Welcome to the CoStar Group 4th Quarter Earnings Conference. And as a reminder, this conference is being recorded. And I would like to turn the conference over to our host, Vice President of Investor Relations, Mr. Rich Simonianelli. Please go ahead, sir.
Thank you, operator, and good morning, everyone. Welcome to CoStar Group's Q4 year end 2015 conference call. Thanks for joining us. Before I turn the call over to Andy Florance and Scott Wheeler, I have a few important facts for you. Certain portions of this discussion contain forward looking statements, which involve many risks and uncertainties that can cause actual results to differ materially from such statements.
Important factors that can cause actual results to differ include, but are not limited to, those stated in CoStar Group's February 24, 2016, press release on our Q4 year end 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. As a reminder, today's call is being broadcast live and in color over the Internet at www.coastargroup.com, where you can also find CoStar's Investor Relations page. A replay will be available approximately 1 hour after the call concludes and will be available for approximately 30 days. To To listen to this replay, please call 800-230-1074 within the United States or Canada or 6 122880329 outside the U.
S. The access code is 385,653. In the Q and A section, just as a reminder, please limit yourself to one question, and we'll have you rejoin the queue if you have additional questions. So I'd like to turn the call over now to Andy Florence.
Andy? Thank you, Rich. Good morning, and thank you, everyone, for joining us for our Q4 year end financial results call. 2015 was an excellent year for CoStar Group. We generated excellent top line growth of 24% year over year, closing 2015 with $712,000,000 in revenue, up from $576,000,000 in 2014.
We had $100,000,000 of net new subscription sales on annual subscriptions during 2015. For the Q4 of 2015, net new sales on annual subscriptions were $29,000,000 an increase of 69% year over year. We achieved our highest quarter ever for net new sales on our core CoStar information services. LoopNet also did well in the quarter as net new sales and annual subscriptions accelerated 80% sequentially from the Q3 of 2015 and 52% over the Q4 of 2014. Our primary focus for 2015 was investing aggressively to integrate CoStar, Apartments dotcom and Apartment Finder in order to drive efficiencies and achieve sustainable long term cost 5%.
Margin improvement was most dramatic in the Q4 of 2015 as we realized cost savings from our Apartments business integration efforts and increased EBITDA by 150% over the Q3 of 2015. Our EBITDA margin climbed 29% in the 4th quarter. We believe these results show that we are clearly on our way to achieving our stated goal of $1,000,000,000 in revenue and 40% adjusted EBITDA margining exiting 2018. Before I update you on our progress in Apartments.com, I want to give you a clear picture of revenue growth in our core CoStar Suite service and our other major products. Core CoStar Suite in North America grew 12 point 4% during the full year 2015 over full year 2014, and that is at the top end of our at the top end of our consistent to 11% to 13% growth guidance.
That is up in absolute dollars compared to the growth from to full year 'fourteen, but down just 33 basis points from the 'fourteen 'thirteen growth rate of 12 point 7%. So they're roughly similar growth rates, up and down a couple of basis points. Core CoStar revenue accelerated back up to 12.5% during the Q4 of 'fifteen over the Q4 of 'fourteen. Core CoStar in the U. K.
Grew at a higher pace of 13.8% year over year in local Great British crowns. But with the negative exchange rate effect, it grew at only 5.5% in U. S. Currency basis. Despite the diversion of resources to the apartment marketplace services, LoopNet Premium Lister still grew 12% during the full year of 2015 compared to the full year 2014.
As we've mentioned before, we are deemphasizing LoopNet information services. And as a result, LoopNet premium searcher grew at 9% during the full year of 2015 versus 2014. For the full year 2015 over 2014, CoStar Real Estate Manager grew at 20%, our businesses for sale marketplace grew at 16%, our land for sale services grew at 17% and CoStar Portfolio Strategies grew at 7%. We have 8 other smaller services with a wide range of growth rates. We are no longer selling 2 of our smallest producing services, so we expect their growth to be negative.
The core CoStar services are consistently strong and growing. We believe that with the apartment services doing so well, we can balance our focus between our core information services and the apartment rental marketplace services. As a result, we expect even more growth in the CoStar core services going forward. In 2015, we focused on building a premier marketplace for renting an apartment in the United States. According to comScore, apartments.com enjoyed more visitor traffic in 2015 than any other apartment rental website.
During the Q4, we achieved the number one position among major competing apartment websites in unique visitors, total visits, total page views, total time on-site, average time on-site, lowest bounce rate, consumer engagement, unaided awareness, search engine optimization, search engine marketing and the number of apartment buildings offered and the handsomest. Apartments.com, that last part was a joke, Comscore does not report on that. Apartments.com finished the year with 60% more page views than our number one competitor and 3 50% more page views than our number 2 competitor. Our most recent focus groups tell us that our website provides the best renter experience among our competitors. Revenue from apartments.com was up approximately 30% year over year in the 4th quarter.
Total apartment related revenue in the Q4 of 2015 was $53,400,000 up 108% over 25 $700,000 in the Q4 of 2015. We achieved outstanding growth in the 4th quarter of 6 60% year over year in net new sales on apartments annual subscriptions. We believe that this sales success stands in stark significant competitors in the space, who we believe have shown little revenue growth over the past year. According to Moody's, RentPath revenue is essentially flat since May 2012. In October 2015, Moody's reported a downgrade report that RentPath generated approximately $250,000,000 of revenue for the 12 months ended June 30, 2015.
Back in May 2012, Moody's reported that RentPath generated approximately $246,000,000 of revenue in 2012, including approximately 7 months of revenues from rent.com following the acquisition close. 2015 was a particularly difficult year for Renpath CEOs as 3 different individuals have held the position since our relaunch at the NAA Industry Conference in June. We further believe that we are offering marketing opportunities to apartment communities with up to 10x exposure of major competitors at a price point 20% below theirs. That is driving significant share shift to us. In November of 2015, we announced our exclusive agreement with Move Inc.
To power 50 unit plus apartment community listings on Move's network of websites, which includes realtor.com, move.com and doorsteps.com. We now promote our advertisers' communities across 6 major apartment websites with a single point of contact at prices we believe are below the largest providers in the apartment listings space. So far, the results have been very good with over a quarter 1000000 leads generated for our apartments customers since their listings went live on realtor.com site in December. We expect that in February, the Move partnership will be responsible for 10% of leads to our advertisers. In March 2015, we embarked on an unprecedented marketing spending just under $500,000,000,000 a year on rent.
Spending just under $500,000,000,000 a year on rent. That compares to automobiles at roughly the same level, and that is approximately 5 times what people spend on beer each year. The market for apartment renters is growing rapidly and increased spending on rentals increased by $100,000,000,000 since 20 10. This is one of the largest consumer segments in the U. S.
Since the beginning of the campaign in March last year through the end of December, we generated over $7,900,000,000 impressions for our ads. Most of you have seen the television campaign featuring Jeff Goldblum. It was responsible for 2,000,000,000 impressions. We also generated over 3,400,000,000 impressions digitally, over 2,200,000,000 impressions for out of home and radio, while social media added another 190,000,000 impressions. As we previously stated, we expect to lower our 2016 marketing spend by approximately $20,000,000 below our 2015 budget levels.
With that budget, we were still able to begin 2016 with a bang as we initiate a comprehensive marketing campaign using Super Bowl 50 as the vehicle. In addition to continuing to build the Apartments dotcom brand, we demonstrated to property managers and owners that we're committed to the apartment space as we move into 2016. The earned media opportunity around our Super Bowl ad was very successful, achieving a publicity value of more than $14,000,000 On Tuesday, before the Super Bowl, CBS showcased Apartments dotcom in a special primetime sneak preview feature alongside other top brands including Audi, Coca Cola, Buick and Budweiser. Also leading up to the game, the Wall The Wall Street Journal announced that Apartments.com would be advertising the Super Bowl, reaching our key client constituency of owners and property managers. The Moving On Up campaign featured Jeff Goldblum, Lil Wayne and saturated Super Bowl headlines with inclusion of our moving day ad at 15 top commercial rankings in national news and entertainment publications, beating out well known players like Mountain Dew, Honda and my favorite Skittles.
Our moving day commercial broke into leading Super Bowl polls ranked number 1 in the Wall Street Journal poll for Best Super Bowl Commercial and Top Star Power. I do have to say I voted twice in the Wall Street Journal poll. U. S. Today Ad Meter included the spot as one of the 6 funniest Super Bowl commercials, and we were the only tech company to take TiVo's top 10 list, coming in at number 7 for most consumer engagement.
Apartments.com was also widely recognized in the entertainment sector, earning inclusion as one of the best commercials in Super Bowl 50 and Rolling Stone, US Weekly, Entertainment Tonight and more. We appeared in 7 national broadcast features, including CBS Super Bowl's greatest commercials, the Today Show, The Today Show, Mornings with Maria Batrimo and Squawk Box. We secured coverage in 50 print publications, including New York Times, Wall Street Journal, USA and Today Newspapers, and we're covering over 40 digital features, including The Wall Street Journal, Advertising Age, The Washington Post and Sports Illustrated. Additionally, we appeared in over 700 digital roundups, including the Business Insider, San Francisco Chronicle, Boston Herald, the Chicago Tribune and Yahoo! Finance.
We garnered over 143 broadcast mentions, including Good Day DC, iOpener Dallas Extra, Good Day New York and ABC World News Now, and Al Roker selected us as his favorite ad. We've gone over so Super Bowl is a highly visible venue and an important branding opportunity, but our Super Bowl ad represents a small component of our 2016 advertising budget. The major component is half the major component for 2016 is the half a dozen new spots we've just completed with filming with Jeff Goldblum this week, and we think these spots will evolve and extend the brand when combined with our digital initiatives. I feel that we have an open field ahead of us right now, and I'm very excited about the opportunity we have this year to further distance the Apartments dotcom brand from our competitors. In the Q4 of 2015, we completed the rebuild and launched the completely new apartment apartmentfinder.com site filled with rich CoStar information and current availabilities.
We have integrated the back ends of Apartments.com, CoStar and Apartment Finder, thereby leveraging the same system, support, research content sales platform to power our entire Apartments network consisting of Apartments.com, Apartment Home Living, Apartment Finder, the 3 websites owned by Move as well as CoStar Market Analytics. We have positioned Apartment Finder as a place for great deals and great apartments. We believe we have dramatically improved the site experience, and I encourage you all to go visit Apartment Finder and see for yourself. It's a really great website and consumers are getting good deals as we highlight apartments that have recently lowered their price or who are offering deals like free rent for a month. The Apartment Finder print services are now gone and all of our contracts have been converted to digital advertising.
Our Apartment Finder sales team is now free to go out and sell rather than convert, which I believe will increase our overall sales of apartment rental marketing services in 2016. We have now achieved Apartment Finder cost synergies of approximately 20,000,000 dollars within 7 months after the close of the acquisition. The Apartment Finder acquisition has been a great success to date and brings a great new team to CoStar Group, and I believe it will continue to help us transform our apartment listing services. CoStar Market analytics service is very closely related to Apartments dotcom and that each product is a key piece to the rent maximization puzzle. We often cross sell the 2 services together.
We believe we are the only company providing a comprehensive bundle of services that addresses the need for lead generation services as well as information services. The information component of our apartment sector products, CoStar Market Analytics, generated very strong sales growth in 2015. This new service added nearly $22,000,000 of net new subscription sales to the core CoStar offering in the 11 months from March 2015 launch through January of 20 16. We believe that at $22,000,000 in revenue, we have penetrated less than 10% of the market opportunity, and we have the potential to add 100 of 1,000,000 of dollars of information and analytics sales in the multifamily vertical. We believe CoStar Market Analytics has even greater potential financial benefit to CoStar because it can help us extend penetration beyond department clients only into valuable customer verticals such as banks, institutional owners and owners who demand comprehensive commercial real estate information coverage for all the major sectors they invest in, and they want to find it in one place.
These clients typically have more risk exposure, greater potential upside and larger budgets from which to draw for our services than do our traditional brokerage clients. Our annual subscription services continue to enjoy high trailing 12 month renewal rates of 90 percent. Our core U. S. CoStar information renewal rates remain very steady at an extraordinary 94 CoStar CoStar information services brings the overall rate down to 90%.
But at the same time, we've been working hard to move both apartments and LoopNet to generally annual contracts with a goal to significantly increase their ultimate renewal rates. So good news in the renewal rate area. I want to take a few minutes to discuss what we're seeing in commercial real estate market economics. Fundamentals are very healthy. Annual rent growth increased for each of the 4 main property types to an average 3.3% in 2015 and vacancy rates declined slightly by 30 basis points, while net absorption and construction levels rose.
Geographically, the vast majority of U. S. Metros reported improving fundamentals. For example, within the office market, 64% of submarkets recorded a year recorded a quarter over quarter improvement in occupancy, which is a market cycle high. 56% of the 54 major metros now have occupancy rates above the 2,006, 2,007 peak.
In the last commercial real estate downturn, that indicator fell dramatically 18 months before the downturn occurred. So I look at it as one of the best leading indicators for commercial estate downturns, and right now, it's solidly in positive territory. While conditions are strong, there's a great deal of room to run. Office, retail and industrial construction is on the rise, but in all of these property types, construction is still well, well below 2,000 levels and long term averages. As is often typical, some markets aren't following this exceptionally positive national trend and not surprisingly, Metro Houston is the best example due to energy prices.
But even there, where real estate demand has slowed, net absorption has remained positive for every quarter and every property type with the exception of apartments in the 4th quarter. The demand for real estate investment has been broadly based with double digit sales gains last year for every major property type. In 2015, we saw a record breaking $637,000,000,000 in commercial real estate sales, up 20% from 1 year ago and 15% over the prior 2,007 peak. The Q4 of 2015 achieved a record $180,000,000,000 And though property sales pricing is rising, it remains rational. Cap rates across property types are maintaining a 70 to 140 basis point spread over risk free rates, such as the 10 year treasury.
This is unlike the period of 1999 2,007 when cap rates irrationally pushed well below the 10 year rate. We see a broad base of strength in the major property sectors. For office, all fundamental metrics hit market cycle highs in 2015, with net absorption up 8%, completions up 40%, occupancy up 50 basis points and rent growth up 60 basis points to a 4.4% annual rate. The strongest office markets continue to be technology dominated metros with double digit rent gains still coming out of the San Francisco Bay Area. We're also finding that the flight to quality space is very strong with 4 and 5 star office properties, achieving net absorption rates twice as high as their fair market share.
The apartment sector performed solidly and rents grew 6% year over year. Apartment net absorption matched 20 fourteen's market cycle high of 209,000 units, which is 40% over the 20 ten-twenty 13 average. Net completions of 214,000 units in 2015 exceeded net absorption slightly for the first time in this cycle and were up 7% from 14%. With this robust construction activity, vacancy rates moved up 35 basis points in the later part of the year from record lows, and rents began to fall from record highs. Still, the vacancy rates were extraordinarily low.
So as they come up a bit, they're still extraordinarily low. And the rents have moved to extraordinarily high as they come down a little bit, they're still extraordinarily high. So but we believe an uptick in vacancy rate would have a very positive impact on our business. We are focused on winning advertising business with approximately 53,050 unit plus market rate properties in the U. S.
That do not currently advertise on Apartments.com. 23,000 of these 50 unit plus properties are essentially fully leased with occupancy rates at or above 98%. Fully leased properties obviously are more difficult to sell advertising to. If vacancy rates move up a few basis points or a few points, it's likely that a significant share of these 23,000 full leased properties would move more into a more active marketing phase, thereby dramatically increasing our size of opportunity. So a little bit of increase in vacancy rates is a good thing for Apartments dotcom.
We had another excellent year in Q4 in the United Kingdom. Revenue, EBITDA and net profit targets for the U. K. Were all exceeded. Revenue increased by approximately 14%, and EBITDA growth as well was well into double digits in local currency.
We had several major CoStar Suite migration wins at the end of the year, including JLL and Cushman Wakefield, as we welcome back the former DTZ users to CoStar. We also secured the commitment of the Scottish government to use CoStar Suite. CoStar U. K. Is expected to complete the migration from legacy focused platform at the end of March.
These conversions were made in average price increase of 34%. We have migrated all the large brokerages in the United Kingdom except one whose contract in England expires at the end of March. Every single major firm in Scotland has migrated. Our new acquisition in Spain is progressing in line with expectations, and we expect to have more to talk about this as the year progresses. All of these numbers are a testament to our strong leadership in the U.
K. And the potential global appeal of the CoStar service offering. The LoopNet marketplace remains The LoopNet marketplace remains
vibrant as we have over
10,000,000 registered LoopNet members. As I mentioned earlier, LoopNet net new sales on annual subscriptions in the 4th quarter accelerated significantly with an 80% increase sequentially from the Q3 2015 and 52% growth over the Q4 2014. With our combined Apartments.com and Apartment Finder sales force up to speed, our CoStar sales team can begin to return focus back on LoopNet and CoStar sales. As you know, we're in the midst of making substantial upgrades to LoopNet. A few weeks ago, we launched a new website with a cleaner user interface.
We have also begun a more to sort higher more to sort higher, enjoy a larger ad and most importantly, cross market across the CoStar platform and audience. Our single highest priority in 2016 is to complete the integration of the back ends of CoStar and LoopNet. We expect this will have a significant positive effect on our revenues, reduce our costs and increase our EBITDA. Tens of thousands of brokers and owners consistently enter and maintain good quality information on hundreds of thousands of properties in LoopNet. In fact, we often see higher quality information in LoopNet from some brokers and even many brokers than we see through the CoStar research process.
Currently, the LoopNet information does not flow automatically into CoStar, so we collect it through our research process at material and significant expense. With 2 separate databases, With 2 separate databases, our clients also incur the unnecessary expense of maintaining information in both systems. Typically significantly different, so in theory, each is less than perfect. We believe that when we create one common back end and the structure forces continuous reconciliation, we'll have a dramatically higher quality database. We believe we can identify those that digitally submit reliable content to us and begin to flow their additions and changes into our systems automatically.
This is expected to reduce our required research headcount while giving us more timely and complete information. In addition to merging the building listing in comps databases, we also plan to merge the contact or people databases of the 2 companies. We expect that this will again reduce our cost of maintaining information and improve our marketing and sales intelligence. Once we have merged the databases, we'll be able to consistently differentiate the amount of information that the lower paying LoopNet information subscribers benefit from versus the amount of information advantage higher paying CoStar customers benefit from. Most importantly, we'll be able to automate a clear continuous comparison of the data sets to our users to better facilitate upsells to our more robust information products.
While we complete this integration, we expect to launch the 2nd phase of CoStar and LoopNet cross selling. In the first phase, we generated more than $80,000,000 of additional CoStar subscription revenue while reducing our costs more than $20,000,000 I believe that this next phase has greater potential. I expect the second phase will be approximately a 2 year up sell process after integration is complete. Currently, there are 100 and 30,000 active LoopNet members that logged into LoopNet in the last 12 months and conducted more than 100 searches each. In addition, 300,000 visitors to the site conducted more than 100 searches each in the past 12 months.
This pool of 430,000 potential users is the target upsell audience for CoStar over the next few years, and it is very large. After integration is complete, we plan to convert all new LoopNet information sales to enterprise sales only, meaning that when a firm wants to buy, all the brokers need to be licensed, not just one, to prevent password sharing. We plan to offer an intermediate product between LoopNet and CoStar that the users access through loopnet.com at a price point between LoopNet and CoStar with a clear value upgrade over the legacy LoopNet information product. It will have twice as many listings as LoopNet currently offers but will not have the breadth of information and analytics that CoStar offers. We expect our sales team will work to upsell LoopNet legacy information users to this new product as well as to CoStar, one of the either, one of the 2.
In addition, we will eventually upsell from the new LoopNet product, again, up to CoStar. I believe there's a potential to upsell net $50,000,000 to $250,000,000 in subscription revenue. About a quarter of all CoStar cancels currently come from clients that use LoopNet as an alternative. We believe the CoStar cancels will go down after we integrate the 2 back ends. Eventually, we would expect to eliminate legacy LoopNet information products to focus our efforts into building industry leading marketing services on the LoopNet platform.
In 2015, we focused the majority of our researchers I'm sorry, we focused the majority of our resources on taking the leading position in multifamily information and marketing. We were successful in adding over $100,000,000 in revenue in the space and have created a widemode platform that we believe can generate high margin double digit growth for years to come. In 2016, our top priority is capturing what we believe is a huge opportunity to drive strong double digit growth in our core information products for many years to come. Any concern with the trade off we made to take the lead position at $500,000,000,000 apartment business for approximately 20 basis points reduction in our core information services reminds me of a story from my childhood. My mother came home one day from the store with 2 new shirts and told me to take them upstairs, try them on and come back down and show them to her.
I put the first one and came back downstairs. She looked at me crestfallen and said, what, you didn't like the other shirt? Of course, nothing was wrong with the other shirt. I just could not wear them both efficiently at precisely the same time. We believe both at our core we believe that our core and the apartments products can grow at strong double digit growth rates for many years to come.
We may though temporarily shift resources from time to time for strategic reasons, generally for brief periods of time, to pursue the big picture. We're proud to exit 2015 having achieved 24% top line revenue growth with a 65% year over year increase in net income. We remain committed to reaching our goal of $1,000,000,000 of revenue and 40% adjusted EBITDA margin exiting 20 18, as I believe I've mentioned. Our $100,000,000 of annualized net new sales in 20 15 indicate that our sales and marketing efforts are working exceptionally well and that our advancements in our service offerings are being well received by users and clients alike. A number of you have commented that you like the new margins growth and expansion that we're showing with our new CFO, Scott Wheeler.
So, hey, great hire. So I'll turn the call over to our outstanding new CFO, Scott Wheeler, for his maiden earnings call, Cruise.
Wonderful. Thank you very much, Andy. I don't have to call you Captain Florence going forward. But thanks for the warm welcome, Andy and team, and good morning, everyone. I do want to say that my 1st 4 to 6 weeks here with the group has been pretty eventful.
I've a chance to meet with a number of investors, so I'm sure on the phone. I also got to meet with our sales folks as they came in for our annual sales conference. Last week, I was in Atlanta getting to meet with clients and hear from them directly. And of course, my favorite was getting to watch Lil Wayne kick football for our commercial. Anyway, who would have expected that when you started a new business?
But over to the numbers, as Andy mentioned, we're very pleased with our performance for the Q4 and for the full year of 2015. The relaunch of Apartments.com, the related marketing investments, the acquisition and relaunch of the Apartment Finder and our core information businesses all drove strong sales results throughout the year and they're expected to contribute to the top line revenue growth as well as continued margin expansion in 2016 and beyond. In the Q4 of 2015, the company reported $193,000,000 of revenue, an increase of 24% compared to the Q4 of 2014. Full year 2015 revenues were 712,000,000 an increase of 136,000,000 or approximately 24% over the full year of 2014. Full year revenue growth for our core CoreStart Suite business is in the 11% to 13% range as expected.
Our gross margin was $148,000,000 for the 4th quarter or 76.6 percent of revenue compared to 72.5% of revenue in the Q4 of 2014 as a very strong increase against both prior year and the Q3 gross margin. We've completed the aggressive transition away from print at Apartment Finder and this now starts to show up in the improved gross margins, a margin which I expect to increase as our business continues its growth throughout 16. Adjusted EBITDA was $65,000,000 or 34 percent of revenues for the Q4 of 2015, an increase of 20 percent from the $54,000,000 in the Q4 of 2014. Non GAAP net income in the 4th quarter was $35,000,000 or $1.10 per diluted share, an increase of 19% compared to the $30,000,000 in the Q4 of 2014. Net income in the Q4 of 2015 was $23,000,000 or $0.71 per diluted share, an increase of 65% compared to the Q4 of 2014.
Now in the Q4, we really started to see these impacts of our cost stronger EBITDA performance. Personnel costs were very favorable as we focused on integrating our Apartments businesses, and we slowed hiring across the company. In addition, we tightened up on a number of discretionary expense areas and we're able to achieve our outstanding marketing results that Andy mentioned with slightly lower spending, an effective improvement in our ROI on marketing. Reconciliation of our non GAAP net income, EBITDA and all the other non GAAP financial measures discussed on this call, their GAAP basis results are shown in detail along with the definitions for these terms in our press release issued yesterday and they're available on our website at www.coastargroup.com. Cash and investments, $437,000,000 as of December 31, 2015, an increase of $46,000,000 from the end of the 3rd quarter.
Short and long term debt outstanding, net of debt issuance expenses, totaled $355,000,000 at year end. Cash flow generated from operating activities totaled $131,000,000 for the 12 months ended December 31, 2015. You can see
we closed out the year in
a very strong cash position, which provides us great flexibility to take advantage of growth opportunities in the year ahead, a flexibility that many of our competitors just don't enjoy. Now I'd like to give some additional color on a few metrics to highlight our strong performance in the Q4 2015. At the end of the Q4, we had approximately 5 35 salespeople across the company, represents a decline of around 60 people from the end of Q3, resulting primarily from continued integration and alignment of the multifamily sales force. Despite this reduction, we still delivered very strong and impressive business orders and sales results. With Apartment Finder integration and the realignment efforts now behind us, we plan to increase the number of sales people throughout 2016.
Throughout this, the information sales force remained relatively stable throughout the Q4. Revenue from subscription services on annual contracts was $136,000,000 for the Q4 of 2015 or 70 percent of total revenue, and this is up from 64% in the prior quarter. We made tremendous progress converting more of the Apartments customer base to annual contracts expect this trend to continue going forward. For the trailing 12 months ended December 31, 2015, revenue from annual contracts totaled $475,000,000 up 22% from the $390,000,000 for the 12 month period ended December 31, 2014, once again reflecting our continued success in growing these annual subscriptions. Renewal rates, as Andy mentioned, for annual subscriptions, revenue remained high during the Q4.
The 12 month trailing rate for CoStar subscription revenue was stable at 90.4%, while the 12 month trailing renewal rate for customers that have been with us for 5 years or longer was 96.3%, roughly in line with the last quarter. So now let's look at the outlook for the full year and for the Q1 of 2016. For the full year 2016, we expect revenue of approximately $830,000,000 to $840,000,000 or 17% to 18% year over year growth versus our 2015 results. On a pro form a basis, revenue is expected to grow 13% to 14%. Our pro form a calculation assumes the total revenue of $735,000,000 for 2015, which includes the revenue from Apartment Finder for the full year and excludes the revenue from the businesses that we discontinued such as Finder Social.
The core business again as Andy mentioned is expected to continue its double digit growth approximately 11% to 13%, underpinned by our investment in CoStar Marketing Analytics and the refocused efforts of our sales forces post integration. The combined Apartments business, including both Apartments dotcom and Apartment Finder, is expected to grow in a range of 20% to 25%. This growth range represents the combined growth of the Apartments.com business that grew at approximately 30% in the 4th quarter, along with the acquired Apartment Finder revenue base going forward. We expect revenue for the Q1 of 2016 in the range of $196,000,000 to 1 $98,000,000 representing top line growth of around 24% to 25%. In terms of earnings for the full year 2016, we expect non GAAP net income per diluted share of approximately $3.62 to $3.72 based on 32,800,000 shares, an increase of approximately 80% year over year at the midpoint.
For the full year, we expect adjusted EBITDA in the range of $227,000,000 to $232,000,000 with a margin of approximately 27% at the midpoint, an increase of 8 full points compared to 2015. We expect to see strong margin growth in the second half of twenty sixteen and exit the year with margins in the mid-thirty percent range. This increase in margin demonstrates a high degree of leverage in our business model with approximately 75% of the 2016 revenue increase converting to adjusted EBITDA. We expect Q1 2016 fully diluted non GAAP net income per share of approximately $0.66 to $0.70 based on 32,700,000 shares. As Andy discussed, we expect our marketing costs to be down year over year with advertising spend more heavily weighted in the first half as we resume our national The relaunch of Apartments.com, the addition of Apartment Finder, the continued investment in our information and analytics products will continue to improve our growth trajectory into 2016.
We're also very focused on efficiency and cost management as we drive this strong top line growth. We will continue to streamline the combined Apartments businesses and identify other areas for efficiencies throughout the company. We believe the current sales trends and the sustained focus on expense management will keep us well positioned to achieve our stated financial goals of $1,000,000,000 of revenue in 2018 and exiting that year with 40% adjusted EBITDA margins. Having said all that, we can now open up the call to questions.
So it appears that we're going to do $1,000,000,000 of revenue someday. That's our goal. Some way. 80% margin, 2019 exiting. Great.
In front
of our new cost saving initiatives, Rich, would you put another quarter in the phone? We're ready to open up for questions.
Thank First, we'll go to the line of Andre Benjamin with Goldman Sachs. Please go ahead.
Thanks. Good morning, guys.
Good morning, Andre. Good morning.
So you gave a ton of numbers. I guess I was wondering how you're thinking about the growth in the core platform in 2016 embedded in the guidance given the puts and takes in the CRE market these days, How you're thinking about the broker versus institutional side? And I guess specifically, I'm trying to make sure my math is right. If I add up all the pieces that you gave us, the apartment growth implies about deceleration for the core business to about 7% in the 4th quarter. So, I guess, what gets us back up in next year?
And is the slowdown more driven by pricing or users? I only have one question, so I have to throw a bunch in there.
No worries. So we don't get the same numbers on that. We show the core business completely stable at roughly a 12.5% year over year growth rate in the Q4. So it's been hovering at that 12%, 12.7%, 12.5%, 12.3% number consistently. And we would expect that we borrowed a lot of salespeople to supplement the Apartments.com sales force to sell apartment related products.
As we go in 2,006 and then we merged with Apartment Finder in 2015 midyear. And they and that entire team did nothing but appropriately did nothing but people from print to digital for the second half of the year. And that was a large 100 some person team. So as we move into 2016, those folks have completed that task. Those are part of people who have completed that task for Apartment Finder, and they're now available to do they focus 100% of their energy on selling apartments related business, which gives us the size and scale of the apartment sales force we and that allows us to bring some of the traditional CoStar people back to focusing on the core.
So while we only saw a few basis points of reduction in growth that reaccelerated in the Q4 in the core, the we should, as we bring more experienced salespeople back into focusing on the core products, see continued robust growth. And then the initiatives I talked about where we integrate the CoStar and LoopNet back ends, I believe that is a powerful accelerant. And I but I believe that we'll see more of that in the later part of the year. So we'll talk about that as we approach delivery on that kind of product. I think that is a multiyear powerful accelerant.
So it could be that when you're doing the math, you're seeing FX effects, you might be seeing discontinuation of a couple of little products that may be small numbers, but from quarter to quarter. So there's some products like our product Resolve that we no longer sell that product because it is not scalable. It's basically software consulting services. We like the technology we pulled from it, but we're not going to continue to sell. That's not going to be a profitable scalable business.
So that one's going backwards a little bit and that could make the numbers look it could be interpreted as something in the core. But the core is 12.5%, which is at the upper end of our 11% to 13%. Now to answer the question on when accelerating in the core, the other thing in the core, which is not core to me. So I define core as I do not blend CoStar and LoopNet as one thing. I think I look at LoopNet as a product and I look at CoStar as a product.
And then within LoopNet, I look at core LoopNet and non core LoopNet. Core LoopNet is the advertising business. LoopNet premium lister or the advertising or LoopLink, anything around advertising, that's doing well. The non core LoopNet is the information services, premium searcher, premium property comps and property facts. That is pretty much revenue waiting to be upsold to higher margin CoStar services.
So that we would see that one we would not be trying to grow dramatically. We're more setting that up for dramatic growth to CoStar upsell conversions. When you address, there's nothing we are seeing at all in our numbers anywhere related to client comment to us. I'm hearing nothing about any negative economic impact right now. And the commercial real estate markets generally are fundamentals are very strong.
And if there's any economic disruption, it is not the fault of commercial real estate this time. So and it's also important to remind people that unlike brokerage clients, we do not our revenue does not drop dramatically in a downturn. So people continue to consume information products like a CB Richard Ellis doesn't cancel their in place contract because their revenues drop, should they drop, they're not driving, but should they drop. And in the worst we ever saw was in the 50 year low watermark for the commercial real estate market was a 3% decline in revenues for the year, after which we saw a strong return. In the 1 down turn, we saw we did not see a decline.
We just kept growing. So we had brokerage firms revenues going down in that decline. We kept going up. So we do not have any indication today of any slowdown in the core or negative economic? And should there be a negative economic in the future, it's not coming from commercial office, industrial, retail, real estate, for sure.
And should that occur, it is we're not highly cyclical like our traditional customers. Now the other thing is that brokers are very important to us personally. They're less and less important to us as a revenue stream. So when we went public, they were 80% of our revenues. Today, they're 29% of our revenues.
And our revenues are diversified across banks, governments, property managers, owners, institutional investors, CMBS investors, power companies, just all kinds of folks. So we're not we do not go as a large broker term goes. So you asked a multi compound question. Hopefully, I answered the compound answer too long. Okay.
You did. I'm trying to
ramp this call up before 3 o'clock, I'm sorry.
And next we'll go to the line of Sarah Gubins with Merrill Lynch. Please go ahead.
Hi, thanks. Good morning. Good morning. Just a couple of real quick ones. Could you quantify the headwind from services at Apartment Finder that you're shutting down in 2016 numbers?
Would you characterize ad spend as being down $20,000,000 in 2016 or was there some shift from the Q4 into the New Year? And then the contract sales were fantastic, but they were sequentially down from the 3rd quarter. So I just wanted to get your take on that.
Sure. So simply put, what happened was we are taking the 2016 spend on marketing around the apartment space down $20,000,000 over the comparative numbers from 2015. The cost savings you saw in the quarter, in the 4th quarter were largely elimination of redundant positions. I mean, that's probably the single biggest beginning, middle and end
of it.
Over 2 thirds of it was from personnel related.
Yes, 200 some people.
Yes, very small amount was from the marketing piece in Q4.
And the so we think that's something that you'll see the reduction in marketing spend. But remember, at a reduced number, we are still the most aggressive player by a wide margin. And as you can tell, like Super Bowl ads, so on and so forth. And we think that will give us significant advantage. We think the marketing dollars at the lower level we are spending are highly efficient because if you're not competing with multiple other voices attempting to brand a similar product in the national space, you have very efficient dollars as very efficient dollars you're spending.
So in the 4th quarter, remember one of the things that was occurring, because you asked about the finder discontinuation of revenue, That number was $10,000,000 $13,000,000 something like that.
Yes, roughly. That was roughly around that.
$10,000,000 $13,000,000 that these were revenue this was revenue that just in the long term would distract us from other higher margin revenue. So it was negative or flat margin revenue that couldn't scale, and we thought it was frankly competitive and distracting. So we took that away to focus on the core. So you get a little bit of tailwind on that. Now remember a little headwind on that, but just year over year basis.
Now remember that in we went into Apartment Finder really aggressively. So we were not messing around and other companies have done print to digital conversions in the course of 2 or 3 years. We did a I'm sorry, a print to digital. We did a print to digital in 4 months. So we wanted to be really quick about it.
And we took 100 and some Apartment Finder salespeople and said, go to your customers and migrate them from a print publication to a digital publication, keep the pricing the same, but go from a month to month contract to a 6 month contract or a 1 year contract and do it by next Tuesday. So it was very rapid. We did that because of the margin benefit and the ability to focus aggressively and produce a much better product at the end and have a scaled sales force and get scaled advantage of these websites, one point of sales, multiple websites for the clients to enjoy leads from. So in doing that, print publications to digital. In particular, you might be in Albany, New York or something where they love their newsstand book.
And but we still turn to great results we did, despite that. And going forward, we're in a much better place than if we kept messing around with print. I hope that answered the question.
Great. Yes, the last one was just new contract sales trends.
That's the new contract sales. The slight reduction there
is the
lost contract when we lose that company in Albany that really wanted a book. Okay.
Makes sense.
Thank you. And
next, we'll go to the
Well, a question for you on the new CoStar product, the intermediate product going between LoopNet and CoStar Suite. I don't know, you have a name for it? Is it CoStar Lite something like that?
I do have a name for it.
Okay. The so the context of the question is given that product, you have your premium searcher revenue. I'd like to ask about approximately how much we're talking there that you're looking to upsell to CoStar Lite or to upsell to the CoStar Full Test. What are the different price points? How do we sort of do some back of the envelope on the potential scenarios there?
Sure. So, first of all, I think you're asking a great question. And it is one that I feel that is an important question for the company and I think that we have a good solution for that with a lot of potential. So I'm feeling very good about that area. So one of the challenges with the traditional premium searcher revenue, which is what 34,000,000 dollars Roughly $34,000,000 is that it is it was a throw it was a relatively low quality product for LoopNet historically and it was a throw away.
So they signed up a number of people at as little as $19 a month, which there's no resemblance to what CoStar charges for higher quality information product. As the LoopNet brand has strengthened, the information has gotten better in LoopNet and they're getting a lot more value than they're paying for. Now you can't increase anybody from $17 to anything meaningful at any kind of other than usurious interest rate kind of growth rate. So it's not a great approach. So we are creating a new product.
So we will those folks who are in Premium Searcher can see both basic and premium listings on LoopNet. Once we do the conversion, the only people that are going to be able to originate basic listings on LoopNet will be people who are paying to advertise with us at least some property. That means some of the basic listings will disappear reducing the value of the legacy product somewhat. And we are offering the upsell product, which has twice the listing volume and more accurate listings of the legacy LoopNet product, we'll be offering that for probably in the $195 to 2.9 $5 a month per person price range. The current legacy product is running at $115 average per month.
Now that average is very average because as you know, we took the price up to about $3.25 or something a month about a year or so ago. So that $1.15 is a blend of the $17 person and the $3.25 person. And also it's not apples to apples. It's comparing yen to pounds because a user at CoStar Group is an enterprise license where all the brokers at the site need to be licensed before the 1st broker gets the service. On the legacy LoopNet, 1 broker and a 100 shop brokerage firm might be the guy who bought the password and shares it with the entire office.
So that $34 a month account might be servicing 100 brokers. So as we bring the new product on board, it will only be licensed at the enterprise site level and it will be moving up to a higher price point. So it will be significant up from where we are before. So it's probably if someone chooses to get the more robust intermediate information product through the LoopNet platform, on average, it will likely be a 300 percent price increase or so. And we think it will be compelling to people because we'll use exactly the same methodology LoopNet used to get people from just using the free LoopNet to the premium searcher LoopNet, where every search you do, you can actually see how much content you're not seeing if you're not in the premium class.
And then the CoStar service is probably another 60% increase above the intermediate service. So we'll move people between these different price points with very clear and very discernible value proposition. So I'm very excited about it. There's a lot of software work to do this year, but clearly, our team is pretty darn good at doing that. And we're they'll hit this one as aggressive as they hit Apartments dotcom and as aggressive as they hit Apartment Finder.
And then I'm really excited what we're going to about what we're going to be able to deliver to our CoStar sales force. And then ultimately by coming up with a clear branding message around LoopNet that it's a marketing vehicle like Apartments.com is, we will ultimately, I believe, sell a lot more marketing revenue as well. And you didn't ask, but there, that's also not a pricing opportunity because our average broker client pays $17 per month for an ad on LoopNet, whereas when we sell to owners, they pay on average for $500,000 and we're going to be moving more towards that.
Wow. Okay. Well, excellent. I appreciate the I
don't know if that helps.
I appreciate the insight. And I also want to say, welcome aboard to Scott Wheeler.
Yes. Thank you very much. Great to be here. Look forward to meeting
you soon. We call him around CoStar, we call him continuous margin expansion, Scott. An acronym for that yet.
And next we'll go to the line of Sterling Auty with JPMorgan. Please go ahead.
Hey, it's actually Darren Ju on for Sterling. Great, Darren. Just a quick question. How you guys think about prioritizing spending between the Apartments dotcom and the Apartment Finder brands? And then like how do you see the growth rates of those two brands trending?
Do they converge in terms of growth rates over the long term?
Yes, good question. They are we are prioritizing branding spend around Apartments dotcom. So we put all the major media dollars into Apartments dotcom. And then but we can leverage that investment in Apartments.com to Apartment Finder or to Apartment Home Living in that as you as someone is acquired by Apartments.com, we cookie them and when they search for this is an example, they search for a pet friendly 1 bedroom in Cleveland Park in D. C, we know that.
And then we retarget them. We spend digital dollars retargeting them saying that Apartment Finder is the ideal site to find a dog friendly apartment in Cleveland Park. And that's very successful. We capture a lot of traffic by and what we're trying to do there is a typical renter goes to 2, 3, 4 sites, and we would like to be half the sites they go to by moving them around through retargeting and so on and so forth. And then the product is being sold.
We're not when we go out there today, we're not selling Apartments.com and we're not selling exposure on Apartment Finder. We're selling exposure on clean selling message. It's much more efficient. Otherwise, you'd have to have 2 competing sales forces. The clients don't want that.
The clients really like being able to pay one price and move across a whole network of websites. And the nice thing is there was not a ton of redundant client base between finderandapartments.com. So what we did is we really just increased share and then we're trying to move the overall forward.
Yes, I
think it's an important message to bring out because as we move forward into this year as we're selling this network through the sales force, there's not going to be a visible separation between Apartment Finder and Apartments.com from a revenue growth perspective. So when I gave the guidance of look for 20% to 25% combined growth going forward, That's all of our apartments, properties together in this network sell and it is exactly at or slightly above the growth rates on an organic basis we're seeing coming out of the end of 2015.
Okay. And just to clarify, the 20% to 25% growth, is that a pro form a growth assuming that you had Apartment Finder for the full year in 2015?
Yes, that's right. That's assuming that and the number I gave I think was $735,000,000 as a pro form a base that we grow off of in total. This includes that 20% to 25% apartment.
Okay. All right.
Thank you. And we believe that combined business will be profitable in the 4th quarter.
And next we'll go through the line of Andrew Jeffrey with SunTrust. Please go ahead.
Hi, it is afternoon now. How are you doing, Andy? Welcome, Scott. Look forward to working with you. I guess what I'm trying to wrap my head around a little bit kind of going back to Andre's question at the beginning of the Q and A session.
Net new has historically been our best look forward metric. It is accelerated to pretty remarkable levels reminiscent of LoopNet coming out of the last recession. And yet the implied rev guide for 2016 doesn't seem to capture that implied acceleration. So I'm wondering if net new isn't the best sort of forward looking metric anymore or if there are some puts or takes or how we should think about your guidance visavis bookings growth and perhaps some conservatism. I'm The breakdown, seeming breakdown in the relationship is what I'm trying to understand better.
It's a good question. I think as you think of the net new is still the metric we'll be using in the annual subscriptions to show how that turns obviously into revenue in the future. The other thing we all have to get used to is now that we've got a really big multifamily and apartments business, it demonstrates a different seasonal pattern in its new and subscription revenue from quarter to quarter. Obviously, there's a peak season in the second and the third quarter for renting and then that cools off. That pattern is going to hold true for the sales efforts.
It's also going to hold true for our marketing efforts. So from what we've been used to in the past, we're going to see a more seasonal pattern that's decent in the Q1. It grows 2nd, 3rd, then it softens in the 4th when you look at apartment selling. So when you peel all those pieces apart and we look sequentially and forward, each of the individual components, seasonality aside, continues to grow and will continue to grow in each quarter next year over the prior quarter. I know it's difficult to see because until we get annual periods of all this stuff in place, it's not as clear.
But that's what we're seeing in the underlying metrics in the new business that we're putting on and then that's translating into consistent sequential growth going forward.
So I think I do think that it is the best single indicator of future revenue expectations. You do have a lot happening. So you have the Finder conversion really coming to a head in the Q4, where we did record reductions. We had the shutdowns of revenue. So that moving Finder through in essence in a 3 month period creates a little bit of noise.
And then I think that we're not looking to be overly aggressive as we go into 2016. We'd like to see we would like to see us continue to put up these unusually strong sales results ongoing. And it's not I don't want to speak on behalf of Scott, but coming into new CFO role, you wouldn't amp up all the dials from the prior year with your over 4 weeks of high confidence.
Thank you for that, Gus. Good introduction.
Okay. So
there's no so you wouldn't call out, for example any inflation in the net new number which is resulting from the conversion of less than annual terms to annual terms which would otherwise blunt future revenue growth. In other words, better retention, better economics, but maybe less related revenue growth.
No. And I believe our apartment renewal rates are doing really well. I think we're going to do a lot better in the apartment renewal rates than anyone in our industry has ever done. And anecdotally, there was one client that you would I mean, we have we're bringing a lot to the table for the clients right now. And so we have a much stronger hand or much stronger product than anyone has had in the space before.
And there was one client that sticks in my mind that we saw a reduction in their spend, as a major national player. It was the only major national player I was aware of. We saw a reduction in their spend in the later part of the year. But they've actually brought that right back up online and above. So I actually think our renewal rate in the apartment side is pretty darn good.
We'll be working hard to keep it up there. And I think it probably ends up being stronger than the LoopNet renewal rate somewhere between LoopNet and CoStar. And that makes that net bookings number actually a good fair representation of what's happening in the business. But there's so when you discontinue all that finder social in the Q4, you take negative net news for terminating a book ad campaign in Albany. There's a little bit of noise there, but the big and it's happening so quickly.
I mean, remember, this has all accelerated in the last three quarters. But I'd say it's still the best indicator. Okay, great.
Thank you very much.
And next, we'll go to the line of Michael Huang with Needham. Please go ahead.
Thanks and good morning guys. Just a quick one for you. So with respect to the annual sales conference that you hosted, what were the key takeaways? And could you share how you're thinking about ramping headcount across the product areas? And maybe the profile of who you're hiring and whether or not that's any different than kind of who you've hired in the past?
Thanks.
So well, one really nice thing about the sales conference was that I felt that there was really good energy and integration between the CoStar sales team, the Apartments.com sales team and the Apartment Finder sales team. So this was the first time they all got an opportunity to get in the same room and it was the first time that they had one relatively common set of products And it was also the first time that they had a really good, I think, a really good territory system they get a hold of so they can understand what their mission was in this collection of products. So I thought there was really good energy. I thought there was a little bit of a morphing of the personalities of the 3 different sales forces into a more corporate, central casting, send me a high end salesperson look. I mean, they were really dressed up.
But the expansion areas would be we're adding customer relationship management people to the CoStar information sales team, about 80 people there. They have some selling responsibilities, but their core responsibility is driving usage. Their selling responsibility is really more around LoopNet to brokers. So that will sustain and drive the LoopNet PL. Then the other thing we did is Max and I spent just thinking very carefully about our rationales of potential revenue, existing revenue and just set slightly different target levels in different cities, especially cities we think have a lot more revenue upside.
So it was a really good feel other than a blizzard that came in and potentially was going to strand 700 salespeople on my credit card for 3 days in Washington. So we had to
get them out of
there quickly, but ahead of the storm. And we only had to pick up the tab for about 30 Brits for the weekend, so it turned out okay.
Yes. We'll also see the territories were aligned closely now in apartments and we have a couple extra regions we've done in a couple 100 territories that we've now aligned with the combined sales force, you can expect there's a number of territories we need to put more folks against. And so that's the other piece besides the customer relationship piece Andy mentioned we'll see more sales force in multifamily going out of those territories.
Okay.
And next we'll go to the line of Brett Huff with Stephens Inc. Please go ahead.
Good afternoon and welcome, Scott.
Thanks, Brett.
Andy, can you talk about lead quality? You mentioned kind of you're expecting high renewal rates from the multifamily folks. The investment you all made in getting real time availability, I think, sort of was the game changer you're going after. It was supposed to produce higher quality leads. Can you give us if it's a metric or anecdotes just to compel us that that's working as you've expected and that it is the leads are higher quality?
Sure. The so again, there's not a there is no sort of 3rd party lead monitoring service that puts out a metric that we can use. But I could take an anecdotal from our biggest customers where they're watching that lead flow and they're saying that one customer, one major customer said, Look, you all came in, in March of last year saying you're going to have this great traffic and great lead flow, and you want us to immediately switch all our advertising to you after we've been doing this for 30 years. So we're going to do that until we watched results for a period of time. And they said that they said and it's consistent with others are saying that as they monitor it, they see a clear and growing differentiation between the leads they receive from us.
And lead is a dirty word. It's what you're really looking for is lease. And so the leases they're seeing come from us is differentiated from all the other sources, which is why they're spending, as you can see from any pretty clear, there's a major shift from other sources to us. That is the best testament of lead quality. But we did an interesting study the other day, and you go back to the old manual way of trying to lease up your apartment building, we know from digitally tracking the results of over 10,000,000 phone calls into apartment communities in 2015.
They only answer the telephone during normal business hours 27% of the time. So they're only available to give somebody information on apartment 27% of the time. And then working on a special project that we made 1500 calls that were all recorded legally and that a separate person and each community was called and asked for a 1 bedroom availability by 2 different people. Each call was recorded And then a 3rd party determined whether or not an accurate answer was given on whether or not there was availability. The accuracy rate for when you call an apartment community and whether or not they have a 1 bedroom availability is 50%.
So when you call and ask community, do you have one bedroom available, they're only able to give the right answer 50% of the time. So you're down to for every 100 calls that come in only 13.5 of them are answered correctly. So the only way the industry is going to lease stuff up is through digital presentation right from the property management systems to the customer. So what we're doing is we're giving consumers neighbors they ask for. We're not playing any games where we serve up apartments that are not available.
So the quality of our leave flow would follow as much better. And then I think that just is evidence. My belief is that the competing companies are seeing significant reductions in revenue other than whatever they could pick up in the print to digital conversion volatility. I think they're seeing negative numbers and that's basically follows from the lead flow.
Okay, that's great. That's great. I appreciate the detail.
And our final question will come from the line of Peter Lowry with JMP Securities. Please go ahead.
Great. Thanks. Just one quick one. Can you give us an update on your current M and A stance or other capital allocation plans? Thanks.
Sure. So I would I'd have to say that there's more potential initiatives that we could pursue than I've ever seen before. Is a wide array and they lie in our traditional business area, in the core business area. They also are in the apartments area. And then they're in related areas.
We also separately are looking at smaller acquisition opportunities in Europe. But so we obviously with growing cash balances and very conservative debt posture, we have capacity. But I would not want to let anything right now interfere with our core priority of integrating LoopNet and CoStar. So whatever happens, the first priority is getting the benefit of that integration done. And so we're probably operationally adverse to adding additional workload for at least 6 months.
But we Frank Carcetti, who's been with us for a long, long time, he's one of 4 CFOs that hang around here, former CFOs that hang around here. He has handed off his responsibilities for our very large research department, and he's focusing on some of our subsidiaries and he's focusing on M and A. So he's spending a lot more time on that. We are looking a lot of things. But again, priority number 1 is operations and realizing the benefit of the resources and assets we already have.
Great. Thank you.
Thank you. So what the heck, we're going to break the rules. We have one more question from Sarah and then we're going to move to the 2nd quarter results.
Thank you. So I just want to clarify with the apartments guidance that you gave for 2016. You've been talking about 25% to 30% before. And I think that referred just to apartments .com and you're now including Apartment Finder and probably some of the product shutdown that's impacting in 2016. Is that the reason for the lower growth versus the 25 percent to 30% that you talked about before?
Yes, Sarah, that's exactly it. When we talked in the last quarter, we said 25% to 30% for Apartments .com. And until we finished the wind off of Finder, we didn't have a good base to start using in our go forward organic growth calculations to know what that combined business is going to be. Now, as you point out, we have that clarity. We know where it's running.
You combine the 30% from Apartments.com with the remaining base of Apartment Finder and on a go forward basis you get 20% to 25% growth range, which is at or slightly above the equivalent of the 30% that we spoke about before. So there is no decline there, there's no change there. It's actually a slight acceleration through each quarter we see next year from the 30% in quotes that we said last year. Is that clear?
Yes, that's very clear. Thank you.
Okay. With that, we will wrap it up. Thank you all for joining us. Congratulations, Scott, on your first earnings call.
You very much. Host start. We'll see you next time.
And ladies and gentlemen, that does conclude our teleconference call for this morning. Again, thank you very much for your participation and for using the AT and T Executive Teleconference Service. You may now disconnect.