KE Holdings Inc. Price & Performance (BEKE)

On today's call, we have Mr. Stanley Peng, our Co Founder, Chairman and Chief Executive Officer and Mr. Tao Xu, our Executive Director and Chief Financial Officer. Mr. Peng will provide an overview of our strategies and business developments, and Mr. Xu will provide additional details on the company's financial results. Before we continue, I refer you to our Safe Harbor statement in our earnings press release which applies to this call as we will make forward looking statements. Please also note that Baker's earnings press release and this conference call in discussions of unaudited GAAP financial information as well as unaudited non GAAP financial measures. Please refer to the company's press release, which contains a reconciliation of the unaudited non GAAP measures to comparable GAAP measures. Lastly, unless otherwise stated, all figures mentioned during this conference call are in RMB. Certain statistical and other information relating to the industry which the company is engaged to be mentioned in this call, has been obtained from various publicly available official or unofficial sources. Neither the company nor any of its representatives has independently verified such data. Which may involve a number of assumptions and limitations and you are cautioned not to give undue weight to such information and add [indiscernible] For today's call, management will use English as the main language, Please note that the Chinese translation is for convenience purpose only In the case of any discrepancy, management statements in their original language will prevail.

With that, I will now turn the call over to our Chairman and CEO, Mr. Stanley Peng. Please go ahead, Stanley.

Thank you, Steve. Hello, everyone. Thank you for joining Baker's fourth quarter and fiscal year twenty twenty four earnings conference Call. Over the past year, China's real estate industry has naturally fast. We have seen accelerated changes Some changes are blocked, For the past thirty years, the decision making process for buying a home was relatively simple. [indiscernible] of making the wrong decisions were low. The main concerns for buyers [indiscernible] When a home become available, the crafting was simple, whether they could secure it. In this kind of market, brokerage companies grow by scaling up because the larger the network the easier it was to access information connect buyers and sellers, [indiscernible] Buyers didn't worry much. About who they're who they were buying from. Getting the home was was what matters. But now, that home process and longer on a runway upward trajectory, There is more uncertainty in customer decision making. And the costs of making the wrong decision are much higher Because of this, buyers' needs have changed First, they want to minimize the risks of buying a home and seek greater certainty in their purchasing decisions. Second, they prioritize living well a subject appearance and a fitting.

That's harder to capture and measure. Airway is looking for the best possible solution. Our job first and foremost, is to build the capability to reduce customer decision making risks. And help them find the best option. This is also how we see AI technology. Both in terms of its potential and how we apply it. Whether though AI or other tools our goal is to have customers make the base decisions and guiding them to address various life challenges through better living solutions. Second, from the service provider standpoint, a lot of experience and knowledge they have built up in the past no longer applies. Consumers are asking us more questions and their concerns are more complex. They also care more about who they are buying through, how knowledgeable they are, and whether or not they are reliable industry professionals. Service providers must be able to address these issues for their customers, The old approach or merely pushing listings to sell home is no longer viable. Our assessments on the industry is that customers will become more selective about who they work with. Top tier agents will increase the replace low performing ones. And technology will give the best services providers an even greater age.

Accelerating industry changes. These three forces will reshape the market faster than ever. Top tier services providers will reap the rewards [indiscernible] efficiency. Gains. The same time, the industry will invest more in those service providers to ramp up their skills. The future isn't about to rely on positive balance sheet. [indiscernible] The growth potential of the industry lies in the new [indiscernible] enhancing service quality and empowering top performing agents. This presents both an opportunity and a new demand for the platform. Requiring us to more effectively support service providers store owners in improving efficiency. Over the past years, we have achieved scale and met efforts to improve efficiency. On one hand, we are strongly in our science scientific management approach. We set clear goals breaks them down into precise steps and focus on key factors that are driving results. We have embedded within our system and use digital tools streamline management and boost efficiency. Now, we need to bring this capabilities to store owners and our new businesses. On the other hand, while the industry's digitalization still has a long way to go, breakthroughs in AI technology. Have opened up the exciting possibilities We now see future potential [indiscernible] enhance the customer experience and significantly improve our platformers operational efficiency.

In 2024, we launched an active platform growth strategy. As a result, the number of active stores grew by 80.3% year over year reaching nearly 49,700 Our agent count count rose to 445,000 increasing 12.1% year over year despite major fluctuations in the real estate market. The number of stores and agents connected to our platform both reached [indiscernible] record highs in 2024. Allowing us to reach more customers than ever before. In 2024, we served 8,600,000 customers That means, on average, every hour of the year, approximately 1,000 families across the country both rented or renovated a property with our hub, having Chinese people to live well is a mission that truly matters. For the full year, our GTV total RMB3 350,000,000,000.00 total revenue hits a record high of RMB 93,500,000,000.0. Growing over 20% year over year. Notably, our existing home transactions businesses [indiscernible] an all time high with GTV rising nearly 11% year over year to RMB2.25 trillion Meanwhile, despite market adjustments, [indiscernible] by strong trust from developers and customers. Our new home transaction business generated RMB $917,000,000,000 in GTV, for the year, down just 3.3% year over year. While total revenue grew by 10% year over year.

On One Body, three Wins strategy has achieved [indiscernible] For our home renovation and furnishing business. We continue to pursue scale growth in 2024 while establishing a positive cycle for scale. Quality and efficiency in Beijing. We completed renovation services for nearly 60,000 homes across more than 40 cities. Nationwide in 2024, connected with over 70,000 home renovation workers, 8,000 designers, and project managers. Home renovation and furnishing business achieved total revenue of RMB 40,800,000,000.0. For the year, a year over year increase of 36%. By enhancing supply chain fulfillment management and improving our systems order dispatch capabilities. In Q4, we successfully reduced the home renovation construction timeline over ten days compared with last year. Additionally, our enhanced in home, in house after sales maintenance capabilities enable us to continuously elevate customer experience In our home rental services, the number of rental units under management surpassed 430,000 twenty twenty four, our revenue surge by 135% year over year to RMB 40,300,000,000.0. In terms of quality and efficiency, we have improved the appearance of property owners and the tenants by resetting roles and responsibilities. Through refined operations, resource and significant improvements across various efficiency metrics including the efficiency of second time rentals and the average number of rental units manager per property manager.

Regarding our business, [indiscernible] several cities last year We do not intend to become developers and build many houses ourselves. Our business logic align closely with our insights about the industry. By exploring this business, we aim to address the high decision making risks faced by both developers and customers during the home buying process. While meeting customer demand for doing well We are committed to promoting the development of major high quality homes within China's residential industry [indiscernible] mitigating project level risks. For developers and other participants in the industry. This require us to build capabilities in areas such as precise customer demand insights [indiscernible] and data driven decision making. For instance, by agreeing aggregating characteristics and needs for home syncing customers. We provide developers with targeted customer demand, enabling them to tailor their offerings accordingly and apply c to m customer customization. We will also set limits on heavy asset investment and gradually shift our business model towards a more ideal platform based [indiscernible] In November, we successfully launched our product solution services project in CN, the first care case [indiscernible] we generate the service revenue through our product solution services. In 2024, we have also made substantial efforts in improving our relationships with the various partners throughout the entire ecosystems.

I believe these efforts relay a solid foundation for our long term success Looking ahead, we need to be more technology driven and more human centric. On the technology side, the rapid added advancement of technologists particularly AI, is set to transform many aspects of work, study, and daily life including reshaping relationships with others. Altering organizational structures, changing hiring philosophies. All of which may undergo transformations. As interactions between people become more increasingly valuable, [indiscernible] of continuing services [indiscernible] the users of I I understand you will become even more crucial. Addressing the industry current pain points, such as the shifts shifting needs of customers for residential services, heightened decision making uncertainty, and increased [indiscernible] service providers' capabilities. We firmly believe that advancements in AI and other technologies will effectively have us tackle these challenges. These tools, we will be better equipped to understand customers' personalized needs, broaden their knowledge and information available to individuals, [indiscernible] enhance our service quality. We will apply AI more intensively across both external and internal operations. Supporting services providers in achieving high quality interactions, This approach will enable us to deliver genuine services while also upgrading the interface through which we provide some services.

On the human humanistic side, we recognize that we operate within our service industry where the value of empathy customer care, and our commitment to services paramount. With [indiscernible] It is essential that each service providers actually embodies the spirits of self reliance self improvements, and self respect. While providing exemplary support. To frontline agents who in turn have additional care of customers we can assure our self worth through customer satisfaction and the recognition of their needs. The virtual cycle translates into practice that are not only [indiscernible] also creative. This humanistic quality will offer a new dimension, to industry evolution and development. Making it possible to elevate consumer adherence to 10 times better increased service providers [indiscernible] time folder, and enhance the value created by our platform 10 times greater. Thank you. Next, I would like to turn the call over to our CFO, Sheetal, to review our fourth quarter and fiscal year twenty twenty four financials. Thank you, Stanley.

And thank you, everyone, for joining us.

Before we dive into our Q4 performance, I'd like to briefly touch on some updates. For the housing market in past year. In 2024, also the annual transaction volume of the new home sales market was estimated to have a decline by around 18% The Chinese growth market witnessed a significant recovery in the first quarter. Following the stimulus practice policies in September. According to National Bureau for Statistics, [indiscernible] rose by nearly 30% quarter over quarter. And achieved a 4% year on year growth in first quarter. Meanwhile, [indiscernible] home buyers' preference with the proportion in total real estate market transaction continues to rise. Thanks to a readily available feature, as well as flexible supply and the price adjustment mechanism. According to Baker Research Institute, the proportion of the stay home GTV in total market GTV has rising from the 40% in 2023 forty six percent in 2024. Following an increase of nearly 30% year over year in 2023. And the number of transactions in the home sales market further grow by more than 10% in 2024. Although the national transaction price of existing homes still declined year on year in 2024, The price rose by only 0.2% sequentially in first quarter.

Indicating a changing trend. With the support of the policy aimed at stabilizing the market Home upgrade demand have become stronger. For solid in homes, the average area and the proportion of homes with three bedroom and above. Both have increased year on year in key cities. The opportunities in the market and the bigger positive long term growth strategy enable dealers to continue making the breakthroughs in scale in 2024. Our free revenue reached RMB 93,500,000,000.0 up 20.2% year over year. Revenue from existing and new home construction services both grew year over year. Reflecting our home transaction service solid fundamentals Our home renovation and the furniture home rental services, emerging and other services act as a new growth engine. With combined revenue rising by 64.2% year over year. Contributing 33.8% of our total revenue in 2024. Up 9.1 percentage points from 2023. In particular, revenue from the renovation and furniture business was RMB14.8 billion, growing by 36.1% year over year. And the revenue from our home rental services reached RMB14.3 billion. Up 135% year over year. While achieving brick stores in scale, we also continuously increase our investment in improving the service quality [indiscernible] and the researching and developing advanced technologies.

We believe these efforts will lay a solid foundation for our long term development and continue to yield returns going forward. In 2024, our gross margin was 24.6%, and our adjusted operating expense ratio was 70.7%. With an adjusted operating margin of 7.4% for the year. Our adjusted net margin reached 7.7% bringing our full year adjusted net income to RMB7.21 billion. Earnings quality improved as well. Our net operating cash inflow in 2024 was RMB 9,400,000,000.0. 1.3 times of our adjusted net income for the year. And the DSO fell by three days year over year to forty two days Turning to our financial performance in Q4. Our total GTV was RMB 1,000 hundred and 43,800,000,000.0. Representing a year over year increase of 55.5%. Net revenue reached RMB31.1 billion. Up 54.1% year over year.

Gross margin declined by 2.4 percentage points year over year. To 23% GAAP net income was RMB 5,000,000 showing a year over year decrease of 13.8% Net GAAP net income reached RMB 1,340,000,000.00, reflecting a year over year decrease of 21.6%. Looking at our housing transaction services, revenue from in home transaction reached RMB 8,900,000,000.0 in Q4. Up 47.5% year over year. And 43.5% quarter over quarter. GTV was RMB744.8 billion rising by 59.1% year over year. And 55.9% quarter over quarter. [indiscernible] growth surpassed revenue year over year. Largely as a result of downsizing of better IT services for the homeowners. GTV outperformed revenue sequentially mainly due to the structural change. That is the revenue share of the rental property service declined due to the seasonality. The contribution margin from both existing home construction services was 40.4% in Q4, representing a decline of 4.1 percentage point year over year. Primarily due to the increase in labor cost related to our effort to improve agents' welfare and a decline of 0.6 percentage points quarter over quarter, mainly resulting from the strategic initiatives [indiscernible] and the variable costs In terms of the new home transaction services, we significantly outperformed the market across various metrics. [indiscernible] the sales from the top 100 developers were relatively stable year over year.

And increased by around 60% sequentially in Q4. In comparison, our new home GTV reached RMB 355,300,000,000.0 in Q4. Up 49.3% year over year. And 56.2% quarter over quarter. [indiscernible] outperforming the industry. This was mainly due to the deepening collaboration with developers as well as our robust and finely tuned operational capability. Revenue from new home transaction was RMB 13,100,000,000.0 in Q4. Rising by 72.7% year over year. And 69.2% from the previous quarter. Revenue outperformed GTV both year over year and sequentially. Once again, demonstrating our strong steady monetization capabilities in new home transactions. The contribution margin from the new home transaction services grew by 0.8 percentage points year over year, to 25.6% largely resulting from the strategic increase in variable commissions as we place the greater emphasis on building a harmonious ecosystem the delivery better rewards to the agent. Sequentially, the new home contribution margin grew by 0.9 percentage points. That's the leverage we gained from the revenue growth. In Q4, as only developers contribute 58% of our new home sales revenue. Revenue from the home renovation and the furniture home rental services, emerging and other services, grew by 38.7% year over year in Q4. Amounting for 29.3% of total revenue.

The contribution profit of Zhen accounted for 24.3% of our total gross profit. Our home renovation and the furniture business maintained a steady growth in Q4 contracting sales reached RMB5.3 billion. Up 34.7% year over year. Revenue reached RMB4.1 billion, increasing 12.8% year over year. Our contracted sales growth rate outpaced our revenue growth rate. Driven by a sharp increase in concrete sales with the real estate market recovering this Q4. While revenue recognition lagged behind, the contribution market for the home renovation and furniture business reached 29.8% up 1.9 percentage points year over year. [indiscernible] in our furniture and home furnishing retails Sequentially, the contribution margin for the home renovation and the furniture business declined 1.5% mainly due to the decline in the proportion of high margin home renovation revenues Contracted sales of furniture and housing, furniture and retails which are not included in our home renovation package reached RMB. 1.7 billion in Q4. Making up approximately 31.7% of the total contracted sales an improvement of 4.2 percentage points from the same period of 2023. Our home rental service business continued to grow at an accelerated pace in Q4. As revenue reached RMB4.6 billion, up 108.7% year over year.

Benefiting from the rapid growth in the number of rental units. Under management. By end of Q4, the number of the rental units on the management exceeded 430,000 compared with over 200,000 in the same period of 2023. The contribution margin for home rental services held relatively stable at 4.6%. Compared with the previous quarter, In Q4, our revenue from emerging and other services decreased by 41.1% year over year and 9.9% quarter over quarter to RMB $4.33 RMB $439,000,000 Next, let's move on to our other cost and expenses in Q4. Our store cost reached RMB $786,000,000, remaining generally stable year over year. And growing by 11.8% quarter over quarter. This quarter over quarter increase was mainly due to the increase in the cost associated with the store renovation and the maintenance. [indiscernible] RMB747 million up 36.3% year over year. And 48.8% quarter over quarter. Primarily driven by the increase in tax and the surcharge [indiscernible] and credit losses. Gross profit rose by 39.4% year over year. To RMB 7,200,000,000.0.

Gross margin was 23%, down 2.4 percentage points year over year. The primary reason for the decline was a year over year decrease in contribution margins from emerging and other services. And its in home transaction services This will partially offset by stronger leverage from the relatively stable store cost and the increased total revenue. Gross margin climbed by 0.3 percentage points sequentially in Q4. Mainly due to the increased contribution margin from the new home transaction services. In Q4, our GAAP operating expenses totaled RMB6.2 billion, up 15.8% year over year. And 39.7% sequentially. G and A expenses were RMB3 billion, increasing 11.8% year over year. Due to the increase of the personnel expenses G and A expense by 55.8% quarter over quarter. Mainly due to the high personnel expenses [indiscernible] Sales in the marketing expenses increased by 12.7% year over year. To RMB2.3 billion. That's the increase in sales and marketing expenses for home renovation and the furniture business. Quarter over quarter, sales and marketing expenses rose by 21.2% mainly due to the growth in marketing expenses for housing transaction services and the increase in the personnel expenses. Our R and D expenses were RMB739 million up 38.4% year over year.

And 28.9% sequentially. [indiscernible] to the increase in R and D for our housing traffic and services and the increased investments in some pioneer research projects. In terms of the profitability, GAAP income from the operations totaled RMB 1,000,000,000 in Q4. Turning positive from a loss in the same period of last year. An increasing of 39.1% sequentially. GAAP operating margin was 3.2%. Increasing 4.1 percentage points from Q4 twenty twenty three and the remaining flat sequentially. Non GAAP income from operations totaled RMB 1,800,000,000.0, growing 105.1% from the same period of last year. And increasing 28.7% quarter over quarter Non GAAP operating margin reached 5.6% up 1.4 percentage points from Q4 twenty twenty three. Due to the decrease of our operating expenses year over year and down 0.4 percentage points from Q3 twenty twenty four attributable to the increase of operating expenses quarter over quarter. GAAP net income totaled RMB $578,000,000 in Q4. Decreasing 13.8% year over year. And 50.5% quarter over quarter. Non GAAP net income was RMB 1,300,000,000.0, down 21.6% year over year. And 24.6% quarter over quarter. Moving to our cash flow and the balance sheet. Net operating cash inflow was RMB5.2 billion in Q4. The new home DSO was thirty four days in Q4.

Which is a testament to our effective risk management. On top of approximately US132 million dollars allocated to the share repurchase during Q4. Our total cash liquidity remained at a high level of RMB78.7 billion. Which excludes customer deposit payable. With our robust cash reserves, we continue to reward our shareholders who have a ground resource through the active share buyback. Enhancing capital operating efficiency and sharing the benefit of our development with investors. In 2024, we repurchased around US dollar US760 million dollars worth of shares which accounts for around 3.9% of the company's total share outstanding. At the end of twenty twenty three. We have consistently delivered our promise to reward shareholders Since the launch of our share repurchase program in September 2022, We have repurchased roughly US dollar US1.63 billion in shares at the end of twenty twenty four. Accounting for about 8.6% of total company shares outstanding before program began. Building our commitment to shareholder returns, we are pleased to announce that our Board approved a final cash dividend for 2024 of US dollar US0.12 dollars per ordinary share. Or US0.36 dollars per ADS to ordinary shareholders and ADS holders of record as of April 9. 2025.

So total expected given the payment will be approximately US dollar US0.4 billion and will be funded for our surplus cash on our balance sheet. With this, our total shareholder returns for 2024 significantly exceeded our net income. Representing around 113% of our net income of the year. We intend to provide shareholders with comprehensive returns in the long term. Proactive and stable manner. Aiming to share the value we create together with our long term shareholders. As we advance through 2025, our financial strategy will accelerate the value creation through three imperatives. First, ensure we make effective capital allocation to drive investment [indiscernible] [indiscernible] And the technology advancements and drive sustainable growth. Second, better deployed technology to drive high financial and risk management efficiency. Third, deliver consistent and sustainable returns to our shareholders ensuring that our growth translate into tangible value to those who invest in our vision. This is how we energy and durability We'll make sure the money [indiscernible] through this framework. It will simultaneously innovation engines [indiscernible] and the compound value to all of our shareholders. This concludes my prepared remarks for today. Operator, are ready to take questions. Thank you. Thank you. You. For your name to be announced.

If you wish to cancel your request, please press 2. If you're on a speakerphone, please pick up the handset to ask your question. As a reminder, we only accept questions on the English language line. For the benefit of all participants on today's call, please limit yourself to one question. And if you have additional you can reenter the queue. If you're going to ask the question in Chinese, please follow with an English translation. Your first question comes from Jia Xiaodong with Nomura. Please go ahead.

Many thanks, management.

For taking my question. My question is about the utilization of the technology for Baker.

So just now, Stanley has mentioned that BigQuery is able to empower its offline source and increase its operational efficiency through technology tools. Such as AI property consultant, property sourcing assistance, etcetera.

So can I ask, is the management considering further introducing or collaborating with advanced AI large models such as DeepSIC? To enhance and optimize the business operations of the company. Like, for example, how can AI be leveraged across the different business areas such as home renovation, property recommendations, and customers and customer services to further increase the user experiences. Thank you.

Okay. So Thank you for your question. For how AI might impact our industry by enhancing efficiency and the user experience we can think about this from three perspectives. The first is our service side, and the second is supply side, and the third is a platform side. [indiscernible] buying and selling real estate has become more challenging for today's clients due to increased uncertainty and risk in decision making. As a result, client access to data, knowledge, know how, and what we now refer to as intelligence. AI can effectively address this issue. [indiscernible] leading us to conclude that AI can significantly optimize [indiscernible] improve the quality of service on the demand side. And secondly, the supply side of the study, we believe that AI will enhance the capabilities of skills agents, and accelerate the industry focus on high quality supply. For a third one, from platform perspective, [indiscernible] platforms with more opportunity to address efficiency changes through innovation. We also emphasize that the core elements of the industry quality, [indiscernible] Historically, our strategies [indiscernible] standardization and our platform model have resolved quality issues on the services side. We also tackle challenges of scalability on the supply side through adoption of platform business model.

However, the industry most significant changes remain efficiency. If efficiency issues are not resolved, profitability will also be a challenger. The emergency or AI can be seen as a production factor integrated into the value chain. Potentially having us tackle quality and scale problems while also addressing efficiency challenges This can create new opportunities for the entire platform and increase its value. So give this conclusion, we place great importance on the capabilities and the potential of AI and we have initialed our series of explorations. We have integrated our own residential industry data with an advanced foundational model to develop our NAAT language model. [indiscernible] and our image in large model, Dream Home, we are iterating on these models and explaining our capabilities to support a variety of applications. Here are a few examples of the application I can show for you. For the customers, we are currently conducting gray box testing for putting AI powered home syncing assistant built on deep seed R1 and a picture data and our own knowledge graph. We have plans to open for 12 in in March. This twenty four and seven home sensing AI assistant can combines deep industry [indiscernible] user demand and the ability to customize real time solutions.

It will help users to overcome the initial challenges of a high early stage decision making costs in home searching. While also helping the agent clarify client needs and improve operational efficiency. In the real CVR, home code scenario, so the combination of the high precision imaging of the new generation of P4 camera and the DeepSeq driven intelligence model can leverage a more refined spatial understanding capability to enhance the intelligence assessment ability for houses and improve the user experience in VR home selection and home tour. And for the business partners, we are build a comprehensive solutions For example, for property agents, We have conducted a great bar green box testing for AI system, like AI property selector and AI property lifting maintenance assistant in several cities. We have also launched AI powered tools [indiscernible] To enhance agent capabilities in client acquisition, demand identification and personalized solutions. For home renovation and operation businesses we have implemented Shunyou, the AI design tools that can automatically generate design plans for marketing, visuals, and we have our self developed B system with AI driven delivery management We also have our cloud based intelligence construction system that can carry our AI automated construction management monitoring.

They are intelligent inspection and [indiscernible] acceptance tools, creating almost a fully AI embedded digital loop For organizational efficiency, we have to deploy five digital AI agents including achieving efficiency breakthroughs in areas such as business analysis and operational strategy support. Let me also share some results of this applications. One, the first, our AI property service management manager already automatically handle 60% of rental property owner management tasks. During the testing. The second digital AI agents [indiscernible] analyze 75% of their time nearly seven nearly 20 of time for operational strategy teams. The third, AI program tools also assist in generating 30% of R and D codes. For 2025, we plan to increase our AI investment to further strengthen the foundational capabilities of our model, data and solutions while accelerating [indiscernible] These guys will make our various AI assistance smarter and further promote AI integration and AI innovation capabilities throughout the organization. Finally, AI facilitates a more efficient flow of information and knowledge.

Which will speed up the end of old model that rely on scale to explore information gaps. We must also break our reliance on scale. On the other hand, AI achievements make it possible for us to enter a new era we are far from where we need to be with the developments [indiscernible] accumulated industry data assets intensive applications, scenarios, and the business validation. [indiscernible] strategic planning in the industry. In the future, we will continually expand AI's role in deeply reshaping the entire residential services process. We believe this is both big responsibility and architect of the residential industry digital infrastructure and crucial to creating long term value for industry. That's my answer. Thank you.

Thank you.

Your next question comes from Timothy Zhao with Goldman Sachs. Please go ahead.

Thank you management for taking my question. My question is regarding the property outlook. As we have seen pretty strong rebound of the market since last September. Just wondering if management can share any insights on the recovery sustainability issue regarding the trend year to date. And how would management team think about the market outlook for this year? And are we going to turn more optimistic about the market? Thank you.

In 2024, the market saw many changes. Now this can be summarized on price sensitive policy stimulus. New positive signals in Q4 and accelerated structural change. Let's look at this change in more detail. On positive front, 2024 has seen a stronger than expected positive impact. Particularly the central government had a policy pivot on September 26, for stabilize the property market with more intense systematic and swiftly implement measures to before being rolled out. This policy efforts brought market resilience in 2024 the Zhuhong market nationwide so decreased price for the increase in volume. According to estimates from the Baker Research Institute, in 2024, the number of the in home traffic unit in China rose by around 15% year over year. While total GTV grow by around 2%. Due to the price factors. Particularly with the release of this new part on September 26, the transaction recovered quickly. In Q4, the Think Home GTV on our platform rose around 60% year over year. Making a stronger and the most tender rebound. Than ever before. Also the price [indiscernible] picking up 0.2% in December. Compared to September. Making the first quarter increase in nearly two years. For in 2024, the new home market nationwide continued to face challenges.

According to the official data, national new home sales declined by 18% while the new home PTV of 100 developers dropped by 28% in 2024.

However, a robust rebound in the new home GTV during Q4 helped bolster the market throughout the year. Regarding the transaction structure, it is increasingly dominated by the existing home. [indiscernible] increased to 46%. Up five percentage point compared to the year of 2023. Notably, this percentage exceeded 50% in top 30 in the 30 top tier cities. Was mainly due to the rapid decline in existing home prices. Which made it more attractive to home buyers. Meanwhile, readily available existing homes have a working demand away from the new home. On the demand mix, the rise of nearly new in homes, met increased demands of home upgrades. Which is the largest segment of buyers. According to paper transaction data, the percentage of its in home sales from with three bedrooms and above grow from 40% in 2020 to 55% in 2024. The proportion of nearly new homes built with the last ten years jumped from 27% in 2020 to 43% in 2024. Regarding the recent market updates, let me talk about the Zhuhong market first. Based on our platform data, exist in home market has sustained the momentum where the transaction volume rebounded mostly started after Chinese New Year.

Specifically look at the same home transaction volume, during the four weeks following the spring festival, the transaction volume of its in home grows by around 40% year over year. Among which the Tier one cities grew by 50%. While Tier two cities such as Chengdu, Yingbo and Tianjin had a robust growth. Notably, the big weekly transaction volume surpassed the optimal high. Following the September stimulus. Reaching the highest level since March 2023. Where the market's barriers pent up [indiscernible] Overall, market follows the seasonal trends. With the momentum starting to moderate in the fourth week after spring festival. While decline was marginal sustaining a high level Regarding the home prices, in February, the home prices slightly decreased by 0.4 percentage month over month. [indiscernible] between the multiple smaller the average amounts decline in 2024. We can refer to [indiscernible] which we compiled based on the proportion of price increase adjustment [indiscernible] Made by homeowners. The impact rebounded rapidly in October. After reaching a low point during the spring it has been gradually recovering with fourth tier cities showing relatively higher sentiment levels. And the Shenzhen exceeding 15% New home market recovered amount today in a traditional off season.

During the four weeks after holidays, new home subscriptions increased over 10% year over year. Price wise, the new home price did stabilize sequentially in September. Regarding the market outlook in the year of 2025, we believe market may start to bottom up in 2025. In our view, the prerequisite of overall market stabilization is achieving stability in the home price. According to our survey, insufficient confidence in housing price expectations that's the biggest obstacle preventing people from purchasing homes. We believe the stabilization of existing home price depends on two factors. First, a balanced supply and demand dynamic with healthy market liquidity. Second, improve the homeowners confidence with less people cutting prices deeply due to the urgent sales. The paper sentiment impacts as a leading indicator would be a useful tool in this regard. The index above for at least six months would demonstrate a market consensus on the price stabilization. So for the policy refinements will stimulate home virus demand. Driving transaction volume recovery. In some cities, the market while shifting from press hot for volume to increase transaction with stable prices Our recent survey indicates that proportional buyers planning home purchase within a year has rising to a two year high.

This reflects stronger market confidence in short We will continue to monitor home viewing activity and the transaction volume as the key indicators. At last, stable existing home price will also help stabilize the price of new homes. Coupled with the policy optimizing new home supply and the housing repurchase program. This will support new home sales and investment recovery. Helping to restore developers investment and the development capability [indiscernible] [indiscernible] In the macro economy and the real estate sector to restore consumers' confidence and expectations. In a neutral scenario, we expect the single market to realize modest recovery in 2025. Whilst the new home market adjustment may continue due to some complexity of the risks but its year over year decline may narrow. Meanwhile, we expect further structural divergence in the housing transaction into NetSuite file. Reinforcing the dominance of these new homes. In particular, larger gradually new secondary new home that admits buyers home operating needs will become top crisis. The new home market will accelerate the supply side innovation offering upgraded products [indiscernible] match the evolving demand. Thank you.

Thank you.

Your next question comes from Griffin Chan with Citi. Please go ahead.

Yeah. I'm going to translate my questions.

So it's about the agency business. The number of agents and store on Baker platform continues to grow. The company has made a lot of effort and investment, and it is quite aggressive.

What kind of growth have the company achieved in the year of 2024 with such an investment? And for the year of 2025, we'll bake the follow the same path for growth, or we will will consider some other like, AI improving the efficiency as well as having a higher growth? Thank you.

Thank you, Chris. In 2024, the main focus of the housing content services were promoting growth and optimizing the ecosystem. With that being met, we achieved a remarkable growth in our performance, demonstrating our ability to continuously outperform the market. Our success also helps agent and store owners in our platform partially offset the impact of multi [indiscernible] Well, for our key focus last year, [indiscernible] Introduced the target incentive package tailored to store of different size to attract industry players. End of twenty twenty four, the number of active non linear stores on our platform exceeded 44,000 and the debt of active non agent reached 361,000 opportunity percent 11% year over year. [indiscernible] Notably, four big new brands joined the platform each with over 100 stores. Our goal is expanding our network, is to enable industry participant to enhance our operational efficiency. That is by leveraging our customer track traffic cooperation network [indiscernible] for patients and management, and the diversified business opportunity within the broader residential service sector. Within three months of journey, the per agent efficiency of newly connected store reached over 80% of the efficiency level of those already planned. The stores. Also around 13% of newly connect force could have doubled average productivity level of the platform with few stores [indiscernible] when they join the platform.

Becoming high productivity stores Thus, store network function has delivered strong investment returns. The payback period for the investment for the new store connect in the first half of the year was at six months. With the cumulative store attrition rate [indiscernible] only 5% within the six months of the [indiscernible] With larger network of store agents, we leverage the digitalized scientific management to help the owners respond the home listing coverage [indiscernible] But the scale of our agent store network continue to respond, it becomes even more critical to deepen ecosystem governance. And strengthen our relationship with all stakeholders All our government's mechanism responded to operation of our regional core governance council. Enabling store owners to better practice in decision making of some platform rules and enhancing engagement. Additionally, our store point based reward program was successfully rolled out in 900 cities. [indiscernible] [indiscernible] received award benefit, average RMB 2,000 equivalent value per store. We also create truth like online store owner workshop. To simplify their management process. With functions such as dashboard, [indiscernible] The satisfaction level of the connect store and the store improved throughout the year. 13 by 4% from Q1 to Q4. Additionally, the monthly store attrition rate in cities excluding Beijing and Shanghai.

Declined by 0.2 percentage point in 2024 compared with the year of 2023. [indiscernible] dropped by 1.7 percentage point year over year. [indiscernible] the key growth engine, [indiscernible] and the innovation leader in the industry will further solidify the positioning of Pianjia in 2024. End of year of 2024. Pianjai had over 114,000 active agents. Making a net increase over 16,000 agents up 17% year over year. Average monthly attrition rate of Bianxia agents nationwide decreased by 0.7 percentage point year over year to a lower level of 3.4%. [indiscernible] demanding. Our solution was to leverage the large store model to enhance organization efficiency. This model was first implemented in Bianxia, with average number of the agent per store rising to 20 at the end of twenty twenty four. Store structure continue to optimize, with the proportion of the large stope reaching over 50%. An increase of 8.6 percentage point year over year. The average commission per the entire store reached 2.53 times of the connected stores reflecting a 5.9% year over year growth. Talent development remains a key investment area for the We launched a three years leadership development program for Linjia store managers. This initiative is to strengthen store efficiency and helping has the platform ability to retain top performing store managers.

In 2025, growth and ecosystem will continue to the key roles for our housing transaction services. Meanwhile, also strive to enhance efficiency. We will continue to ensure the steady growth in our store and agent network. Meanwhile, [indiscernible] through efficiency improvements leveraging ecosystem collaboration, and the digital tools. This includes the implementing a comprehensive long term store incentive such as a point based reward system to convert a skilled advantage to efficiency again. Also, by utilizing more refined measurement tools, we will empower the owners with enhanced operational capability.

Improving regional penetration [indiscernible] more agents and store to increase their in cost. Regarding the entire development, we will continue to strengthen the large store module by getting its stability with Lianxia and promoting it to those connected stores. At the same time, Beijao will further support growth of our three rooms business. [indiscernible] for home renovation and the rental services in Beijing and Shanghai. [indiscernible] benchmark. Thank you.

Thank you.

Your next question comes from Eddie Wang with Morgan Stanley. Please go ahead.

Thank you management for taking my question. My question is about the home rental business. We have achieved rapid growth in the home rental business. What's the key advantage to drive this strong growth? We observed that the home rental market remained challenging with declining rents and the persistent oversupply. How can we maintain the stability of the home rental business and at the same time to enhance the [indiscernible] under such conditions. Thank you. Thank you, Eddie. In 2024, our home rental business, achieved a significant scale up and optional breakthroughs particularly in our carefully run services. Centering the service and efficiency we established a solid fundamental framework for our business model. Skill wise, revenue of our home rental services reached 14,300,000,000.0. Growing 135% year over year. Primarily driven by dysfunction of our capital rent The number of mentioned the units on the carefree rent exceeded four twenty thousand by end of twenty twenty four. Compared to over 200,000 a year ago. As we operate a large scale of properties, we have developed a deeper understanding of the high frequency [indiscernible] long cycle and the complexity of the rental services. To address this, we have broken down the non standard services.

To standardize actions. Undertaken by service provider who are assigned to specific roles [indiscernible] thereby improving the efficiency. For instance, offline rental services such as the property, however, rental inspection, the face to face key exchange are handled by rental rewards to ensure standardized, however, procedures. While rental service managers handling the tenant request through centralized online management. [indiscernible] By year end, lifetime service order accounted for over 15% relying better with the tenant schedules We also deployed AI motion radar tools to detect tenant distraction and proactively improve the service mechanism. With that, our property managers can focus on the rental unit sales and the occupancy without being distracted by the rental affairs. By the end of twenty twenty four, the efficiency for the unit subs increased around 29% year over year driving revenue growth in total housing unit of cafe rent. Beyond organizational capability, we have developed the intelligent AIM system reflecting AI technology to empower operations. From the pricing strategy for the property acquisition, inventory management to leasing strategy [indiscernible] to dynamically manage traffic pricing and the marketing strategy and enhancing labor efficiency. And assets turnover. For example, in private cities, the system has increased operation efficiency of the service providers and the managers by around 40%.

Improves the property turnover rate by 7.7% and the shortens the turnover cycle by 11.3%. Since its launch. From our financial perspective, our rental business saw a sequential improvement in contribution margin in Q4. As the impact of the Q3 summer rental peak is updated, the cafe run experienced a quarter over quarter decline in your home.

In your home starts and the leasing. This lateral decline in expense for the operational staff as a percentage of net rental income [indiscernible] in a marginal improvement. On a full year basis, core operational metrics of the traffic run improved significantly. [indiscernible] [indiscernible] The customer complaint rate at the end of the year decreased by more than 20%. Compared to the beginning of 2024. And we also conduct a cost structure optimizing improve the service quality drove 20 twofour tenant renewal rate to 54.4% and a two percentage points increase year over year. Reducing the channel cost of releasing. Regarding the management of the rental cost, due to the vacancies on one hand, we're focused on enhancing [indiscernible] [indiscernible] [indiscernible] Time. Even into Q4 off season.

The average beacons of care rate decreased from nearly fifteen days as beginning of the year. To under twelve days in Q4. On the other hand, we continuously upgrade our product model The coverage of new product model which includes no vacancy period continue to rise in Q4. This model enhanced our resilience again the rental price volatilities and reduce the vacancy risks The deposit cost per unit of our recovery rent model also dropped This was mainly due to the increased initial leasing success rate which rose to over 80% in 2024. Up by eight percentage point year over year. For the year of 2025, first of all, we still have the high hope for the number of rental units managed on the [indiscernible] Meanwhile, we will continue to balance scale and operation To that, we need to strengthen our value proposition for both tenants and the property owners. This key lies in heightening our service quality, and boosting rerunning efficiency. For tenant, we will further refine our role specialization model and the tailored service standards for different customer segments. For leasing efficiency, we will focus on the talent development in leasing channels leverage AI to enhancing sector leasing efficiency. [indiscernible] and the value added services.

Such as cosmetic housing, decoration to increase the leasing [indiscernible] Thank you.

Thank you. Your next question comes from Sophie Zhang with CICC. Please go ahead. Thanks management for taking my questions and my question is regarding the home renovation business. Home renovation segment has maintained solid growth during the past year. After surpassing the revenue threshold of RMB10 billion in 2023, So can management share the main drivers behind the growth and also the strategic plan for the business segment in 02/2005? Thank you.

Doctor. Sopi.

Introduce for our home renovation and furniture business. Achieved a robust growth. In terms of scale, our revenue reached RMB 14,800,000,000.0 in 2024, up 36.1% year over year. Contracted sales amounted to RMB 16,900,000,000.0, making a year over year increase of 27.3% Contracted sales exceeded RMB3 billion in Beijing, RMB2 billion in Hangzhou, and RMB 1,000,000,000 in Shanghai and Chengdu. Five other cities also achieved the contract itself over RMB500 million each. As for the profitability, the contribution margin for the home renovation and furniture business reached 30.7% in 2024 an improvement of 1.7 percentage points compared to the same period last year. Taking the G9 as a showcase, in 2024, the contribution margin for the home renovation furniture business reached approximately 35% and the pretax profit margin excluding headquarter cost charge. Reached over 5%. The breakthroughs in our home renovation and furniture business are primarily attributable to the highly efficient synergies between our housing transaction services and the new business. As well as our enhanced construction delivery capability and support from our online digital platform. Let me share some additional details. First, different integration of our housing transaction services and renovation services significantly strengthen our customer acquisition ability [indiscernible] [indiscernible] in contracted sales.

We encouraged our agent recommend our new business by point based incentive model. As a result, this has been an increase in the proportion of the concrete cells by agent referrals to the total conquer cells.

Second, as our contract sales grow, we need to strengthen our delivery capabilities. To accomplish this, we optimize dispatch efficiency and workflow. Further shortening the construction timelines Our average construction timelines from the ninety four days into Q4 twenty twenty four. Representing a decline of over ten days in the same period of last year. Meanwhile, we continue to integrate our home sales system and launched version 2.5 nationwide. By analyzing the product management and the unifying draw rules, we have improved the system underlying data foundation This ultimately enable us to produce automated beam design construction drawing and press codes and the unified online material scheduling. About the business outlook for the year of 2025, we have achieved further breakthroughs in business scale last year [indiscernible] our core goal for our food service renovation business is to enhance product strength and improve delivery quality with a customer centric approach. [indiscernible] [indiscernible] we intend to implement implement the following key initiatives First, input the product strength with this model iteration and the showroom upgrade. We plan to establish a strong brand image as a full service home renovation provider Based on our insight into the customer needs, we aim to provide a comprehensive renovation solution rather than simply selling the different products.

At the same time, we expect to upgrade our showrooms We plan to implement showroom as a core display of our offline store. We will collaborate with professional designers to create a [indiscernible] And display various rendering to enhance the offline experience for the customers. Second, enhanced delivery capability [indiscernible] promote the professional of the product managers. Believe that long term stable cooperation product managers is the fundamental guarantee for the quality of the home renovation delivery. We intend to take the full time project manager as a core to enhance delivery quality [indiscernible] [indiscernible] to improve the service provider delivery satisfaction and reduce customer complaint rate. Meanwhile, project managers should be responsible for the delivery quality and orders recommend by public customers. Third, we enhance the operational efficiency We have found the previously there were two ways to provide us connecting with the customer but letting the key person in charge. With that, we have defended store manager as the first manager who is the fully responsible for the customer needs, contract conversion, cost delivery and business management. Achieving an end to end management loop We further defend the designer as the first person in charge of the renovation solutions and the conversation.

We will strengthen the trainer training [indiscernible] enhance our capability of the full service home renovation design skills. Also defined the product manager as the first person in charge of the per [indiscernible] They will focus more on the overall management of the project construction period [indiscernible] At the same time, we place great emphasis on contributing business districts intend to focus on key business districts, [indiscernible] layout structure and common renovation problems in advance. And make the service scope of centers and project manager more concentrate [indiscernible] improving the service efficiency and quality We have always believed that quality is a foundation of the home renovation furniture business. Only our solid foundation has strong and a long lasting building be constructed. Will continue to move forward our pursuit of the CAR T with even greater determination and the confidence in our future development path. Thank you.

Thank you.

We are now approaching the end of the conference call. I'll now turn the call over to your speaker host today, Ms. Sitting Lee, for closing remarks.

Thank you, operator. Thank you once again for joining us today. If you have any further questions, please feel free to contact Beko's Investor Relations team. Through the contact information provided on our website. This concludes today's call and we look forward to speaking with you again next quarter. Thank you and goodbye.