SEGMENT REPORTING

6 Months Ended

Jun. 30, 2015

Segment Reporting [Abstract]

SEGMENT REPORTING

SEGMENT REPORTING

The Company manages its business geographically in two operating segments, with the primary areas of measurement and decision-making being North America, which includes the U.S. and Canada, and International, which includes the U.K. and France. The Company and its subsidiaries' subscription-based services consist primarily of information, analytics and online marketplace services offered over the Internet to commercial real estate industry and related professionals. The Company’s subscription-based information services consist primarily of CoStar Suite^TM services. CoStar Suite is sold as a platform of service offerings consisting of CoStar Property Professional®, CoStar COMPS Professional®and CoStar Tenant® and through the Company's mobile application, CoStarGo®. CoStar Suite is the Company’s primary service offering in the North America and International operating segments. Management relies on an internal management reporting process that provides revenue and operating segment EBITDA, which is the Company’s net income (loss) before interest, income taxes, depreciation and amortization. Management believes that operating segment EBITDA is an appropriate measure for evaluating the operational performance of the Company’s operating segments. EBITDA is used by management to internally measure operating and management performance and to evaluate the performance of the business. However, this measure should be considered in addition to, not as a substitute for or superior to, income from operations or other measures of financial performance prepared in accordance with GAAP.

11. SEGMENT REPORTING — (CONTINUED)

Summarized information by operating segment consists of the following (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
Revenues
North America	$	164,486		$	141,849		$	317,503		$	255,175
International
External customers	6,171			5,859			12,174			11,609
Intersegment revenue	13			36			21			36
Total International revenue	6,184			5,895			12,195			11,645
Intersegment eliminations	(13		)	(36		)	(21		)	(36		)
Total revenues	$	170,657		$	147,708		$	329,677		$	266,784
EBITDA
North America	$	(1,854	)	$	37,090		$	11,823		$	63,458
International	399			489			1,028			1,113
Total EBITDA	$	(1,455	)	$	37,579		$	12,851		$	64,571

The reconciliation of EBITDA to net income (loss) consists of the following (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
EBITDA	$	(1,455	)	$	37,579		$	12,851		$	64,571
Purchase amortization in cost of revenues	(6,576		)	(7,880		)	(12,923		)	(10,757		)
Purchase amortization in operating expenses	(6,965		)	(9,036		)	(14,107		)	(12,335		)
Depreciation and other amortization	(5,133		)	(3,754		)	(9,457		)	(7,429		)
Interest income	137			62			431			199
Interest expense	(2,354		)	(3,753		)	(4,697		)	(5,368		)
Income tax benefit (expense), net	7,380			(4,969		)	6,809			(10,892		)
Net income (loss)	$	(14,966	)	$	8,249		$	(21,093	)	$	17,989

Intersegment revenue recorded was attributable to services performed for the Company’s wholly owned subsidiary, CoStar Portfolio Strategy by Grecam S.A.S. (“Grecam”), a wholly owned subsidiary of CoStar Limited, the Company’s wholly owned U.K. holding company.

North America EBITDA includes an allocation of approximately $336,000 and $383,000 for the three months ended June 30, 2015 and 2014, respectively. North America EBITDA includes an allocation of approximately $538,000 and $736,000 for the six months ended June 30, 2015 and 2014, respectively. This allocation represents costs incurred for International employees involved in development activities of the Company’s North America operating segment.

International EBITDA includes a corporate allocation of approximately $69,000 and $58,000 for the three months ended June 30, 2015 and 2014, respectively. International EBITDA includes a corporate allocation of approximately $126,000 and $138,000 for the six months ended June 30, 2015 and 2014, respectively. This allocation represents costs incurred for North America employees involved in management and expansion activities of the Company’s International operating segment.

11. SEGMENT REPORTING — (CONTINUED)

Summarized information by operating segment consists of the following (in thousands):

	June 30, 2015			December 31, 2014
Property and equipment, net
North America	$	82,781		$	71,209
International	2,661			2,544
Total property and equipment, net	$	85,442		$	73,753
Goodwill
North America	$	1,222,055		$	1,114,363
International	24,734			24,442
Total goodwill	$	1,246,789		$	1,138,805
Assets
North America	$	2,124,922		$	2,138,768
International	41,121			41,896
Total operating segment assets	$	2,166,043		$	2,180,664
Reconciliation of operating segment assets to total assets
Total operating segment assets	$	2,166,043		$	2,180,664
Investment in subsidiaries	(18,344		)	(18,344		)
Intersegment receivables	(73,752		)	(78,638		)
Total assets	$	2,073,947		$	2,083,682
Liabilities
North America	$	558,696		$	564,832
International	75,182			75,584
Total operating segment liabilities	$	633,878		$	640,416
Reconciliation of operating segment liabilities to total liabilities
Total operating segment liabilities	$	633,878		$	640,416
Intersegment payables	(66,084		)	(70,280		)
Total liabilities	$	567,794		$	570,136