to me. So, I define Core as, I do not blend CoStar and LoopNet as one thing. I think of LoopNet as a product, and I look at CoStar as a product. And then within LoopNet, I look at Core LoopNet and non-Core LoopNet.

Core LoopNet is the advertising business. LoopNet Premium Lister or the advertising or Loop-like, anything around advertising, that's doing well. The non-Core LoopNet is the Information Services, Premium Searcher, Premium Property Comps and Property Facts.

That is pretty much revenue waiting to be up sold to higher margin CoStar services so that one we would not be trying to grow dramatically. We're more setting that up for dramatic growth to CoStar up sell conversions. When you address, there is nothing we are seeing at all in our numbers anywhere related to negative economy.

So, there's no anecdotal information coming in from the field. There is no client comment to us. I'm hearing nothing about any negative economic impact right now, and the commercial real estate market is generally are – the fundamentals are very strong, and if there's any economic disruption, it is not the fault of commercial real estate this time.

So, and it's also important to remind people that unlike brokerage clients, we do not, our revenue does not drop dramatically in a downturn. So, people continue to consume information products like a CB Richard Ellis doesn't cancel their in-place contract because their revenues drop, should they drop – they are not driving, but should they drop.

And in the worst we ever saw was in this 50-year low watermark for the commercial real estate market was a 3% decline in revenues for the year after which we saw a strong return. In the 2001 downturn, we saw – we did not see a decline. We just kept growing. So, we have brokerage firms revenues going down in that decline, we kept going up.

So, we do not have any indication today of any slowdown in the Core or negative economic. And should there be a negative economic in the future, it's not coming from commercial office, industrial, retail, real estate for sure. And should that occur, it is – we're not highly cyclical like our traditional customers.

Now, the other thing is that brokers are very important to us personally. They're less and less important to us as a revenue stream. So, when we went public, they were 80% of our revenues. Today, they're 29% of our revenues.

And our revenues are diversified across banks, governments, property managers, owners, institutional investors, CMBS investors, power companies. Just all kinds of folk. So, we're not – we do not go as a large brokerage firm goes. So, you asked a multi-compound question. Hopefully I answered a compound answer, too long. Okay..

You did. Thank you..

Let's try and wrap this call up before 3:00 o'clock. I'm sorry..

And next, we'll go to the line of Sara Gubins with Merrill Lynch. Please go ahead..

Hi. Thanks. Good morning..

Good morning..

Good morning..

Just a couple of real quick ones.

Could you quantify the headwinds from Services at Apartment Finder that you're shutting down in 2016 numbers? Would you characterize ad spend as being down $20 million in 2016 or was there some shift from the fourth quarter into the New Year? And then the contract sales were fantastic but they were sequentially down from the third quarter, so I just wanted to get your take on that.

Thanks..

Sure. So, simply put, what happened was we are taking the 2016 spend on marketing around the Apartment space down $20 million over the comparative numbers from 2015. The cost savings you saw in the quarter – in the fourth quarter were largely elimination of redundant positions, and that's probably, the single biggest beginning, middle and end of it..

Over two-thirds of it was from personnel-related costs..

Yeah. 200-some people..

Yeah. Very small amount was from the marketing piece in Q4..

So we think that's something that you'll see that the reduction in marketing spend, though, remember, at a reduced number, we are still the most aggressive player by a wide margin, and as you can tell like Super Bowl ads and so on and so forth. And we think that will give us significant advantage.

And we think the marketing dollars at the lower level we are spending are highly efficient because if you're not competing with multiple other voices attempting to brand a similar product in the national space, you have very efficient dollars – there's very efficient dollars you're spending.

So, in the fourth quarter, remember one of the things that was occurring. So, you asked about the Finder discontinuation of revenue, that number was $10 million, $13 million, something like that..

Yeah. It was roughly around that..

$10 million, $13 million net. These were revenues – this was revenue that just in the long term would distract us from other higher margin revenue. So, it was negative or a flat margin revenue that couldn't scale and we thought it was frankly competitive and distracting, so we took that away to focus on the Core.

So, you'll get a little bit of tailwind on that. Now, remember – a little headwind on that. But just year-over-year basis. Now, remember that we went in to Apartment Finder really aggressively. So, we were not messing around and other companies have done print to digital conversions in the course of two or three years. We did a – I'm sorry.

A print to digital. We did a print to digital in four months. So, we want to be really quick about it.

And we took 100 and some Apartment Finder sales people and said, go to your customers and migrate them from a print publication to a digital publication, keep the pricing the same, but go from a month-to-month contract to a six-month contract or a one-year contract and do it by next Tuesday. So, it was very rapid.

But we did that because of the margin benefit and the ability to focus aggressively and produce a much better product at the end and have a scaled sales force and get scale advantage to these websites. One point of sales, multiple websites for the clients to enjoy leads from.

So in doing that, we did have some folks not go from print publications to digital. In particular, you might be in Albany, New York or something, where they love their newsstand book. But we still turned the great results we did despite that, and going forward we're in a much better place than if we kept messing around with print.

I hope that answered the question..

Great. The last one was just new contract sales trends..

That's the new contract sales. There's a slight reduction there..

Oh, got it. Got it..

We lost contracts when we lose that company in Albany that really wanted a book..

Okay. Makes sense. Thank you..

We're not big believers in the book. Okay..

And next we'll go the line of Bill Warmington with Wells Fargo. Please go ahead..

Good afternoon, everyone..

Good afternoon..

Hello..

Well, a question for you on the new CoStar product, the inter-media product going between LoopNet and CoStar Suite.

I don't know, you have a name for it or is it CoStar Light, something like that?.

Do you have a name for it?.

Okay. And so, the context of the question is given that product you have your Premium Searcher revenue. I'd like to ask about approximately how much we're talking there, that you're looking to up sell to CoStar Light or to up sell to the CoStar full test.

What are the different price points? How do we sort of do some back of the envelope on the potential scenarios there?.

Sure. So, first of all I think you're asking a great question and it is one that I feel that is an important question for the company and I think that we have a good solution for that with a lot of potential. So, I'm feeling very good about that area.

So, one of the challenges with the traditional Premium Searcher revenue, which is what, $34 million?.

About..

Roughly $34 million. Is that it was a relatively low-quality product for LoopNet historically, and it was a throwaway. So, they signed up a number of people at as little as $19 a month, which bears no resemblance to what CoStar charges for a higher quality information product.

As the LoopNet brand has strengthened, the information has gotten better in LoopNet and they're getting a lot more value than they're paying for. Now, you can't increase anybody from $17 to anything meaningful at any kind of other than usurious interest rate kind of growth rate. So, it's not a great approach.

So, we are creating a new product, so we will – those folks who have Premium Searcher can see both basic and premium listings on LoopNet. Once we do the conversion, the only people that are going to be able to originate basic listings on LoopNet will be people who are paying to advertise with us, at least some property.

That means some of the basic listings will disappear reducing the value of the legacy product, somewhat. And we are offering the up sell product, which has twice the listing volume and more accurate listings as the legacy LoopNet product. We'll be offering that for probably in the $195 to $295 a month per person price range.

The current legacy product, it was running at $115 average per month. Now, that average is very average because as you know, we took the price up to about $325 or something a month, about a year or so ago, so that $115 is a blend of the $17 person and the $325 person..

Yeah..

And also, it's not apples to apples. It's comparing yens to pounds because a user at CoStar Group has an enterprise license where all the brokers of the site need to be licensed before the first broker gets the service.

On the legacy LoopNet, one broker in a 100-shop brokerage firm might be the guy who bought the password and shares it with the entire office. So that $34-a-month account might be servicing 100 brokers. So, as we bring the new products on board, it will only be licensed at the enterprise site level, and it will be moving up to a higher price point.

So, it'll be significant up from where we are before. So, it's probably a – if someone chooses to get the more robust intermediate information products through the LoopNet platform, on average, it will likely be a 300% price increase or so.

And we think it will be compelling to people because we'll use exactly the same methodology LoopNet used to get people from just using the free LoopNet to the Premium Searcher LoopNet where every search you do, you can actually see how much content you're not seeing if you're not in the premium class.

And then the CoStar service is probably another 60% increase above the intermediate service. So, we'll move people between these different price points with very clear and very discernible value proposition. So, I'm very excited about it. There's a lot of software work to do this year, but clearly our team is pretty darn good at doing that.

And we're – they'll hit this one as aggressive as they hit Apartments.com, and as aggressive as they hit Apartment Finder. And then I'm really excited about what we're going to deliver to our CoStar sales force.

And then ultimately by coming up with a clear branding message around LoopNet that it's a marketing vehicle like Apartments.com is, we will ultimately, I believe, sell a lot more marketing revenue as well. And you didn't ask, but there, that's also another pricing opportunity because our average broker-client pays $17 per month for an ad on LoopNet.

Whereas when we sell to owners they pay on average $400 or $500 and we're going to be moving more towards that, so..

Wow. Okay. Well excellent. I appreciate the....

I think you wanted (61:47) numbers.

I don't know if that helps?.

I appreciate the insight. And I also want to say welcome aboard to Scott Wheeler..

Thank you very much. Great to be here. Look forward to meeting you soon..

We call him – around CoStar, we call him continuous-margin-expansion-Scott.

Is there an acronym for that yet?.

CMX (62:09)?.

And next, we'll go to the line of Sterling Auty with JPMorgan. Please go ahead..

It's actually Darren Jue on for Sterling..

Good afternoon, Darren..

My question is about how you guys think about prioritizing spending between the Apartments.com and the Apartment Finder brands? And then like how do you see the growth rates of those two brands trending, do they sort of converge in terms of growth rates over the long term?.

Yeah. Good question. They are – we are prioritizing the branding spend around Apartments.com. So we put all the major media dollars into Apartments.com. And then – but we can leverage that investment, Apartments.com, to Apartment Finder or to Apartment Home Living in that, as someone is acquired by Apartments.com, we cookie them.

And when they search for – this is an example – they search for a pet friendly, one bedroom in Cleveland Park in D.C., we know that. And then we retarget them, we spend digital dollars retargeting them, saying that Apartment Finder is the ideal site to find a dog friendly apartment in Cleveland Park. And that's very successful.

We capture a lot of traffic by – and what we're trying to do there, is a typical renter goes to two, three, four sites, and we would like to be half the sites they go to by moving them around through retargeting and so on and so forth.

And then, the product is being sold – we are not, when we go out there today, we're not selling Apartments.com and we're not selling exposure on Apartment Finder, we're selling exposure on the Apartment Network. And that allows us to leverage the entire sales force across one clean selling message. It's much more efficient.

Otherwise, you'd have to have two competing sales forces. The clients don't want that. The clients really like being able to pay one price and move across a whole network of websites. And the nice thing is, there was not a ton of redundant client base between Finder and Apartments.com.

So, what we did is we really just increased share and then we're trying to move the overall forward..

Yeah. I think it's an important message to bring up because as we move forward into this year, as we're selling this network through the sales force, there's not going to be a visible separation between Apartment Finder and Apartments.com from a revenue growth perspective.

So, when I gave the guidance of look for 20% to 25% combined growth going forward, that's all of our apartments, properties together in this network cell. And it is exactly at or slightly above the growth rates on an organic basis we're seeing coming out of the end of 2015..

Okay.

And just to clarify, the 20% to 25% growth, is that a pro forma growth, assuming that you had Apartment Finder for the full year in 2015?.

Yeah. That's right. That's assuming that. And the number I gave, I think, was $735 million as the pro forma base that we grow off of in total, it includes that 20% to 25% Apartment..

Okay. All right. Thank you..

And we believe that combined business will be profitable in the fourth quarter..

And next, we'll go to the line of Andrew Jeffrey with SunTrust. Please go ahead..

Hi. It is afternoon now.

How are you doing, Andy?.

Good..

Welcome, Scott, look forward to working with you..

Great. You, too, Andrew. Thank you..

I guess what I'm to trying wrap my head around a little bit, kind of going back to Andre's question at the beginning of the Q&A session. Net new has historically been our best look-forward metric. It has accelerated to pretty remarkable levels, reminiscent of LoopNet coming out of the last recession.

And yet, the implied rev guide for 2016 doesn't seem to capture that implied acceleration.

So, I'm wondering if net new isn't the best sort of forward-looking metric anymore, or if there were some puts or takes or how we should think about your guidance vis-à-vis bookings growth and, perhaps, some conservatism? I'm just – give me a breakdown on the relationship, is what I'm trying to understand better..

It's a good question. I think as you think of – the net new is still the metric we'll be using in the annual subscriptions to show how that turns obviously into revenue in the future.

The other thing we all have to get used to is now that we've got a really big multi-family Apartments business, it demonstrates a different seasonal pattern in its new and subscription revenue from quarter-to-quarter. Obviously, there's a peak season in the second and the third quarter for renting and then that cools off.

That pattern is going to hold true for the sales efforts. It's also going to hold true for our marketing efforts.

So, from what we've been used to in the past, we're going to see a more seasonal pattern that's decent in the first quarter, it grows second quarter, third quarter and then it softens in the fourth quarter when you look at apartment selling.

So, when you peel all those pieces apart and we look sequentially and forward, each of the individual components, seasonality aside, continues to grow and will continue to grow in each quarter next year over the prior quarter. I know it's difficult to see because until we get annual periods of all this stuff in place, it's not as clear.

But that's what we're seeing in the underlying metrics in the new business that we're putting on and then that's translating into consistent sequential growth going forward..

So, I think – I do think that it is the best single indicator of future revenue and expectations. You do have a lot happening. So, you have the Finder conversion really coming to a head in the fourth quarter, where we did record reductions. We had the shutdowns of revenue.

So, that moving Finder through in essence in a three-month period creates a little bit of noise. And then I think that we're not looking to be overly aggressive as we go into 2016. We would like to see us continue to put up these unusually strong sales results ongoing.

And not – don't want to speak on behalf of Scott but coming in to the new CFO role you wouldn't amp up all the dials from the prior year with your over four weeks of high confidence..

Thank you for that good introduction..

Okay.

So you wouldn't call out for example any inflation in the net new number which is resulting from the conversion of less than annual terms to annual terms, which would otherwise blunt future revenue growth, in other words, better retention, better economics but maybe less related revenue growth?.

No. And I believe our apartment renewal rates are doing really well. I think we're going to do a lot better in the apartment renewal rates than anyone in our industry has ever done.

And anecdotally, there was one client that you would – we're bringing a lot to the table for the clients right now and so we have a much stronger hand or much stronger product than anyone has had in this space before. And there's one client that sticks in my mind that we saw a reduction in their spend, it was a major national player.

Was the only major national player I was aware that we saw a reduction in their spend in the later part of the year, but they've actually brought that right back up online and above. So, I actually think our renewal rate in the Apartment side is pretty darn good.

We'll be working hard to keep it up there, and I think it probably ends up being stronger than the LoopNet renewal rate. It's somewhere between the LoopNet and CoStar, and that makes that net bookings number actually a good fair representation of what's happening in the business.

But don't- they're so – when you discontinue all that Finder Social on the fourth quarter, you take negative net news for terminating a book ad campaign in Albany. There's a little bit of noise there, but the big – and it's happening so quickly. I mean, remember, this is all accelerated in the last three quarters.

But I'd say it's still the best indicator..

Okay. Great. Thank you very much..

And next, we'll go to the line of Michael Huang with Needham. Please go ahead..

Thanks, and good morning, guys. Just a quick one for you.

So, with respect to the annual sales conference that you – that you hosted, what were the key takeaways? And could you share how you're thinking about ramping head count across the product areas and maybe the profile of who you are hiring, and whether or not that's any different than kind of who you hired in the past? Thanks..

So, well, one really nice thing about the sales conference was that I felt that there was really good energy and integration between the CoStar sales team, the Apartments.com sales team and the Apartment Finder sales team. So, this was the first time they all got an opportunity to get to the same room.

And it was the first time that they had one relatively common set of products and it was also the first time that they had a really good – I think a really good territory system they get a hold of. So they could understand what their mission was in this collection of products. So, I felt there was really good energy.

I thought there was a little bit of a morphing of the personalities as they, three different sales forces into a more corporate central casting, send me a high-end sales person look. I mean they were really dressed up.

But the expansion areas would be we're adding customer relationship management people that the CoStar information sales team, about 80 people there. They have some selling responsibilities, but their core responsibility is driving usage. They're selling responsibility is really more around LoopNet to brokers.

So, they'll sustain and drive the LoopNet PL. Then the other thing we did is Max and I spent a lot of time just saying very carefully about our rationales of potential revenue – existing revenue and just set slightly different target levels in different cities, especially cities that we think have a lot more revenue upside.

So, it was a really good feel other than a blizzard that came in, and potentially was going to strand 700 sales people on my credit card for three days in Washington. So we had to get them out of there quickly ahead of the storm, and we only had to pick up the tab for about 30 Brits for the weekend, so, it turned out okay..

We'll also see the territories were aligned closely now in Apartments, and we have a couple extra regions we've done and a couple hundred territories that we've now aligned with the combined sales force. You're going to expect those number of territories will need to put more folks against.

And so, that's the other piece besides the customer relationship piece that Andy mentioned. We'll see more sales force in multi-family going out to those territories..

Okay..

And next, we'll go to the line of Brett Huff with Stephens, Inc. Please go ahead..

Good afternoon. And welcome, Scott..

Thanks, Brett..

Andy, can you talk about lead quality? You mentioned kind of you're expecting high renewal rates from the multi-family folks, the investment you all made in getting real time availability, I think, sort of was the game changer you're going after – it was supposed to produce higher quality of leads.

Can you give us if it's a metric or anecdotes just to compel us that that's working as you've expected and that it is – the leads are higher quality?.

Sure. So, again, there's not a – there is no sort of third party lead monitoring service that puts out a – a metric that we can use.

But I can take an anecdotal from our biggest customers where they are watching that lead flow and they're saying that one customer, one major customer said, look, you all came in in March of last year saying you're going to have this great traffic and great lead flow and you want us to immediately switch all our advertising to you after we have been doing this for 30 years.

And so, we're not going to do that until we've watched results for a period of time. And they said that, they said, and it's consistent with what others are saying, that as they monitor it, they see a clear and growing differentiation between the leads they received from us and lead is a dirty word. Is what you're really looking for is lease.

And so, the leases they're seeing come from us is differentiated from all the other sources. Which is why they're spending, as you can see, from any – just pretty clear there's a major shift from other sources to us, that is the best testament of lead quality.

But we did an interesting study the other day and you'd go back to the old manual way of trying to lease out your apartment building. We know from digitally tracking the results of over 10 million phone calls into apartment communities in 2015, they only answer the telephone during normal business hours 27% of the time.

So, they're only available to give somebody information on apartment 27% of the time and then working on a special project that we made 1,500 calls, that were all recorded legally, and that a separate person and each community was called and asked for a one bedroom availability by two different people.

Each call was recorded, and then a third party determined whether or not an accurate answer was given on whether or not there's availability. The accuracy rate for when you call an apartment community and whether or not they have a one bedroom availability is 50%.

So, when you call and ask the community if they have a one bedroom available, they're only able to give the right answer 50% of the time. So, you're down to, for every 100 calls that come in only 13.5 of them are answered correctly.

So, the only way the industry's going to lease stuff up is through digital presentation right from the property management systems to the customer. So, what we're doing is we're giving consumers real information as to what's available. We're making it readily accessible.

We're not playing any games where we serve up apartments that aren't in the neighborhoods they asked for. We're not playing any games where we serve up apartments that are not available. So, the quality of our lead flow would follow is much better. And I think that's just is evidence.

My belief is that the competing companies are seeing significant reductions in revenue other than whatever they could pick up in the print to digital conversion volatility. I think they're seeing negative numbers and that basically follows from a lead flow..

Okay. That's great. That's what I need. I appreciate the detail..

And our final question will come from the line of Peter Lowry with JMP Securities. Please go ahead..

Oh, great. Thanks. Just one quick one. Can you give us an update on your current M&A stance or other capital allocation plans? Thanks..

Sure. So, I would, I'd have to say there's more potential initiatives that we could pursue than I've ever seen before. There's a wide array, and they lie in our traditional business area, in the Core business area. They also are in the Apartments area. And then they're in related areas.

We also separately are looking at smaller acquisition opportunities in Europe. But – so, we obviously – with growing cash balances and very conservative debt posture we have capacity. But I would not want to let anything right now interfere with our core priority of integrating LoopNet and CoStar.

So, whatever happens, the first priority is getting the benefit integration done. And so, we're probably operationally adverse to adding additional workload for at least six months.

But we – Frank Carchedi who's been with us for a long, long time, he's one of four CFOs that hang around here, former CFOs that hang around here, he has handed off his responsibilities for our very large research department and he's focusing on some of our subsidiaries and he's focusing on M&A. So, he's spending a lot more time on that.

We are looking at a lot of things. But again, priority number one is operations and realizing the benefit of the resources and assets we already have..

Great. Thank you..

Thank you. So, what the heck? We're going to break the rules. We have one more question from Sara and then we're going to move to the second quarter results..

Thank you. So, I just want to clarify what the Apartments' guidance that you gave for 2016. You've been talking about 25% to 30% before. And I think that referred just to Apartment.com and you're now including Apartment Finder and probably some of the products shut down that's impacting in 2016.

Is that the reason for the lower growth versus the 25% to 30% that you talked about before?.

Yeah, Sara that's exactly it. When we talked in the last quarter, we said 25% to 30% for Apartments.com. And until we finish the wind-off of Finder, we didn't have a good base to start using in our go-forward organic growth calculations to know what that combine business is going to be.

Now, as you point out, we have that clarity, we know where it's running. You combine the 30% from Apartments.com with the remaining base of Apartment Finder and on a go-forward basis you get 20% to 25% growth range, which is at or slightly above the equivalent of the 30% that we spoke about before. So, there's no decline there. There's no change there.

It's actually a slight acceleration through each quarter we see next year from the "30%" (in quotes) that we said last year.

Is that clear?.

Yeah. That's very clear..

Perfect..

Thank you..

You're welcome..

Okay. With that, we will wrap it up. Thank you all for joining us and congratulations, Scott, on your first earnings call...with the CoStar Group..

Thank you very much..

See you next time..

And, ladies and gentlemen, that does conclude our teleconference call for this morning. Again, thank you very much for you participation and for using the AT&T Executive Teleconference Service. You may now disconnect..