Transcript: KE Holdings Q1 2026 Earnings Conference Call

On Tuesday, KE Holdings (NYSE:BEKE) discussed first-quarter financial results during its earnings call. The full transcript is provided below. This transcript is brought to you by Benzinga APIs. For real-time access to our entire catalog, please visit https://www.benzinga.com/apis/ for a consultation. Access the full call at https://edge.media-server.com/mmc/p/ryatk9km/ Summary KE Holdings reported a significant increase in non-GAAP operating profit to 1.67 billion RMB for Q1 2026, marking a 45.1% year-over-year increase and 416.2% quarter-over-quarter rise. The company is focusing on strategic initiatives to balance scale and efficiency, including technology-driven empowerment and refining debt operations. Despite a year-over-year decline in revenue, operational efficiency improved, with non-GAAP net profit margin reaching a record high over the past seven quarters. The company spent approximately $195 million on share repurchases, reflecting confidence in its sustainable development and commitment to shareholder returns. KE Holdings experienced a decline in GDV and revenue due to a high base effect from the previous year but achieved improvements in contribution margins across key business lines. The company emphasized strategic restructuring and AI-driven improvements to enhance decision-making capabilities in its service offerings. Management highlighted significant progress in their home renovation and leasing businesses, focusing on improving underlying capabilities and profitability. The company anticipates continued year-over-year margin improvements and emphasized the importance of long-term strategic planning over short-term gains. Full Transcript Xu Tao (Chief Financial Officer) Translation is for convenience purposes only. In the case of any discrepancy, management statement in their original language will prevail. With that, I will now turn the call over to our CFO, Mr. Xu Tao. Please go ahead. Thank you. Hello everyone. Thank you for joining our Q1 2026 earnings call. First, let me summarize the financial highlights of the quarter. In Q1, our non-GAAP operating profit reached 1.67 billion RMB up 45.1% year over year and 416.2% quarter over quarter. Non GA operating margin stood at 8.8% of reaching the highest level in the past seven quarters. The optimization of our cost and expense structure in 2025 has been reflected in our operating profit in Q1 this year and we expect it to provide a long term positive support to our operating performance going forward. Guided about a strategic focus on balancing scale and efficiency, we have rolled out initiatives including Refining Debt Operation and Technology driven empowerment. In Q1, the contribution margin of all of our core business lines improved year on year, reflecting the translation of our cost structure optimization efforts in 2025 into our income statement. We believe this is structural improvement rather than a cyclical one. Even with a year on year decline in the revenue in Q1, our contribution margin continued to expand, validating the release of property. Meanwhile, our operational efficiency continued to improve. The absolute amount of R and D selling and administrative expenses all decreased both year on year and quarter of quarter, marking the effectiveness of our refined management and cost control measures. Driven by the simultaneous improvement in both gross margin and operating expense ratios on a year over year and quarter over quarter basis, we saw further release of operating leverage with the non-GAAP net profit margin hitting a record high for the past seven quarters. In addition, we continue to deliver on our commitments to shareholders. During the quarter we spent around US$195 million on share repurchases and increasing of about 40% year on year. This move not only represents ongoing returns to shareholders, but also underscores our firm confidence in the company's sustainable and steady development over the medium to long term. Turning to our key financial metrics for Q1 due to the high base from the real estate market in the same period last year, the group's GDV and revenue decline year over year GTV reached 711.2 billion RMB down 15.6 rent year over year. The revenue was 18.9 billion down 19% year over year. That said, we achieved a meaningful improvement in operating efficiency. The group's Gross margin reached 24.1% up 3.5 percentage points Year over year driven by gross margin expansion and improved operating efficiency. Our net margin also increased year over year. In the first quarter GAAP net income was 1.26 billion RMB up 46.7% year over year while the non-GAAP net income was 1.61 billion RMB up 15.7% year over year. Now let me provide you some more details for our existing home transaction services Business scale declined year over year due to the high base in the same period last year while profitability continued to improve in Q1 GTV reached 534.4 billion RMB down 7.9% year over year and up 10.9% quarter over quarter. Revenue from existing home transaction services reached 6.1 billion RMB down 7.7% year over year and up 12.7% quarter over quarter. The GDV declined less than revenue year over year mainly because of the higher proportion of existing home transaction GTV facilitated by connected agents where revenue is recognized on a net basis at platform services fee. On a quarter over quarter basis. Revenue growth also from GDV mainly due to an improvement in land job commission ratess. In particular, platform Service revenue increased by 3.8 percentage over year and 12.5% quarter over quarter, outperforming the overall GDV and demonstrating resilience of our platform model. Despite the year over year decline in revenue scale, contribution margin for the existing home transaction services reached 41.3% at the highest level in the past seven quarters. It was up 3.2 percentage point year over year, mainly attributable to the decline in fixed labor costs driven by the optimization of lean agent and store scale as well as improved organizational efficiency. The contribution margin also increased by 0.9% points quarter over quarter mainly driven by the operating leverage from the revenue recovery in Q1 with fixed labor costs remain relatively stable for new home businesses. Business scale declined year over year due to high market base in the same period last year while profitability improved year over year. Q1 GDV reached 1 45.9 billion RMB downs 37.2% year over year and 29.5% quarter on quarter. New home business revenue was 5.1 billion, down 37% every year and 30% quarter over quarter. The year on year and quarter over quarter. GDV performance was largely consistent with revenue reflecting our stable monetization capability for the business segment even amid a significant fluctuation in scale Q1 contribution margin of a new home business was 25.7% up 2.3 percentage points year over year benefiting from cost structure optimization brought by refined operations. It fell 2.6 percentage points quarter over quarter mainly due to the high base cost by the one off factors in the previous quarter for home renovation and furnishing services, Q1 revenue reached 2.3 billion RMB down 20.6% year over year and 35.3% over quarter. The year on year and quarter over quarter revenue decline was due to our proactive exit from low quality and efficient customer acquisition channels as well as cities with poor UE models. The contribution margin of home renovation and furnishing business was 36.2% in Q1 up 3.6 percentage points year on year, mainly driven by material cost savings from our continued efforts in centralized purchasing and tenor based local procurement as well as labor cost savings from improved order assignment efficiency. On a quarter over quarter basis, contribution margin increased by 7.4 percentage points mainly due to material cost savings and low base effect from certain one off factors in previous quarter. For our home rental services, revenue in Q1 reached 5, representing a slight year over year decline of 1.5% and a quarter over quarter decline of 7.4%. The decline was mainly due to the continuing iteration of Tier 3 ran toward our lighter and lower risk product model with a higher proportion of the home units recognized on a net revenue basis which had a temporary impact on reported revenue scale. However, this doesn't change the growth strategy. A Trajectory of our managed rental units and service capabilities. As of the end of Q1, the number of rental units under our management exceeded 740,000 units, representing an increase of around 47% year over year. Meanwhile, contributory margin for our home rental services business reached 14.8% in Q1, up 8.1 percentage point year over year and 4 percentage points quarter over quarter, marking the sixth consecutive quarter of sequential improvement. This was mainly attributable to two factors. First, proportion of products recognized on the net revenue basis which have higher contribution margins continue to increase. Second, labor cost per unit declined driven by productivity improvements enabled by AI and a more specialized vision of labor for emerging and other businesses. Net revenue in Q1 was $321 million down 8.1% year over year and 30% quarter over quarter. Now let me walk you through the specific key financial metrics for the quarter Q1 store costs were $571 million down 20.3% year over year and 19.6% quarter quarter, mainly benefiting from the rental cost optimization and store network adjustments for Lianjia Q1 gross profit decreased by 5.4% year over year to 4.6 billion RMB and decreased by 4.1% quarter over quarter. Gross margin was 24.1% up 3.5 percentage points year over year and 2.7 percentage points quarter over quarter. Gross margin expanded year over year driven by three factors. First, improvement in rental services contribution margin. Second, favorable mix toward the existing home transactions which carry a higher contribution margin. Third, improvement in existing home contribution margin sequentially. The expansion was mainly due to higher mix of existing home revenue and improvement in existing home contribution margin. Q1 Total GAAP operating expenses were 3.3 billion RMB, reaching the lowest level in nearly three years down 22.3% of year over year. This was mainly attributable to the operating leverage released from improved organizational efficiency, strength in the financial discipline and optimized marketing spending efficiency. Operating expenses decreased by 33% quarter over quarter partly due to the high base from one time expenses related to the organization efficiency improvement and resource allocation in the prior quarter. Specifically, general and Administrative expenses were 1.7 billion down 8.6% year over year mainly due to a decrease in share based compensation expenses on a quarter over quarter basis. GNA expenses decreased by 24% mainly due to the high base of one time expenses in the prior quarter and low expenses driven by the improvement organizational efficiency. Sales and marketing expenses were $1.1 billion down 39% over year mainly driven by the improvement organizational efficiency and more refined management of marketing and promotion expenses on a quarter over quarter basis. Sales and marketing expenses decreased by 43.9% mainly due to the seasonal factors and high base of one time expenses in the prior quarter. R and D expenses were 493 million down 15.6% mainly due to improved organizational efficiency and lower technical services fees on a quarter on quarter basis. R and D expenses decreased by 31.1% primarily due to the high base one time expenses in the prior quarter. Moving to our bottom line performance, our GAAP operating profit was 1.27 billion RMB in Q1 compared with a profit of 591 million RMB in Q1 2025 and a loss of 147 million RMB in Q4 2025. The operating margin was 6.7%, a year over year increase of 4.2 percentage points and a sequential uptick of 7.4 percentage points. Q1 non-GAAP income from operations totaled 1.86 billion increasing 45.1% year over year and 416% quarter over quarter. The non-GAAP operating margin was 8.8% a year over year increase of 3.9 percentage points mainly due to the increase in gross margin and a sequential increase of 7.4 percentage point mainly due to the decrease in the operating expense ratio and the increase in the gross margin. Finally, GAAP net income total at 1.26 billion in Q1 up 46 billion 1425% quarter to quarter. Non GAAP net income was $1.61 billion up 15.7% year over year and 211.5% quarter. In terms of cash flow and balance sheet, we recorded a net operating cash outflow of $1.5 billion in Q1. Our operating cash flow was lower than our profitable performance mainly due to the timing factors related to the payment of accrued employee composition from the previous year. Excluding the impact of this timing factor and our operating cash flow performance was broadly in line with our profitability. In Q1. The turnover date of accounts receivables for our new home business was 64 days, largely stable year over year and remaining at a healthy level. In addition, even after spending approximately US$195 million on share repurchases during this quarter, our broader cash balances excluding customer deposits remain at a promising 65.6 billion RMB. Supported by our solid cash reserves. We place great importance on shareholder returns. In the first quarter we spent over around US$200 million on share repurchases, with the number of shares repurchased representing around 1% of our total shares outstanding as of the end of 2025. Since the launch of our share repurchase program in September 2022 through the end of the first quarter of 2026, we have cumulatively spent around US$2.7 billion on share repurchases, with a number of shares repurchased representing around 13.5% of the company's total shares outstanding before the program began. In summary, in the first quarter we delivered on our operating commitments and achieved a meaningful announcement in our operating capabilities through proactive cost structure optimization, technology driven empowerment and more refined management. Looking ahead, we'll continue to uphold the principle of maximizing the company's overall value as our core priority. We will allocate resources around our long term strategic decision direction, avoid pursuing local optimums and shorter term gains. At the same time, we'll use data and business fundamentals as basis for decision making, maintain our clear ROI discipline for key investments direct resources to our areas where we can better enhance the customer experiences and service better efficiency. Now I'll hand over the call to our CEO. CEO Thank you Mr. Now I'd like to welcome all of you for joining us At KE Holdings 2026 first quarter earnings call. In the first quarter we saw some encouraging early signs across the property market. The existing home market in particular experienced a noticeable spring rebound after Chinese New Year, with transaction momentum, mutual deal conversion, buyer decisiveness and seller sentiment all improving. In some key cities, price expectations are moderating towards rational levels. Previously pent up, move up and trade off demand is now beginning to clear the market in an orderly manner. That said, divergence across cities in the market segment remains pronounced and we are still in a phase of structural adjustment and confidence rebuilding. We're not reading too much into one quarter's data, nor are we disheartened by the continued volatility inherent in any cycle. More importantly, consumers are placing greater emphasis on authentic living needs, asset quality and long term lifestyle fit. The overall industry is now evolving toward a more stable, healthy and sustainable path. Our company's operational quality is also on the rise despite a high base in the prior year period Q1 GTV and revenue declined year over year, yet adjusted net income climbed 15.7% year on year. Now we have seen three notable improvements. First, efficiency gains in Q1 Lianjia's nationwide per capita transaction volume rose 26% year on year, with per capita commission up 8.5% from January to April. Cumulative per capita commission increased 20% year on year, comfortably outperforming local real estate transaction market. Second, no compromise on scale. Our platform's existing home transactions grew 12% year on year. Non Lianjia existing home transactions rose 16% year on year, markedly outpacing the market in Beijing and Shanghai, where Linjia posted the strongest per capita efficiency gains and market penetration also rebounded from the second half of last year. Third, improved profitability and the group's adjusted operating margin recovered to over 8.8%, up 3.9 percentage points year on year while adjusting operating profit growth by approximately 500 million RMB year on year. These measurable Q1 improvements stem from our relentless pursuit of efficiency driven growth. This is not merely about cutting investment, controlling costs or downsizing to boost profits. It means fundamentally reevaluating which services truly solve consumer pain points in today's market, which providers can deliver sustainable value and how our platform amplifies that value through technology mechanisms and resource allocation. At the end of March this year, we Announced a new round of strategic and organizational restructuring. This transformation rests on one fundamental the housing service industry is undergoing fundamental changes. An industry creates value by solving for what is the scariest. For years, China's housing market. was defined by rapid growth, tight supply and strong expectations of rising prices. Listings were the scarce resource. Value came from controlling listing information and the path clients took to reach them. Consumers wanted to know where are the listings? Where? What does it cost? Can I get one? And can we close fast? So the earlier brokerage industry organized naturally around listings and for key holdings. We are trying to make sure that the industry's core is now within our adjustment and listing used to be wanted matter most and now it is the ability to guide decisions. Value creation is upgrading from organizing supply to delivering decision support and housing advisory services. So what consumers really need today is to make sure that they make the right decision with high ticket risk and sorted information so that they can make well informed decisions. And for buyers, decision support means helping them understand whether, where and what truly fits. And for owners, consumer questions have also changed. Their core anxiety has shifted from can I get one? Am I getting it wrong? What they care about now is should I even buy right now? How do I weigh school districts against commute and living comfort? And these two units each have their strengths and which one should I get? And for buyers, decision support means helping them understand whether to buy or not, where to buy and what truly fits. So for owners, it means helping them understand how to present value, price right, find the right buyer and increase closing certainty. AI will accelerate this shift. It'll rapidly commoditize impure information sorting and shallow matchmaking while further amplifying the value of service providers who can guide decisions. It can also turn to top agent expertise into platform capabilities. For us, our real world scenarios, service network transaction loops and continuous data feedback give us the opportunity to combine with AI and build a deep moat. So the strategic restructuring we launched this year is neither short term cost cutting nor a defensive move. It is about reorganizing production around a new scarce resource. Payee holding is evolving from a platform that organizes transactions into one that supports higher quality housing decisions. Redefining the very paradigm of value creation for this era. Here the key is to be more professional. And professionalism for us is simple. It is decision support. What exactly does it take to be more professional? Three things. First, the key organizational change toward better professionalism is to get managers back to the front line. And we have 500 core managers and in 2,534 directors who are in theory, our most capable, highest leverage people. Yet today, many spend over half of their time in meetings, pricing metrics and cranking out reports. The management system metrics and processes we built once drove our growth and made industry more efficient. But any system that doesn't center around the consumer's real needs risks becoming an end in itself. And that is why a critical part of this transformation is sending managers back to the front lines to re understand consumers, re understand what service provider means and redefine their own professional values. In Beijing, Regional Director Zhang has done a lot what I consider truly returning to the front lines. He manages 16 commercial districts and 12 stores. Every week he reviews listings in person. Every week he joins owner interviews. Every Saturday he holds office at the signing. So every time. He was involved, efficiency improves. There was an owner and an agent deadlocked over small price gap. The deal stuck for ages. So when John stepped in, he stopped talking about a price and started asking what are you selling? Where are you aheading next? What is this money used for? He discovered that owner didn't need a better price, they need a trade up plan. So we helped them rethink their housing options, ultimately driving both the new home purchased and the existing home sale. So he feeds store and competitor data into AI to generate diagnostic reports, shifting from reading metrics to prescribing solutions. So oversight has given way to spotting specific problems and helping fix them. Next is building a knowledge base across districts, store and individual tiers, qualifying property details, customer profiles and listing presentation playbooks. Second, service providers must become more professional. In the past, agents were essentially generalists. They took every client, handled every need and touched every stage of the deal. And the model worked when listings were scarce and deals move fast. But today AI is rapidly flattening the traditional agent's edge in process, scripted talk and policy. Know how. At the same time, customer needs are clearly segmented. School districts, luxury upgrades, new homes, asset dispositioning, leasing, renovation, etc. Each demands a different knowledge base and service approach and trust building process. The true professionalism in the future will be defined by three things AI cannot do. Understanding a client's real pain points and needs. Decision support, Helping them think through the trade offs. This is analytical and proposal capabilities and delivering reliable accountable recommendations. This is accountability for high stakes decisions. So these three capabilities can only grow in real world scenarios. So to make our service providers more professional, first we need to do is to train them. From testing knowledge to hands off drills and case based reviews. The system will also capture frontline best practices and with AI structure them for people to study and benchmark against. Second, judging whether a service provider's professional may shift from a static exam or certificate to how they serve clients over time and what clients say about them. AI can track a service provider, analyzing their service process and client feedback, making their professional capabilities visible, evaluable and able to continuously accumulate and grow. Third, the platform must turn non standard services into products. Much of our best service used to depend on individual know how, but these skills are scattered, inconsistent and hard to replicate. The platform's job is to codify this expertise into product tools and processes so every consumer gets consistently great service and every agent is properly equipped. For sellers, we're pushing decision support further upstream to cover the entire sales cycle before listing. We help owners understand the market, comparable properties like the buyers and fair price ranges so agents can craft a shopper sales plan. After listing, we feedback information that actually matters to that specific property, helping owners make informed calls on pricing, pacing and strategy. And for owners with different needs, we are testing differentiated products through owner segmentation and listing tiering. For example Community open dates concentrate exposure and buyer feedback for owners ready to sell and entering price negotiations, Committed to Sell uses deposits, online bidding and system comparisons to cut down back and forth and help both sides reach agreement faster. A recent commit to sell deal illustrates this very well. An owner in Beijing's Desheng District district had a property worth over 10 million. She was in price but more anxious about locking in a sale before month's end. In the past this meant endless showings in price, ping pong and stalled deals. But Commit to Sell compresses everything into clear window. The owner put down a deposit, the listing got concentrated promotion and buyers debate online in every new the clock was ticking. The winning buyer wasn't even first in line, but with transparent rules and a firm deadline, she bait online on Friday evening and closed at the owner's price. The buyer saw an opportunity, the seller got certainty. No price slashing, just a product mechanism that matched a real seller, a real buyer and an agent who know the property and the market. For buyers, we're also pushing services. Earlier today, clients enter a content intervene decision phase long before they meet an agent. They search everywhere, but credible, neutral, structured guidance is very scarce. So they need professional support as a reference in their decision making. So we're putting our frontline leaders, managers, directors and district aheads who know the market and consumer best on the front lines of content creation and building a tiered content matrix with the platform. We're not trying to turn them into influencers chasing traffic rather this pushes them to truly present their expertise about communities, listing transactions and clients already in their ahead simultaneously before the client reaches the agent. We are adding a more neutral decision service layer through middle office Service Rose. Combined with AI experts in legal, finance, school districts and high end properties, we help the client conduct clarification of needs, purchasing power calculation, risk disclosure, preliminary asset planning. Then we match these clear, better understood needs to the most suitable service provider. Therefore, we will pivot to a more precise matching stage. I want to say that AI is not a single tool, but a new organizational capability. For instance, with our application building platform for frontline employees, staff simply describe their needs using natural language and AI helps generate and deploy the application. As of the end of April, the platform has covered over 7,100 employees with more than 4,400 applications, seeing actual traffic and total visitors surpassing 4.12 million. So this proves that tools originating from the front lines are being utilized by the business and organizational resources will continually flow toward real problems. Furthermore, one city is piloting a new collaboration model. Business experts define the scenarios function, staff design the skills and the scenario. Engineers provide tool and API support. A three person squad can simultaneously advance over 20 specific scenarios. So in the past the business proposed needs and waited for the development. Now whoever best understands this narrow, but it's based in its definition and rapid iteration. In this way, the frontline expertise is no longer just a personal experience. It can be amplified and institutionalized by AI. Beyond property transactions, I would also like to briefly talk about home renovation and leasing. Q1 Contract value and revenue declined year over year, primarily due to our proactive focus on specific cities and channels since last year, coupled with the new home market volatility that also impacts the demand. However, we are more focused on the underlying capabilities and the path to monetization or profitability. In Q1, the contribution margin of home renovation reached 36.2%, up 3.6 percentage points year over year, with the losses narrowing significantly. For the past year, we have done substantial fundamental work in product modularization, digitalization of tools, supply chain, centralized procurement and other types of works, driving the business from being highly non standardized toward becoming more stable, replicable and manageable. For leasing business. Units under management reach 740,000 in Q1, maintaining rapid growth, the share of net method products rose quickly. The profit margin contribution from Carefree rand increased from 6.7% in the same period last year to 14.8%. Behind all these are product structure optimizations, EU management, AI empowering and organizational process restructuring. So the leasing business proves That a seemingly fragmented heavy operational heavy business can also enhance efficiency and gradually form economies of scale through AI and process restructuring. Looking further aahead, we aim to center our efforts on communities to reconstruct long term operational capability. Stores in the future will gradually upgrading to community housing service node and agents will also evolve from single transaction roles into client managers capable of deploying platform capabilities across existing home, new homes, leasing, renovation, design, delivery, etc. And etc. Regarding how investors can track this progress, I believe there are several metrics. First, core business efficiency and operational quality. Second, the PILOTS programs in community operational units and also our actions of putting managers into the front line. Number three, the productization of buyer and seller services. Number four, the adoption of AI across the organization and also its improvement on customer experience and also operational efficiency. Number five, the expansion from single transactions to long term community operations and long term value. Number six, long term investment incentive direction and organizational stability. These are not short term commitments but rather a framework to guide our transformation progress. These decisions cannot be accomplished or goals cannot be accomplished in a single quarter. We are planning this round of transformation across a multi year cycle. Our principles are clear. PILOTS comes first. Without blind expansion, we're going to have prudent operations ensuring core business operation quality and cash flow remains stable and continuous iteration, constantly optimizing service provider division of labor, resource allocation, AI tools, sales, service products, buyer decision, service layers and et cetera. In conclusion, I would like to summarize Bayco's long term value in one sentence. The industry is transitioning from finding listings to making decisions and what Baker must do is to upgrade our platform capability from organizing transactions to supporting higher quality residential decisions. The significance of Q1 results lies not only just margin improvement, but also invalidating that a virtuous cycle can be formed among organizational efficiency, per capita efficiency gains, service provider structure optimization and platform growth. Going forward, we'll continue to invest resources, mechanisms, AI and product capabilities where genuine customer value is created, driving BACO to forge more stable, higher quality and more sustainable long term value. Thank you everyone. We will now open the floor for the QA session. Thank you, Stanley. As a reminder, we only accept questions on the Chinese language line. If you would like to ask questions, please press Start one and wait for your name to be announced. If you would like to cancel your request, please press the Palm key. For the benefit of all participants on today's call, please limit yourself to one question. If you have additional questions, you can re enter the queue. All right, first question comes from Thomas Tron. From Jeffries. Please go aahead Good evening management. Thank you for taking that question. We noticed that the existing home market saw a spring rally in Q1. What are the main, what were the main drivers and how does it compare to previous? And also is this trend sustainable? Thank you Thomas for your question. Compared with the previous rebounds, this round of recovery stands out in three ways. First, it's not just a short term volume bond driven by policy stimulus. It reflects genuine demand being released as price corrections have lowered the price barrier to home ownership. Second, it's not only simple case of trading price for volume, we're seeing prices stabilize at this stage. And third, it's not only buyers coming back to the market. Seller expectations and supply mix are also showing incremental improvement. So this recovery is more resilient than we have seen in the past. Looking at the volume and price performance. First, existing home transactions on our platform grew 12% year over year in Q1 and March set a new all time monthly record up 21% year over year. At the same time, core cities showed clear signs of phased price stabilization. According to KE Research Institute, existing home prices in tier one cities rose by 1.5% month over month in March, marking two consecutive months of sequential growth. In Beijing and Shanghai, prices increased by 3.8% and 3.3% respectively during the Q1. We see three factors driving this shift. First, it's the policy. The government signal to stabilize the housing market. has been clear. Measures such as tax optimization and housing provident fund adjustment have reduced transaction costs. Second, on the price side, after deep correction, the entry barrier for home buyers has come down substantially. In March, the rental yields across the top 50 cities rose 40%. 40 basis points year over year to 28% and spread versus mortgage rates continue to narrow. Housing is gradually regaining its appeal. Third on the demand side is combination of policy support and the lower price brought previously hesitant buyers back to the market, driving the recovery in transaction. More importantly, we're seeing market expectations, supply demand structure improving. On the margin, on the one hand, buyers are making decisions faster, the conversion rate from viewings to transaction has improved. On the other hand, seller expectations are stabilizing and pressure to cut prices have eased. Q1, the share of sellers are willing to offer sharp discount for a quick sale fell by 3 percentage points quarter over quarter and new listings in March were down 14% year over year. Looking at the transaction mix, upgraded demand agreement makes the long term driver in Q1. So seasonal factors like residential registration and school enrollment, combined with the targeted policies favoring lower priced homes lead to seasonal increases in the share of first time homebuyers in Tier one cities that side From a long term perspective, upgrade demand has continued to rise and now is approaching 60% and became a core driver of the market. Heading into Q2, the market transaction volume came down substantially seasonally from its March peak, but the pace of adjustment has been more moderate than the same period of last year in April, year over year, growth in existing home transactions on our platform expanded further to over 30% and the absolute volume hit a second highest record. Sharing Resilience in Terms of Price KE Research Institute data shows that existing home prices in the top 50 cities held steady month over month for a second consecutive month in April. In tier one cities, prices are up 2.8% cumulatively from January through April with Shanghai up 5.9% and Beijing up over 4%. The trade up chain is also recovering. Since April, larger size and mid to high priced home have accounted for a slightly higher share of transactions across cities, indicating a recovery in upgrade demand and providing some support to market resilience. Overall, we believe existing home transaction volumes should continue to grow year over year. In Q2 on pricing, core areas in tier 1 cities have relatively solid support, but a broader nationwide stabilization would need more months of data to confirm. Thank you. Next question comes from Jentong at CITIC securities. Please go aahead. Congratulations on the non cytical revenue uptick for the past quarter. Here's my question for the management. The company is advancing its strategic transformations. We noticed that you have been piloting a program called Commit to Sell in Beijing. Could you share an update on that progress? Are there any cases that validate the impact and can it effectively improve the transaction efficiency? Xu Tao (Chief Financial Officer) Thank you. Thank you for the question. Well, some investors may not be familiar with this product yet. Changi Mai or Commit to Sell is one of the products under our homeowner side of service transformation in Beijing. It is still in its early pilot stage, so it's not a simple auction style listing. It's a matching tool designed to help both buyers and sellers come down on the back and forth and negotiating. The sellers set a reserve price online and buyers place the bids back to buy a deposit and the system whereas matches the bids against the reserve price to close the deal. It focuses on the bidding and closing stages even when the transaction didn't go through. The bidding results provided some incredible valuable insights that feed the sellers into making better decisions going forward. We have noticed that early signs are encouraging. Transaction cost cycles have been shortened, homeowner satisfaction have been high. That said, the sample size is still quite small. So we are being prudent in how we read these early results. Before I dive any further, I'd like to bring it back and put it in the context of our broader strategic transformation, which I think will make things clear in today's market listings are rising, buyers are more cautious. Homeowners essentially sell by playing the odds. They don't get a clear read on the market feedback and they don't have many effective tools cutting the price. So that's why the core of our homeowner side of service transformation is to help sellers make better decisions throughout the selling process and improve the certainty of closing. So namely whether or now is the right time to sell, at what price and through what approach. In practice, we are not building a single product. Instead we are identifying seller objective expectations and property characteristics and rebuilding our services across the entire selling life cycle covering listing, pricing, marketing exposure, viewing feedback and bid negotiation for Commit to Sell is one of the pilot products designed for a specific group of sellers. These products on a fixed lineup, they are continuing. They continue to evolve based on the feedback of the seller and also market changes. The core idea is to match the right transaction path and the right service to each seller and each property. Rather than pushing every listing through the same playbook from the pilots programs that we have at hand so far, these products indeed improve the price discovery and transaction efficiency. We are also piloting other services such as community open day events designed to concentrate buyer interest. Going forward for each of these new products and services, we'll continue tracking key operating metrics including product adoption rates, transaction efficiency and agent productivity. On the agent side, I want to make one point especially clear. This new model doesn't diminish the value of agents, it amplifies it. It elevates the agent's role from passing along information and relaying offers to helping sellers assess price, identify genuine buyers and build trust and momentum in its negotiation process. Every successful closing reflects the core value that professional agent brings. As you said this year? Our focus this year is not to focus on the scales and also instead we're focusing on optimizing the business model around healthy and sustainable profitability, personalized offerings under a well defined framework and higher quality fulfillment and delivery. These are the important foundations for the next stage of growth. We have already seen tangible improvements in delivering capabilities and profitability and going forward we'll continue to deepen synergies with our home transaction services, improve consortium and gradually enhance revenue performance. And this year we are focused on three key areas, improving product capabilities, standardization, construction, fulfillment and delivery and upgrading our design tools to improve efficiency. And on the product side, our approach is not to view customer demand as a simple trade off between standardization and personalization. Instead, we're using a two dimensional product matrix to better address different customer needs. Vertically, we design different packages based on budget level and service depth, helping customers with different needs from those seeking practical solutions to those looking to upgrade their living quality. And horizontally, we break down customers high frequency lifestyle needs into modules such as file storage and soft furnishing. This allows customers to combine modules within clear product framework and get solutions that better fit their family needs. At the same time, it allows us to improve efficiency, control costs and enhanced unit economics through module review and SKU concentration, design tools and standardized and delivery process in terms of construction, fulfillment and delivery standardization. This year we have extended professionalization of project managers to the work level for certain key types of workers. We are moving away from a relatively loose labor cooperation model to a model based platform selection, platform evaluation and platform coordination. Dispatch and workers with stronger delivery performance and better customer feedback can receive more jobs. At the same time, this helps us build a more stable delivery workforce, creating a positive cycle amongst quality worker income and delivery consistency. In March among these professionalized workers and plumbing and electrical workers saw their average monthly order volume increase by over 50% compared with the average in the second half of 2025. At the same time, we continue to deepen the development of our self developed BIM design tools. We're promoting the full process digitalization of floor plan imports, solution design rendering, online quotation and construction join output. This enables us to build a closed data loop on the platform which in turn supports the continuous integration of our BIM tools and help improve design productivity overall. While the revenue side has been affected in the near term by adjustments and volatility in external demand transmission, we're seeing improvements in the underlying capabilities of the business. In particular, standardization and replicability are gradually being strengthened across key areas and we believe revenue from our home renovation furnishing business can stabilize and return to quality growth. Now the next question please and congratulations on the positive trend and We've seen clear year over year improvement in profit margins across the companies and businesses in Q1. Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.