KE Holdings, Inc. Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Business growth: In the first quarter, the business continued rapid growth, supported by market momentum and the active growth strategy. In the fourth quarter, GTV of the platform increased by 34% and revenue rose by 42% year-over-year.
• AI application: In housing transaction business, tested AI-powered home seeking assistant accessible to 40% of traffic. Developed AI-based agent assistant for service providers and AI property maintenance assistant for agents. Digital partner Xiaobei improved operation support.
• Operational efficiency: In the fourth quarter, GTV per store per agent rose by 8% and 14% respectively, and GTV per agent for connected stores was up 18% year-over-year.
• Business segments: Home renovation advanced product design and rolled out project manager programs. Home rental services saw rapid growth in the number of rental units under management. AI deployed in contract conversion, construction process, and internal management.

Segment Performance

• Housing transaction services: Total TTB was RMB844.2 billion, a year-over-year increase of 34%. Net revenue reached RMB23.3 billion, up 42.4% year-over-year. In-home transaction revenue in Q1 was RMB6.9 billion, up 20% year-over-year, with GTV of RMB580.3 billion, rising 28.1% year-over-year. New home transaction GTV was RMB232.2 billion in Q1, up 53% year-over-year, and revenue was RMB8.1 billion, up 64.2% year-over-year.
• Home renovation and furniture: Revenue reached RMB2.9 billion, increasing by 22.3% year-over-year. The contribution margin reached a record high of 32.6%, up 2 percentage points year-over-year and 2.8 percentage points quarter-over-quarter.
• Home rental services: Revenue reached a record high of RMB5.1 billion in Q1, up 93.8% year-over-year. The number of rental units under management exceeded 500,000 at the end of Q1.
• Emerging and other services: Revenue decreased by 50% year-over-year and 20.3% quarter-over-quarter to RMB350 million in Q1.

Guidance

• Market outlook: Expected a typical seasonal slowdown in Q2 sequentially. Year-over-year, the existing home market is expected to see a slight increase in existing home transaction volume but at a slower pace than Q1. Impact of international trade frictions on housing transactions monitored.
• Business strategy: Focus on efficiency improvements in financial strategy, continue to support long-term business development by exploring AI technology, and aim to consistently offer stable and sustainable returns to shareholders.

Risks

• Impact of international trade frictions on housing transactions, which may cause short-term uncertainties affecting buyer expectations.

Question and Answer

Q: Outlook for property market going forward, considering macro dynamics and U.S. tariff?

A: Tao Xu said for Q2, expected a seasonal slowdown sequentially. Year-over-year, the existing home market may see a slight increase but at a slower pace. Monitored the impact of trade frictions on housing market through lead indicators like home viewing, customer traffics and listing volume.

Q: Expansion plan for housing agents and agency stores, and efficiency improvement?

A: Tao Xu mentioned continued growth of active stores and agents. Focus on cost-effectiveness, used digital tools and incentive programs to improve efficiency. Aimed to develop more high-performing stores and increase the proportion of large and high-quality stores.

Q: Home renovation and furniture segment operation and AI strategy?

A: Tao Xu detailed that home renovation and furniture revenue was RMB2.9 billion (+22.3% yoy). AI applied in contract conversion (rapidly form IR proposal), construction process (intelligent construction system), and internal management (AI employees for team management).

Q: Beihaojia contribution to new home development and C2M business?

A: Tao Xu explained Beihaojia's C2M model provides new home product solutions for developers. Used AI and database to understand customer needs. Participated in new home projects, and had advantages in customer insight and market knowledge for developers' decision-making.