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    BEKE
    Earnings call· Mar 2026(Q1 FY26)

    KE Holdings Q1 FY26 earnings call BEKE

    May 19, 2026 Source

    Executive summary

    KE Holdings Q1 FY26 — Strong Profitability Amidst Market Volatility, Driven by Efficiency Gains and Strategic Transformation

    KE Holdings delivered strong Q1 FY26 profitability, with non-GAAP operating margin hitting a 7-quarter high, driven by cost optimization and efficiency gains across all core businesses. Despite a challenging market and year-over-year revenue decline, the company is undergoing a strategic transformation to enhance decision support for clients and agents through AI and refined operations, aiming for sustainable long-term value creation.

    Highlights

    5

    • Non-GAAP operating profit reached RMB 1.67 billion, up 45.1% year-over-year and 416.2% quarter-over-quarter.

    • Non-GAAP operating margin stood at 8.8%, reaching the highest level in the past 7 quarters, up 3.9 percentage points year-on-year.

    • GAAP net income was RMB 1.26 billion, up 46.7% year-over-year and 1,425% quarter-on-quarter.

    • Existing home transactions on our platform grew 12% year-over-year in Q1, with March setting a new all-time monthly record up 21% year-over-year.

    • Number of rental units under management exceeded 740,000 units, representing an increase of around 47% year-over-year.

    Concerns

    3

    • Group's GTV was RMB 711.2 billion, down RMB 15.6 million year-over-year, and revenue was RMB 18.9 billion, down 19% year-over-year, due to a high base from the prior year.

    • New home GTV reached RMB 145.9 billion, down 37.2% year-over-year and 29.5% quarter-over-quarter.

    • Home renovation and furnishing Services revenue reached RMB 2.3 billion, down 20.6% year-over-year and 35.3% quarter-over-quarter due to proactive exit from low-quality channels and cities.

    Guidance & targets

    2
    CategoryTargetConfidence
    Existing home transaction volume growth
    continue to grow year-over-year
    medium materiality
    High
    Full-year margin improvement
    year-on-year margin improvement
    high materiality
    High

    Segment performance

    6
    SegmentRevenueYoYQoQMargin
    Existing Home Transaction Services
    Profitability continued to improve despite GTV and revenue decline due to high base. Contribution margin reached highest level in 7 quarters, driven by lower fixed labor costs and improved organizational efficiency.
    GTV: RMB 534.4 billion (down 7.9% YoY, up 10.9% QoQ)Platform service revenue growth: 3.8% YoY, 12.5% QoQ
    		RMB 6.1 billion-10.7%12.7%41.3% contribution margin
    New Home Business
    Scale declined significantly year-over-year due to high market base, but profitability improved year-over-year due to cost structure optimization. Quarter-over-quarter decline in contribution margin due to one-off factors in prior quarter.
    GTV: RMB 145.9 billion (down 37.2% YoY, down 29.5% QoQ)
    		RMB 5.1 billion-37%-30%25.7% contribution margin
    Home Renovation and Furnishing Services
    Revenue decline due to proactive exit from low-quality channels and cities. Contribution margin improved significantly due to material cost savings from centralized purchasing and improved order assignment efficiency.
    		RMB 2.3 billion-20.6%-35.3%36.2% contribution margin
    Home Rental Services
    Revenue decline due to shift towards lighter, lower-risk product model with higher proportion of net revenue basis recognition. Contribution margin improved for the sixth consecutive quarter due to product mix and productivity gains from AI.
    Managed rental units: >740,000 units (up 47% YoY)Net-accounted home units share: >40% of managed inventory
    		RMB 5 billion-1.5%-7.4%14.8% contribution margin
    Emerging and Other Businesses
    Net revenue declined year-over-year and quarter-over-quarter.
    		RMB 321 million-8.1%-30%—
    Lianjia
    Gross profit decreased but gross margin expanded due to improved brand services contribution margin, favorable mix towards existing home transactions, and improved existing home contribution margin.
    Gross profit: RMB 4.6 billion (down 5.4% YoY, down 4.1% QoQ)Nationwide per capita transaction volume: up 26% YoYPer capita commission: up 8.5% YoYCumulative per capita commission (Jan-Apr): up 20% YoYExisting home transactions: rose 16% YoY
    		———24.1% gross margin

    Operational metrics

    36
    Non-GAAP operating profit
    RMB 1.67 billionup 45.1% YoY, up 416.2% QoQ
    Q1 FY26

    Reached highest level in the past 7 quarters.

    Non-GAAP operating margin
    8.8%up 3.9 percentage points YoY, up 7.4 percentage points QoQ
    Q1 FY26

    Reached highest level in the past 7 quarters.

    GAAP net income
    RMB 1.26 billionup 46.7% YoY, up 1,425% QoQ
    Q1 FY26

    GAAP net income for the quarter.

    Non-GAAP net income
    RMB 1.61 billionup 15.7% YoY, up 211.5% QoQ
    Q1 FY26

    Non-GAAP net income for the quarter.

    Group GTV
    RMB 711.2 billiondown RMB 15.6 million YoY
    Q1 FY26

    Group GTV for the quarter.

    Group Revenue
    RMB 18.9 billiondown 19% YoY
    Q1 FY26

    Group revenue for the quarter.

    Group Gross Margin
    24.1%up 3 percentage points YoY
    Q1 FY26

    Group gross margin for the quarter.

    Share repurchases
    USD 195 millionup ~40% YoY
    Q1 FY26

    Amount spent on share repurchases during the quarter.

    Cumulative share repurchases
    USD 2.7 billion
    Sep 2022 - Q1 FY26

    Total amount spent on share repurchases since the program launched.

    Cash balances (excluding customer deposits)
    RMB 65.6 billion
    Q1 FY26

    Cash reserves at the end of the quarter.

    Operating cash outflow
    RMB 1.5 billion
    Q1 FY26

    Net operating cash outflow, primarily due to timing factors related to accrued employee compensation.

    Accounts receivables turnover days
    64 daysstable YoY
    Q1 FY26

    Turnover days for accounts receivables in the new home business, remaining at a healthy level.

    Store costs
    RMB 571 milliondown 20.3% YoY, down 19.6% QoQ
    Q1 FY26

    Benefiting from store network adjustments.

    Total GAAP operating expenses
    RMB 3.3 billiondown 22.3% YoY, down 33% QoQ
    Q1 FY26

    Reached the lowest level in nearly 3 years, driven by improved organizational efficiency and financial discipline.

    General and administrative expenses
    RMB 1.7 billiondown 8.6% YoY, down 24% QoQ
    Q1 FY26

    Decrease mainly due to lower share-based compensation expenses and improved organizational efficiency.

    Sales and marketing expenses
    RMB 1.1 billiondown 39% YoY, down 43.9% QoQ
    Q1 FY26

    Driven by improved organizational efficiency and refined management of marketing and promotion expenses.

    R&D expenses
    RMB 493 milliondown 15.6% YoY, down 31.1% QoQ
    Q1 FY26

    Due to improved organizational efficiency and lower technical services fees.

    GAAP operating profit
    RMB 1.27 billionvs RMB 591 million in Q1 2025, vs loss of RMB 147 million in Q4 2025
    Q1 FY26

    GAAP operating profit for the quarter.

    GAAP operating margin
    6.7%up 4.2 percentage points YoY, up 7.4 percentage points QoQ
    Q1 FY26

    GAAP operating margin for the quarter.

    Adjusted operating profit increase
    RMB 500 millionYoY
    Q1 FY26

    Increase in adjusted operating profit year-over-year.

    Rental yield
    28%up 40 bps YoY
    March

    Rental yield across top 50 cities, showing housing regaining appeal.

    Share of sellers offering sharp discount
    down 3 percentage pointsQoQ
    Q1 FY26

    Indicates stabilizing seller expectations.

    New listings
    down 14%YoY
    March

    New listings in March.

    First-time homebuyers share
    increased
    Q1 FY26

    Seasonal increase due to factors like residential registration and school enrollment.

    Upgrade demand share
    approaching 60%
    Q1 FY26

    Upgrade demand remains a long-term driver of the market.

    Existing home transaction growth on platform
    over 30%YoY
    April

    Year-over-year growth in existing home transactions on the company's platform.

    Existing home prices
    steady month-over-month
    April

    According to Baker Research Institute data.

    Existing home prices cumulative increase
    2.8%
    Jan-Apr

    Cumulative price increase from January through April.

    Existing home prices cumulative increase
    5.9%
    Jan-Apr

    Cumulative price increase from January through April.

    Existing home prices cumulative increase
    4%
    Jan-Apr

    Cumulative price increase from January through April.

    Larger size/mid-to-high priced homes share
    slightly higher
    since April

    Indicating a recovery in trade-up demand.

    Material cost reduction
    >20%
    since last year

    Driven by centralized procurement and local [indiscernible].

    Professionalized workers average monthly order volume increase
    >50%vs H2 2025 average
    Q1 FY26

    Improved productivity for certain key types of workers.

    AI application platform employees covered
    >7,100
    end of April

    Number of frontline employees covered by the AI application platform.

    AI applications with actual traffic
    >4,400
    end of April

    Number of AI applications seeing actual traffic.

    AI applications total business
    RMB 4.12 million
    end of April

    Total business generated by AI applications.

    Industry KPIs

    1
    MetricValueDetails
    Leasing revenue growth-1.5%%

    Risks & headwinds

    4
    Market volatility and structural adjustmentQ1 FY26

    Q1 GTV and revenue declined year-over-year

    Mitigation: Relentless pursuit of efficiency-driven growth, strategic restructuring, focus on decision support.

    Divergence in core cities and market segmentsQ1 FY26

    remains pronounced

    Mitigation: Not reading too much into one quarter's data, focusing on long-term structural changes.

    Declining market trend and demand for renovation and furnishingQ1 FY26

    Q1 revenue reached RMB 2.3 billion, down 20.6% year-over-year and 35.3% quarter-over-quarter

    Mitigation: Proactive exit from low-quality channels/cities, optimizing business model for healthy profitability, product standardization, improved fulfillment.

    Temporary impact on home rental revenue scale due to product model iterationQ1 FY26

    Q1 revenue reached RMB 5 billion, representing a slight year-over-year decline of 1.5% and a quarter-over-quarter decline of 7.4%

    Mitigation: Shift toward lighter, lower-risk product model with higher proportion of net revenue basis, focusing on managed rental unit growth and service capability.

    What to watch in Q2 FY26

    5

    Existing home transaction volume growth

    Q2 FY26
    CurrentUp 30% YoY in April on platform
    TargetContinue to grow year-over-year

    Why it matters

    Indicates market recovery and demand sustainability, crucial for overall revenue.

    Overall, we believe existing home transaction volumes should continue to grow year-over-year in Q2.

    Q&A highlights

    4

    What were the main drivers of the Q1 existing home market rally, how does it compare to previous years, and is this trend sustainable?

    The Q1 recovery is more resilient than previous rebounds, driven by policy support, lower prices after corrections, and genuine demand release. Existing home transactions on the platform grew 12% YoY in Q1, with March setting a record. Tier 1 cities showed price stabilization. Management expects continued YoY growth in Q2 transaction volumes.

    “Compared with the previous rebounds, this round of recovery stands out in 3 ways. First, it's not just a short-term volume bond driven by policy stimulus. It reflects genuine demand being released as the price correction have lowered the price barrier to homeownership.”

    asked by Thomas Chong · answered by Unknown Executive

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Transformation and AI Integration

    KE Holdings is undergoing a strategic restructuring, shifting its focus from organizing transactions to supporting higher-quality housing decisions. This transformation involves reorganizing production around 'decision support' as the new scarce resource, leveraging AI to amplify service provider value, and turning agent expertise into platform capabilities. The goal is to redefine value creation in the housing service industry by providing comprehensive advisory services.

    02

    Manager-to-Frontline Initiative

    A critical component of the strategic transformation is sending 500 core managers and 2,534 directors back to the front lines. This initiative aims to re-understand consumer needs, redefine professional values for service providers, and shift from metric-driven oversight to direct problem-solving and prescribing solutions. This approach is intended to make the management system more consumer-centric and efficient.

    03

    Productization of Services

    The platform is standardizing and productizing expertise into tools and processes to ensure consistently high-quality service for all consumers and to better equip agents. Examples include pushing decision support upstream for sellers, helping them understand market dynamics and buyer profiles. The company is also testing differentiated products like 'Commit to Sell' and 'Community Open Day' to improve price discovery and transaction efficiency for specific seller needs.

    04

    Home Renovation & Furnishing Business Optimization

    Despite a year-over-year revenue decline of 20.6% and a quarter-over-quarter decline of 35.3% in Q1, attributed to proactive exits from low-quality channels and market volatility🌐, the company is focusing on optimizing its business model. The strategy emphasizes healthy and sustainable profitability, personalized offerings, and higher-quality fulfillment. Key areas of improvement include a two-dimensional product matrix, standardization of construction fulfillment, and upgrading self-developed BIM design tools to enhance efficiency and unit economics.

    05

    Home Rental Services Growth and Efficiency

    The home rental services business maintained rapid growth, with managed rental units exceeding 740,000, an increase of 47% year-over-year. Profitability significantly improved, with contribution margin reaching 14.8%, up 8.1 percentage points year-over-year. This was achieved through a structural shift towards net-accounted products, which carry higher contribution margins, and productivity gains driven by AI and a more specialized division of labor.

    06

    Market Recovery Dynamics

    The existing home market experienced an encouraging 'spring rally' in Q1, driven by supportive government policies, lower entry barriers after price corrections, and improving buyer/seller expectations. This recovery is perceived as more resilient than previous rebounds, with Tier 1 cities showing signs of price stabilization. Trade-up demand is also recovering, contributing to market resilience, and existing home transaction volumes are expected to continue year-over-year growth in Q2.

    AI-generated summary of the company’s earnings call. Not investment advice.