Our BizBuySell services, which include BizQuest®, provide an online marketplace for businesses for sale. Our LandsofAmerica services, which include LandAndFarm, provide an online marketplace for rural lands for sale that is also accessible via our Land.com domain.

We provide market research, consulting and analysis for commercial real estate investors and lenders via our CoStar Portfolio Strategy and CoStar Market Analytics service ~~offerings,~~offerings; portfolio and debt analysis, management and reporting capabilities through our CoStar Investment Analysis and CoStar Risk Analytics service offerings; and real estate and lease management solutions, including lease administration and abstraction services, through our CoStar Real Estate Manager service offerings. We have created and are continually improving our standardized platform of information, analytics and online marketplaces where members of the commercial real estate and related business community can continuously interact and facilitate transactions by efficiently accessing and exchanging accurate and standardized commercial real estate information.

Our standardized platform includes the most comprehensive proprietary database in the industry; the largest research department in the industry; proprietary data collection, information management and quality control systems; a large in-house product development team; a broad suite of web-based information, analytics and online marketplaces; a large team of analysts and economists; and a large, diverse base of clients. Our database has been developed and enhanced for more than 2729 years by a research department that makes thousands of daily database updates. In addition to our internal efforts to grow the database, we have obtained and assimilated ~~over 90~~approximately 100 proprietary databases.

~~We have five flagship brands - CoStar, LoopNet, Apartments.com, BizBuySell and LandsofAmerica.~~ Our ~~subscription-based~~comprehensive commercial real estate database powers our information services, ~~consist primarily of CoStar Suite~~^TM ~~services. CoStar Suite is sold as a platform of service offerings consisting of CoStar Property Professional®, CoStar COMPS Professional®and CoStar Tenant® and through our mobile application, CoStarGo®. CoStar Suite is our primary service offering~~sources data used in our ~~North America~~analytic services and ~~International operating segments. Prior~~provides content for most of our online marketplace services. Our ability to utilize the ~~third quarter of 2014, FOCUS~~^TM ~~was~~same commercial real estate information across our ~~primary service offering~~standardized platform creates efficiencies in operations and improves data for our ~~International operating segment. We introduced CoStar Suite in the U.K. in the fourth quarter of 2012 and no longer offered FOCUS to new clients beginning in 2013.~~customers.

Our subscription-based services consist primarily of ~~similar~~information, analytics, and online marketplace services offered over the Internet to commercial real estate industry and related professionals. Our services are typically distributed to our clients under subscription-based license agreements that renew automatically, a majority of which have a term of one year. Upon renewal, many of the subscription contract rates may change in accordance with contract provisions or as a result of contract renegotiations. To encourage clients to use our services regularly, we generally charge a fixed monthly amount for our subscription-based ~~information~~ services rather than charging fees based on actual system ~~usage. Contract~~usage or number of paid clicks. Depending on the type of service, contract rates are generally based on the number of sites, number of users, organization size, the client's business focus, geography, ~~and~~ the number and types of services to which a client ~~subscribes.~~subscribes, the number of properties a client advertises and the prominence and placement of a client's advertised properties in the search results. Our subscription clients generally pay contract fees on a monthly basis, but in some cases may pay us on a quarterly or annual basis.

Expansion and Growth

Acquisitions

We have continually expanded the geographical coverage of our existing information services and developed new information, analytics and online marketplace services. In addition to internal growth, we have grown our business through strategic acquisitions.

~~Historically, our expansion includes~~ Our more recent acquisitions include the acquisitions of Chicago ReSource in Chicago in 1996 and New Market Systems in San Francisco in 1997. In August 1998, we expanded into the Houston region through the acquisition of Houston-based real estate information provider C Data Services. In January 1999, we expanded further into the Midwest and Florida by acquiring LeaseTrend and into Atlanta and Dallas/Fort Worth by acquiring Jamison Research. In February 2000, we acquired COMPS.COM, a San Diego-based provider of commercial real estate information. In November 2000, we acquired First Image Technologies, a California-based provider of commercial real estate software. In September 2002, we expanded further into Portland, Oregon through the acquisitionApril 1, 2014 purchase of certain assets of Napier Realty Advisors (doing business as REAL-NET). In January 2003, we established a base in the U.K. with our acquisition of London-based FOCUS Information Limited. In May 2004, we expanded into Tennessee through the acquisition of Peer Market Research, and ~~in June 2004, we extended our coverage~~assumption of the U.K. through the acquisition of Scottish Property Network. In September 2004, we strengthened our position in Denver, Colorado through the acquisition of substantially all of the assets of RealComp, a local comparable sales information provider.

In January 2005, we acquired National Research Bureau, a Connecticut-based provider of U.S. shopping center information. In December 2006, our U.K. subsidiary, CoStar Limited, acquired Grecam S.A.S. (“Grecam”), a provider of commercial property information and market-level surveys, studies and consulting services located in Paris, France. In February 2007, CoStar Limited also acquired Property Investment Exchange Limited (“Propex”), a provider of commercial property information and operator of an electronic platform that facilitates the exchange of investment property located in London, England. In April 2008, we acquired the assets of First CLS (doing business as the Dorey Companies and DoreyPRO), an Atlanta-based provider of local commercial real estate information. In July 2009, we acquired Massachusetts-based CoStar Portfolio Strategy (formerly known as Property and Portfolio Research), a provider of real estate analysis, market forecasts and credit risk analytics to the commercial real estate industry, and its wholly owned U.K. subsidiary Property and Portfolio Research Ltd., and in October 2009, we acquired Massachusetts-based CoStar Investment Analysis (formerly known as Resolve Technology), a provider of business intelligence and portfolio management software serving the institutional real estate investment industry. In October 2011, we acquired CoStar Real Estate Manager (formerly known as Virtual Premise), a Software as a Service, or on-demand software provider of real estate and lease management solutions located in Atlanta, Georgia. In April 2012, we completed the acquisition of LoopNet, an online marketplace that enables property owners, landlords, and commercial real estate agents working on their behalf to list properties for sale or for lease and to submit detailed information about property listings. More recently, on April 1, 2014, we purchased certain assets and assumed certain liabilities related to the Apartments.com business (collectively ~~the “Apartments.com Business”~~referred to as “Apartments.com”), a national online apartment rentals resource for renters, property managers and owners, from Classified Ventures, LLC (“CV”). On June 1, 2015, to further support our expansion into the multifamily vertical, we acquired Network Communications, Inc. (“NCI”), including its Apartment Finder business (collectively referred to as “Apartment Finder”). Apartment Finder provides lead generation, advertising, and Internet marketing solutions to property managers and owners through its main service, ApartmentFinder.com. On July 1, 2015, we acquired the assets of Belbex Corporate, S.L. (“Belbex”), a small commercial real estate information provider operating in Madrid, Spain. On May 3, 2016, we acquired Thomas Daily GmbH (“Thomas Daily”), a commercial real estate news and information provider operating in Freiburg, Germany. Most recently, on January 31, 2017, we acquired Koa Lei, Inc. (doing business as Westside Rentals and now known as Westside Rentals, LLC), an online marketplace specializing in Southern California real estate rentals, and its affiliated entity Westside Credit Services, LLC, a provider of credit checks and tenant screening for landlords in the Southern California real estate rental market.

~~Expansion~~Development and ~~Development~~Expansion

We expect to continue our software development efforts to improve existing services, introduce new services, integrate ~~products~~ and ~~services,~~ cross-sell existing services, and expand and develop supporting technologies for our research, sales and marketing organizations. We are committed to supporting and improving our information, ~~analytics~~news, analytic and online marketplace solutions.

~~In October 2013, we introduced technology enhancements to CoStar Suite, our platform~~The launch of ~~service offerings consisting~~the Apartments.com website and the ApartmentFinder.com website in 2015 are examples of ~~CoStar Property Professional, CoStar COMPS Professionaland CoStar Tenant. The enhancements improve Costar Suite's user interface, search functionality and analytic capabilities. For example, the CoStar Multifamily~~® ~~information search feature allows users to access our extensive multifamily property database. In addition, CoStar Lease Analysis~~^TM~~, an integrated workflow tool, provides users a simple way to produce understandable cash flows for any proposed or existing lease. We plan to continue~~ our software development efforts to ~~enhance~~improve existing services, introduce new services, and integrate and cross-sell existing services. We believe the improved sites, enhanced search capabilities, availability of information regarding real-time vacancies and our ~~new Lease Analysis workflow tool~~continued development and introduction of enhancements to ~~develop~~our online apartment rental marketplaces have attracted more consumers, making the sites more attractive to property managers, which has also increased our cross-selling opportunities. In addition, we recently launched Apartamentos.com, an apartment-listing site offered exclusively in Spanish built and tailored to meet the needs of Spanish language households in the U.S., which is believed to represent approximately 20 percent of the U.S. renter population. We believe greater functionality makes our services valuable to an even broader audience and helps us increase sales of our services to brokers, banks, owners, institutional investors and other ~~potential lease comparable services~~industry participants. We expect technology enhancements to drive continued revenue growth in ~~2015.~~2017 and the foreseeable future.

In ~~October 2013,~~2016, we ~~also released CoStarGo® 2.0,~~began working to further integrate the ~~next generation~~backend systems of ~~our mobile application, which was launched~~the LoopNet and CoStar databases, so that the two services will share a unified database of information in order to create operating efficiencies and improve the ~~U.S. on August 15, 2011 and introduced in the U.K. on November 5, 2012. CoStarGo is our iPad application that integrates and provides CoStar Suite subscribers mobile access~~data available to our ~~comprehensive property, tenant~~customers. We also hope to increase the quantity and ~~comparable sales information. CoStarGo 2.0 adds powerful analytic capabilities~~quality of the listing information available by enabling select brokers and other industry participants to load information directly into the integrated system, simultaneously reducing the time and costs associated with researching and maintaining our comprehensive ~~mobile solution.~~database of commercial real estate information.

In 2014, we introduced enhancements to our flagship marketing platform, LoopNet.com. For example, we added a targeted advertising service that allows brokers or firms to purchase advertisements based on geographic and property type criteria. Additionally, we introduced ProVideo, a service that enables owners and brokers to enhance their LoopNet listings with high quality videos of interior spaces, amenities and exterior features.

In February 2015, as a result of our product development efforts, we launched a new Apartments.com website with a cleaner look, information about actual rental availabilities, rents and other fees, and better search functionality. In conjunction with the launch, we plan to embark on a wide-scale marketing campaign commencing during the first quarter of 2015 and running throughout the remainder of 2015 to generate brand awareness and site traffic for Apartments.com, including an incremental investment of $75.0 million above Apartments.com’s 2014 annualized marketing spend since the close of the acquisition of the Apartments.com Business. The marketing campaign is expected to feature television and radio advertising, online/digital advertising, social media and out-of-home ads and will be reinforced by Search Engine Marketing.

~~We continue to integrate, develop and cross-sell the services offered by the businesses we have acquired, including Apartments.com and LoopNet.~~ We evaluate potential changes to our service offerings from time to time in order to better align the services we offer with customers’ needs. Further, in some cases, when integrating and coordinating our services and assessing industry and client needs, we may decide to combine, shift focus from, de-emphasize, phase out, or eliminate a service that, among other things, overlaps or is redundant with other services we offer. ~~For example,~~In the event that we ~~are currently assessing whether~~eliminate or phase out particular service offerings, we may experience reduced revenues and earnings. The decision to ~~transition~~eliminate or phase out a service offering may also ultimately result in increased revenues and earnings from sales of other services we offer in lieu of the eliminated or phased out services. We continue to assess the timing and potential impact of transitioning the LoopNet marketplace to a pure marketing site for commercial real estate where, eventually, all listings would be paid and users could search the site for free.

~~To more fully integrate and connect our services and, ultimately,~~When we implement this shift, we will seek to ~~provide improved access to our resources, we launched a new brand identity in May 2014. The new branding is designed to unite our flagship brands - CoStar,~~convert LoopNet ~~Apartments.com, BizBuySell and LandsofAmerica - with a modern, cohesive look that will enhance customers’ access to the full breadth of our~~ information ~~analytics and marketplace solutions. The resulting streamlined network of platforms is expected to improve the customer experience and make it easier for~~ customers to ~~find~~higher value, more profitable annual subscription information services, which should increase revenues and earnings over time. However, we cannot predict with certainty the ~~most useful tools for their commercial real estate~~amount or timing of any reductions in revenues and earnings or subsequent increases in revenues and earnings, if any, resulting from the elimination or phasing out of the LoopNet information analytic and marketplace needs. The new brand identity was unveiled in connection with the launch of our new corporate website and newly designed website interfaces for CoStar, LoopNet and Apartments.com. Our new website interfaces provide streamlined navigation and search functions for visitors and enable customers to quickly access our market-leading services.services or any other service offering, if implemented.

Internationally, we continue to integrate our operations more fully with those in the U.S. Similar to our North America operating segment, we intend to continue to upgrade our international platform of services and expand the coverage of our service offerings within our International segment. To further those initiatives, we introduced CoStar Suite in the U.K. during the fourth quarter of 2012 and no longer offered FOCUS to new clients beginning in 2013. CoStar Suite is sold as a consistent international platform of service offerings consisting of CoStar Property Professional, CoStar COMPS Professionaland CoStar Tenant and through the Company's mobile application, CoStarGo. CoStarGo 2.0 was released in the U.K. in October 2013 simultaneous with its release in the U.S. Additionally, we upgraded our back-end research operations, fulfillment and Customer Relationship Management systems to support these new U.K. services. The financial performance of our International operating segment continues to improve. During the twelve months ended December 31, 2014, International EBITDAOur revenues have increased ~~to a positive amount~~ as a result of revenues from acquired businesses and from cross-selling opportunities among the customers of CoStar and the acquired companies. We expect to continue to increase revenues as a result of such cross-selling opportunities. We may incur increased ~~revenue~~expenses in connection with any marketing and ~~decreased operating expenses as compared to the twelve months ended December 31, 2013. See the “Non-GAAP Financial Measures” section included~~sales campaigns involving cross-selling opportunities and initiatives, and in ~~this Annual Report on Form 10-K for further details on the non-GAAP financial measures.~~connection with promotion of our new services and brands.

We ~~recently expanded~~are expanding the geographic reach of our North America services. In 2014, we began offering our services in Toronto, Canada. Building on our experience in Toronto, we ~~plan~~have expanded and are continuing to expand our research into additional Canadian cities. In the second quarter of 2015, we began offering services in Calgary and Vancouver. In the second quarter of 2016, we began offering services in Ottawa and in the third quarter of 2016, we began offering services in Edmonton. On July 1, 2015, we expanded our International services into Madrid, Spain through the acquisition of the assets of Belbex, a small commercial real estate information provider operating in Madrid, Spain. Further, on May 3, 2016, we expanded our International services into key markets in Germany, through the acquisition of Thomas Daily, a commercial real estate news and information provider operating in Freiburg, Germany. We believe that our integration efforts and continued investments in our services, including expansion of our existing service offerings, have created a platform for long-term revenue growth. We expect these investments to result in further penetration of our subscription-based ~~information~~ services and the successful cross-selling of our services to customers in existing markets.

We have invested in the expansion and development of our field sales force to support the growth and expansion of our company and our service offerings in North America and internationally. We plan to continue to invest in, evaluate and strategically position our sales force as the Company continues to develop and grow. We are also investing in our research ~~capacity~~operations to support continued growth of our information and analytics offerings, to support the Apartments.com ~~Business and~~network, to expand into additional Canadian ~~markets.~~markets and to provide services in Madrid, Spain and key markets in Germany. We recently established our research operations headquarters in Richmond, Virginia, and plan to expand our research team and continue investing in research operations to meet the growing content needs of our clients. While we believe investments we make in our business create a platform for growth, those investments may reduce our profitability and adversely affect our financial position.

In support of our continued expansion and development, during June 2014, we completed a public equity offering of 3,450,000 shares of common stock for $160.00 per share, resulting in net proceeds to the Company of approximately $529.4 million. We intend to ~~use~~continue to assess the ~~net proceeds~~need for additional investments in our business, in addition to the investments discussed above, in order to develop and distribute new services within our current platform or expand the reach of our current service offerings. Any future product development or expansion of services, combination and coordination of services or elimination of services or corporate expansion, development or restructuring efforts could reduce our profitability and increase our capital expenditures. Any new investments, changes to our service offerings or other unforeseen events could cause us to generate losses and negative cash flow from ~~the public equity offering to fund all or a portion of the costs of any strategic acquisitions we decide to pursue~~operations in the ~~future,~~future. We expect to ~~finance the growth of~~continue our ~~business~~software development efforts to improve existing services, introduce new services, integrate products and services, cross-sell existing services, and expand and develop supporting technologies for ~~working capital~~our research and ~~other general corporate purposes.~~sales and marketing organizations. We are committed to continuing to support and improve our information, analytics and online marketplace solutions.

Industry Overview

The market for commercial real estate information and analysis is vast based on the variety, volume and value of transactions related to commercial real estate. Each transaction has multiple participants and multiple information requirements, and in order to facilitate transactions, industry participants must have extensive, accurate and current information and analysis. Members of the commercial real estate and related business community require daily access to current data such as space availability, properties for sale, rental units available, rental rates, vacancy rates, tenant movements, sales comparables, supply, new construction, absorption rates and other important market developments to carry out their businesses effectively. Market research (including historical and forecast conditions) and applied analytics have also become instrumental to the success of commercial real estate industry participants operating in the current economic environment. There is a strong need for an efficient marketplace, where commercial real estate professionals can exchange information, evaluate opportunities using standardized data and interpretive analyses, and interact with each other on a continuous basis.

A large number of parties involved in the commercial real estate and related business community make use of the services we provide in order to obtain information they need to conduct their businesses, including:



•	Sales and leasing brokers	•	Government agencies
•	Property owners	•	Mortgage-backed security issuers
•	Property managers	•	Appraisers
•	Design and construction professionals	•	Pension fund managers
•	Real estate developers	•	Reporters
•	Real estate investment trust managers	•	Tenant vendors
•	Investment bankers	•	Building services vendors
•	Commercial bankers	•	Communications providers
•	Mortgage bankers	•	Insurance companies’ managers
•	Mortgage brokers	•	Institutional advisors
•	Retailers	•	Investors and asset managers

The commercial real estate and related business community ~~generally has~~historically operated in an inefficient marketplace because of the fragmented approach to gathering and exchanging information within the marketplace. Various organizations, including hundreds of brokerage firms, directory publishers and local research companies, ~~collect~~collected data on specific markets and ~~develop~~developed software to analyze the information they ~~have~~ independently gathered. This highly fragmented methodology ~~has~~ resulted in duplication of effort in the collection and analysis of information, excessive internal cost and the creation of non-standardized data containing varying degrees of accuracy and comprehensiveness, resulting in a formidable information gap.

The creation of a standardized information platform for commercial real estate requires an infrastructure including a standardized database, accurate and comprehensive research capabilities, experienced analysts, easy to use technology and intensive participant interaction. By combining our extensive database, ~~approximately~~ ~~1,481~~researchers and outside contractors, our experienced team of analysts and economists, technological expertise and broad customer base, we believe that we have created such a platform.

Within the apartment rental community, most apartment listing websites primarily supply only the listings that property owners pay to advertise and often return results that are inconsistent with the renter's search criteria. These limited results generally do not provide information about the actual rental availabilities. We believe that consumers expect accurate, actionable and comprehensive apartment rental information. To create the ~~new~~ Apartments.com, ~~website,~~ApartmentFinder.com, and Apartamentos.com websites, we ~~have drawn~~drew on our multifamily database and ~~undertaken~~undertook a research effort collecting and verifying information and visiting and photographing properties. With the ~~launch of the new~~ Apartments.com, ~~website,~~ApartmentFinder.com and Apartamentos.com websites, we believe that we ~~have~~ created an easily searchable ~~site~~sites with a comprehensive selection of rentals, information on actual rental availabilities and rents, and in-depth data on neighborhoods, including restaurants, nightlife, history, schools and other important facts.

CoStar’s Comprehensive Database

CoStar has spent more than 2729 years building and acquiring a database of commercial real estate information, which includes information on leasing, sales, comparable sales, tenants, and demand statistics, as well as digital images.

~~As of~~ ~~January 30, 2015, our database of real estate information covered the U.S., London, England and other parts of the U.K., and contained information about:~~

~~Approximately 1.3 million sale and lease listings;~~

~~Approximately 4.5 million total properties;~~

~~Approximately 8.2 billion square feet of sale and lease listings;~~

~~Approximately 5.8 million tenants;~~

~~Approximately 2.3 million sales transactions valued in the aggregate at approximately $5.7 trillion; and~~

~~Approximately 16.5 million digital attachments, including building photographs, aerial photographs, plat maps and floor plans.~~

This highly complex database is comprised of hundreds of data fields, tracking such categories ~~as:~~



•	~~Location~~	•	~~Mortgage and deed information~~
•	~~Site and zoning information~~	•	~~For-sale information~~
•	~~Building characteristics~~	•	~~Income and expense histories~~
•	~~Space availability~~	•	~~Tenant names~~
•	~~Tax assessments~~	•	~~Lease expirations~~
•	~~Ownership~~	•	~~Contact information~~
•	~~Sales and lease comparables~~	•	~~Historical trends~~
•	~~Space requirements~~	•	~~Demographic information~~
•	~~Number of retail stores~~	•	~~Retail sales per square foot~~

as location, site and zoning information, building characteristics, space and unit availability, tax assessments, ownership, sales and lease comparables, space requirements, number of retail stores, number of listings, mortgage and deed information, for-sale and for-lease listings, income and expense histories, tenant names, lease expirations, contact information, historical trends, demographic information and retail sales per square foot. The database also includes building photographs, aerial photographs, 3D virtual apartment tours, plat maps and floor plans.

CoStar Research

We have developed a sophisticated data collection organization utilizing a multi-faceted research process. In ~~2014,~~2016, our full time researchers and contractors ~~drove millions of miles, conducted hundreds of thousands of on-site building inspections, and~~ conducted millions of interviews of brokers, owners, tenants, apartment community owners and property managers. We recently established our research operations headquarters in Richmond, Virginia. We expect the Richmond research headquarters will be a technology innovation hub, powering the software development necessary to support the content within our information, analytics and marketing services.

Research Department. ~~As of~~ ~~January 30, 2015, we had approximately 1,481 commercial real estate research professionals and outside contractors performing research.~~ Our research professionals undergo an extensive training program so that we can maintain consistent research methods and processes throughout our research department. Our researchers collect and analyze commercial real estate information through millions of phone calls, e-mails and ~~internet~~Internet updates each year, in addition to field inspections, public records review, news monitoring and direct mail. ~~Each researcher is~~We have also set up direct feeds from larger apartment sites and have put in place an automated system that compiles information sourced from the Internet in order to provide the most up-to-date information on rental availabilities.

Our researchers are responsible for maintaining the accuracy and reliability of our database information. As part of their update process, researchers develop cooperative relationships with industry professionals that allow them to gather useful information. Because of the importance commercial real estate professionals place on our data and our prominent position in the industry, many of these professionals routinely take the initiative and proactively report available space and transactions to our researchers.

CoStar has an extensive field research effort that includes physical inspection of properties in order to research new markets, find additional property inventory, photograph properties and verify existing information. In 2016, our field researchers drove millions of miles and conducted hundreds of thousands of on-site building inspections. CoStar's field research effort also includes creating high quality videos of interior spaces (including walk-through videos and 3D virtual apartment tours of apartment communities), amenities and exterior features of properties. CoStar utilizes ~~146~~ high-tech, field research vehicles across the U.S., Canada, ~~and~~ the U.K. and Spain. A significant majority of these vehicles are customized, energy efficient hybrid cars that are equipped with computers, proprietary Global Positioning System tracking software, high resolution digital cameras and handheld laser instruments to help precisely measure buildings, geo-code them and position them on digital maps. Some of our researchers also use custom-designed trucks with the same equipment as well as pneumatic masts that extend up to an elevation of twenty-five feet to allow for unobstructed building photographs from “birds-eye” views. Each CoStar vehicle uses wireless technology to track and transmit field data. A typical site inspection consists of photographing the building, measuring the building, geo-coding the building, capturing “For Sale” or “For Lease” sign information, counting parking spaces, assessing property condition and construction, and gathering tenant information. Certain researchers canvass properties, collecting tenant data suite by suite. ~~Our subsidiary, CoStar Field Research, LLC, recently entered into an agreement to purchase~~We also utilize a low-flying airplane ~~capable of conducting~~to conduct aerial research of commercial real estate. ~~In 2015, we plan to~~We place researchers on the low-flying aircraft to scout additional commercial developments and take aerial ~~photographs.~~photographs and videos.

Data and Image Providers. We license a small portion of our data and images from public record providers and ~~third party~~third-party data sources. Licensing agreements with these entities ~~provide for our~~allow us to use of a variety of commercial real estate information, including property ownership, tenant information, demographic information, maps, ~~and~~ aerial photographs and 3D virtual apartment tours of apartment communities, all of which enhance various CoStar services. These license agreements generally grant us a non-exclusive license to use the data and images in the creation and supplementation of our information, analytics and online marketplaces and include what we believe are standard terms, such as a contract term ranging from one to five years, automatic renewal of the contract and fixed periodic license fees or a combination of fixed periodic license fees plus additional fees based upon our usage.

Management and Quality Control Systems. Our research processes include automated and non-automated controls to ensure the integrity of the data collection process. A large number of automated data quality tests check for potential errors, including occupancy date conflicts, available square footage greater than building area, typical floor space greater than land area and expired leases. We also monitor changes to critical fields of information to ensure all information is kept in compliance with our standard definitions and methodology. Our non-automated quality control procedures include:

calling our information sources on recently updated properties to re-verify information;

performing periodic research audits and field checks to determine if we correctly canvassed buildings;

providing training and retraining to our research professionals to ensure accurate data compilation; and

compiling measurable performance metrics for research teams and managers for feedback on data quality.

Finally, one of the most important and effective quality control measures we rely on is feedback provided by the commercial real estate professionals using our data every day.

Proprietary Technology

~~As of~~ ~~January 30, 2015, CoStar had a staff of 417 product development, database and network professionals.~~ CoStar’s information technology professionals focus on developing new services for our customers, improving and maintaining existing services, integrating our current services, securing our comprehensive database of commercial real estate information and delivering research automation tools that improve the quality of our data and increase the efficiency of our research analysts.

~~Our subscription-based information services consist primarily of CoStar Suite~~^TM ~~services. CoStar Suite is sold as a platform of service offerings consisting of CoStar Property Professional®, CoStar COMPS Professional®and CoStar Tenant® and through our mobile application, CoStarGo®.~~

Our information technology team is responsible for developing, improving and maintaining ~~CoStar services, including but not limited to CoStar Property Professional~~®~~, CoStar COMPS Professional~~®~~, CoStar Tenant~~®~~, CoStar Showcase®, CoStarGo®~~, ~~CoStar Connect~~®~~, CoStar Lease Analysis~~^TM~~, CoStar Multifamily~~®~~, LoopNet Premium Lister~~^TM~~, LoopNet Premium Searcher~~^TM~~, LoopLink~~®~~, CoStar Portfolio Strategy~~^TM ~~products~~CoStar's information, analytics and ~~services, CoStar Market Analytics~~^TM ~~products and services, CoStar Investment Analysis~~^TM ~~Portfolio Maximizer and CoStar Investment Analysis~~^TM ~~Request, CoStar Real Estate Manager~~^TM ~~products and services, and Apartments.com products and~~online marketplace services.

Our information technology team is also responsible for developing the infrastructure necessary to support CoStar’s business processes, our comprehensive database of commercial real estate information, analytics and online marketplaces and our extensive image library. The team implements technologies and systems that introduce efficient workflows and controls ~~that~~designed to increase the production capacity of our research teams and improve the quality of our data. Over the years, the team has developed data collection and quality control mechanisms that we believe are unique towithin the commercial real estate industry. The team continues to develop and modify our enterprise information management system that integrates ~~CoStar~~CoStar's sales, research, field research, customer support and accounting information. We use this system to maintain our commercial real estate research information, manage contacts with the commercial real estate community, provide research workflow automation and conduct daily automated quality assurance checks. In addition, our information technology team has also developed fraud-detection technology to detect and prevent unauthorized access to our services.

Our information technology professionals ~~also~~ maintain the servers and network components necessary to support CoStar services and research systems. CoStar's core services are served from multiple data centers to support uninterrupted service for our customers. CoStar’s services are continually monitored in an effort to ensure our customers fast and reliable access.

CoStar's comprehensive data protection policy provides for use of secure networks, strong passwords, encrypted data fields, off-site storage and other protective measures in an effort to ensure the availability and security of all core systems.

Services

Our suite of information, analytics and online marketplaces is branded and marketed to our customers. Our services are primarily derived from a database of building-specific information and offer customers specialized tools for accessing, analyzing and using our information. Over time, we expect to continue to enhance our existing information, analytics and online marketplaces and develop additional services that make use of our comprehensive database to meet the needs of our existing customers as well as potential new categories of customers.

Our principal information, analytics and online ~~marketplaces~~marketplace services as of January ~~30, 2015~~31, 2017, are described in the following paragraphs:

CoStar

CoStar Property Professional® CoStar Property Professional, or “CoStar Property,” is the Company’s flagship service. It provides subscribers a comprehensive inventory of office, industrial, retail and multifamily properties and land in markets throughout the U.S., the U.K. and ~~Toronto,~~parts of Canada, including for-lease and for-sale listings, historical data, building photographs, maps and floor plans. Commercial real estate professionals use CoStar Property to identify available space for lease, evaluate leasing and sale opportunities, value assets and position properties in the marketplace. Our clients also use CoStar Property to analyze market conditions by calculating current vacancy rates, absorption rates or average rental rates, and forecasting future trends based on user selected variables. CoStar Property provides subscribers with powerful map-based search capabilities as well as a user controlled, password protected extranet (or electronic “file cabinet”) where brokers may share space surveys and transaction-related documents online, in real time, with team members. When used together with CoStar ~~Connect,~~Connect®, CoStar Property enables subscribers to share space surveys and transaction-related documents with their clients, accessed through their corporate website. CoStar Property, along with all of CoStar’s other core information, analytics and online marketplaces, is delivered solely via the Internet.

•CoStar ~~Multifamily®~~CoStar Multifamily information, included as part of CoStar Property Professional, provides subscribers a comprehensive multifamily property database combined with analytic and forecasting tools that enable them to make investment decisions about multifamily properties. CoStar Multifamily provides information about buildings with 20 or more units including rents and occupancy rates, comparable sales transactions, construction locations, floor plans, high-resolution property images and detailed information on amenities and concessions.

•~~CoStar~~ Lease ~~Analysis~~^TMAnalysis® CoStar Lease Analysis is an integrated workflow tool that allows subscribers to incorporate CoStar data with their own data to perform ~~in depth~~in-depth lease analyses. CoStar Lease Analysis can be used to produce an understandable cash flow analysis as well as key metrics about any proposed or existing lease. It combines financial modeling with CoStar’s comprehensive property information, enabling the subscriber to compare lease alternatives.

CoStar COMPS Professional® CoStar COMPS Professional, or ~~“COMPS Professional,~~“CoStar COMPS,” provides comprehensive coverage of comparable commercial real estate sales information in the U.S., the U.K. and ~~Toronto,~~parts of Canada. It is the industry’s most comprehensive database of comparable sales transactions and is designed for professionals who need to research property comparables, identify market trends, expedite the appraisal process and support property valuations. CoStar COMPS ~~Professional~~ offers subscribers numerous fields of property information, access to support documents (e.g., deeds of trust) for new comparables, demographics and the ability to view for-sale properties alongside sold properties in three formats – plotted on a map, aerial image or in a table.

CoStar Tenant® CoStar Tenant is a detailed online business-to-business prospecting and analytical tool providing commercial real estate professionals with the most comprehensive commercial real estate-related tenant information available in the U.S., the U.K. and ~~Toronto, Canada tenant information available.~~parts of Canada. CoStar Tenant profiles tenants occupying space in commercial buildings and provides updates on lease expirations - one of the service’s key features - as well as occupancy levels, growth rates and numerous other facts. Delivering this information via the Internet allows users to target prospective clients quickly through a searchable database that identifies only those tenants meeting certain criteria.

~~CoStarGo~~CoStar Go® ~~CoStarGo~~CoStar Go is an iPad application that integrates and provides subscribers of ~~Costar~~CoStar Suite mobile access to our comprehensive property, comparable sales and tenant information in our suite of online service offerings – consisting of CoStar Property Professional, CoStar COMPS Professional and CoStar Tenant. ~~CoStarGo~~CoStar Go provides a single, location-centric mobile interface that allows users to access and display comprehensive information on millions of properties and gain instant access to analytic data and demographic information from the field.

CoStar Market Analytics^TM CoStar Market Analytics is an analytics platform for owners, investors and lenders, and provides a comprehensive view of the commercial real estate market, including competitive properties, sale comparables, lease comparables, market trends, economic forecasting, etc.

CoStar Lease Comps CoStar Lease Comps, included as part of CoStar Suite® services, provides subscribers an integrated solution that captures, manages and maintains their lease data. CoStar Lease Comps also analyzes lease data.

CoStar Advertising®CoStar Advertising offers property owners and brokers a highly targeted and cost effective way to market a space for lease or a property for sale directly to CoStar subscribers looking for that type of space through interactive advertising. Our advertising model is based on varying levels of exposure, enabling the advertiser to target as narrowly or broadly as its budget permits. With the CoStar Advertising program, when the advertiser’s listings appear in a results set, they receive priority positioning and are enhanced to stand out. The advertiser can also purchase exposure in additional submarkets, or the entire market area so that this ad will appear even when this listing would not be returned in a results set.

CoStar Portfolio ~~Strategy~~^TMStrategy®~~and CoStar Market Analytics~~^TM~~Our subsidiary,~~ CoStar Portfolio Strategy ~~offers products and~~ services are designed to meet the research and risk management needs of commercial real estate owners, investors, lenders and ~~lenders.~~government regulators. CoStar Portfolio Strategy and CoStar Market Analytics cover metropolitan areas throughout the U.S., the U.K., Toronto, Canada and Europe, with offerings including historical and forecast market data and analysis by market and property type, and services including access to CoStar Portfolio Strategy’sleverages its staff of analysts, economists, and strategists to ~~develop~~consult with clients on investment and ~~deliver~~lending strategies, including custom strategic research ~~solutions. Key tools include analysis of underlying property data, assessment of current~~and portfolio strategy, target market ~~fundamentals, forecasts of future market performance,~~selection, capital-raising initiatives, relative value and ~~credit default models.~~custom scenario analyses, and acquisition and disposition studies.

•CoStar Risk ~~Analytics~~^TMAnalytics® COMPASS CoStar Risk Analytics COMPASS is ~~CoStar Portfolio Strategy’s premier~~a commercial real estate risk management tool. It allows users to calculate Probability of Default, Loss Given Default, Expected Loss and ~~Confidence Interval (of Expected Loss) results~~Unexpected Loss at various confidence levels for a loan or a portfolio. It provides direct comparisons of credit risk and refinance risk across Time, Market, Property Type and Loan Structure for all macroeconomic forecast (including Federal Stress Testing / Comprehensive Capital Analysis and Review (“CCAR”)) scenarios. CoStar Risk AnalyticsCOMPASS^CRE is used by lenders, issuers, servicers, ratings agencies and regulators to estimate required loss reserves, economic capital and ~~economic~~regulatory capital, target lending opportunities, set pricing strategy, objectively compare/price loans, more effectively allocate capital, ~~and~~ manage refinance ~~risk.~~risk and conduct stress testing. Clients for CoStar Risk Analytics COMPASS services or data include most of the Systemically Important Financial Institutions (“SIFIs”) as well as a large number of other top-500 banks, insurance companies, hedge funds and government financial regulators.

CoStar Investment ~~Analysis~~^TMAnalysis® Portfolio Maximizer CoStar Investment Analysis Portfolio Maximizer is an industry leading real estate portfolio management software solution. CoStar Investment Analysis Portfolio Maximizer allows users to model partnership structures, calculate waterfall distributions and fees, model and analyze debt obligations and create multiple “what if” scenarios for alternative investment decisions.

CoStar Investment ~~Analysis~~^TMAnalysis® Request CoStar Investment Analysis Request is the first business intelligence software solution built specifically for managing commercial real estate investments. CoStar Investment Analysis Request helps users eliminate some of the difficulties of consolidating real estate investment data from disparate sources and facilitates standardization of information presentation and reporting across an organization. CoStar Investment Analysis Request also provides a platform for users to develop business intelligence and reporting capabilities.

CoStar Real Estate ~~Manager~~^TMManager® Corporate Edition CoStar Real Estate Manager Corporate Edition is a real estate management software solution designed for corporate real estate managers, company executives, business unit directors, brokers and project managers. CoStar Real Estate Manager Corporate Edition helps users connect real estate initiatives with company strategic goals, streamline portfolio operations, automate the process for collecting and managing space requests, reduce occupancy costs with analytics that track location performance against targets, and maximize location performance through proactive portfolio management. CoStar Real Estate Manager also provides lease abstraction and data review services in order to facilitate the effective implementation of this software solution.

CoStar Real Estate ~~Manager~~^TMManager® Retail Edition CoStar Real Estate Manager Retail Edition is a real estate management software solution designed for company executives, real estate dealmakers and store planning and construction managers. CoStar Real Estate Manager Retail Edition helps users to utilize comprehensive and real-time data to establish goals and store strategies, manage the execution of real estate strategies, summarize critical portfolio data to drive cost-saving decisions and benchmark prerequisite store-level information and metrics for maximizing location performance through proactive portfolio management. CoStar Real Estate Manager also provides lease abstraction and data review services in order to facilitate the effective implementation of this software solution.

CoStar Private Sale ~~Network~~^TMNetwork® CoStar Private Sale Network provides clients with custom-designed and branded websites to market their listings directly to investors. CoStar Private Sale Network allows investors to customize a commercial real estate website and build and send email communications to announce listings, calls for offers and bid deadlines.

CoStar Brokerage ~~Applications~~^TMApplications® CoStar Brokerage Applications provides users with access to the latest tools to effectively manage and optimize business operations. These structured and consistent project management tools allow users to track critical dates, employee or organization-wide results and current and prospective projects.

LoopNet

LoopNet® Basic and Premium Membership ~~Our subsidiary, LoopNet, offers~~We offer two types of memberships on the LoopNet marketplace, basic and premium. Basic membership is available free-of-charge to anyone who registers at our LoopNet website and enables members to experience some of the benefits of the LoopNet offering, with limited functionality. As of January ~~30, 2015,~~31, 2017, LoopNet had approximately ~~9.4~~10.8 million registered members, of which ~~81,856~~82,000 were premium members.

•LoopNetPremium ~~Lister~~^TMLister® LoopNet Premium Lister is designed for commercial real estate professionals and other customers who seek the broadest possible exposure for their listings, access to leads lists, and advanced marketing and searching tools. LoopNet Premium Lister provides subscribers with the ability to market their listings to all LoopNet.com visitors, as well as numerous other features. LoopNet Premium Lister is available for a quarterly or annual subscription.

•LoopNet Premium Searcher^TM LoopNet Premium Searcher is designed for members searching for commercial real estate who need commercial real estate marketplace searching access, reports and other marketing and searching tools. LoopNet Premium Searcher provides subscribers with full access to all LoopNet property listings, including Premium and Basic Listings, as well as numerous other features. LoopNet Premium Searcher is available for a monthly, quarterly or annual subscription.

LoopLink® LoopLink is an online real estate marketing and database services suite that enables commercial real estate firms to showcase their available properties both on the LoopNet marketplace and on the brokerage firm’s own website using hosted search software. Within LoopNet, each LoopLink listing is branded with the client’s logo and is hyperlinked to the client’s website. Additionally, the LoopLink service provides customizable, branded property search and results screens that can be integrated into the client’s website. The LoopNet import service offers the opportunity to simplify the process of submitting listings to LoopNet from the client’s internal databases, and features advanced data matching and data integrity rules and file conversion capabilities. LoopNet charges a monthly subscription fee to commercial real estate firms for the LoopLink service. Key features of LoopLink include comprehensive reporting and listing administration tools, ~~a searchable and seamlessly integrated professional directory,~~ property mapping for geographic and feasibility analysis, thumbnail photos and expanded property descriptions in search results.

Apartments.com

Apartments.com^TM ~~Our subsidiary, Apartments, LLC (doing business as Apartments.com), operates an online~~Apartments.com, part of our network of apartment ~~marketplace for renters that matches apartment seekers with apartment homes and provides property managers and owners a platform for~~ marketing ~~their properties. Apartments.com~~sites, provides a variety of ad packages and enhancements that allow property managers and owners to fully showcase their apartment community through increased exposure and interactions that allow renters to view, engage and connect with the community, including featured community listings, customized flyers and brochures, and special offer coupons.

ApartmentHomeLiving.com^TM ApartmentHomeLiving.com, part of our network of apartment marketing sites, provides renters with another national online apartment rentals resource that showcases apartments for rent with official prices, pictures, floor plans and detailed information on each apartment.

ApartmentFinder.com^TMApartmentFinder.com, part of our network of apartment marketing sites, provides lead generation, advertising and Internet marketing solutions to property managers and owners through its main service, ApartmentFinder.com.

Apartamentos.com^TM Apartamentos.com, part of our network of apartment marketing sites, provides Spanish speaking renters with a national online apartment rentals resource offered exclusively in Spanish, with the same primary features found on Apartments.com.

WestsideRentals.com® WestsideRentals.com, part of our network of apartment marketing sites, specializes in Southern California real estate rentals.

LandsofAmerica

LandsofAmerica^TM and LandAndFarm^TM LandsofAmerica.com and LandAndFarm.com are leading online marketplaces for rural land for sale. Sellers pay a fee to list their land for sale, and interested buyers can search the respective sites' listings for free. The LandsofAmerica.com and LandAndFarm.com websites are also accessible via our Land.com domain.

BizBuySell

BizBuySell® and BizQuest® BizBuySell.com and BizQuest.com are leading online marketplaces for operating businesses for sale. Business sellers pay a fee to list their operating businesses for sale, and interested buyers can search the respective sites' listings for free. The BizBuySell and BizQuest Franchise Directories allow interested business buyers to search hundreds of franchise opportunities, and franchisors can list their availabilities in the directory on a cost per lead basis.

Clients

We draw clients from across the commercial real estate and related business ~~community. Commercial~~community, including commercial real estate brokers, ~~have traditionally formed the largest portion of CoStar clients, however, we also provide services to~~ owners, developers, landlords, property managers, financial institutions, retailers, vendors, appraisers, investment banks, government agencies and other parties involved in commercial real estate. ~~The following chart lists U.S. and U.K. clients that are well known or have the highest annual subscription fees in each of the various categories, each as of~~ ~~January 30, 2015~~:



~~Brokers~~	~~Lenders, Investment Bankers~~	~~Institutional Advisors, Asset Managers~~
~~Avison Young~~	~~AEGON USA Realty Advisors~~	~~Bravo Strategies — U.K.~~
~~Binswanger~~	~~Bank of America, N.A.~~	~~AEW Capital Management LP~~
~~BNP Paribas — U.K.~~	~~Capital One Bank~~	~~BlackRock~~
~~CB Richard Ellis~~	~~Citibank~~	~~Hartford Investment Management Company~~
~~CB Richard Ellis — U.K.~~	~~Citigroup Global Markets — U.K.~~	~~ING Investment Management~~
~~Charles Dunn Company~~	~~Deutsche Bank~~	~~Lasalle Investment Management — U.K.~~
~~Coldwell Banker Commercial NRT~~	~~JP Morgan Chase Bank~~	~~Manulife Financial~~
~~Colliers~~	~~Key Bank~~	~~MetLife Real Estate Investment~~
~~Colliers International UK — U.K.~~	~~Q10 Capital LLC~~	~~NorthMarq Capital~~
~~CRESA~~	~~Suntrust~~	~~Progressive Casualty Insurance Co.~~
~~Cushman & Wakefield~~	~~TD Bank~~	~~Prudential~~
~~Cushman & Wakefield — U.K.~~	~~Wells Fargo~~	~~Standard Life Investments — U.K.~~
~~DAUM Commercial Real Estate Services~~	~~Wells Fargo — U.K.~~	~~USAA Real Estate Company~~
~~Drivers Jonas Deloitte — U.K.~~
~~DTZ, a UGL company~~
~~Gerald Eve — U.K.~~
~~GVA Grimley — U.K.~~	~~Owners, Developers~~	~~Appraisers, Accountants~~
~~HFF~~	~~Europa Capital Partners — U.K.~~	~~Deloitte~~
~~Jones Lang LaSalle~~	~~Hines~~	~~Integra~~
~~Jones Lang LaSalle — U.K.~~	~~Industrial Developments~~	~~KPMG~~
~~Kidder Mathews~~	~~LNR Property Corp~~	~~Marvin F. Poer~~
~~Knight Frank LLP — U.K.~~	~~Shorenstein Properties, LLC~~	~~Price Waterhouse Coopers~~
~~Lambert Smith Hampton — U.K.~~	~~Tishman Speyer~~	~~Ryan LLC~~
~~Lee & Associates~~
~~Marcus & Millichap~~
~~Mohr Partners~~
~~Montagu Evans — U.K.~~	~~Retailers~~	~~GovernmentAgencies~~
~~NAI Global~~	~~7-Eleven~~	~~City of Chicago~~
~~Newmark Grubb Knight Frank~~	~~Carter's~~	~~Cook County Assessor’s Office~~
~~Re/Max~~	~~Dollar General Corporation~~	~~County of Los Angeles~~
~~Savills Commercial — U.K.~~	~~Jos. A Bank~~	~~Federal Deposit Insurance Corporation~~
~~Savills Studley~~	~~Massage Envy~~	~~Federal Reserve Bank of New York~~
~~Sperry Van Ness~~	~~Petco~~	~~Internal Revenue Service~~
~~Transwestern~~	~~Rent-A-Center~~	~~Transportation Security Administration~~
~~USI Real Estate Brokerage Services~~	~~Sony~~	~~U.S. Department of Housing and Urban Development~~
~~Voit Real Estate Services~~	~~Spencer Gifts LLC~~	~~U.S. General Services Administration~~
~~Weichert Commercial Brokerage~~	~~Walgreens~~	~~Valuation Office Agency — U.K.~~

~~REITs~~	~~Property Managers~~	~~Vendors~~
~~Boston Properties~~	~~AP Commercial~~	~~Comcast Corporation~~
~~Brandywine Realty Trust~~	~~Elliott Associates~~	~~Cox Communications~~
~~Duke Realty Corporation~~	~~Leggat McCall Properties~~	~~Kastle Systems~~
~~KBS Realty Advisors~~	~~Lincoln Property Company~~	~~Regus~~
~~Kimco Realty Corporation~~	~~Navisys Group~~	~~Time Warner Cable~~
~~Simon Property Group~~	~~Osprey Management Company~~	~~Turner Construction Company~~
~~Vornado/Charles E. Smith~~	~~PM Realty Group~~	~~Verizon Communications~~

For the years ended December 31, ~~2012~~2014, ~~2013~~2015 and ~~2014,~~2016, no single client accounted for more than 5% of our revenues.

Sales and Marketing

~~As of~~ ~~January 30, 2015, CoStar had a staff of 751 sales, marketing and customer support professionals, with the majority of our direct sales force located in field sales offices.~~ Our sales teams are primarily located in 31 field sales offices throughout the U.S. and in offices ~~located in~~outside of the U.S., including, among others, London, ~~England; Manchester,~~ England; Glasgow, Scotland; ~~Paris, France~~Madrid, Spain; and ~~Toronto, Canada.~~Freiburg, Germany. Our inside sales teams are primarily located in our Washington, ~~DC; San Francisco, California;~~DC and Chicago, Illinois offices. These teams prospect for new clients and perform product and service demonstrations exclusively by telephone and over the Internet to support the direct sales force. ~~A portion of the inside sales teams are also responsible for selling some of our services.~~

Our local offices typically serve as the platform for our in-market sales, customer support and field research operations for their respective regions. The sales force is responsible for selling to new prospects, training new and existing clients, providing ongoing customer support, renewing existing client contracts and identifying cross-selling opportunities. In addition, the sales force has primary front line responsibility for customer care. Our customer service and support staff is charged with ensuring high client satisfaction by providing ongoing customer support. In 2016, we formed a customer relationship team consisting of client relationship managers in the sales organization, to drive even greater usage of our products and services. The client relationship managers are responsible for training existing users, sharing market specific research with clients, ensuring accurate and timely listings and ensuring client driven product enhancement ideas are shared with our product development team.

Our sales strategy is to aggressively attract new clients, while providing ongoing incentives for existing clients to subscribe to additional ~~services.~~products and services in order to achieve high renewal rates. We actively manage client accounts in order to retain clients by providing frequent service demonstrations as well as company-client contact and communication. We place a premium on training new and existing client personnel on the use of our services so as to promote maximum client utilization and satisfaction with our services. Our strategy also involves entering into multi-year, multi-market license agreements with our larger clients.

We seek to make our services essential to our clients’ businesses. To encourage clients to use our services regularly, we generally charge a fixed monthly amount for our subscription-based information services rather than fees based on actual system usage. Contract rates for subscription-based services are generally based on the number of sites, number of users, organization size, the client’s business focus, geography, ~~and~~ the number and types of services to which a client ~~subscribes.~~subscribes, the number of properties a client advertises and the prominence and placement of a client's advertised properties in the search results. Our subscription clients generally pay contract fees on a monthly basis, but in some cases may pay us on a quarterly or annual basis.

Our primary marketing methods include: service demonstrations; ~~face to face~~face-to-face networking; web-based marketing; direct marketing; communication via our corporate website and news services; participation in trade show and industry events; Company-sponsored events; print advertising in trade magazines and other business publications; client referrals; and CoStar Advisor^TM, LoopNews^TM and other company newsletters distributed via email to our clients and prospects. In ~~addition,~~2015, we ~~recently~~ launched ~~an improved~~the current Apartments.com ~~website with~~and ApartmentFinder.com websites, each of which has a cleaner look, information about actual rental availabilities, rents and other fees, and better search functionality. ~~In conjunction with the launch, we plan to embark on a wide-scale marketing campaign commencing during the first quarter of 2015 and running throughout the remainder of 2015 to~~To generate brand awareness and site traffic for Apartments.com ~~including an incremental investment of $75.0 million above Apartments.com’s 2014 annualized marketing spend since the close of the acquisition of the Apartments.com Business. The~~after launch, we utilized a marketing campaign ~~is expected to feature~~featuring television and radio advertising, online/digital advertising, social media and out-of-home ads and ~~will be~~ reinforced bythat advertising with Search Engine Marketing. We also support Apartment Finder through Search Engine Marketing. In early 2016, we ran a Super Bowl ad to continue to generate brand awareness and site traffic for Apartments.com. We currently plan to continue to utilize these marketing methods and will continue to work to determine the optimal level of marketing investment for our services for future periods.

Web-based marketing and direct marketing are effective means for us to find prospective clients. Our web-based marketing efforts include search engine optimization, paid advertising with major search engines, social media and display advertising on commercial real estate news and business websites and mobile applications, and our direct marketing efforts include television, radio, out-of-home ads, direct mail, email and telemarketing, and, when applicable, make extensive use of our unique, proprietary database. Once we have identified a prospective client, our most effective sales method is a service demonstration. We use various forms of advertising to build brand identity and reinforce the value and benefits of our services. We also sponsor and attend local association activities and events, including industry-leading events for commercial real estate brokers, owner/investors and retail and financial services institutions, and attend and/or exhibit at industry trade shows and conferences to reinforce our relationships with our core user groups.

We currently offer dozens of webinars each year aimed at helping customers learn more about the commercial real estate industry and how to use our services. The webinars are available both as live presentations and as on-demand programs hosted on our website. On a monthly basis, we issue the CoStar Commercial Repeat Sales Index ("CCRSI"), a comprehensive set of benchmarks that investors and other market participants can use to better understand commercial real estate price movements. ~~The Index~~CCRSI is produced using our underlying data and is publicly distributed by CoStar through the news media and made available online at http://www.costargroup.com/costar-news/ccrsi.

Our sales and marketing efforts have focused and will continue to focus on cross-selling and marketing our services. WeSimilar to our prior acquisitions, we have been cross-selling, and plan to continue to cross-sell, the services offered by ~~the businesses we have acquired, including~~ Apartments.com and ~~LoopNet. Our goal is~~ApartmentFinder.com and the other services we offer, including, but not limited to ~~upsell clients~~CoStar Market Analytics. We will also continue to focus on upselling LoopNet information users to CoStar as we phase out the ~~services that best meet their needs and to create further cross-selling revenue synergies.~~LoopNet information service offerings.

Competition

The market for information, analytics and online marketplaces generally is competitive and rapidly changing. In the commercial real estate and apartment rentals industries, we believe the principal competitive factors affecting these services and providers are:

quality and depth of the underlying databases;

ease of use, flexibility and functionality of the software;

intuitiveness and appeal of the user interface;

timeliness of the data, including listings;

breadth of geographic coverage and services offered;

completeness and accuracy of content;

client service and support;

perception that the service offered is the industry standard;

price;

effectiveness of marketing and sales efforts;

proprietary nature of methodologies, databases and technical resources;

vendor reputation;

brand loyalty among customers; and

capital resources.

We compete directly and indirectly for customers with the following categories of companies:

online marketing services or websites targeted to commercial real estate brokers, buyers and sellers of commercial real estate properties, insurance companies, mortgage brokers and lenders, such as commercialsearch.com, PropertyLine.com, Reed Business Information Limited, officespace.com, MrOfficeSpace.com, TenantWise, www.propertyshark.com, Rofo, BuildingSearch.com, CIMLS, CompStak, Rightmove, ~~WorkplaceIQ, RealPoint LLC~~estatesgazette.com and ~~estatesgazette.com;~~DebtX;

publishers and distributors of information, analytics and marketing services, including regional providers and national print publications, such as Xceligent, eProperty Data, CBRE Economic Advisors, Marshall & Swift, Yale Robbins, Reis, Real Capital Analytics, The Smith Guide, ~~Pierce Eislen~~Yardi Matrix, Axiometrics, Inc., ReScour, Inc. and ~~Axiometrics, Inc.;~~RealMassive;

~~internet~~Internet listing services featuring apartments for rent, such as ApartmentGuide.com, ~~ApartmentFinder.com,~~ ForRent.com, Zillow Rentals, Trulia Rent, Craigslist, ApartmentList.com, Rent.com and Move.com;

locally controlled real estate boards, exchanges or associations sponsoring property listing services and the companies with whom they partner, such as Xceligent, ~~eProperty Data,~~ Catalyst, the National Association of Realtors, CCIM Institute, Society of Industrial and Office Realtors, the Commercial Association of Realtors Data Services and the Association of Industrial Realtors;

real estate portfolio management software solutions, such as Cougar Software, MRI Software, Altus and Intuit;

real estate lease management and administration software solutions, such as Accruent, Tririga, Manhattan Software, Lucemex and AMT;

in-house research departments operated by commercial real estate brokers; and

public record providers.

As the market for information, analytics and online marketplaces develops, additional competitors (including companies which could have greater access to data, financial, product development, technical, analytic or marketing resources than we do) may enter the market and competition may intensify. For example, a company like Bloomberg L.P. has the resources, and has previously announced an intention, to move into the commercial real estate information business. Further, a company like Google, which has a far-reaching web presence and substantial data aggregation capabilities, could enter the commercial real estate marketing arena. A company like Zillow, which already has a presence in residential real estate and the apartment rentals industry, could use its resources to further expand in the online apartment rentals industry creating greater competition among ~~internet~~Internet listing services for the marketing budgets of property managers and property owners. While we believe that we have successfully differentiated ourselves from existing competitors, current or future competitors could materially harm our business.

Proprietary Rights

To protect our proprietary rights in our methodologies, database, software, trademarks and other intellectual property, we depend upon a combination of:

trade secret, misappropriation, copyright, trademark, computer fraud, database protection and other laws;

registration of copyrights and trademarks;

nondisclosure, noncompetition and other contractual provisions with employees and consultants;

license agreements with customers;

patent protection; and

technical measures.

We seek to protect our software’s source code, our database and our photography as trade secrets and under copyright law. Although copyright registration is not a prerequisite for copyright protection, we have filed for copyright registration for many of our databases, photographs, software and other materials. Under current U.S. copyright law, the arrangement and selection of data may be protected, but the actual data itself may not be. Certain U.K. database protection laws provide additional protections for our U.K. databases. We license our services under license agreements that grant our clients non-exclusive, non-transferable rights. These agreements restrict the disclosure and use of our information and prohibit the unauthorized reproduction or transfer of any of our proprietary information, methodologies or analytics.

We also attempt to protect our proprietary databases, our trade secrets and our proprietary information through confidentiality and noncompetition agreements with our employees and consultants. Our services also include technical measures designed to detect, discourage and prevent unauthorized copying of our intellectual property. We have established an internal antipiracy team that uses fraud-detection technology to continually monitor use of our services to detect and prevent unauthorized access, and we actively prosecute individuals and firms that engage in this unlawful activity.

We maintain U.S. and international trademark registrations for CoStar’s core service names and proactively file U.S. and international trademark applications covering our new and planned service names. Our federally registered trademarks include CoStar®, CoStar Property®, CoStar COMPS Professional®, CoStar Tenant®, ~~CoStarGo®~~CoStar Go®, CoStar Lease Analysis®, CoStar Showcase®, and LoopNet®, among many others. In the U.S., trademarks are generally valid as long as they are in use and have not been found to be generic. We consider our trademarks in the aggregate to constitute a valuable asset. In addition, we maintain a patent portfolio that protects certain of our systems and methodologies. We currently have one granted patent in the U.K., which expires in 2021, covering, among other things, certain of our field research methodologies and ~~six~~seven patents in the U.S. which expire in 2020, 2021 (2 patents), 2022 (2 patents), 2025 and ~~2025,~~2032, respectively, covering, among other things, critical elements of CoStar’s proprietary field research technology and mapping tools. We regard the rights protected by our patents as valuable to our business, but do not believe that our business is materially dependent on any single patent or on our portfolio of patents as a whole.

Employees

As of January ~~30, 2015,~~31, 2017, we employed ~~2,444~~3,064 employees. None of our employees are represented by a labor union. We have experienced no work stoppages. We believe that our employee relations are excellent. In common with many German companies, employees in our German subsidiary, Thomas Daily GmbH, have elected three fellow employees to form a Works Council, which represents our employees at the location and has certain rights to receive information from us and engage us in discussions under applicable law.

Available Information

Our investor relations ~~internet~~Internet website is http://www.costargroup.com/investors. The reports we file with or furnish to the Securities and Exchange Commission, including our annual report, quarterly reports and current reports, as well as amendments to those reports, are available free of charge on our ~~internet~~Internet website as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission. You may review and copy any of the information we file with the Securities and Exchange Commission at the Commission's Public Reference Room at 100 F Street, NE, Washington, DC 20549. You may obtain information regarding the operation of the Public Reference Room by calling the Securities and Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission maintains an ~~internet~~Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Commission at http://www.sec.gov.


Item 1A.	Risk Factors

Cautionary Statement Concerning Forward-Looking Statements

We have made forward-looking statements in this Report and make forward-looking statements in our press releases and conference calls that are subject to risks and uncertainties. Forward-looking statements include information that is not purely historic fact and include, without limitation, statements concerning our financial outlook for ~~2015~~2017 and beyond, our possible or assumed future results of operations generally, and other statements and information regarding assumptions about our revenues, EBITDA, adjusted EBITDA, non-generally accepted accounting principles (“GAAP”) net income, non-GAAP net income per share, net income (loss), net income (loss) per share, fully diluted net income (loss) per share, weighted-average outstanding shares, taxable income (loss), cash flow from operating activities, available cash, operating costs, amortization expense, intangible asset recovery, capital and other expenditures, effective tax rate, equity compensation charges, future taxable income, ~~purchase amortization,~~pending acquisitions, the anticipated benefits of completed or proposed acquisitions, the anticipated benefits of cross-selling efforts, product development and release, sales and marketing campaigns, product integrations, elimination and de-emphasizing of services, contract renewal rate, the timing of future payments of principal under our $400.0 million term loan facility available to us under a credit agreement dated April 1, 2014 (the “2014 Credit Agreement”), expectations regarding our compliance with financial and restrictive covenants in the 2014 Credit Agreement, ~~acquisitions,~~ financing plans, geographic expansion, capital structure, contractual obligations, legal proceedings and claims, our database, database growth, services and facilities, employee relations, future economic performance, our ability to liquidate or realize our long-term investments, management’s plans, goals and objectives for future operations, and growth and markets for our stock. Sections of this Report which contain forward-looking statements include “Business,” “Risk Factors,” “Properties,” “Legal Proceedings,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Quantitative and Qualitative Disclosures About Market Risk,” “Controls and Procedures” and the Financial Statements and related Notes.

Our forward-looking statements are also identified by words such as “hope,” “anticipate,” “may,” “believe,” “expect,” “intend,” “will,” “should,” “plan,” “estimate,” “predict,” “continue” and “potential” or the negative of these terms or other comparable terminology. You should understand that these forward-looking statements are estimates reflecting our judgment, beliefs and expectations, not guarantees of future performance. They are subject to a number of assumptions, risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. The following important factors, in addition to those discussed or referred to under the heading “Risk Factors,” and other unforeseen events or circumstances, could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in our forward-looking statements: commercial real estate market conditions; ~~the pace of recovery in the commercial real estate market;~~ general economic ~~conditions;~~conditions, both domestic and international; our ability to identify, acquire and integrate acquisition candidates; our ability to realize the expected benefits, cost savings or other synergies from acquisitions, including the ~~Apartments.com acquisition,~~acquisitions of Thomas Daily, Westside Rentals and the assets of Belbex, on a timely basis or at all; our ability to combine acquired businesses successfully or in a timely and cost-efficient manner; business disruption relating to integration of acquired businesses or other business initiatives; our ability to transition the Westside Rentals service platform to our model; the amount of investment for sales and marketing and our ability to realize a return on investments in sales and marketing; our ability to effectively and strategically combine, eliminate or de-emphasize service offerings; reductions in revenues as a result of service changes; the time and resources required to develop upgraded or new services and to expand service offerings; changes or consolidations within the commercial real estate industry; customer retention; our ability to attract new clients; our ability to sell additional services to existing clients; our ability to integrate our North America and International product offerings; our ability to integrate the backend systems of CoStar and LoopNet and subsequently create operating efficiencies and provide improved data to our customers; our ability to successfully transition LoopNet to a pure marketing site, where all listings are paid and searches are free, in a timely manner and minimize the impact of that transition on revenue; our ability to successfully introduce and cross-sell new products or upgraded services in U.S. and foreign markets; our ability to attract consumers to our online marketplaces; the success of our marketing campaigns in generating brand awareness and site traffic; competition; foreign currency fluctuations; global credit market conditions affecting investments; our ability to continue to expand successfully, timely and in a cost-efficient manner, including internationally; our ability to effectively penetrate and gain acceptance in new ~~sectors;~~sectors and geographies; our ability to control costs; litigation; changes in accounting policies or practices; release of new and upgraded services or entry into new markets by us or our competitors; data quality; expansion, growth, development ~~and~~or reorganization of our sales force; employee retention; technical problems with our services; managerial execution; changes in relationships with real estate brokers, property managers and other strategic partners; legal and regulatory issues; and successful adoption of and training on our services.

Accordingly, you should not place undue reliance on forward-looking statements, which speak only as of, and are based on information available to us on, the date of this Report. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to update any such statements or release publicly any revisions to these forward-looking statements to reflect new information or events or circumstances after the date of this Report or to reflect the occurrence of unanticipated events.

Risk Factors

~~Risks Related to our Business~~

Our revenues and financial position will be adversely affected if we are not able to attract and retain clients. Our success and revenues depend on attracting and retaining subscribers to our information, analytics and online marketplaces. Our subscription-based information, analytics and online marketplaces generate the largest portion of our revenues. However, we may be unable to attract new clients, and our existing clients may decide not to add, not to renew or to cancel subscription services. In addition, in order to increase our revenue, we must continue to attract new customers, continue to keep our cancellation rate low and continue to sell new services to our existing customers. We may not be able to continue to grow our customer base, keep the cancellation rate for customers and services low or sell new services to existing customers as a result of several factors, including without limitation: economic pressures; the business failure of a current client or clients; a decision that customers have no need for our services; a decision to use alternative services; customers’ and potential customers’ pricing and budgetary constraints; consolidation in the real estate and/or financial services industries; data quality; technical problems; or competitive pressures. We compete against many other commercial real estate information, analytics, and marketing service providers for business, including competitors that offer their services through rapidly changing methods of delivering real estate information. If clients cancel services or decide not to renew their subscription agreements, and we do not sell new services to our existing clients or attract new clients, then our renewal rate and revenues may decline.

We may not be able to successfully introduce new or upgraded information, analytics and online marketplace services or combine or shift focus from services with less demand, which could decrease our revenues and our profitability. Our future business and financial success will depend on our ability to continue to anticipate the needs of customers and potential customers, and to introduce new and upgraded services into the marketplace. To be successful, we must adapt to changes in the industry, as well as rapid technological changes by continually enhancing our information, analytics and online marketplace services. Developing new services and upgrades to services, as well as integrating and coordinating current services, imposes heavy burdens on our systems department, management and researchers. The processes are costly, and our efforts to develop, integrate and enhance our services may not be successful. As we continue to combine our operations with those that we have acquired, we must continue to assess the purposes for which various services may be used alone or together, and how we can best address those uses through stand-alone services or combinations of coordinating applications thereof. In addition, successfully launching and selling a new or upgraded service puts pressure on our sales and marketing resources. In 2015, we launched the current Apartments.com and the ApartmentFinder.com websites, both after completing extensive product development. To generate brand awareness and site traffic for Apartments.com, we utilize a multi-channel marketing campaign. The launch of the sites and/or the marketing campaign may not continue to increase brand awareness, site traffic and/or revenues. If we are unsuccessful in obtaining greater market share, we may not be able to offset the expenses associated with the launch and marketing campaign, which could have a material adverse effect on our financial results.

If we are unable to develop new or upgraded services or decide to combine, shift focus from, or phase out a service that overlaps or is redundant with other services we offer, then our customers may choose a competitive service over ours and our revenues may decline and our profitability may be reduced. For example, we continue to assess the timing and potential impact of transitioning the LoopNet marketplace to a pure marketing site for commercial real estate where, eventually, all listings would be paid and users could search the site for free. We expect to see a short-term reduction in revenues and earnings, as well as reduced search engine optimization, when we implement this transition. Although we continue to assess the timing and best strategy to implement this shift and plan to seek to convert customers to higher value, more profitable annual subscription information services, which should increase revenues and earnings over time, we cannot predict with certainty whether we will be successful in shifting customers to higher value, more profitable subscriptions and, consequently, in offsetting any reduction in revenues and earnings. Therefore, when we make this transition, our revenues and earnings may ultimately decline. In addition, if we incur significant costs in developing new or upgraded services or combining and coordinating existing services, if we are not successful in marketing and selling these new services or upgrades, or if our customers fail to accept these new or combined and coordinating services, then there could be a material adverse effect on our results of operations due to a decrease of our revenues and a reduction of our profitability.

A downturn or consolidation in the commercial real estate industry may decrease customer demand for our services. The commercial real estate market may be adversely impacted by many different factors, including lower than expected job growth or job losses resulting in reduced real estate demand; rising interest rates and slowing transaction volumes that negatively impact investment returns; excessive speculative new construction in localized markets resulting in increased vacancy rates and diminished rent growth; and unanticipated disasters and other adverse events such as slowing of the growth in the working age population resulting in reduced demand for all types of real estate. A reversal of improvements in the commercial real estate industry’s leasing activity and absorption rates or a renewed downturn in the commercial real estate market may affect our ability to generate revenues and may lead to more cancellations by our current or future customers, either of which could cause our revenues or our revenue growth rate to decline and reduce our profitability. A depressed commercial real estate market has a negative impact on our core customer base, which could decrease demand for our information, analytics and online marketplaces. Also, companies in this industry ~~are consolidating,~~may consolidate, often in order to reduce expenses. Consolidation, or other cost-cutting measures by our customers, may lead to cancellations of our information, analytics and online marketplace services by our customers, reduce the number of our existing clients, reduce the size of our target market or increase our clients’ bargaining power, all of which could cause our revenues to decline and reduce our profitability. If cancellations, reductions of services, and failures to pay increase, and we are unable to offset the resulting decrease in ~~revenue~~revenues by increasing sales to new or existing customers, our revenues may decline or grow at lower rates.

~~If we are unable to hire qualified persons for, or retain and continue to develop, our sales force, or if our sales force is unproductive, our revenues could be adversely affected.~~ In order to support revenues and future revenue growth, we need to continue to develop, train and retain our sales force. Our ability to build and develop a strong sales force may be affected by a number of factors, including: our ability to attract, integrate and motivate sales personnel; our ability to effectively train our sales force; the ability of our sales force to sell an increased number and different types of services; our ability to manage effectively an outbound telesales group; the length of time it takes new sales personnel to become productive; the competition we face from other companies in hiring and retaining sales personnel; our ability to effectively structure our sales force; and our ability to effectively manage a multi-location sales organization. If we are unable to hire qualified sales personnel and develop and retain the members of our sales force, including sales force management, or if our sales force is unproductive, our revenues or growth rate could decline and our expenses could increase.

Negative general economic conditions could increase our expenses and reduce our revenues. Our business and the commercial real estate industry are particularly affected by negative trends in the general economy. The success of our business depends on a number of factors relating to general global, national, regional and local economic conditions, including perceived and actual economic conditions, recessions, inflation, deflation, exchange rates, interest rates, taxation policies, availability of credit, employment levels, and wage and salary levels. Negative general economic conditions could adversely affect our business by reducing our revenues and profitability. If we experience greater cancellations or reductions of services and failures to timely pay, and we do not acquire new clients or sell new services to our existing clients, our revenues may decline and our financial position would be adversely affected. Adverse national and global economic events, as well as any significant terrorist attack, are likely to have a dampening effect on the economy in general, which could negatively affect our financial performance and our stock price. Further actions or inactions of the U.S. or other major national governments may also impact economic conditions, which could result in financial market disruptions or an economic downtown. Market disruptions may also contribute to extreme price and volume fluctuations in the stock market that may affect our stock price for reasons unrelated to our operating performance. In addition, a significant increase in inflation could increase our expenses more rapidly than expected, the effect of which may not be offset by corresponding increases in revenue. Conversely, deflation resulting in a decline of prices could reduce our revenues. In the current economic environment, it is difficult to predict whether we will experience significant inflation or deflation in the near future. A significant increase in either could have an adverse effect on our results of operations.

If we are unable to hire qualified persons for, or retain and continue to develop, our sales force, or if our sales force is unproductive, our revenues could be adversely affected. In order to support revenues and future revenue growth, we need to continue to develop, train and retain our sales force. Our ability to build and develop a strong sales force may be affected by a number of factors, including: our ability to attract, integrate and motivate sales personnel; our ability to effectively train our sales force; the ability of our sales force to sell an increased number and different types of services; our ability to manage effectively an outbound telesales group; the length of time it takes new sales personnel to become productive; the competition we face from other companies in hiring and retaining sales personnel; our ability to effectively structure our sales force; and our ability to effectively manage a multi-location sales organization, including field sales personnel. If we are unable to hire qualified sales personnel and develop and retain the members of our sales force, including sales force management, or if our sales force is unproductive, our revenues or growth rate could decline and our expenses could increase.

We may not be able to compete successfully against existing or future competitors in attracting advertisers, which could harm our business, results of operations and financial condition. We compete to attract advertisers. ~~Large companies with~~Our competition for advertisers may have significant brand recognition ~~have large~~as well as greater numbers of direct sales personnel than we have and may generate more web traffic than we do, which may provide a competitive advantage. To compete successfully for advertisers against future and existing competitors, we must continue to invest resources in developing our advertising platform and proving the effectiveness and relevance of our advertising services. Pressure from competitors seeking to acquire a greater share of our advertisers’ overall marketing budget could adversely affect our pricing and margins, lower our revenue, and increase our research and development and marketing expenses. If we are unable to compete successfully against our existing or future competitors, our business, results of operations or financial condition could be adversely affected.

We may be unable to increase awareness of our brands, including CoStar, LoopNet, or Apartments.com, BizBuySell and LandsofAmerica, which could adversely affect our business. We rely heavily on our brands, which we believe are key assets of our ~~Company.~~company. Awareness and differentiation of our brands are important for attracting and expanding the number of users of, and subscribers to, our online marketplaces, such as LoopNet, the Apartments.com network of rental websites, CoStar Showcase, LandandFarm.com and ~~LoopNet.com. In 2015, we~~LandsofAmerica.com. We expect to ~~increase our investment~~continue to invest in sales and marketing, activities by approximately $75.0 million to increase brand awareness and grow traffic in conjunction a wide-scale marketing campaign commencing during the first quarter of 2015 and running throughout the remainder of 2015 to generate brand awareness and site traffic for the improved Apartments.com website. Further, we expect thatincluding sales and marketing ~~expenses~~ for our other brands ~~will continue to increase~~ as we seek to grow the ~~number~~numbers of subscribers orto, and advertisers toon, our marketplaces. ~~Increased~~Our methods of advertising may not be successful in increasing brand awareness or, ultimately, be cost-effective. If we are unable to maintain or enhance user and advertiser awareness of our brands, or if we are unable to recover our ~~additional~~ marketing and advertising costs through increased usage of our services and increased advertising on the Apartments.com network of rental websites, our business, results of operations and financial condition could be adversely affected.

We rely on Internet search engines to drive traffic to our websites. If search results do not feature our websites prominently, traffic to our websites would decrease and our business could be adversely affected. Google, Bing, Yahoo! and other Internet search websites drive traffic to our websites, including CoStar.com, the Apartments.com network of rental websites, LoopNet.com, BizBuySell.com and ~~LoopNet.com.~~LandsofAmerica.com. For example, when a user types an apartment building address into an Internet search engine, organic search ranking of our Apartments.com webpages will determine how prominently such webpages are displayed in the search results. However, our ability to maintain high organic search result rankings is not entirely within our control. Our competitors’ search engine optimization, or SEO, efforts may result in their websites receiving a higher search result page ranking than the rankings our websites receive, or Internet search engines could revise their methodologies in a way that would adversely affect our search result rankings, each of which could slow the growth of our user base. Further, search engine providers could align with our competitors, which could adversely affect traffic to our websites. Our websites have experienced fluctuations in search result rankings in the past, and we anticipate similar fluctuations in the future. If we experience a material reduction in the number of users directed to our websites through Internet search engines, our business, results of operations and financial condition could be adversely affected.

If we are unable to maintain or increase traffic to our marketplaces, our business and operating results could be adversely affected. Our ability to generate ~~revenue~~revenues from our marketplace businesses depends, in part, on our ability to attract users to our websites. If we fail to maintain or increase traffic to our marketplaces, our ability to acquire additional subscribers or advertisers and deliver leads to existing subscribers and advertisers could be adversely affected. ~~We expect that our~~Our marketing expenses may increase in connection with our efforts to maintain or increase traffic to our websites. Our efforts to maintain or generate additional traffic to our marketplaces may not be successful. Even if we are able to attract additional users, increases in our operating expenses could negatively impact our operating results if we are unable to generate more ~~revenue~~revenues through increased sales of subscriptions to our marketplace products. We ~~also~~ face competition to attract users to our marketplace websites. Our existing and potential competitors include companies that could devote greater technical and other resources than we have available to provide services that users might view as superior to our offerings. Any of our future or existing competitors may introduce different solutions that attract users away from our services or provide solutions similar to our own that have the advantage of better branding or marketing resources. If we are unable to increase traffic to our marketplaces, or if we are unable to generate enough additional ~~revenue~~revenues to offset increases in expenses related to increasing traffic to our marketplaces, our business and operating results could be adversely affected.

If real estate professionals or other advertisers reduce or cancel their advertising spending with us and we are unable to attract new advertisers, our operating results would be harmed. Our marketplace businesses, including LoopNet, the Apartments.com ~~Business~~network of rental websites, CoStar Showcase, LandandFarm.com and ~~LoopNet.com,~~LandsofAmerica.com, depend on advertising ~~revenue~~revenues generated primarily through sales to persons in the real estate industry, including property managers and owners, and other advertisers. Our ability to attract and retain advertisers, and ultimately to generate advertising revenue, depends on a number of factors, including:

increasing the number of unique visitors to, and users of, our websites and mobile applications;

the quantity and quality of the leads that we provide to our advertisers;

the success of any ~~increased~~ marketing and product development efforts directed at attracting additional users and advertisers to our marketplaces;

keeping pace with changes in technology and with our competitors; and

offering an attractive return on investment to our advertisers for their advertising ~~spending~~dollars spent with us.

Further, with respect to the Apartments.com ~~marketplace,~~network of rental websites, our ability to attract and retain advertisers also depends on the current apartment rental market and apartment vacancy rates. If vacancy rates are too high or too low, advertisers may not need to utilize our marketplace services.

~~We do not have long-term contracts with most~~

Many of the advertisers who advertise on our ~~marketplaces.~~marketplaces do not have long-term contracts. These advertisers could choose to modify or discontinue their relationships with us with little or no advance notice. In addition, as existing subscriptions for advertising expire, we may not be successful in renewing these subscriptions or securing new subscriptions. We may not succeed in retaining existing advertisers’ spending or capturing a greater share of such spending if we are unable to convince advertisers of the effectiveness of our services as compared to alternatives. In addition, future changes to our pricing methodology for advertising services may cause advertisers to reduce or discontinue their advertising with us. If current advertisers reduce or end their advertising spending with us and we are unable to attract new advertisers, our advertising ~~revenue~~revenues and business, results of operations and financial condition could be adversely affected.

If we do not invest in product development and provide services that are attractive to our users and to our advertisers, our business could be adversely affected. Our success depends on our continued improvements to provide services that make our marketplaces useful for users, and attractive to our advertisers. As a result, we must continually invest resources in research and development to improve the appeal and comprehensiveness of our services and effectively incorporate new technologies. If we are unable to provide services that users want to use, then users may become dissatisfied and use competitors’ websites. If we are unable to continue offering innovative services, we may be unable to attract additional users and advertisers or retain our current users and advertisers, which could harm our business, results of operations and financial condition.

If we are not able to successfully finance and/or integrate acquisitions, our business operations and financial position could be adversely affected. We have expanded our markets and services in part through acquisitions of complementary businesses, services, databases and technologies, and expect to continue to do so in the future. Our strategy to acquire complementary companies or assets depends on our ability to identify, and the availability of, suitable acquisition candidates. We may incur costs in the preliminary stages of an acquisition, but may ultimately be unable or unwilling to consummate the proposed transaction for various reasons. In addition, acquisitions involve numerous risks, including the ability to realize or capitalize on ~~synergy~~synergies created through combinations; managing the integration of personnel and ~~products;~~products or services; potential increases in operating costs; managing geographically remote operations; the diversion of management’s attention from other business concerns and potential disruptions in ongoing operations during integration; the inherent risks in entering markets and sectors in which we have either limited or no direct experience; and the potential loss of key employees, clients or vendors and other business partners of the acquired companies. We may not successfully integrate acquired businesses or assets and may not achieve anticipated benefits of an acquisition, including expected synergies. Acquisitions could result in dilutive issuances of equity securities, the incurrence of debt, one-time write-offs of goodwill and substantial amortization expenses of other intangible assets. We may be unable to obtain financing on favorable terms, or at all, if necessary to finance future acquisitions making it impossible or more costly to acquire complementary businesses. If we are able to obtain financing, the terms may be onerous and restrict our operations. Further, certain acquisitions may be subject to regulatory approval, which can be time consuming and costly to obtain, and the terms of such regulatory approvals may impose limitations on our ongoing operations or require us to divest assets or lines of business.

~~The failure to successfully integrate the Apartments.com Business and/or fully realize expected synergies from the acquisition in the expected time frame or at all~~Market volatility may ~~adversely affect our future results and our business.~~ The success of the Apartments.com acquisition will depend, in part, on our ability to successfully integrate the Apartments.com Business and realize the benefits and synergies we anticipate to result from the combination of our business and the Apartments.com Business, including anticipated growth opportunities and cost savings. We may not be able to achieve these objectives in whole or in part. Any failure to timely realize these anticipated benefits could have ~~a material~~an adverse effect on our ~~revenues, expenses~~stock price. The trading price of our common stock has fluctuated widely in the past, and we expect that it will continue to fluctuate in the future. The price could fluctuate widely based on numerous factors, including: economic factors or conditions; quarter-to-quarter variations in our operating ~~results.~~

~~The success~~results; changes in analysts’ estimates of our earnings; announcements by us or our competitors of technological innovations, new services, or other significant or strategic information; general conditions in the commercial real estate industry; general conditions of local, national or global economies; developments or disputes concerning copyrights or proprietary rights or other legal proceedings; and regulatory developments. In addition, the stock market in general, and the shares of Internet-related and other technology companies in particular, have historically experienced extreme price fluctuations. This volatility has had a substantial effect on the market prices of securities issued by many companies for reasons unrelated to the operating performance of the ~~acquisition will also depend in part~~specific companies and may have the same effect on ~~our ability to minimize or eliminate any difficulties that may occur in connection with~~ the ~~integration~~market price of our business and the Apartments.com Business. The integration process could result in the loss of key employees, loss of key clients, loss of key vendors and other business partners, increases in operating costs, increases in taxes, or the disruption of each company's ongoing businesses, any or all of which could adversely affect our ability to achieve the anticipated benefits and synergies of the acquisition. Our efforts to integrate the two businesses will divert management's attention and other resources from uses that could otherwise have been beneficial to the Company. In addition, management may decide to combine or eliminate products or services currently offered by Apartments.com, which could also result in the loss of revenues, key employees, key clients, key vendors or other business partners.

During the integration process, we will depend on CV to provide certain services to us during a transitional period, including, among others, billing and collection services. If these services are not provided to us, we may incur additional expense to replicate or procure these services from other third parties.

~~Our current or future geographic expansion plans may not result in increased revenues, which may negatively impact our business, results of operations and financial position~~. Expanding into new markets and investing resources towards increasing the depth of our coverage within existing markets imposes additional burdens on our research, systems development, sales, marketing and general managerial resources. During 2015, we plan to continue to increase the depth of our coverage in the U.S., Canada and the U.K. If we are unable to manage our expansion efforts effectively, if our expansion efforts take longer than planned or if our costs for these efforts exceed our expectations, our financial position could be adversely affected. In addition, if we incur significant costs to improve data quality within existing markets, or are not successful in marketing and selling our services in these markets or in new markets, our expansion may have a material adverse effect on our financial position by increasing our expenses without increasing our revenues, adversely affecting our profitability.common stock.

If we are not able to obtain and maintain accurate, comprehensive or reliable data, we could experience reduced demand for our information, analytics and online marketplace services. Our success depends on our clients’ confidence in the comprehensiveness, accuracy and reliability of the data and analysis we provide. The task of establishing and maintaining accurate and reliable data and analysis is challenging. If our data, including the data we obtain from third parties, or analysis is not current, accurate, comprehensive or reliable, we could experience reduced demand for our services or legal claims by our customers, which could result in lower revenues and higher expenses. Our U.S. researchers use integrated internal research processes to update our database. Any inefficiencies, errors, or technical problems with this application could reduce the quality of our data, which could result in reduced demand for our services, lower revenues and higher costs.

We may not be able to successfully introduce new or upgraded information, analytics and online marketplace services or combine or shift focus from services with less demand, which could decrease our revenues and our profitability. Our future business and financial success will depend on our ability to continue to anticipate the needs of, and to introduce new and upgraded services into the marketplace. To be successful, we must adapt to changes in the industry, as well as rapid technological changes by continually enhancing our information, analytics and online marketplace services. Developing new services and upgrades to services, as well as integrating and coordinating current services, imposes heavy burdens on our systems department, management and researchers. The processes are costly, and our efforts to develop, integrate and enhance our services may not be successful. As we continue to combine our operations with those that we have acquired, we must continue to assess the purposes for which various services may be used alone or together, and how we can best address those uses through stand-alone services or combinations or coordinating applications thereof. In addition, successfully launching and selling a new or upgraded service puts pressure on our sales and marketing resources. We recently launched the new Apartments.com website after undergoing extensive product development. We also plan to launch a wide-scale marketing campaign in an effort to increase brand awareness and site traffic. The launch of the new site and/or the new marketing campaign may not result in increased brand awareness, site traffic and/or revenues. If we are unsuccessful in obtaining greater market share, we may not be able to offset the expense associated with the new launch and marketing campaign, which could have a material adverse effect on our financial results.

If we are unable to develop new or upgraded services or decide to combine, shift focus from, or phase out a service that overlaps or is redundant with other services we offer, then our customers may choose a competitive service over ours and our revenues may decline and our profitability may be reduced. For example, we are currently assessing whether to transition the LoopNet marketplace to a pure marketing site for commercial real estate where, eventually, all listings would be paid and users could search the site for free. We would expect to see a short-term reduction in revenues and earnings if we implement this transition. Although we are assessing the best strategy to implement this shift and will seek to convert customers to higher value, more profitable annual subscription information services to increase revenues and earnings over time, we cannot predict with certainty whether we will be successful in shifting customers to higher value, more profitable subscriptions and, consequently, in offsetting any reduction in revenue and earnings; therefore, if we make this transition, our revenues and earnings may ultimately decline. In addition, if we incur significant costs in developing new or upgraded services or combining and coordinating existing services, are not successful in marketing and selling these new services or upgrades, or our customers fail to accept these new or combined and coordinating services, it could have a material adverse effect on our results of operations by decreasing our revenues and reducing our profitability.

Competition could render our services uncompetitive. The ~~market~~markets for information systems and services and for online marketplaces in general is highly competitive and rapidly changing. Competition in ~~this market~~these markets may increase further if economic conditions or other circumstances cause customer bases and customer spending to decrease and service providers to compete for fewer customer resources. Our existing competitors, or future competitors, may have greater name recognition, larger customer bases, better technology or data, lower prices, easier access to data, greater user traffic or greater financial, technical or marketing resources than we have. Our competitors may be able to undertake more effective marketing campaigns, obtain more data, adopt more aggressive pricing policies, make more attractive offers to potential employees, subscribers, advertisers, distribution partners and content providers or may be able to respond more quickly to new or emerging technologies or changes in user requirements. If we are unable to retain customers or obtain new customers, our revenues could decline. Increased competition could result in lower revenues and higher expenses, which would reduce our profitability.

Our focus on internal and external investments may place downward pressure on our operating margins. Over the past few years, we have increased the rate of investments in our business, including internal investments in product development ~~and sales and marketing,~~ to expand the breadth and depth of services we provide to our ~~customers.~~customers and investments in sales and marketing to generate brand awareness. Our investment strategy is intended to increase our revenue growth in the future. Our operating margins may experience downward pressure in the short term as a result of investments. Furthermore, our investments may not have their intended effect. ~~For instance,~~In addition, our external investments may lose value and we may incur impairment charges with respect to such investments. Such impairment charges may negatively impact our profitability. If we are unable to successfully execute our investment strategy or if we fail to adequately anticipate and address potential problems, we may experience decreases in our revenues and operating margins.

If we are unable to enforce or defend our ownership and use of intellectual property, our business, brands, competitive position and operating results could be harmed. The success of our business depends in large part on our intellectual property, including intellectual property involved in our methodologies, database, services and software. We rely on a combination of trademark, trade secret, patent, copyright and other laws, nondisclosure and noncompetition provisions, license agreements and other contractual provisions and technical measures to protect our intellectual property rights. However, current law may not provide for adequate protection of our databases and the actual data. In addition, legal standards relating to the validity, enforceability and scope of protection of proprietary rights in ~~internet related~~Internet-related businesses are uncertain and evolving, and changes in these standards may adversely impact the viability or value of our proprietary rights. If we are not successful in protecting our intellectual property, including our content, our brands and our business, results of operations and financial condition could be harmed. The same would be true if a court found that our services infringe other persons’ intellectual property rights. Any intellectual property lawsuits or threatened lawsuits in which we are involved, either as a plaintiff or as a defendant, could cost us a significant amount of time and money and distract management’s attention from operating our business. In addition, if we do not prevail on ~~any~~an intellectual property ~~claims,~~claim, this could result in a change to our methodology or information, analytics and online marketplace services and could reduce our profitability.

Effective trademark, trade secret, patent, and copyright protection may not be available in every country in which our services may be provided. The laws of certain countries do not protect proprietary rights to the same extent as the laws of the United States and, therefore, in certain jurisdictions, we may be unable to protect our intellectual property and our proprietary technology adequately against unauthorized third-party copying or use, which could harm our competitive position.

~~In addition, we~~We seek to enforce our rights against people and entities that infringe our intellectual property, including through legal action. Taking such action may be costly, and we cannot ensure that such actions will be successful. Any increase in the unauthorized use of our intellectual property could make it more expensive for us to do business and harm our results of operations or financial condition.

We may not be able to successfully halt the operation of websites that aggregate our data, as well as data from other companies, such as copycat websites that may misappropriate our data. Third parties may misappropriate our data through website scraping, robots or other means and aggregate this data on their websites with data from other companies. In addition, “copycat” websites may misappropriate data on our website and attempt to imitate our brands or the functionality of our website. We may not be able to detect all such websites in a timely manner and, even if we could, technological and legal measures may be insufficient to stop their operations. In some cases, particularly in the case of websites operating outside of the U.S., our available remedies may not be adequate to protect us against the misappropriation of our data. Regardless of whether we can successfully enforce our rights against the operators of these websites, any measures that we may take could require us to expend significant financial or other resources.

Litigation or government investigations in which we become involved may significantly increase our expenses and adversely affect our stock price. Currently and from time to time, we are a party to various lawsuits. Any lawsuits, threatened lawsuits or government investigations in which we are involved, whether as plaintiff or defendant, could cost us a significant amount of time and money, could distract management’s attention away from operating our business, could result in negative publicity and could adversely affect our stock price. In addition, if any claims are determined against us or if a settlement requires us to pay a large monetary amount or take other action that materially restricts or impedes our operations, our profitability could be significantly reduced and our financial position could be adversely affected. Our insurance may not be sufficient to cover any losses we incur in connection with litigation claims.

We may be subject to legal liability for collecting, displaying or distributing information. Because the content in our database is collected from various sources and distributed to others, we may be subject to claims for breach of contract, defamation, negligence, unfair competition or copyright or trademark infringement or claims based on other theories. We could also be subject to claims based upon the content that is accessible from our website through links to other websites or information on our website supplied by third parties. We could also be subject to claims that the collection or provision of certain information breached laws and regulations relating to privacy and data protection. Even if these claims do not result in liability to us, we could incur significant costs in investigating and defending against any claims and we could be subject to public notice requirements that may affect our reputation in the marketplace. Our potential liability for information distributed by us to others could require us to implement measures to reduce our exposure to such liability, which may require us to expend substantial resources and limit the attractiveness of our information, analytics and online marketplaces to users.

Our actual or perceived failure to comply with privacy laws and standards could adversely affect our business, financial condition and results of operations. We are dependent on information technology networks and systems to process, transmit and store electronic information and to communicate between our locations around the world and with our clients. We collect, use and disclose personally identifiable information, including among other things names, addresses, phone numbers and email addresses. We collect, store and use sensitive or confidential transaction information and, in certain circumstances, credit card information. In addition, we collect personal information from tenants and landlords, including social security numbers, dates of birth, financial information, tax returns, employment information, background checks and credit scores, which is used in the apartment rental application process and for verification of landlords. As a result, we are subject to a variety of state, national, and international laws and regulations that apply to the collection, use, retention, protection, disclosure, transfer and other processing of personal data, including the Fair Credit Reporting Act. These privacy- and data protection-related laws and regulations are evolving, with new or modified laws and regulations proposed and implemented frequently and existing laws and regulations subject to new or different interpretations. Compliance with these laws and regulations can be costly and can delay or impede the development of new products. A violation of any laws or regulations relating to the collection or use of personal information could result in the imposition of fines against us.

The U.S.-EU Safe Harbor Framework, which established means for legitimizing the transfer of personal data by U.S. companies from the European Economic Area, or EEA, to the U.S., recently was invalidated by a decision of the European Court of Justice, or the ECJ. In light of the ECJ’s decision, we have undertaken efforts to conform transfers of personal data from the EEA based on current regulatory obligations, the guidance of data protection authorities and evolving best practices. We continue to review our business practices and the evolving regulations and may find it necessary or desirable to make further changes to our personal data handling or engage in additional efforts to cause our transfer and receipt of EEA residents’ personal data to be legitimized under applicable European law. We may find it necessary to establish systems to maintain EU-origin data in the European Economic Area, which may involve substantial expense and distraction from other aspects of our business. Despite our efforts, we may be unsuccessful in establishing legitimate means of transferring certain data from the EEA, including due to ongoing legislative activity, which may vary the current data protection landscape.

Our actual or alleged failure to comply with applicable privacy or data security laws, regulations and policies, or to protect personal data, could result in enforcement actions and significant penalties against us, which could result in negative publicity, increase our operating costs, subject us to claims or other remedies and have a material adverse effect on our business, financial condition and results of operations.

Because the interpretation and application of many privacy and data protection laws are uncertain, it is possible that these laws may be interpreted and applied in a manner that is inconsistent with our existing data management practices or the features of our products. If so, in addition to the possibility of fines, lawsuits and other claims and penalties, we could be required to fundamentally change our business activities and practices or modify our products, which could harm our business.

We expect that there will continue to be new proposed laws, regulations and industry standards concerning privacy, data protection and information security in the United States and other jurisdictions, and we cannot yet determine the impact such future laws, regulations and standards may have on our business. Our policies concerning the collection, use and disclosure of personally identifiable of information are described on our websites. While we believe that our policies are appropriate and that we are in compliance with our policies, we could be subject to legal claims, government action, harm to our reputation or experience significant remediation costs if we experience a security breach or our practices fail, or are seen as failing, to comply with our policies or with applicable laws concerning personally identifiable information.

We are subject to a number of risks related to acceptance of credit cards and debit cards for customer payments. We accept payments for our services through credit and debit card transactions. For credit and debit card payments, we pay interchange and other fees, which may increase over time. An increase in those fees may require us to increase the prices we charge and would increase our cost of revenues, either of which could harm our business, financial condition or results of operations.

We depend on processing vendors to complete credit and debit card transactions. If we or our processing vendors fail to maintain adequate systems for the authorization and processing of credit card transactions, it could cause one or more of the major credit card companies to disallow our continued use of their payment products. We could lose customers if we are not able to continue to use payment products of the major credit card companies. In addition, if the systems for the authorization and processing of credit card transactions fail to work properly and, as a result, we do not charge our customers’ credit cards on a timely basis or at all, our business, revenue, results of operations and financial condition could be harmed.

We are also subject to payment card association operating rules, certification requirements and rules governing electronic funds transfers, which could change or be reinterpreted in ways that make it more difficult for us to comply. We are required to comply with payment card industry security standards. Failing to comply with those standards may violate payment card association operating rules, federal and state laws and regulations, and the terms of our contracts with payment processors. Any failure to comply also may subject us to fines, penalties, damages and civil liability, and may result in the loss of our ability to accept credit and debit card payments. Further, there is no guarantee that such compliance will prevent illegal or improper use of our payment systems or the theft, loss, or misuse of data pertaining to credit and debit cards, ~~card holders~~cardholders and transactions. If we fail to adequately control fraudulent credit card transactions, we may face civil liability, diminished public perception of our security measures and significantly higher credit card-related costs, each of which could harm our business, results of operations and financial condition.

If we are unable to maintain our chargeback rate or refund rates at acceptable levels, our processing vendors may increase our transaction fees or terminate their relationships with us. Any increases in our credit and debit card fees could harm our results of operations, particularly if we elect not to raise our rates for our services to offset the increase. The termination of our ability to process payments on any major credit or debit card would significantly impair our ability to operate our business.

~~We may not be able to successfully halt the operation of websites that aggregate our data, as well as data from other companies, such as copycat websites that may misappropriate our data.~~ Third parties may misappropriate our data through website scraping, robots or other means and aggregate this data on their websites with data from other companies. In addition, “copycat” websites may misappropriate data on our website and attempt to imitate our brands or the functionality of our website. We may not be able to detect all such websites in a timely manner and, even if we could, technological and legal measures may be insufficient to stop their operations. In some cases, particularly in the case of websites operating outside of the U.S., our available remedies may not be adequate to protect us against the misappropriation of our data. Regardless of whether we can successfully enforce our rights against the operators of these websites, any measures that we may take could require us to expend significant financial or other resources.

~~Litigation or government investigations in which we become involved may significantly increase our expenses and adversely affect our stock price~~. Currently and from time to time, we are a party to various lawsuits. Any lawsuits, threatened lawsuits or government investigations in which we are involved could cost us a significant amount of time and money to defend, could distract management’s attention away from operating our business, could result in negative publicity and could adversely affect our stock price. In addition, if any claims are determined against us or if a settlement requires us to pay a large monetary amount or take other action that materially restricts or impedes our operations, our profitability could be significantly reduced and our financial position could be adversely affected. Our insurance may not be sufficient to cover any losses we incur in connection with litigation claims.

If we fail to protect confidential information against security breaches, or if customers or potential customers are reluctant to use our services because of privacy concerns, we might face additional costs and could lose customers or potential customers. We collect, use and disclose personally identifiable information, including among other things names, addresses, phone numbers, and email addresses. We also collect, store and use sensitive or confidential transaction information and, in certain circumstances, credit card information. Our policies concerning the collection, use and disclosure of these types of information are described on our websites. While we believe that our policies are appropriate and that we are in compliance with our policies, we could be subject to legal claims, government action, harm to our reputation or experience significant remediation costs if we experience a security breach or our practices fail, or are seen as failing, to comply with our policies or with applicable laws concerning personally identifiable information.

~~We may be subject to legal liability for collecting, displaying or distributing information~~. Because the content in our database is collected from various sources and distributed to others, we may be subject to claims for breach of contract, defamation, negligence, unfair competition or copyright or trademark infringement or claims based on other theories. We could also be subject to claims based upon the content that is accessible from our website through links to other websites or information on our website supplied by third parties. We could also be subject to claims that the collection or provision of certain information breached laws and regulations relating to privacy and data protection. Even if these claims do not result in liability to us, we could incur significant costs in investigating and defending against any claims. Our potential liability for information distributed by us to others could require us to implement measures to reduce our exposure to such liability, which may require us to expend substantial resources and limit the attractiveness of our information, analytics and online marketplaces to users.

Concern of prospective customers regarding our use of the personal information collected on our websites could keep prospective customers from subscribing to our services. Industry-wide incidents or incidents with respect to our websites, including misappropriation of third-party information, security breaches, or changes in industry standards, regulations or laws, could deter people from using the Internet or our websites to conduct transactions that involve the transmission of confidential information, which could harm our business. Under various state laws, if there is a breach of our computer systems and we know or suspect that unencrypted personal customer data has been stolen, we are required to inform any customers whose data was stolen, which could result in significant costs and harm our reputation and business.

In addition, certain state laws require businesses that maintain personal information in electronic databases to implement reasonable measures to keep that information secure. Various states have enacted different and sometimes contradictory requirements for protecting personal information collected and maintained electronically. Compliance with numerous and contradictory requirements of the different states is particularly difficult for an online business such as ours which collects personal information from customers in multiple jurisdictions.

We may face adverse publicity and loss of consumer confidence if we are not able to comply with laws requiring us to take adequate measures to assure the confidentiality of the personally identifiable information that our customers have given to us. This could result in a loss of customers and revenue that could jeopardize our success. Even if we are in full compliance with all relevant laws and regulations, we may face liability or disruption of business if we do not comply in every instance or if the security of the customer data that we collect is compromised, regardless of whether our practices comply or not. If we were required to pay any significant amount of money in satisfaction of claims under these laws, or if we were forced to suspend operations for any length of time due to our inability to comply fully with any such laws, our business, operating results and financial condition could be adversely affected.

Our business depends on retaining and attracting highly capable management and operating personnel. Our success depends in large part on our ability to retain and attract management and operating personnel, including our President and Chief Executive Officer, Andrew Florance, and our other officers and key employees. Our business requires highly skilled technical, sales, management, web product and development, marketing and research personnel, who are in high demand and are often subject to competing offers. To retain and attract key personnel, we use various measures, including employment agreements, awards under a stock incentive plan and incentive bonuses for key employees. These measures may not be enough to retain and attract the personnel we need or to offset the impact on our business of the loss of the services of Mr. Florance or other key officers or employees.

~~We may have difficulty attracting, motivating and retaining executives and other key employees in light of the acquisition of the Apartments.com Business.~~ Uncertainty about the effect of the acquisition on our employees, including employees who joined the Company as a result of the acquisition of the Apartments.com Business, may have an adverse effect on the combined business. This uncertainty may impair our ability to attract, retain and motivate key personnel. If our key employees or Apartments.com key employees depart, we may incur costs in identifying, hiring, training and retaining replacements for departing employees, which could reduce our ability to realize the anticipated benefits of the acquisition of the Apartments.com Business.

An impairment in the carrying value of goodwill could negatively impact our consolidated results of operations and net worth. Goodwill and identifiable intangible assets not subject to amortization are tested annually by each reporting unit on October 1 of each year for impairment and are tested for impairment more frequently based upon the existence of one or more indicators. We consider our operating segments, North America and International, as our reporting units under Financial Accounting Standards Board (“FASB”) authoritative guidance for consideration of potential impairment of goodwill. We assess the impairment of long-lived assets, identifiable intangibles and goodwill whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Judgments made by management relate to the expected useful lives of long-lived assets and our ability to realize undiscounted cash flows of the carrying amounts of such assets. The accuracy of these judgments may be adversely affected by several factors, including the factors listed below:

Significant underperformance relative to historical or projected future operating results;

Significant changes in the manner of our use of acquired assets or the strategy for our overall business;

Significant negative industry or economic trends; or

Significant decline in our market capitalization relative to net book value for a sustained period.

These types of events or indicators and the resulting impairment analysis could result in goodwill impairment charges in the future, which would reduce our profitability. Impairment charges could negatively affect our financial results in the periods of such charges, which may reduce our profitability. As of December 31, ~~2014,~~2016, we had approximately ~~$1.1~~$1 billion of goodwill, including ~~$1.1~~$1 billion in our North America operating segment and ~~$24.4~~$27 million in our International operating segment.

~~As a result of the consolidation of certain of our facilities, we may incur additional costs~~. We have taken, and may continue to take, actions that may increase our cost structure in the short-term but are intended to reduce certain portions of our long-term cost structure, such as consolidation of office space. As a result of consolidation of office space, we may reduce our long-term occupancy costs, but incur restructuring charges. If our long-term cost reduction efforts are ineffective or our estimates of cost savings are inaccurate, our profitability could be negatively impacted. Expected savings from relocating facilities can be highly variable and uncertain. Further, we may not be successful in achieving the operating efficiencies or operating cost reductions expected from these efforts in the amounts or at the times we anticipate.

If we are unable to obtain or retain listings from commercial real estate brokers, agents, property owners and apartment property managers, our commercial real estate ("CRE") marketplace services, including but not limited to LoopNet, the Apartments.com network of rental websites, CoStar Showcase, LandandFarm.com and ~~Lands of America,~~LandsofAmerica.com, could be less attractive to current or potential customers, which could reduce our revenues. The value of our CRE marketplace services to our customers depends on our ability to increase the number of property listings provided and searches conducted. The success of our CRE marketplace services depends substantially on the number of property listings submitted by brokers, agents, property owners and, in the case of apartment rentals, property managers. This is because an increase in the number of listings increases the utility of the online service and of its associated search, listing and marketing services. If agents marketing large numbers of property listings, such as large brokers in key real estate markets, choose not to continue their listings with us, or choose to list them with a competitor, our CRE marketplace services could be less attractive to other real estate industry transaction participants, resulting in reduced revenue. Similarly, the value and utility of our other marketplaces, including BizBuySell and BizQuest, are also dependent on attracting and retaining listings.

If we are unable to convince commercial real estate professionals that our CRE marketplace services are superior to traditional methods of listing, searching and marketing commercial real estate, they could choose not to use those services, which could reduce our revenues or increase our expenses. The primary source of new customers for our CRE marketplace services is participants in the commercial real estate community. Many commercial real estate professionals are used to listing, searching and marketing real estate in traditional and off-line ways, such as by distributing print brochures, sharing written lists, placing signs on properties, word-of-mouth and newspaper advertisements. Commercial real estate and investment professionals may prefer to continue to use traditional methods or may be slow to adopt and accept our online products and services. If we are not able to persuade commercial real estate participants of the efficacy of our online products and services, they may choose not to use our CRE marketplace services, which could negatively impact our business. Similarly, if we are unable to convince the business and investment community to utilize our online business for sale marketplaces rather than traditional methods of listing and marketing businesses for sale, our revenues could be negatively affected.

The number of LoopNet's registered members is higher than the number of actual members. The number of registered members in LoopNet's network is higher than the number of actual members because some members have multiple registrations or others may have registered under fictitious names. Given the challenges inherent in identifying these accounts, we do not have a reliable system to accurately identify the number of actual members, and thus we rely on the number of registered members as a measure of the size of the LoopNet marketplace. If the number of LoopNet's actual members does not continue to grow and those members do not convert to premium members, then the LoopNet marketplace business may not grow as fast as we expect, which could harm our operating and financial results.

If we are unable to increase our revenues or our operating costs are higher than expected, our profitability may decline and our operating results may fluctuate significantly. We may not be able to accurately forecast our revenues or future revenue growth rate. Many of our expenses, particularly personnel costs and occupancy costs, are relatively fixed. As a result, we may not be able to adjust spending quickly enough to offset any unexpected increase in expenses or revenue shortfall. We may experience higher than expected operating costs, including increased personnel costs, occupancy costs, selling and marketing costs, investments in geographic expansion, acquisition costs, communications costs, travel costs, software development costs, professional fees and other costs. If operating costs exceed our expectations and cannot be adjusted accordingly, our profitability may be reduced and our results of operations and financial position will be adversely affected. Additionally, we may not be able to sustain our ~~historic~~ revenue growth rates, and our percentage revenue growth rates may decline. Our ability to increase our revenues and operating profit will depend on increased demand for our services. Our sales are affected by, among other things, general economic and commercial real estate conditions. Reduced demand, whether due to changes in customer preference, a weakening of the U.S. or global economy, competition or other reasons, may result in decreased ~~revenue~~revenues and growth, adversely affecting our operating results.

Our current or future geographic expansion plans may not result in increased revenues, which may negatively impact our business, results of operations and financial position. Expanding into new markets and investing resources towards increasing the depth of our coverage within existing markets imposes additional burdens on our research, systems development, sales, marketing and general managerial resources. If we are unable to manage our expansion efforts effectively, if our expansion efforts take longer than planned or if our costs for these efforts exceed our expectations, our financial position could be adversely affected. In addition, if we incur significant costs to improve data quality within existing markets, or are not successful in marketing and selling our services in these markets or in new markets, our expansion may have a material adverse effect on our financial position by increasing our expenses without increasing our revenues, adversely affecting our profitability.

International operations expose us to additional business risks, which may reduce our profitability. Our international operations and expansion subject us to additional business risks, including: currency exchange rate fluctuations; adapting to the differing business practices and laws in foreign countries; difficulties in managing foreign operations; limited protection for intellectual property rights in some countries; difficulty in collecting accounts receivable and longer collection periods; costs of enforcing contractual obligations; impact of recessions in economies outside the U.S.; and potentially adverse tax consequences. In addition, international expansion imposes additional burdens on our executive and administrative personnel, systems development, research and sales departments, and general managerial resources. If we are not able to manage our international operations successfully, we may incur higher expenses and our profitability may be reduced. Finally, the investment required for additional international expansion could exceed the profit generated from such expansion, which would reduce our profitability and adversely affect our financial position.

Fluctuating foreign currencies may negatively impact our business, results of operations and financial position. Due to our acquisitions of CoStar U.K. Limited (formerly FOCUS Information Limited), ~~Grecam S.A.S., and~~ Property and Portfolio Research Ltd., Grecam S.A.S., the assets of Belbex Corporate, S.L., Thomas Daily, as well as our expansion into Canada, a portion of our business is denominated in the British Pound, Euro and Canadian dollar. As a result, fluctuations in foreign currencies may have an impact on our business, results of operations and financial position. Foreign currency exchange rates have fluctuated and may continue to fluctuate. Significant foreign currency exchange rate fluctuations may negatively impact our international revenue, which in turn affects our consolidated revenue. Currencies may be affected by internal factors, general economic conditions and external developments in other countries, all of which can have an adverse impact on a country’s currency. Currently, we are not party to any hedging transactions intended to reduce our exposure to exchange rate fluctuations. We may seek to enter into hedging transactions in the future, but we may be unable to enter into these transactions successfully, on acceptable terms or at all. We cannot predict whether we will incur foreign exchange losses in the future. Further, significant foreign exchange fluctuations resulting in a decline in the respective, local currency may decrease the value of our foreign assets, as well as decrease our revenues and earnings from our foreign subsidiaries, which would reduce our profitability and adversely affect our financial position.

The economic effects of “Brexit” may affect relationships with existing and future customers and could have an adverse impact on our business and operating results. On June 23, 2016, the U.K held a referendum in which British citizens approved an exit from the European Union (“E.U.”), commonly referred to as “Brexit.” The referendum is non-binding; however, if passed into law, negotiations would commence to determine the future terms of the U.K.’s relationship with the E.U. The impact to us from Brexit will depend, in part, on the outcome of tariff, trade, regulatory and other negotiations. This impact may affect not only our U.K. operations but operations in other parts of the E.U. Any transitional or permanent agreements resulting from such negotiations could potentially disrupt the markets we serve and the tax jurisdictions in which we operate.

As a result of the referendum, the global markets and currencies have been adversely impacted, including a sharp decline in the value of the British Pound as compared to the U.S. dollar. A potential devaluation of the local currencies of our international customers relative to the U.S. dollar may impair the purchasing power of our international customers and could cause international customers to decrease or cancel orders, or terminate or fail to renew subscriptions for our services.

Volatility in exchange rates resulting from Brexit is expected to continue in the short term as the U.K negotiates its exit from the E.U. We translate sales and other results denominated in foreign currency into U.S. dollars for our financial statements. During periods of a strengthening dollar, our reported international sales and earnings could be reduced because foreign currencies may translate into fewer U.S. dollars.

The announcement of Brexit and the withdrawal of the U.K. from the E.U. may create global economic uncertainty, which may cause our customers to closely monitor their costs and reduce their spending budgets on our products and services. In addition, Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the U.K determines which E.U. laws to replace or replicate, and those laws and regulations may be cumbersome, difficult or costly in terms of compliance. Further, Brexit may lead other E.U. member countries to consider referendums regarding their E.U. membership. Any of these effects of Brexit, among others, could adversely affect our business, financial condition, operating results and cash flows.

Changes in laws, regulations or fiscal and tax policies or the manner of their interpretation or enforcement could adversely impact our financial performance. New laws or regulations, or changes in existing laws or regulations, or the manner of their interpretation or enforcement, could increase our cost of doing business. In particular, there may be significant changes in U.S. laws and regulations by the new U.S. presidential administration that could affect a wide variety of industries and businesses, including our business. The new U.S. presidential administration has called for substantial change to fiscal and tax policies, which may include comprehensive tax reform. We cannot predict the impact, if any of these changes to our business. If the new U.S. presidential administration materially modifies U.S. laws and regulations or fiscal and tax policies, our business, financial condition, and results of operations could be adversely affected.

Our indebtedness could adversely affect us, including by decreasing our business flexibility and increasing our costs. On April 1, 2014, ~~(the “Closing Date”),~~ we entered into the 2014 Credit Agreement by and among CoStar, as borrower, CoStar Realty Information, Inc., as co-borrower, the lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent. The 2014 Credit Agreement provides for a ~~$400.0~~$400 million term loan facility and a ~~$225.0~~$225 million revolving credit facility, each with a term of five years. ~~The~~We used the proceeds of the term loan facility and $150 million of the initial borrowing under the revolving credit facility ~~on the Closing Date in an amount of $150.0 million were used~~ to refinance the term loan facility and revolving credit facility established under a credit agreement dated February 16, 2012 (the “2012 Credit Agreement”), including related fees and expenses, and pay a portion of the consideration and transaction costs related to the Apartments.com acquisition. The 2014 Credit Agreement contains customary restrictive covenants imposing operating and financial restrictions on us, including restrictions that may limit our ability to engage in acts that we believe may be in our long-term best interests. These covenants restrict our ability and the ability of our subsidiaries to (i) incur additional indebtedness, (ii) create, incur, assume or permit to exist any liens, (iii) enter into mergers, consolidations or similar transactions, (iv) make investments and acquisitions, (v) make certain dispositions of assets, (vi) make dividends, distributions and prepayments of certain indebtedness, and (vii) enter into certain transactions with affiliates.

The operating restrictions and financial covenants in the 2014 Credit Agreement and any future financing agreements may limit our ability to finance future operations or capital needs, to engage in other business activities or to respond to changes in market conditions. Our ability to comply with any financial covenants could be affected materially by events beyond our control, and we may be unable to satisfy any such requirements. If we fail to comply with these covenants, we may need to seek waivers or amendments of such covenants, seek alternative or additional sources of financing or reduce our expenditures. We may be unable to obtain such waivers, amendments or alternative or additional financing on a timely basis or at all, or on favorable terms.

We are required to make periodic principal and interest payments pursuant to the terms of the 2014 Credit Agreement. If an event of default occurs, the interest rate on overdue amounts will increase and the lenders under the 2014 Credit Agreement may declare all outstanding borrowings, together with accrued interest and other fees, to be immediately due and payable and may exercise remedies in respect of the collateral. We may not be able to repay all amounts due under the 2014 Credit Agreement in the event these amounts are declared due upon an event of default.

Negative conditions in the global credit markets may affect the liquidity of a portion of our long-term investments. Currently, our long-term investments include mostly AAA-rated auction rate securities (“ARS”), which are primarily student loan securities supported by guarantees from the Federal Family Education Loan Program (“FFELP”) of the U.S. Department of Education. Continuing negative conditions in the global credit markets have prevented some investors from liquidating their holdings of auction rate securities because the amount of securities submitted for sale has exceeded the amount of purchase orders for such securities. As of December 31, ~~2014,~~2016, we held ~~$18.7~~$11 million par value of ARS, all of which failed to settle at auctions. When an auction fails for ARS in which we have invested, we may be unable to liquidate some or all of these securities at par. In the event we need or desire to immediately access these funds, we will not be able to do so until a future auction on these investments is successful, a buyer is found outside the auction process or an alternative action is determined. If a buyer is found but is unwilling to purchase the investments at par, we may incur a loss, which would reduce our profitability and adversely affect our financial position.

Our ARS investments are not currently actively trading and therefore do not currently have a readily determinable market value. The estimated fair value of the ARS no longer approximates par value. We have used a discounted cash flow model to determine the estimated fair value of our investment in ARS as of December 31, ~~2014.~~2016. The assumptions used in preparing the discounted cash flow model include estimates for interest rates, credit spreads, timing and amount of cash flows, liquidity risk premiums, expected holding periods and default risk of the ARS. We update the discounted cash flow model on a quarterly basis to reflect any changes in the assumptions used in the model and settlements of ARS investments that occurred during the period. Based on this assessment of fair value, as of December 31, ~~2014,~~2016, we determined there was a decline in the fair value of our ARS investments of approximately ~~$691,000.~~$848,000. The decline was deemed to be a temporary impairment and was recorded as an unrealized loss in accumulated other comprehensive loss in stockholders’ equity. If the issuers of these ARS are unable to successfully close future auctions and/or their credit ratings deteriorate, we may be required to record additional unrealized losses in accumulated other comprehensive loss or an other-than-temporary impairment charge to earnings on these investments, which would reduce our profitability and adversely affect our financial position.

We have not made any material changes in the accounting methodology used to determine the fair value of the ARS. We do not expect any material changes in the near term to the underlying assumptions used to determine the unobservable inputs used to calculate the fair value of the ARS as of December 31, ~~2014~~2016. However, if changes in these assumptions occur, and, should those changes be significant, we may be required to record additional unrealized losses in accumulated other comprehensive loss or an other-than-temporary impairment charge to earnings on these investments.

U.S. political, credit and financial market conditions may negatively impact or impair the value of our current portfolio of cash, cash equivalents and investments, including U.S. Treasury securities and U.S.-backed investments, as well as our access to credit.Our cash, cash equivalents and investments are held in a variety of common financial instruments, including U.S. treasury securities. Deterioration in the U.S. credit and financial markets may result in losses or deterioration in the fair value of our cash, cash equivalents, or investments. On August 5, 2011, Standard & Poor’s lowered its long term sovereign credit rating on the U.S. from AAA to AA+. This downgrade, and any future downgrades of the U.S. credit rating, could impact the stability of future U.S. treasury auctions, affect the trading market for U.S. government securities, result in increased interest rates and impair access to credit. These factors could negatively impact the liquidity or valuation of our current portfolio of cash, cash equivalents, and investments, which may affect our ability to fund future obligations. Further, these factors may result in an increase in interest rates and borrowing costs and make it more difficult to obtain credit on acceptable terms, which may affect our ability to fund future obligations and increase the costs of obtaining financing for future obligations.

Technical problems or disruptions that affect either our customers’ ability to access our services, or the software, internal applications, database and network systems underlying our services, could damage our reputation and brands and lead to reduced demand for our information, analytics and online marketplace services, lower revenues and increased costs. Our business, brands and reputation depend upon the satisfactory performance, reliability and availability of our websites, the Internet and our service providers. Interruptions in these systems, whether due to system failures, computer viruses, software errors, physical or electronic break-ins, or malicious hacks or attacks on our systems (such as denial of service attacks), could affect the security and availability of our services on our mobile applications and our websites and prevent or inhibit the ability of users to access our services. Our operations also depend on our ability to protect our databases, computers and software, telecommunications equipment and facilities against damage from potential dangers such as fire, flood, power loss, security breaches, computer viruses, telecommunications failures, terrorist attacks, acts of war, electronic and physical break-ins, computer viruses, earthquakes and similar events. Our users rely on our services when conducting their own businesses. Disruptions in, or reductions in ability to access, our services for whatever reason could damage our users’ businesses, harm our reputation, result in additional costs or result in reduced demand for our information, analytics and online marketplace services, any of which could harm our business, results of operations and financial condition.

In addition, the software, internal applications and systems underlying our services are complex and may not be error-free. Our careful development and testing may not be sufficient to ensure that we will not encounter technical problems when we attempt to enhance our software, internal applications and systems. Any inefficiencies, errors or technical problems with our software, internal applications and systems could reduce the quality of our services or interfere with our customers’ access to our information, analytics and online marketplaces, which could reduce the demand for our services, lower our revenues and increase our costs.

The majority of the communications, network and computer hardware used to operate our mobile applications and websites are located at facilities in Virginia and California. We do not own or control the operation of certain of these facilities. Our systems and operations are vulnerable to damage or interruption from fire, flood, power loss, security breaches, computer viruses, telecommunications failure, terrorist attacks, acts of war, electronic and physical break-ins, earthquakes and similar events. These risks may be increased with respect to operations housed at facilities we do not own or control. The occurrence of any of the foregoing events could result in damage to our systems and hardware or could cause them to fail completely, and our insurance may not cover such events or may be insufficient to compensate us for losses that may occur.

A failure of our systems at any site could result in reduced functionality for our users, and a total failure of our systems could cause our mobile applications or websites to be inaccessible. Problems faced or ~~cause~~caused by our information technology service providers, including content distribution service providers, private network providers, ~~internet~~Internet providers and third-party web-hosting providers, or with the systems by which they allocate capacity among their customers (as applicable), could adversely affect the experience of our users. Any financial difficulties, such as bankruptcy reorganization, faced by these third-party service providers or any of the service providers with whom they contract may have negative effects on our business, the nature and extent of which are difficult to predict. If our third-party service providers are unable to keep up with our growing needs for capacity, our business could be harmed. In addition, if distribution channels for our mobile applications experience disruptions, such disruptions could adversely affect the ability of users and potential users to access or update our mobile applications, which could harm our business.

Our business interruption insurance may not cover certain events or may be insufficient to compensate us for the potentially significant losses, including the potential harm to the future growth of our business, which may result from interruptions in our service as a result of system failures or malicious attacks. Any errors, defects, disruptions or other performance problems with our services could harm our reputation, business, results of operations and financial condition.

Our operating results and revenues are subject to fluctuations and our quarterly financial results may be subject to seasonality and market cyclicality, each of which could cause our stock price to be negatively affected. The commercial real estate market may be influenced by general economic conditions, economic cycles, annual seasonality factors and many other factors, which in turn may impact our financial results. The market is large and fragmented. The different sectors of the industry, such as office, industrial, retail, multifamily, and others, are influenced differently by different factors, and have historically moved through economic cycles with different timing. As such, it is difficult to estimate the potential impact of economic cycles and conditions or seasonality from year-to-year on our overall operating results. In addition, our results may be impacted by seasonality. The timing of widely observed holidays and vacation periods, particularly ~~slow downs~~slowdowns during the end-of-year holiday period, and availability of real estate agents and related service providers during these periods, could significantly affect our quarterly operating results during that period. If we are unable to adequately respond to economic, seasonal or cyclical conditions, our revenues, expenses and operating results may fluctuate from quarter to quarter. Our operating results, revenues and expenses may fluctuate for many reasons, including those described below and elsewhere in this Annual Report on Form 10-K:

Rates of subscriber adoption and retention;

Timing of our sales conference or significant marketing events;

A slow-down during the end-of-year holiday period;

Changes in our pricing strategy and timing of changes;

The timing and success of new service introductions and enhancements;

The shift of focus from, or phase out of services that overlap or are redundant with other services we offer;

The amount and timing of our operating expenses and capital expenditures;

Our ability to control expenses;

The amount and timing of non-cash stock-based charges;

Costs related to acquisitions of businesses or technologies or impairment charges associated with such investments and acquisitions;

Competition;

Changes or consolidation in the real estate industry;

Our investments in geographic expansion and to increase coverage in existing markets;

Interest rate fluctuations;

Successful execution of our expansion and integration plans;

The development of our sales force;

Foreign currency and exchange rate fluctuations;

Inflation; and

Changes in client budgets.

These fluctuations or seasonality effects could negatively affect our results of operations during the period in question and/or future periods or cause our stock price to decline. In addition, changes in accounting policies or practices may affect our level of net income. Fluctuations in our financial results, revenues and expenses may cause the market price of our common stock to decline.

The consent order approved by the Federal Trade Commission in connection with the LoopNet merger imposes conditions that could have an adverse effect on us and our business, and failure to comply with the terms of the consent order may result in adverse consequences for the combined company. On April 26, 2012, the FTC accepted the consent order in connection with the LoopNet merger that was previously agreed to among the FTC staff, CoStar, and LoopNet on April 17, 2012. The consent order was subject to a 30-day public comment period, and on August 29, 2012, the FTC issued its final acceptance of the consent order.

The consent order, which is publicly available on the FTC's website at http://www.ftc.gov/, requires CoStar to maintain certain business practices that the FTC believes are pro-competitive. For example, the consent order requires CoStar to maintain its customary practice of selling its products separately and on a market-by-market basis. It also requires CoStar to license its products to customers who have bought its competitors' products on a non-discriminatory basis. In addition, CoStar is required to maintain its customary licensing practices with respect to the length of its contracts, to allow customers with multi-year contracts to cancel with one year's advance notice, and to agree to reduce the cost of any litigation with customers by offering to arbitrate certain disputes. In the event that CoStar fails or is unable to comply with the terms of the consent order, CoStar could be subject to an enforcement proceeding that could result in substantial fines and/or injunctive relief. Further, the provisions of the consent order may result in unanticipated adverse effects on the combined company and, therefore, reduce our ability to realize the anticipated benefits of the merger. For example, the terms of the consent order that require us to continue to sell our products separately may prohibit us from combining or eliminating certain business lines, products or services that we believe would result in a long-term positive impact on our ~~revenue~~revenues and earnings.

We have incurred and will continue to incur acquisition-related costs. We have incurred severance costs and expect to incur additional costs to integrate prior acquisitions, such as IT integration expenses and costs related to the renegotiation of redundant vendor agreements. Costs in connection with acquisitions and integrations may be higher than expected, and we may also incur unanticipated acquisition-related costs. These costs could adversely affect our financial condition, results of operation or prospects of the combined business.

Changes in accounting and reporting policies or practices may affect our financial results or presentation of results, which may affect our stock price. Changes in accounting and reporting policies or practices could reduce our net income, which reductions may be independent of changes in our operations. These reductions in reported net income could cause our stock price to decline. For example, in 2006, we adopted authoritative guidance for stock compensation, which required us to expense the value of granted stock options.

~~Market volatility may have an adverse effect on our stock price~~. The trading price of our common stock has fluctuated widely in the past, and we expect that it will continue to fluctuate in the future. The price could fluctuate widely based on numerous factors, including: economic factors; quarter-to-quarter variations in our operating results; changes in analysts’ estimates of our earnings; announcements by us or our competitors of technological innovations, new services, or other significant or strategic information; general conditions in the commercial real estate industry; developments or disputes concerning copyrights or proprietary rights or other legal proceedings; and regulatory developments. In addition, the stock market in general, and the shares of internet-related and other technology companies in particular, have experienced extreme price fluctuations. This volatility has had a substantial effect on the market prices of securities issued by many companies for reasons unrelated to the operating performance of the specific companies and may have the same effect on the market price of our common stock.


Item 1B.	Unresolved Staff Comments

None.


Item 2.	Properties

Our headquarters is located at 1331 L Street, NW, in downtown Washington, DC, where we occupy approximately 149,500 square feet of office space. Our lease for our headquarters expires May 31, 2025 (with two 5-year renewal options). Our headquarters is used primarily by our North America operating segment. Our principal facility in the U.K. is located in London, England, where we occupy approximately 7,000 square feet of office space. Our lease for this facility has a maximum term ending July 8, 2023, with early termination available at our option on July 9, 2018, with advance notice. This facility is used primarily by our International operating segment.

In addition to ~~two~~our downtown Washington, DC leased ~~facilities (including our headquarters)~~facility and our London, England facility, we established our research operations ~~are principally run~~headquarters in Richmond, Virginia in the fourth quarter of 2016, in which we occupy 99,075 square feet of office space. In addition to the Richmond research facility, we also operate our research functions out of leased spaces in San Diego, California; Columbia, Maryland; ~~Atlanta, Georgia;~~and Glasgow, ~~Scotland; and Paris, France.~~Scotland. Additionally, we lease office space in a variety of other metropolitan areas. These locations include, ~~without limitation,~~among others, the following: ~~New York;~~Atlanta, Georgia; Austin, Texas; Boston, Massachusetts; Chicago, Illinois; Irvine, California; Los ~~Angeles; Chicago;~~Angeles, California; and San Francisco; Sacramento; Boston; Orange County, California; Philadelphia; Houston; Phoenix; Detroit; Pittsburgh; Miami; Orlando; Denver; Dallas; Kansas City; Cleveland; Cincinnati; Indianapolis; Austin; Salt Lake City; Las Vegas; Seattle; Portland; St. Louis; Louisville; Minneapolis; San Luis Obispo, California; Ontario, California; Charlotte; Durham, North Carolina; Manchester, England and Toronto, Canada.Francisco, California.

We believe these facilities are suitable and appropriately support our business needs.


Item 3.	Legal Proceedings

Currently, and from time to time, we are involved in litigation incidental to the conduct of our business. ~~Certain pending legal proceedings are discussed in Note 11 of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.~~ We are not a party to any lawsuit or proceeding that, in the opinion of our management based on consultations with legal counsel, is likely to have a material adverse effect on our financial position or results of operations.


Item 4.	Mine Safety Disclosures

Not Applicable.

PART II


Item 5.	Market for the Registrant’s Common Stock, Related Stockholder Matters and Issuer Purchases of Equity Securities

Price Range of Common Stock. Our common stock is traded on the Nasdaq Global Select Market under the symbol “CSGP.” The following table sets forth, for the periods indicated, the high and low daily closing prices per share of our common stock, as reported by the Nasdaq Global Select Market.


	High		Low		High		Low
Year Ended December 31, 2013
Year Ended December 31, 2015
First Quarter	$	109.46	$	89.28	$	200.62	$	169.95
Second Quarter	$	129.51	$	105.73	$	214.20	$	193.36
Third Quarter	$	170.09	$	131.03	$	218.43	$	164.53
Fourth Quarter	$	186.62	$	161.29	$	210.42	$	170.07

Year Ended December 31, 2014
Year Ended December 31, 2016
First Quarter	$	214.00	$	166.78	$	199.73	$	148.90
Second Quarter	$	188.95	$	150.55	$	218.66	$	176.85
Third Quarter	$	160.10	$	138.76	$	224.10	$	204.82
Fourth Quarter	$	188.39	$	137.60	$	215.75	$	180.29

As of February ~~2, 2015,~~1, 2017, there were ~~900~~1,280 holders of record of our common stock.

Dividend Policy. We have never declared or paid any dividends on our common stock. The 2014 Credit Agreement includes covenants that, subject to certain exceptions, restrict our ability and the ability of our subsidiaries to pay dividends or distributions. Any future determination to pay dividends will be at the discretion of our Board of Directors, subject to applicable limitations under Delaware law, and will be dependent upon our results of operations, financial position and other factors deemed relevant by our Board of Directors. We do not anticipate paying any dividends on our common stock during the foreseeable future, but intend to retain any earnings for future growth of our business.

Recent Issues of Unregistered Securities. We did not issue any unregistered securities during the ~~year~~years ended December 31, ~~2014~~2015 and 2016.

Issuer Purchases of Equity Securities. The following table is a summary of our repurchases of common stock during each of the three months in the quarter ended December 31, ~~2014~~2016:

ISSUER PURCHASES OF EQUITY SECURITIES


Month, 2014	Total Number of Shares Purchased		Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
Month, 2016						Total Number of Shares Purchased		Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
October 1 through 31	58		$148.32	—	—	399		$216.06	—	—
November 1 through 30	—		—	—	—	—		—	—	—
December 1 through 31	3,273		167.10	—	—	9,600		183.88	—	—
Total	3,331	⁽¹⁾	$166.78	—	—	9,999	⁽¹⁾	$185.16	—	—

⁽¹⁾ The number of shares purchased consists of shares of common stock tendered by employees to the Company to satisfy the employees’ minimum tax withholding obligations arising as a result of vesting of restricted stock grants under the Company’s 2007 Stock Incentive Plan, as amended, which shares were purchased by the Company based on their fair market value on the vesting ~~date.~~date or the immediately preceding business day. None of these share purchases were part of a publicly announced program to purchase common stock of the Company.

Stock Price Performance Graph

The stock performance graph below shows how an initial investment of $100 in our common stock would have compared to:

An equal investment in the Standards & Poor's Stock 500 (“S&P 500”) Index; and

An equal investment in the S&P 500 Internet Software & Services ~~Index; and~~Index.

The comparison covers the period beginning December 31, ~~2009~~,2011, and ending on December 31, ~~2014~~,2016, and assumes the reinvestment of any dividends. ~~You should note~~Note that this performance is historical and is not necessarily indicative of future price performance.


Company / Index	12/31/09	12/31/10	12/31/11	12/31/12	12/31/13	12/31/14	12/31/11		12/31/12		12/31/13		12/31/14		12/31/15		12/31/16
CoStar Group, Inc.	100	137.80	159.76	213.96	441.90	439.62	$	100.00	$	133.93	$	276.61	$	275.18	$	309.74	$	282.47
S&P 500 Index	100	115.06	117.49	136.30	180.44	205.14	100.00		116.00		153.57		174.60		177.01		198.18
S&P 500 Internet Software & Services Index	100	102.56	107.95	129.36	192.46	205.16	100.00		119.83		178.29		190.06		253.38		266.49



Delaware	52-2091509
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1331 L Street, NW, Washington, DC 20005
(Address of principal executive offices) (zip code)

(202) 346-6500
(Registrant’s telephone number, including area code)

(877) 739-0486
(Registrant’s facsimile number, including area code)



Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, $.01 par value	NASDAQ Global Select Market



Large accelerated filer x	Accelerated filer ¨
Non-accelerated filer ¨	Smaller reporting company ¨



PART I
Item 1.	Business	4
Item 1A.	Risk Factors	1817
Item 1B.	Unresolved Staff Comments	3130
Item 2.	Properties	3130
Item 3.	Legal Proceedings	3230
Item 4.	Mine Safety Disclosures	3230

PART II
Item 5.	Market for the Registrant’s Common Stock, Related Stockholder Matters and Issuer Purchases of Equity Securities	3331
Item 6.	Selected Consolidated Financial and Operating Data	3533
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3634
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	5451
Item 8.	Financial Statements and Supplementary Data	5552
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	5552
Item 9A.	Controls and Procedures	5552
Item 9B.	Other Information	5653

PART III
Item 10.	Directors, Executive Officers and Corporate Governance	5753
Item 11.	Executive Compensation	5753
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	5753
Item 13.	Certain Relationships and Related Transactions, and Director Independence	5753
Item 14.	Principal Accountant Fees and Services	5753

PART IV
Item 15.	Exhibits and Financial Statement Schedules	5854
	Signatures	5955
	Index to Exhibits	6157
	Index to Consolidated Financial Statements	F-1


	Year Ended December 31,													Year Ended December 31,
Consolidated Statement of Operations Data:	2010		2011		2012			2013			2014
Consolidated Statements of Operations Data:														2012			2013			2014			2015			2016
Revenues	$	226,260	$	251,738	$	349,936		$	440,943		$	575,936		$	349,936		$	440,943		$	575,936		$	711,764		$	837,630
Cost of revenues	83,599		88,167		114,866			129,185			156,979			114,866			129,185			156,979			188,885			173,814
Gross margin	142,661		163,571		235,070			311,758			418,957			235,070			311,758			418,957			522,879			663,816
Operating expenses	119,886		141,800		207,630			257,604			338,079			207,630			257,604			338,079			511,424			518,911
Income from operations	22,775		21,771		27,440			54,154			80,878			27,440			54,154			80,878			11,455			144,905
Interest and other income	735		798		526			326			516			526			326			516			537			1,773
Interest and other expense	—		—		(4,832		)	(6,943		)	(10,481		)	(4,832		)	(6,943		)	(10,481		)	(9,411		)	(10,016		)
Income before income taxes	23,510		22,569		23,134			47,537			70,913			23,134			47,537			70,913			2,581			136,662
Income tax expense, net	10,221		7,913		13,219			17,803			26,044			13,219			17,803			26,044			6,046			51,591
Net income	$	13,289	$	14,656	$	9,915		$	29,734		$	44,869
Net income per share — basic	$	0.65	$	0.63	$	0.37		$	1.07		$	1.48
Net income per share — diluted	$	0.64	$	0.62	$	0.37		$	1.05		$	1.46
Net income (loss)														$	9,915		$	29,734		$	44,869		$	(3,465	)	$	85,071
Net income (loss) per share — basic														$	0.37		$	1.07		$	1.48		$	(0.11	)	$	2.64
Net income (loss) per share — diluted														$	0.37		$	1.05		$	1.46		$	(0.11	)	$	2.62
Weighted average shares outstanding — basic	20,330		23,131		26,533			27,670			30,215			26,533			27,670			30,215			31,950			32,167
Weighted average shares outstanding — diluted	20,707		23,527		26,949			28,212			30,641			26,949			28,212			30,641			31,950			32,436


	As of December 31,										As of December 31,
Consolidated Balance Sheet Data:	2010		2011		2012		2013		2014		2012		2013		2014		2015		2016
Cash, cash equivalents, short-term and long-term investments	$	239,316	$	573,379	$	177,726	$	277,943	$	544,163
Cash, cash equivalents and long-term investments											$	177,726	$	277,943	$	544,163	$	437,325	$	577,175
Working capital	188,279		521,401		97,925		196,913		480,521		97,925		196,913		480,521		337,452		472,545
Total assets	439,648		771,035		1,165,139		1,256,982		2,083,682		1,155,583		1,250,440		2,070,483		2,079,571		2,185,063
Total long-term liabilities	7,252		50,076		237,158		217,567		450,846		230,536		213,674		440,982		400,510		375,904
Stockholders’ equity	381,502		659,177		826,343		927,862		1,513,546		826,343		927,862		1,513,546		1,543,780		1,654,213



	2016			2015			Increase (Decrease) ($)			Increase (Decrease) (%)
Revenues
CoStar Suite	$	408,456		$	360,440		$	48,016		13	%
Information services	77,178			75,790			1,388			2
Multifamily	224,835			160,630			64,205			40
Commercial property and land	127,161			114,904			12,257			11
Total revenues	837,630			711,764			125,866			18
Cost of revenues	173,814			188,885			(15,071		)	(8	)
Gross margin	663,816			522,879			140,937			27
Operating expenses:
Selling and marketing	296,483			302,226			(5,743		)	(2	)
Software development	76,400			65,760			10,640			16
General and administrative	123,297			115,507			7,790			7
Customer base amortization	22,731			27,931			(5,200		)	(19	)
Total operating expenses	518,911			511,424			7,487			1
Income from operations	144,905			11,455			133,450			NM
Interest and other income	1,773			537			1,236			230
Interest and other expense	(10,016		)	(9,411		)	605			6
Income before income taxes	136,662			2,581			134,081			NM
Income tax expense, net	51,591			6,046			45,545			NM
Net income (loss)	$	85,071		$	(3,465	)	$	88,536		NM
__________________________
NM - Not meaningful



	2015												2016
	Mar. 31			Jun. 30			Sep. 30			Dec. 31			Mar. 31			Jun. 30			Sep. 30			Dec. 31
Revenues	$	159,020		$	170,657		$	189,078		$	193,009		$	199,739		$	206,869		$	212,711		$	218,311
Cost of revenues	45,396			44,634			53,728			45,127			42,900			42,679			42,222			46,013
Gross margin	113,624			126,023			135,350			147,882			156,839			164,190			170,489			172,298
Operating expenses	117,131			146,152			135,781			112,360			126,538			136,071			130,893			125,409
Income (loss) from operations	(3,507		)	(20,129		)	(431		)	35,522			30,301			28,119			39,596			46,889
Interest and other income	294			137			42			64			84			159			344			1,186
Interest and other expense	(2,343		)	(2,354		)	(2,363		)	(2,351		)	(2,509		)	(2,455		)	(2,498		)	(2,554		)
Income (loss) before income taxes	(5,556		)	(22,346		)	(2,752		)	33,235			27,876			25,823			37,442			45,521
Income tax expense (benefit), net	571			(7,380		)	2,610			10,245			11,155			10,247			14,241			15,948
Net income (loss)	$	(6,127	)	$	(14,966	)	$	(5,362	)	$	22,990		$	16,721		$	15,576		$	23,201		$	29,573
Net income (loss) per share — basic	$	(0.19	)	$	(0.47	)	$	(0.17	)	$	0.72		$	0.52		$	0.48		$	0.72		$	0.92
Net income (loss) per share — diluted	$	(0.19	)	$	(0.47	)	$	(0.17	)	$	0.71		$	0.52		$	0.48		$	0.72		$	0.91



	Total		2017		2018-2019		2020-2021		2022 and thereafter
Operating leases	$	186,490	$	26,548	$	52,427	$	45,892	$	61,623
Long-term debt obligations⁽¹⁾	345,000		35,000		310,000		—		—
Purchase obligations⁽²⁾	11,640		7,680		3,959		1		—
Total contractual principal cash obligations	$	543,130	$	69,228	$	366,386	$	45,893	$	61,623



	Total		2015		2016-2017		2018-2019		2020 and thereafter
Operating leases	$	166,297	$	19,442	$	37,390	$	33,587	$	75,878
Long-term debt obligations⁽¹⁾	385,000		20,000		55,000		310,000		—
Purchase obligations⁽²⁾	10,565		8,513		2,006		46		—
Total contractual principal cash obligations	$	561,862	$	47,955	$	94,396	$	343,633	$	75,878


Allowance for Doubtful Accounts and Billing Adjustments ⁽¹⁾	Balance at Beginning of Year		Charged to Expense		Charged to Other Accounts ⁽²⁾		Write-offs, Net of Recoveries		Balance at End of Year		Balance at Beginning of Year		Charged to Expense		Charged to Other Accounts ⁽²⁾		Write-offs, Net of Recoveries		Balance at End of Year
Year ended December 31, 2012	$	2,524	$	1,456	$	475	$	1,520	$	2,935
Year ended December 31, 2013	$	2,935	$	2,317	$	—	$	1,855	$	3,397
Year ended December 31, 2014	$	3,397	$	4,822	$	881	$	4,285	$	4,815	$	3,397	$	4,822	$	881	$	4,285	$	4,815
Year ended December 31, 2015											$	4,815	$	7,002	$	1,470	$	5,809	$	7,478
Year ended December 31, 2016											$	7,478	$	7,358	$	—	$	8,492	$	6,344


⁽¹⁾	Additions to the allowance for doubtful accounts are charged to bad debt expense.


⁽²⁾	Amounts represent opening balances from acquired businesses.



	COSTAR GROUP, INC.

	By:	/s/ Andrew C. Florance
		Andrew C. Florance
		President and Chief Executive Officer



Signature	Capacity	Date


/s/ Michael R. Klein	Chairman of the Board	February ~~26, 2015~~23, 2017
Michael R. Klein

/s/ Andrew C. Florance	Chief Executive Officer and	February ~~26, 2015~~23, 2017
Andrew C. Florance	President and a Director
	(Principal Executive Officer)

/s/ ~~Brian J. Radecki~~Scott T. Wheeler	Chief Financial Officer	February ~~26, 2015~~23, 2017
~~Brian J. Radecki~~Scott T. Wheeler	(Principal Financial and Accounting Officer)

~~/s/ David Bonderman~~	~~Director~~	~~February 26, 2015~~
~~David Bonderman~~

/s/ Michael J. Glosserman	Director	February ~~22, 2015~~23, 2017
Michael J. Glosserman

/s/ Warren H. Haber	Director	February ~~24, 2015~~23, 2017
Warren H. Haber

/s/ John W. Hill	Director	February ~~22, 2015~~23, 2017
John W. Hill

/s/ Laura Cox Kaplan	Director	February 21, 2017
Laura Cox Kaplan

/s/ Christopher J. Nassetta	Director	February ~~23, 2015~~17, 2017
Christopher J. Nassetta

/s/ David J. Steinberg	Director	February 23, ~~2015~~2017
David J. Steinberg



	2013												2014
	Mar. 31			Jun. 30			Sep. 30			Dec. 31			Mar. 31			Jun. 30			Sep. 30			Dec. 31
Revenues	$	104,033		$	108,999		$	112,301		$	115,610		$	119,076		$	147,708		$	153,056		$	156,096
Cost of revenues	33,606			32,101			31,724			31,754			33,643			39,481			40,932			42,923
Gross margin	70,427			76,898			80,577			83,856			85,433			108,227			112,124			113,173
Operating expenses	73,025			61,615			60,807			62,157			68,292			91,318			88,644			89,825
Income (loss) from operations	(2,598		)	15,283			19,770			21,699			17,141			16,909			23,480			23,348
Interest and other income	104			83			52			87			137			62			46			271
Interest and other expense	(1,755		)	(1,758		)	(1,736		)	(1,694		)	(1,615		)	(3,753		)	(2,698		)	(2,415		)
Income (loss) before income taxes	(4,249		)	13,608			18,086			20,092			15,663			13,218			20,828			21,204
Income tax expense (benefit), net	(1,839		)	5,315			7,034			7,293			5,923			4,969			7,871			7,281
Net income (loss)	$	(2,410	)	$	8,293		$	11,052		$	12,799		$	9,740		$	8,249		$	12,957		$	13,923
Net income (loss) per share — basic	$	(0.09	)	$	0.30		$	0.40		$	0.46		$	0.34		$	0.28		$	0.41		$	0.44
Net income (loss) per share — diluted	$	(0.09	)	$	0.29		$	0.39		$	0.45		$	0.34		$	0.28		$	0.40		$	0.43



	2013								2014
	Mar. 31		Jun. 30		Sep. 30		Dec. 31		Mar. 31		Jun. 30		Sep. 30		Dec. 31
Revenues	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Cost of revenues	32.3		29.5		28.2		27.5		28.3		26.7		26.7		27.5
Gross margin	67.7		70.5		71.8		72.5		71.7		73.3		73.3		72.5
Operating expenses	70.2		56.5		54.1		53.7		57.3		61.9		57.9		57.6
Income (loss) from operations	(2.5	)	14.0		17.7		18.8		14.4		11.4		15.4		14.9
Interest and other income	0.1		0.1		—		0.1		0.1		0.1		—		0.2
Interest and other expense	(1.7	)	(1.6	)	(1.5	)	(1.5	)	(1.3	)	(2.5	)	(1.8	)	(1.5	)
Income (loss) before income taxes	(4.1	)	12.5		16.2		17.4		13.2		9.0		13.6		13.6
Income tax expense (benefit), net	(1.8	)	4.9		6.4		6.3		5.0		3.4		5.1		4.7
Net income (loss)	(2.3	)%	7.6	%	9.8	%	11.1	%	8.2	%	5.6	%	8.5	%	8.9	%



Exhibit No.		Description

**2.1		Agreement and Plan of Merger, dated as of April 27, ~~2011,~~2015, by and among CoStar ~~Group,~~Realty Information, Inc., ~~Lonestar Acquisition Sub,~~Orange, LLC, Network Communications, Inc., and ~~LoopNet, Inc.~~Shareholder Representative Services LLC (Incorporated by reference to Exhibit 2.1 to the ~~Registrant’s~~Registrant's Current Report on Form 8-K filed with the Commission on April ~~28, 2011).~~
~~2.2~~		Amendment No. 1 to the Agreement and Plan of Merger, dated as of May 20, 2011, among LoopNet, Inc., the Registrant and Lonestar Acquisition Sub, Inc. (Incorporated by referenced to Exhibit 2.1 to Registrant’s Current Report on Form 8-K filed May 23, 2011)29, 2015).
3.1		Third Amended and Restated Certificate of Incorporation (Incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed with the Commission on June 6, 2013).
3.2		Third Amended and Restated By-Laws (Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on September 24, 2013).
4.1		Specimen Common Stock Certificate (Incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-4 of the Registrant (Reg. No. 333-174214) filed with the Commission on June 3, 2011).
*10.1		CoStar Group, Inc. ~~1998~~2016 Stock Incentive Plan ~~as amended~~ (Incorporated by reference to Exhibit ~~10.1~~4.4 to the ~~Registrant’s Report~~Registration Statement on Form ~~10-Q for~~S-8 of the ~~quarter ended September 30, 2005)~~Registrant (Reg. No. 333-212278) filed with the Commission on June 28, 2016).
*10.2		CoStar Group, Inc. 2007 Stock Incentive Plan, as amended (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed June 8, 2012).
*10.3		CoStar Group, Inc. 2007 Stock Incentive Plan French Sub-Plan (Incorporated by reference to Exhibit 10.3 to the Registrant’s Report on Form 10-K ~~for the year ended December 31, 2007)~~filed February 29, 2008).
*10.4		Form of CoStar Group, Inc. 2016 Plan Restricted Stock Grant Agreement between the Registrant and certain of its officers, directors and employees (Incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed July 28, 2016).
*10.5		Form of CoStar Group, Inc. 2016 Plan Restricted Stock Grant Agreement for Service Awards between the Registrant and certain of its officers and employees (Incorporated by reference to Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q filed July 28, 2016).
*10.6		Form of CoStar Group, Inc. 2016 Plan Restricted Stock Unit Grant Agreement between the Registrant and certain of its officers and employees (Incorporated by reference to Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q filed July 28, 2016).
*10.7		Form of CoStar Group, Inc. 2016 Plan Incentive Stock Option Grant Agreement between the Registrant and certain of its officers and employees (Incorporated by reference to Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q filed July 28, 2016).
*10.8		Form of CoStar Group, Inc. 2016 Plan Incentive Stock Option Grant Agreement between the Registrant and Andrew C. Florance (Incorporated by reference to Exhibit 10.7 to the Registrant’s Quarterly Report on Form 10-Q filed July 28, 2016).
*10.9		Form of CoStar Group, Inc. 2016 Plan Nonqualified Stock Option Grant Agreement between the Registrant and certain of its officers, directors and employees (Incorporated by reference to Exhibit 10.8 to the Registrant’s Quarterly Report on Form ~~10-K for the year ended December 31, 2004)~~10-Q filed July 28, 2016).
*~~10.5~~10.10		Form of CoStar Group, Inc. 2016 Plan Nonqualified Stock Option Grant Agreement between the Registrant and Andrew C. Florance (Incorporated by reference to Exhibit ~~10.8.1 to the Registrant’s Report on Form 10-K for the year ended December 31, 2004).~~
*10.6		~~Form of Restricted Stock Agreement between the Registrant and certain of its officers, directors and employees (Incorporated by reference to Exhibit~~ 10.9 to the Registrant’s Quarterly Report on Form ~~10-K for the year ended December 31, 2004)~~10-Q filed July 28, 2016).
*~~10.7~~10.11		Form of 2007 Plan Restricted Stock Grant Agreement between the Registrant and certain of its officers, directors and employees (Incorporated by reference to Exhibit 99.1 to the Registrant’s Report on Form 8-K filed June 22, 2007).
*~~10.8~~10.12		Form of 2007 Plan Restricted Stock Unit Agreement between the Registrant and certain of its officers and employees (Incorporated by reference to Exhibit 10.8 to the Registrant's Report on Form 10-K ~~for the year ended December 31, 2013)~~filed February 20, 2014).
*~~10.9~~10.13		Form of 2007 Plan Incentive Stock Option Grant Agreement between the Registrant and certain of its officers and employees (Incorporated by reference to Exhibit 10.8 to the Registrant’s Report on Form 10-K ~~for the year ended December 31, 2008)~~filed February 24, 2009).
*~~10.10~~10.14		Form of 2007 Plan Incentive Stock Option Grant Agreement between the Registrant and Andrew C. Florance (Incorporated by reference to Exhibit 10.9 to the Registrant’s Report on Form 10-K ~~for the year ended December 31, 2008)~~filed February 24, 2009).
*~~10.11~~10.15		Form of 2007 Plan Nonqualified Stock Option Grant Agreement between the Registrant and certain of its officers and employees (Incorporated by reference to Exhibit 10.10 to the Registrant’s Report on Form 10-K ~~for the year ended December 31, 2008)~~filed February 24, 2009).
*~~10.12~~10.16		Form of 2007 Plan Nonqualified Stock Option Grant Agreement between the Registrant and certain of its directors (Incorporated by reference to Exhibit 10.11 to the Registrant’s Report on Form 10-K ~~for the year ended December 31, 2008)~~filed February 24, 2009).



Exhibit No.		Description
*~~10.13~~10.17		Form of 2007 Plan Nonqualified Stock Option Grant Agreement between the Registrant and Andrew C. Florance (Incorporated by reference to Exhibit 10.12 to the Registrant’s Report on Form 10-K ~~for the year ended December 31, 2008)~~filed February 24, 2009).
*~~10.14~~10.18		Form of 2007 Plan French Sub-Plan Restricted Stock Agreement between the Registrant and certain of its employees (Incorporated by reference to Exhibit 10.10 to the Registrant’s Report on Form 10-K ~~for the year ended December 31, 2007)~~filed February 29, 2008).
*~~10.15~~10.19		CoStar Group, Inc. 2011 Incentive Bonus Plan (Incorporated by referenced to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed June 8, 2011).
*~~10.16~~10.20		CoStar Group, Inc. ~~Employee Stock Purchase~~2016 Cash Incentive Plan ~~as amended~~ (Incorporated by reference to Exhibit ~~10.14~~10.2 to the Registrant’s Quarterly Report on Form ~~10-K for the year ended December 31, 2010)~~10-Q filed July 28, 2016).



~~Exhibit No.~~*10.21		~~Description~~CoStar Group, Inc. Amended and Restated Employee Stock Purchase Plan (Incorporated by reference to Exhibit 4.4 to the Registrant’s Registration Statement on Form S-8 filed with the Commission on September 14, 2015).
*~~10.17~~10.22		Summary of Non-Employee Director Compensation (Incorporated by reference to Exhibit 10.1 to the Registrant's Report on Form 10-Q ~~for the quarter ended September 30,~~filed on October 24, 2013).
*~~10.18~~10.23		Employment Agreement for Andrew C. Florance (Incorporated by reference to Exhibit 10.2 to Amendment No. 1 to the Registration Statement on Form S-1 of the Registrant (Reg. No. 333-47953) filed with the Commission on April 27, 1998).
*~~10.19~~10.24		First Amendment to Andrew C. Florance Employment Agreement, effective January 1, 2009 (Incorporated by reference to Exhibit 10.16 to the Registrant’s Report on Form 10-K ~~for the year ended December 31, 2008)~~filed February 24, 2009).
*10.20		Executive Service Contract dated February 16, 2007, between Property Investment Exchange Limited and Paul Marples (Incorporated by reference to Exhibit 10.14 to the Registrant’s Report on Form 10-K for the year ended December 31, 2007).
*10.21		Leaving Agreement dated February 27, 2013, between CoStar U.K. Limited and Paul Marples (Incorporated by reference to Exhibit 10.19 to the Registrant's Report on Form 10-K for the year ended December 31, 2012).
*10.22		Separation Agreement and General Release dated October 6, 2013, between CoStar Realty Information, Inc. and Jennifer Kitchen (Incorporated by reference to Exhibit 10.22 to the Registrant's Report on Form 10-K for the year ended December 31, 2013).
~~10.23~~10.25		Form of Indemnification Agreement between the Registrant and each of its officers and directors (Incorporated by reference to Exhibit 10.1 to the Registrant’s Report on Form 10-Q ~~for the quarter ended March 31,~~filed on May 7, 2004).
~~10.24~~		Agreement for Lease between CoStar UK Limited and Wells Fargo & Company, dated August 25, 2009 (Incorporated by reference to Exhibit 10.26 to the Registrant’s Report on Form 10-K for the year ended December 31, 2009).
~~10.25~~		Sub-Underlease between CoStar UK Limited and Wells Fargo & Company, dated November 18, 2009 (Incorporated by reference to Exhibit 10.28 to the Registrant’s Report on Form 10-K for the year ended December 31, 2009).
10.26		Deed of Office Lease by and between GLL L-Street 1331, LLC and CoStar Realty Information, Inc., dated February 18, 2011, and made effective as of June 1, 2010 (Incorporated by reference to Exhibit 10.1 to the Registrant’s Report on form 10-Q ~~for the quarter ended March 31,~~filed on April 29, 2011).
10.27		Credit Agreement dated February 16, 2012, by and among the Registrant, as Borrower, CoStar Realty Information, Inc., as Co-Borrower, the Lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent (Incorporated by reference to Exhibit 10.1 to the Registrant's Report on Form 10-Q for the quarter ended March 31, 2012).
~~10.28~~		First Amendment dated as of April 25, 2012, to the Credit Agreement dated as of February 16, 2012, among the Registrant, CoStar Realty Information, Inc., the Lenders from time to time party thereto and JPMorgan Chase Bank N.A., as Administrative Agent (Incorporated by referenced to Exhibit 10.2 to the Registrant's Current Report on Form 8-K filed April 30, 2012).
~~10.29~~		Asset Purchase Agreement, dated as of February 28, 2014, by and between Classified Ventures, LLC and CoStar Group, Inc. (Incorporated by reference to Exhibit 10.1 to CoStar’s Current Report on Form 8-K, filed March 3, 2014).
~~10.30~~		Credit Agreement, dated as of April 1, 2014, by and among CoStar Group, Inc., as Borrower, CoStar Realty Information, Inc., as Co-Borrower, the Lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent (Incorporated by reference to Exhibit 10.1 to CoStar’s Current Report on Form 8-K, filed April 4, 2014).
10.28		Amendment No. 1 to the Credit Agreement by and among CoStar Group, Inc., as Borrower, CoStar Realty Information, Inc., as Co-Borrower, the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent (Incorporated by reference to Exhibit 10.1 to CoStar’s Current Report on Form 8-K, filed June 5, 2015).
10.29		Form of Voting Agreement, by and among CoStar Realty Information, Inc. and the funds and accounts managed by Beach Point Capital Management LP (Incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed with the Commission on April 29, 2015).
21.1		Subsidiaries of the Registrant (filed herewith).
23.1		Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm (filed herewith).
31.1		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.2		Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.1		Certification of Principal Executive Officer pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.2		Certification of Principal Financial Officer pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).



~~Exhibit No.~~		~~Description~~
101		The following materials from CoStar Group, Inc.’s Annual Report on Form 10-K for the year ended December 31, ~~2014,~~2016, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated ~~Statement~~Statements of Operations for the years ended December 31, ~~2012, 2013~~2014, 2015 and ~~2014,~~2016, respectively; (ii) Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, ~~2012, 2013~~2014, 2015 and ~~2014,~~2016, respectively; (iii) Consolidated Balance Sheets at December 31, ~~2013~~2015 and December 31, ~~2014,~~2016, respectively; (iv) Consolidated Statements of Stockholders’ Equity for the years ended December 31, ~~2012, 2013~~2014, 2015 and ~~2014,~~2016, respectively; (v) Consolidated Statements of Cash Flows for the years ended December 31, ~~2012, 2013~~2014, 2015 and ~~2014,~~2016, respectively; (vi) Notes to the Consolidated Financial Statements that have been detail tagged; and (vii) Schedule II – Valuation and Qualifying Accounts (submitted electronically with this report).



Reports of Independent Registered Public Accounting Firm	F-2
Consolidated Statements of Operations for the years ended December 31, ~~2012, 2013~~2014, 2015 and ~~2014~~2016	F-4
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, ~~2012, 2013~~2014, 2015 and ~~2014~~2016	F-5
Consolidated Balance Sheets as of December 31, ~~2013~~2015 and ~~2014~~2016	F-6
Consolidated Statements of Stockholders’ Equity for the years ended December 31, ~~2012, 2013~~2014, 2015 and ~~2014~~2016	F-7
Consolidated Statements of Cash Flows for the years ended December 31, ~~2012, 2013~~2014, 2015 and ~~2014~~2016	F-8
Notes to Consolidated Financial Statements	F-9


	December 31,						December 31,
	2013			2014			2015			2016
ASSETS
Current assets:
Cash and cash equivalents	$	255,953		$	527,012		$	421,818		$	567,223
Accounts receivable, net of allowance for doubtful accounts of approximately $3,397 and $4,815 as of December 31, 2013 and 2014, respectively	20,761			38,694
Deferred and other income taxes, net	22,506			20,007
Accounts receivable, net of allowance for doubtful accounts of approximately $7,478 and $6,344 as of December 31, 2015 and 2016, respectively							40,276			48,537
Income tax receivable	—			1,027			430			129
Prepaid expenses and other current assets	6,597			9,736			10,209			11,602
Debt issuance costs, net	2,649			3,335
Total current assets	308,466			599,811			472,733			627,491

Long-term investments	21,990			17,151			15,507			9,952
Deferred income taxes, net							9,107			7,273
Property and equipment, net	57,719			73,753			88,311			87,568
Goodwill	718,587			1,138,805			1,252,945			1,254,866
Intangible assets, net	144,472			241,622			238,318			195,965
Deposits and other assets	1,855			2,676			2,650			1,948
Debt issuance costs, net	3,893			9,864
Total assets	$	1,256,982		$	2,083,682		$	2,079,571		$	2,185,063
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	24,063		$	20,000		$	16,746		$	31,866
Accounts payable	4,939			8,608			9,673			11,478
Accrued wages and commissions	20,104			23,155			31,045			33,803
Accrued expenses	23,200			27,001			31,423			31,092
Deferred gain on the sale of building	2,523			2,523			2,523			2,523
Income taxes payable	2,362			—			46			3,814
Deferred rent							1,687			1,206
Deferred revenue	34,362			38,003			42,138			39,164
Total current liabilities	111,553			119,290			135,281			154,946

Long-term debt, less current portion	129,062			365,000			338,366			306,473
Deferred gain on the sale of building	26,286			23,762			21,239			18,715
Deferred rent	22,828			27,032			29,628			31,589
Deferred income taxes, net	34,582			30,349			4,585			18,386
Income taxes payable	4,809			4,703			6,692			741
Total liabilities	329,120			570,136			535,791			530,850

Commitments and contingencies
Commitments and contingencies (Note 11)

Stockholders’ equity:
Preferred stock, $0.01 par value; 2,000 shares authorized; none outstanding	—			—			—			—
Common stock, $0.01 par value; 60,000 shares authorized; 28,848 and 32,318 issued and outstanding as of December 31, 2013 and 2014, respectively	288			323
Common stock, $0.01 par value; 60,000 shares authorized; 32,509 and 32,606 issued and outstanding as of December 31, 2015 and 2016, respectively							325			326
Additional paid-in capital	863,780			1,405,414			1,440,321			1,471,127
Accumulated other comprehensive loss	(5,530		)	(6,384		)	(7,594		)	(13,039		)
Retained earnings	69,324			114,193			110,728			195,799
Total stockholders’ equity	927,862			1,513,546			1,543,780			1,654,213
Total liabilities and stockholders’ equity	$	1,256,982		$	2,083,682		$	2,079,571		$	2,185,063


	Common Stock					Additional Paid-In Capital				Accumulated Other Comprehensive Loss			Retained Earnings				Total Stockholders’ Equity			Common Stock					Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Retained Earnings			Total Stockholders’ Equity
	Shares		Amount						Shares				Retained Earnings			Amount									Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Retained Earnings			Total Stockholders’ Equity
Balance at December 31, 2011	25,426		$	254		Additional Paid-In Capital			$	Accumulated Other Comprehensive Loss	637,816		$	(8,568	)		Total Stockholders’ Equity		$	29,675		$	659,177
Net income	—		—			—				—			9,915				9,915
Foreign currency translation adjustment	—		—			—				1,277			—				1,277
Net decrease in unrealized loss on investments	—		—			—				773			—				773
Exercise of stock options	273		2			9,194				—			—				9,196
Restricted stock grants	855		8			(8		)		—			—				—
Restricted stock grants surrendered	(96	)	—			(4,204		)		—			—				(4,204		)
Stock compensation expense, net of forfeitures	—		—			12,207				—			—				12,207
Employee stock purchase plan	10		—			749				—			—				749
Consideration for LoopNet	1,880		19			137,036				—			—				137,055
Excess tax benefit from stock-based compensation	—		—			198				—			—				198
Balance at December 31, 2012	28,348		283			792,988				(6,518		)	39,590				826,343
Net income	—		—			—				—			29,734				29,734
Foreign currency translation adjustment	—		—			—				610			—				610
Net decrease in unrealized loss on investments	—		—			—				378			—				378
Exercise of stock options	409		3			16,820				—			—				16,823
Restricted stock grants	238		2			(2		)		—			—				—
Restricted stock grants surrendered	(158	)	—			(8,469		)		—			—				(8,469		)
Stock compensation expense, net of forfeitures	—		—			41,403				—			—				41,403
Employee stock purchase plan	11		—			1,455				—			—				1,455
Excess tax benefit from stock-based compensation	—		—			19,585				—			—				19,585
Balance at December 31, 2013	28,848		288			863,780				(5,530		)	69,324				927,862			28,848		$	288		$	863,780		$	(5,530	)	$	69,324		$	927,862
Net income	—		—			—				—			44,869				44,869			—		—			—			—			44,869			44,869
Foreign currency translation adjustment	—		—			—				(1,690		)	—				(1,690		)
Net decrease in unrealized loss on investments	—		—			—				836			—				836
Other comprehensive loss																				—		—			—			(854		)	—			(854		)
Exercise of stock options	68		1			3,802				—			—				3,803			68		1			3,802			—			—			3,803
Restricted stock grants	260		2			(2		)		—			—				—			260		2			(2		)	—			—			—
Restricted stock grants surrendered	(321	)	(2		)	(50,553		)		—			—				(50,555		)	(321	)	(2		)	(50,553		)	—			—			(50,555		)
Stock compensation expense, net of forfeitures	—		—			28,503				—			—				28,503			—		—			28,503			—			—			28,503
Stock issued for equity offering	3,450		34			529,326				—			—				529,360			3,450		34			529,326			—			—			529,360
Employee stock purchase plan	13		—			2,152				—			—				2,152			13		—			2,152			—			—			2,152
Excess tax benefit from stock-based compensation	—		—			28,406				—			—				28,406			—		—			28,406			—			—			28,406
Balance at December 31, 2014	32,318		$	323		$	1,405,414			$	(6,384	)	$	114,193			$	1,513,546		32,318		323			1,405,414			(6,384		)	114,193			1,513,546
Net loss																				—		—			—			—			(3,465		)	(3,465		)
Other comprehensive loss																				—		—			—			(1,210		)	—			(1,210		)
Exercise of stock options																				60		1			5,068			—			—			5,069
Restricted stock grants																				239		2			(2		)	—			—			—
Restricted stock grants surrendered																				(121	)	(1		)	(16,435		)	—			—			(16,436		)
Stock compensation expense, net of forfeitures																				—		—			35,153			—			—			35,153
Employee stock purchase plan																				13		—			2,595			—			—			2,595
Excess tax benefit from stock-based compensation																				—		—			8,528			—			—			8,528
Balance at December 31, 2015																				32,509		325			1,440,321			(7,594		)	110,728			1,543,780
Net income																				—		—			—			—			85,071			85,071
Other comprehensive loss																				—		—			—			(5,445		)	—			(5,445		)
Exercise of stock options																				29		—			3,303			—			—			3,303
Restricted stock grants																				195		2			(2		)	—			—			—
Restricted stock grants surrendered																				(142	)	(1		)	(16,423		)	—			—			(16,424		)
Stock compensation expense, net of forfeitures																				—		—			36,388			—			—			36,388
Employee stock purchase plan																				15		—			2,842			—			—			2,842
Excess tax benefit from stock-based compensation																				—		—			4,698			—			—			4,698
Balance at December 31, 2016																				32,606		$	326		$	1,471,127		$	(13,039	)	$	195,799		$	1,654,213


2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — (CONTINUED)


2.	~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~ — ~~(CONTINUED)~~



Leasehold improvements		Shorter of lease term or useful life
Furniture and office equipment		Five to ten years
~~Research vehicles~~Vehicles		Five to ten years
Computer hardware and software		Two to five years


Cash and cash equivalents				$	39
Accounts receivable	$	11,402		4,556
Goodwill	421,724			107,692
Acquired trade names and other intangible assets	71,779			23,642
Acquired customer base	69,684			21,856
Acquired database technology	11,489			4,076
Acquired building photography	1,006			2,425
Deferred income taxes, net				9,290
Other assets and liabilities	(2,866		)	(849		)
Fair value of identifiable net assets acquired	$	584,218		$	172,727



Maturity	Fair Value
Due in:
2015	$	—
2016 — 2019	822
2020 — 2024	—
2025 and thereafter	16,329
Available-for-sale investments	$	17,151


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Auction rate securities	$	17,842	$	380	$	(1,071	)	$	17,151	$	10,800	$	—	$	(848	)	$	9,952
Available-for-sale investments	$	17,842	$	380	$	(1,071	)	$	17,151	$	10,800	$	—	$	(848	)	$	9,952


	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Cash	$	160,275	$	—	$	—	$	160,275
Money market funds	310,482		—		—		310,482		$	175,344	$	—	$	—	$	175,344
Commercial paper	56,255		—		—		56,255		6,383		—		—		6,383
Auction rate securities	—		—		17,151		17,151		—		—		9,952		9,952
Total assets measured at fair value	$	527,012	$	—	$	17,151	$	544,163	$	181,727	$	—	$	9,952	$	191,679


	Auction Rate Securities			Auction Rate Securities
Balance at December 31, 2008	$	29,340
Balance at December 31, 2014				$	17,151
Decrease in unrealized loss included in accumulated other comprehensive loss	684			256
Settlements	(300		)	(1,900		)
Balance at December 31, 2009	29,724
Balance at December 31, 2015				15,507
Decrease in unrealized loss included in accumulated other comprehensive loss	40			395
Settlements	(575		)	(5,950		)
Balance at December 31, 2010	29,189
Decrease in unrealized loss included in accumulated other comprehensive loss	245
Settlements	(4,850		)
Balance at December 31, 2011	24,584
Auction rate securities upon acquisition	442
Decrease in unrealized loss included in accumulated other comprehensive loss	836
Settlements	(4,200		)
Balance at December 31, 2012	21,662
Decrease in unrealized loss included in accumulated other comprehensive loss	378
Settlements	(50		)
Balance at December 31, 2013	21,990
Decrease in unrealized loss included in accumulated other comprehensive loss	836
Settlements	(5,675		)
Balance at December 31, 2014	$	17,151
Balance at December 31, 2016				$	9,952



	Deferred Consideration
Balance at December 31, 2012	$	2,304
Accretion for 2013	384
Payments made in 2013	(1,344		)
Balance at December 31, 2013	1,344
Payments made in 2014	(1,344		)
Balance at December 31, 2014	$	—


	North America		International			Total			North America		International			Total
Goodwill, December 31, 2012	$	692,639	$	25,439		$	718,078
Goodwill, December 31, 2014									$	1,114,363	$	24,442		$	1,138,805
Acquisition									112,947		2,400			115,347
Effect of foreign currency translation	—		509			509			—		(1,207		)	(1,207		)
Goodwill, December 31, 2013	692,639		25,948			718,587
Goodwill, December 31, 2015									1,227,310		25,635			1,252,945
Acquisitions	421,724		—			421,724			467		5,933			6,400
Effect of foreign currency translation	—		(1,506		)	(1,506		)	—		(4,479		)	(4,479		)
Goodwill, December 31, 2014	$	1,114,363	$	24,442		$	1,138,805
Goodwill, December 31, 2016									$	1,227,777	$	27,089		$	1,254,866


	December 31,						Weighted- Average Amortization Period (in years)	December 31,						Weighted- Average Amortization Period (in years)
	2013			2014				2015			2016
Capitalized product development cost	$	2,140		$	2,140		4	$	2,243		$	2,275		4
Accumulated amortization	(2,029		)	(2,140		)		(2,172		)	(2,217		)
Capitalized product development cost, net	111			—				71			58

Building photography	13,743			14,943			5	17,677			17,271			4
Accumulated amortization	(12,005		)	(12,665		)		(15,875		)	(16,351		)
Building photography, net	1,738			2,278				1,802			920

Acquired database technology	77,368			88,739			4	77,905			78,151			5
Accumulated amortization	(41,073		)	(60,498		)		(62,818		)	(72,691		)
Acquired database technology, net	36,295			28,241				15,087			5,460

Acquired customer base	130,960			199,826			10	221,409			220,749			10
Accumulated amortization	(74,734		)	(102,443		)		(129,782		)	(150,445		)
Acquired customer base, net	56,226			97,383				91,627			70,304

Acquired trade names and other intangible assets⁽¹⁾	59,336			128,171			13	153,910			153,607			13
Accumulated amortization	(9,234		)	(14,451		)		(24,179		)	(34,384		)
Acquired trade names and other intangible assets, net	50,102			113,720				129,731			119,223

Intangible assets, net	$	144,472		$	241,622			$	238,318		$	195,965


Year ending December 31,	Maturities		Maturities
Due in:
2015	$	20,000
2016	20,000
2017	35,000		$	35,000
2018	55,000		55,000
2019	255,000		255,000
Long-term debt, including current maturities	$	385,000	$	345,000


Unrecognized tax benefits as of December 31, 2011	$	3,347
Increase for current year tax positions	792
Decrease for prior year tax positions	(161		)
Expiration of the statute of limitation for assessment of taxes	(69		)
Unrecognized tax benefits as of December 31, 2012	3,909
Increase for current year tax positions	66
Increase for prior year tax positions	2,037
Expiration of the statute of limitation for assessment of taxes	(55		)
Unrecognized tax benefits as of December 31, 2013	5,957			$	5,957
Increase for current year tax positions	51			51
Decrease for prior year tax positions	(189		)	(189		)
Expiration of the statute of limitation for assessment of taxes	(70		)	(70		)
Unrecognized tax benefits as of December 31, 2014	$	5,749		5,749
Increase for prior year tax positions				1,954
Expiration of the statute of limitation for assessment of taxes				(39		)
Unrecognized tax benefits as of December 31, 2015				7,664
Increase for current year tax positions				368
Decrease for prior year tax positions				(6,115		)
Expiration of the statute of limitation for assessment of taxes				(74		)
Unrecognized tax benefits as of December 31, 2016				$	1,843