KE : Transcript

KE Holdings Inc.

Second Quarter 2023

Earnings Conference Call Script

Thursday,31 August 2023

KE Holdings Inc. Second Quarter 2023 Earnings Conference Call

Thursday, 31 August 2023

KE Holdings Inc.

Second Quarter 2023 Earnings Conference Call Script

Operator: Hello ladies and gentlemen. Thank you for standing by for KE Holdings Inc.'s second quarter 2023 earnings conference call. 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. Siting Li, IR Director of the Company. Please go ahead, Siting.

Li, Siting:

Good evening and good morning, everyone! Welcome to KE Holdings Inc. or Beike's second quarter 2023 earnings conference call. The Company's financial and operating results were published in the press release earlier today and are posted on the Company's IR website: investors.ke.com.

On today's call, we have Mr. Stanley Peng, our co-founder, chairman and chief executive officer, and Mr. Tao Xu, our executive director and chief financial officer. Mr. Peng will provide an overview of our strategies and business developments, and Mr. Xu will provide additional details on the company's financial results.

Before we continue, I refer you to our safe harbor statement in our earnings press release, which applies to this call as we will make forward-looking statements.

Please also note that Beike'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 this conference call are in RMB.

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

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KE Holdings Inc. Second Quarter 2023 Earnings Conference Call

Thursday, 31 August 2023

Peng, Stanley:

Thank you, Siting. Hello everyone. Thank you for joining Beike's second quarter 2023 Earnings Conference Call.

In the first half of this year, our performance improved significantly compared with the same period last year, with 43% year-on-year growth of our total GTV and 51% year-on- year growth of our total revenue. Although the housing market experienced a surge and a subsequent adjustment on a quarterly basis, compared to the same period last year, China's real estate and residential markets as a whole still demonstrated recovery. In addition, during the market correction we successfully retained service providers, effectively reduced costs and raised our efficiencies, all while rapidly expanding our emerging businesses. This combination of initiatives has enabled us to capitalize more effectively on the market's rebound and outperform the market.

In the first half of this year, for our primary business of home transaction services, we continued to expand our ACN, optimize its ecosystem and refine platform operations while exploring breakthroughs in Lianjia. These all propelled our organic growth.

The capabilities of our service providers have also expanded. Our home renovation and furnishing services have gained rapid growth momentum. We reconstructed the industry's competitive mechanisms to help the good get better and established capabilities in customer acquisition, conversion, project delivery, data, products, supply chain and others. This has led to breakthroughs in our service quality and scale, as well as the economic performance of our home renovation and furnishing services business, with total contract sales in the first half of the year reaching 6 billion RMB and total revenue reaching 4 billion RMB. Going forward, we expect to replicate our success in leading cities to more areas and gradually establish a virtuous cycle across the board. Our rental property management services business has also achieved meaningful development in the second quarter. The scale of our carefree rent improved significantly to reach 120,000 units under management, and the occupancy rate reached 94.5%.

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KE Holdings Inc. Second Quarter 2023 Earnings Conference Call

Thursday, 31 August 2023

Today's housing industry has reached an inflection point in the course of its development. The traditional golden age of real estate was accompanied by 30 years of reform and opening up, along with rapid urbanization and a substantial demographic dividend. As the per capita living area increased, houses have been in short supply, leading to a one-way increase in property prices. Buying a house became the core goal of many people in China. In the process, real estate has gradually strayed away from its initial function to provide residential homes. Instead, it has taken on the dual roles of an investment asset and a speculative tool.

However, all that deviate from their intended course will return to their original track, and today, the industry is reverting to its core value proposition. The essential function of real estate is once again "serving people" with "quality living." The true golden age of focusing on "people" and "living" has just begun. Amid this shift, customers' rising demand for better living is far from being fulfilled. In other words, there is a central challenge in today's housing market and the foreseeable future, born of the disparity between customer demand for more joyful living, and the inadequate supply of quality services and products. This contradiction motivates us to climb our next mountain and introduces substantial growth opportunities in our future.

Our solution to resolve the supply and demand imbalances includes two essential components: providing joyful living for customers, in Chinese we call it 安 居 ， and

facilitating fulfilling careers for service providers, which we call 乐业 in Chinese. This is

also a continuation of our mission of "admirable service, joyful living."

Specifically, we have upgraded our corporate strategy to "One Body, Three Wings," accompanied by organizational realignments. This evolution represents the strategic expansion and deepening of our "One Body, Two Wings" model. With a focus on our customers and frontline value creation, we have established four business lines - Housing Transaction Services, Home Renovation and Furnishing Services, Home Rental Services, and our newest addition, Beihaojia 贝好家, where we are engaging in new home

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KE Holdings Inc. Second Quarter 2023 Earnings Conference Call

Thursday, 31 August 2023

supply-side upgrades. Each of these tailored businesses caters to customers' residential aspirations and service providers' diverse career aspirations.

In the process of providing joyful living 安居 for customers, superior goods and services

will see great benefits, whether they relate to the property itself, or the provision of a wide range of residential necessities, such as renting, purchasing, trusteeship, home renovation and furnishings, and so on. Next, I will go into more detail about how we define good products and services for joyful living, within the context of our "One Body, Three Wings" strategy.

Regarding our one-body home transaction services business, its value will be more obvious after the market normalizes, enabling more sustainable and healthier development.

When identifying the "right" property becomes more challenging and emotional for consumers, service providers must establish trust, emphasizing the importance of building emotional connections around these relationships. Fostering this type of customer relationship will allow service providers the opportunity to provide more value- added services and extended value for communities around "joyful living." It will also enable consumers to redefine how service providers are viewed and unleash the huge potential of our ACN.

We also have significant room to further enhance customers' experience with our home transaction services. On one side, the bargaining power of homebuyers continues to rise. On the other side, homeowners are expressing intense demand for quick property sales and exchange. This will inevitably reshape the service dynamics of the brokerage industry, and direct the way to better consumer experiences in the next phase of industry's evolution. Meanwhile, we see room for further value creation in deeper integration with communities and in the evolution of consumers' aesthetics. All these opportunities are allowing our core business to become a key force in "joyful living."

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