CoStar sues Zillow for copyright infringement

CoStar Group, a real estate data and analytics company, has been sued by Zillow for copyright infringement. The suit alleges that CoStar copied Zillow's proprietary data and used it in its own products. CoStar has reported Q2 adjusted earnings and revenue that rose from the previous year, and has raised its annual revenue forecast. The company also appointed a new national director of multifamily analytics. Various analysts have adjusted their price targets for CoStar, with some maintaining their buy ratings.

CoStar Group, Inc. (NASDAQ:CSGP), a leading provider of commercial real estate information and analytics, has been sued by Zillow for alleged copyright infringement. The lawsuit, filed in New York federal court, accuses Zillow of publishing over 46,000 of CoStar’s copyrighted photographs on its platform and partner sites Redfin and Realtor.com without permission [1].

According to the complaint, Zillow has used CoStar’s watermarked images more than 250,000 times on Zillow.com, and the alleged infringement has extended to its partnerships with Redfin and Realtor.com. CoStar, which maintains a robust financial health with a current ratio of 5.83, has invested billions in building its real estate database and copyrights over two million original real estate photos annually [1].

The lawsuit notes that Zillow has previously faced similar legal challenges, with a previous case resulting in a multi-million dollar payment for copyright infringement claims brought by real estate photography studio VHT, Inc. [1]. CoStar has indicated it might pursue legal action against Redfin and Realtor.com if the allegedly infringing images are not removed from their platforms [1].

CoStar Group’s strong Q2 results have been highlighted by a 15% year-over-year increase in revenue to $781 million, net income of $6.2 million, and adjusted EBITDA reaching $85 million. The company also reported record net new bookings of $93 million, a 65% increase from the prior quarter [2]. CoStar Group has raised its annual revenue forecast to a range of $3.135 billion to $3.155 billion for the full year 2025, and its adjusted EBITDA guidance for the full year 2025 has been increased to a range of $370 million to $390 million [2].

The company has also appointed Grant Montgomery as National Director of Multifamily Analytics, bringing over 25 years of experience to the role [2]. Various analysts have adjusted their price targets for CoStar Group, with Needham raising its price target to $105 and maintaining a Buy rating, citing strong Q2 results. Similarly, Citi increased its price target to $100, highlighting a 55% year-over-year rise in commercial real estate bookings as a key factor. BMO Capital also adjusted its price target upward to $89, noting solid revenue growth, although partly attributed to expense timing [1].

References:
[1] https://www.investing.com/news/company-news/costar-sues-zillow-for-alleged-copyright-infringement-of-thousands-of-photos-93CH-4159762
[2] https://www.ainvest.com/news/costar-group-raises-annual-revenue-forecast-q2-earnings-beat-estimates-2507/