Thank you for standing by for KE Holdings Inc. First Quarter twenty twenty five Earnings Conference Call. Please note that today's call, including the management's prepared remarks and question and answer session, will all be in English. Simultaneous interpretation in Chinese is available on a separate line for the duration of the call. Access the call in Chinese, you will need to dial in to the Chinese language line. At this time, all participants are in listen only mode. Today's conference call is being recorded. I will now turn the call over to your host, Ms. C. Ting Li, IR Director of the company. Please go ahead, Seating. Thank you, operator. Good evening, and good morning, everyone.

Welcome to KE Holdings, Inc. Baker's first quarter twenty twenty five earnings conference call. The company's financial and operating results were published in the press release earlier today and are posted on the company's IR site. Investors.kE.com. On today's call, we have Mr. Cao Xu, our Executive Director and Chief Financial Officer. Mr. Xu will provide an overview of our strategies and business developments on behalf of our of Mr. Stanley Peng, our Co Founder Chairman and Chief Executive Officer. And then Mr. Xu will discuss the financials in more detail. Before we continue, I refer you to our safe harbor statement. In our earnings press release which applies to this call as we will make forward looking statements. Please also note that Baker's earnings press release and this conference call include discussions of 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 these conference call are in RMB. Certain statistical and other information relating to the industry, in which the company is engaged to be mentioned in this call has been obtained from various publicly available official or unofficial sources.

Neither the company nor any of its representatives have 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 estimates. For today's call, management will use English as the main language. Please note that the Chinese translation is for convenience purpose only. In the case of any discrepancy, management's statements in their original language will prevail. With that, I will now turn the call over to our CFO, Ms. Tao Xu. Please go ahead, Tao.

Thank you, mister team. Hello, everyone.

You for joining Baker first quarter twenty twenty five earnings conference call. In the first quarter, our business continued to deliver rapid growth. This is function was partially based on the market momentum. That was fueled by the supportive policies. Since last September, It was also consistently driven our active growth strategy. So that was started in the second half of twenty twenty three. The first quarter, PTV on our platform increased by 34% and the revenue rose by 42% both on a year over year basis. Our business continue to outperform the market in the first quarter. Across multiple metrics Notably, GTV for our in home transaction business increased by 28% year over year. In the fourth quarter According to Baker Research Institute data, the year over year growth of the national GTV this segment was about 60%. GTV for our new home concession business increased by 53% year over year. [indiscernible] Decline year over year reported by the MBS data. The 1,200 developers GTV new home sales also failed by approximately 7% in the first quarter. We continue to see strong momentum in the growth of connected stores and agent on our platform. In the first quarter, the number of active store surpassed 55,200.

A record high. Increasing over 12,600 from the same period of one year ago. [indiscernible] the number of Konnect stores increased by more than 12,300 On the agent side, the number of active agents grow by 23% year over year. Representing a net addition of over 90,000 agents. Compared with the same period last year. [indiscernible] year over year. To reach a record high. We're also seeing a steady improvement in efficiency at the store and agent level. In the fourth quarter, PTV per store and per agent rose by 814% respectively. Making the fourth consecutive quarter of year over year increase. For connected stores, GTV per agent was up by 18% year over year. Translating into stronger revenue for both stores and agents. Our platform operation support ratio remain high. With impressive year over year improvement This year, we are focused on driving both skill and efficiency as two priorities of our growth strategy. In the first quarter, traffic leads our new home transaction services his new record. The interior active market helped with driving more traffic leads [indiscernible] from the higher customer satisfaction. From the search results and the more personalized [indiscernible] [indiscernible] [indiscernible] to each user's narrow and profile.

Will make it easier for people to explore home listing on our apps. To fit their needs, This improving performance also reflect user's current preference to be more home listing before making purchase decision. For our new home transaction business, this year, we are focusing on optimizing our collaboration with developers to better support their sales through needs. While improving agent efficiency [indiscernible] In the first quarter, we concentrate our efforts on high end projects in the market. At the same time, we continue to drive greater participation from our stores in the new home business through the incentive mechanism. Our one body three month strategy maintains stronger performance traction, For the home renovation, and the furniture business, we have adjusted our pace this year. To strategically focus on reshaping our products and delivery capabilities. Our primary goal are to make them more customer oriented while streamlining our organizational structure for greater efficiency. On product front, we significantly advanced the design of our new home group renovation products in the first quarter. On delivery side, [indiscernible] [indiscernible] This drove 156% year over year increase. [indiscernible] for project manager. Reaching 2.97 compared with previously 1.16. In 2024. We also carried out a worker sharing model As a result, top performing project managers have seen improved personnel income.

Enabling them to focus on more for service delivery and quality. The first quarter, over 4% of our total home renovation projects came from the referral by previous customers. In addition, our front end organizational management efficiency improved markedly. The average amount order volume per home renovation designer increased by almost 33%. Moving from 0.79 in 2024 to 1.05 the first quarter of this year. And our pacing total order growth year over year in the home renovation business. Our home rental services continue to achieve the skill breakthroughs in the first quarter. With more than 500,000 rental units under our management. We also made solid progress in improving both default management and increasing our renewal rate. Last quarter, Stanley shared some thoughts on our AI deployment plan. Next, I'd like to provide an update. On our use of AI in the first quarter. In our housing transaction business, on server to end customers, we can check testing of our AI powered home seeking assistant Pujin, [indiscernible] which is already accessible 40% of our traffic on our homepage. [indiscernible] [indiscernible] And proprietary knowledge graphs, We're actually building the industry vertical database based on the larger model to improve putting smart response accuracy. [indiscernible] [indiscernible] To optimize the interactions between the service provider and customers.

We believe a smart AI system will empower both homeowners and the buyers with the more intelligent solutions for the homemaking and decision making. We're also helping service providers identify more accurate leads. In terms of AI tools for service providers, our agent service home buyers will introduce the LINEQO. The AFS agent assistant. LICA offers a full suite of features including customer acquisition, home selection, air travel assistance, and a smart follow ups. These tools empower agents to activate the customer enhance their professional service capability, [indiscernible] connecting with customer. By March 2025, over 200,000 agents nationwide. Have used LaiQoo. Collectively manage over 2,500,000 customers with impressive efficiency improvements The conversion rate from leads to formal client mandates increased by over 30%. And the mandate to transition commercial rate rose over 10%. Agents effectively using LaiQoo achieved the land to transaction conversion rate that was three times higher [indiscernible] Using this product. For agents, serving homeowners, we identify a common issue. Many home listing were not being properly maintained on platform due to agents limited time and tension. Which reduced the cell through efficiency. Resources, we leverage AI property maintenance assistance which helps agent match listing more efficiently and improve the experience for homeowners.

Within the homeowner dedicated AI service group, Their system offers the monthly price. [indiscernible] report analysis, and the entire device based promotion. As of March 2025, the product has been tailored by 110,000 agents. And have served 400,000 homeowners [indiscernible] cumulatively. [indiscernible] testing maintained with our [indiscernible] Four times that of those without it, Additionally, our digital partner Xiaoyi utilized AI capability to enhance critical operational workflow from contract quality inspection to automate the post signing for us. The solution even variable improvements in front line service quality and efficiency. Delivering over 30,000 cumulative hours in productivity saving. In our home renovation business, launched the AI customer maintenance tool strengthen follow-up on the lead conversion during the most critical two week window in home renovation marketing. The AI based lightweight beam and the intelligent marketing solution has improved efficiency. In both design and marketing. For our home rental service, our AI assistant for post rental support has been tested online in 30 cities. It is already successful 25% per tenant request. So intelligent automation. Providing tenant with a smart more responsive service experience. At the same time, it enhanced the efficiency through the better collaboration among the various roles involved in the recent progress.

I share lots of numbers on the total volume and the average efficiency rate of our business. But these are not the key items we focus on. We care deeply about every individual customer's experience. And we remain committed to enhance our service quality. Since 2024, we introduced the fund custody system in our home renovation business. Giving customers greater control and the peace of mind. [indiscernible] revolution farms, are frozen in customer personal bank account. And only released towards after project milestone has been completed. And approved by customer. Including plumbing and electrical tracks based on renovation and final acceptance. This model shifts away the traditional pay first the middle major approach in the industry. Through the system integration, customers can track their phones online in real time.

Full visibility and the traceability. And the interest earned during the custody period [indiscernible] In 2025, we rolled out our renovation fund custody service in several cities. Including Beijing and Wuhan. On top of that, we have developed a fund custody solution plan framework that can be utilized by other industry peers. On the scoring, our commitment to driving the industry progress. Finally, we are encouraged by China technical advance and are closely watching the evolving of the external market environment. While we remain confident in our platform ability, to deliver sustained growth over the long chain, [indiscernible] strategy. We are approaching the short chain with cautious optimism. That is why still continue to invest formally in AI. While taking a more measured approach to other investments this year. [indiscernible] we are now setting clear short and medium to ROI benchmark. To ensure the disciplined capital allocation. This balanced strategy will help us better position ourselves to capitalize on both market recovery opportunities and AI driven generation productivity dates. [indiscernible] All while protecting the interest of the shareholders who share our long term vision, [indiscernible] this year, we will continue with active share shareholder returns. Thank you. Next, I will review our first quarter twenty twenty five financials.

Once again, Before we dive into our Q1 performance, I'd like to briefly touch upon some updates in the housing market. In Q1, the market performance was very stable. Perpetuating the continued positive influence result from positive implemented in September The threshold is the cost for the home purchase before the lowered exerting a stronger incentive efforts on home buyers. According to National Bureau of Statistics, new home sales remained relatively flat year over year in Q1. But it's in the substantial over year decline in the same period last year. Meanwhile, the existing home market remained at a high level in activity, excluding the impact of the holiday. Benefiting from the readily available nature of in home, According to the Baker Research Institute, in q one, Western Home GTV rose by around 16% and the number of home existing home transaction client by around 28%. Both year over year. The growth in the transition volume, the overall supply demand relationship improved. And the housing price showed a signal of putting out. Instilling more confidence in potential home buyers to enter the market Demand for the upgrade was even more robust. Amongst its new home sales in key cities, the share of three bedroom and the larger homes continue to rise year over year in Q1.

Turning to our Q1 financial performance. Our total TTV was RMB 844,200,000,000.0. Representing a year over year increase of 34%. Net revenue reached RMB23.3 billion. Up 42.4% year over year. Gross margin declined by 4.5 percentage points year over year. To 28.7%. GAAP net income was RMB $855,000,000 increasing 97.9% year over year. Non GAAP net income reached RMB1.39 billion. Remaining stable year over year. At our housing transaction services, revenue from existing home transaction reached RMB 6,900,000,000.0 in Q1. Up 20% year over year. And down 23% quarter over quarter. GTV was RMB 580,300,000,000.0. Rising by 28.1% year over year. And the declining by 22.1% quarter over quarter. PTP growth outpaced the revenue year over year. Mainly due to a decline in the revenue share of the rental brokerage services. And a high contribution from this in home transaction service GTV facilitated by Konnect agents. The revenue of the KENAG net revenues derived from platform services The contribution market from these in home transaction services was 38.1% in Q1. Representing a decline of 6.4 percentage points year over year. Primarily due to the increased support under the improved welfare for the service providers. This is our long term strategy.

To build a harmonious ecosystem Sequentially, the contribution margin dropped by 2.3 percentage points [indiscernible] [indiscernible] due to the decline in revenue exceeding that in fixed labor cost. In terms of the new home concession services, [indiscernible] Star RC reports that the sales from the top hundred developers grew by around 7% year over year. And 41% sequentially in Q1. In comparison, our new home PCB [indiscernible] Hundred 32,200,000,000.0 in Q1, up 53% year over year. And down 34.6% quarter over quarter. Once again outperforming the industry. This was mainly due to the deepening of our collaboration with developers, and our finely tuned operational capability. Are the most cells confirmation from the partial subscription in last quarter. Revenue from new home transactions was RMB 8,100,000,000.0 in q one. Rising by 64.2% year over year. And dropping by 38.2% from previous quarter. Revenue outperformed the GTV year over year, demonstrating our stronger monetization capabilities while GTV growth outpaced revenue growth sequentially, to the seasonality. The contribution margin from the new home consent services rose by 1.1 percentage point year over year, to 23.4% As we gained leverage from the revenue growth, exceeding that of the fixed cost. Sequentially, the new home contribution margin declined 2.2 percentage points largely attributable to the seasonality effect.

In Q1, as only developers contribute around 54% of our new home sales revenue. Increasing by around four percentage points year over year. Revenue from home renovation and furniture home rental service and emerging and other services grew by 46.2%. Year over year in Q1. It accounted for 35.9% of our total revenue, compared to 35% in the same period last year. The contribution profit from this business accounted for 32.7% of our total gross profit. Revenue reached RMB 2 for our home renovation furniture business. Revenue rate RMB 2,900,000,000.0. Increasing by 22.3% year over year. Mainly due to the increased orders from the home renovation. Contribution margin the home renovation and furniture business reached a record high of 32.6%. Up two percentage points year over year. And 2.8 percentage points quarter over quarter. Mainly driven by the increased gross margin our home renovation business. Our home rental services business continue to grow at an accelerated pace in Q1. Its revenue reached a record high of RMB. 5,100,000,000.0. Up 93.8% year over year. Mainly benefiting from the rapid growth is number of the rental unit under management. End of Q1, the number of rental units on the management exceeded 500,000 compared with over 250,000 in the same period of 2024.

Contribution margin for the home rental services was 6.7% up 1.2 percentage point year over year.

And 2.1 percentage points quarter over quarter largely due to the improved gross profit of our paraffiliate business. As we continue to refine the carefully run business model, based on the sense of the business contract. The revenue from some newly managed rental units were recorded as net revenues derived from the service fee. In this quarter. In Q1, our revenue from the merchant and other services decreased by 50% year over year. And the 20.3% quarter over quarter to RMB $350,000,000 Next, let's move on to our other cost expenses in Q1. Our store cost, which are 717,000,000 remaining relatively stable year over year. And dropping by 8.8% quarter over quarter. The sequential decrease was mainly from the lower store rental cost, Other costs were RMB $547,000,000 up to 44.4% year over year. Primarily due to the increased tax and the surcharge and the financial service reserve [indiscernible] Sequentially, other cost declined by 26.7%. Largely driven by the decreases in the tax and the surprise. Financial service and reserves. And the credit losses and the share based compensation. Gross profit rose by 17% year over year. To RMB4.82 billion. Gross margin was 20.7% down 4.5 percentage point year over year.

The primary reason for the decline was decrease in contribution margin from the same home transaction services. Gross margin fueled by 2.4 percentage [indiscernible] sequentially in Q1. Mainly due to the structural region as the revenue contribution of new home concession service declined. In Q1, our GAAP operating expenses totaled RMB4.2 billion. Up 2.9% year over year and down 31.3% sequentially. [indiscernible] G and A expenses were RMB 1,900,000,000.0. Decreasing by 7.2% year over year. Mainly due to the reduced share based compensation expenses G and A expenses dropped by 36.7% quarter over quarter, and primarily attributable to the lower personnel expenses [indiscernible] Sales and marketing expenses increased by 9.2% year over year. To RMB 1,800,000,000.0 resulting from the increased expenses for the home renovation and furniture business Total of quarter, sales and marketing expenses, fell by 24.4% mainly due to a decline in marketing expenses for home construction services and the reduced personnel expenses. Our R and D expenses were RMB $584,000,000 up 24.9% year over year. Driven by higher personnel expenses and technical service fee. Sequentially, R and D expenses dropped by 21%. Largely as a result of reduced personnel expenses. In terms of the profitability, GAAP income from operation totaled RMB $591,000,000 in Q1.

A remarkable increase compared with the same period of last year. And decreasing by 41.6% sequentially. GAAP operating margin was 2.5% increasing by 2.5 percentage points from Q1 twenty twenty four. And falling by 0.7 percentage point quarter over quarter. Non GAAP income from operations totaled RMB1.15 billion. Growing by 19.6% from the same period of last year. And dropping by 34.6% sequentially. Non GAAP operating margin reached 4.9%, down 0.9 percentage points from Q1 twenty twenty four. And 0.7 percentage points from the previous quarter. Mainly attributable to the gross margin decrease both year over year and quarter over quarter. GAAP net income totaled RMB $855,000,000 in Q1. Rising by 97.9% year over year.

And 48.2% quarter over quarter. Non GAAP net income was RMB 1,390,000,000.00. Remaining stable year over year. And increasing 3.7% quarter over quarter. Moving to our cash flow and balance sheet. We realize the net operating cash outflow of RMB 4,000,000,000 in Q1. New Home DSO reached the sixty three days in Q1. Remaining at healthy level. On top of approximately US dollar $159,000,000 allocated to share repurchase during Q1. Our total cash liquidity remained at the high level of RMB. $774,300,000,000.0. [indiscernible] With our robust cash reserves, we continue to reward our shareholder who have grown with us through active share buyback. Enhancing capital operation efficiency, and sharing the benefit of our developments with investors. In Q1, we repurchased around US139 million worth of shares which accounted for around 0.6% of the company's total share outstanding at the end of twenty twenty four. Have consistently delivered our promise to reward shareholders Since the launch of our share repurchase program, in September 2022. We have repurchased roughly US1.76 billion in share at the end of Q1 twenty twenty five. Accounting for around 9.2% of our total share outstanding before the program began. This year, our business will focus on efficiency improvements The financial strategy we will ensure that our investment [indiscernible] to improve personnel and store productivity.

We will respect every penny, [indiscernible] While maintaining the discipline constant expense control. We'll continue to support the long term business developments by fully backing [indiscernible] And actively exploring AI technology. At the same time, we possess natural resources and the intention to consistently offer the civil and sustainable returns to our shareholders. This concludes my prepared remarks for today. Operator, are ready to take questions.

Thank you. If you wish to cancel your request, please press 2. If you're on a speaker phone, 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, And if you have additional questions, you can reenter the queue. If you're going to ask a question in Chinese, please follow with an English translation. Your first question comes from Timothy Zhao from Goldman Sachs. Please go ahead.

You, Michael, for taking my questions. I think my question is regarding the outlook for the property market going forward. I think we note rebound of the private market transactions after Chinese New Year. Just wondering from second quarter and onwards, what is your outlook for the property market? It's really considering the latest macro dynamics as well as the impact from The U. S. Tariff. Thank you.

Thank you, Tim For Q1 market performance, with the central government continues effort to the real estate market So it's in home market, so a relatively strong recovery of the Chinese New Year. And the new home market also performed stable. Let me give some details. The existing home market rebound after Chinese New Year as expected. According to paper research institute, nationwide is in home DTV, for by 16% year over year. In Q1. Sustaining the momentum field by the September 26 policy stimulus. This growth was mainly due to the cumulative impact of the early stimulus policies This policies substantially lower the size code and the cost of the home purchase. Motivating more people to buy rising transaction volume also helped to balance supply demand in the short narrowing the decline in the home prices year over year. [indiscernible] buyers back to market Lithium home prices have stayed most stable dipping by 0.5% month over month in March. First tier cities, like Beijing and Shanghai, That's what as well as second tier cities with a strong net publishing flows. And the steady increase in the hosting demand in recent years. Such as Hangzhou and Chengdu. Let's see home prices have picked up slightly month over month.

For new home market in Q1, which is also very stable according to NBS data q '1 new home sales were all overall flat year over year.

Down 0.4% pTB of 1,200 developers dropped by 7% year over year in Q1. Notably, the sales by flow area decreased by over 15% year over year. Since Q2 of the Trans New Year, the market follow these typical seasonal patterns If in home transaction volume peaked into early March, then gradually declined through April. The month over month decreased of the income prices [indiscernible] with 1.3% drop in April. As transistor volume reduced From a supply demand standpoint, the total number of the same home listing on Baker Road in q one, up four in q four of last year. This aligns with seasonal trend of lowering three as year end. And higher inventory at the start of the year. It is also a natural result of the single market dysfunction and the lifting of the sales restrictions. Which have released the more housing supply. The fastener supply of the nearly new is the thing home into the market has also improved overall listing supply quality and create a better conditions for buyers looking to the home upgrades. [indiscernible] increase in the market demand outpaced the increase in inventory. In April, April ratio of the home viewing to inventory was at 1.8.

Which is at the higher end of the historical range of the point six to 1.9. This address a stronger buyer interest and the plenty of demand. With the market able to absorb new inventory. However, the conversion from the home viewing to transaction has slowed. Meaning [indiscernible] this mainly due to the shortened uncertainties affecting buyer [indiscernible] including external factors such as the geopolitical tension, just highlight some softening the housing price expectations. Made the buyers more hesitate to enter the market For future market outlook, we believe this market outlook will depend on two main factors. Impact of the international trade frictions on housing transactions. And the strength and the timing of domestic comfort measures. On a neutral scenario, we expect a typical seasonal slowdown in Q2, on a sequential quarter basis, [indiscernible] is is bad to see a slight increase in the single transaction volume. Also at a slower pace in Q1. This supported by the higher transaction volume in Q1. The growing supply of the high quality nearly new existing home [indiscernible] in customer home viewing. As the market experienced a quarter on quarter decline in q two, and if at no trade pressure it intensifies in Q3, Indicators such as the housing price, [indiscernible] development investment may weaken.

This could create rooms for further supportive policy measures in the second half of the year. Which would help improve both supply and demand in property market and support stable market developments We're also closely monitoring the impact of change in global trade. On those market. In terms of home listings, overall number of the new listing on bigger platform remains stable in April. With no signs of the homeowners rushing to sell. The number of the home viewing for both existing and new home still showed a notable year over year increase in April. When categorizing the cities, so that we covered by high and low trade dependency, We observed that since the tariffs down off in early April, cities with a high trade dependency [indiscernible] have shown the weaker year over year. And the month over month home viewing performance compared to cities with low trade dependency. [indiscernible] have caused some short term disruption in better expectation in certain cities. There has not been a significant trend of the divergence overall. And the homeowner sentiment remains stable.

Moving forward, we will continue to monitor potential impact of the trade frictions on housing market So the leading indicators as home viewing, customer traffic, [indiscernible] We observed a notable de escalation recent US China trade tensions. Where this should help stabilize the business and the consumer expectation in near term.

In our view, we believe that the international trade frictions represent a long term dynamic process with uncertainties and the potential for improvements. During the upcoming ninety days negotiation window, we will closely monitor the developments, track the resulting impact and assess the potential implication for both real estate market and our company on ongoing basis. In the medium to long term, we maintain our cautiously optimistic outlook trusting both China and The US will continue to move together each other based on the positive progress made so far. Meanwhile, to continue the implementation of domestic supportive policies is decided to further boost customer confidence Together, this is expected to mitigate the impact of trade risk on the property market. Helping to consolidate the initial stabilization of the single home market [indiscernible] ease pressure on the new home market. Thank you.

Your next question comes from Xiaodong Zhang from CICC. Please go ahead. So thanks management for taking my questions. And my question is regarding the housing transaction services business. So could management elaborate on the expansion plan for this year in terms of housing agents and the agency stores? And on top of that, how will you continuously improve the efficiency of those existing and new newly connected agents and stores on the platform.

Thank you. Thank you, Sophie. This year, we will continue to promote healthy growth our agency network to support the sustained its function of our housing construction services. At the same time, we will place greater emphasis on the cost effectiveness of the storage expansion.

Our aim is to enhance efficiency and the income of platform stores and agents. Thereby increasing the stability of agent careers. Providing better services to customers, and achieving more sustainable long term growth. For our platform.

In terms of the agent and store network is function, by end of this Q1, the number of active stores on our platform increased by nearly 30% year over year.

As the number of active agent grow by 23% year over year.

The growth was mainly driven by the non data segments. A 33% year over year increase in active non data store of 24% year over year increase. In active nonmeta agents in our platform.

In Q1, several major brands during our platform, that includes our [indiscernible] And the Kunzhu brokerage company in Kunshan and Suzhou This shows the core value of our platform in by side market. Which is our stronger existing home business operation agent connection network, and the digital empowerment [indiscernible] In Q1, our efficiency efforts paid off in the stable market environment. The average number of the transaction per agent growth notably in Q1. This helped offset the decline in average housing unit prices As a result, this in home GTV per agent grew by over 9% year over year.

In Q1. The average number of agent also rose by 18% year over year. Together, this is factored led to a 28% year over year increase in existing home PTV on our platform.

Clearly outperforming the 16% increase in national watch TV [indiscernible] Our platform's efficient for efficiency focused mechanism also start to show results.

The share of the high performing stores increased from 16.7% at the end of twenty twenty four to 18.4% in Q1.

On average, the store were about 2.5 times [indiscernible] [indiscernible] productive than that of those stores on the platform. Their respective cities. To improve the efficiency, we refined our internal measurements We use the digital tools such as online store owner workshop, and AR property testing assistant along with offline property listing sessions to facilitate the separation of home listing [indiscernible] We also improve platform operation, so the building mechanisms like a point based incentive program, and regional governance council This encourages the owners to keep growing business and work more closely with each other. Our store retention rate remain healthy for both old and new stores.

While it's in home attrition rate dropped to 2.9% in Q1. Down 6% sequentially and 38% year over year. And a six month retention rate for newly connected stores in first half of twenty twenty four was 94%. Showing the long term value of our platform support For full year, we recently foresee just the number of Linzhou agents and store will remain largely stable. Meanwhile, we expect a modest increase [indiscernible] the public expansion in certain key regions.

On top of the stable agent and store networking, improving efficiency, will be our core goal this year. And beyond. This year, we will provide more targeted to store owners to help them improve regional competitiveness At the same time, on our points based incentive system, we aim to develop more high performance stores aiming to upgrade the overall structure of our store network.

In the long run, the last store model will be a key strategy for enhancing productivity. In the future, our platform will host more high performing large stores each with over 10 agents These stores will attract more top talents This large store boost high efficiency and a strong staff retention. Allowing the owners to achieve better in car and stay in business longer.

So store owners can better support agents ensure their income stability and enabling the owners to provide superior service to customer.

The platforms varies the residential service, will also offer agent diversified opportunities for additional income Additionally, we firmly believe that breakthroughs in AI will present opportunities for transformative improvements in industrial productivity We have already developed a variety of AI applications to support our service and providers And we will continue to accelerate development to redefine the capabilities of the quality service providers and to drive their efficiency gains.

This year, in a volatile market, we aim to increase the average number of transaction per connect agent maintain stable per capita emissions.

Over the next two to three years, we plan to increase the proportion of large and high quality stores This store have a more stable high performing agents with high efficiency with stop productivity being two to three times of the current average.

We anticipate [indiscernible] this will lead to approximately a 20% improvement in efficiency of those connected agent over platform. Thank you.

Thank you. Your next question comes from Jisi Dong from Nomura. Please go ahead.

Bakers Home renovation and furnishing business achieved 20% plus year on year growth in the first quarter with 82 percentage points improvement in contribution margin. Could management share more specifics of the segments operation as well as the outlook on the margin in the future? In addition, management has shared a lot of the ideas of Fake using AI to drive its business and improve its its service quality. Looking into the next few quarters, [indiscernible] update us more on bigger strategy and investment plan for AI from both the 2B and 2C perspectives? Thank you.

Thank you, Chiyo. Our home renovation and furniture business demonstrate excellent performance in this q one. In terms of scale, [indiscernible] revenue amounted to RMB 2,900,000,000.0 up 22.3% year over year. Cities such as Beijing, Guangzhou and Zhengzhou performed especially well. And each achieved over 50% year over year growth in revenue. Regarding profitability, the contribution margin for the home renovation and furniture business reached 32.6%. In Q1. An increase of two percentage point compared to the same period last year. Reaching a quicker high and reflecting our credibility, of the refined operation and management.

We believe that the AI has extensive application scenarios in the home renovation and furniture. We're also continuously deepening the application of AI. Such as the contract conversion, construction process, and internal management Let me elaborate for details.

First, the in the early stage of the contract conversion, previously, designers conduct the initial communication with customers through the two dimensional black and white flow plans.

The only professional drawing reduced the customer perception and the fact efficiency of the counter conversion. Currently, empowered by AI, when customer visit our offline store for the first time, designers can rapidly formulate an IR proposal based on the customer's preference for decoration style, and home layouts.

This AI proposal in contrast to various type of the three-dimensional color rounded design drawing. [indiscernible] space analysis storage, the smart device layout plan.

This significantly enhanced the experience of first time stoppiators. [indiscernible] boost the contract conversion rate [indiscernible] the time period from first time in store to selling a preliminary contract or the shortened from previously ten days. To within six days. In March. Definitely in the construction process, have developed an intelligent constructions system, real time online inspections, are realized by installing by installing cameras on the spot. AI can also realize automatic [indiscernible] In core construction operation. Such as the real name on the drop specification. Inspection of the site cleaning needs, and the noise recognition In addition, by equipping staff with a smart inspection devices We assist in strategizing the home renovation acceptance process. Through AI recording technology. We can recontrast the acceptance process. Enabling principal and quantifiable evaluation of the construction quality Taking Beijing as an example, the acceptance of [indiscernible] has increased by more than two percentage points. [indiscernible] With before.

Meanwhile, in terms of the internal management, have a multiple AI employees [indiscernible] Enhanced the effectiveness of the team management by automatically summarizing and commenting on daily reports. [indiscernible] This option has collapsed and commented on most 20,000 daily reports saving the team more on [indiscernible] [indiscernible] AI employee [indiscernible] such as information distribution, and automatic order assignment through the information collection and AI analysis capabilities. Xiaotation had to distribute information over 5,000 times and some timely reminder over 10,000 times within half a year. In the future, our AI is borrowing for home renovation business will be concentrate on the following aspects. More accurate insight and an an analyst of the customer demands. And the more efficient the design powered by AI. We aim to achieve the better personnel of the solution from demand to design. [indiscernible] it has a professionalism and the efficiency of our services. Thank you.

Thank you. Your next question comes from John Lam from UBS. Please go ahead.

So let me translate my questions.

So my question is regarding on Beihaojia. So we see that Beihaojia has already participated the numerous new home projects. So just wanted to see how payout. Yeah. Contribute to the new home development And also regarding on the C2M business, how the business is being reflected? Thank you. [indiscernible] Beihua just business model provides the Sichuan new home product solution partners like developers. [indiscernible] and massive database to deeply understand our target customers' needs and and the preference.

Our tools help predict the type of home customers wanted and the price they expect Developers use this insight to guide the project positioning and the product design. Making their new home offering more cliche to custom demands.

So far, Behaojia has participate in nine purchase across different models. To our self operate project, [indiscernible] Five projects involve equity partners which primarily focus on the products positioned using H1. And the RISE-two project, are purely light access model.

Where we do not engage in investment, but instead provide the product positioning solution to partners and the charger service fee. Regarding the funding use, across the seven investment involved projects, So total investment have been reached about RMB 2,300,000,000.0. Band of this Q1, we have recovered nearly RMB 500,000,000 from Chuxin. Net investment from our own funds stands over RMB 1,800,000,000.0. Amongst this, our first IP partnership New Home Projects, which we collaborate with the Power China Real Estate, [indiscernible] [indiscernible] Achieve a complete sellout of all initial units on the first day of launch.

The project delivered the IRR nearly 50%. At the shareholder level. Demonstrating how our C2M service capacity provide partners [indiscernible] [indiscernible] In building C2M capabilities, we have a two key advantage.

First, we have a deep understanding of the needs of potential consumers. This came from our unique database. Build our massive online and offline traffic of our platform. It also draws from the rich company interactions in our brokerage, home renovation and rental services.

Together, this forms the foundation of our core data infrastructure.

With this data, we can analyze the key indicators such as the source, quantity, purchasing power, and specific product needs of the of potential customers in a more timely intuitive [indiscernible] competitive manner. This level of detailed customer insight helps developers make a more accurate decision and other resources more effectively in areas such as land operation assessment [indiscernible] [indiscernible] Ultimately, leading to the greater operational certainty.

Our second advantage is a strong market.

Knowledge and price ability.

We use actual transaction price of this in home along with the real time and the upstream data like a homeowners leasing price. And the price adjustments. [indiscernible] model to build a valuation model for different geographic histories.

These models can more accurately estimate the project and sector value and update quickly based on the change in the market. This approach aligns more closely the price formation logic, in a buyer's market.

There's in home price [indiscernible] results from the decentralized and the free negotiation between buyer and sellers.

In a market dominated by existing home transaction, In home, prices often give a more accurate multilayered view of the market the new home market data.

Just help us better market trend.

Based on these two advantage, we have refined our core C2M2s. We will continue to improve their accuracy and professionalism over time. We also support our C2M model with more innovative ways to reach customers. [indiscernible] with customers, we're also building an online community for them. Building a better home together.

With our application. This enables users to directly participate in evaluation and co creation of new home product designs. For example, [indiscernible] users can visit building a better home together page They can view and compare to home design plan. Engaging in the design process of their future dream homes. [indiscernible] much earlier than traditional methods.

It also makes their preference reflect in the new home products. We have already provide our first C2M product solution service [indiscernible] Through which we've run a service fee.

Showing stronger marketing recognition from our business approach.

In Xi'an project, Beihao Zhang provide the full set of product solutions This included the customer service [indiscernible] [indiscernible] [indiscernible] [indiscernible] [indiscernible] price forecasting and the market services.

We also give targeted project planning advice such as optimizing the elevation to household ratio. Enhancing the landscape, [indiscernible] Trying to address the key developer pinpoints [indiscernible] product premium and product competitiveness. [indiscernible] but not the last, as a newcomer to the industry, KEITHOXIA remains humble and respectful to the market. Although the business has been established for less than two years, we have already seen the promising results in several projects [indiscernible] and strengthens our confidence in continuous optimization and moving forward. Thank you.

You. We are now approaching the end of the conference call. I will now turn the call over to your host today, Ms. Seating Lee, for closing remarks.

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