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BEKE
Earnings call · Jun 2026 (Q2 FY26)

KE Holdings Q2 FY26 earnings call BEKE

Aug 21, 2026 Source

Executive summary

KE Holdings Inc. Q2 FY26 — Profitability Surges Amidst Strategic Transformation

KE Holdings delivered strong Q2 FY26 profitability, with non-GAAP net income surging 74.9% year-over-year, driven by improved gross margins and reduced operating expenses. The company is undergoing a strategic transformation focused on consumer-centricity, refined operations, and leveraging AI to enhance agent efficiency and service quality, moving towards a specialized, modular ecosystem. While revenue saw a modest decline due to business adjustments and market pressures, the focus remains on sustainable, high-quality growth and shareholder returns.

Highlights

5

  • Non-GAAP Net income grew 74.9% year-over-year to CNY 3.185 billion.

  • Non-GAAP net margin reached 13%, up 6 percentage points year-over-year, a 3-year high.

  • Group's gross margin increased 6.7 percentage points year-over-year to 28.6%.

  • GAAP operating expenses fell 14.1% year-over-year.

  • Existing Home Transaction Services GTV grew 8% year-over-year to RMB 629.89 billion, with contribution margin up 6.1 percentage points to 46.1%.

Concerns

4

  • Total revenue decreased 5.7% year-over-year.

  • Home renovation and furnishing revenue was RMB 3.19 billion, down 30.1% year-over-year, reflecting proactive adjustments and market pressures.

  • Home rental services revenue was RMB 4.83 billion, down 14.8% year-over-year, due to a product model transition.

  • G&A expenses increased 18.9% quarter-over-quarter due to a RMB 280 million bad debt provision.

Guidance & targets

CategoryTargetConfidence
Home Renovation and Furnishing revenue
no further broad-based contractions
medium materiality
Medium

Segment performance

SegmentRevenueYoYQoQMargin
Existing Home Transaction Services
Scale returned to growth and profitability improved significantly, driven by lower fixed labor costs and a structural shift toward higher-margin platform service revenue. GTV outpaced revenue growth due to a larger share of non-Lianjia GTV where platform service fees are recognized on a net basis.
GTV: RMB 629.89 billionGTV growth YoY: 8%GTV growth QoQ: 17.9%Contribution margin growth YoY: 6.1 percentage pointsContribution margin growth QoQ: 4.8 percentage pointsNon-Lianjia platform service revenue growth YoY: 27.8%Non-Lianjia platform service revenue growth QoQ: 29.8%Connected store transaction volume growth YoY: nearly 30%Average transaction per active connected store growth: 26%
RMB 7.02 billion4.5%14.5%46.1%
New Home Business
Scale remained stable year-over-year while profitability continued to improve despite a pressured market. This was achieved by collaborating on high-quality projects, improving customer conversion, and optimizing costs, leading to cost structure optimization from refined operations.
GTV: RMB 258.39 billionGTV growth YoY: 1.2%GTV growth QoQ: 77.1%Contribution margin growth YoY: 4.4 percentage pointsContribution margin growth QoQ: 3.1 percentage points
RMB 8.95 billion3.8%75.9%28.8%
Home Renovation and Furnishing
The year-over-year decline reflects proactive adjustments of inefficient customer acquisition channels and exit from cities with weak unit economics, alongside dampened renovation demand from new home market pressures. Quarter-over-quarter revenue increase reflects seasonal business recovery. Contribution margin improved due to lower material costs through centralized procurement and refined cost management.
Contribution margin growth YoY: 7.5 percentage pointsContribution margin growth QoQ: 3.4 percentage points
RMB 3.19 billion-30.1%36.4%39.6%
Home Rental Services
Revenue decline stemmed from transitioning Carefree Rent to a lighter, low-risk product model utilizing net basis revenue recognition. Profitability improved due to a favorable product mix shift and operating improvements from lower labor, installation, and post-lease costs.
Managed units: 790,000Managed units growth YoY: approximately 34%Net base product comprising: over 50%Contribution margin growth YoY: 6.9 percentage pointsContribution margin growth QoQ: 0.5 percentage pointsOwner renewal rate: 74%Owner renewal rate growth: 4 percentage pointsTenants renewal rate: 56%Tenants renewal rate growth: 1 percentage pointManagement units per asset manager: 170Management units per asset manager growth YoY: 40%
RMB 4.83 billion-14.8%-3.6%15.3%
Emerging and Other Businesses
Experienced strong year-over-year and quarter-over-quarter revenue growth.
RMB 550 million26.4%7%—

Risks & headwinds

Revenue decline in Home Renovation and Furnishing Q2 FY26

Down 30.1% year-over-year to RMB 3.19 billion in Q2 FY26.

Mitigation:Proactive adjustments of inefficient customer acquisition channels and exit from cities with weak unit economics; centralized procurement and refined cost management.

Revenue decline in Home Rental Services Q2 FY26

Down 14.8% year-over-year to RMB 4.83 billion in Q2 FY26.

Mitigation:Transitioning Carefree Rent to a lighter, low-risk product model utilizing net basis revenue recognition; focus on stabilizing units under management, improving efficiency, and increasing asset-light products.

Bad debt provision in New Home Business Q2 FY26

RMB 280 million provision in Q2 FY26.

Mitigation:Prudent assessment of Seneca-related receivables and collateral.

Market polarization and cautious customer decision-making Ongoing

Structural transaction recovery while prices continue to bottom; core cities and high-quality supply are more resilient, but the market remains polarized.

Mitigation:Focus on professional judgment and transaction certainty, precise matching, and professional execution to help customers make better decisions.

What to watch in Q3 FY26

Home Renovation & Furnishing Revenue Recovery

Next quarter (Q3 FY26) and rest of FY26
Current Down 30.1% YoY in Q2 FY26
Target Recovery / no further broad-based contractions

Why it matters

Indicates the effectiveness of proactive adjustments and market stabilization, impacting overall revenue growth.

The year-over-year decline reflects our proactive adjustments of inefficient customer acquisition channels and exit from cities with a weak unit economics... This proactive adjustment is now largely complete. We expect no further broad-based contractions this year.

Q&A highlights

Given diverging volume/price trends and Q3 momentum, what are KE Holdings' controllable levers for Q3 and the full year amidst market uncertainty?

Tao Xu explained that the existing home market showed structural recovery, especially in Tier 1 cities, while new homes remained pressured. The company will focus on capturing structural opportunities, maintaining financial discipline, and managing cash flow. Operations will not rely on market events, with a leaner cost structure providing both upside potential and downside protection.

“Overall, we see a structural transaction recovery while prices continue to bottom, core cities and high-quality supply and more resilient, but the market remains pelorized.”

asked by Timothy Zhao · answered by Tao Xu

2 min read 5 chapters

Detailed narrative

Strategic Transformation and Operational Refinement

KE Holdings is undergoing a strategic transformation, shifting from a 'one size fits all' approach to district-specific and project-specific strategies. This involves analyzing specific districts or projects to tailor solutions, particularly in high-end communities. The company is also changing its metrics focus from scale and market share to consistent agent transactions, agent efficiency, healthy store profitability, and stable service quality. Managers are being mobilized to the front line, personally engaging in sales, revisiting leads, and accompanying agents to signing centers to foster a deeper understanding of operational realities.

Consumer-Centricity and Agent Evolution

The company clarifies that being consumer-centric does not mean bypassing agents but rather transforming the single agent role into a group of independently valuable, specialized roles. This is achieved by creating more high-value tasks and segmenting decision-making processes, recognizing that consumers need help filtering choices, not just more options. The platform is evolving from a commission-leading model to a modular ecosystem that includes consulting, showing, contracting, and renovation, where anyone creating incremental value is considered a service provider, enabling professional service providers to win in the long term.

AI's Impact on Business and Organization

AI is viewed as a new production factor, not an opponent, enabling innovation and reshaping the organization. AI helps manage unstructured data, shifting granularity from managing averages to managing individual properties, clients, and agents with tailored solutions. It changes the division of labor, lowers fixed costs, and increases variable costs, allowing for rapid iteration and high-frequency, low-cost profitability gains. AI also forces managers to create real business value from the front line rather than just reporting numbers, with human intervention becoming the new bottleneck in perfected workflows.

Market Dynamics and Strategic Response

The property market shows diverging trends, with structural recovery in existing homes (especially Tier 1 cities) and prices bottoming, while the new home market remains pressured. The company's strategy focuses on capturing structural market opportunities by allocating resources based on market performance, customer groups, and property types, reinforcing coverage in higher-tier cities. Financial discipline, flexible resource allocation, and strict cash flow management are prioritized to navigate market volatility, ensuring that new investments meet ROI and service validation criteria before scaling.

Home Renovation and Rental Services Adjustments

Home renovation revenue declined due to proactive exits from inefficient cities, stores, and acquisition channels, and overall dampened demand from fewer new home deliveries. However, contribution margins improved significantly through centralized procurement and refined cost management. For Home Rental Services, revenue declined due to a transition to a lighter, net-based revenue product model, but profitability improved due to this structural shift and operating optimization. The focus for both segments is on delivery quality, enhancing user experience, and improving efficiency and renewal rates to ensure sustainable profitability.

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