Ladies and gentlemen, thank you for standing by. Welcome to the CoStar Group 4th Quarter Earnings Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session. Call.
As a reminder, today's call is being recorded. Your hosting speaker, Rich Simonelli. Please go ahead, sir.
Thank you very much, operator. Welcome to the call and greetings from Richmond. We're here for our CoStar Group's Q4 2016 conference call. Before I turn the call over to Andy Florance, our CEO and Founder and Scott Wheeler, our CFO, I have some important facts to convey to you. Certain portions of this discussion contain forward looking statements, which involve many risks and uncertainties that can cause results to differ materially from such statements.
Important factors that can cause actual results to differ include, but are not limited to, those stated in CoStar Group's February 22, 2017 press release on our Q4 results and in our filings with the SEC, including our most recent annual report on Form 10 ks and quarterly report on Form 10 Q under the heading Risk Factors. All forward looking statements are based on information available to CoStar on the date of this call, and CoStar assumes no obligation to update these statements whether as a result of new information, future events or otherwise. For a reconciliation of non GAAP net income, EBITDA, adjusted EBITDA and all of the non GAAP financial measures discussed on this call to their GAAP basis results and reconciliation for whatever directly comparable GAAP measure are shown in detail along with definitions for these terms in our press release issued yesterday, which is available on our website at costargroup.com. As a reminder, our conference call is being broadcast live and in color over the Internet on www.coastargroup.com, where you can also find CoStar's Investor Relations page. A replay will be available approximately an hour after this call concludes and will be available for approximately 30 days.
You'll be able to listen to that replay on 800-four seventy five-six 70 with the United States or Canada or 320-365-3844 outside the U. S. The access code is 417, 293,000,000 U. S. The access code is 417 293.
The other thing for today, just keep in mind, we'll take questions at the end. You will get one question And then if we have time permitting, we'll allow a second to roll through the questions. So with that, I'll
turn it over to Andy Florance. Thank you, Rich. Good morning. As you likely have seen in our earnings release, we achieved outstanding financial performance in 2016. Our revenue of 838,000,000 for the full year of 2016 was up 18% versus the full year of 2015.
Our sales force added $126,000,000 of revenue for 2016 and generated $112,000,000 of net subscription bookings. CoStar Suite revenue was up 14% year over year in the 4th quarter. Multifamily revenue for the full year grew 22% on a pro form a basis. We dramatically increased EBITDA by $125,000,000 over the prior year to reach $215,000,000 for the full year 2016. EBITDA increased 139% over the full year 20 CoStar and Apartments dotcom are very profitable business models, enabling us to expand our margins nearly 1200 basis points year over year, while at the same time making important significant investments into future growth initiatives.
We continue to make significant and important investments, but we still expect EBITDA from our 2016 result of 2 $15,000,000 to grow to a range of $223,000,000 to $229,000,000 for 20 17. For the 7th quarter in a row, we achieved net new bookings of greater than $25,000,000 and the 4th quarter net new bookings increased to $29,000,000 We had our best year ever selling CoStar Suite, and Q4 was the 2nd highest quarter ever for both CoStar sales and Apartments.com sales. Apartment.com's bookings were exceptionally strong in the 4th quarter and were up 62% year over year. We prioritize subscription revenue streams because we believe that subscription revenue with high renewal rates and greater visibility is higher value revenue. Subscription revenue for the trailing 12 months climbed 1 $162,000,000 to reach $637,000,000 for the full year of 2016 and now represents 77% of our revenue.
Our renewal rate for clients with 5 years or more business with us is steady at 98%. In 2016, we reached 101,000 CoStar North American subscribers, up 17% from 86 1,000 in 2015. We exited the Q4 of 2016 with a total of 6.91 sales staff relationship managers for a 30% increase of 158 people over the same time a year ago. The investment in more salespeople is paying off as we are delivering 14% top line growth on our flagship product on a much larger base. Of the 158 net sales headcount adds in 2016, 80 were CoStar customer relationship managers working in the field.
They conducted over 53,000 trainings since we launched the program in April of last year. And they're reinforcing the CoStar brand in every customer contact. We are seeing immediate results in heavier usage of our services, including those stickier services that entrench CoStar more deeply into the daily workflow of brokers. In our focus groups, we hear from brokers that this service emphasis is a significant value add to their CoStar subscriptions. Better trained clients who get more other CoStar subscription are more likely to renew, recommend and spend more with us.
With the addition of these client managers, our experienced sales producers are freed up to spend more time selling CoStar. The primary motivation for investing now in these 80 new customer relationship managers is to support our efforts to upsell tens of thousands of LoopNet users to CoStar over the next 2 years. In order to put many of our sales reps closer to our clients and prospects, we invested in opening 30 new sales offices across the U. S. In 2016.
We believe the sales force is more productive when they work as a team in an office location instead of working from home and that our local presence retention. Our incremental investments in sales and customer service do not maximize margin in the short run, but they do deliver long term competitive advantages and enhance long term high margin revenue generation capabilities. We continue to believe we will exceed $1,000,000,000 of annual revenue in 2018 with 40% adjusted EBITDA margin in the 4th quarter of 2018. In the Q2 of 2014, way back 2.5 years ago, we began investing very aggressively to expand our platform into the multifamily sector. The apartment sector has an asset value of $3,000,000,000 to 4 $1,000,000,000,000 with more than 100,000,000 Americans living in rental properties.
We feel that we are competitively advantaged in the apartment space for marketing and information dollars. We also believe that the assets we are building to serve the multifamily side of commercial real estate are synergistic with our office, industrial retail and land side of commercial real estate. As we close 2016, we've been working hard for 7 quarters to make those investments a success, and I want to take a moment to take stock of how we have used your capital to create real value for you in the Apartments dotcom brand. First, look at the amazing revenue growth we've achieved in such a short time. In Q2 of 2014, when we acquired Apartments dotcom, it had $86,000,000 of revenue.
As we exited 2016, our monthly revenue annualized for Apartments related related information revenue we won because of this, we reached $278,000,000 an increase of $192,000,000 from the start. We have grown $86,000,000 of annual revenue at Apartments.com to $278,000,000 in 3 short years. At this level of revenue, we believe we are now the largest most successful player in the online multifamily industry globally. We did this by utilizing our information advantage, rebuilding the websites to refocus on the renter as the ultimate customer, and we were the first to aggressively brand an apartment marketing site as you would sensibly do with any mega consumer sector. Our effort to draw more renters to our sites to create more value for our advertisers has been a huge success.
In the month we closed Apartments dotcom, the site drew just 5,000,000 unique visitors for its advertisers. By January 2017, that number had tripled to 22,000,000 unique visitors on our apartments network. As we have increased visitors and time, we have dramatically increased total page views from 23,000,000 on Apartments.com@acquisition to nearly a250,000,000 a month now. That is a 10 fold increase. We are still hard at work increasing our traffic for our advertisers and visits to apartments.com are up 42% year over year according to Comscore.
We have a clear number one position in this industry and visits, unique visitors and time on-site as reported by Comscore for December 2016. In 2016, the 2nd full year of our operation of our new apartments.com, we had 165 1,000,000 more visits to the network than we had in 2015. More traffic has equaled more leads for our advertisers. In fact, the number of leads from the beginning of our acquisition of Apartments.com to now has increased 2 10% on a quarterly basis. Again, we're still working hard to grow that lead flow and leads have increased 62% year over year alone.
As we grow traffic in leads, we have grown sales. In Q2 of 'fourteen, total Apartments.com bookings were 1,100,000. That number has grown more than 12 fold to $13,700,000 in Q4 of 'sixteen. The impact on our overall business has been significant. In Q1 of 2014, before we acquired Apartments dotcom, our overall CoStar Group bookings were $13,700,000 for the quarter.
That has now grown 114 percent to $29,300,000 last quarter. When we acquired Apartments in Q2 'fourteen, Apartments dotcom had 18,000 properties advertised on-site. That number has grown 86% to 34,000 by the Q4 of this year of last year. In Q2 'fourteen, the average advertising price per property was $441 That number has climbed 37% to $606 a month in the most recent quarter. As the number of advertised properties has grown, we have gained very valuable data for our information products.
There were no electronic unit level feeds connecting Apartments dotcom into the customer's property management systems in Q2 'fourteen. Now we have over 20,000 plus electronic feeds covering the majority of our advertisers' properties. Because of this high speed flow of content, we have now collected a 1,000,000,000,000 rent points. Jay Spivey, John Affleck, Robert Jennings and I were awarded best paper from an academic journal article on how to use this big data accurately model apartment rents. Our annualized revenue from sales of the information derived from this model is now over $38,000,000 We have worked hard to win clients to Apartments.com.
We held nearly 200,000 meetings with customers in 2016. And what we hear in focus groups is that they now consider us the best sales force with the best customer service. We conducted 22,000 surveys and asked, on a scale of 1 to 10, how likely are you to recommend a carpartments.com to a friend? We scored 9.7 on average. That rounds to 10 on a scale of 10.
I believe this customer satisfaction hard work has resulted in a 23% sales productivity increase of the average apartments rep in 2016. Clearly, our leadership position is strong and growing in multifamily and we're still in the earliest phases. We intend to build on that competitive advantage. The Hispanic population in the U. S.
Is approximately 57,000,000, 32,000,000 of which are renters. This is the very fastest growing segment of the market and could be as large as 128,000,000 people by 2,050. Hispanics represent 20% of the rental market, yet they are very underserved. We launched apartmentos.com at the beginning of February with high value content translated by humans and low value free content translated by machine. As our customers put ads up in English, we automatically translate them into Spanish.
Renters can submit leads in Spanish and the site translates them on the fly for the leasing managers who don't speak Spanish. We plan to drive awareness of the partmentos.com launch with Spanish ads on stations such as Univision, Telemundo ESPN Desportes. In addition, we have a very aggressive SEM program in place to drive traffic. The initial feedback to the site has been very, very positive and I'm proud of what we've done with the site. Launchingapartmentos.com was and is a significant investment.
Westside Rentals has been the number one website in Southern California for finding small rental properties for 20 years. It has collected content from 350,000 landlords. This unique content will give us a rich database of listings, availabilities and landlords and a brand name that we expect will continue to draw massive amounts of rich content. Last year, Westside Rentals placed 71,000 branded For Rent signs in lawns and windows across the L. A.
Market, creating massive brand awareness. In the 1st few weeks post acquisition, we have made all of that content available on Apartments.com. By doing this, we have nearly doubled the small property content we previously offered renters in Southern California. It is our belief that if we have dramatically better content, we will draw more renters to Apartments dot com. More renters in the site will mean more leads for our advertisers and that in turn will drive more sales and continued share shift to Apartments.com.
We expect the richer site will also drive increased organic traffic. We plan to capture what we learned from Westside Rentals and deploy those content lessons in markets across the U. S. We will see the existing Westside Rental subscription revenue fade down as we put the content on apartments.com and we hope to replace that revenue with ad revenue growth on Apartments.com. We have an aggressive marketing campaign to drive even greater awareness of Apartments.com in 20 17.
You will once again see Jeff Goldblum in the role of Brad Bellflower, the Silicon Valley maverick, as he shows renters from all walks of life a better way to find an apartment using the Apartum Internet. We are filming 5 spots with him including several Southern California spots featuring Westside Rentals. Our advertising spots focus on general audiences, seniors and students and will most likely be translated into Spanish or most will be translated into Spanish. As you know, we did not run a Super Bowl commercial this year, but we will have 9,600 TV spots during a span of 7 months, up from the 5,400 we ran over 4 months in 20 16. We hope to get better productivity and efficiency from our advertising dollars on this plan.
We clearly have the most aggressive branding for online apartment rental listings ever executed and we think this is an essential and wise investment. By year end 2017, we plan to have invested approximately $100,000,000 brandingapartments.com in each of 3 consecutive years for a total brand investment in excess of $300,000,000 It's getting a lot harder to find people who are not familiar with Apartments.com or Apartamentos dotcom. There's a strong emerging profitability story for Apartments dotcom. In the Q4 2016, Apartments has swung from requiring investment to generating significant profits. We expect that profit profile of apartments.com will fit the target margin investors expect from our core CoStar business over the years to come.
Today, our apartment sales team is almost at full capacity with approximately 225 field reps. There are over 80,000 large properties that we're targeting to advertise on Apartments.com that are not currently doing so. So we have an enormous opportunity to continue to grow our EBITDA with high incremental margins on new sales. Clearly, our investments over these 2.5 years have transformed Apartments dotcom into a very valuable brand. We have become the clear number one apartment ILS on a combination of traffic, SEM, SEO, total communities, leads delivered, brand revenue and EBITDA.
The focus for us in 2017 is upselling and cross selling LoopNet users to CoStar. Turning back to CoStar. The overwhelming majority of our CoStar clients are commercial real estate professionals. They're brokers, owners, lenders, developers, appraisers, major retailers, institutional investors and the like. In sharp contrast, 99.9% of our 60,000,000 annual LoopNet users are end users like tenants, retailers and small investors.
Only a tiny 2 tenths of a percent of LoopNet users are commercial real estate professionals. Yet 50% of the LoopNet product features cater to that small user base. Because the legacy design of LoopNet attempts to cater to both audiences, The 99.9% of LoopNet's audience that are end users are very valuable target audience for our brokers and owners who must market their commercial properties. Post integration, 100 percent of LoopNet's product design will target the needs of end users and the need professionals have to market to them. LoopNet will become a pure optimized marketing platform.
The first step is to migrate the small percentage of LoopNet users that are commercial real estate professionals trying to use LoopNet as their information platform over to CoStar for their information needs. CoStar is a much better information solution for commercial real estate professionals. When we say small percentage of LoopNet users, we mean the 100,000 professionals using it as an information platform, generating just under $40,000,000 of LoopNet revenue. By contrast, there are 100,000 professionals also subscribing to CoStar Suite, generating approximately $400,000,000 in revenue. Many of the most intensive professionals using LoopNet pay nothing for the service at all.
Obviously, CoStar information services capture a much higher price point. We believe that we can upsell 1,000 to tens of thousands of LoopNet information users to CoStar generating tens of 1,000,000 to 100 of 1,000,000 of net new subscription fees. We have a great track record here. When CoStar and LoopNet first emerged, we made a concerted effort to upsell CoStar to LoopNet subscribers and we generated $80,000,000 in upsell subscription revenues over about 2 years. Our software teams are working hard to integrate LoopNet and CoStar databases into 1 unified database by May of 2017.
We believe this unified database will be more comprehensive than either of the 2 stand alone databases. Post unification, all of the properties, listings, tenants, analytics and comparable sales and leases will be available only to the CoStar users. Going forward, LoopNet will only contain our advertisers' listings. This is a big change where currently 32% of the listings in LoopNet are from brokers not paying us a dime. Because of this today, about 54% of all active listings are visible in LoopNet.
That creates a material negative substitution effect between LoopNet and CoStar. Once we eliminate the free listings, we believe that LoopNet's listing coverage will drop to 39% reducing the substitution effect, plus or minus. We believe that 28% reduction in listings will mean 2 things. 1st, the paid ads on LoopNet will get more attention and will not have to compete with the free ads. 2nd, the information value of CoStar will surge relative to LoopNet making it even more compelling upsell solution for the commercial real estate professional.
Once the databases are unified, it will be a straightforward task to communicate clearly to brokers using LoopNet that they're only seeing a fraction of the market and they use CoStar if they want to see the whole market. We plan to convert LoopNet information users to CoStar with a combination of in product marketing, in product result comparisons, retargeting direct mail and direct sales. And I'm going to throw in telesales. As we have approached the integration of CoStar and LoopNet, we have stopped pushing sales of LoopNet information products. We do not want to move a new customer into a product we know full well we're just about to discontinue.
This product discontinuation created a significant headwind sales bookings in 2016, reducing our annualized net new bookings by $7,400,000 $3,200,000 of this headwind occurred in Q4 2016, reducing $32,200,000 in Q4 net sales bookings to the $29,000,000 we reported for Q4 2016. Post integration, we plan to keep and strengthen our LoopNet marketing solutions that are currently generating around $100,000,000 annually. According to Hitwise, in January, LoopNet and our network of online commercial real estate marketplaces captured 4 times unique visitors as the next 50 websites in that space combined that share. That market presence is unprecedented and our customers tell us that LoopNet really generates the leads they need to lease and sell their properties. We believe that LoopNet's share of traffic of the top 50 U.
S. Commercial real estate websites is greater than that of Zillow's, Rightmove, ZARIA Group, Scout24, Ciloget's or fin.n0's share of the traffic of the top 50 residential websites in their respective countries. These residential sites charge the average broker 7,000 to 33,000 annually for marketing services. By contrast, LoopNet is only charging an average of $6.53 per agent per year. Eliminating all those free LoopNet adds is the first step in increasing the average price.
There's a lot of room to grow LoopNet's marketing revenue, and we look forward to having that opportunity. Over the next 2 years, we'll work to migrate tens of thousands of LoopNet users to potentially and to CoStar. LoopNet users to CoStar potentially generating more than $100,000,000 of subscription fees. Most of these prospects will carefully consider the accuracy and comprehensiveness of the information in CoStar before they make that investment to upgrade to CoStar. In anticipation, we've been hard at work upgrading our research capabilities to ensure that our information is the best it's ever been when we begin this one major upselling effort this year.
In the Q4 2016, we began expansion of CoStar research capabilities to support this need by opening a new research headquarters $50 some space in Washington $60 space in Washington. After just 4 months, we already have 250 staff in place here in Richmond. We're doing more than just adding more researchers. We're working to make all of our researchers more productive and more effective. Moving to Richmond, we have begun to reexamine how we position our research process with participants in our industry.
Historically, our researchers have reached out to brokers to collect information from them to update our database. Our branding was more about what we wanted from the interaction, a lot less about how they would benefit from the interaction. We have turned that around and now when we interact with brokers, we're reaching out to make sure we're maximizing the exposure their properties are getting in front of our massive audience of buyers, brokers and tenants, so that they can sell their properties as quickly as possible and earn their fees. Not surprisingly, they're much more receptive. Our audiences are very valuable to these brokers.
200,000 commercial real estate professionals use our sites to find properties for sale or lease. Our audience is responsible for up to $1,000,000,000,000 in leasing and sales transactions each year. We believe our audiences are responsible for the vast majority of all commercial real estate deals done in the past year. On a typical day, our audience executes 8,000,000 searches for properties on our sites. 93% of the top 1,000 U.
S. Brokerage firms use our sites to search for properties or sale or lease. That's just the CoStar site and probably 100% of top 1,000 with all sites. Brokers are responding really well to this new branding and our researchers are much more productive. On a per researcher basis, we're conducting 3 times the number of broker interviews per day than we were conducting in the Q4 2015.
We believe that having more researchers that are more productive will translate to higher quality data and more successful LoopNet to CoStar upsells. We are surging our investment in research this year as we execute the final phase of the LoopNet to CoStar upsell process. We believe it will have a very high ROI while reducing risks inherent in migrating so many clients to a new product. Research is the foundation of CoStar. In Wall Street parlance, it's the competitive moat around the business.
It's what has differentiated CoStar from all the rest and allowed us to achieve outsized returns over many years. I view our investments in research as an excellent use of capital as we look to strengthen our competitive advantage for many years to come. Our research headcount will continue to increase through 2017, but we expect some of the research headcount to drop in the out years after we complete the LoopNet integration. As you know, we initially initiate a lawsuit against Exelligent for brazenly stealing and reselling CoStar's data and images on an industrial scale. The Daily Mail Group, which owns the majority stake in Exelligent is a multibillion dollar company that has all the resources necessary to enable Exeligent to invest in the U.
S. To build content honestly. Instead, Exeligent has paid an army of low paid workers in the Philippines and India to steal our content. We filed this lawsuit only after an initial investigation revealed no fewer than 10,000 instances of CoStar's data and photos appearing on Exeligent's publicly accessible website. We believe that a comprehensive review of Exelligent's subscription database will reveal tens of 1,000 more, many more.
What we know so far is that Exelligent and its agents in the U. S, Philippines and India illegally created thousands of LoopNet accounts, made 1,700,000 requests for copies of photos and property information and systematically cropped out logos and add their own logos to our copyright photos. We also know that Excelgent has used listings and property information from stolen from CoStar subscription database in connection with its efforts to research and open new markets. We have amassed a significant amount of evidence of Exeligent's theft and we feel confident we will win in this case. Apart from the evidence of widespread illegal access and copy that we've already gathered, Exeligent's own former employees condemn its business practices as unethical and have confirmed Exeligent's method of building its databases based on stealing CoStar information.
Also in what we believe and is an early indication of the merits of our case, judges in the Philippines and India reviewed the evidence gathered to date and found probable cause and ordered the or the extraordinary search or seizure of 100 of Exeligent's agents' computers. Exeligent's public response does not deny that they have accessed Lubna and CoStar without authorization a 1000000 times in aggregate in order to take CoStar content or that they have copied or and published thousands of CoStar copyright photographs. We firmly believe that even though this litigation will be time consuming and expensive, taking the necessary steps to protect our intellectual property is absolutely the right thing to do and serves the best interest of our shareholders. Winning this lawsuit, of course, means securing a permanent injunction that will ensure Exeligent purges and stops stealing our content. We're also seeking monetary damages from Exeligent, including substantial damages for their infringement of our copyright works.
Courts have discretion to award statutory copyright damages depending upon the willfulness of the infringements. And in this case, we believe we already have the overwhelming evidence of Exelligent's willfulness. We know that despite having received hundreds of access denied notices and also having their IP addresses blocked by our security teams over 100 times, Exelligent rotate its IP addresses and used anonymizers and proxy services like Tor and Hidadore to mask their identities. A former researcher at Exelligent said, Exelligent managers specifically instructed me and my colleagues to crop out the watermarks on any image that we copied from the Internet, including the CoStar watermarks on the photos we copied. The removal of watermarks was part of the training I received at Exeligent.
These are not the hallmarks of unintentional copyright infringement. On the contract on the contrary, Exeligent is an information company that understands copyright law and its blatant widespread theft of its competitors' copyright content at the direction of management paints an overwhelming picture of willful copyright infringement. Taking into account the number of our copyrighted foes we've already found on Exeligent's public website, we believe that it's reasonable to expect that once we conduct a comprehensive review of Exeligent's subscription database, we will find tens of 1,000 more. We also know that one of our previous copyright cases caption CoStar Realty Information Group versus Field DBA Alliance Valuation Group, the court award is $14,000 per infringed image. While we respect the wide discretion courts having awarding statutory copyright damages and understand it's almost impossible to predict outcomes, we believe the most likely scenario is a statutory damage award in the 1,000 of dollars per infringed image and the number of infringing images in the tens of 1,000 resulting in very significant damages award.
Exeligent's owners have the financial resources to pay such judgment. You can find details of litigation at wwcoastar.com/ exelegant. We continue to see strong demand for CoStar's analytic capabilities. Today, we generate approximately $140,000,000 in annualized subscription revenue tied to commercial real estate analytics. 39% of our revenue now comes from owners, lenders and institutional investors.
The commercial real estate debt and equity sector is now one of our biggest growth drivers. We expect outsized growth in the debt and equity area in the future and we are prioritizing our investments in research, product development and sales in that area. We have invested dramatically to increase the number of markets that our economists cover with quarterly written reports. We have built and are about to launch daily property level to we just released the office version of the underwriting report. We also plan to release underwriting reports for industrial later this year.
We now show fantastic daily rental movements in our rent charts and we added 50 new customizable real time charts analysis to our products in 2016. In 2016, we integrated our CoStar and portfolio strategies into 1 unified platform And we migrated all the remaining 200 client companies from the old portfolio strategies platform into CoStar. This represents 1800 individual users, plus or minus. The conversions have resulted in $4,600,000 in net new annualized revenue. We believe that combining the best of the high level analytics from Portfolio Strategies with a granular always current on the fly analytics of CoStar, we have the best of breed analytics combination going forward.
This allows us to move away from a boutique offering or a boutique offering servicing the top 1% of the potential clients to a robust service that has tens of 1,000 of client opportunities and potentially 100 of 1,000,000 of dollars of high margin revenue. Portfolio Strategies continues to sell excellent advisory services, which it will sell in tandem with CoStar Market Analytics. Lands of America, BizBuySell and Commercial Real Estate Manager are 3 of our emerging high potential companies. Over the past 5 years, the 3 in aggregate have grown revenues from $19,000,000 to $39,000,000 and they've grown their EBITDA from $2,000,000 to $9,000,000 We have solid leadership at each of these groups, and we believe they'll continue to grow profitably for many years to come. CoStar Real Estate Manager is now managing a250,000 leases for our clients.
It provides market leading real estate management software to retailers and global companies and was one of the first in its industry to market with its new lease accounting module. The new module helps companies get in compliance with new FASB standards for lease accounting. The new standards require companies to include the value of practically all leases on their balance sheet. In November of 2016, we announced an alliance with BDO to help companies get in compliance with the new accounting standards. We're also working with PwC and other leading accounting firms here.
I have to say I wish my Professor Reinhart, my accounting professor in college could have been there as one of our multibillion dollar customers raved about how good my accounting software was. He would have fallen over dead if he'd heard that. Release of the new leasing standards is already driving demand for our service as net new sales of real estate managed increased by 32% in 2016 over 2015. New customers in 2016 included major retailers and global companies such as GE, Adidas, Cardinal Health, City, State Street, Wyndham, Owens Coring, 5 Guys and many others. Our recently acquired German commercial real estate information provider, Thomas Daly, turned in a strong initial performance, growing revenue 17% Q4 2016 over Q4 2015 as we grew their field sales staff from 2% to 7%.
Our Spanish commercial real estate information provider, BelvEx, is making strong progress growing its coverage in the Madrid market. At the beginning of 2016, they tracked 2,700 space availability listings in Madrid. We have tripled or quadrupled their research team, canvassed the entire market and have uncovered 26,000 potential new listings. We can confirm these listings in the months to come. We could increase our coverage tenfold this year over the legacy BelvEx databases.
So finally, to wrap up with commercial real estate markets. Occupancy rates at year 16 reached new business cycle highs for office retail industrial properties and rent growth for the industry as a whole averaged 3.9%, which is nearly double the 2.1 percent inflation rate. The real estate capital markets invested 6 $100,000,000,000 in sales in 2016. Although that was down 7% from the record set in 2015, it was still the 2nd highest volume ever recorded and 90% higher than the average since the year 2000. There's broad strength in occupancy rates.
More than half of the office and 2,000,000 than the 'six and 'seven average of their last market peak. So clearly, the key driver of investment returns, occupancy is very strong right now. Analysis of the apartment market shows that it's becoming increasingly competitive. Effective rent growth has dropped to 2.4% from 5% a year earlier. The slowdown stems partly from 209,000 new units delivered in 2016, which is over 50% more than the 10 year historical average.
New apartment supply pushed vacancy up to 6.1% from 5.6% a year earlier. And 2016 marked the 1st year in this market cycle with higher Office fundamentals remain strong. Occup Office fundamentals remain strong. Occupancy hit a business cycle high of 90% in the Q4 of 2016, up 30 basis points over levels in the Q4 of 2015. Year over year rent growth of 3.2% marks the 13th consecutive quarterly period when annual rent growth exceed 3%.
This story, high occupancy, well above inflation rent gains and net absorption above historical averages is repeated in other real estate sectors, including retail, logistics, light industrial and hospitality. Real Estate's broad strength has helped attract increased demand for CoStar's products and services. In summary, the Q4 of 'sixteen was highlighted by solid revenue growth, strong sales in CoStar and in Apartments dotcom and huge margin expansion year over year. At this point, I'll turn it over to Scott Wheeler, our CFO, for the really interesting stuff.
Great, Danny. Thank you very much. 2016 was certainly an outstanding year financially for CoStar Group. As Angie mentioned, our revenue in the full year increased 18%, which translates into a 14% growth rate on a pro form a basis. These pro form a results include the revenue from Apartment Finder for 2015 net of the revenue streams that we eliminated such as Finder Social.
In the Q4, we reported $218,000,000 of revenue, increasing 13% versus Q4 2015 and 14% including the impact of foreign currency movements in the UK. Looking at our revenue performance by services, CoStar Suite revenue growth accelerated throughout the year, exiting Q4 2016 at a 14% growth rate or 15% on a constant currency basis. This is a full 400 basis point improvement over the comparable 11% growth rate achieved in the Q4 2015. The acceleration of the growth rate in 2016 is a result of continued investments in our sales force and the analytics products, as Andy mentioned earlier. As we move to 2017, we expect the CoStar Suite growth rates to moderate somewhat from the 2016 levels to be within a 12% to 13% growth range.
This moderation in the growth rate is a result of timing of large contracts in 2016 as well as the effect of continued strong revenue growth on a larger revenue base. Revenue growth rates in information services, which is approximately $19,000,000 per quarter, turned negative in the Q4 of 2016 as expected. This is a result of our decision to wind down the LoopNet information products ahead of the planned integration this year with CoStar Suite. We expect information services revenue to decline at mid to high single digit rates in the first half of twenty seventeen and low double digit rates in the second half of the year. We expect full year revenue in information services to decline in the 9% to 11% range overall.
Over time, as we move the LoopNet commercial real estate professionals to CoStar Suite, the related revenues will also move out of information services and into CoStar Suite Services. We do not expect this to be a material impact to CoStar Suite revenues in 2017, but rather in 2018. In multifamily, our 2016 revenue increased 40% year over year, which is 22% on a pro form a basis. For the Q4 of 2016, multifamily revenue growth was slightly below 20% as expected at 19%. For 2017, we're raising our growth expectations for multifamily revenue to the 20% to 22% range based on strong 4th quarter sales.
This is driven by the rebuilding and the effectiveness of our sales force in multifamily. We do not expect a material amount of revenue from the acquisition of Westside Rentals in 2017 as we transition this revenue model from rental subscriptions over to advertising revenue. Rounding out our service performance, commercial property and land grew 11% year over year, both for the full year and in the 4th quarter. We expect these services to continue to grow in the low double digits in a range of 10% to 12% for 2017. Over to margins, our gross margin came in at 79% in the 4th quarter.
Vast majority of our cost of revenues relate to our research operations, which as Andy mentioned, we're expanding with our new research center in Richmond, Virginia. Accordingly, we expect our gross margins to moderate in 2017 into the 75% to 78% range as we scale up our team in Richmond. Our operating expenses in the 4th quarter were down $5,000,000 sequentially versus the Q3 of 2016. This is a result of our expected seasonality in our marketing spend, which was partially offset by legal costs related to the Exeligent litigation of approximately $5,000,000 in the 4th quarter. Operating expenses increased $13,000,000 versus the Q4 of 2015, primarily due to increased sales in customer service investments, litigation costs and new product investments.
Now let's take a look at some of the performance metrics for the quarter. As Andy mentioned, our expanded sales force delivered $29,000,000 in net bookings in the Q4 of 2016 despite the negative net new bookings effect from information services. We expect this negative net new bookings effect to continue throughout 2017. Our cross selling of LoopNet users to CoStar is expected to result in the increased CoStar Suite bookings in the second half of twenty seventeen, but is not expected to have a noticeable impact on revenue growth until 2018. Net new bookings were strong in the 4th quarter as was annualized net new sales on annual subscriptions of $27,000,000 Both of these metrics showed positive sequential trends with increases of 13% 10% respectively.
We believe net new bookings is the most relevant of the 2 metrics to indicate the overall direction of the company. Accordingly, we plan to continue to provide net new bookings each quarter in the future, but will no longer provide the annualized net new sales on annual subscriptions metric. Renewal rates on annual contracts were 90.4% in the Q4 of 20 16, equal to renewal rates in Q4 2015 and broadly in line with trends for the past 6 quarters. I'll now turn to our outlook for the full year and the Q1 of 2017. For the full year of 2017, we expect revenue of approximately $935,000,000 to $945,000,000 or 11% to 13% year over year growth versus 2016 results.
Our revenue growth rates are modestly lower than the growth rate achieved in 2016, primarily as a result of the expected revenue decline in information services of approximately 9% to 11% that I mentioned previously. We expect revenue for the Q1 of 2017 in the range of $223,000,000 to $225,000,000 representing top line growth of around 11% to 13%. In terms of earnings for the full year 2017, we expect non GAAP net income per diluted share of approximately $4.18 to $4.28 based on 32,800,000 shares, which is broadly in line with the results we achieved in 2016. For the full year, we expect adjusted EBITDA to grow from $256,000,000 in 20.16 to a forecasted range of $260,000,000 to 2 $65,000,000 with a margin of approximately 28% at the midpoint. This represents a modest year over year decline of 200 to 300 basis points when compared to the 1200 basis point increase in adjusted EBITDA margins we just delivered in 2016.
When taking the 2 years together, by the end of 2017, we expect to have grown our margins 800 to 900 basis points from the beginning of 2016, while also making these very significant investments to support the future growth and security of our business. Our outlook for 2017 earnings and adjusted margins include 2 important initiatives since we last updated you on our October call. First, our full year forecast includes $15,000,000 or $0.28 per diluted share associated with the Exeligent litigation. As Danny discussed, taking the necessary steps to protect our intellectual property is absolutely the right thing to do and serves the best interests of our clients and our shareholders. We currently expect the $2,020,000,000 costs of this litigation to be in the range of $10,000,000 to $20,000,000 and have not assumed any potential outcomes in our forecast even though there's potential and precedent for material damage awards.
We'll continue to provide updates quarterly as we progress throughout the year on this matter. 2nd, our outlook includes the impact of the January 31 acquisition of Westside Rentals, the leader in content for small rental properties in Southern California. We expect this acquisition to create valuable content, traffic and advertising synergies when added to our Apartments dotcom network. Accordingly, we need to transition the Westside Rentals revenue model away from renter subscriptions and over to advertising revenue, consistent with our existing multifamily business. This transition results in modest dilution of approximately $5,000,000 or $0.10 per diluted share in 2017.
With regards to our plans for marketing costs, we anticipate total marketing costs for 2017 at the same level as 2016, but with a higher level of spending for direct marketing in our information business to support the LoopNet and CoStar integration efforts. Advertising spend is more heavily weighted in the first half with the second quarter expected to be our largest marketing quarter with as much as 40% of our annual marketing budget expended in that quarter. As a result, we expect the 2nd quarter to be the low point for adjusted EBITDA margins for the year as was the case in 2016. With regards to margin progression throughout the year, we expect margins to decline in the 1st 3 quarters of 2017 on a year over year basis. The decline coincides with the ramp up of our research investment and the timing of the vast majority of our annual marketing spend.
For the Q4, we expect to exit 2017 with adjusted EBITDA margins above 35% and above our Q4 2016 margins. The high degree of leverage in our business model following periods of investments gives us confidence in achieving our goal of 40% adjusted EBITDA margin exiting 2018. We expect Q1 2017 fully diluted non GAAP net income per share of approximately $0.92 to $0.97 based on 32,400,000 shares. Our outlook assumes approximately $4,000,000 in costs associated with the Exeligent litigation in the Q1. Overall, the company delivered an impressive and exceptional performance in 2016 and will continue to focus on investing to deliver these profitable revenue growth in the future.
I will now open the call up to questions. Thank
Okay. The first question is from the line of Brent Huff, Stephens. Please go ahead.
Hey, good afternoon, Guy or good morning, guys. Can you hear me okay?
Yes, we can. Okay,
Can you give us a little more detail the detail you guys gave on kind of the tenor of the sunsetting revenue, the bookings of the cross sale revenue and the Suite happening in the second half, but not hitting the P and L until 2018. Is Is there any more detail you can give us on that? A lot of the questions we got after the release last night was, is that the primary driver of what people thought was the lower guide or is there additional sort of incremental spending on research or things like that that we're not seeing or is it all just the timing of
the Loop sunset? I'll let Scott answer most of that. But I would say
that the LoopNet sunset does create a very material and significant headwind and you saw a lot of it in the second half of twenty sixteen. We still performed very, very well, but it's just a significant headwind. You're trading out $60 a month subscriptions for $300 a month subscriptions, but the $60 going out. And we haven't yet sort of seen the we've seen the money going out from the $60 ones being discontinued. We're not yet seeing the mass of the $300 ones come in and those come in the middle of the year.
So we're being conservative around that real and ugly sort of reality.
Yes. And Brett, that played a lot into our thinking, obviously, as we came out with our numbers for the year. We certainly know that the direction of travel of infra services, which we just talked about is a $7,000,000 9% to 11% drag. And then we fully expect there will be good selling efforts in the second half. But as we've talked before, we don't tend to build those into revenue until we let those sales build and are taking a cautious approach, those will help us in 2018 and not materially in 2017.
With your question on investments, there's no new investments from what we've talked about before. We're putting a lot of our investment power this year into research. You heard us talk about obviously Richmond. We're also investing in further field research. We're investing in research in Canada and in our international markets.
And so when you take all of the grounded investments in research to put our data and our products on the best footing, it's all those things together that puts us into the guide that we came out with today and which one we talked about back in October, you recall we were concerned that 2017 was expected to have a significant margin growth just like we had in 2016. And at that point, we said we need to caution everybody that wasn't going to be the case. And so when we finished all our planning this year and came out with our guidance, those are still the primary investments and the uncertainty on the top line from the LoopNet conversion is the other factor in deciding where we wanted to come out today in our communication.
Next question is from the line of Andre Benjamin, Goldman Sachs. Please go ahead.
Thanks and good morning. Good morning, Andre. I just had a question on the margins as well. If you could just maybe talk a little bit about 2018, I know you just put out 2017 guidance, but there's a lot of focus on the exit of 2018 at 40%. I guess, how do you think about the full year margin as opposed to just exiting at 40%, given you just talked about the 1st three quarters of 2017 being down, but then obviously a huge pop in the Q4 exiting at 35%?
Yes. Good question. The reason to talk about the trajectory of margins this year is really to demonstrate when we finish a period of investment, which Andy mentioned a lot in apartments as well, but as soon as you finish that period and obviously the sales continue to run up at that very high and predictable rate that we have, then the margins and the profit move up very quickly, which you've seen us do many times in the past. So we still expect that in 2018 that we will see margins moving north for the entire year. And then as we have seasonally shown that the Q4 is always going to be the highest.
I believe if you look over the past couple of years, it's typically 5 ish percent higher margin in Q4 than in the other quarters. But that's going to change based on obviously sales pace and cost management, which is again in our control. So obviously we're not giving any guidance on 2018 yet, but we can say that we still expect to be able to deliver what we said in our commitments for the $1,000,000,000 over $1,000,000,000 in revenue and the 40% exiting and the full year will be higher as well.
Next question is from the line of Mayank Tandon, Needham and Company. Please go ahead.
Thank you. I just had a
quick question around the acquisition pipeline, your expectations in terms of timing of future deals. And then also maybe some word on the international opportunities as you're looking at investments outside the U. S?
Sure. So there's definitely a robust set of opportunities for us both in the a lot of them around the apartment space. But there are a number of things we're looking at. We're always talking to people. We are the amount of work we're doing right now around this, LoopNet to CoStar conversion keeps us focused on that task at hand.
It's a big lever in the business. So we're focused on that through for a long time, like at least through May. And but the no, really through the summer. But the there are opportunities out there and we obviously can't discuss specific things. And
some
of those could accelerate sooner if the timing on the other side was such that we had to move. But it's a broader range of opportunities. On the international front, I'm pretty happy with where things are shaping up there. The United Kingdom, which was our first foray overseas, was a lot of work, a lot of learning. It's been very successful.
We have, I don't know, 97 of the top 100 brokerage firms there as clients. It's a profitable business. It's a very strong business. We've got a good management team there. The United Canada, our second foray overseas our 2nd material foray overseas.
We there was a competitor there, been there for many, many years. Within our 1st 2 years, we outpaced them in revenue. And I think we're really just at the starting point there. I think we have a lot of potential upside there in Toronto. We are investing a little bit in research up there to fill that out and make sure that we're covering all the markets there Edmonton, Calgary, Vancouver, Ottawa and Toronto.
We believe we now have the best databases for commercial real estate in Canada. And as you can see, as we're moving into more language software, we will be doing a polyglot version of CoStar in the next 18 months or so. So then, Madrid has been a fascinating experience. It's like looking at data flow in 1980. We've really gone to that market and to increase the perceived amount of listing opportunities for brokers tenfold in the 1st year is dramatic.
In Germany and we're going to really that's our primary focus right now is standing that up and making that happen. And then Germany, we've got a good solid business there, but we think there's an opportunity to grow without changing anything just to leverage product further and drive more sales by just doing a different philosophy, more focused selling efforts there. So we are continuing to keep our eyes open for other opportunities overseas, but it's probably about the pace you're seeing right now, which is a country a year.
Good pace?
Yes. There's not many countries.
It's like 140 years to cover the world or something like that?
We'll be down to North Korea in 120 years.
Next question is from the line of Sterling Auty, JPMorgan. Please go ahead.
Yes, thanks. Hi, guys. You guys gave us a lot of data. I just want to make sure that I'm clear on a couple of things. So on the margin front, if we adjust back for the things that we didn't know the last time last quarter when you talked to us, so the litigation costs, the acquisition, etcetera, would you say that the pace of investment that you're putting forth for 2017 is on par with what you talked to us last time or is an acceleration?
Because I think where a lot of our models were, we still had slight improvement in margin for 2017 and then the improvement to the goal. I think this part of the reaction is it's a departure from that. But again, there's moving parts. So was that core investment in line with what you were talking to us about a quarter ago?
Yes. This is a the question is we go through our planning process. And again, back in October, we hadn't finished out what our investments would look like. Again, we're investing in research as the primary piece. And you heard Andy talk about other components of research that are important like productivity of research.
So you need to put technology folks in to drive software productivity that can allow these 1,000 researchers to deliver productivity over time and create a better cost profile. And so you put all these things in and then you come out with what your investment plan is a year for the budget, which we do in the early part of December. I was actually pretty happy when we came to the end of that process and on a 720 some million cost base, we came within 1% of where that cost would be when we finally ended up with our budget. So I would rather, of course, had it been above the margin we said last time, but it was $7,000,000 or so below. So we're not unhappy with where it came out.
It's still in line with what we're investing and we still expect the same great returns on top of the money that we're putting back into the business here.
Really, we have a great business here except for John Coleman, our General Counsel spending way too much on legal.
Okay. Next question is from
the line of Andrew Jeffrey, SunTrust. Please go ahead.
Hey guys, thanks for taking the question. Appreciate it. Andy, I guess high level question and I think this is what we're hearing today is, how do you talk to us in the investment community about the long term growth and profitability of CoStar Group. We've made a lot of investments and obviously a pretty aggressive growth initiative, which seems to be working well in apartments. But we're going to have this sort of sawtooth pattern into perpetuity, or is there a point at which CoStar kind of goes into harvest mode, has the right assets in place and really sustainably grows EBITDA?
Because I think that's critical for the stock from here.
Sure. Well, so I would say, it's a very fine tooth sawtooth blade. So you got real lumberjack stuff with big blades, real big sawtooth and you got a real fine metal one. This is a fine metal one. So when you really unfortunately, I've been at this for 30 years.
So when I look at it in the broader picture, it is a very actually fairly smooth, consistent EBITDA expansion profile. So $215,000,000 was a pretty significant advance over each of the next number of years with variation. So we're having a lot of discussion around a couple of points this year. We really frankly envision a much, much larger business than what CoStar Group is today. So we I would inspire more to what something like my friend Jeff Bezos has done or Mike Bloomberg has done something that is a lot the goal of 2018 $1,000,000,000 in revenue is an important goal.
We keep articulating it, the 40% EBITDA margin. That's not my goal. We'd like to be talking about $5,000,000,000 in revenue someday. So we are definitely playing a little bit of a longer term growth game. And that's sort of reality.
And we see things like this LoopNet CoStar conversion this year where it basically impacts the entire commercial real estate industry throughout the United States in a very fundamental way. We just approach that very carefully and we want to make sure that whatever we do this year keeps us on track for our true long term goals, which is building a business that's an order of magnitude larger than the business we have today.
Thank you. And our next question is
from the line of Brandon Doble, William Blair. Please go ahead.
Thanks. Guys, how do we think about the progression of the sales force this year? Do you have the right numbers or should we see a continuation of kind of mid to high or maybe even low double digit headcount growth? And if so, where should we expect those people to be concentrated in?
I would say that we're largely stable where we are incrementally, mechanically, it could be plus 40, could be plus 20. Big picture, we have the sales force we need. Just finished our sales conference, you looked at that sales force and said, Oh, my gosh, that is an enormous sales force. And it is an incredibly competent sales force and it is a great team to go to market with. So we're very happy with it.
I think we're probably more focused on fine tuning details, some organizational shifts here and there, minor things. And we might shift a little bit of focus to inside sales as we convert LoopNet clients in markets that are far away from one of our field offices. But these are all pretty minor. It's roughly we're very happy with what we've got right there. And to stand in front of 7.50 people at that sales conference and see the team we've amassed, you're like, wow, it's impressive.
And last couple of quarters, you guys have talked about, I guess, let's call it a different go to market strategy with the apartments assets, just write more touch points, better organization, etcetera. How much more work do you have to do there nationally to get it to where you really think you've got the right go to market strategy? Or has there been any changes in the last handful of months based on what you saw kind of middle of 2016?
I guess you get a different answer if you talk to me or to some of those sales people. The sales people feel that we have them worked at 100% of capacity. And I think they're doing a fantastic job. I'm really happy with the customer service rates we're getting from people, the 9.68 or whatever it is. And so I think we're in a pretty good place.
We did institute the pure hunter role last year and so that's maybe 4 or 5 months old. We're fine tuning that, but I think that's progressing well. We're we want to have a little more touch point with our major accounts. We're selling more in the top 50 accounts than we do in the rest of the accounts overall, but we still think there's more room to do even better there. But again, big picture, I'd say, fairly happy with what we've got there.
And I definitely believe we have by far the best sales force in the industry. I mean, there's some good salespeople, some other operations out there that we compete against, but we definitely have the best sales force by a country mile.
Yes. And the proof is in that net bookings number in Q4 for apartments It's very good and you can see that the outcome of that hard productivity work in the mid part of the year is starting to come through.
Next question is from the line of Peter Christiansen of Citi. Please go ahead.
Good afternoon, guys. Thanks for having me part of the mix. Quick question. Welcome. Thank you.
You're welcome. You covered the LoopNet, CoStar transition pretty well and extensively here. But I was wondering if you can give us some color on some of the conversations that you're having with clients and how they view it and what's been some of the early indications so far?
Well, we haven't hit the main thrust of this. So we are we're really waiting for that magical moment of when you have the unified database. At that point, it gets a very clean story where there it's just there's 5 gallons in this bucket and 1 gallon in that bucket in terms of information. It's very literal and it's very clean story. We're having a conversation with people basically saying, look, almost everybody using LoopNet as an end user, it's no longer fair that we would be hampering or holding that system back by bringing along a 0.2% group of brokers trying to use this information system.
That story is working pretty well. But the other thing is that you get to roll back 5 to 10 years ago where the industry really didn't couldn't define differences between CoStar and LoopNet. They just thought they were 2 versions of the same thing. And the pictures become clearer and clearer and clearer. We just ran a whole slew of focus groups around the United States and it was really nice because you could begin to see LoopNet is an essential tool to market your listings.
It is not an information system. And they're look at CoStar is an indispensable information system. So we're actually just amplifying what the more knowledgeable people in the industry know and we're and then we're trying to push that out to the laggards and try to move them into the right slot. So I'm sure there will be there's a little bit of folks who have been getting a great deal for a long time. They've been getting literally 100 of 1000 of advertising exposures a year for free or they've been servicing their information needs for free for a long time.
But the way we're restructuring the products, we're looking for some sort of fair price from everybody who's really an ongoing reoccurring participant in the industry. And so these are negotiators, these are brokers. The folks who are going to be going from paying us nothing to $1 a month will make the loudest noise of all. But we're just going to work our way through it. And I think there's general acceptance to what's going on there.
I also have been I was sitting with well the CEO of Cushman and Whitefield the other day as he was as we were meeting with the head of or the gentleman that runs North America As he was we were meeting with the person that runs Canada. And it was fascinating to listen to him explain our business to his Canadian leader. And he talked as much about our distribution of the importance of our distribution channel of content from the marketing perspective. And that was a new first time I ever heard a CEO or senior person actually clearly divide the 2 products as complementary, there's a little bit of there's going to be there's a little bit of there's going to be a little bit of noise and pain as people figure out they're getting a great deal of gigs up or too good a deal of gigs up. But we're very excited about what we've got here going on this year.
Salespeople are even more excited than I am. They're thrilled. I don't know if I answered your question.
Thank you. Next question is from the line of Patrick Walravens, JMP Securities. Please go ahead.
Pat, thank you very much for taking my question. I guess as you look to scale beyond $1,000,000,000 in revenue longer term, what markets do you feel you need to enter? And would you be open or would you consider expanding into the property management software market? That's it for me. Thanks.
Sure. Well, we've got a there's a we can there's an awful lot of runway right here in the segments we're in right now, the analytics segment, international growth, just penetration. Like we only have 23% of the brokers signed up for CoStar property in the United States right now. A lot of opportunity to grow just right where we are for many years to come. On the subject of the property management software, there's some very high quality companies out there in the property management world.
The problem is, is they each sit in a little high switch cost zone, sort of entrenched fortified positions that we're a little more interested in being able to work cooperatively across multiple zones. And as soon as you acquire one of those property management companies, you sort of lock down into a fantastic relationship with 10% of the market. And we're sort of a company that needs to have a fantastic relationship with 95% of the market. And we don't want to get into a trench warfare, winter invasion of Russia kind of thing with those property management systems. That's more of a longer term outlook, something you come back to after you were in a much bigger place.
Very helpful. Thank you very much. So with that, I think that completes all the questions we can see here. And I would like to thank you all for joining us for the year end conference call. We look forward to updating you next quarter.
Sure. Yes. Thank you very much.
Thank you. Ladies and gentlemen, that does conclude your conference. We do thank you for joining while using AT and T Executive Teleconference. You may now disconnect. Have a good day.