Hello, ladies and gentlemen. Thank you for standing by for KE Holdings Inc.’s Fourth Quarter and Fiscal Year 2024 Earnings Conference Call. Please note that today’s call, including the management’s prepared remarks and question-and-answer session, will all be in English. Simultaneous interpretation in Chinese is available on a separate line for the duration of the call. To access the call in Chinese, you will need to dial into the Chinese language line. At this time, all participants are in listen-only mode. Today’s conference call is being recorded. I will now turn the call over to your host, Ms. Siting Li, IR Director of the Company. Please go ahead, Siting.

Good evening and good morning, everyone! Welcome to KE Holdings Inc., or Beike’s, fourth quarter and fiscal year 2024 earnings conference call. The Company’s financial and operating results were published in the press release earlier today and are posted on the Company’s IR website: investors.ke.com. On today’s call, we have Mr. Stanley Peng, our co-founder, chairman and chief executive officer, and Mr. Tao Xu, our executive director and chief financial officer. Mr. Peng will provide an overview of our strategies and business developments, and Mr. Xu will provide additional details on the Company’s financial results. Before we continue, I refer you to our safe harbor statement in our earnings press release, which applies to this call as we will make forward-looking statements. Please also note that Beike’s earnings press release and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. Please refer to the Company’s press release, which contains a reconciliation of the unaudited non-GAAP measures to comparable GAAP measures. Lastly, unless otherwise stated, all figures mentioned during this conference call are in RMB. Certain statistical and other information relating to the industry in which the Company is engaged to be mentioned in this call has been obtained from various publicly available official or unofficial sources. Neither the Company nor any of its representatives has independently verified such data, which may involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such information and estimates. For today’s call, management will use English as the main language. Please note that the Chinese translation is for convenience purposes only. In the case of any discrepancy, management’s statements in their original language will prevail. With that, I will now turn the call over to our Chairman and CEO, Mr. Stanley Peng. Please go ahead, Stanley.

Thank you, Siting. Hello everyone. Thank you for joining Beike’s fourth quarter and fiscal year 2024 Earnings Conference Call. Over the past year, China’s real estate industry has matured faster. We’ve seen accelerated changes, some changes are abrupt. For the past thirty years, the decision-making process for buying a home was relatively simple, and the risks of making the wrong decisions were low. The main concern for buyers was speed. When a home became available, the question was simply whether they could secure it. In this kind of market, brokerage companies grew by scaling up because the larger the network, the easier it was to access information, connect buyers and sellers, and close deals. Buyers didn’t worry much about who they were buying from; getting the home was what mattered. But now that home prices are no longer on a one-way upward trajectory, there is more uncertainty in customer decision-making, and the costs of making the wrong decision are much higher. Because of this, buyers’ needs have changed. First, they want to minimize the risks of buying a home and seek greater certainty in their purchasing decisions. Second, they prioritize ‘living well’—a subjective experience and a “feeling”—that is harder to capture and measure. Everyone is looking for the best possible solution. Our job, first and foremost, is to build the capability to reduce customer decision-making risks and help them find the best option. This is also how we see AI technology, both in terms of its potential and how we apply it. Whether through AI or other tools, our goal is to help customers make the best decisions and, guiding them to address various life challenges through better living solutions. Second, from the service providers’ standpoint, a lot of the experience and knowledge they’ve built up in the past no…

Thank you, Stanley, and thank you everyone for joining us. Before we dive into our Q4 performance, I would like to briefly touch on some updates of the housing market in the past year. In 2024, although the annual total transaction volume of the new home sales market was estimated to have declined by around 18%, the Chinese real estate market witnessed a significant recovery in the fourth quarter following the stimulus package policies in September. According to the National Bureau of Statistics, new home sales rose by nearly 30% quarter-on-quarter and achieved a 4% year-on-year growth in the fourth quarter. Meanwhile, existing homes demonstrated home buyers’ preference, with its proportion in total real estate market transactions continuously rising, thanks to "readily available" feature as well as the flexible supply and price adjustment mechanism. According to the Beike Research Institute, the proportion of existing home GTV in total market GTV has risen from 40% in 2023 to 46% in 2024. Following an increase of nearly 40% year-on-year in 2023, the number of transaction in existing home sales market further grew by more than 10% in 2024. Although the national transaction price of existing homes still declined year-on-year in 2024, the prices rose by 0.2% sequentially in the fourth quarter indicating a changing trend, with the support of policies aimed at stabilizing the market. Home upgrade demands have become stronger. For sold existing homes, the average area, and the proportion of homes with three-bedroom and above both have increased year-on-year in key cities. The opportunities in the market and Beike’s positive long-term growth strategy enabled us to continue making breakthroughs in scale in 2024. Our full-year revenue reached RMB93.5 billion, up 20.2% year-over-year. Revenues from existing and new home transaction services both grew year-over-year, reflecting our home transaction services’ solid fundamentals.…

Thank you. As a reminder, we only accept questions on the English language line. For the benefit of all participants on today’s call, please limit yourself to one question, and if you have additional questions, you can reenter the queue. If you are going to ask the question in Chinese, please follow with an English translation. Your first question comes from Jizhou Dong with Nomura. Please go ahead.

Thanks management for taking my questions. My question is about the utilization of the technology for Beike. So just now Stanley has mentioned that Beike is able to empower its offline stores and increase its operational efficiency through technology tools such as AI property consultant, property sourcing assistant, et cetera. So can I ask is the management considering further introducing or collaborating with advanced AI large models such as DeepSeek to enhance and optimize the business operations of the company? Like for example, how can AI be leveraged across the different business areas such as home renovation, property recommendations, and customer services to further increase the user experiences? Thank you.

Thanks for your question. For how AI might impact our industry by enhancing efficiency and user experience, we can think about this from three perspectives: the service side, the supply side, and the platform side. From Consumer Services Perspective: Buying and selling real estate has become more challenging for today’s clients due to increased uncertainty and risk in decision-making. As a result, clients need access to data, knowledge, know-how, or what we now refer to as intelligence. AI can effectively address the issues customers face, leading us to conclude that AI can significantly optimize the customer experience and greatly improve the quality of services on the demand side. And secondly, from the supply side perspective, we believe that AI will enhance the capabilities of skilled agents and accelerate the industry focus on high-quality supply. For a third one, from platform perspective, AI provides platforms with more opportunities to address efficiency challenges through innovation. We often emphasize that the core elements of the industry are quality, scale, and efficiency. Historically, our strategies through authentic property listings, building housing dictionary, service standardization, and our platform model, have resolved quality issues on the service side. We also tackled challenges of scalability on the supply side through adopting a platform business model. However, the industry’s most significant challenge remains efficiency. If efficiency issues are not resolved, profitability will also be a challenge. The emergence of AI can be seen as a production factor integrated into the value chain, potentially helping us tackle quality and scale problems while also addressing efficiency challenges. This can create new opportunities for the entire platform and increase its value. Given these conclusions, we place great importance on the capabilities and potential of AI, and we have initiated a series of explorations. We have integrated our own residential industry data…

Thank you. Your next question comes from Timothy Zhao with Goldman Sachs. Please go ahead.

[Interpreted] Thank you management for taking my question. My question is regarding the property market outlook. As we have seen a pretty strong rebound of the property market since last September. Just wondering if you can share any insights on the recovery sustainability, especially regarding the trend year-to-date, and how will management team think about the market outlook for this year? And are we going to turn more optimistic about the market? Thank you.

Thank you. In 2024, the market saw many new changes. These can be summarized as unprecedented policy stimulus, new positive signals in Q4, and accelerated structural changes. Let’s look at these changes in more detail. On the policy front, 2024 has seen a stronger-than-expected policy impact. Particularly, the central government had a policy pivot on September 26 to “stabilize the property market”, with more intense, systematic, and swiftly implemented measures than before being rolled out. These policy effects brought market resilience. In 2024, the existing home market nationwide saw decreasing price for increasing volume. According to estimates from the Beike Research Institute, in 2024 the number of existing home transaction units in China rose by about 15% year-over-year, while total GTV grew by around 2% due to price factors. Particularly, with the release of new policies on September 26, the transactions recovered quickly. In Q4, existing home GTV on our platform rose by around 60% year-over-year, marking a stronger and more sustained rebound than ever before. Also, the price stabilized somewhat, ticking up 0.2% in December compared to September, marking the first quarterly increase in nearly two years. In 2024, the new home market nationwide continued to face challenges. According to official data, national new home sales declined by 18%, while new home GTV of CRIC’s top 100 developers dropped by 28% in 2024. However, a robust rebound in new home GTV during Q4 helped bolster the market throughout the year. Regarding transaction structure, it is increasingly dominated by existing homes. In 2024, the proportion of existing housing GTV nationwide increased to 46%, up 5 percentage points compared to 2023. Notably, this percentage exceeded 50% in the 30 top-tier cities. This was mainly due to the rapid decline in existing home prices, which made them more attractive to home buyers.…

Thank you. Your next question comes from Griffin Chan with Citi. Please go ahead.

[Interpreted] Thanks for taking my question. I’m going to translate my questions. So it’s about the agency business. We have observed a continuous increase in the number of agents and stores on the Beike platform. The company has made a lot of effort and investments, and it is quite aggressive. What kind of growth did the company achieve in 2024 as a result of these investments? Will the company follow the same growth strategy in 2025, or will we consider some other, like AI, improving the efficiency as well as having a higher growth? Thank you.

Thank you. In 2024, the main focuses of our housing transaction services were promoting growth and optimizing ecosystem. With that in mind, we achieved remarkable growth in our performance, demonstrating our ability to continuously outperform the market. Our success also helped the agents and stores on our platform partially offset the impacts of market contractions. One of our key focuses last year was expanding the agent and store network. We introduced targeted incentive packages tailored to stores of different sizes to attract industry players. By the end of 2024, the number of active non-Lianjia stores on our platform exceeded 44 thousand and that of active non-Lianjia agents reached 331 thousand, up 20% and 11% year-over-year, respectively. Notably, four big new brands joined the platform, each with over 100 stores. Our goal in expanding the network is to enable industry participants to enhance their operational efficiency. That is by leveraging our customer traffic, cooperation network effect, practical tools for operations and management, and diversified business opportunities within the broader residential services sector. Within three months of joining, the per-agent efficiency of newly connected stores reached over 80% of the efficiency level of those already connected stores. Also, around 13% of newly connected stores could double the average productivity level of platform’s existing stores within six months of joining the platform, becoming high-productivity stores. Thus our store network expansion has delivered strong investment returns. The payback period for the investments for new stores connected in the first half of the year was at six months, with a cumulative store attrition rate of only 5% within six months of connection. With a larger network of stores and agents, we leverage digitalized scientific management to help store owners expand home listing coverage and improve conversion rates. As the scale of our agent-store network continues…

Thank you. Your next question comes from Eddy Wang with Morgan Stanley. Please go ahead.

[Interpreted] Thank you management for taking my question. My question is about the home rental business. We have achieved rapid growth in the home rental business. What’s the key advantage to drive this strong growth? We observed that the home rental market is still facing challenges with declining rents and the persistent oversupply. How can we maintain the stability of the home rental business, and at the same time improve profitability under such conditions? Thank you.

Thank you. In 2024, our home rental business achieved a significant scale-up and operational breakthroughs, particularly in our Carefree Rent service. Centered on "service and efficiency," we established a solid foundational framework for our business model. Scale-wise, revenues of our home rental services reached 14.3 billion RMB, growing 135% year-over-year, primarily driven by the expansion of Carefree Rent. The number of managed units under Carefree Rent exceeded 420,000 by the end of 2024, compared to over 200,000 units a year ago. As we operate a larger scale of properties, we have developed a deeper understanding of the high frequency, non-standard nature, long cycle and complexity of rental services. To address this, we have broken down the non-standard services to standardized actions, undertaken by service providers who were assigned specific roles through specialization, thereby improving efficiency. For instance, offline rental services such as property handover, rental inspections, and face-to-face key exchanges are handled by rental stewards to ensure standardized handover procedures. While rental service managers handle tenant requests through centralized online management, providing 24/7 support. By year-end, nighttime service orders accounted for over 16%, aligning better with tenants’ schedules. We also deployed AI emotion radar tools to detect tenant dissatisfaction and proactively improve service mechanisms. With that, our property managers can focus on rental unit signups and occupancy, without being distracted by rental affairs. By the end of 2024, their efficiency of new unit signups increased 29% year-over-year, driving rapid growth in total housing units of Carefree Rent. Beyond organizational capabilities, we have developed the intelligent ‘AIMS’ system, utilizing AI technology to empower operations. From pricing strategies for property acquisition, inventory management, to leasing strategies, we deployed intelligent algorithms to dynamically manage traffic, pricing, and marketing strategies, enhancing labor efficiency and asset turnover. For example, in pilot cities, the system has…

Thank you. Your next question comes from Sophie Zhang with CICC. Please go ahead.

[Interpreted] Thank you management for taking my question. And my question is regarding the home renovation business. The home renovation segment has maintained solid growth during the past year after surpassing the revenue threshold of RMB10 billion in 2023. So can management share the main drivers behind the growth and also the strategic plan of this business in 2025? Thank you.

Thank you. In 2024, our home renovation and furnishing business achieved robust growth. In terms of scale, our revenue reached RMB14.8 billion in 2024, up 36.1% year-over-year. Contracted sales amounted to RMB16.9 billion, marking a year-over-year increase of 27.3%. Specifically, contracted sales exceeded RMB3 billion in Beijing, RMB2 billion in Hangzhou and RMB1 billion in Shanghai and Chengdu. Five other cities also achieved contracted sales above RMB500 million each. As for profitability, the contribution margin for the home renovation and furnishing business reached 30.7% in 2024, an improvement of 1.7 percentage points compared to the same period last year. Taking Beijing as an example, in 2024, the contribution margin of home renovation and furnishing business reached approximately 35%, and the pre-tax profit margin excluding the headquarter cost reached over 5%. The breakthroughs in our home renovation and furnishing business are primarily attributable to the highly efficient synergies between our housing transaction services and new businesses, as well as our enhanced construction delivery capabilities and support from our underlying digital platform. Let me share some additional details: First, deeper integration of our housing transaction services and renovation services significantly strengthened our customer acquisition ability and drove rapid growth in contracted sales. We encouraged our agents to recommend our new businesses by points-based incentive model. As a result, there has been an increase in the proportion of contracted sales by agent referrals to the total contracted sales. Second, as our contracted sales grew, we needed to strengthen our delivery capabilities. To accomplish this, we optimized dispatch efficiency and workflow, further shortening construction timelines. Our average construction timeline is around 94 days in Q4 2024, representing a decline of over 10 days in the same period last year. Meanwhile, we continued to iterate our Home SaaS system and launched Version 2.5 nationwide. By…

Thank you. We are now approaching the end of the conference call. I will now turn the call over to your speaker host today, Ms. Siting Li, for closing remarks.

Thank you once again for joining us today. If you have further questions, please feel free to contact Beike’s investor relations team through the contact information provided on our website. This concludes today’s call, and we look forward to speaking with you again next quarter. Thank you, and goodbye.