KE Holdings Q1 2024: Revenues Down Year-on-Year But Expectations Still Surpassed

Chinese portal giant KE Holdings (also known as Beike) has released its unaudited financial results for Q1 2024, beating expectations but still suffering a share price drop as revenues fell compared to last year.

Highlights include:

• Revenues of RMB 16.4 billion (USD 2.3 billion) comfortably beat expectations (forecasted RMB 16 billion)
• But YoY revenues fell significantly, a 19.2% decrease from 2023 (RMB 29.5 billion/USD 4.15 billion)
• Revenue for Beike's diversified renovations and furnishing segment grew 71.1%% YoY, to RMB 2.4 billion (USD 337 million)
• Net income reached RMB432 million (USD 60 million); adjusted net income was RMB1,392 million (USD 195 million)

Mr Stanley Yongdong Peng, Chairman of the Board and CEO at Beike, said:

"As the existing housing market plays an increasingly important role, China's real estate industry is accelerating its transformation into a new era.

"We have prioritized quality and efficiency, making new strides across multiple business lines. We actively connect with quality stores in the industry and innovate the community mini-store models under our self-owned brand Lianjia, significantly enhancing our community presence and service capabilities, gradually establishing the infrastructure for a one-stop residential services platform.

"We deeply explore customer needs and have made numerous new attempts to enhance our online and offline service capabilities in housing transactions and our new initiatives. These include innovative ways of connecting with customers through short videos and live streaming, and providing various protections to address tenants' core concerns. "

Despite revenue drops and lower net income, Beike achieved steady growth across several metrics including active users (5%), number of agents (1.5%) and number of stores (2.8%).

Meanwhile, renovations and furnishings—possibly the most interesting part of Beike—continued its growth as a significant revenue driver (up 71.1% YoY) as overall revenues from home renovations and furnishing, home rental services, emerging and other services more than doubled (112.9%) since Q1 2023.

On the other hand, Beike's existing home transaction services (-37.6%)  and new home transaction services (-41.5%) both saw significant decreases YoY.

In context, the RMB 6.5 billion revenue from home renovations and other emerging services now contributes almost exactly one-third (32.56%) of total revenues for Beike and more than existing homes transactions (RMB 6 billion)—only new home transactions services (RMB 7.5 billion) outpaced this segment:

Beike acknowledged this in the financial statement, saying:

The decrease [in net revenues] was primarily attributable to the decrease of net revenues from existing home transaction services and new home transaction services, partially offset by the increase of net revenues from home renovation and furnishing and home rental services.