Release Date: August 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- KE Holdings Inc (BEKE, Financial) achieved a 7.5% year-over-year increase in total GTV, reaching RMB839 billion.
- Net revenue for Q2 2024 was RMB23.4 billion, representing a 19.9% year-over-year increase.
- GAAP net income rose by 46.2% year-over-year to RMB1.9 billion.
- The home renovation and furnishing business saw revenue growth of 53.9% year-over-year.
- The home rental services revenue increased by 167.1% year-over-year, with the number of managed units exceeding 310,000.
Negative Points
- The new home transaction services revenue declined by 8.8% year-over-year.
- The contribution margin for new home transaction services fell by 2.2 percentage points year-over-year.
- Despite improvements, the new home market remains subdued with a year-over-year decline in sales.
- The overall market recovery is constrained by expectations of further price drops and cautious buyer sentiment.
- The company faces challenges in balancing scale, quality, and efficiency in its new business ventures.
Q & A Highlights
Q: With lots of supportive property policies rolled out since the second quarter, especially after May 17, what changes have occurred in the real estate market? Do new home and existing home markets show divergent performance? How sustainable are transactions after these policies? And what is your view on transaction outlook in the second half of this year?
A: (Tao Xu, CFO) In Q2, the housing market showed steady month-by-month improvement with a boost to in-home transaction volume since the new policy introduced on May 17. Existing home transactions saw notable recovery, especially in first-tier cities, with volumes on Beike's platform increasing month-by-month. The new home market's year-over-year sales decline in Q2 narrowed month-by-month but did not show significant overall improvement. For the second half of the year, the existing home market is expected to remain stable, with transaction volumes in first-tier cities likely stabilizing after a spike-like recovery.
Q: Can management comment on why our new home business is doing better than the industry? Can we also comment on the monetization rate and the trend?
A: (Tao Xu, CFO) Our new home business continued to significantly outperform the industry due to our robust operational and execution capabilities. In Q2, our new home GTV reached RMB235.3 billion, down 20% year-over-year but up 55% quarter-over-quarter. Our stable monetization capabilities have been validated, and we have not compromised our monetization capability to gain market share. The certainty of our business momentum stems from our channel service coverage function and enhanced sell-through capabilities.
Q: What is the growth strategy for home transaction services, and how is the feedback from the store level so far?
A: (Tao Xu, CFO) This year, our core strategy for home transaction business is promoting growth and building a harmonious ecosystem. By the end of Q2, the total number of active non-Lianjia stores on our platform increased to 38,900, and the number of active Lianjia agents rose to 308,000. We have provided fee discounts, installment plans, and other support for new stores, and the productivity of agents in new stores reached over 80% of the productivity of agents in existing stores on the platform.
Q: What are the key operating focuses for the home renovation business this year, and what is the progress so far?
A: (Yongdong Peng, CEO) This year, we are focusing on building important infrastructure and capabilities, including upgrading our digitalized fundamental capability and optimizing our construction delivery and customized furniture delivery capabilities. We have iterated our Home SaaS system to Version 2.5 and are promoting it nationwide. We have also implemented proactive maintenance services and improved the success rate of one-time installation to around 80% in the first half of this year.
Q: How should we look at the unit economics of the home rental business, and what are the key drivers behind the profitability improvement?
A: (Yongdong Peng, CEO) In Q2, revenue from our rental services reached RMB3.19 billion, increasing by 167% year-over-year. We improved our business unit economics by addressing tenants' major pain points, enhancing leasing efficiency, and cutting vacancy costs. We also strengthened our dedicated rental agent team and improved productivity, achieving a breakeven in Beijing by managerial accounting on the city level.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
