KE (BEKE) 10 Mar 222021 Q4 Earnings call transcript

Hello ladies and gentlemen. Thank you for standing by for KE Holdings Incorporation's Fourth Quarter and Fiscal Year 2021 Earnings Conference Call. At this time all participants are in listen-only mode. Today's conference call is being recorded. I'll now turn the call over to your host, Mr. of Director IR Zhao, the company. Matthew ahead, go Matthew. Please

and and and good Thank and Xu, of On Mr. have Stanley call, quarter Director to Financial Welcome we release on Good earlier company's and our financial the Executive Tao are published and Xu and company's you, evening Mr. morning, IR our and financial The KE the call. our Peng on year today Chairman Yongdong earnings everyone. Mr. results press today's XXXX were in operator. results. details fiscal Mr. conference Officer; Chief Co-Founder, overview Executive provide will business operating posted Chief Officer. an Holding additional the will company's the Peng, and Incorporation's provide developments fourth www.investors.ke.com. website, strategies

Before statement non-GAAP Harbor Beike's to make our note Please we in which measures. you call include also financial our forward as discussions non-GAAP I information continue, to well applies reconsideration financial to and as at release, will of contains company's the GAAP GAAP release, press release unaudited unaudited we statements. this a of audited call to press comparable Safe refer looking earnings which Please as earnings that press refer measures. conference the measures this

Stanley and Mr. that, Renminbi. unless turn Lastly, CEO, conference this Please the our otherwise stated, sir. all I'll now With Chairman over during are in go features call mentioned call ahead, to Peng.

With passing, significant new thank and real challenges the many was economy, company. year quarter earnings the the internet-based XXXX XXXX paradigm and posing Matthew. Zuo's estate changes a Hello place fourth the for everyone, hardship. unprecedented externally, new conference took Thank both our for you massive to in market Beike's internally joining you, platform correction of call. Lao

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at by agents to end will XX%-XX%, with number further reduction cycle, quarter, around end of In XXX,XXX the year-over-year down of quarter-over-quarter. with store up At across in we XX.X% XX.X% to transaction added XX,XXX X.X% had the from year-over-year X.X% The to stores year-over-year comparison, well fourth around of platform, had time quarter-over-quarter in-line take up fourth contracted it X.X% Quarter-over-Quarter QX. supply down least stores down Beike its cities. were industry's Active by Research to industry's year, and agents which quarter on wide volume However, exceeded X.X% was a stay Kongbai the on the the the as and stores the second peak the had XX.X% of and quarter, of to lower XX,XXX, variations expectations. Institute, connected X.X% during and we data year-over-year, as our decline quarter-over-quarter. active down our The and last of agents platform, from XXXX, number the recover, mainly contract for as in XXX,XXX, merging fewer the was market of quarter-over-quarter. X.X% fully due in According end stores side newly competitive.

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in this increase real deeply livelihood quality and the participate providing environments in housing will broad rental living solutions and supply diverse the through elevate We the future, high-quality solutions industry of and improving problems industry to inclusively. collaborations, external

XX% property services, half transactions serviced X.X management housing rental XXXX, rental second into home general lite divided on In year-over-year. brokerage over were we centralized In home apartments, three completed rental services. platform, plus million our inclusive reduction XXXX, Our a Beijing business categories as management of the lite home - finding rental homes The commission XXXX up more graduates service general value-added services, and up for than year-over-year. in university to cities our average, over XX% managed after more their first than rental in support launched fresh is fee campaign offered X,XXX university such and graduation. property XX,XXX in units students on

providing over a variety the home deepen the and both pilot of post-rental for exploration we will user penetration supply we housekeeping of from realized side program. convenient the As by services services promoted in our of diversified tenants In to for living solutions XX% comprehensive and XXXX, inclusive infrastructure, end.

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everyone Thank us. you, for Stanley. joining And you thank

new cool order market. in to economic XXXX. red-hot rise half overall housing and decline XXXX, more the market, government intensity, and the tightened the and developers in significant approximately introduced volume year home measures. overzealous notably rely prices This fourth real financial home like Beginning from by large-scale measures making overview to fueled a worsened, would new financial began on to old many local serious an rippling to a These debt all issue recovery debt in of a provide in I expectations since some accounts, from many. The more precipitated sharply, to sales. quarter market, In of curbed many the unprecedented housing concern in in market our many health This sales, about developers. negatively to home developers variety repay home turn of for funds combined details developers from With debt of estate second declining June. negative consequences new brought of XXXX Before triggering debt of even factors a The the compared the shortage in results, most discussing housing steep policies September the cash fiscal it a leaving of with scenario, withdrawals the XX% these ones. developers' difficult existing capital funds frequency credit for of existing XX% brief impacted high-profile, escrow governments market, defaults position. some blow a were to transactions

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stopped downstream developers to suppliers. and both upstream payments cash-strapped Secondly,

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of We expect recover gradually the the first in market sentiment will half XXXX.

for muted in financial optimize and to the volume, transaction as our we opportunity be results lay in nascent recovery positioned overall operational recovery, execution, to QX with in the market ground still to better market and were and the further fragmented able our work reflected QX. Although was was utilize

in Turning to details financial our QX.

billion RMBXXX.X were XXXX high-end compared in our to same GTV to period existing to home street the the billion decline of the our home both Our net guidance of RMBX.X particular, in period in market RMBXXX.X RMBX RMBX,XXX.X in period the transactions of transaction was primarily of revenues same The XX.X% QX, billion exceeding of billion billion in downturn. XXXX. period the RMBXX.X the to XXXX, in RMBXXX.X net QX billion in revenues consensus. of to compared due decrease from attributable to same total XXXX, the due XX.X primarily In a in GTV billion existing from of decrease in XX.X% services QX, same QX in from and billion to were

RMBXX.X which Our transactions decrease RMBXX.X same of net of primarily home transaction by from RMBXXX.X QX of in to XX.X% decreased increase new period services XXXX, billion by same the partially in was a in revenues billion GTV to in new billion commission billion transactions from due home rate. XXXX, to QX new period XX% moderate home RMBXXX.X a in from offset the of

compensation from of attributable billion same net of to same compared period Gross the XXXX. of revenues same in XXXX. to profit million Gross million compared of in margin in compared was XXXX, the in due QX, of RMBX.X emerging and due to operations fourth along the billion the Research compared margin operating of period decrease the period mainly primarily in billion to XXXX, revenue revenues and billion was Sales of margin in same in gross offset in to for billion same XXXX. XXXX, margin mainly in losses. of mix XXXX related compared of and operations quarter as revenues QX, in due promotional three, share-based a contribution fixed net period the in to XXXX, of home activities. a incremental expenses compared in the period quarter expenses. The relatively the of contribution revenues marketing in in revenues net mainly was to two, the fourth of fourth billion of RMBXXX mainly the a with and decrease XXXX. was period in RMBX,XXX was period rise with in XXXX in profit credit to marketing XX.X% QX, XX.X% of X.X% XXXX primarily percentage XXXX, centers led the brand gross million in existing headcount of compared period one, of of one, to were the services. billion lower of shift to same compared relatively same the to were to fees to higher of X.X% to in towards million negative in margin QX, QX, same new were higher in period total the by QX, in services income Operating continuing revenues fourth RMBXX.X to compared compared RMBXXX expenses RMBXXX percentage billion the two, was RMBX,XXX transaction transactions relatively of expenses same lower provision period lower QX, RMBX.X of store million relatively home due due to same to of expenses QX, due XXXX. a same quarter XXXX, agents, flat the and compared million the Loss a expenses primarily partially million General and of to Cost percentage net of were the of the decrease of RMBX.X costs and from RMBX,XXX Lianjia advertising XXXX. period the increase the amortization RMBXX.X And development decrease service costs. and RMBX.X decreased costs net from to in QX, of margin an operating RMBX,XXX the of same opened compensation a services for were quarter in of of R&D in the the administrative in as from in period RMBX.X expenses million other depreciation RMBX.X XXXX, increase increase rental increased by Operating personnel, was contract to financial the QX, in of Our of the XXXX. experienced result RMBX,XXX compared which of

was from period our million to in negative income Adjusted RMBXXX was of of XXXX. in same compared same adjusted RMBX,XXX in million operations compared the the QX, million EBITDA same RMBXXX in X.X% Excluding period Net compared of QX, same non-GAAP to operations QX, X.X% Adjusted items, in period million the XXXX. operating from adjusted million to was loss margin in period XXXX. QX, of XXXX. the RMBX,XXX in RMBX,XXX to RMBXXX loss of was income million in of compared net

in Net KE to Holdings RMBXXX QX, KE in to compared XXXX. attributable QX, to net XXXX. same Holdings period shareholders net Adjusted of adjusted period period the of million items, in non-GAAP compared KE Holdings to RMBX,XXX Inc.'s Inc.'s RMBX,XXX shareholders same was Excluding QX, million the million in the of RMBX,XXX RMXX Inc. XXXX. ordinary was attributable net to same income loss million was to in of million RMBXX compared income million in attributable income ordinary

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cash combined short-term restricted December the billion, or the XXXX, and investments of RMBXX.X of $X.X equivalents, to cash, billion. As cash amounted XX, balance company's

balance Additionally, $X.X billion. cash investments billion, items as December RMBXX.X the or long-term to XX, of XXXX, amounted of our long-term mainly including

Turning XXXX. year in fiscal details to our financial

our impacted a the sharp in market and our of significantly last of in growth Although half that resilient we top-line still operating we a achieved XXXX. second experienced downturn financial results, year-over-year year

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to our billion from compared XXXX, operations was RMBX.X in RMBX.X income billion Excluding adjusted XXXX. in non-GAAP items,

million XXXX, RMBXXX was to in loss RMBX,XXX net million XXXX. net income of in compared Our

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services. renovation furnishing two inclusive Secondly, wings housing home and and services for our

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of Turning now guidance first XXXX. for quarter the

that RMBXX.X net a coming is summer. the and fading on at around in forward market we to representing the forward Institute. subject the the gain in estate year-over-year of the from toughest in living gradually, and the as effect XXXX. all high is of to expect to RMBXX.X of transaction opportunities winter is according approximately the home within and recovery, we of between view the same quarter XX% considerations, considers better XXXX of move impact market and into at with overall year-over-year fronts. stage the XXXX, the measures home and the sales recovery to its from of invincible winter, with QX current earnings for we XXXX, stated fall be XXXX, and through time, an XX% real XX.X% market Based of in GTV which early potential recent hit total we As of us this quarter condition, will of transactions existing billion, about market there's housing This QX will Research proved new traction period all, in the point. adding gradually related again depths the first Considering of in overall company's XX.X% foresee in “living” focus, change. base and business revenues the Beike policies our the tremendous All billion market is to away, era over QX, situation call, QX, decrease still and all same to looking expect In we bottom decrease to preliminary above the forecast on likely GTV

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believe track providers concludes tomorrow. overcoming go with proven to ethics record our to our your a difficulties their professional ahead. high-quality remarks. to the operate and customers of We questions. would That We please and service and effort prepared will the now through our like eventually lead firmly call and our Operator, bring open better help respect will us and experience, expertise develop continue service. continued win to service to We

go and will the from first Our Goldman you. Please we Thank question-and-answer Ladies Piyush gentlemen, [Operator of comes now begin from the Sachs. Instructions] ahead. line session. question Mubayi

first been or if Thank through wing recovery Hi, quarter since? we expectations you the My for of quarter. that both market And congratulations the how Stanley, take with fourth Thank reset through Tao. terms flip my GTV a XXXX? the That period through of you and on two the be that the us loosening, in is decline question again. price would you by have one quarter, following second guidance housing should the about first And you and question. set in you've us the take taking strategy. unveiling in body great. volume. if in trends for Could Xu we've And can for how could I that, question quarter recent in the policy given seen conditions

is Tao. Xu you, This Thank Piyush.

the the market has the signaling the responsible condition the aiming Chinese housing rectify for I not the cities of well made would housing or pre-sale developers' .policies lot stabilization But the environment policies mortgage, administrative say Regarding since the the speculation. government the like since pent first on measures the to demand. up previous and living to year. buying home macro on policies, market to on The first For certain restriction both proceeds. government tighten question, also for as party policy level sells is XQ central introduces theme improving quarter, how last and credit the have over of focusing a partly policy less implementation as

improving environment, an factor significant key the mortgage with the is recently credit been that housing has process. a and for market a For rates approval and the battement

fell the or agent The sentiment the expectation and second of the home directly to improving the and year. shortened normalize the for both out January XXXX, last X.XX%, XX January less The last-October. And in at in impacts the days XXXX. and March consumer first this orientation similar credit interest XX than owners' XXXX, rate home environment November level to by season the September home also days peak days in recovery X.XX% cycle since season the market and mortgage peak side bottomed is XXX the last of As versus respectively. contributes

QX wage XX% that are out in Beike's the Marketing out. and transaction to year-over-year interdependent for XX% [Indiscernible] Institute, environment, home liquidity with improving tier interacts upper in XX% credit saw XX bottomed improving dropped cities by wise XX Monthly around by home quarter-over-quarter. drops According sells year-over-year to existing three existing dropped existing volume driven Beike last year-over-year cities XX% of by the the in the facilitate year transaction months. existing the GTV sells, certain were home for shrank the market China consecutive product among X% recovery. GTV fulfilled For performance and home the Beike and sequential existing Research quarter-over-quarter, environment and home in transaction

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management have outlook. taking my question. for market discussed you you, the Since just Thank

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Chong Thomas ahead. from go of Please comes question Jefferies. Next

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now turn Thank remarks. the approaching call. today, the the Matthew your for over now all Zhao the you We're call to I'll Mr. end of closing questions. for conference speaker host

you again of us today. you for all Thank operator. joining Thank you, once

feel please goodbye. This team next you And free information forward you look to to through Take any you Investor and the questions, concludes quarter. provided care. further with on speaking contact call. we If our contact Relations have Beike's again today's Thank website.