The company has vowed to cut spending on Homes.com by more than 35% after years of trying to build a fourth major real estate listing search portal.
CoStar laid off members of its Homes.com team this week as the company began implementing a series of cost cuts under pressure from investors.
The company would not confirm how many roles were affected, whether the layoffs were focused on specific teams, whether it shifted away from using writers to create content to enrich listings, or whether sales roles were moved from Homes.com to other parts of the company.
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Instead, the company acknowledged in a statement that it had cut jobs and said it would focus on artificial intelligence going forward.
“In order to align our organization with these strategic objectives and position the company for continued success, we have made the difficult decision to eliminate certain roles within our organization,” a CoStar Group spokesperson said in a statement. “This decision was not made lightly, and we deeply appreciate the contributions each affected team member has made during this transformational period.”
The cuts come at a time when CoStar has pledged to reduce spending on Homes.com by $300 million this year, totaling more than 35% compared to last year’s spending. The company said it will save more than $100 million each year until 2030, when Homes.com is expected to reach profitability.
The layoffs were announced a day after CoStar announced Homes AI, an artificially intelligent search assistant.
The cuts followed growing pressure from investors who questioned CoStar’s aggressive foray into residential after dominating the commercial real estate sector.
Koster suggested that the impending cost reductions mark the end of the investment period and the beginning of a new era in which Homes.com’s value proposition will be proven in the market.
“Over the past two years, we have experienced a period of rapid growth following the initial investment phase and successful launch of Homes.com,” a company spokesperson said. “This momentum has enabled us to achieve important milestones and expand our services to further meet the needs of our customers.”
According to local reports, CoStar also mentioned AI last year when it planned to eliminate some roles and hire for other roles, such as expanding its sales force at Homes.com.
The ongoing changes come as Coster seeks to protect itself from activist investors who have criticized the company’s heavy spending on Homes.com in recent years.
DE Shaw and Third Point each said the focus on building a portal that could compete with Zillow, Redfin and Realtor.com for consumer awareness was misguided. DE Shaw said it was time for the company to abandon Homes.com, saying it was hurting the performance of CoStar’s primarily commercial real estate brands.
CoStar is scheduled to report its fourth quarter results next week.
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