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ACQUISITIONS | 12 Months Ended
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Dec. 31, 2023
Business Combination and Asset Acquisition [Abstract] |
ACQUISITIONS | ACQUISITIONS OnTheMarket On December 12, 2023, CoStar UK acquired OnTheMarket, the operator of onthemarket.com, a U.K. residential property portal. At the time of closing, CoStar UK acquired all of the then issued ordinary share capital of OnTheMarket for cash consideration of 110 pence per share or £94.0 million ($117.9 million). OnTheMarket had certain share option contracts that had not been exercised at the time of closing for which CoStar UK has established a liability for £2.0 million ($2.6 million). This resulted in total consideration of £96.0 million ($120.4 million). Certain shares outstanding at the time of the closing resulted from contracts held by employees of OnTheMarket or its subsidiaries that required OnTheMarket to withhold income and employment taxes of £4.0 million ($5.1 million) which represented consideration payable at December 31, 2023 and were remitted in January 2024. The following table summarized the amounts recorded for acquired assets and assumed liabilities recorded at their fair value as of the closing date of the acquisition (in millions):
|  |  |  |  | Preliminary: December 12, 2023
Cash and cash equivalents |  |  |  |  | $ | 18.2 |
Accounts receivable |  |  |  |  | 2.3 |
Goodwill |  |  |  |  | 62.8 |
Intangible assets |  |  |  |  | 55.2 |
Accrued expenses |  |  |  |  | (12.7) |
Accrued wages and commissions |  |  |  |  | (2.0) |
Deferred income taxes, net |  |  |  |  | (3.0) |
Other assets and liabilities |  |  |  |  | (0.4) |
Fair value of identifiable net assets acquired |  |  |  |  | $ | 120.4 |
The net assets of OnTheMarket were recorded at their estimated fair values. In valuing the acquired assets and assumed liabilities, fair value estimates were based primarily on future expected cash flows, market rate assumptions for contractual obligations and appropriate discount rates. The purchase price allocation is preliminary, subject primarily to the Company's assessment of certain tax matters, contingencies and intangibles valuation. The estimated fair value of the customer base assets incorporated significant assumptions that had a material impact on the estimated fair value, such as discount rates, projected revenue growth rates, customer attrition rates and profit margins. The following table summarizes the fair values (in millions) of the identifiable intangible assets acquired in the OnTheMarket Acquisition included in the Company's International operating segment, their related estimated useful lives (in years) and their respective amortization methods:
|  |  |  |  | Estimated Fair Value |  | Estimated Useful Life |  | Amortization Method
Customer base |  |  |  |  | $ | 42.0 |  |  | 8 |  | Accelerated
Trade name |  |  |  |  | 10.2 |  |  | 15 |  | Straight-line
Technology |  |  |  |  | 3.0 |  |  | 2 |  | Straight-line
Total intangible assets |  |  |  |  | $ | 55.2 |  |  |  |  |
Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Specifically, the goodwill recorded as part of the OnTheMarket Acquisition includes, but is not limited to: (i) the expected synergies and other benefits that the Company believes will result from combining its operations with international operations and (ii) any intangible assets that do not qualify for separate recognition, such as the assembled workforce. The $62.8 million of goodwill recorded as part of the acquisition is associated with the Company's International operating segment, of which none is expected to be deductible for income tax purposes. Transaction costs associated with the OnTheMarket Acquisition were $11.0 million. Business Immo In April 2022, the Company acquired Business Immo, a leading commercial real estate news service provider in France, for €5.8 million ($6.3 million), net of cash acquired and the assumption of outstanding debt. As part of the acquisition, the Company recorded goodwill and intangible assets of $7.1 million and $3.9 million, respectively. The net assets of Business Immo were recorded at their estimated fair value. The Company retired the assumed debt in the second quarter of 2022. The net assets of Business Immo were recorded at their estimated fair value. The Company retired the assumed debt in the second quarter of 2022. BureauxLocaux In October 2021, CoStar UK acquired BureauxLocaux, a commercial real estate digital marketplace in France, for a base purchase price of €35.0 million ($40.6 million) in cash, subject to customary working capital and other post-closing adjustments which were settled in the fourth quarter of 2021. As part of the acquisition, the Company recorded goodwill and intangible assets of $27.4 million and $18.3 million, respectively, in the Company's International operating segment. The net assets of BureauxLocaux were recorded at their estimated fair value. Homes.com In May 2021, the Company closed the Homes.com Acquisition, in which the Company acquired all of the issued and outstanding equity interests in Homes Group for a purchase price of $150.0 million in cash, subject to customary working capital and other post-closing adjustments which resulted in total consideration of $152.2 million. Homes Group operates Homes.com, a residential marketplace hosted on the website Homes.com and mobile apps that provided real estate advertising and marketing services. In November 2022 CoStar Group integrated the operations of Homes.com and Homesnap. The following table summarizes the amounts recorded for acquired assets and assumed liabilities recorded at their fair values as of the acquisition date (in millions):
|  |  |  |  | Final: May 24, 2021
Cash and cash equivalents |  |  |  |  | $ | — |
Accounts receivable |  |  |  |  | 1.8 |
Lease right-of-use assets |  |  |  |  | 0.4 |
Goodwill |  |  |  |  | 91.9 |
Intangible assets |  |  |  |  | 53.4 |
Deferred income taxes, net |  |  |  |  | 7.9 |
Lease liabilities |  |  |  |  | (0.4) |
Deferred revenue |  |  |  |  | (1.5) |
Other assets and liabilities |  |  |  |  | (1.3) |
Fair value of identifiable net assets acquired |  |  |  |  | $ | 152.2 |
The net assets of Homes Group were recorded at their estimated fair values. In valuing the acquired assets and assumed liabilities, fair value estimates were based primarily on future expected cash flows, market rate assumptions for contractual obligations and appropriate discount rates. The estimated fair value of the customer base assets incorporated significant assumptions that had a material impact on the estimated fair value, such as discount rates, projected revenue growth rates, customer attrition rates and profit margins. The following table summarizes the fair values (in millions) of the identifiable intangible assets acquired in the Homes.com Acquisition included in the Company's North America operating segment, their related estimated useful lives (in years) and their respective amortization methods:
|  |  |  |  | Estimated Fair Value |  | Estimated Useful Life |  | Amortization Method
Customer base |  |  |  |  | $ | 32.0 |  |  | 8 |  | Accelerated
Trade name |  |  |  |  | 21.0 |  |  | 15 |  | Straight-line
Technology |  |  |  |  | 0.4 |  |  | 2 |  | Straight-line
Total intangible assets |  |  |  |  | $ | 53.4 |  |  |  |  |
Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Specifically, the goodwill recorded as part of the Homes.com Acquisition includes but is not limited to: (i) the expected synergies and other benefits that the Company believes will result from combining its operations with Homes.com operations and (ii) any intangible assets that do not qualify for separate recognition, such as the assembled workforce. The $91.9 million of goodwill recorded as part of the acquisition is associated with the Company's North America operating segment, of which $20.0 million is expected to be deductible for income tax purposes. Transaction costs associated with the Homes.com Acquisition were not material. The Company paid $5.0 million into a cash escrow account for stay bonuses for certain Homes.com employees and recognized compensation expense for the stay bonus over the six-month post-combination period. Upon acquisition, the Company assessed the probability it would be required to pay certain state tax liabilities and recorded an accrual of $6.6 million determined in accordance with the provisions of ASC 450, Contingencies, as the fair value was not determinable. Landmark has agreed to indemnify the Company for tax liabilities related to periods prior to the acquisition and an indemnification asset was established for $6.6 million in the purchase price allocation. Pro Forma Financial Information (unaudited) The unaudited pro forma financial information presented below reflects the consolidated results of operations of the Company assuming the OnTheMarket Acquisition had taken place on January 1, 2022 and was as follows (in millions, except per share data):
|  |  | Year Ended December 31,
|  |  |  |  | 2023 |  | 2022 |  |
Revenue |  |  |  |  | $ | 2,494.0 |  |  | $ | 2,224.3 |  |  |
Net income |  |  |  |  | $ | 371.9 |  |  | $ | 361.9 |  |  |
Net income per share - basic |  |  |  |  | $ | 0.91 |  |  | $ | 0.91 |  |  |
Net income per share - diluted |  |  |  |  | $ | 0.91 |  |  | $ | 0.91 |  |  |
The impact of the OnTheMarket Acquisition on the Company's revenue and net income in the consolidated statements of operations from December 12, 2023 through December 31, 2023 was not material. The unaudited pro forma financial information presented below reflects the consolidated results of operations of the Company assuming the Homes.com Acquisition had taken place on January 1, 2020 and was as follows (in millions, except per share data):
|  |  | Year Ended December 31,
|  |  |  |  | 2021 |  |
Revenue |  |  |  |  | $ | 1,962.1 |  |  |
Net income |  |  |  |  | $ | 286.7 |  |  |
Net income per share - basic |  |  |  |  | $ | 0.74 |  |  |
Net income per share - diluted |  |  |  |  | $ | 0.73 |  |  |
The unaudited pro forma financial information for all periods presented includes amortization charges from acquired intangible assets, retention compensation, as referenced above, and the related tax effects, along with certain other accounting effects, but excludes the impacts of any expected operational synergies. The unaudited pro forma financial information, as presented above, is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisitions had not taken on place on the dates listed above. The impact of the Homes.com Acquisition on the Company's revenues and net income in the consolidated statements of operations from May 24, 2021 through December 31, 2021 was an increase of $13.6 million and a decrease of $23.5 million, respectively. The pro forma financial information of the BureauxLocaux Acquisition and Business Immo Acquisition was not material.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//805/tableOfContent + Details
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