KE Holdings Inc

Hello ladies and gentlemen. Thank you for standing by for KE Holdings Inc's second quarter 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'll now turn the call over to your host, Ms. Siting Lee, IR Director of the company. Please go ahead, Siting.

Thank you, operator. Good evening and good morning, everyone. Welcome to Katie Holdings Inc. Oracle's second quarter 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 On today's call, we have Mr. Stanley Peng, our co-founder, chairman, and chief executive officer, and this is Hao Xu, our executive director and chief financial officer. Mr. Peng will provide an overview of our strategies and business development, 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 FACA's earnings press release and this conference call include discussions of unnoticed gap financial information as well as unnoticed non-gap financial measures. Please refer to the company's press release, which contains a reconciliation of the unnoticed non-gap measure to comparable gap measure. Lastly, unless otherwise stated, all figures mentioned during this call are in R&D. Certain statistical and other information relating to the industry in which the company is engaged to be mentioned in these calls has been obtained from various publicly available official or unofficial sources. Neither the company nor any of its representatives have 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 service only, and in case of any discrepancy, management 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, Siti. Hello, everyone. Thank you for joining FACR's second quarter and interim 2024 audience conference call. In the second quarter, we continue to outpace the broader market. Since the beginning of the year, we have made strategic efforts to boost growth, foster our ecosystem, and transform our business into a technology-powered, one-stop residential services platform model. These efforts have paid off, and we achieved high-quality performance across the board. A set of supportive policies boosted the overall market recovery in the second quarter. Notably, the existing home market, especially in first tier cities, rebounded sharply in May and June. Our home transaction business performed well within this favorable market environment, with both our existing and new home transactions surpassing the broader market's performance. More specifically, in May, Existing home transactions on Baker's platform saw positive GTV growth compared to the previous year, and in June, growth surged by nearly 70% year-over-year. According to estimates from data disclosed by the housing bureaus and housing associations of the four first tier cities, the total number of online restricted transactions for existing home grew by around 16% year-over-year in the second quarter of 2024. For reference, while online-restricted transactions on Bitcoin's platform grew by 40% year-over-year. For new home transactions, the contraction rate on Bitcoin's platform narrowed to 25% year-over-year in May from contract transaction value. And in June, GTV turned positive with the contract transaction value growing over 12% year-over-year. For the second quarter, GTV over CRICs, top 100 real estate companies, declined by 35% year-over-year, while GTV contraction, a big platform, narrowed to 20%. The improvements in the second quarter this year were partly due to the warning efforts of the high base we saw in the first quarter. More importantly, our scientific management and proactive operational initiatives focused on improving our performance against internal benchmarks, underpined our ability to outperform in a relatively stable market. I'd like to share some color on our existing home business. In 2024, we have placed more emphasis on our operations in scaling up store and agent networks. enriching community outreach and managing key housing projects to broaden our customer base and home listing coverage. Since the end of 2023, our platform has seen a net increase of over 2,400 active stores, or a 6% increase, and a net increase of over 40,000 active agents. As we expand our touch points, we are also putting more effort into high-quality listing management, concentrating on quality home listings and exploring different ways to tap into new media-based opportunities for customer acquisition and conversion. All these initiatives have improved customer and home listing conversion rates. We also boost cooperation efficiency with the efforts such as region-based core governance communities and reinforce business conduct governance by preventing private or fly deals, improving closed-loop management on our platform. On the new home business front, we doubled down on our effort to increase number of cooperation projects and strengthening our sales conversion capabilities In terms of expanding our cooperation with more new home projects, we established an end-to-end monitoring process for all projects and focused on managing key housing projects and developers to improve the quality of new home projects. To improve sales conversions, we overhauled our sales process this year. Our approach to new home sales used to be a huge crowd strategy that focuses more on properties than customers. This year, we are adopting a more precise approach driven by customer demands. In addition, we started monitoring and analyzing conversion day from our cooperation with upstream and downstream value chain partners on a daily basis. We also delivered impressive results in our non-home transaction business of home renovation and furnishings and home rental services. Despite the challenging market, in the first half of the year, revenues from our home renovation and furnishings business and home rental services grew close to 60% and 177% respectively compared to a year ago, and the gross margins continue to improve. In fact, This year, we intentionally slowed our pace in the home renovation and furnishing business against the rapid growth in scale. We achieved last year. To give you a bit of context, when exploring new business within a big organization, building confidence in the business' viability and continuity is the first and most important challenge. That's why last year was all about accelerating our skill, where we succeeded without compromising quality or reputation. This proved the business was viable, making a crucial first step. However, if you run too fast, you risk sacrificing quality and losing customers' trust. How to balance skill and quality and establish trust? is a second challenge to developing new business. Having confirmed the business's viability with last year's strong performance, we slowed down this year to make sure we are growing in the right way by increasing the second critical challenges. This year, we have been focused on two areas. First, we enhanced our capability to deliver comprehensive, well-thought, full-service solutions. This includes improving our development of full-service complete renovation products, our management capabilities with service providers, supply chains, and integrated delivery, as well as building the corresponding system infrastructure. Second, we integrated and promoted the Home SaaS 2.5 system We integrated the one-stop full-service capabilities we developed in Beijing into Home SaaS 2.5, which can handle up to 5,000 simultaneous construction orders. We also integrated the BIM, SSC, middle office, and the integrated material fulfillment model. Our goal this year is to roll out these advanced capabilities nationwide through the Home SaaS 2.5 system. This year, we continue ramping up our ability to connect new supplies on our platform. The number of stores for our housing transaction services is steadily increasing, and the number of service providers for our new initiatives is also growing rapidly. Without these new suppliers, our customers will face limited options. and our source capability could be constrained. Expanding supply also inevitably forces us to consider how best to manage it, ensuring their quality and improvements. Our biggest challenge is to leverage certain rules to have these supplies achieve better outcomes. We view these supplies on our platform as targets for transformation. not monetization. That's to say, once the suppliers, including service providers, join our platform, we must enhance them. As a result, we are consistently investing in training for stores, operators, and implementing robot operations for home listings, customer engagement, and our ecosystem to enhance resources conversion efficiency. Regarding our new businesses, we have made significant effort to reform the incentive mechanism for service providers through rule-based order dispatch and service provider rankings. By fostering a transparent and a benign competitive environment, we ensure resources are allocated more efficiently to the most capable talent. In the next era, Customers will become more selective about services, allowing high-quality service providers to stand out, and service variants will decrease. Customers' needs will be more diverse and new. More segmented needs will emerge. These two points guide our efforts to upgrade our products and services and deepen our operations. This remains tremendous potential for growth and efficiency improvement in both our relatively mature housing transaction sources and our emerging business ventures. One solution is to focus on community-based business by leveraging in-depth community knowledge and understanding residents' profiles and their needs for home purchase, rental, and renovation. we can offer more targeted products and services. This approach will lead to change in customer acquisition channels, organizational structures, and supply chains, allowing us to differentiate ourselves from the traditional residential industry. More importantly, these changes will help us build trust in our low frequency transaction industry. The key to community-based business is high service density. To that end, we launched more stores and organizational innovations in communities this year to increase supply. For example, in Shanghai, we added a number of community convenience service stations affiliated with stores, and other cities are replicating this model. Additionally, we are integrating home renovation and rental services Within Lianjia stores, we have deployed home renovation expert agents in over 1,200 Lianjia stores and are showcasing renovation techniques and hosting in-store designers in pilot stores. Our coverage of existing home listing in Shanghai grew from 76% last year to 87%. in areas that we operate in, and revenues from our home renovation and carefree rental business in Shanghai with Q2 grow by 63% and 140% year-over-year, respectively. In Chengdu, we piloted a strategy focusing on key housing projects for our home renovation and furnishing business. Our operational team shifted back to intensive community engagement rather than dispersed services, rebuilding our community-based services process and product logic. These pilot projects have demonstrated impressive improvements in conversion efficiency and productivity. In the second half of this year, the external micro-environments will continue to pose many challenges to our business. Faced with these challenges, our core goal has always been to build capabilities that will keep the organization constantly moving forward, from one success to the next. Over the past month, we have been fortunate to validate with minimal fail and error that our home renovation and furnishing model, as well as our rental business model, drive growth in our organization. At the same time, our one-body business has shown further growth potential. Through proactive marketing outreach, providing support for store owners and agents to achieve great success, and integrating our new initiatives, we can drive even greater growth. In this context, our next step is to address issues related to the appropriate pace of each business and the balance between scale, quality, and efficiency. Thank you. Next, I would like to turn the call over to our CFO to talk or review our second quarter 2024 financials.