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SEGMENT REPORTING
 9 Months Ended
Sep. 30, 2016
Segment Reporting [Abstract]  
SEGMENT REPORTING
SEGMENT REPORTING

Segment Information

The Company manages its business geographically in two operating segments, with the primary areas of measurement and decision-making being North America, which includes the U.S. and Canada, and International, which includes the U.K., Spain, Germany and France. The Company and its subsidiaries' subscription-based services consist primarily of information, analytics and online marketplace services offered over the Internet to commercial real estate industry and related professionals. The Company’s subscription-based information services consist primarily of CoStar Suite® services. CoStar Suite is sold as a platform of service offerings consisting of CoStar Property Professional®, CoStar COMPS Professional® and CoStar Tenant® and through the Company's mobile application, CoStar Go®. CoStar Suite is the Company’s primary service offering in the North America and International operating segments. Management relies on an internal management reporting process that provides revenue and operating segment net income (loss) before interest, income taxes, depreciation and amortization (“EBITDA”). Management believes that operating segment EBITDA is an appropriate measure for evaluating the operational performance of the Company’s operating segments. EBITDA is used by management to internally measure operating and management performance and to evaluate the performance of the business. However, this measure should be considered in addition to, not as a substitute for or superior to, income from operations or other measures of financial performance prepared in accordance with GAAP.

Summarized information by operating segment consists of the following (in thousands):
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2016
 
2015
 
2016
 
2015
Revenues
 
 
 
 
 
 
 
North America
$
205,637

 
$
182,556

 
$
598,757

 
$
500,059

International
 

 
 

 
 

 
 

External customers
7,074

 
6,522

 
20,562

 
18,696

Intersegment revenue
3

 
4

 
24

 
25

Total International revenue
7,077

 
6,526

 
20,586

 
18,721

Intersegment eliminations
(3
)
 
(4
)
 
(24
)
 
(25
)
Total revenues
$
212,711

 
$
189,078

 
$
619,319

 
$
518,755

 
 
 
 
 
 
 
 
EBITDA
 

 
 

 
 

 
 

North America
$
56,305

 
$
20,993

 
$
148,296

 
$
32,816

International
1,371

 
1,096

 
2,761

 
2,124

Total EBITDA
$
57,676

 
$
22,089

 
$
151,057

 
$
34,940



The reconciliation of net income (loss) to EBITDA consists of the following (in thousands):
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2016
 
2015
 
2016
 
2015
Net income (loss)
$
23,201

 
$
(5,362
)
 
$
55,498

 
$
(26,455
)
Purchase amortization in cost of revenues
5,736

 
9,964

 
17,119

 
22,887

Purchase amortization in operating expenses
5,550

 
7,153

 
17,602

 
21,260

Depreciation and other amortization
6,794

 
5,403

 
18,320

 
14,860

Interest income
(344
)
 
(42
)
 
(587
)
 
(473
)
Interest expense
2,498

 
2,363

 
7,462

 
7,060

Income tax expense (benefit), net
14,241

 
2,610

 
35,643

 
(4,199
)
EBITDA
$
57,676

 
$
22,089

 
$
151,057

 
$
34,940



11.
SEGMENT REPORTING — (CONTINUED)

Segment Information — (Continued)

Intersegment revenue recorded was attributable to services performed for the Company’s wholly owned subsidiary, CoStar Portfolio Strategy by Grecam S.A.S. (“Grecam”), a wholly owned subsidiary of CoStar Limited, the Company’s wholly owned U.K. holding company.

North America EBITDA includes an allocation of approximately $70,000 and $225,000 for the three months ended September 30, 2016 and 2015, respectively. North America EBITDA includes an allocation of approximately $379,000 and $763,000 for the nine months ended September 30, 2016 and 2015, respectively. This allocation represents costs incurred for International employees involved in development activities of the Company’s North America operating segment.

International EBITDA includes a corporate allocation of approximately $113,000 and $74,000 for the three months ended September 30, 2016 and 2015, respectively. International EBITDA includes a corporate allocation of approximately $246,000 and $200,000 for the nine months ended September 30, 2016 and 2015, respectively. This corporate allocation represents costs incurred for North America employees involved in management and expansion activities of the Company’s International operating segment.

11.
SEGMENT REPORTING — (CONTINUED)

Segment Information — (Continued)

Summarized information by operating segment consists of the following (in thousands):
 
September 30,
2016
 
December 31,
2015
Property and equipment, net
 
 
 
North America
$
83,415

 
$
86,191

International
1,951

 
2,120

Total property and equipment, net
$
85,366

 
$
88,311

 
 
 
 
Goodwill
 

 
 

North America
$
1,227,777

 
$
1,227,310

International
28,576

 
25,635

Total goodwill
$
1,256,353

 
$
1,252,945

 
 
 
 
Assets
 

 
 

North America
$
2,205,725

 
$
2,130,202

International
45,990

 
41,370

Total operating segment assets
$
2,251,715

 
$
2,171,572

 
 
 
 
Reconciliation of operating segment assets to total assets
 

 
 

Total operating segment assets
$
2,251,715

 
$
2,171,572

Investment in subsidiaries
(18,344
)
 
(18,344
)
Intersegment receivables
(80,784
)
 
(73,657
)
Total assets
$
2,152,587

 
$
2,079,571

 
 
 
 
Liabilities
 

 
 

North America
$
523,844

 
$
525,566

International
71,094

 
72,544

Total operating segment liabilities
$
594,938

 
$
598,110

 
 
 
 
Reconciliation of operating segment liabilities to total liabilities
 

 
 

Total operating segment liabilities
$
594,938

 
$
598,110

Intersegment payables
(61,049
)
 
(62,319
)
Total liabilities
$
533,889

 
$
535,791



11.
SEGMENT REPORTING — (CONTINUED)

Revenues by Services

The Company provides information, analytics and online marketplaces to the commercial real estate industry. The revenue by type of service consists of the following (in thousands):
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
2016
 
2015
 
2016
 
2015
Information and analytics
 
 
 
 
 
 
 
CoStar Suite(1)
$
103,261

 
$
91,350

 
$
301,969

 
$
266,931

Information services(2)
19,486

 
19,126

 
58,336

 
56,415

Online marketplaces
 
 
 
 
 
 
 
Multifamily(3)
57,654

 
49,312

 
164,752

 
110,187

Commercial property and land(4)
32,310

 
29,290

 
94,262

 
85,222

Total revenues
$
212,711

 
$
189,078

 
$
619,319

 
$
518,755


(1) CoStar Suite is comprised of CoStar Property Professional, CoStar COMPS Professional, CoStar Tenant; CoStar Market Analytics; and CoStar Portfolio Strategy.

(2) Information services is comprised of LoopNet Premium Searcher; CoStar Real Estate Manager; CoStar Risk Analytics COMPASS; CoStar Investment Analysis Portfolio Maximizer; CoStar Investment Analysis Request; CoStar Brokerage Applications; PROPEX; Grecam; Belbex and Thomas Daily.

(3) Multifamily is comprised of Apartments.com, ApartmentFinder.com and ApartmentHomeLiving.com.

(4) Commercial property and land is comprised of LoopNet Premium Lister; LoopLink; CoStar Advertising; BizBuySell and BizQuest; LandsofAmerica and LandAndFarm; and CoStar Private Sale Network.