KE Holdings, Inc. Q3 FY2024 earnings call

• In Q3, each business segment delivered solid results. Existing home transactions GTV grew 8.8% y-o-y, new home transactions GTV grew 18% y-o-y, home renovation and furnishing revenue grew ~33% y-o-y, and home rental services revenue grew 118% y-o-y.
• Emphasized the importance of long-term perspective, with survival and development as core imperatives, and integrity and creativity as key for long-term success.
• Platform active stores increased by 14.6% y-o-y with nearly 6,000 net additions, and active agents exceeded 420,000. Strategic collaborations with top developers covered 26% of new home transactions in August.
• Optimized store and platform operating efficiency; non-Beijing/Shanghai average revenue per store exceeded previous years' same period, and support ratio of platform staff to frontline agents reached record high.
• Officially established a small leadership committee to plan key strategies and initiatives, and appointed CEOs for new businesses to drive synergies.
• Home renovation and furnishing business had revenue over RMB10 billion in the first three quarters across over 45,000 projects; home rental services business had revenue near RMB10 billion in the first three quarters with Carefree Rent managing over 360,000 units.
• Launched store points incentive program to reward store owners, distributing ~RMB18 million in cash equivalent incentives to pilot cities in Q3.

1. Existing home transactions business: GTV reached RMB477.8 billion in Q3, up 8.8% year-over-year; revenue was RMB6.2 billion, down 1.4% year-over-year and 15.2% quarter-over-quarter. 2. New home transactions business: GTV was RMB227.6 billion in Q3, up 18% year-over-year; revenue was RMB7.7 billion, up 30.9% year-over-year but down 2.6% quarter-over-quarter. 3. Home renovation and furnishing business: Revenue in Q3 was RMB4.2 billion, up 32.6% year-over-year; contracted sales were RMB4.1 billion, up 24.6% year-over-year. 4. Home rental services business: Revenue in Q3 was RMB3.9 billion, up 118.4% year-over-year; by the end of Q3, the number of rental units managed exceeded 370,000, with Carefree Rent managing over 360,000 units. 5. Emerging and other services: Net revenue decreased by 21.5% year-over-year in Q3.

• Central government's positive policies boosted market rebound, and expected market to be relatively stable in Q4.
• Latest round of policies have more enduring effects on the housing market, but housing price sustainability needs observation, and requires economic fundamental recovery and supply-side measures.

• Industry has fundamental unresolved problems related to quality and commitment.
• Market environment changes may bring risks such as sustainability of policy effects and economic fundamental recovery.

Q: Regarding recent real estate policies, how does management view the difference from the past, the effect of policies on leasing, and the market forces required for market stabilization?

A: Q3 market performance was muted, but post-September policy package led to strong market rebound. This round of policies has wider scope and intensity than previous ones, promoting transaction recovery. Future market stabilization needs economic fundamental improvement and supply-side measures.

Q: What is the growth outlook for the home renovation and furnishing business and progress in operating efficiency improvement in light of signs of recovery in home transactions in September?

A: Q3 home renovation and furnishing business achieved steady growth. Through optimizing operation management, centralized purchasing, shortening construction timelines, and strengthening after-sales, operating efficiency and profitability were improved.

Q: What are the plans for store expansion and maintaining outperformance of the market?

A: Platform active stores and agents increased. Second half strategy shifted to large stores, raised store threshold, and adopted refined strategies for different business districts, and launched store points incentive program to boost scale and efficiency.

Q: How is the operation different in the home rental business?

A: Q3 home rental services revenue grew 118.4% y-o-y. Through optimizing services, centralized management, improving lease renewal rate and leasing efficiency, and taking targeted measures in peak and off-seasons, the business maintained growth.

Q: About Beihaojia project and business model?

A: Beihaojia won a land auction in Chengdu. It is a data-driven residential development service platform with C2M product solution, and will charge service fees for integrated solutions, not a real estate developer.