UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 6-K

 

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of August 2024

 

Commission File Number: 001-39436

 

 

 

KE Holdings Inc.

(Registrant’s Name)

 

 

 

Oriental Electronic Technology Building,

No. 2 Chuangye Road, Haidian District,

Beijing 100086

People’s Republic of China

(Address of Principal Executive Offices)

 

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

 

Form 20-F x     Form 40-F ¨

 

 

 

 

 

EXHIBIT INDEX

 

Exhibit No.   Description
99.1   Press Release—KE Holdings Inc. Announces Second Quarter 2024 Unaudited Financial Results and Upsizing and Extension of Share Repurchase Program
99.2   Press Release—KE Holdings Inc. Announces Upsizing and Extension of Share Repurchase Program
99.3   Announcement —Interim Results Announcement for the Six Months Ended June 30, 2024

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  KE Holdings Inc.
       
  By : /s/ XU Tao
  Name : XU Tao
  Title : Chief Financial Officer

 

Date: August 13, 2024

 

 

 

 

Exhibit 99.1

 

KE Holdings Inc. Announces Second Quarter 2024 Unaudited Financial Results and Upsizing and Extension of Share Repurchase Program

 

BEIJING, China, August 12, 2024 - KE Holdings Inc. (“Beike” or the “Company”) (NYSE: BEKE and HKEX: 2423), a leading integrated online and offline platform for housing transactions and services, today announced its unaudited financial results for the second quarter ended June 30, 2024 and upsizing and extension of the share repurchase program.

 

Business and Financial Highlights for the Second Quarter 2024

 

·Gross transaction value (GTV)1 was RMB839.0 billion (US$115.5 billion), an increase of 7.5% year-over-year. GTV of existing home transactions was RMB570.7 billion (US$78.5 billion), an increase of 25.0% year-over-year. GTV of new home transactions was RMB235.3 billion (US$32.4 billion), a decrease of 20.2% year-over-year. GTV of home renovation and furnishing was RMB4.2 billion (US$0.6 billion), an increase of 22.3% year-over-year. GTV of emerging and other services was RMB28.8 billion (US$4.0 billion), an increase of 12.2% year-over-year.

 

·Net revenues were RMB23.4 billion (US$3.2 billion), an increase of 19.9% year-over-year.

 

·Net income was RMB1,900 million (US$262 million). Adjusted net income2 was RMB2,693 million (US$371 million).

 

·Number of stores was 45,948 as of June 30, 2024, a 6.9% increase from one year ago. Number of active stores3 was 44,423 as of June 30, 2024, an 8.1% increase from one year ago.

 

 

1 GTV for a given period is calculated as the total value of all transactions which the Company facilitated on the Company’s platform and evidenced by signed contracts as of the end of the period, including the value of the existing home transactions, new home transactions, home renovation and furnishing and emerging and other services (excluding home rental services), and including transactions that are contracted but pending closing at the end of the relevant period. For the avoidance of doubt, for transactions that failed to close afterwards, the corresponding GTV represented by these transactions will be deducted accordingly.

 

2 Adjusted net income (loss) is a non-GAAP financial measure, which is defined as net income (loss), excluding (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from acquisitions and business cooperation agreement, (iii) changes in fair value from long-term investments, loan receivables measured at fair value and contingent consideration, (iv) impairment of goodwill, intangible assets and other long-lived assets, (v) impairment of investments, and (vi) tax effects of the above non-GAAP adjustments. Please refer to the section titled “Unaudited reconciliation of GAAP and non-GAAP results” for details.

 

3 Based on our accumulated operational experience, we have introduced the operating metrics of number of active stores and number of active agents on our platform, which can better reflect the operational activeness of stores and agents on our platform.

 

“Active stores” as of a given date is defined as stores on our platform excluding the stores which (i) have not facilitated any housing transaction during the preceding 60 days, (ii) do not have any agent who has engaged in any critical steps in housing transactions (including but not limited to introducing new properties, attracting new customers and conducting property showings) during the preceding seven days, or (iii) have not been visited by any agent during the preceding 14 days. The number of active stores was 41,076 as of June 30, 2023.

 

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·Number of agents was 458,690 as of June 30, 2024, a 5.2% increase from one year ago. Number of active agents4 was 411,478 as of June 30, 2024, relatively flat compared with one year ago.

 

·Mobile monthly active users (MAU)5 averaged 49.7 million in the second quarter of 2024, compared to 48.0 million in the same period of 2023.

 

Mr. Stanley Yongdong Peng, Chairman of the Board and Chief Executive Officer of Beike, commented, “In the second quarter of this year, our series of operational enhancements and scientific management measures supported us in achieving high-quality results that notably exceeded the market performance. We further expanded our broader and deeper connections with service providers and new home projects on the supply side in our housing transaction services. Through a series of training programs and refined operational measures, we enhanced the operational efficiency of the supply side, optimizing the platform ecosystem. This year, our home renovation and furnishing and home rental services focused on capability building, achieving significant business growth and continuous operational improvement. We are also exploring ways to deepen our community engagement by increasing the density of services and innovating the operational models of community stores and service providers, with the aim of better understanding and meeting consumer needs.”

 

“The growth potential for our home transaction services remains significant, and the business models and capabilities of our home renovation and furnishing and home rental services have also been validated. Looking ahead, our core goal is to build an organization that can continuously progress from one success to the next. Our next step is to achieve sustained growth by driving a positive cycle of scale, quality, and efficiency,” concluded Mr. Peng.

 

Mr. Tao Xu, Executive Director and Chief Financial Officer of Beike, added, “In the second quarter of 2024, a series of easing policies were implemented, leading to an improvement in the transaction volume of the existing housing market, while the year-on-year decline in the new home market sequentially narrowed each month although still remaining subdued overall. Amid gradually improving market sentiment, we continuously deepened our operations and achieved excellent performance in the second quarter.

 

 

4 “Active agents” as of a given date is defined as agents on our platform excluding the agents who (i) delivered notice to leave but have not yet completed the exit procedures, (ii) have not engaged in any critical steps in housing transactions (including but not limited to introducing new properties, attracting new customers and conducting property showings) during the preceding 30 days, or (iii) have not participated in facilitating any housing transaction during the preceding three months. The number of active agents was 409,054 as of June 30, 2023.

 

5 “Mobile monthly active users” or “mobile MAU” are to the sum of (i) the number of accounts that have accessed our platform through our Beike or Lianjia mobile app (with duplication eliminated) at least once during a month, and (ii) the number of Weixin users that have accessed our platform through our Weixin Mini Programs at least once during a month. Average mobile MAU for any period is calculated by dividing (i) the sum of the Company’s mobile MAUs for each month of such period, by (ii) the number of months in such period.

 

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For the second quarter, our total net revenues reached RMB23.4 billion, up 19.9% year-over-year. The contribution margin from existing home transaction services rose substantially both year-over-year and quarter-over-quarter, and the monetization capability of our new home transaction services has been further strengthened. Non-housing transaction services grew rapidly, with revenues from our home renovation and furnishing business and home rental services reaching history highs. Our continuous improvement in operational efficiency generated a gross margin of 27.9%, ticking up from 27.4% in the same period last year. Our net income in the second quarter saw a 46.2% year-over-year increase, reaching RMB1,900 million, and our adjusted net income grew by 13.9% to RMB2,693 million, showcasing improved profitability.

 

With our robust cash reserves, we continued with shareholder returns through active share buybacks. As of the date of this press release, we have in aggregate repurchased shares with a total consideration of approximately US$480 million in 2024, which accounted for approximately 2.75% of the Company's total issued shares at the end of 2023. We have also upsized and extended the existing share repurchase program to August 31, 2025, with the repurchase authorization being increased from US$2 billion to US$3 billion. Moving forward, we will continue to reward the shareholders who have been staying alongside our growth and share the value created by the Company with them.”

 

Second Quarter 2024 Financial Results

 

Net Revenues

 

Net revenues increased by 19.9% to RMB23.4 billion (US$3.2 billion) in the second quarter of 2024 from RMB19.5 billion in the same period of 2023, primarily attributable to the increase of net revenues from existing home transaction services and the expansion of home renovation and furnishing and home rental business, partially offset by the decrease of net revenues from new home transaction services. Total GTV increased by 7.5% to RMB839.0 billion (US$115.5 billion) in the second quarter of 2024 from RMB780.6 billion in the same period of 2023, primarily attributable to the recovery of existing home transaction market driven by the release of supportive policies in the second quarter of 2024, partially offset by the sluggish new home transactions market due to weaknesses in both supply and demand in the second quarter of 2024.

 

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·Net revenues from existing home transaction services increased by 14.3% to RMB7.3 billion (US$1.0 billion) in the second quarter of 2024 from RMB6.4 billion in the same period of 2023, primarily attributable to the increase of the GTV of existing home transactions of 25.0% to RMB570.7 billion (US$78.5 billion) in the second quarter of 2024 from RMB456.5 billion in the same period of 2023. The higher growth rate of the GTV of existing home transactions than that of net revenues was primarily attributable to a lower commission rate of existing home transactions charged by Lianjia stores in Beijing, partially offset by a higher contribution from GTV of existing home transactions served by Lianjia agents, for which revenue is recorded on a gross commission basis, while for GTV served by connected agents on the Company’s platform the revenue is recorded on a net basis from platform service, franchise service and other value-added services.

 

Among that, (i) commission revenue increased by 17.1% to RMB6.0 billion (US$0.8 billion) in the second quarter of 2024 from RMB5.1 billion in the same period of 2023, primarily due to an increase in GTV of existing home transactions served by Lianjia stores of 29.9% to RMB233.2 billion (US$32.1 billion) in the second quarter of 2024 from RMB179.4 billion in the same period of 2023, partially offset by the decrease in commission rate of existing home transactions charged by Lianjia stores in Beijing; and

 

(ii)revenues derived from platform service, franchise service and other value-added services, which are mostly charged to connected stores and agents on the Company’s platform were RMB1.4 billion (US$0.2 billion) in the second quarter of 2024 compared to RMB1.3 billion in the same period of 2023, mainly due to an increase of GTV of existing home transactions served by connected agents on the Company’s platform of 21.8% to RMB337.5 billion (US$46.4 billion) in the second quarter of 2024 from RMB277.1 billion in the same period of 2023, partially offset by the decrease in certain value-added revenues such as training revenues which were not directly driven by GTV of existing home transactions served by connected agents.

 

·Net revenues from new home transaction services decreased by 8.8% to RMB7.9 billion (US$1.1 billion) in the second quarter of 2024 from RMB8.7 billion in the same period of 2023, primarily due to the decrease of GTV of new home transactions of 20.2% to RMB235.3 billion (US$32.4 billion) in the second quarter of 2024 from RMB295.0 billion in the same period of 2023, partially offset by the improved monetization capability. Among that, the GTV of new home transactions facilitated on Beike platform through connected agents, dedicated sales team with the expertise on new home transaction services and other sales channels decreased by 20.2% to RMB192.5 billion (US$26.5 billion) in the second quarter of 2024 from RMB241.3 billion in the same period of 2023, and the GTV of new home transactions served by Lianjia brand decreased by 20.3% to RMB42.8 billion (US$5.9 billion) in the second quarter of 2024 from RMB53.7 billion in the same period of 2023.

 

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·Net revenues from home renovation and furnishing increased by 53.9% to RMB4.0 billion (US$0.6 billion) in the second quarter of 2024 from RMB2.6 billion in the same period of 2023, primarily attributable to a) the increase of orders driven by the synergetic effects from customer acquisition and conversion between home transaction services and home renovation and furnishing business, b) a larger contribution from furniture and home furnishing sales (in categories such as customized furniture, soft furnishings, and electrical appliances), and c) shortened lead time driven by enhanced delivery capabilities.

 

·Net revenues from home rental services increased by 167.1% to RMB3.2 billion (US$0.4 billion) in the second quarter of 2024 from RMB1.2 billion in the same period of 2023, primarily attributable to the increase of the number of rental units under the Carefree Rent model.

 

·Net revenues from emerging and other services were RMB0.9 billion (US$0.1 billion) in the second quarter of 2024, compared to RMB0.6 billion in the same period of 2023.

 

Cost of Revenues

 

Total cost of revenues increased by 19.2% to RMB16.9 billion (US$2.3 billion) in the second quarter of 2024 from RMB14.1 billion in the same period of 2023.

 

·Commission – split. The Company’s cost of revenues for commissions to connected agents and other sales channels was RMB5.4 billion (US$0.7 billion) in the second quarter of 2024, compared to RMB5.8 billion in the same period of 2023, primarily due to the decrease in net revenues from new home transactions services derived from transactions facilitated through connected agents and other sales channels.

 

·Commission and compensation – internal. The Company’s cost of revenues for internal commission and compensation increased by 7.9% to RMB4.4 billion (US$0.6 billion) in the second quarter of 2024 from RMB4.1 billion in the same period of 2023, primarily due to an increase in the GTV of existing home transactions facilitated through Lianjia agents.

 

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·Cost of home renovation and furnishing. The Company’s cost of revenues for home renovation and furnishing increased by 50.2% to RMB2.8 billion (US$0.4 billion) in the second quarter of 2024 from RMB1.8 billion in the same period of 2023, which was in line with the growth of net revenues from home renovation and furnishing.

 

·Cost of home rental services. The Company’s cost of revenues for home rental services increased by 138.2% to RMB3.0 billion (US$0.4 billion) in the second quarter of 2024 from RMB1.3 billion in the same period of 2023, primarily attributable to the growth of net revenues from home rental services.

 

·Cost related to stores. The Company’s cost related to stores was RMB681 million (US$94 million) in the second quarter of 2024, compared with RMB730 million in the same period of 2023 primarily attributable to the decrease in the amortization of the renovation costs for Lianjia stores.

 

·Other costs. The Company’s other costs increased to RMB511 million (US$70 million) in the second quarter of 2024 from RMB431 million in the same period of 2023, mainly due to the increased tax and surcharges in line with the increased net revenues and the increased maintenance costs of home rental services.

 

Gross Profit

 

Gross profit increased by 22.0% to RMB6.5 billion (US$0.9 billion) in the second quarter of 2024 from RMB5.3 billion in the same period of 2023. Gross margin was 27.9% in the second quarter of 2024, compared to 27.4% in the same period of 2023 primarily due to a) a higher contribution margin for home renovation and furnishing primarily attributable to enhanced supply chain capabilities and continuous refined management; b) a higher contribution margin for home rental services primarily due to improved operational efficiency; c) a lower costs related to stores as percentage of net revenues; and d) partially offset by a lower contribution margin for new home transaction services led by a higher commission-split as percentage of net revenues from new home transaction services paid to connected agents and other channels.

 

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Income (Loss) from Operations

 

Total operating expenses increased by 5.6% to RMB4.5 billion (US$0.6 billion) in the second quarter of 2024 from RMB4.3 billion in the same period of 2023.

 

·General and administrative expenses were RMB2,079 million (US$286 million) in the second quarter of 2024, relatively flat compared with RMB2,105 million in the same period of 2023.

 

·Sales and marketing expenses increased by 14.1% to RMB1,882 million (US$259 million) in the second quarter of 2024 from RMB1,649 million in the same period of 2023, mainly due to the increase in sales and marketing expenses for home renovation and furnishing business in line with the growth of net revenues from home renovation and furnishing.

 

·Research and development expenses increased by 6.3% to RMB505 million (US$69 million) in the second quarter of 2024 from RMB475 million in the same period of 2023.

 

Income from operations was RMB2,015 million (US$277 million) in the second quarter of 2024, compared to income from operations of RMB1,081 million in the same period of 2023. Operating margin increased to 8.6% in the second quarter of 2024 from 5.5% in the same period of 2023, primarily due to a slight increase in gross margin and improved operating leverage in the second quarter of 2024, compared to the same period of 2023.

 

Adjusted income from operations6 was RMB2,813 million (US$387 million) in the second quarter of 2024, compared to RMB2,148 million in the same period of 2023. Adjusted operating margin7 was 12.0% in the second quarter of 2024, compared to 11.0% in the same period of 2023. Adjusted EBITDA8 was RMB3,372 million (US$464 million) in the second quarter of 2024, compared to RMB2,505 million in the same period of 2023.

 

 

6 Adjusted income (loss) from operations is a non-GAAP financial measure, which is defined as income (loss) from operations, excluding (i) share-based compensation expenses, and (ii) amortization of intangible assets resulting from acquisitions and business cooperation agreement, and (iii) impairment of goodwill, intangible assets and other long-lived assets. Please refer to the section titled “Unaudited reconciliation of GAAP and non-GAAP results” for details.

 

7 Adjusted operating margin is adjusted income (loss) from operations as a percentage of net revenues.

 

8 Adjusted EBITDA is a non-GAAP financial measure, which is defined as net income (loss), excluding (i) income tax expense, (ii) share-based compensation expenses, (iii) amortization of intangible assets, (iv) depreciation of property, plant and equipment, (v) interest income, net, (vi) changes in fair value from long-term investments, loan receivables measured at fair value and contingent consideration, (vii) impairment of goodwill, intangible assets and other long-lived assets, and (viii) impairment of investments. Please refer to the section titled “Unaudited reconciliation of GAAP and non-GAAP results” for details.

 

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Net Income (Loss)

 

Net income was RMB1,900 million (US$262 million) in the second quarter of 2024, compared to RMB1,300 million in the same period of 2023.

 

Adjusted net income was RMB2,693 million (US$371 million) in the second quarter of 2024, compared to RMB2,364 million in the same period of 2023.

 

Net Income (Loss) attributable to KE Holdings Inc.’s Ordinary Shareholders

 

Net income attributable to KE Holdings Inc.’s ordinary shareholders was RMB1,892 million (US$260 million) in the second quarter of 2024, compared to RMB1,309 million in the same period of 2023.

 

Adjusted net income attributable to KE Holdings Inc.’s ordinary shareholders9 was RMB2,685 million (US$369 million) in the second quarter of 2024, compared to RMB2,373 million in the same period of 2023.

 

Net Income (Loss) per ADS

 

Basic and diluted net income per ADS attributable to KE Holdings Inc.’s ordinary shareholders10 were RMB1.67 (US$0.23) and RMB1.61 (US$0.22) in the second quarter of 2024, respectively, compared to RMB1.10 and RMB1.08 in the same period of 2023, respectively.

 

 

9 Adjusted net income (loss) attributable to KE Holdings Inc.’s ordinary shareholders is a non-GAAP financial measure and defined as net income (loss) attributable to KE Holdings Inc.’s ordinary shareholders, excluding (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from acquisitions and business cooperation agreement, (iii) changes in fair value from long-term investments, loan receivables measured at fair value and contingent consideration, (iv) impairment of goodwill, intangible assets and other long-lived assets, (v) impairment of investments, (vi) tax effects of the above non-GAAP adjustments, and (vii) effects of non-GAAP adjustments on net income (loss) attributable to non-controlling interests shareholders. Please refer to the section titled “Unaudited reconciliation of GAAP and non-GAAP results” for details.

 

10 ADS refers to American Depositary Share. Each ADS represents three Class A ordinary shares of the Company. Net income (loss) per ADS attributable to KE Holdings Inc.’s ordinary shareholders is net income (loss) attributable to ordinary shareholders divided by weighted average number of ADS outstanding during the periods used in calculating net income (loss) per ADS, basic and diluted.

 

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Adjusted basic and diluted net income per ADS attributable to KE Holdings Inc.’s ordinary shareholders11 were RMB2.36 (US$0.32) and RMB2.28 (US$0.31) in the second quarter of 2024, respectively, compared to RMB2.00 and RMB1.96 in the same period of 2023, respectively.

 

Cash, Cash Equivalents, Restricted Cash and Short-Term Investments

 

As of June 30, 2024, the combined balance of the Company’s cash, cash equivalents, restricted cash and short-term investments amounted to RMB59.7 billion (US$8.2 billion).

 

Upsizing and Extension of Share Repurchase Program

 

As previously disclosed, the Company established a share repurchase program in August 2022 and upsized and extended it in August 2023, under which the Company may purchase up to US$2 billion of its Class A ordinary shares and/or ADSs until August 31, 2024 (the “Existing Share Repurchase Program”). As of the date of this press release, the Company in aggregate has purchased approximately 95.0 million ADSs (representing approximately 285.0 million Class A ordinary shares) on the New York Stock Exchange with a total consideration of approximately US$1,389.8 million under the Existing Share Repurchase Program since its launch.

 

On August 12, 2024, the Company’s board of directors approved modifications to the Existing Share Repurchase Program, pursuant to which the repurchase authorization has been further increased from US$2 billion to US$3 billion of its Class A ordinary shares and/or ADSs and extended until August 31, 2025 (the “Extended Share Repurchase Program”). In the annual general meeting (the “AGM”) held on June 14, 2024, the shareholders of the Company have approved to grant the board of directors a general unconditional mandate to purchase the Company’s own shares (the “2024 Share Repurchase Mandate”) which covers the repurchases to be made under the Extended Share Repurchase Program until the conclusion of the next AGM of the Company. After the expiry of the 2024 Share Repurchase Mandate, the Company will seek for another general unconditional mandate for repurchase from the shareholders of the Company at the next AGM to continue its share repurchase under the Extended Share Repurchase Program.

 

 

11 Adjusted net income (loss) per ADS attributable to KE Holdings Inc.’s ordinary shareholders is a non-GAAP financial measure, which is defined as adjusted net income (loss) attributable to KE Holdings Inc.’s ordinary shareholders divided by weighted average number of ADS outstanding during the periods used in calculating adjusted net income (loss) per ADS, basic and diluted. Please refer to the section titled “Unaudited reconciliation of GAAP and non-GAAP results” for details.

 

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Conference Call Information

 

The Company will hold an earnings conference call at 8:00 A.M. U.S. Eastern Time on Monday, August 12, 2024 (8:00 P.M. Beijing/Hong Kong Time on Monday, August 12, 2024) to discuss the financial results.

 

For participants who wish to join the conference call using dial-in numbers, please complete online registration using the link provided below at least 20 minutes prior to the scheduled call start time. Dial-in numbers, passcode and unique access PIN would be provided upon registering.

 

Participant Online Registration:

 

English Line: https://s1.c-conf.com/diamondpass/10040170-jgu87y.html

 

Chinese Simultaneous Interpretation Line (listen-only mode): https://s1.c-conf.com/diamondpass/10040172-lap9i8.html

 

A replay of the conference call will be accessible through August 19, 2024, by dialing the following numbers:

 

United States: +1-855-883-1031
Mainland, China: 400-1209-216
Hong Kong, China: 800-930-639
International: +61-7-3107-6325
Replay PIN (English line):   10040170
Replay PIN (Chinese simultaneous interpretation line): 10040172

 

A live and archived webcast of the conference call will also be available at the Company’s investor relations website at https://investors.ke.com.

 

Exchange Rate

 

This press release contains translations of certain RMB amounts into U.S. dollars (“US$”) at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to US$ were made at the rate of RMB7.2672 to US$1.00, the noon buying rate in effect on June 28, 2024, in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ amounts referred could be converted into US$ or RMB, as the case may be, at any particular rate or at all. For analytical presentation, all percentages are calculated using the numbers presented in the financial statements contained in this earnings release.

 

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Non-GAAP Financial Measures

 

The Company uses adjusted income (loss) from operations, adjusted net income (loss), adjusted net income (loss) attributable to KE Holdings Inc.’s ordinary shareholders, adjusted operating margin, adjusted EBITDA and adjusted net income (loss) per ADS attributable to KE Holdings Inc.’s ordinary shareholders, each a non-GAAP financial measure, in evaluating its operating results and formulating its business plan. Beike believes that these non-GAAP financial measures help identify underlying trends in the Company’s business that could otherwise be distorted by the effect of certain expenses that the Company includes in its net income (loss). Beike also believes that these non-GAAP financial measures provide useful information about its results of operations, enhance the overall understanding of its past performance and future prospects and allow for greater visibility with respect to key metrics used by its management in formulating its business plan. A limitation of using these non-GAAP financial measures is that these non-GAAP financial measures exclude share-based compensation expenses that have been, and will continue to be for the foreseeable future, a significant recurring expense in the Company’s business.

 

The presentation of these non-GAAP financial measures should not be considered in isolation or construed as an alternative to gross profit, net income (loss) or any other measure of performance or as an indicator of its operating performance. Investors are encouraged to review these non-GAAP financial measures and the reconciliation to the most directly comparable GAAP measures. The non-GAAP financial measures presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to the Company’s data. Beike encourages investors and others to review its financial information in its entirety and not rely on a single financial measure. Adjusted income (loss) from operations is defined as income (loss) from operations, excluding (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from acquisitions and business cooperation agreement, and (iii) impairment of goodwill, intangible assets and other long-lived assets. Adjusted operating margin is defined as adjusted income (loss) from operations as a percentage of net revenues. Adjusted net income (loss) is defined as net income (loss), excluding (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from acquisitions and business cooperation agreement, (iii) changes in fair value from long-term investments, loan receivables measured at fair value and contingent consideration, (iv) impairment of goodwill, intangible assets and other long-lived assets, (v) impairment of investments, and (vi) tax effects of the above non-GAAP adjustments. Adjusted net income (loss) attributable to KE Holdings Inc.’s ordinary shareholders is defined as net income (loss) attributable to KE Holdings Inc.’s ordinary shareholders, excluding (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from acquisitions and business cooperation agreement, (iii) changes in fair value from long-term investments, loan receivables measured at fair value and contingent consideration, (iv) impairment of goodwill, intangible assets and other long-lived assets, (v) impairment of investments, (vi) tax effects of the above non-GAAP adjustments, and (vii) effects of non-GAAP adjustments on net income (loss) attributable to non-controlling interests shareholders. Adjusted EBITDA is defined as net income (loss), excluding (i) income tax expense, (ii) share-based compensation expenses, (iii) amortization of intangible assets, (iv) depreciation of property, plant and equipment, (v) interest income, net, (vi) changes in fair value from long-term investments, loan receivables measured at fair value and contingent consideration, (vii) impairment of goodwill, intangible assets and other long-lived assets, and (viii) impairment of investments. Adjusted net income (loss) per ADS attributable to KE Holdings Inc.’s ordinary shareholders is defined as adjusted net income (loss) attributable to KE Holdings Inc.’s ordinary shareholders divided by weighted average number of ADS outstanding during the periods used in calculating adjusted net income (loss) per ADS, basic and diluted.

 

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Please see the “Unaudited reconciliation of GAAP and non-GAAP results” included in this press release for a full reconciliation of each non-GAAP measure to its respective comparable GAAP measure.

 

About KE Holdings Inc.

 

KE Holdings Inc. is a leading integrated online and offline platform for housing transactions and services. The Company is a pioneer in building infrastructure and standards to reinvent how service providers and customers efficiently navigate and complete housing transactions and services in China, ranging from existing and new home sales, home rentals, to home renovation and furnishing, and other services. The Company owns and operates Lianjia, China’s leading real estate brokerage brand and an integral part of its Beike platform. With more than 22 years of operating experience through Lianjia since its inception in 2001, the Company believes the success and proven track record of Lianjia pave the way for it to build its infrastructure and standards and drive the rapid and sustainable growth of Beike.

 

12

 

 

Safe Harbor Statement

 

This press release contains statements that may constitute “forward-looking” statements pursuant to the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “aims,” “future,” “intends,” “plans,” “believes,” “estimates,” “likely to,” and similar statements. Among other things, the quotations from management in this press release, as well as Beike’s strategic and operational plans, contain forward-looking statements. Beike may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”) and The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about KE Holdings Inc.’s beliefs, plans, and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Beike’s goals and strategies; Beike’s future business development, financial condition and results of operations; expected changes in the Company’s revenues, costs or expenditures; Beike’s ability to empower services and facilitate transactions on Beike platform; competition in the industry in which Beike operates; relevant government policies and regulations relating to the industry; Beike’s ability to protect the Company’s systems and infrastructures from cyber-attacks; Beike’s dependence on the integrity of brokerage brands, stores and agents on the Company’s platform; general economic and business conditions in China and globally; and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in KE Holdings Inc.’s filings with the SEC and the Hong Kong Stock Exchange. All information provided in this press release is as of the date of this press release, and KE Holdings Inc. does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

 

For investor and media inquiries, please contact:

 

In China:

KE Holdings Inc.

Investor Relations

Siting Li

E-mail: ir@ke.com

 

Piacente Financial Communications

Jenny Cai

Tel: +86-10-6508-0677

E-mail: ke@tpg-ir.com

 

In the United States:

Piacente Financial Communications

Brandi Piacente

Tel: +1-212-481-2050

E-mail: ke@tpg-ir.com

 

Source: KE Holdings Inc.

 

13

 

 

KE Holdings Inc.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(All amounts in thousands, except for share, per share data)

 

   As of
December 31,
   As of
June 30,
 
   2023   2024 
   RMB   RMB   US$ 
ASSETS               
Current assets               
Cash and cash equivalents   19,634,716    9,409,071    1,294,731 
Restricted cash   6,222,745    8,117,582    1,117,016 
Short-term investments   34,257,958    42,222,652    5,810,030 
Short-term financing receivables, net of allowance for credit losses of RMB122,482 and RMB118,595 as of December 31, 2023 and June 30, 2024, respectively   1,347,759    1,460,169    200,926 
Accounts receivable and contract assets, net of allowance for credit losses of RMB1,681,127 and RMB 1,687,261 as of December 31, 2023 and June 30, 2024, respectively   3,176,169    3,904,153    537,229 
Amounts due from and prepayments to related parties   419,270    416,759    57,348 
Loan receivables from related parties   28,030    27,770    3,821 
Prepayments, receivables and other assets   4,666,976    5,098,886    701,631 
Total current assets   69,753,623    70,657,042    9,722,732 
Non-current assets               
Property, plant and equipment, net   1,965,098    2,065,608    284,237 
Right-of-use assets   17,617,915    20,487,100    2,819,119 
Long-term investments, net   23,570,988    22,132,865    3,045,584 
Intangible assets, net   1,067,459    927,533    127,633 
Goodwill   4,856,807    4,847,762    667,074 
Long-term loan receivables from related parties   27,000    19,300    2,656 
Other non-current assets   1,473,041    1,360,787    187,250 
Total non-current assets   50,578,308    51,840,955    7,133,553 
TOTAL ASSETS   120,331,931    122,497,997    16,856,285 

 

14

 

 

KE Holdings Inc.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)

(All amounts in thousands, except for share, per share data)

 

   As of
December 31,
   As of
June 30,
 
   2023   2024 
   RMB   RMB   US$ 
LIABILITIES               
Current liabilities               
Accounts payable   6,328,516    6,684,706    919,846 
Amounts due to related parties   430,350    398,473    54,832 
Employee compensation and welfare payable   8,145,779    6,064,974    834,568 
Customer deposits payable   3,900,564    5,794,761    797,386 
Income taxes payable   698,568    747,112    102,806 
Short-term borrowings   290,450    445,530    61,307 
Lease liabilities current portion   9,368,607    11,632,047    1,600,623 
Contract liability and deferred revenue   4,665,201    5,422,197    746,119 
Accrued expenses and other current liabilities   5,695,948    6,186,560    851,299 
Total current liabilities   39,523,983    43,376,360    5,968,786 
Non-current liabilities               
Deferred tax liabilities   279,341    279,341    38,439 
Lease liabilities non-current portion   8,327,113    8,136,397    1,119,605 
Other non-current liabilities   389    2,791    384 
Total non-current liabilities   8,606,843    8,418,529    1,158,428 
TOTAL LIABILITIES   48,130,826    51,794,889    7,127,214 

 

15

 

 

KE Holdings Inc.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)

(All amounts in thousands, except for share, per share data)

 

   As of
December 31,
   As of
June 30,
 
   2023   2024 
   RMB   RMB   US$ 
SHAREHOLDERS’ EQUITY               
KE Holdings Inc. shareholders’ equity               
Ordinary shares (US$0.00002 par value; 25,000,000,000 ordinary shares authorized, comprising of 24,114,698,720 Class A ordinary shares and 885,301,280 Class B ordinary shares. 3,571,960,220 Class A ordinary shares issued and 3,443,860,844 Class A ordinary shares outstanding(1) as of December 31, 2023; 3,529,562,630 Class A ordinary shares issued and 3,395,696,348 Class A ordinary shares outstanding(1) as of June 30, 2024; and 151,354,549 and 147,500,681 Class B ordinary shares issued and outstanding as of December 31, 2023 and June 30, 2024, respectively)   475    467    64 
Treasury shares   (866,198)   (350,595)   (48,243)
Additional paid-in capital   77,583,054    73,059,977    10,053,387 
Statutory reserves   811,107    811,107    111,612 
Accumulated other comprehensive income   244,302    397,365    54,679 
Accumulated deficit   (5,672,916)   (3,349,081)   (460,849)
Total KE Holdings Inc. shareholders' equity   72,099,824    70,569,240    9,710,650 
Non-controlling interests   101,281    133,868    18,421 
TOTAL SHAREHOLDERS' EQUITY   72,201,105    70,703,108    9,729,071 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY   120,331,931    122,497,997    16,856,285 

 

(1)Excluding the Class A ordinary shares registered in the name of the depositary bank for future issuance of ADSs upon the exercise or vesting of awards granted under our share incentive plans and the Class A ordinary shares repurchased but not cancelled in the form of ADSs.

 

16

 

 

KE Holdings Inc. 

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(All amounts in thousands, except for share, per share data, ADS and per ADS data)

 

   For the Three Months Ended  For the Six Months Ended 
   June 30,
2023
  June 30,
2024
  June 30,
2024
  June 30,
2023
  June 30,
2024
  June 30,
2024
 
   RMB  RMB  US$  RMB  RMB  US$ 
Net revenues                   
Existing home transaction services  6,415,888  7,334,889  1,009,314  15,597,087  13,061,919  1,797,380 
New home transaction services  8,695,630  7,933,805  1,091,728  17,099,714  12,850,320  1,768,263 
Home renovation and furnishing  2,624,899  4,040,224  555,953  4,032,830  6,449,072  887,422 
Home rental services  1,193,534  3,187,540  438,620  2,100,888  5,812,743  799,860 
Emerging and other services  553,970  873,972  120,263  931,482  1,573,690  216,547 
Total net revenues  19,483,921  23,370,430  3,215,878  39,762,001  39,747,744  5,469,472 
Cost of revenues                   
Commission-split  (5,753,173) (5,439,667) (748,523) (11,363,560) (8,857,846) (1,218,880)
Commission and compensation-internal  (4,118,839) (4,444,340) (611,562) (9,360,775) (8,065,289) (1,109,821)
Cost of home renovation and furnishing  (1,848,140) (2,776,351) (382,039) (2,825,059) (4,448,069) (612,075)
Cost of home rental services  (1,260,041) (3,001,325) (412,996) (2,248,885) (5,481,822) (754,324)
Cost related to stores  (729,912) (680,930) (93,699) (1,415,651) (1,365,977) (187,965)
Others  (430,626) (510,767) (70,284) (855,083) (889,605) (122,413)
Total cost of revenues(1)   (14,140,731) (16,853,380) (2,319,103) (28,069,013) (29,108,608) (4,005,478)
Gross profit  5,343,190  6,517,050  896,775  11,692,988  10,639,136  1,463,994 
Operating expenses                   
Sales and marketing expenses(1)   (1,649,458) (1,881,726) (258,934) (2,943,272) (3,505,463) (482,368)
General and administrative expenses(1)  (2,105,234) (2,079,299) (286,121) (3,726,483) (4,098,494) (563,972)
Research and development expenses(1)  (474,789) (504,509) (69,423) (931,529) (971,809) (133,725)
Impairment of goodwill, intangible assets and other long-lived assets  (32,775) (36,397) (5,008) (32,775) (36,397) (5,008)
Total operating expenses  (4,262,256) (4,501,931) (619,486) (7,634,059) (8,612,163) (1,185,073)
Income from operations  1,080,934  2,015,119  277,289  4,058,929  2,026,973  278,921 
Interest income, net  338,735  356,578  49,067  602,226  666,253  91,679 
Share of results of equity investees  8,805  351  48  14,475  (3,735) (514)
Fair value changes in investments, net  29,841  70,523  9,704  73,006  78,288  10,773 
Impairment loss for equity investments accounted for using Measurement Alternative  (7,214) (1,902) (262) (9,313) (8,049) (1,108)
Foreign currency exchange loss  (50,540) (55,277) (7,606) (15,833) (73,025) (10,049)
Other income, net  172,310  363,972  50,084  727,283  901,610  124,066 
Income before income tax expense  1,572,871  2,749,364  378,324  5,450,773  3,588,315  493,768 
Income tax expense  (273,366) (848,960) (116,821) (1,401,522) (1,255,789) (172,802)
Net income  1,299,505  1,900,404  261,503  4,049,251  2,332,526  320,966 

 

17 

 

 

KE Holdings Inc. 

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Continued)

(All amounts in thousands, except for share, per share data, ADS and per ADS data)

 

   For the Three Months Ended  For the Six Months Ended 
   June 30,
2023
  June 30,
2024
  June 30,
2024
  June 30,
2023
  June 30,
2024
  June 30,
2024
 
   RMB  RMB  US$  RMB  RMB  US$ 
Net loss (income) attributable to non-controlling interests shareholders  9,228  (8,343) (1,148) 6,326  (8,691) (1,196)
Net income attributable to KE Holdings Inc.  1,308,733  1,892,061  260,355  4,055,577  2,323,835  319,770 
Net income attributable to KE Holdings Inc.’s ordinary shareholders  1,308,733  1,892,061  260,355  4,055,577  2,323,835  319,770 
                    
Net income  1,299,505  1,900,404  261,503  4,049,251  2,332,526  320,966 
Currency translation adjustments  1,233,419  84,115  11,575  893,719  120,450  16,574 
Unrealized gains (losses) on available-for-sale investments, net of reclassification  (15,649) 7,282  1,002  (1,024) 32,613  4,488 
                    
Total comprehensive income  2,517,275  1,991,801  274,080  4,941,946  2,485,589  342,028 
Comprehensive loss (income) attributable to non-controlling interests shareholders  9,228  (8,343) (1,148) 6,326  (8,691) (1,196)
Comprehensive income attributable to KE Holdings Inc.  2,526,503  1,983,458  272,932  4,948,272  2,476,898  340,832 
Comprehensive income attributable to KE Holdings Inc.’s ordinary shareholders  2,526,503  1,983,458  272,932  4,948,272  2,476,898  340,832 

 

18 

 

 

KE Holdings Inc. 

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Continued)

(All amounts in thousands, except for share, per share data, ADS and per ADS data)

 

   For the Three Months Ended  For the Six Months Ended 
   June 30,
2023
  June 30,
2024
  June 30,
2024
  June 30,
2023
  June 30,
2024
  June 30,
2024
 
   RMB  RMB  US$  RMB  RMB  US$ 
Weighted average number of ordinary shares used in computing net income per share, basic and diluted                   
                    
—Basic  3,559,273,186  3,406,250,235  3,406,250,235  3,555,127,466  3,422,928,331  3,422,928,331 
                    
—Diluted  3,632,443,288  3,525,256,472  3,525,256,472  3,643,230,834  3,533,558,988  3,533,558,988 
                    
Weighted average number of ADS used in computing net income per ADS, basic and diluted                   
                    
—Basic  1,186,424,395  1,135,416,745  1,135,416,745  1,185,042,489  1,140,976,110  1,140,976,110 
                    
—Diluted  1,210,814,429  1,175,085,491  1,175,085,491  1,214,410,278  1,177,852,996  1,177,852,996 
                    
Net income per share  attributable to KE Holdings Inc.'s ordinary shareholders                   
                    
—Basic  0.37  0.56  0.08  1.14  0.68  0.09 
                    
—Diluted  0.36  0.54  0.07  1.11  0.66  0.09 
                    
Net income per ADS attributable to KE Holdings Inc.'s ordinary shareholders                   
                    
—Basic  1.10  1.67  0.23  3.42  2.04  0.28 
                    
—Diluted  1.08  1.61  0.22  3.34  1.97  0.27 
                    
(1) Includes share-based compensation expenses as follows:                   
                    
Cost of revenues  132,570  125,401  17,256  226,566  249,834  34,379 
                    
Sales and marketing expenses  46,416  43,458  5,980  77,481  90,761  12,489 
General and administrative expenses  655,554  513,776  70,698  1,188,897  1,090,910  150,114 
Research and development expenses  46,687  48,416  6,662  90,038  92,926  12,787 

 

19 

 

 

KE Holdings Inc.

UNAUDITED RECONCILIATION OF GAAP AND NON-GAAP RESULTS

(All amounts in thousands, except for share, per share data, ADS and per ADS data)

 

    For the Three Months Ended     For the Six Months Ended  
    June 30,
2023
    June 30,
2024
    June 30,
2024
    June 30,
2023
    June 30,
2024
    June 30,
2024
 
    RMB     RMB     US$     RMB     RMB     US$  
Income from operations     1,080,934       2,015,119       277,289       4,058,929       2,026,973       278,921  
Share-based compensation expenses     881,227       731,051       100,596       1,582,982       1,524,431       209,769  
Amortization of intangible assets resulting from acquisitions and business cooperation agreement     152,640       29,991       4,127       302,773       184,284       25,358  
Impairment of goodwill, intangible assets and other long-lived assets     32,775       36,397       5,008       32,775       36,397       5,008  
Adjusted income from operations     2,147,576       2,812,558       387,020       5,977,459       3,772,085       519,056  
                                                 
Net income     1,299,505       1,900,404       261,503       4,049,251       2,332,526       320,966  
Share-based compensation expenses     881,227       731,051       100,596       1,582,982       1,524,431       209,769  
Amortization of intangible assets resulting from acquisitions and business cooperation agreement     152,640       29,991       4,127       302,773       184,284       25,358  
Changes in fair value from long-term investments, loan receivables measured at fair value and contingent consideration     (2,671 )     87       12       (38,581 )     13,278       1,827  
Impairment of goodwill, intangible assets and other long-lived assets     32,775       36,397       5,008       32,775       36,397       5,008  
Impairment of investments     7,214       1,902       262       9,313       8,049       1,108  
Tax effects on non-GAAP adjustments     (6,562 )     (6,494 )     (894 )     (13,122 )     (13,410 )     (1,845 )
Adjusted net income     2,364,128       2,693,338       370,614       5,925,391       4,085,555       562,191  
                                                 
Net income     1,299,505       1,900,404       261,503       4,049,251       2,332,526       320,966  
Income tax expense     273,366       848,960       116,821       1,401,522       1,255,789       172,802  
Share-based compensation expenses     881,227       731,051       100,596       1,582,982       1,524,431       209,769  
Amortization of intangible assets     156,994       36,012       4,955       309,914       194,518       26,767  
Depreciation of property, plant and equipment     195,093       173,690       23,901       384,815       338,859       46,629  
Interest income, net     (338,735 )     (356,578 )     (49,067 )     (602,226 )     (666,253 )     (91,679 )
Changes in fair value from long-term investments, loan receivables measured at fair value and contingent consideration     (2,671 )     87       12       (38,581 )     13,278       1,827  
Impairment of goodwill, intangible assets and other long-lived assets     32,775       36,397       5,008       32,775       36,397       5,008  
Impairment of investments     7,214       1,902       262       9,313       8,049       1,108  
Adjusted EBITDA     2,504,768       3,371,925       463,991       7,129,765       5,037,594       693,197  
                                                 
Net income attributable to KE Holdings Inc.’s ordinary shareholders     1,308,733       1,892,061       260,355       4,055,577       2,323,835       319,770  
Share-based compensation expenses     881,227       731,051       100,596       1,582,982       1,524,431       209,769  
Amortization of intangible assets resulting from acquisitions and business cooperation agreement     152,640       29,991       4,127       302,773       184,284       25,358  
Changes in fair value from long-term investments, loan receivables measured at fair value and contingent consideration     (2,671 )     87       12       (38,581 )     13,278       1,827  
Impairment of goodwill, intangible assets and other long-lived assets     32,775       36,397       5,008       32,775       36,397       5,008  
Impairment of investments     7,214       1,902       262       9,313       8,049       1,108  
Tax effects on non-GAAP adjustments     (6,562 )     (6,494 )     (894 )     (13,122 )     (13,410 )     (1,845 )
Effects of non-GAAP adjustments on net income attributable to non-controlling interests shareholders     (7 )     (7 )     (1 )     (14 )     (14 )     (2 )
Adjusted net income attributable to KE Holdings Inc.’s ordinary shareholders     2,373,349       2,684,988       369,465       5,931,703       4,076,850       560,993  

 

20

 

 

KE Holdings Inc. 

UNAUDITED RECONCILIATION OF GAAP AND NON-GAAP RESULTS (Continued)

(All amounts in thousands, except for share, per share data, ADS and per ADS data)

 

    For the Three Months Ended     For the Six Months Ended  
    June 30,
2023
    June 30,
2024
    June 30,
2024
    June 30,
2023
    June 30,
2024
    June 30,
2024
 
    RMB     RMB     US$     RMB     RMB     US$  
Weighted average number of ADS used in computing net income per ADS, basic and diluted                                    
                                     
—Basic     1,186,424,395       1,135,416,745       1,135,416,745       1,185,042,489       1,140,976,110       1,140,976,110  
                                                 
—Diluted     1,210,814,429       1,175,085,491       1,175,085,491       1,214,410,278       1,177,852,996       1,177,852,996  
                                                 
Weighted average number of ADS used in calculating adjusted net income per ADS, basic and diluted                                                
                                                 
—Basic     1,186,424,395       1,135,416,745       1,135,416,745       1,185,042,489       1,140,976,110       1,140,976,110  
                                                 
—Diluted     1,210,814,429       1,175,085,491       1,175,085,491       1,214,410,278       1,177,852,996       1,177,852,996  
                                                 
Net income per ADS attributable to KE Holdings Inc.'s ordinary shareholders                                                
                                                 
—Basic     1.10       1.67       0.23       3.42       2.04       0.28  
                                                 
—Diluted     1.08       1.61       0.22       3.34       1.97       0.27  
                                                 
Non-GAAP adjustments to net income per ADS attributable to KE Holdings Inc.'s ordinary shareholders                                                
                                                 
—Basic     0.90       0.69       0.09       1.59       1.53       0.21  
                                                 
—Diluted     0.88       0.67       0.09       1.54       1.49       0.21  
                                                 
Adjusted net income per ADS attributable to KE Holdings Inc.'s ordinary shareholders                                                
                                                 
—Basic     2.00       2.36       0.32       5.01       3.57       0.49  
                                                 
—Diluted     1.96       2.28       0.31       4.88       3.46       0.48  

 

21

 

 

KE Holdings Inc. 

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(All amounts in thousands)

 

    For the Three Months Ended     For the Six Months Ended  
    June 30,
2023
    June 30,
2024
    June 30,
2024
    June 30,
2023
    June 30,
2024
    June 30,
2024
 
    RMB     RMB     US$     RMB     RMB     US$  
Net cash provided by (used in) operating activities     (196,144 )     4,772,954       656,778       7,431,689       3,857,678       530,836  
Net cash provided by (used in) investing activities     2,055,696       (8,134,019 )     (1,119,277 )     7,633,614       (6,843,593 )     (941,709 )
                                                 
Net cash used in financing activities     (2,537,964 )     (3,931,260 )     (540,959 )     (2,869,607 )     (5,377,054 )     (739,907 )
Effect of exchange rate change on cash, cash equivalents and restricted cash     36,149       35,666       4,908       22,137       32,161       4,422  
Net increase (decrease) in cash and cash equivalents and restricted cash     (642,263 )     (7,256,659 )     (998,550 )     12,217,833       (8,330,808 )     (1,146,358 )
Cash, cash equivalents and restricted cash at the beginning of the period     38,454,355       24,783,312       3,410,297       25,594,259       25,857,461       3,558,105  
Cash, cash equivalents and restricted cash at the end of the period     37,812,092       17,526,653       2,411,747       37,812,092       17,526,653       2,411,747  

 

22

 

 

KE Holdings Inc.

UNAUDITED SEGMENT CONTRIBUTION MEASURE

(All amounts in thousands)

 

    For the Three Months Ended     For the Six Months Ended  
    June 30,
2023
    June 30,
2024
    June 30,
2024
    June 30,
2023
    June 30,
2024
    June 30,
2024
 
    RMB     RMB     US$     RMB     RMB     US$  
Existing home transaction services                                                
                                                 
Net revenues     6,415,888       7,334,889       1,009,314       15,597,087       13,061,919       1,797,380  
Less: Commission and compensation     (3,490,480 )     (3,851,787 )     (530,024 )     (8,169,959 )     (7,032,712 )     (967,733 )
                                                 
Contribution     2,925,408       3,483,102       479,290       7,427,128       6,029,207       829,647  
                                                 
New home transaction services                                                
                                                 
Net revenues     8,695,630       7,933,805       1,091,728       17,099,714       12,850,320       1,768,263  
Less: Commission and compensation     (6,330,323 )     (5,947,840 )     (818,450 )     (12,462,059 )     (9,768,943 )     (1,344,251 )
                                                 
Contribution     2,365,307       1,985,965       273,278       4,637,655       3,081,377       424,012  
                                                 
Home renovation and furnishing                                                
                                                 
Net revenues     2,624,899       4,040,224       555,953       4,032,830       6,449,072       887,422  
Less: Material costs, commission and compensation     (1,848,140 )     (2,776,351 )     (382,039 )     (2,825,059 )     (4,448,069 )     (612,075 )
                                                 
Contribution     776,759       1,263,873       173,914       1,207,771       2,001,003       275,347  
                                                 
Home rental services                                                
                                                 
Net revenues     1,193,534       3,187,540       438,620       2,100,888       5,812,743       799,860  
Less: Property leasing costs, commission and compensation     (1,260,041 )     (3,001,325 )     (412,996 )     (2,248,885 )     (5,481,822 )     (754,324 )
                                                 
(Deficit)/Contribution     (66,507 )     186,215       25,624       (147,997 )     330,921       45,536  
                                                 
Emerging and other services                                                
                                                 
Net revenues     553,970       873,972       120,263       931,482       1,573,690       216,547  
Less: Commission and compensation     (51,209 )     (84,380 )     (11,611 )     (92,317 )     (121,480 )     (16,717 )
                                                 
Contribution     502,761       789,592       108,652       839,165       1,452,210       199,830  

 

23

 

 

Exhibit 99.2 

 

KE Holdings Inc. Announces Upsizing and Extension of Share Repurchase Program

 

BEIJING, China, August 12, 2024 - KE Holdings Inc. (“Beike” or the “Company”) (NYSE: BEKE and HKEX: 2423), a leading integrated online and offline platform for housing transactions and services, today announced that its board of directors has approved the upsizing and extension of its share repurchase program.

 

As previously disclosed, the Company established a share repurchase program in August 2022 and upsized and extended it in August 2023, under which the Company may purchase up to US$2.0 billion of its Class A ordinary shares and/or American depositary shares (“ADSs”) until August 31, 2024 (the “Existing Share Repurchase Program”). As of the date of this press release, the Company in aggregate has purchased approximately 95.0 million ADSs (representing approximately 285.0 million Class A ordinary shares) on the New York Stock Exchange with a total consideration of approximately US$1,389.8 million under the Existing Share Repurchase Program since its launch.

 

On August 12, 2024, the Company’s board of directors approved modifications to the Existing Share Repurchase Program, pursuant to which the repurchase authorization has been further increased from US$2.0 billion to US$3.0 billion of its Class A ordinary shares and/or ADSs and extended until August 31, 2025 (the “Extended Share Repurchase Program”). In the annual general meeting (the “AGM”) held on June 14, 2024, the shareholders of the Company have approved to grant the board of directors a general unconditional mandate to purchase the Company’s own shares (the “2024 Share Repurchase Mandate”) which covers the repurchases under the Extended Share Repurchase Program until the conclusion of the next AGM of the Company. After the expiry of the 2024 Share Repurchase Mandate, the Company will seek for another general unconditional mandate for repurchase from the shareholders of the Company at the next AGM to continue its share repurchase under the Extended Share Repurchase Program.

 

1

 

 

About KE Holdings Inc.

 

KE Holdings Inc. is a leading integrated online and offline platform for housing transactions and services. The Company is a pioneer in building infrastructure and standards to reinvent how service providers and customers efficiently navigate and complete housing transactions and services in China, ranging from existing and new home sales, home rentals, to home renovation and furnishing, and other services. The Company owns and operates Lianjia, China’s leading real estate brokerage brand and an integral part of its Beike platform. With more than 22 years of operating experience through Lianjia since its inception in 2001, the Company believes the success and proven track record of Lianjia pave the way for it to build its infrastructure and standards and drive the rapid and sustainable growth of Beike.

 

Safe Harbor Statement

 

This press release contains statements that may constitute “forward-looking” statements pursuant to the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “aims,” “future,” “intends,” “plans,” “believes,” “estimates,” “likely to,” and similar statements. Beike may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”) and The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about KE Holdings Inc.’s beliefs, plans, and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Beike’s goals and strategies; Beike’s future business development, financial condition and results of operations; expected changes in the Company’s revenues, costs or expenditures; Beike’s ability to empower services and facilitate transactions on Beike platform; competition in the industry in which Beike operates; relevant government policies and regulations relating to the industry; Beike’s ability to protect the Company’s systems and infrastructures from cyber-attacks; Beike’s dependence on the integrity of brokerage brands, stores and agents on the Company’s platform; general economic and business conditions in China and globally; and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in KE Holdings Inc.’s filings with the SEC and the Hong Kong Stock Exchange. All information provided in this press release is as of the date of this press release, and KE Holdings Inc. does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

 

2

 

 

For investor and media inquiries, please contact:

 

In China:

KE Holdings Inc.

Investor Relations

Siting Li

E-mail: ir@ke.com

 

Piacente Financial Communications

Jenny Cai

Tel: +86-10-6508-0677

E-mail: ke@tpg-ir.com

 

In the United States:

Piacente Financial Communications

Brandi Piacente

Tel: +1-212-481-2050

E-mail: ke@tpg-ir.com

 

Source: KE Holdings Inc.

 

3

 

 

Exhibit 99.3

 

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

 

 

KE Holdings Inc.

貝殼控股有限公司

(A company controlled through weighted voting rights and incorporated in the Cayman Islands with limited liability)

(Stock Code: 2423)

 

INTERIM RESULTS ANNOUNCEMENT FOR

THE SIX MONTHS ENDED JUNE 30, 2024

 

KE Holdings Inc. (“Beike” or the “Company”) (NYSE: BEKE and HKEX: 2423), a leading integrated online and offline platform for housing transactions and services, today announced its unaudited financial results for the six months ended June 30, 2024 (the “Reporting Period”), which have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”), which are different from the IFRS Accounting Standards.

 

In this announcement, “we,” “us,” and “our” refer to the Company and where the context otherwise requires, the Group (as defined under the “General Information” section).

 

OPERATIONAL AND FINANCIAL HIGHLIGHTS FOR THE SIX MONTHS ENDED JUNE 30, 2024

 

●           Gross transaction value (GTV)1 was RMB1,468.9 billion for the six months ended June 30, 2024, representing a decrease of 16.2% from RMB1,752.1 billion in the same period of 2023. GTV of existing home transactions was RMB1,023.8 billion for the six months ended June 30, 2024, representing a decrease of 8.7% from RMB1,120.8 billion in the same period of 2023. GTV of new home transactions was RMB387.1 billion for the six months ended June 30, 2024, representing a decrease of 32.4% from RMB572.9 billion in the same period of 2023. GTV of home renovation and furnishing was RMB7.6 billion for the six months ended June 30, 2024, representing an increase of 24.0% from RMB6.1 billion in the same period of 2023. GTV of emerging and other services was RMB50.3 billion for the six months ended June 30, 2024, representing a decrease of 3.9% from RMB52.3 billion in the same period of 2023.

 

●           Net revenues were RMB39.7 billion for the six months ended June 30, 2024, relatively flat compared with RMB39.8 billion in the same period of 2023.

 

 

 

1GTV for a given period is calculated as the total value of all transactions which the Company facilitated on the Company’s platform and evidenced by signed contracts as of the end of the period, including the value of the existing home transactions, new home transactions, home renovation and furnishing and emerging and other services (excluding home rental services), and including transactions that are contracted but pending closing at the end of the relevant period. For the avoidance of doubt, for transactions that failed to close afterwards, the corresponding GTV represented by these transactions will be deducted accordingly.

 

1

 

 

●           Net income was RMB2,333 million for the six months ended June 30, 2024, compared to RMB4,049 million in the same period of 2023. Adjusted net income2 was RMB4,086 million for the six months ended June 30, 2024, compared to RMB5,925 million in the same period of 2023.

 

●           Number of stores was 45,948 as of June 30, 2024, a 6.9% increase from 43,000 as of June 30, 2023. Number of active stores3 was 44,423 as of June 30, 2024, an 8.1% increase from 41,076 as of June 30, 2023.

 

●           Number of agents was 458,690 as of June 30, 2024, a 5.2% increase from 435,813 as of June 30, 2023. Number of active agents4 was 411,478 as of June 30, 2024, relatively stable compared with 409,054 as of June 30, 2023.

 

●          Mobile monthly active users (MAU)5 averaged 49.7 million for the three months ended June 30, 2024, compared to 48.0 million for the three months ended June 30, 2023.

 

 

 

2Adjusted net income (loss) is a non-GAAP financial measure, which is defined as net income (loss), excluding (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from acquisitions and business cooperation agreement, (iii) changes in fair value from long-term investments, loan receivables measured at fair value and contingent consideration, (iv) impairment of goodwill, intangible assets and other long-lived assets, (v) impairment of investments, and (vi) tax effects of the above non-GAAP adjustments. Please refer to the section titled “Unaudited reconciliation of GAAP and non-GAAP results” for details.

 

3Based on our accumulated operational experience, we have introduced the number of active agents and active stores on our platform which can better reflect the operational activeness of stores and agents on our platform.

 

“Active stores” as of a given date is defined as stores on our platform excluding the stores which (i) have not facilitated any housing transaction during the preceding 60 days, (ii) do not have any agent who has engaged in any critical steps in housing transactions (including but not limited to introducing new properties, attracting new customers and conducting property showings) during the preceding seven days, or (iii) have not been visited by any agent during the preceding 14 days.

 

4“Active agents” as of a given date is defined as agents on our platform excluding the agents who (i) delivered notice to leave but have not yet completed the exit procedures, (ii) have not engaged in any critical steps in housing transactions (including but not limited to introducing new properties, attracting new customers and conducting property showings) during the preceding 30 days, or (iii) have not participated in facilitating any housing transaction during the preceding three months.

 

5“Mobile monthly active users” or “mobile MAU” are to the sum of (i) the number of accounts that have accessed our platform through our Beike or Lianjia mobile app (with duplication eliminated) at least once during a month, and (ii) the number of Weixin users that have accessed our platform through our Weixin mini programs at least once during a month. Average mobile MAU for any period is calculated by dividing (i) the sum of the Company’s mobile MAUs for each month of such period, by (ii) the number of months in such period.

 

2

 

 

BUSINESS REVIEW AND OUTLOOK

 

Business Review for the Reporting Period

 

China’s real estate market was relatively muted year-over-year in the first quarter of 2024 due to a high base effect in 2023 and seasonal factors, but the second quarter saw gradual improvements as various supportive policies were implemented. We consistently maintained a neutral market perspective, continuously deepened our operations, empowered service providers and store owners, and supported the rapid growth of new businesses, all of which contributed to a high-quality operational performance. Our existing home and new home businesses outperformed the market in the first half of 2024, while home renovation and furnishing and home rental services became our new growth engines. Revenue from non-housing transaction services accounted for 34.8% of total net revenues in the first half of 2024, a significant increase of 17 percentage points compared to the same period last year, further demonstrating our solid footing to a model of “one-stop residential services platform.” Additionally, we continued to enhance shareholder returns, optimize our capital structure, and improve capital operational efficiency, creating and continuously increasing long-term value for our shareholders.

 

Existing home transaction services

 

In the first half of 2024, amidst the gradual improvement of the existing housing market, our existing home transaction services achieved robust development, benefiting from the reinforcement of our agent and store network and the advancement of refined operations.

 

With a goal focused on driving growth and building a harmonious ecosystem, we actively connect with high-quality brands, stores, and agents. As of June 30, 2024, the number of active stores on our platform reached 44,423, up by 8.1% year-over-year, while the number of active agents was 411,478, rising by 0.6% year-over-year.

 

We offer supportive initiatives such as fee discounts and installment plans to brands for the new store connections. Through our customized integration plan, we help them accelerate growth and improve efficiency, effectively unleashing their potential. Simultaneously, we have implemented refined operational measures including property listing reviews and focusing on “quality property listings”, along with technological products such as smart homeowner maintenance assistant and AI-driven home selection tools to enhance agents’ operational capabilities and efficiency. We also developed an online workbench for store owners to streamline management processes and support scientific store management.

 

We continue to optimize the platform ecosystem by mobilize more city operation teams to participate in high-risk store management and leveraging data capabilities to pre-identify high-risk stores and reduce the risk of violations. At the same time, we are continuously improving the underlying mechanisms of our platform ecosystem, expanding the coverage of regional co-governance councils, and encouraging store owners to actively participate in ecosystem governance, jointly promoting healthy competition in the industry.

 

In the operation of our self-owned brand, Lianjia, we are exploring the transformation to a one-stop residential services model based on the agent-store model. We are advancing the large store model and, at the same time, experimenting with different store formats in Shanghai Lianjia. This includes increasing community coverage through community convenience service stations and establishing stores equipped with home renovation scenarios, positioning them as gateways to one-stop residential services.

 

3

 

 

New home transaction services

 

In the first half of 2024, our new home transaction services significantly outperformed the industry, maintaining strong monetization capability. The resilience of our business primarily stems from expanded channel coverage and enhanced sell-through capabilities.

 

As the new home market shifts to a buyer’s market, the role of channels has evolved from mere sales to insight and analysis of customer needs, working with developers to address new home buyers’ pain points. Therefore, we have proactively established strategic partnerships with more high-quality developers through innovative service product models to increase our coverage of high-quality projects.

 

In terms of sell-through capability, we have expanded our new home agent base, and higher monetization rates for new home sales in a buyer’s market also served as a strong incentive for our agents. At the same time, we leverage technology to help precise matching of homes and buyers, identifying potential clients, and improving selling efficiency. Additionally, leveraging our capabilities on multiple residential services, we integrate existing home and new home businesses to facilitate customers to sell their old homes and buy new ones smoothly. We also provide a range of services, such as home renovation and rental, to bring service innovation to developers and address customers’ home buying challenges.

 

We adhered to a strict risk control baseline. Our account receivable turnover days of new home transaction services shortened to 45 days in the second quarter of 2024. Net revenue derived from the “Commission in Advance” model, with commissions prepaid by developers, accounted for around 49% of total net revenue from new home transaction services, remaining at a high level. The percentage of commission income from state-owned developers reached around 55% in the second quarter of 2024, up from around 47% in the same period of 2023.

 

Home renovation and furnishing services

 

Our home renovation and furnishing services have maintained steady growth, with a 24.0% year-on-year increase in total GTV and a 59.9% year-on-year rise in revenue for the first half of 2024. Alongside this scale growth, profitability has also strengthened, with the contribution margin for home renovation and furnishing reaching 31.0% in the first half of 2024.

 

In 2024, we focused on strengthening the foundational capabilities of our home renovation and furnishing services. We are advancing the development of our digital system capabilities based on Home SaaS, promoting a unified business model framework for our home renovation and furnishing services nationwide. Our Home SaaS has now been updated to version 2.5, incorporating our continuously restructured processes and standards, and it has been implemented in several cities. Compared to previous versions, Home SaaS 2.5 mainly upgrades two modules: the BIM Shared Service Centre mid-office module and the integrated material fulfillment module. These additions enable the generation of standardized construction drawings and automatic renovation quotations, enhance designer efficiency, and reduce error rates. The materials fulfillment module also achieves unified online scheduling for various main material categories, increasing the certainty of material delivery.

 

In terms of delivery capability optimization, we have shortened construction periods by improving order dispatch efficiency and refining construction processes. The combined construction period for basic construction and main materials in the second quarter of 2024 reduced notably year-over-year. On customized furniture delivery, by setting relevant standards and enhancing training of service providers, we improved the success rate of one-time installation of customized furniture.

 

4

 

 

Home rental services

 

Our home rental services have grown rapidly, with revenue primarily coming from the decentralized rental property management service Carefree Rent. As of the end of the second quarter of 2024, home units under Carefree Rent exceeded 300,000, compared with over 120,000 at the same time in 2023. The number of units managed under our centralized long-term apartments was over 14,000 by the end of the second quarter, compared to over 7,000 as of the same date of 2023.

 

In terms of service quality, we focus on addressing tenants’ core pain points by providing service guarantees and continuously refining our standardized service capabilities. We ensure timely and high-quality responses to tenant issues, enhancing the overall rental experience.

 

At the same time, we advanced the rental efficiency of Carefree Rent through various efforts, reducing the vacancy costs, and strengthening operation stability. We continuously iterate on the Carefree Rent product model to enhance our ability to withstand rental income fluctuations. In terms of renting-out, we established stable rental channels by building dedicated teams and improving productivity. Building on this foundation, combined with efficiency gains from refined operations, we have achieved an increase in the first-time rental success rate and a reduction in the number of days needed for second-time rentals.

 

Business Outlook

 

The accelerating transformation of the China’s real estate industry is driving it towards a new era, with consumers’ demand for “better living” increasingly on the rise. The growth potential for our home transaction services remains significant, and the business models and capabilities of our home renovation and furnishing and home rental services have also been validated. Looking ahead, our core goal is to build an organization that can continuously progress from one success to the next. Our next step is to achieve sustained growth by driving a positive cycle of scale, quality, and efficiency.

 

SHAREHOLDER RETURNS

 

While achieving robust performance, we also placed a high priority on shareholder returns. As at the date of this announcement, this year we have allocated approximately US$480 million to our Existing Share Repurchase Program (as defined below), repurchasing a total number of American depositary shares (the “ADSs”) that represents approximately 2.75% of our total issued shares by the end of 2023. Cumulatively, since the launch of our Existing Share Repurchase Program in September 2022 up to the date of this announcement, we have repurchased around US$1.39 billion worth of ADSs, which represents approximately 7.51% of the Company’s total issued shares prior to the launch of the Existing Share Repurchase Program. Additionally, on August 12, 2024, our board of directors has approved the upsizing and extension of our Existing Share Repurchase Program. The repurchase authorization has been increased from US$2 billion to US$3 billion, and the program’s duration has been extended to August 31, 2025. With our substantial cash reserves and robust financial management capabilities, we aim to create and continuously enhance long-term value for our shareholders through our proactive shareholders return initiatives.

 

5

 

 

MANAGEMENT DISCUSSION AND ANALYSIS

 

Net Revenues

 

Net revenues were RMB39.7 billion for the six months ended June 30, 2024, relatively flat compared with RMB39.8 billion in the same period of 2023, primarily attributable to the decreased net revenues from existing and new home transaction services, offset by the expansion of our home renovation and furnishing and home rental business. Total GTV decreased by 16.2% to RMB1,468.9 billion for the six months ended June 30, 2024, from RMB1,752.1 billion in the same period of 2023, primarily attributable to the high base effect of the housing transaction market for the six months ended June 30, 2023, especially for the three months ended March 31, 2023, and the sluggish new home transaction market for the six months ended June 30, 2024, while the new home transaction market also experienced a sequential recovery month-on-month for the three months ended June 30, 2024 driven by the release of the supportive policies.

 

Net revenues from existing home transaction services decreased by 16.3% to RMB13.1 billion for the six months ended June 30, 2024, compared to RMB15.6 billion in the same period of 2023, primarily due to an 8.7% decrease in GTV of existing home transactions to RMB1,023.8 billion for the six months ended June 30, 2024, from RMB1,120.8 billion in the same period of 2023. The difference in year-over-year change rate between the GTV of existing home transactions and that of net revenues was primarily attributable to a lower commission rate for existing home transaction services charged by Lianjia stores in Beijing, and a higher contribution from GTV of existing home transactions served by connected agents on the Company’s platform, for which revenue is recorded on a net commission basis from platform service, franchise service and other value-added services, while for GTV served by Lianjia agents is recorded on a gross basis.

 

Among that, (i) commission revenue decreased by 17.5% to RMB10.6 billion for the six months ended June 30, 2024, from RMB12.9 billion in the same period of 2023, primarily due to a decrease in GTV of existing home transactions served by Lianjia stores of 11.9% to RMB412.4 billion for the six months ended June 30, 2024, from RMB468.2 billion in the same period of 2023 and the decreased commission rate for existing home transaction services charged by Lianjia stores in Beijing; and

 

6

 

 

(ii) the revenues derived from platform service, franchise service and other value-added services, which are mostly charged to connected stores and agents on the Company’s platform, decreased by 10.5% to RMB2.5 billion for the six months ended June 30, 2024, from RMB2.7 billion in the same period of 2023, mainly due to a 6.3% decrease of GTV of existing home transactions served by connected agents on the Company’s platform to RMB611.5 billion for the six months ended June 30, 2024, from RMB652.6 billion in the same period of 2023.

 

Net revenues from new home transaction services decreased by 24.9% to RMB12.9 billion for the six months ended June 30, 2024, from RMB17.1 billion in the same period of 2023, primarily due to the decrease of GTV of new home transactions of 32.4% to RMB387.1 billion for the six months ended June 30, 2024, from RMB572.9 billion in the same period of 2023, partially offset by our improved monetization capability. Among that, the GTV of new home transactions facilitated on the Beike platform through connected agents, dedicated sales team with the expertise on new home transaction services and other sales channels decreased by 33.0% to RMB313.8 billion for the six months ended June 30, 2024, from RMB468.3 billion in the same period of 2023, while the GTV of new home transactions served by Lianjia brand decreased by 29.9% to RMB73.3 billion for the six months ended June 30, 2024, from RMB104.6 billion in the same period of 2023.

 

Net revenues from home renovation and furnishing increased by 59.9% to RMB6.4 billion for the six months ended June 30, 2024 from RMB4.0 billion in the same period of 2023, primarily attributable to a) the increase of orders driven by the synergetic effects from customer acquisition and conversion between home transaction services and home renovation and furnishing business, b) a larger contribution from furniture and home furnishing sales (in categories such as customized furniture, soft furnishings, and electrical appliances), and c) shortened lead time driven by enhanced delivery capabilities.

 

Net revenues from home rental services increased by 176.7% to RMB5.8 billion for the six months ended June 30, 2024, from RMB2.1 billion in the same period of 2023, primarily attributable to the increase of the number of rental units under the Carefree Rent model.

 

Net revenues from emerging and other services were RMB1.6 billion for the six months ended June 30, 2024, compared to RMB0.9 billion in the same period of 2023.

 

Cost of Revenues

 

Total cost of revenues were RMB29.1 billion for the six months ended June 30, 2024, relatively flat compared with RMB28.1 billion in the same period of 2023.

 

Commission – split. The Company’s cost of revenues for commissions to connected agents and other sales channels decreased by 22.1% to RMB8.9 billion for the six months ended June 30, 2024 from RMB11.4 billion in the same period of 2023, primarily due to the decrease in the GTV of new home transactions facilitated through connected agents and other sales channels for the six months ended June 30, 2024 compared with the same period of 2023.

 

Commission and compensation – internal. The Company’s cost of revenues for internal commission and compensation decreased by 13.8% to RMB8.1 billion for the six months ended June 30, 2024, compared to RMB9.4 billion in the same period of 2023, primarily due to the decrease in the GTV of existing home and new home transactions facilitated through Lianjia agents.

 

7

 

 

Cost of home renovation and furnishing. The Company’s cost of revenues for home renovation and furnishing increased by 57.5% to RMB4.4 billion for the six months ended June 30, 2024 from RMB2.8 billion in the same period of 2023, which was in line with net revenues from home renovation and furnishing.

 

Cost of home rental services. The Company’s cost of revenues for home rental services increased by 143.8% to RMB5.5 billion for the six months ended June 30, 2024 from RMB2.2 billion in the same period of 2023, primarily attributable to the growth of net revenues from home rental services.

 

Cost related to stores. The Company’s cost related to stores was RMB1.4 billion for the six months ended June 30, 2024, as stable compared with RMB1.4 billion in the same period of 2023.

 

Other costs. The Company’s other costs were RMB0.9 billion for the six months ended June 30, 2024, as stable compared with RMB0.9 billion in the same period of 2023.

 

Gross Profit

 

Gross profit decreased by 9.0% to RMB10.6 billion for the six months ended June 30, 2024 from RMB11.7 billion in the same period of 2023. Gross margin was 26.8% for the six months ended June 30, 2024, compared to 29.4% in the same period of 2023. The decrease in gross margin was mainly due to: a) a lower proportion of net revenues contributed from existing home transaction services with a higher contribution margin level than other main revenue streams, and b) a lower contribution margin for new home transaction services led by a higher commission-split as percentage of net revenues from new home transaction services paid to connected agents and other channels, and the decreased net revenues from new home transaction services with relatively flat fixed costs, partially offset by: c) a higher proportion of net revenues contributed from home renovation and furnishing with a higher contribution margin level, and d) a higher contribution margin for home rental business primarily due to improved operation efficiency and enhanced monetization capability.

 

Income (Loss) from Operations

 

Total operating expenses increased by 12.8% to RMB8.6 billion for the six months ended June 30, 2024, from RMB7.6 billion in the same period of 2023.

 

General and administrative expenses were RMB4.1 billion for the six months ended June 30, 2024, compared to RMB3.7 billion in the same period of 2023, mainly due to the increase in personnel costs resulting from the expansion of home renovation and furnishing and home rental services.

 

Sales and marketing expenses increased by 19.1% to RMB3.5 billion for the six months ended June 30, 2024, from RMB2.9 billion in the same period of 2023, mainly due to the increase in sales and marketing expenses for home renovation and furnishing services in line with the growth of net revenues from home renovation and furnishing for the six months ended June 30, 2024 compared to the same period of 2023.

 

Research and development expenses were RMB1.0 billion for the six months ended June 30, 2024, relatively flat compared with RMB0.9 billion in the same period of 2023.

 

8

 

 

Income from operations was RMB2.0 billion for the six months ended June 30, 2024, compared to RMB4.1 billion in the same period of 2023. Operating margin was 5.1% for the six months ended June 30, 2024, compared to 10.2% in the same period of 2023, primarily due to a) a relatively lower gross profit margin and b) the increased contribution of net revenues from home renovation and furnishing and home rental services, which was still in the ramp-up period with a relatively lower operating margin than that of housing transaction services for the six months ended June 30, 2024 compared to the same period of 2023.

 

Adjusted income from operations6 was RMB3.8 billion for the six months ended June 30, 2024, compared to RMB6.0 billion in the same period of 2023. Adjusted operating margin7 was 9.5% for the six months ended June 30, 2024, compared to 15.0% in the same period of 2023. Adjusted EBITDA8 was RMB5.0 billion for the six months ended June 30, 2024, compared to RMB7.1 billion in the same period of 2023.

 

Net Income (Loss)

 

Net income was RMB2.3 billion for the six months ended June 30, 2024, compared to RMB4.0 billion in the same period of 2023.

 

Adjusted net income was RMB4.1 billion for the six months ended June 30, 2024, compared to RMB5.9 billion in the same period of 2023.

 

Liquidity and Capital Resources

 

During the Reporting Period and up to the date of this announcement, we have financed our operating and investing activities through cash flows from operations and cash provided by historical equity and debt financing activities. As of June 30, 2024, the combined balance of our cash, cash equivalents, restricted cash and short-term investments amounted to RMB59.7 billion, compared to RMB60.1 billion as of December 31, 2023. Our cash and cash equivalents primarily consist of cash on hand, demand deposits and highly liquid investments placed with banks with original maturities of less than three months. Our restricted cash are primarily escrow payments collected from the property buyers on behalf of and payable to the property sellers.

 

We believe that our current cash, cash equivalents and restricted cash and expected cash provided by operating activities will be sufficient to meet our current and anticipated working capital requirements and capital expenditures for an extended period of time. We may, however, need additional cash resources in the future if we experience changes in business conditions or other developments. We may also need additional cash resources in the future if we identify and wish to pursue opportunities for investment, acquisition, capital expenditure or similar actions.

 

 

6 Adjusted income (loss) from operations is a non-GAAP financial measure, which is defined as income (loss) from operations, excluding (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from acquisitions and business cooperation agreement, and (iii) impairment of goodwill, intangible assets and other long-lived assets. Please refer to the section titled “Unaudited reconciliation of GAAP and non-GAAP results” for details.

 

7 Adjusted operating margin is adjusted income (loss) from operations as a percentage of net revenues.

 

8 Adjusted EBITDA is a non-GAAP financial measure, which is defined as net income (loss), excluding (i) income tax expense, (ii) share-based compensation expenses, (iii) amortization of intangible assets, (iv) depreciation of property, plant and equipment, (v) interest income, net, (vi) changes in fair value from long-term investments, loan receivables measured at fair value and contingent consideration, (vii) impairment of goodwill, intangible assets and other long-lived assets, and (viii) impairment of investments. Please refer to the section titled “Unaudited reconciliation of GAAP and non-GAAP results” for details.

 

9

 

 

The following table sets out our cash flows for the periods indicated:

 

   

For the Six Months

Ended June 30,

 
    2024     2023  
    RMB     RMB  
    (in thousands)  
    (unaudited)     (unaudited)  
Net cash provided by operating activities     3,857,678       7,431,689  
Net cash provided by (used in) investing activities     (6,843,593 )     7,633,614  
Net cash used in financing activities     (5,377,054 )     (2,869,607 )
Effect of exchange rate change on cash, cash equivalents and restricted cash     32,161       22,137  
                 
Net increase (decrease) in cash and cash equivalents and restricted cash     (8,330,808 )     12,217,833  
Cash, cash equivalents and restricted cash at the beginning of the period     25,857,461       25,594,259  
                 
Cash, cash equivalents and restricted cash at the end of the period      17,526,653       37,812,092  

 

Indebtedness

 

The following table sets forth a breakdown of our financial indebtedness as of the dates indicated:

 

   As of   As of 
   June 30,   December 31, 
   2024   2023 
   RMB   RMB 
   (in thousands)
   (unaudited)     
Current:          
Short-term borrowings   445,530    290,450 
Lease liabilities   11,632,047    9,368,607 
           
Sub-total   12,077,577    9,659,057 
           
Non-current:          
Lease liabilities   8,136,397    8,327,113 
           
Total   20,213,974    17,986,170 

 

10

 

 

Except as disclosed in this announcement, we did not have any material mortgages, charges, debentures, loan capital, debt securities, loans, bank overdrafts or other similar indebtedness, finance lease or hire purchase commitments, liabilities under acceptances (other than normal trade bills), acceptance credits, which are either guaranteed, unguaranteed, secured or unsecured, or guarantees or other contingent liabilities as of June 30, 2024.

 

Significant Investment and Material Acquisition and Disposal

 

The wealth management products that we subscribed for during the Reporting Period, which constituted discloseable transactions of the Company under the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) as disclosed in the relevant announcement, are set out below:

 

Sunshine Jinfengli Zhenxiang No. C034 (陽光金豐利臻享 C034 期), Sunshine Jinfengli Zhenxiang No. C036 (陽光金豐利臻享 C036 期) and Sunshine Jinfengli Zhenxiang No. C040 (陽光金豐利臻享 C040 期) in the principal amount of RMB1 billion, RMB0.45 billion and RMB1.2 billion with Everbright Wealth Management Co., Ltd. on October 18, 2023 (redeemed on April 16, 2024), November 28, 2023 (redeemed on May 28, 2024), and February 20, 2024, respectively. For further details, please refer to the announcement of the Company dated February 20, 2024.

 

Save as disclosed herein, we did not have any significant investment or material acquisition or disposal of subsidiaries, associates and joint ventures for the six months ended June 30, 2024.

 

Pledge of Assets

 

As of June 30, 2024, no property, plant and equipment was pledged.

 

Future Plans for Material Investments or Capital Asset

 

We did not have detailed future plans for significant investments or capital assets as of June 30, 2024.

 

Gearing Ratio

 

As of June 30, 2024, our gearing ratio (i.e., total liabilities divided by total assets, in percentage) was 42.3% (as of December 31, 2023: 40.0%).

 

Foreign Exchange Exposure

 

Substantially all of our revenues and expenses are denominated in RMB. We do not believe that we currently have any significant direct foreign exchange risk. Although our exposure to foreign exchange risks should be limited in general, the value of your investment will be affected by the exchange rate between U.S. dollar and Renminbi.

 

Historically, the Renminbi has fluctuated against the U.S. dollars at times significantly and unpredictably. The depreciation of the Renminbi against the U.S. dollars was approximately 2.4% for the six months ended June 30, 2024. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the Renminbi and the U.S. dollars in the future.

 

11

 

 

To the extent that we need to convert U.S. dollars into Renminbi for our operations, appreciation of the Renminbi against the U.S. dollar would have an adverse effect on the Renminbi amounts we receive from the conversion. Conversely, if we decide to convert Renminbi into U.S. dollars for the purpose of making payments for dividends on our Class A ordinary shares of the Company (the “Class A ordinary shares”) or ADSs or for other business purposes, appreciation of the U.S. dollar against the Renminbi would have a negative effect on the U.S. dollar amounts available to us.

 

As of June 30, 2024, we had RMB-denominated cash and cash equivalents, restricted cash and short-term investments of RMB55.6 billion, and U.S. dollar-denominated cash and cash equivalents, restricted cash and short-term investments of US$0.6 billion. Assuming we had converted RMB55.6 billion into U.S. dollars at the exchange rate of RMB7.2672 for US$1.00 as of June 30, 2024, our U.S. dollar cash balance would have been US$8.2 billion. If the RMB had depreciated by 10% against the U.S. dollar, our U.S. dollar cash balance would have been US$7.5 billion instead.

 

Interest Rate Risk

 

We may invest the net proceeds that we receive from our offshore offerings in interest-earning instruments. Fixed-rate securities may have their fair market value adversely impacted due to a rise in interest rates, therefore our future investment income may fall short of expectations due to changes in interest rates, or we may suffer losses in principal if we have to sell securities which have declined in market value due to changes in interest rates. As of June 30, 2024, our exposure to such interest rate risk is mainly from RMB2.3 billion of wealth management products in short-term investments. We have not been, and do not expect to be, exposed to material interest rate risks relating to our investment in short-term instruments.

 

Capital Expenditures

 

Our capital expenditures were RMB462 million for the six months ended June 30, 2024. Capital expenditures represent cash paid for purchase of property, plant and equipment and intangible assets. We intend to fund our future capital expenditures with our existing cash balance and proceeds from our offshore offerings. We will continue to make capital expenditures to meet the expected growth of our business.

 

Material Cash Requirements

 

Our material cash requirements as of June 30, 2024 and any subsequent interim period primarily include our capital expenditures and contractual obligations. We intend to fund our material cash requirements with our cash balance. We will continue to make cash commitments, including capital expenditures, to meet the expected growth of our business.

 

12

 

 

The following table sets forth our contractual obligations as of June 30, 2024:

 

   Total  

Remainder
of 2024

   2025   2026   2027   2028   Thereafter 
   (RMB in thousands) 
Operating lease and other commitments    1,119,600    191,755    248,771    257,415    176,338    92,961    152,360 
Lease liability obligations   20,575,485    6,642,671    8,577,458    2,820,672    1,097,600    570,641    866,443 

 

As of June 30, 2024, our operating lease and other commitments included RMB734.4 million in operating lease commitments, RMB301.7 million in capital commitments, RMB81.7 million in investment commitment, and RMB1.8 million in obligation to purchase services.

 

Except for the commitments as disclosed above and financial guarantees as discussed in section below, we did not have any other long-term obligations or material guarantees as of June 30, 2024.

 

Off-Balance Sheet Arrangements

 

We provide financial guarantees through our subsidiaries for loans that we facilitate for certain financial partners or individual lenders. We are obligated to compensate the lenders for the principal and interest payment in the event of the borrowers’ default. Therefore, we effectively provide guarantees to lenders against the credit risk.

 

Other than the above, we have not entered into any other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or product development services with us.

 

Employees and Remuneration

 

As of June 30, 2024, we had a total of 122,599 employees. The following table sets forth the total number of employees categorized by function as of June 30, 2024:

 

Function 

Number of
employees

 
Agents and supporting staff   96,440 
Platform operation   6,263 
Research and development   1,992 
Business development, sales and marketing   6,804 
Administration and management   11,100 
Total   122,599 

 

13

 

 

We believe that we offer our employees competitive compensation packages and an environment that encourages self-development and, as a result, have generally been able to attract and retain qualified personnel and maintain a stable core management team. In addition, we invest significant resources in the recruitment of employees to support our fast growth of business operations. In particular, we have been successfully attracted a large number of college graduates to join our offline operations in delivering real estate brokerage services to housing customers and experienced and talented research and development professionals to join us in expanding and enhancing our platform technology capabilities.

 

As required by regulations in China, we participate in various employee social security plans that are organized by municipal and provincial governments, including pension, unemployment insurance, childbirth insurance, work-related injury insurance, medical insurance and housing provident fund. We are required under PRC law to make contributions to employee benefit plans at specified percentages of the salaries, bonuses and certain allowances of our employees, up to a maximum amount specified by the local government from time to time. Bonuses are generally discretionary and based in part on employee performance and in part on the overall performance of our business. We have granted, and plan to continue to grant, share-based incentive awards to our employees in the future to incentivize their contributions to our growth and development.

 

We enter into standard labor contracts with our employees. To date, we have not experienced any significant labor disputes. None of our employees is represented by a labor union.

 

14

 

 

OTHER INFORMATION

 

Purchase, Sale and Redemption of the Company’s Listed Securities

 

As previously announced, the Company established a share repurchase program in August 2022 and upsized and extended it in August 2023, under which the Company may purchase up to US$2 billion of its Class A ordinary shares and/or ADSs until August 31, 2024 (the “Existing Share Repurchase Program”). As at the date of this announcement, the Company has repurchased a total of 95,012,729 ADSs (representing 285,038,187 Class A ordinary shares) on the New York Stock Exchange (“NYSE”) at an aggregate consideration of US$1,389,782,786.29 under the Existing Share Repurchase Program. On August 12, 2024, the board of directors of the Company (the “Board”) approved modifications to the Existing Share Repurchase Program, pursuant to which the repurchase authorization has been increased from US$2 billion to US$3 billion of its Class A ordinary shares and/or ADSs and extended until August 31, 2025 (the “Extended Share Repurchase Program”, and together with the Existing Share Repurchase Program, the “Share Repurchase Program”). In the annual general meeting (the “AGM”) held on June 14, 2024, the shareholders have approved to grant the Board a general unconditional mandate to purchase the Company’s own shares (the “2024 Share Repurchase Mandate”) which covers the repurchases to be made under the Extended Share Repurchase Program until the conclusion of the next AGM of the Company. After the expiry of the 2024 Share Repurchase Mandate, the Company will seek for another general unconditional mandate for repurchase from the shareholders of the Company at the next AGM to continue its share repurchase under the Extended Share Repurchase Program.

 

During the Reporting Period, the Company repurchased a total of 26,995,560 ADSs (representing 80,986,680 Class A ordinary shares) on the NYSE at an aggregate consideration of US$380,000,306.80. Details of the repurchase of Class A ordinary shares represented by ADSs on the NYSE during the Reporting Period are summarized as follows:

 

    Number and
Method of
    Price Paid per Share  
Month of Repurchase   Repurchased
Shares
    Highest
Price Paid
    Lowest
Price Paid
    Aggregate
Consideration
 
          (US$)     (US$)     (US$)  
January 2024     21,969,609 on the NYSE       5.33       4.30       104,535,169.47  
March 2024     25,029,735 on the NYSE       4.80       4.22       115,449,467.38  
April 2024     24,685,980 on the NYSE       5.25       4.17       110,759,992.05  
May 2024     4,385,676 on the NYSE       5.66       4.97       24,256,103.19  
June 2024     4,915,680 on the NYSE       5.20       4.86       24,999,574.71  
Total     80,986,680 on the NYSE                       380,000,306.80  

 

 

15

 

 

The Board considers that the Share Repurchase Program reflects the confidence of the Board and the management team in the current and long-term business outlook and growth of the Company. The Board considers that the Share Repurchase Program is in the best interest of the Company and its shareholders as a whole.

 

A total of 80,986,680 Class A ordinary shares represented by ADSs repurchased during the Reporting Period has been cancelled, including the 9,301,356 Class A ordinary shares represented by ADSs repurchased in May and June 2024 and cancelled in July 2024. Upon cancellation of the Class A ordinary shares converted from the ADSs repurchased, the weighted voting right (“WVR,” as defined under the Listing Rules) beneficiaries of the Company simultaneously reduced their WVR in the Company proportionately by way of converting their Class B ordinary shares of the Company (the “Class B ordinary shares”) into Class A ordinary shares on a one-to-one ratio pursuant to Rule 8A.21 of the Listing Rules, such that the proportion of shares carrying WVR of the Company shall not be increased, pursuant to the requirements under Rules 8A.13 and 8A.15 of the Listing Rules. Accordingly, a total of 3,248,679 Class B ordinary shares has been converted into Class A ordinary shares on a one-to-one ratio, including (i) 2,265,648 Class B ordinary shares converted by Mr. Yongdong Peng, through a discretionary trust established by him (as the settlor), and (ii) 983,031 Class B ordinary shares converted by Mr. Yigang Shan, through a discretionary trust established by him (as the settlor). As a result of the cancellation of the 80,986,680 Class A ordinary shares represented by ADSs repurchased during the Reporting Period and the conversion of 3,248,679 Class B ordinary shares into Class A ordinary shares on a one-to-one ratio, the number of Class A ordinary shares in issue was reduced by 77,738,001.

 

Save as disclosed above, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company’s listed securities during the Reporting Period and up to the date of this announcement.

 

Compliance with the Corporate Governance Code

 

The Company’s corporate governance practices are based on the principles and code provisions set forth in the Corporate Governance Code (the “CG Code”) contained in Appendix C1 to the Listing Rules.

 

Pursuant to Code Provision C.2.1 of part 2 of the CG Code, companies listed on The Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”) are expected to comply with, but may choose to deviate from the requirement that the responsibilities between the chairman and the chief executive officer should be separate and should not be performed by the same individual. The Company does not have a separate chairman and chief executive officer and Mr. Yongdong Peng currently performs these two roles.

 

All major decisions are made in consultation with members of the Board, including the relevant Board committees and three independent non-executive directors. All of the directors of the Company are encouraged to participate actively in all Board and committee meetings of which they are members, and the Chairman ensures that all issues raised are properly briefed at the Board meetings. The Board believes that vesting the roles of both chairman and chief executive officer in the same person has the benefit of ensuring consistent leadership within the Group and enables more effective and efficient overall strategic planning for the Group. The Board considers that the balance of power and authority for the present arrangement will not be impaired and this structure will enable the Company to make and implement decisions promptly and effectively.

 

16

 

 

Other than the above, during the Reporting Period and up to the date of this announcement, the Company has complied with all applicable principles and code provisions of the CG Code.

 

Compliance with the Model Code for Securities Transactions

 

The Company has adopted the Seconded Amended and Restated Statement of Policies Governing Material Non-Public Information and the Prevention of Insider Trading (the “Company’s Code”), with terms no less exacting than the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”) as set out in Appendix C3 to the Listing Rules, as its own securities dealing code to regulate all dealings by the directors and relevant employees of the Company of securities in the Company and other matters covered by the Company’s Code.

 

Having made specific enquiries to all of the directors of the Company, all directors of the Company confirmed that they have fully complied with all relevant requirements set out in the Model Code and the Company’s Code during the Reporting Period and up to the date of this announcement.

 

Important Events after the Reporting Period

 

Save as disclosed in this announcement, no other important events affecting the Group occurred since June 30, 2024 and up to the date of this announcement.

 

Review of Unaudited Interim Condensed Consolidated Financial Information

 

The unaudited interim condensed consolidated financial information of the Group for the six months ended June 30, 2024 have been reviewed by the auditor of the Company, PricewaterhouseCoopers, in accordance with International Standard on Review Engagements 2410, “Review of interim financial information performed by the independent auditor of the entity.” The unaudited interim condensed consolidated financial information of the Group for the six months ended June 30, 2024 have also been reviewed by the audit committee of the Board.

 

Interim Dividend

 

The Board did not recommend the distribution of an interim dividend for the six months ended June 30, 2024.

 

Publication of Interim Results and Interim Report

 

This announcement is published on the website of the Hong Kong Stock Exchange at http://www.hkexnews.hk and on the website of the Company at https://investors.ke.com. The 2024 Interim Report containing all the information required by the Listing Rules will be made available on the websites of the Company and the Hong Kong Stock Exchange in due course.

 

Appreciation

 

The Company would like to express its appreciation to all the staff for their outstanding contribution towards the Company’s development. The Board wishes to sincerely thank the management for their dedication and diligence, which are the key factors for the Company to continue its success in future. Also, the Company wishes to extend its gratitude for the continued support from its shareholders, customers and business partners. The Company will continue to deliver sustainable business development, so as to create more values for all its shareholders.

 

17

 

 

Use of Non-GAAP Financial Measures

 

The Company uses adjusted income (loss) from operations, adjusted net income (loss), adjusted net income (loss) attributable to KE Holdings Inc.’s ordinary shareholders, adjusted operating margin and adjusted EBITDA, each a non-GAAP financial measure, in evaluating its operating results and formulating its business plan. Beike believes that these non-GAAP financial measures help identify underlying trends in the Company’s business that could otherwise be distorted by the effect of certain expenses that the Company includes in its net income (loss). Beike also believes that these non-GAAP financial measures provide useful information about its results of operations, enhance the overall understanding of its past performance and future prospects and allow for greater visibility with respect to key metrics used by its management in formulating its business plan. A limitation of using these non-GAAP financial measures is that these non-GAAP financial measures exclude share-based compensation expenses that have been, and will continue to be for the foreseeable future, a significant recurring expense in the Company’s business.

 

The presentation of these non-GAAP financial measures should not be considered in isolation or construed as an alternative to gross profit, net income (loss) or any other measure of performance or as an indicator of its operating performance. Investors are encouraged to review these non-GAAP financial measures and the reconciliation to the most directly comparable GAAP measures. The non-GAAP financial measures presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to the Company’s data. Beike encourages investors and others to review its financial information in its entirety and not rely on a single financial measure. Adjusted income (loss) from operations is defined as income (loss) from operations, excluding (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from acquisitions and business cooperation agreement, and (iii) impairment of goodwill, intangible assets and other long-lived assets. Adjusted operating margin is defined as adjusted income (loss) from operations as a percentage of net revenues. Adjusted net income (loss) is defined as net income (loss), excluding (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from acquisitions and business cooperation agreement, (iii) changes in fair value from long-term investments, loan receivables measured at fair value and contingent consideration, (iv) impairment of goodwill, intangible assets and other long-lived assets, (v) impairment of investments, and (vi) tax effects of the above non-GAAP adjustments. Adjusted net income (loss) attributable to KE Holdings Inc.’s ordinary shareholders is defined as net income (loss) attributable to KE Holdings Inc.’s ordinary shareholders, excluding (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from acquisitions and business cooperation agreement, (iii) changes in fair value from long-term investments, loan receivables measured at fair value and contingent consideration, (iv) impairment of goodwill, intangible assets and other long-lived assets, (v) impairment of investments, (vi) tax effects of the above non-GAAP adjustments, and (vii) effects of non-GAAP adjustments on net income (loss) attributable to non-controlling interests shareholders. Adjusted EBITDA is defined as net income (loss), excluding (i) income tax expense, (ii) share-based compensation expenses, (iii) amortization of intangible assets, (iv) depreciation of property, plant and equipment, (v) interest income, net, (vi) changes in fair value from long-term investments, loan receivables measured at fair value and contingent consideration, (vii) impairment of goodwill, intangible assets and other long-lived assets, and (viii) impairment of investments.

 

18

 

 

For more information on the non-GAAP financial measures, please see the table captioned “Unaudited reconciliation of GAAP and Non-GAAP results” set forth at the end of this announcement.

 

SAFE HARBOR STATEMENT

 

This announcement contains statements that may constitute “forward-looking” statements pursuant to the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “aims,” “future,” “intends,” “plans,” “believes,” “estimates,” “likely to,” and similar statements. Among other things, the business outlook in this announcement, as well as Beike’s strategic and operational plans, contain forward-looking statements. Beike may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”) and the Hong Kong Stock Exchange, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about KE Holdings Inc.’s beliefs, plans, and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Beike’s goals and strategies; Beike’s future business development, financial condition and results of operations; expected changes in the Company’s revenues, costs or expenditures; Beike’s ability to empower services and facilitate transactions on Beike platform; competition in the industry which Beike operates; relevant government policies and regulations relating to the industry; Beike’s ability to protect the Company’s systems and infrastructures from cyber-attacks; Beike’s dependence on the integrity of brokerage brands, stores and agents on the Company’s platform; general economic and business conditions in China and globally; and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in KE Holdings Inc.’s filings with the SEC and the Hong Kong Stock Exchange. All information provided in this announcement is as of the date of this announcement, and KE Holdings Inc. does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

 

  By order of the Board
  KE Holdings Inc.
  Yongdong Peng
  Chairman and Chief Executive Officer

 

Hong Kong, August 12, 2024

 

As at the date of this announcement, the board of directors of the Company comprises Mr. Yongdong Peng, Mr. Yigang Shan, Mr. Wangang Xu and Mr. Tao Xu as the executive directors, Mr. Jeffrey Zhaohui Li as the non-executive director, and Ms. Xiaohong Chen, Mr. Hansong Zhu and Mr. Jun Wu as the independent non-executive directors.

 

19

 

 

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(All amounts in thousands, except for share and per share data)

 

       For the Six Months
Ended June 30,
 
   Note   2024   2023 
       RMB   RMB 
Net revenues:               
Existing home transaction services       13,061,919    15,597,087 
New home transaction services        12,850,320    17,099,714 
Home renovation and furnishing        6,449,072    4,032,830 
Home rental services        5,812,743    2,100,888 
Emerging and other services        1,573,690    931,482 
                
Total net revenues        39,747,744    39,762,001 
                
Cost of revenues:               
Commission-split        (8,857,846)   (11,363,560)
Commission and compensation-internal        (8,065,289)   (9,360,775)
Cost of home renovation and furnishing        (4,448,069)   (2,825,059)
Cost of home rental services        (5,481,822)   (2,248,885)
Cost related to stores        (1,365,977)   (1,415,651)
Others        (889,605)   (855,083)
                
Total cost of revenues        (29,108,608)   (28,069,013)
                
Gross profit        10,639,136    11,692,988 
                
Operating expenses:               
Sales and marketing expenses        (3,505,463)   (2,943,272)
General and administrative expenses        (4,098,494)   (3,726,483)
Research and development expenses        (971,809)   (931,529)
Impairment of goodwill, intangible assets and other long-lived assets         (36,397)   (32,775)
                
Total operating expenses        (8,612,163)   (7,634,059)

 

20

 

 

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (CONTINUED)

(All amounts in thousands, except for share and per share data)

 

          For the Six Months
Ended June 30,
 
    Note     2024     2023  
            RMB       RMB  
Income from operations             2,026,973       4,058,929  
                       
Interest income, net             666,253       602,226  
Share of results of equity investees             (3,735 )     14,475  
Fair value changes in investments, net             78,288       73,006  
Impairment loss for equity investments accounted for using measurement alternative             (8,049 )     (9,313 )
Foreign currency exchange loss             (73,025 )     (15,833 )
Other income, net             901,610       727,283  
                         
Income before income tax expense             3,588,315       5,450,773  
Income tax expense     5       (1,255,789 )     (1,401,522 )
                         
Net income             2,332,526       4,049,251  
Net loss (income) attributable to non-controlling interests shareholders             (8,691 )     6,326  
                         
Net income attributable to KE Holdings Inc.             2,323,835       4,055,577  
                         
Net income attributable to KE Holdings Inc.’s ordinary shareholders             2,323,835       4,055,577  

 

21

 

 

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (CONTINUED)

(All amounts in thousands, except for share and per share data)

 

          For the Six Months Ended June 30,  
    Note     2024     2023  
          RMB     RMB  
Net income           2,332,526       4,049,251  
Other comprehensive income                      
Currency translation adjustments             120,450       893,719  
Unrealized gains (losses) on available-for-sale investments, net of reclassification             32,613       (1,024 )
                         
Total other comprehensive income             153,063       892,695  
                         
Total comprehensive income             2,485,589       4,941,946  
                         
Comprehensive loss (income) attributable to non-controlling interests shareholders             (8,691 )     6,326  
                         
Comprehensive income attributable to KE Holdings Inc.             2,476,898       4,948,272  
                         
Comprehensive income attributable to KE Holdings Inc.’s ordinary shareholders             2,476,898       4,948,272  
                         
Weighted average number of ordinary shares used in computing net income per share,  basic and diluted                        
– Basic     7       3,422,928,331       3,555,127,466  
– Diluted     7       3,533,558,988       3,643,230,834  
                         
Net income per share attributable to ordinary shareholders                        
– Basic     7       0.68       1.14  
– Diluted     7       0.66       1.11  
                         
Share-based compensation expenses included in:                        
Cost of revenues             249,834       226,566  
Sales and marketing expenses             90,761       77,481  
General and administrative expenses             1,090,910       1,188,897  
Research and development expenses             92,926       90,038  

 

22

 

 

UNAUDITED RECONCILIATION OF GAAP AND NON-GAAP RESULTS

(All amounts in thousands, except for share and per share data)

 

      

For the Six Months

Ended June 30,

 
   Note   2024   2023 
       RMB   RMB 
Income from operations       2,026,973    4,058,929 
Share-based compensation expenses        1,524,431    1,582,982 
Amortization of intangible assets resulting from acquisitions and business cooperation agreement         184,284    302,773 
Impairment of goodwill, intangible assets and  other long-lived assets         36,397    32,775 
                
Adjusted income from operations        3,772,085    5,977,459 
                
Net income        2,332,526    4,049,251 
Share-based compensation expenses        1,524,431    1,582,982 
Amortization of intangible assets resulting from acquisitions and business cooperation agreement         184,284    302,773 
Changes in fair value from long term investments, loan receivables measured at fair value and  contingent consideration         13,278    (38,581)
Impairment of goodwill, intangible assets and other long-lived assets         36,397    32,775 
Impairment of investments        8,049    9,313 
Tax effects on non-GAAP adjustments        (13,410)   (13,122)
                
Adjusted net income        4,085,555    5,925,391 
                
Net income        2,332,526    4,049,251 
Income tax expense        1,255,789    1,401,522 
Share-based compensation expenses        1,524,431    1,582,982 
Amortization of intangible assets        194,518    309,914 
Depreciation of property, plant and equipment        338,859    384,815 
Interest income, net        (666,253)   (602,226)
Changes in fair value from long term investments, loan receivables measured at fair value and contingent consideration         13,278    (38,581)
Impairment of goodwill, intangible assets and other long-lived assets         36,397    32,775 
Impairment of investments        8,049    9,313 
                
Adjusted EBITDA        5,037,594    7,129,765 

 

23

 

 

 

UNAUDITED RECONCILIATION OF GAAP AND NON-GAAP RESULTS (CONTINUED)

(All amounts in thousands, except for share and per share data)

 

       For the Six Months 
       Ended June 30, 
   Note   2024   2023 
       RMB   RMB 
Net income attributable to KE Holdings Inc.’s ordinary shareholders         2,323,835    4,055,577 
Share-based compensation expenses       1,524,431    1,582,982 
Amortization of intangible assets resulting from acquisitions and business cooperation agreement       184,284    302,773 
Changes in fair value from long term investments, loan receivables measured at fair value and contingent consideration       13,278    (38,581)
Impairment of goodwill, intangible assets and other long-lived assets        36,397    32,775 
Impairment of investments        8,049    9,313 
Tax effects on non-GAAP adjustments       (13,410)   (13,122)
Effects of non-GAAP adjustments on net income attributable to non-controlling interests shareholders        (14)   (14)
                
Adjusted net income attributable to KE Holdings Inc.’s ordinary shareholders        4,076,850    5,931,703 

 

24 

 

 

UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

(All amounts in thousands, except for share and per share data)

 

       As of
June 30,
   As of
December 31,
 
   Note   2024   2023 
       RMB   RMB 
ASSETS            
Current assets            
Cash and cash equivalents      9,409,071   19,634,716 
Restricted cash      8,117,582   6,222,745 
Short-term investments      42,222,652   34,257,958 
Short-term financing receivables, net of allowance for credit losses of RMB118,595 and RMB122,482 as of June 30, 2024 and December 31, 2023, respectively       1,460,169   1,347,759 
Accounts receivable and contract assets, net of allowance for credit losses of RMB1,687,261 and RMB1,681,127 as of June 30, 2024 and December 31, 2023, respectively   4   3,904,153   3,176,169 
Amounts due from and prepayments to related parties      416,759   419,270 
Loan receivables from related parties      27,770   28,030 
Prepayments, receivables and other assets      5,098,886   4,666,976 
             
Total current assets      70,657,042   69,753,623 
             
Non-current assets            
Property, plant and equipment, net      2,065,608   1,965,098 
Right-of-use assets      20,487,100   17,617,915 
Long-term investments, net      22,132,865   23,570,988 
Intangible assets, net      927,533   1,067,459 
Goodwill      4,847,762   4,856,807 
Long-term loan receivables from related parties      19,300   27,000 
Other non-current assets      1,360,787   1,473,041 
             
Total non-current assets      51,840,955   50,578,308 
             
TOTAL ASSETS      122,497,997   120,331,931 

 

25 

 

 

UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

(All amounts in thousands, except for share and per share data)

 

          As of
June 30,  
    As of
 December 31,
 
    Note     2024     2023  
          RMB     RMB  
LIABILITIES                  
Current liabilities                  
Accounts payable   6     6,684,706     6,328,516  
Amounts due to related parties         398,473     430,350  
Employee compensation and welfare payable         6,064,974     8,145,779  
Customer deposits payable         5,794,761     3,900,564  
Income taxes payable         747,112     698,568  
Short-term borrowings         445,530     290,450  
Lease liabilities current portion         11,632,047     9,368,607  
Contract liability and deferred revenue         5,422,197     4,665,201  
Accrued expenses and other current liabilities         6,186,560     5,695,948  
                   
Total current liabilities         43,376,360     39,523,983  
                   
Non-current liabilities                  
Deferred tax liabilities   5     279,341     279,341  
Lease liabilities non-current portion         8,136,397     8,327,113  
Other non-current liabilities         2,791     389  
                   
Total non-current liabilities         8,418,529     8,606,843  
                   
TOTAL LIABILITIES         51,794,889     48,130,826  

 

26 

 

 

UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

(All amounts in thousands, except for share and per share data)

 

       As of
June 30,
   As of
December 31,
 
   Note   2024   2023 
       RMB   RMB 
SHAREHOLDERS’ EQUITY            
KE Holdings Inc. shareholders’ equity            
Ordinary shares (US$0.00002 par value; 25,000,000,000 ordinary shares authorized, comprising of 24,114,698,720 Class A ordinary shares and 885,301,280 Class B ordinary shares. 3,529,562,630 Class A ordinary shares issued and 3,395,696,348 Class A ordinary shares outstanding(1) as of June 30, 2024; 3,571,960,220 Class A ordinary shares issued and 3,443,860,844 Class A ordinary shares outstanding(1) as of December 31, 2023; and 147,500,681 and 151,354,549 Class B ordinary shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively)       467   475 
Treasury shares      (350,595)  (866,198)
Additional paid-in capital      73,059,977   77,583,054 
Statutory reserves      811,107   811,107 
Accumulated other comprehensive income      397,365   244,302 
Accumulated deficit      (3,349,081)  (5,672,916)
             
Total KE Holdings Inc. shareholders’ equity      70,569,240   72,099,824 
             
Non-controlling interests      133,868   101,281 
             
TOTAL SHAREHOLDERS’ EQUITY      70,703,108   72,201,105 
             
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY       122,497,997   120,331,931 

 

(1)Excluding the Class A ordinary shares registered in the name of the depositary bank for future issuance of ADSs upon the exercise or vesting of awards granted under our share incentive plans and the Class A ordinary shares repurchased but not cancelled in the form of ADSs.

 

27 

 

 

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(All amounts in thousands, except for share and per share data)

 

   For the Six Months
Ended June 30,
 
   2024   2023 
   RMB   RMB 
Cash flows from operating activities:        
Net income  2,332,526   4,049,251 
Adjustments to reconcile net income to net cash provided by operating activities:         
Depreciation of property, plant and equipment  338,859   384,815 
Amortization of intangible assets  194,518   309,914 
Provision/(reversal) of allowance for expected credit losses  74,140   (7,363)
Impairment of goodwill, intangible assets and other long-lived assets   36,397   32,775 
Share of results of equity investees  3,735   (14,475)
Dividend received from equity method investments  15,827   20,842 
Fair value changes in investments  (78,288)  (73,006)
Impairment loss for equity investments accounted for using measurement alternative   8,049   9,313 
Investment and interest income  (116,151)  (469,460)
Foreign currency exchange loss (gain)  (63,104)  15,833 
Loss (gain) on disposal of property, plant and equipment and intangible assets   (202)  532 
Share-based compensation expenses  1,524,431   1,582,982 
Changes in assets and liabilities:        
Accounts receivable and contract assets  (815,840)  599,611 
Amounts due from and prepayments to related parties  2,511   (20,002)
Prepayments, receivables and other assets  (419,222)  (741,165)
Right-of-use assets  (2,714,611)  (2,678,470)
Other non-current assets  (42,320)  4,404 
Accounts payable  329,145   (23,655)
Amounts due to related parties  (31,877)  (13,709)
Employee compensation and welfare payable  (2,080,805)  (1,233,377)
Customer deposits payable  1,894,197   443,771 
Contract liability and deferred revenue  756,996   1,474,217 
Lease liabilities  2,072,724   2,604,335 
Accrued expenses and other current liabilities  585,097   1,019,760 
Income taxes payable  48,544   205,121 
Other liabilities  2,402   (51,105)
         
Net cash provided by operating activities  3,857,678   7,431,689 

 

28 

 

 

 

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)

(All amounts in thousands, except for share and per share data)

 

   For the Six Months
Ended June 30,
 
   2024   2023 
   RMB   RMB 
Cash flows from investing activities:          
Purchases of other short-term investments   (12,308,702)   (10,541,760)
Maturities of other short-term investments   22,944,980    20,925,887 
Cash paid for business combinations, net of cash acquired   (20,041)   (9,174)
Proceeds from disposal of subsidiaries and long-lived assets   4,619    8,097 
Purchases of property, plant and equipment and intangible assets   (462,401)   (277,732)
Financing receivables originated   (22,602,440)   (12,452,312)
Collections of financing receivables principal   22,493,916    12,489,166 
Purchases of held-to-maturity debt investments   (15,364,238)   (7,910,354)
Purchases of other long-term investments   (3,514,988)   (462,622)
Maturities of held-to-maturity debt investments   1,850,110    5,047,564 
Disposal of other long-term investments   127,632    803,947 
Loans to related parties       (47,000)
Repayments of loans from related parties   7,960    59,907 
           
Net cash provided by (used in) investing activities   (6,843,593)   7,633,614 
           
Cash flows from financing activities:          
Repurchase of ordinary shares   (2,701,210)   (2,748,108)
Proceeds from issuance of ordinary shares upon exercise of share option    1    1 
Proceeds from short-term borrowings   606,033     
Repayments of short-term borrowings   (451,174)   (121,500)
Dividends paid to equity holders of the Company   (2,830,704)    
           
Net cash used in financing activities   (5,377,054)   (2,869,607)
           
Effect of exchange rate change on cash, cash equivalents and restricted cash    32,161    22,137 
           
Net increase (decrease) in cash and cash equivalents and restricted cash    (8,330,808)   12,217,833 

 

29

 

 

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)

(All amounts in thousands, except for share and per share data)

 

   For the Six Months
Ended June 30,
 
   2024   2023 
   RMB   RMB 
Cash, cash equivalents and restricted cash at the beginning of the period          
Including:          
Cash and cash equivalents at the beginning of the period   19,634,716    19,413,202 
Restricted cash at the beginning of the period   6,222,745    6,181,057 
           
Total   25,857,461    25,594,259 
           
Cash, cash equivalents and restricted cash at the end of the period          
Including:          
Cash and cash equivalents at the end of the period   9,409,071    31,750,204 
Restricted cash at the end of the period   8,117,582    6,061,888 
           
Total   17,526,653    37,812,092 
           
Supplemental disclosures:          
Cash paid for income taxes   (1,113,362)   (1,177,588)
Cash paid for interest   (6,831)   (9,904)
           
Non-cash investing activities          
Changes in accounts payable related to property, plant and equipment addition    (27,026)   9,225 

 

30

 

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION

(All amounts in thousands, except for share and per share data)

 

1.GENERAL INFORMATION

 

KE Holdings Inc. (the “Company”) was incorporated in the Cayman Islands on July 6, 2018 under the Cayman Islands Companies Law as an exempted company with limited liability. The Company through its consolidated subsidiaries, variable interest entities (the “VIE”s) and the subsidiaries of the VIEs (collectively, the “Group”), is principally engaged in operating a leading integrated online and offline platform for housing transactions and services in the People’s Republic of China (the “PRC” or “China”).

 

In August and November 2020, the Company has completed its initial public offering and follow-on offering on the New York Stock Exchange.

 

In May 2022, the Company has completed its listing on the Hong Kong Stock Exchange by way of introduction.

 

2.BASIS OF PREPARATION

 

The accompanying unaudited interim condensed consolidated financial information have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) applicable to interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Certain information and note disclosures normally included in the annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted consistent with Article 10 of Regulation S-X. The unaudited interim condensed consolidated financial information have been prepared on the same basis as the audited financial statements and include all adjustments, consisting of normal recurring adjustments, as necessary for the fair statement of the Company’s financial position as of June 30, 2024, and its results of operations and cash flows for the six months ended June 30, 2023 and 2024. The consolidated balance sheets as of December 31, 2023 have been derived from audited consolidated financial statements at that date but does not include all of the information and footnotes required by U.S. GAAP. Results for interim periods are not necessarily indicative of those that may be expected for a full year or for any future period. The unaudited interim condensed consolidated financial information and related disclosures have been prepared with the presumption that users of these unaudited interim condensed consolidated financial information have read or have access to the audited consolidated financial statements and related footnotes for the year ended December 31, 2023. Accordingly, these unaudited interim condensed consolidated financial information should be read in conjunction with the Company’s audited consolidated financial statements and related footnotes for the year ended December 31, 2023. The accounting policies applied are consistent with those of the audited consolidated financial statements for the preceding fiscal year.

 

Change in segment

 

In view of the increased scale and business importance of the Group’s home rental services with reported revenue exceed the quantitative threshold of reportable segment, the Group separately report home rental services from the first quarter of 2024 onwards, which is also in accordance with the way report to the Group’s chief operating decision maker. Prior period results have been recast to conform to this updated presentation for the current year. See Note 3. “Segment Information” for additional information.

 

3.SEGMENT INFORMATION

 

(a)Description of segments

 

    The Group’s organizational structure is based on a number of factors that the CODM uses to evaluate, view and run its business operations which include, but are not limited to, customer base, homogeneity of services and technology. The Group’s operating segments are based on this organizational structure and information reviewed by the Group’s CODM to evaluate the operating segment results.

 

    Due to the increased scale and business importance of the Group’s home rental services, the Group separately report home rental services from the first quarter of 2024 onwards, which is also in accordance with the way report to the Group’s chief operating decision maker. Prior period results have been recast to conform to this updated presentation for the current period.

 

31

 

 

NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL INFORMATION (CONTINUED)

(All amounts in thousands, except for share and per share data)

 

    Subsequent to the change, the Group operates its businesses in five segments: existing home transaction services, new home transaction services, home renovation and furnishing, home rental services, and emerging and other services. The following summary describes the operations in each of the Group’s reportable segment:

 

(1)Existing home transaction services: The existing home transaction segment provides services in existing home market include i) agency services to sales or leases of existing homes, either through acting as the principal agent or a participating agent in collaboration with the principal agents; ii) platform and franchise services to brokerage firms on Beike platform who provide agency services in existing home market; and iii) Other transaction services, such as transaction closing service through the Group’s transaction center.

 

(2)New home transaction services: The new home transaction business segment provides new home transaction services in new home market. New home transaction services refer to marketing services provided to real estate developers to facilitate sales of new properties developed by the real estate developers to property buyers. The Group signs the new home transaction services contracts with the sales companies of the developers and then mobilizes all agents registered with the platform to fulfil such contracts.

 

(3)Home renovation and furnishing: The home renovation and furnishing business segment provides a one-stop solution to give housing customers access to a comprehensive range of home renovation and furnishing, ranging from interior design, renovation, re-modeling, furnishing, supplies, to after-sales maintenance and repair.

 

(4)Home rental services: The home rental business provides rental property management and operation services with respect to dispersed and centralized properties, and other rental-related services including monetization of platform traffic and online rental management services.

 

(5)Emerging and other services: Emerging and other services include financial service business and other newly developed businesses.

 

    The Group defines contribution for each service line as the revenue less the direct compensation to our internal agents and sales professionals, split commission to connected agents and other sales channels for such services, property leasing costs related to rental property management service and direct costs for home renovation and furnishing. We define contribution margin as a percentage of contribution bearing to revenue.