CoStar Group Inc. (NASDAQ:CSGP)

The analysis of property, plant, and equipment over the five-year period reveals several notable trends and shifts in asset composition and valuation.

Leasehold improvements

These assets showed a generally upward trajectory from 2018 to 2022, rising from $65,332 thousand to $108,901 thousand. The increase was steady until 2020, with a slight dip in 2021 before a significant increase in 2022.

Furniture, office equipment and vehicles

Values for these assets increased from 2018 to 2020, peaking at $68,587 thousand, but then declined sharply in 2021 to $47,540 thousand. In 2022, there was a modest recovery to $52,610 thousand, indicating reduced investment or possible disposals during 2021.

Computer hardware and software

There was a steady increase from 2018 to 2020, reaching $86,755 thousand. However, in 2021, the value dropped markedly to $30,179 thousand and partially recovered to $43,830 thousand in 2022, suggesting possible asset write-downs, disposals, or reclassification in 2021.

Aircrafts

The holding in aircrafts grew significantly from a low base of $2,796 thousand in 2018 to $27,657 thousand in 2019 and remained relatively stable around $28,000 thousand in 2020 before a steep increase to $68,670 thousand in 2021. This was followed by a notable decrease to $44,209 thousand in 2022, implying acquisitions followed by partial disposals or depreciation.

Land

The recorded value of land started appearing only in 2020 at $24,642 thousand and showed consistent growth thereafter, reaching $52,227 thousand by 2022. This trend reflects increased investments in land assets during recent years.

Buildings

Building assets also emerged in the records in 2020 at $2,970 thousand and then expanded dramatically to $96,496 thousand in 2021 and $105,060 thousand in 2022, indicating substantial capital expenditures in structures over these years.

Property and equipment, gross

Gross property and equipment increased steadily year-over-year from $193,094 thousand in 2018 to $406,837 thousand in 2022, demonstrating ongoing asset base expansion nearly doubling over five years.

Accumulated depreciation and amortization

This balance shows a declining negative value from -$109,791 thousand in 2018 to -$166,153 thousand in 2020, indicating growing accumulated depreciation consistent with asset aging. However, in 2021 and 2022, the figure surprisingly decreased in magnitude (around -$85,800 thousand), which might reflect asset write-offs, disposals, or adjustments to accumulated depreciation accounting.

Property and equipment, net

Net property and equipment increased consistently from $83,303 thousand in 2018 to $126,325 thousand in 2020, followed by a substantial jump to $271,431 thousand in 2021 and further to $321,250 thousand in 2022. This significant increase aligns with the spikes in land, buildings, and aircraft values and could also reflect changes in depreciation accounting or asset valuation adjustments.

Overall, the data indicates a pronounced growth in fixed assets, notably in land and buildings in recent years, accompanied by fluctuations in accumulated depreciation that suggest adjustments or reclassifications. The net asset values reflect an expanding asset base, with particular investment emphasis starting in 2020 onwards, indicating strategic capital investments or acquisitions in physical assets.

Average Age Ratio

The average age ratio showed a general decline over the five-year period. Starting at 56.86% in 2018, it slightly decreased to 55.8% in 2019 and then increased to a peak of 62.04% in 2020. Following this, there was a significant reduction to 26.96% in 2021 and a further decrease to 24.14% in 2022. This pattern suggests a recent trend towards a younger asset base relative to the total useful life.

Estimated Total Useful Life

The estimated total useful life of assets increased steadily from 7 years in 2018 to 12 years in 2022. Notably, there was a sharp rise between 2020 and 2021, from 9 to 11 years, maintaining further growth to 12 years by 2022. This indicates a possible shift towards acquiring assets expected to have longer operational durations.

Estimated Age, Time Elapsed Since Purchase

The estimated age of assets experienced an increase from 4 years in 2018 to 6 years in 2020, followed by a pronounced decrease to 3 years in both 2021 and 2022. This reversal, concurrent with the decrease in the average age ratio, may point to recent substantial investments in newer assets or asset replacement cycles.

Estimated Remaining Life

The estimated remaining life of assets exhibited a rising trend, starting from 3 years in 2018, moving to 4 years in both 2019 and 2020, and then sharply increasing to 8 years in 2021 and 9 years in 2022. This increase aligns with the extended total useful life and suggests improved longevity or the acquisition of newer assets with longer remaining usage periods.

Property and Equipment, Gross

The gross value of property and equipment increased steadily from US$193.1 million in 2018 to US$406.8 million in 2022. This represents more than a doubling over five years, indicating significant investment and expansion in physical assets.

Accumulated Depreciation and Amortization

Accumulated depreciation and amortization rose from approximately US$109.8 million in 2018 to US$166.2 million in 2020, reflecting the aging of existing assets. However, a notable decline occurs in 2021 and 2022, dropping to roughly US$85.9 million and US$85.6 million respectively. This decrease contrasts sharply with the prior increasing trend and may suggest asset disposals, revaluation, or changes in depreciation methods.

Land

The recorded value of land assets begins at US$24.6 million in 2020 and grows consistently through 2021 and 2022, reaching US$52.2 million. This points to acquisitions or reclassifications increasing the land holdings over the recent years.

Average Age Ratio

The average age ratio, a metric reflecting the relative age of assets, stood near 57% in 2018 and remained around this level into 2020. A significant drop is observed in 2021 and 2022, falling to approximately 27% and 24% respectively. This decline suggests that newer assets have been added, effectively lowering the asset base’s average age and potentially enhancing operational efficiency.

Property and equipment, gross

Over the observed period, the gross value of property and equipment exhibited a consistent upward trend. Beginning at approximately $193.1 million at the end of 2018, this figure increased steadily each year, reaching around $406.8 million by the end of 2022. This represents more than a twofold increase, indicating sustained investment in fixed assets.

Land

Land values were not reported for the years 2018 and 2019 but appeared from 2020 onwards. Starting at about $24.6 million in 2020, the value of land increased notably to approximately $52.2 million by the end of 2022. This upward movement suggests a growing allocation of capital toward land acquisitions or reclassification of asset categories.

Depreciation expense for property and equipment

Depreciation expense remained relatively stable across the five-year span. It was steady at $26.0 million in both 2018 and 2019, then slightly increased to $28.8 million in 2020. Subsequent years maintained a nearly constant expense close to $29.0 million through 2022. This stability in depreciation expense occurs despite the rising gross value, implying extended asset lives or changes in depreciation methods.

Estimated total useful life

The estimated useful life of property and equipment showed an increasing trend. Starting at 7 years in 2018, it increased to 9 years in 2019 and 2020, then further extended to 11 years in 2021 and 12 years by 2022. This elongation correlates with the stable depreciation expense despite rising asset values, reflecting a possible reassessment of asset longevity.

Overall insights

The data indicate a strong expansion in property and equipment assets, accompanied by an increase in land holdings from 2020 onward. While asset values more than doubled, depreciation expenses remained stable due to a gradual increase in estimated asset useful life. This suggests a strategic approach to capitalizing and depreciating assets over longer periods, thereby managing expense recognition and potentially smoothing profit impacts.

Accumulated Depreciation and Amortization

The accumulated depreciation and amortization showed an increasing trend from 2018 through 2020, rising from $109,791 thousand in 2018 to $166,153 thousand in 2020. However, there was a notable decline in the figures for 2021 and 2022, dropping significantly to $85,862 thousand and $85,587 thousand respectively. This reversal suggests possible changes in accounting policies, asset disposals, or revaluations affecting the accumulated amount.

Depreciation Expense for Property and Equipment

The depreciation expense has remained relatively stable over the five-year period, with slight incremental increases. It was $26,000 thousand in 2018 and 2019, rising modestly to $28,800 thousand in 2020, then maintaining a narrow increase to $29,000 thousand in 2021 and $29,100 thousand in 2022. This consistency indicates a steady approach to expense recognition possibly aligned with the company’s asset base and depreciation policies.

Time Elapsed Since Purchase

The time elapsed since purchase shows an increasing trend initially, with values moving from 4 years in 2018 to 6 years in 2020, indicating aging assets on the books. Subsequently, in 2021 and 2022, the time elapsed resets to 3 years, suggesting a significant addition or replacement of property and equipment during these later years, which brought the average age of assets down.

Overall Insights

The upward trend in accumulated depreciation and accumulated amortization up to 2020 aligns with aging assets, as reflected in the increase in the time elapsed since purchase. The subsequent reduction in accumulated depreciation and amortization, coupled with a decrease in the average age of assets after 2020, points toward a refresh or replacement of the asset base. The steady depreciation expense level throughout the period reflects consistent capital expenditure and depreciation methods, with no major fluctuations in expense recognition despite changes in asset age and accumulated depreciation totals.

Property and Equipment, Net

The net value of property and equipment shows a consistent upward trend from 2018 through 2022. Starting at $83.3 million in 2018, it increased moderately to $107.5 million in 2019 and $126.3 million in 2020. A more significant rise occurred in 2021, with the net value reaching $271.4 million and continued growth to $321.3 million in 2022. This pattern indicates ongoing investment or acquisition of assets, particularly marked from 2020 onward.

Land

Data for land assets begins to appear in 2020, with a value of $24.6 million. This value increased substantially in the subsequent years, rising to $38.8 million in 2021 and $52.2 million in 2022, suggesting the company has been actively acquiring land, which may be contributing to the overall growth in property and equipment net value.

Depreciation Expense for Property and Equipment

The annual depreciation expense remained fairly stable over the five-year period, showing a slight increase from $26 million in both 2018 and 2019 to $28.8 million in 2020, then marginally increasing to $29 million in 2021 and $29.1 million in 2022. The relatively steady depreciation expense, despite the significant increase in net property and equipment, may reflect changes in asset mix, acquisition of assets with longer useful lives, or changes in depreciation methods.

Estimated Remaining Life

The estimated remaining life of the property and equipment rose from 3 years in 2018 to 9 years by the end of 2022. This increase suggests a shift towards acquiring or maintaining assets that have longer useful lives, which aligns with the notable increases in property and equipment values during this period and the steady depreciation expense.