KE Holdings Inc

Hello, ladies and gentlemen. Thank you for standing by for KE Holdings Inc's third quarter 2024 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. Sitting Lee, IR Director of the company. Please go ahead, Sitting.

Thank you, operator. Good evening and good morning, everyone. Welcome to KE Holdings or Baker's Third 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 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 well as we will make forward-looking statements. Please also note that Baker'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 measures to comparable gap 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 resources. 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 estimation. For today's call, management will use English as the main language. Please note that the Chinese translation is for convenience purpose only. 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, Siting. Hello, everyone. Thank you for joining Baker's Third Quarter 2024 Earnings Conference Forum. In the third quarter, we continue demonstrating our dynamic and sustainable growth momentum. Despite challenges in the market, each of our business segments delivers solid results. GTV for our existing home transaction business reached RMB $477.8 billion in the third quarter, up 8.8% year-over-year. According to estimate from data disclosed by the housing bureaus and housing associations of the first tier cities, the total number of online registered transactions for existing homes grew by about 21% year-over-year in the third quarter, while the number on Baker platform soar by 44% year-over-year, for reference. For new home transactions, GTV on Baker platform increased by an impressive 18% to RMB $227.6 billion in the third quarter, while new home transaction GTV or CRIC top 100 developer declined 29% year-over-year. In the third quarter, of home renovation and furnishing and home rental services revenue grew year-over-year by around 33% and 118% respectively. At the end of Q3, a noticeable shift in policy also boosted a solid market rebound. In this market cycle, one thing we have become increasingly certain about is the importance of thinking long-term we are going to be deeply understanding the power of our long-term perspective. For our organization, survival and development are our core imperatives. Among this, our foremost priority is to survive, enduring and surviving. Therefore, our focus is not just on how to navigate next year, but on how to become a company that can survive for 30, 40, or even 100 years. The greatest of three to a company's longevity are rigidity, bureaucracy, and loss of vitality to grow and innovate. To treat less, a company needs two things. The first is integrity. Doing the right things and creating value for society. And second, creativity. Every step we take today is guided by these principles. Doing the right things, even if it's difficult, and fostering creativity. This is how we will become a company that extends the pace of time. Let me share how we are putting this vision into action. For any large The biggest rate is lack of growth. The proactive business growth strategy we put in place this year has yielded remarkable results. In terms of scale, at the end of the third quarter, we have increased the number of active stores on our platform by 14.6% year-over-year. with a net addition of almost 6,000 stores compared with the same period last year. We now have more than 46,800 Agile stores. The number of actual agents also grew to over 420,000, which means we added 24,000 agents since the third quarter of last year. Our strategic collaborations in the new in the new home market grows than all top tier developers. In August, the number of transactions from our strategic project developers accounted for 26% of our total new home transactions. We also made strides in improving store and platform operating efficiencies. In the third quarter, the average revenue per store on our platform, excluding Beijing, and Shanghai surpassed levels from the same period in previous years. The support ratio of platform staff to frontline agents also reached a record high. We also maintain robust risk control and strive for higher service quality. The right mechanisms are also crucial for fostering organizational creativity. In the third quarter, we officially established a small leadership committee as an innovative state toward rethinking large organizations' governance. It's a governance system that ensures forward thinking and a long-term outlook. After a year of trail implementation, the committee is now officially in place. It consists of the leaders of our main business lines as well as the heads of our finance and HR departments. Li Fengyan, Wang Yongquan, Xu Tao, and Zuo Donghua. The committee will report directly to me and is tasked with carefully considering and planning the company's key strategies and initiatives. Its goal is to ensure collaborative leadership, clear accountability, and continuous self-reflection by design. This model brings together diverse perspectives to help us make better decisions and strengthen our unity as a team. In the future, we will continue to refine and promote the innovation of our company's governance mechanism to further strengthen our leadership framework. In addition, we have officially appointed the CEOs of our new initiative businesses. Xu Wanggang, who had already been serving as the CEO of Bei Haojia, will now also lead our home renovation and furnishing business. Wang Yongqin will head for our home rental services business and also continue in his role as the COO of Lianjia. They will both report to me. These appointments reflect our commitment to tackling future challenges and our focus on aligning resources to achieve greater synergies across the group. With development over the past few years, our home renovation and furnishing and home rental services business have achieved several key milestones. In the first three quarters of this year alone, revenues from our home renovation and furnishing business surpassed RMB 10 billion across more than 45,000 projects. Revenue from our home rental services business approached RMB 10 billion during the first three quarters with the number of rental units managed under carefree exceeding 360,000. I'm truly grateful to our accident team for fostering these achievements. That is to say, we have more work to do. There are still many fundamental unresolved problems in the industry. We will iterate our scientific management and other capabilities to address the industry underlying issues related to quality and commitment among the others. We hope that when people talk about this industry and our brand in a few years, they will say, your quality is exceptional. Today, we are at a pivotal moment in this undertaking of the next two years we will strengthen our core capability to reach our vision. For our platform ecosystem, we are more committed than ever to working with store owners and store managers. They are the high-frequency players in this low-frequency industry. Our top priority is helping them achieve better returns. If they adopt a long-term mindset, our platform can achieve lasting growth. In the third quarter, we introduced new operational mechanisms to support this goal. We launched our StorePoints incentive program that rewards store owners for long-term platform loyalty, strong performance, integrity, and innovative business practices. This initiative is to significantly enhance store owners' satisfaction and allegiance to our platform. In Q3, We distributed around RMB 18 million in cash equivalent incentives to store owners in pilot cities. Take Shenzhen, one of our pilot cities as an example. Over the past two to three years, more than 1,000 new stores have joined our network in Shenzhen. While growing in scale, these new stores face three major challenges. insufficient emphasis on existing home transactions, slow progress in the new initiatives like home renovation and rentals, and weak collaboration across the platform with relatively high post-transaction customer complaint rates. We tailor specific incentives within the store point system to address these issues and motivate positive change Stores can now increase 20% extra bonus points for completing existing home listing transactions. They also receive two to three times bonus points for conducting non-housing transaction businesses. Stores are also awarded separate bonus points if they have been in our network for a long time and have a history of compliance and collaboration. Store owners can convert their points into additional benefits. In October, store owners in Shenzhen received a total of RMB 2.49 million equivalent incentives and 930,000 bigger coins, with top single store receiving RMB 210,000 equivalent incentives. Notably, the platform's profit sharing payouts to store owners boosted their income offsetting the cost of renting a storefront. At the same time, we effectively addressed the three core problems. Monthly existing home transactions began to recover and increase by 12% sequentially in September. Number of units leased out under kill-free range grew by 21% in Q3 compared with Q2. And across all existing home transactions reached 74.5% of total transactions are recorded high. Of course, this matrix only indicates short-term achievements. More importantly, our goal is to use the store membership point system to encourage store owners to think long-term, share value with them, and provide a clear development path on the platform, driving groups for both stores and the platform. Moving on to grant of Lianjia, we have continued to advance its tech law plan this year. Our decision to invest in Lianjia during tough market adjustments is also firmly rooted in our long-term vision. First, Lianjia is the cornerstone of our one-body-swing-win strategy. Maintaining Lianjia's solid fundamentals is crucial while we promote is pension based on sustainable operations and ongoing efficiency. Lianjia also need to lead the way in innovation and be the front runner in tackling industry changes. Reconstructing operational capabilities and advancing agents professional development. The number of Lianjia's actual agents grew by almost 30%. year-over-year, exceeding 110,000, the lianjia agent attrition rate in cities, excluding Beijing and Shanghai, dropped to 4.4% at the end of September, down 0.4 percentage points from 2023. In addition, we also continue to make headway in the large-store model, with the average number of agents per store across Lianjia nationwide climbing to 19.2. As of September, nearly 3,800 Lianjia Managed Naval Employees and above have trained in the Lianjia Large Store Leadership Development Program. To sustain creativity, we will constantly map out new opportunities and possibilities for the future. We cannot afford to wait until growth slows down to start innovating. Nor should we fall into complacency or simply defend what we have. Instead, we must plan ahead, remain open to embracing new ideas, and invest in long-term strategies. That saying, we won't make blind bets. Each segment in our industry is substantial. and entering any new venture requires an intensive decision-making process. Our approach includes extensive forethoughts, pilot trails, our dedicated teams, and deep engagement. Our thorough understanding is essential before taking any action. We don't rush. This is our underlying rationale for exploring Beihou's business opportunities. We are greatly encouraged by the central government's recent positive statements and a series of coordinated policy measures to support and stabilize the property market. Since the end of September, the market reaction has been strong and far-reaching. We are now seeing signs of market recovery with regards to both volume and prices. As we navigate through higher and lower We must remain calm at the peaks, stay fast at the truths, and grounded in reality in return. This is how we find true stability, with the broad environment improving. The truths we have learned during this period of market adjustment are clear. Steering committed to long-term maintaining optimism, fostering resilience and unity. This truth and the bold efforts we made in challenging times will enable us to go even further in a more favorable environment. Thank you. Next, I would like to turn the call over to our CFO, Juntao, to reveal our third quarter 2024 financials.