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KE Holdings (BEKE) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Real Estate· May 19, 2026

Source: earnings call transcript

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

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

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

BEKE operating KPIs by quarter

BEKE operating KPIs stated on its earnings calls, by fiscal quarter
KPI Dec 2025 Q4 FY25This call Mar 2026 Q1 FY26Change vs prior quarter
Rental units under management Home rental services
700K+ At the end of Q4, we had over 700,000 rental units under management, a year-on-year increase of around 62%. Source: earnings call transcript
740K+ As of the end of the Q1, the number of rental units under our management exceeded 740,000 units representing an increase of around 47% year-over-year. Source: earnings call transcript
—

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Risks & headwinds

Market volatility and structural adjustment Q1 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 segments Q1 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 furnishing Q1 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 iteration Q1 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

Existing home transaction volume growth

Q2 FY26
Current Up 30% YoY in April on platform
Target Continue 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.

Find out whether BEKE delivers this. Inve re-checks your case every morning.

Q&A highlights

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 read 6 chapters

Detailed narrative

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.

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.

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.

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.

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.

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.