Release Date: November 21, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- KE Holdings Inc (BEKE, Financial) reported a 12.5% year-over-year increase in total GTV, reaching RMB736.8 billion.
- The company's new home transaction GTV increased by 18.4% year-over-year, significantly outperforming the market.
- Revenue from home renovation and furnishing services grew by 32.6% year-over-year, demonstrating strong growth in this segment.
- The number of active agents on the platform grew to over 420,000, indicating a robust expansion of the agent network.
- KE Holdings Inc (BEKE) maintained a high level of cash liquidity at RMB76.3 billion, supporting financial stability and shareholder returns through share repurchases.
Negative Points
- Gross margin declined by 4.7 percentage points year-over-year to 22.7%, primarily due to increased fixed labor costs.
- GAAP net income decreased by 0.2% year-over-year, and non-GAAP net income fell by 17.5%, indicating pressure on profitability.
- The contribution margin from existing home transaction services decreased by 7.7 percentage points year-over-year.
- Revenue from emerging and other services decreased by 21.5% year-over-year, reflecting challenges in diversifying revenue streams.
- The home rental services business saw a decline in contribution margin due to higher commission expenses related to seasonality.
Q & A Highlights
Q: How does the management view the recent property policy changes, and what effects have been observed so far?
A: (Tao Xu, CFO) The recent policy changes have led to a stronger market recovery compared to previous rounds. Transaction volumes in both existing and new home markets surged, especially in Tier 1 cities. The policies introduced a comprehensive package of countercyclical measures, which have improved market expectations and led to significant increases in transaction volumes and temporary price stabilization.
Q: What is the growth outlook for the home renovation and furnishing business, and how has operating efficiency been improved?
A: (Tao Xu, CFO) The home renovation and furnishing business achieved steady growth with a 25% increase in contracted sales and a 33% rise in revenue year-over-year. Operating efficiency has been improved through refined operation management, centralized purchasing, and enhanced product packages, leading to a contribution margin of 31.2%.
Q: How does KE Holdings plan to sustain its market outperformance in both existing and new home businesses?
A: (Tao Xu, CFO) KE Holdings focuses on platform expansion, ecosystem development, and high-level collaborations with developers. The company has expanded its agent store network and shifted strategy towards larger stores to boost scale and efficiency. In the new home business, strategic collaborations with top developers have been enhanced, leading to increased market share and sell-through rates.
Q: Can you share insights into the operations of the home rental business and how it differentiates from others?
A: (Tao Xu, CFO) The home rental business saw a 118.4% increase in revenue due to a rise in managed units. KE Holdings focuses on quality and efficiency, offering standardized services and centralized management. The lease renewal rate improved, and operational efficiency was enhanced by reducing vacancy periods and optimizing product models.
Q: What is the rationale behind the recent land acquisition in Chengdu, and what is the company's business model for this project?
A: (Tao Xu, CFO) The land acquisition in Chengdu is a pilot project to validate KE Holdings' C2 solutions across various stages. The company aims to build trust with partners and does not intend to become a real estate developer. The long-term business model focuses on providing residential development services through a data-driven approach, charging service fees for integrated solutions rather than capital investment.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
