KE Holdings Inc

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'll 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 K.E. Holdings, Inc. or Baker'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 Baker's earnings press release and this conference call include discussions of unnoticed GAAP financial information, as well as unnoticed non-GAAP financial measures. Please refer to the company's press release, which contains a reconciliation of the unnoticed 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 purpose only. In the 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, Christine. Hello, everyone. Thank you for joining Baker's first quarter and fiscal year 2024 release conference call. Over the past year, China's real estate industry has matured fast. We have seen accelerated changes. Some changes are abrupt. For the past 30 years, The decision-making process for buying a home was relatively simple, and the risks of making the wrong decisions were low. The main concerns for buyers were speed. When a home became available, the question was simple whether they could secure it. In this kind of market, brokerage companies go 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 matters. 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 risk of buying a home and see greater certainty in their purchasing decisions. Second, they prioritize living well, a subject's experience and a feeling. That's 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 though AI or other tools, our goal is to help customers make the base decisions and guiding them to address various life challenges through better living solutions. Second, from the service provider's standpoint, a lot of the experience and knowledge they have built up in the past no longer applies. Consumers are asking us more questions and their concerns are more complex. They also care more about who they are buying through how knowledgeable they are, and whether or not they are reliable industry professionals. Service providers must be able to address these issues for their customers. The old approach of merely pushing listings to sell home is no longer viable. Our assessments on the industry is that customers will become more selective about who they work with. Top care agents will increasingly replace low-performing ones. And technology will give the best services providers an even greater edge, accelerating industry changes. These three forces will reshape the market faster than ever. Top tier services providers will reap the rewards of great brand premium and increased efficiency gains. At the same time, the industry will invest more in those service providers to ramp up their skills. The future isn't about relying on past experiences. The growth potential of the industry lies in the new paradigm. enhancing service quality, and empowering top-performing agents. This presents both an opportunity and a new demand for the platform, requiring us to more effectively support service providers and store owners in improving efficiency. Over the past years, we have achieved skill and made efforts to improve efficiency. On one hand, We are strong in our scientific management approach. We set clear goals, break them down into precise steps, and focus on key factors that are driving results. We have embedded this in our system and use digital tools to streamline management and boost efficiency. Now, we need to bring these capabilities to store owners and our new businesses. On the other hand, while the industry's digitalization still has a long way to go, breakthroughs in AI technology have opened up exciting possibilities. We now see future potential to reshape service providers' capabilities, enhance the customer experience, and significantly improve our platformer's operational efficiency. In 2024, we launched an active platform growth strategy. As a result, the number of active stores grew by 80.3% year-over-year, reaching nearly 49,700. Our aging count rose to 445,000, increasing 12.1% year-over-year. Despite major fluctuations in the real estate market, the number of stores and agents connected to our platform both reached record highs in 2024, allowing us to reach more customers than ever before. In 2024, we served 8.6 million customers. That means, on average, every hour of the year, Approximately 1,000 families across the country both rented or renovated a property with our help. Helping Chinese people to live well is a mission that truly matters. For the full year, our GTV total RMB 3.35 trillion. Total revenue hits a record high of RMB 93.5 billion, growing over 20% year-over-year. Notably, our existing home transactions businesses also reached an all-time high, with GTV rising nearly 11% year-over-year to RMB's 2.25 trillion. Meanwhile, despite market adjustments backed by strong trust from developers and customers, our new home transaction business generated RMB $917 billion in GTV for the year, down just 3.3% year-over-year, while total revenue grew by 10% year-over-year. A one-body, three-winds strategy has achieved enduring success for our home renovation and furnishing businesses. We continue to pursue scale growth in 2024 while establishing a positive cycle of scale, quality, and efficiency in Beijing. We completed renovation services for nearly 60,000 homes across more than 40 cities nationwide in 2024, connected with over 70,000 home renovation workers, 8,000 designers, and 5,000 project managers. Our home renovation and furnishing business achieved total revenue, or RMB, 40.8 billion for the year, a year-over-year increase of 36%. By enhancing supply chain fulfillment management and improving our system's order dispatch capabilities, In Q4, we successfully reduced the home renovation construction timeline by over 10 days compared with last year. Additionally, our enhanced in-house after-sales maintenance capabilities enable us to continuously elevate customer experience. In our home rental services, the number of rental units under management surpassed 430,000 in 2024, our revenue surged by 135% year-over-year to RMB 40.3 billion. In terms of quality and efficiency, we have improved the endurance of property owners and tenants by reshaping roles and responsibilities through refined operations, We saw significant improvements across various efficiency metrics, including the efficiency of second-time rentals and the average number of rental units manager per property manager. Regarding our business, we acquired land in several cities last year. We do not intend to become developers and build many houses ourselves. Our business logic aligns closely with our insights about the industry. By exploring this business, we aim to address the high decision-making risks faced by both developers and customers during the home-buying process, while meeting customers' demands for living well. We are committed to promoting the development of major high-quality homes within China's residential industry while mitigating critical level risks for developers and other participants in the industry. This requires us to build capabilities in areas such as precise customer demand insights, deeper user engagement, and data-driven decision-making. For instance, By aggregating characteristics and needs for home-sinking customers, we provide developers with targeted customer demand, enabling them to tailor their offerings accordingly and apply C2M customization. We will also set limits on heavy asset investment and gradually shift our business model towards a more ideal platform-based light assets model. In November last year, we successfully launched our product solution services project in Xi'an, the first case in which we generated service revenue through our product solution services. In 2024, we have also made substantial efforts in improving our relationships with the various partners throughout the entire ecosystems. I believe these efforts we lay a solid foundation for our long-term success. Looking ahead, we need to be more technology-driven and more human-centric. On the technology side, the rapid advancement of technologies, particularly AI, is set to transform many aspects of work, study, and daily life, including reshaping relationships with others, altering organizational structures, and changing hiring philosophies, all of which may undergo transformations. As interactions between people become more increasingly valuable, the essence of genuine services in bordering the answers of I understand you will become even more crucial. Addressing the industry's current pain points such as the shifting needs of customers for residential services, heightened decision-making uncertainty, and increased expectations for service providers' capabilities. We firmly believe that advancements in AI and other technologies will effectively help us tackle these challenges. With these tools, we will be better equipped to understand customers' personalized needs, broaden the knowledge and information available to individuals, and comprehensively enhance our service quality. We will apply AI more intensively across both external and internal operations, supporting services providers in achieving high-quality interactions. This approach will enable us to deliver genuine services while also upgrading the interface through which we provide such services. On the humanistic side, we recognize that we operate within a service industry where the value of empathy, customer care, and our commitment to services are paramount. While technology can facilitate these values, it is essential that each service provider actually embodies the spirit of self-reliance self-improvement, and self-respect by providing exemplary support to frontline agents who, in turn, take excellent care of customers. We can affirm our self-worth through customer satisfaction and recognition of their needs. The virtual cycle translates into priorities that are not only ethical, but also creative. This humanistic quality will offer a new dimension to industry evolution and development, making it possible to elevate consumer experience to 10 times better, increase service providers' efficiency 10 times further, and enhance the value created by our platform 10 times greater. Thank you. Next, I would like to turn the call over to our CFO, Xu Tao, to review our fourth quarter and fiscal year 2024 financials.