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CoStar Group, Inc. (CSGP) Q1 2019 Earnings Call Transcript

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CoStar Group, Inc. (NASDAQ: CSGP)
Q1 2019 Earnings Call
April 23, 2019, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the CoStar First Quarter Financial Results Call. At this time, all lines are in a listen-only mode, and later we will conduct a question-and-answer session with instructions being given at that time. (Operator Instructions) And, as a reminder, today's call is being recorded.

I would now like to turn the call over to our host, Rich Simonelli. Please go ahead, sir.

Richard Simonelli -- Vice President, Investor Relations

Thank you very much, operator, and welcome to CoStar Group's first quarter 2019 conference call. Before I turn the call over to Andy Florance, our CEO and Founder; and Scott Wheeler, our CFO, I'd like to share some very interesting and important items that could actually make your day.

Certain portions of our discussion today may contain forward-looking statements, which involve many risks and uncertainties that could 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 April 23, 2019, press release on our first quarter earnings and our company outlook and in our CoStar filings with the SEC, including our most recent annual report on Form 10-K and our subsequent Q reports on Form 10-Q is 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.

Reconciliation to the most directly comparable GAAP measure to the non-GAAP financial measures discussed on this call, including non-GAAP net income, EBITDA, adjusted EBITDA and forward-looking non-GAAP guidance are shown in detail in our press release issued today along with definitions for those terms, long definitions. The press release is available on our website located at costargroup.com.

As a reminder, today's conference call is being broadcast live and in color on our new and vastly improved Investor Relations website. Please refer to our press release today to how to access this call going forward. Remember one question, so make it a good one.

And I'll now turn the call over to Andy.

Andrew Florance -- Founder, President and Chief Executive Officer

Thank you, Rich. Well, let's move to this call quickly, so that we can all get to those long definitions of key financial terms in our press release. Thank you for joining us for CoStar Group's first quarter 2019 earnings call. It was just eight weeks ago that we reported superb year-end results and we are pleased to be back so soon reporting another strong quarter with solid revenue growth and even stronger profitability growth.

In the first quarter of 2019, CoStar Group total revenue was $328 million, up 20% year-over-year. We've generated $55 million more revenue in the past quarter than we did in the same quarter one year ago. Apartments.com led the way with 30% year-over-year revenue growth. LoopNet's revenue increased 17% year-over-year. CoStar Suite revenue grew 13%, which was at the upper-end of our guidance. Our rural lands marketplaces grew 21% and our business for sale marketplace revenue grew 12% year-over-year.

CoStar Real Estate Manager continues to be a tour de force and major contributor with 95% year-over-year revenue growth. With high incremental margin on each dollar sold, our strong revenue growth continues to translate into even higher earnings growth. In each of the last two quarters, we've generated the highest quarterly net income in our history.

Net income increased to $85 million in the first quarter, up 63% from $52 million in the first quarter of 2018. We've generated $113 million of EBITDA and $125 million of adjusted EBITDA in the quarter. When annualized, that's consistent with our expectations of generating $0.5 billion of adjusted EBITDA in 2019. Our $55 million year-over-year increase in revenue in the quarter generate a $43 million year-over-year increase of EBITDA, effectively $0.78 of every incremental dollar sold translate into EBITDA.

In the first quarter of 2019, adjusted EBITDA margin was 38%, an increase of 700 basis points compared to the first quarter of 2018. Companywide net new bookings grew 36% year-over-year to $48 million in the first quarter of 2019. For the second consecutive apart quarter, Apartments.com generate our best bookings quarter ever as our sales force continues its strong momentum with a 40% increase in net new bookings year-over-year.

Last year, we communicate that our entire Apartments sales force was investing a significant amount of time and effort into the important job of converting the newly acquired ForRent contracts into Apartments network contracts. That investment yielded great results, but also meant that they had less time available to generate net new sales last year. Now that we have completed the ForRent conversion and have more time, you can clearly see that the Apartments sales forces' productivity is surging. These results are more impressive because of the quality of customer service the Apartments sales force is delivering, while also delivering great sales numbers.

During the first quarter of 2019, the Apartments.com sales force conducted 80,000 sales meetings and earned an audited Net Promoter recommendation score of 9.8 out of 10. That is clearly outstanding customer satisfaction.

LoopNet net bookings were up 27% in the first quarter of 2019 over Q1 of 2018. In the first quarter of 2018, we achieved record CoStar sales results when thousands of stranded Xceligent clients rapidly migrated to CoStar. Not surprisingly, while CoStar sales were strong this quarter they didn't -- the bookings did not rise over the Q1 2018 exceptional high watermark.

We have grown the CoStar sales force by 6% from the fourth quarter of 2018 to the first quarter of 2019. We intend to continue to grow the CoStar sales force by approximately 30% overall from Q4 2018 to Q4 2019. We have a robust product pipeline for CoStar, CoStar Analytics and the LoopNet marketplace, so we want to grow our sales force to meet the scale of our future opportunity.

As we add salespeople, they typically have material revenue impact about a year after they join us. We attribute a big part of our Apartments.com sales success to the priority we place on customer service. Our CoStar sales commission plans over the past year now reflect these same values. As a result, our salespeople are spending more face-to-face time with our clients and prospects. CoStar sales meetings were up 43% year-over-year from 30,000 in the first quarter of 2018 to 43,000 in the most recent quarter. On a per salesperson basis, meetings were up 33%. Net Promoter recommendation scores for the CoStar sales force have climbed to 9.02 on a 10-point scale. I believe this is a leading indicator of client retention and future sales growth.

Apartments.com continues to increase our industry-leading position among Internet listing services by achieving all-time highs in unique visitors and number of visits, as reported by comScore for both the month of March and the first quarter of 2019. In the first quarter of 2019, the Apartments.com network had 162 million visits, up 35% year-over-year and averaged 20 million unique monthly visitors, an increase of 30% year-over-year.

According to comScore, the Apartments.com network hit an all-time high of 61 million visits in March. That's an increase of 18 million visits over March of 2018 and is up 40% year-over-year. We have been the number one most visited Apartment network for the past 41 months. Also according to comScore, as a network, we had twice the number of monthly visits and monthly unique visitors that the RentPath network had in the first quarter of 2019.

On a site basis, Apartments.com had 4 times the number of monthly visits that Apartment Guide had. Wow! Apartments.com tracks a list of 10,000 apartment keywords that we believe are important for marketing multifamily communities online. As of today, we hold the number one organic position in Google's core results for 93% of those keywords when compared to other listing sites. Our primary competitor, RentPath, only holds 2% of them. We continue to pull further away from the competition and I believe that in 2019 we will see a strengthening continuation of that trend.

We launched our 2019 Apartments.com marketing campaign, which focuses on the reality that the apartments you choose will change the future you. We have four new TV spots of the highest production quality on special effects we've ever produced. Of course, they feature Jeff Goldblum as our spokesperson Brad Bellflower. We've already gotten great feedback from our clients, from renters and the media on the campaign and we're excited that the heaviest portion of our media plan kicks in during the second quarter to support peak rental season.

We're also excited to announce that tomorrow we plan to launch a completely redesigned ForRent.com website, just in time for peak rental season. The new site has a completely redefined renter search experience. Key features include a beautiful new design, lightning fast performance and optimization to rank in the top of Google searches. It's the first site in our network of 11 sites that offers renters a more of a focus on the independent or smaller properties by returning them mixed into the very top of our search results, it'll give renters the feeling that this is really a condo small home, small independent owner website, as well as having large institutional properties.

We plan to support the new site launch with aggressive levels of marketing support, including paid search, display advertising, social media, email marketing and strong push by our direct sales team. We look forward to the new site delivering even more traffic leads and leases to our advertisers.

We have identified a need that some advertisers with properties and lease up low occupancy in highly competitive market environments have to drive additional lease of their communities even beyond our existing top level, prior top level Diamond package. In response, we have introduced a newer, higher tiered advertising level called Diamond+ Plus, we're really creative of that name, which guarantees the advertiser placement in the top three search results in a given sub-market.

The Diamond+ Plus ads average approximately $4,050 per month or nearly $2,500 more per month than the old basic Diamond ad. We believe Diamond+ Plus ads will continue to positively impact our net new bookings throughout 2019 and beyond.

In March, LoopNet visits grew 23% year-over-year and we had nearly 6 million unique monthly visitors coming to the site. We are steadily rolling out a number of enhancements for LoopNet as we continue to focus on improving the user experience. This is similar to the strategy we successfully deployed with Apartments.com marketplace. We continue to show strong success with sales of higher priced power ads to owners on the LoopNet platform and these remain a major part of our growth strategy. We had nearly 3 million in annualized net new sales of power ads in the first quarter and the highest priced Diamond level ad sales showed the strongest growth at 87% compared to the first quarter of last year.

In the Premium Lister product, we continue to focus on raising the quality of the listings, eliminating unlimited listing plans, which were steeply discounted, and increasing prices on many of the older underpriced listing plans. Average price per listing for this product was up 49% compared to the same quarter last year.

Realla is our United Kingdom emerging version of LoopNet. I'm very excited about the potential of that product and in fact we have seen a 346% year-over-year growth in unique visitors on Realla. Belbex is our version of LoopNet for Spain and its organic unique visitors are up 163% year-over-year. Right now, we're in investing phase on these sites building out the traffic, but we intend to begin monetizing them later next year.

We continue to deliver a steady stream of enhancements to the CoStar products. Dozens of these enhancements are new commercial real estate analytic tools. These include tools for accessing the probability of selling and leasing in various timeframes, animate weather map like time-based market translate over digital markets, maps, market overview videos from our team of analysts and economists, daily rental rate detail, new statistical exports, retail property underwriting reports and a much more soon to be followed by even more enhancements.

We've recently announced a strategic relationship with Fort Worth based Buxton. Buxton is an industry leader in retail site analytics. They analyze and model a retailer successful stores, competitive threats and store to store cannibalization among other factors and then determine ideal potential new locations that are likely to achieve above average sales. Now, Buxton clients who are also CoStar clients will be able to search CoStar for properties that are within ideal trade zones Buxton has identified. This combines the best ranks of each company to provide greater convenience and value to our mutual customers. Both firms intend to cross-sell to one another's client basis.

In the first quarter of 2019, CoStar Real Estate Manager revenue was up 95% year-over-year. It continued its strong performance with an increase of 15% on net new bookings in the first quarter of 2019 compared to the same strong quarter last year. CoStar Real Estate Manager continues to add Fortune 1000 customers such as HP, Archer Daniels, Campbells Soup, AECOM, Aramark, and many others. CoStar Real Estate Manager has staked out a leadership position in the lease accounting software market and Q1 represent the first quarter reporting under the new ASC 842 standard.

Continued opportunity exists with later reporting public companies as well as the full slate of large private companies. We expect to continue to leverage this market leadership position throughout the remainder of 2019.

As we continue to add more institutional and analytic services to CoStar Suite, we've begun to enhance our research coverage of REITs, CMBS business institutional investors. In the first quarter, we completed audit reconciliation of more than 12,000 REIT-owned properties, which encompassed 1.6 billion square feet. We added nearly 4,000 true owners to current or formerly owned REIT properties. We've reconciled CMBS filings back to 2015 and stayed current on 2019 filings, adding thousands of new lease comps, rental points and new deals.

Brokers using Listing Manager continued to be solid contributors to the database. In the US, more than 40% of our listings are added each month by our users and new users are steadily joining the ranks of Listing Manager. We've plan to market Listing Manager to encourage more use of this service. We believe that Listing Manager functioning of CoStar and LoopNet will help us to deliver higher quality data, more effective marketing benefits, greater convenience to our clients, all at a much lower cost than some of our historical data collection methods.

Commercial real estate continues to attract unprecedented levels of interest from investors. Total deal volume has set new records in each of the past few years and pricing continues to rise. The high level of interest in commercial real estate is justified by sound fundamentals, characterized by strong leasing, consistent demand, limited supply and the lowest vacancy rates since 2000. The robust health of this sector has benefit the industry at large, including brokers, appraisers, underwriters, owners and lenders. And the multifamily sector high levels of construction have been boosting advertising revenues for platforms like Apartments.com, which is a near necessity for communities in Lisa (ph). Barring any surprises, the US will set a record -- the US economy will set a record in July 2019 for the longest post-war expansion on record with 102 months of consecutive job gains. We see no obvious imbalance threatening this remarkable streak in the commercial real estate markets and consensus forecast and CoStar's house viewers growth continuing into 2020, albeit at a slower pace. International concerns around Brexit and China may dim growth slightly, but may also perpetuate the flood of international capital that's fueled US asset price gains, including in commercial and multifamily real estate.

The slow and steady growth over the past few years has produced consistent demand and rent gains across all property types. Apartment rent growth accelerated last year, posting 3% gains for the first time since 2016, despite increasing supply. But a broad search of housing, especially for sale product has produced unprecedented demand for new rental product and transaction volume continues to set new records as investors clearly believe in the multifamily story.

The office market features an enviable fundamentals and limited supply, at least outside of major markets, which are undergoing wholesale reinventions like Hudson Yards in New York, The Boston seaport, Amazon's HQ2 in Crystal City, Lake View Union in Seattle and South of Market in San Francisco, but single digit office vacancies have delivered only mediocre rent growth at just 2% over the past year.

Perhaps, the most remarkable feature of the office market is the consistency of rent growth. Eight years of slow, steady increases, a welcome departure from the boom bust cycles of 1999 and 2007, of course throw in there 1986 or 1981, I think that is roughly right.

The outlook calls for more steady if modest rent gains, thanks to low vacancy levels, even if demand weakens.

Demand for industrial properties remain at historically high levels, driven by the growth -- growing trend toward online purchasing and same day delivery. Still, vacancy rates appear to have bottomed out amid record setting deliveries. Persistent rent growth of more than 5% has drawn a record setting sales volume resulting in price appreciation exceeding 10% year-over-year. The growing economy has yet to reverse lackluster dynamics for retail sector though as structural change in the industry when demand for physical space. While, well located properties continue to perform well, historically low vacancy rates are still mainly a result of limited construction and have yet to fuel significant rent gains.

We expect the record levels of interest in commercial and multifamily real estate to continue across all property types at an any economic outcome, CoStar Group offers products and services that are essential to owners, lenders, brokers, investors and property managers alike as they participate in commercial real estates' increasingly competitive ultra high stakes marketplace.

It's been a great start to a new year for CoStar and I'm extremely excited about the rest of the year and particularly the coming decade, as we continue to execute on our long term vision. At this point, I'm going to liven up the call by turning it over to our CFO, Scott Wheeler.

Scott Wheeler -- Chief Financial Officer

Thank you, Andy. Very flattering introduction. Here comes the lively portion of the call, I'm going to Call+. All right. Well, we did have a great start to 2019, great sales numbers, produced great revenue growth and these both allow our leverage model to give us increased levels of profitability and strong cash generation. So, as Andy mentioned, revenue in the first quarter of 2019 increased 20% over first quarter of 2018, which was near the high-end of our guidance.

Looking at revenue performance by services, CoStar Suite revenue growth was 13% in the first quarter of 2019 versus first quarter of 2018. The growth was primarily driven to both brokers and owners and it's evenly balanced between existing clients and new logos. As previously communicated, the revenue growth rate for CoStar Suite is expected to be in the 11% to 13% range for 2019.

Revenue in the Information Services Group grew 25% year-over-year in the first quarter, primarily as a result of CoStar Real Estate Manager's revenue growth of 95%. The adoption of the new lease accounting standards created strong demand for our Real Estate Manager product, which we do expect to continue, although slightly moderated throughout the year as we move past the peak adoption date of the new lease standard. Information Services revenue is expected to grow at a rate of 11% to 13% on a year-over-year basis.

Multifamily revenue growth for Q1 remained strong at 30% over the first quarter of 2018, which is in line with our expectations. Going forward, the second and third quarters of 2019 are expected to reflect the lower growth rates than the first quarter of 2019 for two reasons, both related to the ForRent acquisition. First, we've now lapped the anniversary date of the ForRent acquisition. Second, there will be a modest negative effect on the 2019 growth rate, because certain products and duplicative revenues were eliminated since the acquisition, but we're in our 2018 base results.

The growth rate in the second quarter for 2019 is expected to be in the low-teens increasing to the high-teens by the third quarter.

On a pro forma basis, when you include ForRent for all of 2018 and you exclude the discontinued services, the year-over-year multifamily revenue growth would be approximately 20% in both the second and the third quarters of 2019. Multifamily revenue is expected to exit 2019 in line with the 20% full year outlook for multifamily.

Last, but certainly not least, Commercial Property and Land revenue grew 17% year-over-year in the first quarter of 2019. This is due to the continued strong sales of LoopNet marketing products, including our tiered advertising products which grew approximately 37% year-over-year in the first quarter. Our Lands business also contributed to strong growth with 21% year-over-year revenue growth. And we continue expect organic growth in the Commercial Property and Land sector in the 18% to 20% range for 2019.

Gross margins came in at 78% in the first quarter of 2019, in line with what we saw in the fourth quarter of 2018 and we expect this level of gross margins to continue around 78% for 2019. Operating expenses of $164 million for the first quarter of 2019 is slightly below our expectations, primarily as a result of modest timing delays in our marketing and some G&A expenses.

First quarter adjusted EBITDA of $125 million represents a 49% increase compared to adjusted EBITDA of $84 million in the first quarter of 2018. The adjusted EBITDA was approximately $3 million above the midpoint of our guidance range and about $1 million above the high-end of our guidance range. The resulting adjusted EBITDA margin of 38% is 90 basis points above the midpoint of our guidance and 740 basis points above the 31% margin we achieved in the first quarter of 2018.

Net income for the first quarter 2019 of $85 million, increased 63% or $33 million compared to first quarter of 2018.

Our effective tax rate in the quarter was 13%, reflecting benefits associated with share-based payment transactions.

Non-GAAP net income for the first quarter increased 54% to $92 million or $2.53 per diluted share and includes adjustments for stock-based compensation and acquisition-related expenses. Non-GAAP net income for the first quarter assumes a tax rate of 25%, which does not include discrete items such as the impact of the share-based payment transaction.

Cash and investment balances were approximately $1.2 billion as of March 31, 2019, up $132 million since the end of 2018.

Now let's look at some of our performance metrics for the quarter. At the end of the first quarter, our sales force totaled approximately 757 people. The renewal rate on annual contracts for the first quarter was in line with the rate achieved in the fourth quarter of 2018 at 90%. The renewal rate for customers who've been subscribers for five years or longer was 96%, in line with the 96% renewal rate in the fourth quarter of 2018.

Subscription revenue on annual contracts now accounts for 82% of our revenue in the first quarter, up from 79% this time last year. The improvements are primarily a result of our successful migration of the ForRent customer base for Apartments.com network and to annual contract.

I'll now discuss our outlook for the full year and the second quarter of 2019. Based on first quarter revenue and sales results, our full year 2019 revenue range of $1.37 billion to $1.38 billion remains unchanged. We continue to expect revenue growth for the year between 15% and 16%. We expect revenue for the second quarter of 2019 in the range of $333 million to $337 million, representing top line growth of around 13% at the midpoint. The growth rate expected in the second quarter is negatively impacted by the discontinued ForRent revenues mentioned earlier and the lapping of the anniversary of that acquisition.

On a pro forma basis, including ForRent for all of 2018 and excluding discontinued services, our revenue growth rate outlook for the second quarter would be approximately 16%. We expect adjusted EBITDA to be in the range of $495 million to $505 million for the full year of 2019 in line with our previous outlook. Year-over-year, we expect adjusted EBITDA growth of 20% with adjusted EBITDA margin for the year of approximately 36% at the midpoint of the guidance range.

For the second quarter of 2019, we expect adjusted EBITDA in the range of $98 million to $102 million. As in prior years, we expect the second quarter to be the low point for adjusted EBITDA margins for the year, as we increase our marketing spend for the start of the peak apartment rental season. Margins are expected to increase sequentially in the third and fourth quarters.

In terms of earnings, our revised range of $9.90 to $10.10 for full year non-GAAP net income per diluted share is an increase of approximately $0.10 at the midpoint compared to our previous outlook. For the second quarter of 2019, we expect non-GAAP net income per share in a range of $1.94 to $2.02, based on 36.7 million shares.

So to wrap things up, a great start to the year and a very strong position financially, and I certainly look forward to updating each and every one of you on our progress as we continue throughout the year. Thank you.

Andrew Florance -- Founder, President and Chief Executive Officer

That's definitely a Call+.

Scott Wheeler -- Chief Financial Officer

Thank you. Let's open it up for some questions.

Questions and Answers:

Operator

All right. Thank you. (Operator Instructions) And our first question comes from George Tong of Goldman Sachs. Please go ahead.

George Tong -- Goldman Sachs -- Analyst

Hi. Thanks. Good afternoon. Your 2Q guidance implies about 120 basis points of year-over-year EBITDA margin expansion at the midpoint, which compares with 740 bps of margin expansion you just delivered and your full year guidance suggestive rate of margin expansion will narrow relative to the first half. Can you discuss the factors that are driving a more conservative back-end margin outlook?

Scott Wheeler -- Chief Financial Officer

Yeah. I think what we see George is certainly the timing of investment policy and second quarter is primarily driven by all the marketing that we're spending and we expect that to be our strongest quarter, but still up in third and fourth quarter over the prior years. I think you also see a lot of benefit in the first quarter as we passed. We had the ForRent acquisition annualizing and so all those benefits are now into the numbers as we lap the margin improvements we got last year from ForRent. So those are pretty much the biggest factors I would call off.

Operator

All right. Thank you. And now to the line of Bill Warmington of Wells Fargo. Please go ahead.

William Warmington -- Wells Fargo Securities -- Analyst

Good afternoon, everyone.

Andrew Florance -- Founder, President and Chief Executive Officer

Welcome, Bill, we've been waiting for you.

William Warmington -- Wells Fargo Securities -- Analyst

So, is it true that you're handing out free Tesla's to all the sell-side analysts, is that what I'd heard something about that?

Scott Wheeler -- Chief Financial Officer

It depends on the nature of the report.

William Warmington -- Wells Fargo Securities -- Analyst

Okay.

Andrew Florance -- Founder, President and Chief Executive Officer

Those are good questions, Bill. Thank you.

William Warmington -- Wells Fargo Securities -- Analyst

All right. Okay. Now the real question.

Andrew Florance -- Founder, President and Chief Executive Officer

This is for top performers.

William Warmington -- Wells Fargo Securities -- Analyst

I was hoping for an update on the LoopNet marketplace in two ways, one being the build out of the LoopNet marketplace site and how that's going? And second is, maybe to talk about some changes in the sales force structure moving to a more of a national account coverage model that might help the sale of that product?

Andrew Florance -- Founder, President and Chief Executive Officer

Sure. So definitely a lot of effort, lot of work going on LoopNet 2.0. And actually it was about there for a week or so -- last year the development -- last week -- two weeks ago, i was with the development team for the week in California going over the product, a very productive meeting, and we hope to make strong releases in the third and fourth quarter around that product area. I picked up a customer service call this morning randomly and the customer was complaining they wanted two major features in LoopNet that we have already put into the new design, so right top of the list. So stronger and easier searching for restaurants and being able to highlight things with broker comments. So feeling good about that where that's going.

We're also spent last week with our photography team making sure the right to support the new elements of that product. And you can see that growth began to click up and we remain very excited about it and you also see it beginning -- an effort going on in Spain and in the United Kingdom to match the effort that we're doing here. And so, all in all, it remains on track and we are excited about it.

In terms of the major accounts to the national accounts, the sales force, we took the -- we had last year quarters on what the sales force need to sell of LoopNet in order to make the higher commission rates. We've removed that this year, so they could focus on general customer service and set their own allocations and priorities, and the nice thing is the sales results have continue to come in for LoopNet naturally without the commission focuses. So we think that's looking good and we will be structured in the LoopNet major national accounts the same way we structure Apartments.com in the near future. So it's a lot of software work going on and a lot of operating work that needs to be done to position for it, but it's on track and it's a top priority.

Operator

All right. Thank you. And now to the line of David Ridley-Lane of Bank of America. Please go ahead.

David Ridley-Lane -- Bank of America Merrill Lynch -- Analyst

Sure. Two questions on the -- of the impact of the ForRent product cancellations. One, do you have some sort of quantification for the impact on net bookings in the first quarter? And, two, did I get my sort of the math right around your guidance for the second quarter, that it's about $3 million of revenue that was -- it was canceled for the second quarter. Is that in the ballpark? Thank you.

Scott Wheeler -- Chief Financial Officer

No, we don't have a number on the booking side, David. There was -- there's certainly effects running through last year, but we did talk about the -- on the booking side effects. But on the pro forma side, we see the -- I look for the Apartments pro forma for you, I will get it. I know it's here somewhere. So, yeah, we had somewhere between $3 million and $6 million per quarter throughout the year that we're going to -- expect us -- and the biggest effect would have been in the second quarter for 2018. So, hopefully, that will help give you some idea of how big those discontinued revenues are.

Operator

All right. Thank you. And now to line of Peter Christiansen from Citi. Please go ahead.

Peter Christiansen -- Citigroup Inc -- Analyst

Good afternoon. Thanks for the question. On the 40% bookings growth in multifamily, do you have any sense of what portion of that is coming from competitive takeaways versus just normal wins, new wins? And then my follow-up is, with $1.2 billion going on $1.3 billion in cash on the balance sheet, what's your sense for deploying that capital as we look forward to the next couple of quarters?

Andrew Florance -- Founder, President and Chief Executive Officer

Good questions. So in the first one, I was -- I ran into our Head of Apartment Sales last week down in Richmond and she couldn't wait to tell me about some huge competitive wins we just had. I think she was talking about some community with 135 properties moving over or something or some organization with 135 properties moving over. So my sense is, that there is a lot of competitive shifts going on. We are having some success with the Diamond+ Plus ads as well, but a lot of its competitive shift and the numbers are really quite impressive. Like, when I look at the total of counts, I don't -- I won't recall exactly what the number was last time I looked, but they are very impressive, competitive wins and for good reason as the traffic numbers are so compelling, the lead advantages are so compelling on Apartments.com. And the benefit of having invested well over $1 billion in Apartments.com has resulted in a huge competitive distancing going on there.

I also got an email today from Apartments' Regional Sales Manager with someone moving a bunch of properties over and they specifically cited the quality of our customer service. They said the fact that we were in their communities every month or every month and a half briefing them on what was happening in their local market and the fact that they had not seen the competitor in four years was a major factor in shifting all their purchasing over to us. So on hard numbers I've seen in the last two months, I would say major competitive shift and anecdotally in the last two weeks, I'd say, continuation and possible acceleration in competitive shift.

In terms of our petty cash of $1.2 billion to $1.3 billion, we are -- remained active in looking at a number of potential acquisitions, but we remain selective and we devote a significant amount of effort to that ongoing and those things will happen in time, but our track record over the last 20 years of acquiring 30 plus companies, it's sort of hard to imagine that won't continue. And so that -- we would expect that capital would be put to good use in transformative ways and we look forward to that day.

Operator

Thank you. And now it's the line of Andrew Jeffrey from SunTrust. Please go ahead.

Andrew Jeffrey -- SunTrust Robinson Humphrey -- Analyst

Hi, guys. (multiple speakers) the update today. Andy, what one of the areas that come up over the years is international? And you've kind of mentioned big markets, but maybe not a whole lot of companies with critical mass or maybe different market structures. Sounds like maybe you're getting closer to monetizing that opportunity now. Can you kind of frame that up in what it might mean over the next few years for your growth?

Andrew Florance -- Founder, President and Chief Executive Officer

Sure. So we're -- I mean you're right. There are some acquisition opportunities over there that are midsized that could be interesting, but that -- really what we're focusing on is just organic growth in those markets. So we have been racheting up our investment in the last 18 months in the United Kingdom, where we're in Germany and Spain. We see some exciting -- some good opportunities in France, availability of lower cost digital data, machine learning to harvest data on the Internet, so we're investing period and we saw -- on a small scale, we saw a huge growth in the first quarter in the United Kingdom in our bookings, but still modest by comparison to the United States and we think that we have every expectation that that growth will pay off in the next couple of years. The nice thing is we're now getting a multi-country footprint and I will be -- I think it'll be transformative when we can put three or four European countries into one consistent platform. So that's one of our big goals in the next three years or so, and I think that will move us up to parallel growth rates for the United States.

Operator

Thank you. And now it's line of Stephen Sheldon from William Blair. Please go ahead.

Stephen Sheldon -- William Blair & Company -- Analyst

Hi, guys. Good evening.

Andrew Florance -- Founder, President and Chief Executive Officer

Good evening, Steve.

Stephen Sheldon -- William Blair & Company -- Analyst

On bookings, it seems like you're continuing to see broad based momentum, but I wanted to ask how bookings activity in the first quarter kind of compare to your expectations, so just excluding the LoopNet run off in the year ago period, $48 million this quarter was down, some relative to the $54 million in the year ago period and $50 million in the fourth quarter. I know there were some seasonality relative to the fourth quarter, but anything else that we should consider when making the sequential and the year-over-year bookings comparisons?

Scott Wheeler -- Chief Financial Officer

Not really. I think we were very happy with the bookings, I was upwardly surprised as the Apartments.com bookings were extremely strong and continue to be extremely strong. We're running the business looking nine months, a year or so out, so we're working a lot of things that are not month to month and there is always volatility as you look at the numbers like what land might be doing one quarter, what farms might be doing one quarter. Things shift around, they're all generally really strong, but there is -- since they're real returns and real sales results, there's volatility to them. If they are ever perfectly linear, that'd be a made-off situation, that's not happening. And so they move around, but they're strong. I think we got the pay off from last year's customer service and conversion efforts for the ForRent when you see the surging productivity there, the investment in additional face time with customers, with CoStar will probably pay off in the next two quarters. So, all in all, great quarter, very happy of the results and phenomenal results.

Operator

Thank you. And now to line of Mayank Tandon from Needham. Please go ahead.

Mayank Tandon -- Needham & Co. -- Analyst

Thank you. Andy or Scott, Is there a way to think about revenue growth in terms of the pricing uplift you expect this year and over time and the contribution from new clients plus increased penetration from current clients? How should we think about the growth profile if you break it down that way? I do realize it's going to be difficult across different segments, which is maybe for the company overall.

Andrew Florance -- Founder, President and Chief Executive Officer

I'll throw some remarks and then you can deal as well. So lot of the pricing lift we're seeing is, we are not driving aggressive price increases against our core customers for the same products, the exception being on our marketplaces demand is really strong. So with LoopNet, you're seeing super strong demand in markets like Southern California and Southern Florida, so you're getting some saturation on advertisers. So we're eliminating big, big steeply discounted contracts, so someone was getting 60% price breaks or discounts, we're eliminating those consistently and bringing people more up to standard pricing level that looks that gives you that 49% year-over-year price lift on PL. It's not so much we're taking off everybody up, we're eliminating low-end discounts. Then you're getting product transformation, so as we rebuild LoopNet to really effectively showcase mega properties of super high-end properties, those will be sold at dramatically higher price points, but to new customers for new product. So that'll bring the average -- the ASP up dramatically, but not because we're doing across the board increases for the same product, it'll be more incremental prices.

The -- this continue as we go into more analytic products for CoStar, you're selling to higher utility institutional clients, you get higher ASPs there as well, but delivering product to the 1% or 2% brokerage shop in Oklahoma City remains just as higher priority and we're not taking those prices up beyond roughly inflation. So, it's a mix. Do you want to?

Scott Wheeler -- Chief Financial Officer

Yeah. We track the price volume mix equation into the big groups. And as you just said, the only place where we've really had price increase was in the LoopNet, getting rid of some of those discounts and then as we moved people in the ForRent acquisition to the broader network then you saw this other effect of moving to a broader network contract, which would have higher revenues per property than what we had before. So it's not really a pure price increase, it's a broader package increase and such -- those types of things and the other ones that Andy mentioned that are really driving what we called price, which really is accounting for good half of what our revenue growth is in many quarters, because of those effects.

Operator

All right. Thank you. (Operator Instructions) And now it's the line of Pat Walravens from IMP Securities (sic-JMP Securities). Please go ahead.

Joe Goodwin -- JMP Securities LLC -- Analyst

Hi. This is actually Joe Goodwin on for Pat. Thank you for taking my question. I was just curious (multiple speakers)

Richard Simonelli -- Vice President, Investor Relations

JMP Securities?

Joe Goodwin -- JMP Securities LLC -- Analyst

Yeah, JMP Securities. That was a poor mistake there. Yeah. As a former software salesperson myself, I was looking at the Net Promoter Scores that you guys shared earlier and they seem really high and from my experience people don't always love speaking with software sales reps, that's what imply. So I guess just really curious, how do you guys go about calculating those scores? And how and when did you collect that data?

Andrew Florance -- Founder, President and Chief Executive Officer

Yes, so what happens is, there is a independent team that works in a different group from sales based on on Atlanta, Georgia, and each day they look at meetings that occurred 4 to 24 hours prior and they randomly sample the people at those meetings where held with and I won't get the wording exactly right, but they say based on your meeting yesterday and your overall impression of Apartments or CoStar how likely do you recommend CoStar or Apartments.com to a friend or colleague? So it's the recommended question. And that gets us a 9.02 on CoStar and gets us to 9.8 on Apartments.com and there was one woman, sorry, I can't remember her name or where she was, who for the year, last year, scored 9.98. So she is just a little bit of a strongest sales person than you are. But I bowed -- and to her, like, if we get a 9.98, I'll try to get her name for the next earnings call, so I want actually Cassandra to recruit her.

You're right that people don't want to talk to -- typically don't want to spend their day with software salespeople, but we try to make sure that we're showing them some new benefit to them. We also talk to them about the general market. I also believe we delivered over 1 million tchotchkes last year...

And the cookies and the candies.

Scott Wheeler -- Chief Financial Officer

Those cookies, candy, a charger cable, a cozy, we delivered so many little minor gifts. We do have all kinds of strategies for building those relationships and it tends to work.

Operator

Thank you. And now to line of Sterling Auty from J.P. Morgan. Please go ahead.

Sterling Auty -- J.P. Morgan Securities -- Analyst

(technical difficulty)

Andrew Florance -- Founder, President and Chief Executive Officer

Sterling, we're having a hard time hearing you.

Sterling Auty -- J.P. Morgan Securities -- Analyst

Is the line better?

Andrew Florance -- Founder, President and Chief Executive Officer

That's better.

Scott Wheeler -- Chief Financial Officer

Better.

Sterling Auty -- J.P. Morgan Securities -- Analyst

Okay. I was saying that, in the prepared remarks, you had the commentary obviously on the strength of multifamily, but also the deceleration in commercial real estate, just want to -- from a high level, does that mean that as you look throughout the rest of the year that the focus of the investments will continue to be on the strength in multifamily housing? And just to this quarter, did you invest to the level you thought you would in the commercial real estate part of the business?

Andrew Florance -- Founder, President and Chief Executive Officer

I would think that we did invest in the commercial real estate side the way we'd expect to. And investing, I think the question is reinvesting into the strengths of multifamily. In the prepared remarks, I'd noticed that and I thought, yes, there's a lot of upside in commercial real estate right now as with the whole economy. And yes, the statistics, the market indicators are all as the best I've seen in my career, for sure.

I hate to ever admit this, but I also -- we'd note earlier $1.2 billion to $1.3 billion in cash, downturns are good too, because we bought some amazing companies in the downturns and we are not terribly cyclical as a company. We typically are able to grow through downturns and there is actually both a cyclical advantage to strengthen Apartment industry for us as people are building a lot of new developments. They are ready to invest in getting faster lease up on those new buildings. Conversely, when the wheels come off and vacancy rates drop, what they spend on lead generation with Apartments.com is peanuts or any other call for term you want to use compared to the amount of money at risk in these communities.

So when someone spending $1,100, $1,200 a month on getting the majority of their lease to keep their $250 million property leased and solvent, they don't cut back on that $1,100 a month. So I think that's one of the nice things about our business as we are pretty -- we've benefited in the up cycle and we're very resilient on the down cycle. But still today, no indicators show in the down cycle.

Operator

Thank you. We have no one else in queue. Please continue.

Andrew Florance -- Founder, President and Chief Executive Officer

With that. we're going to wrap up the call. Thank you, everyone, for joining us, and thank you Scott for a fantastic Call+, and thank you Rich for a really fascinating read on the risks and the definitions and look forward to hearing you -- hearing -- spending time with you guys again at the end of the second quarter.

Operator

All right. Thank you. And ladies and gentlemen this call will be available for replay after 7:30 PM Eastern Time today through midnight May 23, 2019. You may access the AT&T Replay System at any time by dialing 1-800-475-6701, and entering the access code of 466402. Again, that's 1-800-475-6701. And international participants may dial 320-365-3844, with the access code of 466402. And that does conclude our conference for today. Thank you for your participation and for using the AT&T Executive Teleconference Service. You may now disconnect.

Duration: 55 minutes

Call participants:

Richard Simonelli -- Vice President, Investor Relations

Andrew Florance -- Founder, President and Chief Executive Officer

Scott Wheeler -- Chief Financial Officer

George Tong -- Goldman Sachs -- Analyst

William Warmington -- Wells Fargo Securities -- Analyst

David Ridley-Lane -- Bank of America Merrill Lynch -- Analyst

Peter Christiansen -- Citigroup Inc -- Analyst

Andrew Jeffrey -- SunTrust Robinson Humphrey -- Analyst

Stephen Sheldon -- William Blair & Company -- Analyst

Mayank Tandon -- Needham & Co. -- Analyst

Joe Goodwin -- JMP Securities LLC -- Analyst

Sterling Auty -- J.P. Morgan Securities -- Analyst

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