BEKE

Hello, ladies and gentlemen. Thank you for standing by for KE Holdings first quarter 2026 earnings conference call. I am Siting Li, IR Director of KE Holdings. Please note that today's call, including management-prepared remarks and a Q&A session, will all be in Chinese. Simultaneous interpretation in English will be available on a separate line. To access the call in Chinese, you will need to dial the Chinese line. At this moment, all participants are in listen-only mode. Today's conference call is being recorded. The company's financial and operating results were published in the press release earlier today and are posted on the company's IR website. With us today, we have Mr. Stanley Peng, our Co-founder, Chairman, and Chief Executive Officer, and Mr. Xu Tao, our Executive Director and CFO. Mr. Xu will provide an overview of our business update and financial performance.

Mr. Peng will share more on our strategic transformation and insights. Before we continue, I refer you to our safe harbor statement in our earnings press release, which applies to this call, as we will make a forward-looking statement. Please also know that because earnings press release and this conference call included discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial measures, please refer to the company's press release, which contains a reconciliation of the unaudited non-GAAP measures to the comparable GAAP measures. Unless otherwise stated, all figures mentioned in today's call are in RMB. Certain statistical and other information relating to the industry in which the company is engaged to be mentioned in this call has been obtained from various publicly available official or unofficial sources.

Neither the company nor any of its representatives has independently verified such data, which may involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such information and estimates. For today's call, management will use Chinese as the main language. Please note that English translation is for convenience purposes only. In the case of any discrepancy, management statement in the 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 CNY 1.67 billion, up 45.1% year-over-year and 416.2% quarter-over-quarter.

Non-GAAP operating margins stood at 8.8%, reaching the highest level in the past 7 quarters. The optimization of our cost and expenses structure in 2025 has been reflected in our operating profit in Q1 this year, and we expect it to provide long-term positive support to our operating performance going forward. Guided by the 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 property in Q1, our contribution margin continued to expand, validating the release of profit elasticity.

Meanwhile, our operational efficiency continued to improve. The absolute amounts of the R&D, selling, and administrative expenses all decreased both year-over-year and quarter-over-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 a non-GAAP net profit margin hitting a record high for the past seven quarters. We continue to deliver on our commitments to shareholders. During the quarter, we spent around $195 million on share repurchases, an increase of about 40% year-over-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 GTV and revenue declined year-over-year. GTV was CNY 711.2 billion, down 15.6% year-over-year. The revenue was CNY 18.9 billion, down 19% year-over-year. That said, we attributed 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 CNY 1.26 billion, up 46.7% year-over-year, while the non-GAAP net income was CNY 1.61 billion, up 15.7% year-over-year. 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 CNY 534.4 billion, down 7.9% year-over-year and up 10.9% quarter-over-quarter. Revenue from existing home transaction services reached CNY 6.1 billion, down 10.7% year-over-year and up 12.7% quarter-over-quarter.

The GTV 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 as per platform services fees. On a quarter-over-quarter basis, revenue growth outperformed GTV, mainly due to an improvement in Lianjia commission rate. In particular, platform service revenue increased by 3.8% year-over-year and 12.5% quarter-over-quarter, outperforming the overall GTV 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%, the highest level in past seven quarters.

It was up 3.2 percentage points year-over-year, mainly attributable to the decline in the fixed labor costs driven by the optimization of the Lianjia agent and store scale, as well as improved organizational efficiency. The contribution margin also increased by 0.9 percentage point quarter-over-quarter, mainly driven by the operating leverage from the revenue recovery in Q1, with fixed labor costs remaining relatively stable. For new home businesses, business scale declined year-over-year due to a high market base in the same period last year, while profitability improved year-over-year. Q1 GTV reached CNY 145.9 billion, down 37.2% year-over-year and 29.5% quarter-over-quarter. New home business revenue was CNY 5.1 billion, down 37% year-over-year and 30% quarter-over-quarter.

The year-over-year and quarter-over-quarter GTV performance was largely consistent with revenue, reflecting our stable monetization capability for the business segment. Even amid significant fluctuations in scale, Q1 contribution margin of 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 caused by the one-off factors in the previous quarter. For home renovation and furnishing services, Q1 revenue reached CNY 2.3 billion, down 20.6% year-over-year and 35.3% quarter-over-quarter. The year-over-year and quarter-over-quarter revenue decline was due to our proactive exit from low-quality and inefficient customer acquisition channels, as well as cities with poor UE models.

The contribution margin of the 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 tender-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 effects from certain one-off factors in previous quarter. For our home renter services, revenue in Q1 reached CNY 5 billion, 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 Carefree Rent toward a 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 the reported revenue scale. However, this doesn't change the growth strategy or trajectory of our managed renter units and service capability. 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, the contribution margin for our home renter services business reached 14.8% in Q1, up 8.1 percentage points 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, continued to increase. Second, labor costs per unit declined, driven by productivity improvements enabled by AI and a more specialized division of labor. For emerging and other businesses, net revenue in Q1 was CNY 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 CNY 571 million, down 20.3% year-over-year and 19.6% quarter-over-quarter, mainly benefiting from the rental cost optimization and the store network adjustments for Lianjia.

Q1 gross profit had decreased by 5.4% year-over-year to CNY 4.6 billion 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, a 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 a higher mix of existing home revenue and improvement in the existing home contribution margin. Q1 total GAAP operating expenses were CNY 3.3 billion, reaching the lowest level in nearly three years, down 22.3% year-over-year.

This was mainly attributable to the operating leverage released from improved organizational efficiency, strengthened financial discipline, and optimized marketing spending efficiency. All operating expenses decreased by 33% quarter-over-quarter, partly due to the high base from one-time expenses related to the organizational efficiency improvement and resource allocation in the prior quarter. Specifically, general and administrative expenses were CNY 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, G&A expenses decreased by 24%, mainly due to the high base of the one-time expenses in the prior quarter and low expenses driven by the improved organizational efficiency. Sales and marketing expenses were CNY 1.1 billion, down 39% year-over-year, mainly driven by an improved 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 a high base of one-time expenses in the prior quarter. R&D expenses were CNY 493 million, down 15.6%, mainly due to improved organizational efficiency and lower technical services fees. On a quarter-over-quarter basis, R&D expenses decreased by 31.1%, primarily due to the high base one-time expenses in the prior quarter. Moving on to our bottom line performance. Our GAAP operating profit was CNY 1.27 billion in Q1 compared with a profit of CNY 591 million in Q1 2025 and a loss of CNY 147 million 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 CNY 1.67 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 the gross margin, and a sequential increase of 7.4 percentage points, mainly due to the decrease in the operating expense ratio and the increase in the gross margin. Finally, GAAP net income totaled CNY 1.26 billion in Q1, up 46.7% year-over-year and 1,425% quarter-over-quarter.

Non-GAAP net income was CNY 1.61 billion, up 15.7% year-over-year and 211.5% quarter-over-quarter. In terms of the cash flow and balance sheet, we recorded a net operating cash outflow of CNY 1.5 billion in Q1. Operating cash flow was lower than our profit performance, mainly due to the timing factors related to the payment of accrued employee compensation from the previous year. Excluding the impact of this timing factor, our operating cash flow performance was broadly in line with our profitability. In Q1, the turnover days of accounts receivable for our new home business were 64 days, largely stable year-over-year and remaining at a healthy level.

Even after spending approximately $195 million on share repurchases during this quarter, our broader cash balances, excluding customer deposits, remain at approximately CNY 65.6 billion. Supported by our solid cash reserves, we place great importance on shareholder returns. In the first quarter, we spent over around $200 million on share repurchases, with the 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 enhancement 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 direction, avoiding pursuing local optimums and shorter-term gains. At the same time, we'll use data and business fundamentals as basis for decision-making and maintain our clear ROI discipline for key investments, directing resources toward areas where we can better enhance customer experiences and service and better efficiency. Now I'll hand over the call to our CEO.

Well, thank you, Mr. Tao. 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 into deal conversion, buyer decisiveness, and seller sentiment all improving. In some key cities, the price expectations are moderating towards rational levels. Previously pent-up move-up and trade-up demand is now beginning to clear the market in an orderly manner. That said, in divergence of core cities and market segments remains pronounced. 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 period, Q1 GTV and revenue declined year over year, yet adjusted net income climbed at 15.7% year-on-year. We have seen three notable improvements. First, efficiency gains. In Q1, Lianjia 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 by 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 Lianjia posted the strongest per capita efficiency gains, market penetration also rebounded from the second half of last year. Third, improved profitability. The group's adjusted operating margin recovered to over 8.8%, up 3.9 percentage points year-on-year, while adjusted operating profit rose by approximately CNY 500 million 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 re-evaluating 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 premise: the housing service industry is undergoing fundamental changes. An industry creates value by solving for what is the scarcest. 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 it. Consumers wanted to know where the listings are, what they cost, if I can get one, and if we can close fast. The earlier brokerage industry organized naturally around listings. For KE Holdings, we are trying to make sure that the industry's core is now within our adjustment. Listings used to be what mattered 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.

What consumers really need today is to make sure that they make the right decision with high tickets, risks, and sorted information so that they can make well-informed decisions. For buyers, decision support means helping them understand whether, where, and what truly fits. For owners, consumer functions 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 the commute and living comfort? These two units each have their strengths, and which one should I get? For buyers, decision support means helping them understand whether to buy or not, where to buy, and what truly fits. 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 computer information sorting and shallow matchmaking, while further amplifying the value of service providers who can guide decisions. It can also turn 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. 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. KE Holdings 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 towards better professionalism is to get managers back to the front lines. We have 500 core managers and 2,534 directors who are, in theory, our most capable, highest-leverage people. Yet today, many spend over half of their time in meetings, parsing metrics, and cranking out reports. The management system, metrics, and processes we built once drove our growth and made the industry more efficient. Any system that doesn't center around the consumer's real needs risks becoming an end in itself. 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, our Regional Director, Zhang, has done a lot that I consider truly returning to the front line.

He manages 16 commercial districts and 12 stores. Every week, he reviews listings in person. Every week, he joins owner interviews. Every Saturday, he hosts office signing. Every time he was involved, efficiency improved. There was an owner and an agent deadlocked over a small price gap, and the deal stuck for ages. When Zhang stepped in, he stopped talking about a price and started asking, Why are you selling? Where are you heading next? What is this money used for? He discovered that the owner didn't need a better price. They need a trade-up plan. He helped them rethink their housing options, ultimately driving both the new home purchase and the existing home sale. He feeds store and competitor data into AI to generate diagnostic reports, shifting from reading metrics to prescribing solutions.

Oversight has given way to spotting specific problems and helping fix them. Next, he's building a knowledge base across district, store, and individual tiers, codifying 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 moved fast. 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, et cetera, each demand 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, efficient support, helping them think through the trade-offs. This is analytical and proposal capabilities and delivering reliable accountable and recommendations. This is accountability for high-stakes decisions. These three capabilities can only grow in real-world scenarios. To make our service providers more professional, first we need to do is train them from tech 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 is 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, likely buyers, and fair price ranges so agents can craft a sharper sales plan. After listing, we feedback information that actually matters to that specific property, helping owners make informed calls on pricing, pacing, and strategy.

For owners with different needs, we are testing differentiated products through owner segmentation and listing tiering. For example, community open days concentrate exposure and buyer feedback. For owners ready to sell and entering price negotiations, Commit to Sell uses a deposit, 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, Desheng District, had a property worth over CNY 10 million. She was firm in price, more anxious about locking in a sale before month-end. In the past, this meant endless showings and price ping pong and stalled deals. Commit to Sell compresses everything into a clear window. The owner put down a deposit, the listing got concentrated promotion, and buyers bid online, and everyone knew the clock was ticking.

The winning buyer wasn't even first in line, but with transparent rules and a firm deadline, she bid 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 knows the property and the market. For buyers, we're also pushing services earlier. Today, clients enter a content-driven pre-decision phase long before they need an agent. They search everywhere, but credible, neutral, structured guidance is very scarce. They need professional support as a reference in their decision-making.

We're putting our front-line leaders, managers, directors, and district heads 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, listings, transactions, and clients already in their hands.

Simultaneously, before the client reaches the agent, we're adding a more neutral decision service layer. Through middle office service roles, combined with AI experts in legal, finance, school districts, and high-end properties, we help the client conduct, you know, clarification of needs, purchasing power calculation, risk disclosure, preliminary asset planning. We match these clear, better understood needs to the most suitable service provider. We will pivot to a more precise matching stage. I wanna 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 visits surpassing 4.12 million.

This proves that tools originating from the front lines are being utilized by the business, and organizational resources will traditionally flow toward the real problems. Furthermore, one city is piloting a new collaboration model. Business experts define the scenarios; functional staff design the skills; and the scenario engineers provide tool and API support. A three-person squad can simultaneously advance over 20 specific scenarios. In the past, the business proposed needs and waited for the development. Now, whoever best understands the scenario participates in its definition and rapid iteration. In this way, the frontline expert's 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, centralized supply chain procurement, and other types of work. Driving the business from being highly nonstandardized toward becoming more stable, replicable, and manageable. For leasing business, units under management reached 740,000 in Q1, maintaining rapid growth. The share of net method products rose quickly.

The profit margin contribution from Carefree Rent increased from 6.7% in the same period last year to 14.8%. Behind all these are product structure optimizations, UE management, AI empowering, and organizational process restructuring. The leasing business proves that a seemingly fragmented, heavy, operationally heavy business can also enhance efficiency and gradually form economies of scale through AI and a process restructuring. Looking further ahead, we aim to center our efforts on communities to reconstruct long-term operational capabilities. Stores in the future will gradually upgrade into community housing service nodes, and agents will also evolve from single transaction roles into client managers capable of deploying platform capabilities across existing homes, new homes, leasing, renovation, design, delivery, and et cetera. Regarding how investors can track this progress, I believe there are several metrics. First, core business efficiency and operational quality.

Second, the pilot programs in community operational units and also our actions of putting managers into the front line. Number three, this is the productization of buyer and seller services. Number four, the adoption of AI across the organization and also its improvement in customer experience and operational efficiency. Number five, the expansion from single transactions to long-term community operations and long-term value. Number six, long-term 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 come first without blind expansion.

We're going to have prudent operations, ensuring core business operational quality and cash flow remain stable, and continuous iteration, constantly optimizing service providers, division of labor, resource allocation, AI tools, service products, buyer decision service layers, et cetera. In conclusion, I would like to summarize Beike's long-term value in one sentence. The industry is transitioning from finding listings to making decisions. What Beike must do is upgrade our platform capability from organizing transactions to supporting higher-quality residential decisions.

The significance of Q1 results lies not only just in margin improvement but also in validating 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 Beike to forge more stable, higher-quality, and more sustainable long-term value. Thank you, everyone. We will now open the floor for the Q&A session.

Thank you, Stanley. As a reminder, we only accept the questions on the Chinese language line. If you would like to ask a question, please press star-one and wait for your name to be announced. If you'd like to cancel your request, please press the pound 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 Chong from Jefferies. Please go ahead.

Good evening, management. Thank you for taking my question. We noticed that the existing home market saw a spring rally in Q1. What were the main drivers, and how does it compare to previous? 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 bump 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 a simple case of trading price for volume. We're seeing prices stabilize at this stage. Third, it's not only buyers coming back to the market. Seller expectations and supply mix are also showing incremental improvements. This recovery is more resilient than we have seen in the past. Looking at volume and price performance, first, existing home transactions on our platform grew 12% year-over-year in Q1, and in 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 the Beike Research Institute. Existing home prices in Tier-1 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 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 yield across the top 50 cities rose 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 a combination of policy support and the lower price brought up previously hesitant buyers back to the market, driving the recovery in transactions. 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 transactions has improved. On the other hand, seller expectations are stabilizing, and pressure to cut a price has eased. In Q1, the share of sellers willing to offer a 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 remains a long-term driver in Q1.

Seasonal factors like residential re-registration and school enrollment, combined with the targeted policies favoring lower-priced homes, lead to a seasonal increase in the share of first-time home buyers in tier-one cities. That side, from a long-term perspective, upgrade demand has continued to rise and now is approaching 60% and has become a core driver of the market. Heading into Q2, the market and transaction volume came down 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, showing resilience. In terms of price, Beike 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 top Tier-1 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-sized and mid- to-high-priced homes have accounted for a slightly higher share of transactions in core cities, indicating a recovery in upgraded 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-one cities have relatively solid support, but a broader nationwide stabilization would need more months of data to confirm.

Thank you. Next question comes from [Shantal] at CITIC Securities. Please go ahead.

Congratulations on the non-cyclical 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 its impact? Can it effectively improve the transaction efficiency? Thank you.

Thank you for the question. Well, some investors may not be familiar with this product yet. Chángqī Mài, or Commit to Sell, is one of the products under our homeowner side of service transformation in Beijing. It is still in its early, piloted stage. 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 in negotiating. The sellers set a reserve price online, and buyers place bids backed by a deposit, and the system matches the bids against the reserve price to close the deal. It focuses on the bidding and closing stages. You know, 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 has been high. That said, the sample size is still quite small. 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 the things clearer. In today's market, listings are rising, buyers are more cautious. You know, homeowners essentially sell by playing the odds. You know, they don't get a clear read on the market feedback, and they don't have many effective tools beyond cutting the price. That's why the core of our homeowner-side service transformation is to help sellers make better decisions throughout the selling process and improve the certainty of closing. Namely, whether now is the right time to sell, at what price, and through what approach. In practice, we're not building a single product.

Instead, we are identifying seller objectives, expectations, and property characteristics, and we bring our services across the entire selling life cycle, covering listing, pricing, marketing, exposure, viewing, feedback, and bid negotiation. For Commit to Sell, you know, is one of the pilot products designed for a specific group of sellers. These products aren't a fixed lineup. They, you know, 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 pilot 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 emphasizes. 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 the negotiation process. Every successful closing reflects the core value that a professional agent brings. Finally, I want to emphasize that this transformation is a long-term journey. Our approach is a small-scale piloting, continuous integration, and data-driven validation over the long run. If we can keep improving the decision quality of both sellers and buyers, there is significant room to expand the service penetration and efficiency.

The next question comes from Timothy Zhao at Goldman Sachs.

Thank you for giving me this opportunity to raise a question. My question is about the home renovation and furnishing business. We have seen some decline in this part of the business. Could you share with us what reasons are now driving this decline, and how do you make of the recent tendencies in this business? Since, given the current KPIs of this part of the business, what are exactly are the major KPIs you're focusing, and what progress have you made in that regard? Thank you.

Well, thank you for the question. I want to explain three reasons. First is our business changes. We have shut down some of our traditional business parts, and that is the first reason. The second one is that we have narrowed down some part of our furnishing and renovation businesses in some cities.

The other one is that we have seen a declining market trend, and there are also some declines in the demand for renovation and furnishing. How do we read the decline? As you said, this year, our focus is not to focus on the scales. 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. Going forward, we'll continue to deepen synergies with our home transaction services to improve conversion and gradually enhance revenue performance.

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. 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. 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 a 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 enhance unit economics through module reuse and SKU concentration, design tools, and standardized delivery processes. In terms of construction fulfillment and delivery standardization, this year we have extended professionalization of project managers to the works 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. Workers with a 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 risk, 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 and solution design rendering, online quotation, and construction drawing output. This enables us to build a closed data loop on the platform, which in turn supports the continuous iteration of our BIM tools and helps improve design productivity.

Overall, while the revenue side has been affected in the near term by adjustments and a volatility in external demand transmission, we're seeing improvements in the underlying capabilities of the business, and particular standardization and replicability are gradually being strengthened across key areas. We believe revenue from our home renovation furnishing business can stabilize and return to quality growth.

The next question, please.

Congratulations on the positive trend. It has been clear year-over-year improvement in profit margins across the company's businesses in Q1. How does the management assess the sustainability of current margin levels? Is there further room for improvement going forward?

Thank you, John, for the question. Our profitability improved significantly year-on-year in Q1. Our gross margin reached 24.1%, up 3.5 percentage points year-on-year, and non-GAAP operating margin reached 8.8%, up 3.9 percentage points, both at a seven-quarter high. This margin improvement wasn't driven by any single business or one-off factor. It is the result of a series of proactive optimizations across operating quality, resource allocation, cost structure, and unit economics.

Looking at each business in Q1, contribution margins improved year-over-year across all our core businesses. Starting from our housing transaction business, the contribution margin improvement in existing home transactions came mainly from lower fixed labor costs and higher agent productivity. Fixed labor costs in existing home transactions were down 24% year-on-year in Q1, which was a key driver of the margin expansion. This reflects the work we've been doing since last year on Lianjia, including refining store and agent scale, optimizing organizational structure, improving resource allocation efficiency, et cetera. In the long run, further upside will come from continued gains in Lianjia store and agent productivity and resource conversion efficiency as our business and transformation go forward. The new home business's more refined operational management brought the overall variable cost ratio down 2.7 percentage points.

Going forward, we'll innovate our service model by providing developers with a full lifecycle project solution by leveraging our data, marketing, and other capabilities. This will diversify our revenue mix and support stable profitability. In home renovation and furnishing, contribution margin improved mainly thanks to lower material costs and higher labor productivity. Since last year, we've been actively advancing centralized procurement alongside localized embedding. This has driven down prices on some materials by more than 20%, and those cost savings continue to flow through this year. We've also optimized our order dispatch system, routing more orders to project managers with stronger execution capabilities who focus on serving platform customers and tightening their service radius to improve productivity per person.

Looking ahead, as supply chain scale benefits continue to materialize and service provider productivity further improves, there's still room to optimize the unit economics of our home renovation business. In home rental services, contribution margin improved quarter-over-quarter, mainly driven by better unit economics in our Carefree Rent and a structural shift toward rental units accounted for under a net accounting method, which carries a higher gross margin. As of the end of March, net method home units accounted for over 40% of our managed inventory. Meanwhile, the UE improvement came from several drivers. Higher productivity, which both reduced internal costs and streamlined operational labor, better supply chain pricing, which lowered the maintenance and cost ratio, and some seasonal factors as well.

Looking forward, with quarterly margins fluctuating in May, the shift toward higher-margin revenue, combined with continued improvements in our products and operations, leaves room for further improvement in the unit economics in rental services. On the expense side, total operating expenses in Q1 hit a near record low. The decline across all three expense lines was driven by improvements in organizational productivity and disciplined financial management, including refined control of marketing spend. On AI, we're maintaining a disciplined investment approach. We continue to scale up investment in core business models and foundational AI capabilities while actively reviewing and reallocating resources from lower ROI projects to areas with higher long-term value creation. This lets us keep investing in long-term capabilities on a solid financial foundation, support sustainability, and continue opening up new and more efficient avenues for growth.

For the whole year, our home transaction business has built great earnings flexibility. The profitability model in our two-wing businesses will continue to improve, and our cost discipline remains firm. Our quarterly margins may show some seasonal fluctuations, but we stay confident in year-on-year margin improvement for the full year. Thank you.

Thank you, Mr. Xu. With that, we conclude our Q&A session. Thank you once again for joining today's conference call. Should you have any further questions, please reach out to KE Holdings' investor relations team via the contact details listed on our website. This brings today's earnings call to a close. We look forward to connecting with you again next quarter. Thank you and goodbye.

Hello, ladies and gentlemen. Thank you for standing by for KE Holdings, Inc. Fourth Quarter and Fiscal Year 2025 Earnings Conference Call. Please note that today's call, including management's prepared remarks and a question-and-answer session will all be available in English. Simultaneous interpretation in Chinese is available on a separate line for the duration of the call. [Operator Instructions] Today's conference call is being recorded. I will now turn the call over to your host, Ms. Siting Li, IR Director of the company. Please go ahead, Siting.

Thank you, operator. Good evening, and good morning, everyone. Welcome to KE Holdings Inc, Beike's Fourth Quarter and Fiscal Year 2025 Earnings Conference Call. The company's financial and operating results were published in the press release earlier today and are posted on the company's IR website, investors.ke.com. On today's call, we have Mr. Stanley Peng, our Co-Founder, Chairman and Chief Executive Officer; and Mr. Tao Xu, our Executive Director and Chief Financial Officer. Mr. Xu will provide an overview of our business update and financial performance, then Mr. Peng will share more on our strategic update and thinking. Before we continue, I refer you to our safe harbor statement in our earnings press release, which applies to this call as we will make forward-looking statements. Please also note that Beike's earnings press release and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial measures. Please refer to the company's press release, which contains a reconciliation of the unaudited non-GAAP measures to comparable GAAP measures. Lastly, unless otherwise stated, all figures mentioned during this conference call are in RMB. Certain statistical and other information relating to the industry in which the company is engaged to be mentioned in this call has been obtained from various publicly available official or unofficial sources. Neither the company nor any of its representatives has independently verified such data, which may involve a number of assumptions and limitations, and you are cautioned not to give undue way to such information and estimates. For today's call, management will use English as the main language. Please note that the Chinese translation is for convenience purpose only. In the case of any discrepancy, management statements in their original language will prevail. With that, I will now turn the call over to our CFO, Mr. Tao Xu. Please go ahead.

Thank you, Siting. Hello, everyone. Thank you for joining our 2025 Q4 and full year earnings call. To begin, I would like to provide a summary of our financial highlights for the fiscal year of 2025. In 2025, in response to evolving customer needs, we initiated a strategic pivot from sales-driven to efficiency-driven growth to optimize our business model, better leverage technology and improve our cost structure and unit economics, we implemented a series of initiatives, these efforts are laying the foundation for more sustainable growth while strengthening the stability and the flexibility of our earnings model. First, our fee revenue remained relatively stable amid market fluctuations, outperforming the broader industry trend. This performance was underpinned by a more diversified and the countercyclical business structure. Revenue from our non-housing transaction business accounted for a record high of 41% of total revenue. The internal structure of the housing transaction services also improved. With the existing home GTV accounting for 67.6% of our total GTV, reflecting our focus on market segments with greater structural growth potential. Notably, the GTV contribution from connected brands further increased to approximately 63% of our existing home GTV, indicating higher contribution of revenue with lighter business model. The existing home platform service revenue was basically stable year-on-year, also demonstrating the resilience of our platform business model. Second, our operational efficiency improved and the cost structure was optimized, laying foundation for future profit expansion. In our existing home business, fixed labor costs recorded a sequential decline for the 4 consecutive quarters throughout the year, significantly enhanced the profit elasticity. By the end of the year, we had a same release of operating leverage with the contribution margin of existing home business rebounding sequentially in Q4. In our new home business, both variable cost ratio and fixed personnel expenses decreased year-on-year, driving a 0.2 percentage points year-on-year increase in the full year contribution margin. The home renovation business significantly narrowed its operating losses and home rental services turned profitable at the operating level for the full year, with their contribution margin rising by 0.7 percentage points and 3.6 percentage points year-on-year, respectively. The overall operational efficiency also continued to improve with operating expenses ratio down 1.4 percentage points year-on-year. Third, we remain steadfast in our commitment to delivering active shareholder returns. In 2025, our total share repurchase reached approximately USD 921 million, a year-on-year increase of around 29%. Furthermore, we are pleased to announce a final cash dividend plan for 2025 of approximately USD 0.3 billion, bringing our full year total shareholder return to approximately USD 1.22 billion, a year-on-year increase of around 9%. This accounts for approximately 170% of our 2025 non-GAAP net profit, far exceeding the proportion of the 2024. Turning to our Q4 performance. Due to the high base in the same period of 2024, our GTV and revenue saw a notable year-on-year decline. Our GTV reached RMB 724.1 billion, representing a decrease of 36.7% year-on-year. Revenue was RMB 22.2 billion, down 28.7% year-on-year. As a result of the decline in transaction scale, our gross profit margin was 21.4%, a year-on-year decrease of 1.6 percentage points. Q4 GAAP net profit was RMB 823 million (sic) [ RMB 82 million ], down 85.7% year-on-year. Non-GAAP net profit was RMB 517 million, representing a year-on-year decline of 61.5%. It is important to note that our bottom line performance in Q4 was partially affected by one-off expenses related to our cost optimization initiatives, which this adjustment weighed on near-term profitability. They are helping us to streamline our cost structure and position the company with greater operating leverage going forward. With that overview, I'd like to provide some details on the financial performance of each business segment. In our existing home business, due to the relatively higher base in the same period last year, the scale of our existing home transaction business declined in the fourth quarter, while the profitability improved. GTV from the existing home business reached RMB 482 billion in Q4, reflecting a 35.3% decrease year-on-year and a 4.7% decrease quarter-on-quarter. Revenue was RMB 5.4 billion, down 39% year-on-year and 9.2% quarter-on-quarter. GTV outperformed revenue year-on-year was mainly due to the higher GTV contribution from the existing home transaction facilitated by connected agents for which revenues are recorded on a net basis. On a quarter-on-quarter basis, GTV outperformed revenue was mainly driven by the structural shift as the revenue contribution from the rental brokerage services decreased amid the seasonal fluctuations, which have a relatively higher take rate. In this segment, revenue from platform service decreased by 19.9% year-on-year, significantly outperforming the overall GTV decline and demonstrating the resilience of the platform model. Despite the year-on-year adjustment and the sequential decline in revenue, the contribution margin of the existing home business reached 40.4%, remaining stable year-on-year and rising 1.5 percentage points quarter-on-quarter. This resilience in profitability against external volatility is a direct result of our disciplined headcount control and our focus on organizational efficiency in 2025. For new home business, affected by high base, the scale declined year-on-year, with profitability improved. GTV reached RMB 207 billion in Q4, a year-on-year decrease of 41.7% and a sequential increase of 5.5%. Revenue from the new home business was RMB 7.3 billion, a year-on-year decrease of 44.5% and a sequential increase of 9.4%. GTV outperformed the revenue year-on-year was mainly due to the higher base of monetization rate, while revenue outperformed GTV quarter-on-quarter, primarily due to the seasonal factors, even with the significant scale fluctuation, the contribution margin of the new home business rose to 28.3%, an increase of 2.6 percentage points year-on-year and 4.2 percentage points quarter-on-quarter, benefiting from the cost structure optimization driven by new home operations. For home renovation and franchise services, revenue reached RMB 3.6 billion in Q4, a year-on-year decrease of 12% and a sequential decrease of 15.9%. This temporary softening in revenue reflects our prudent balance between scale and risk, as we proactively optimized our channel structure and moderate pace of certain non-brokerage channels. Contribution margin was 28.8% in Q4, down 0.9 percentage points year-on-year and 3.2 percentage points quarter-on-quarter, mainly because we made provision for potential warranty costs of the home renovation orders still on the warranty period at the end of 2025 based on the principle of the prudence. Excluding this impact, our core cost structure continues to improve. This increased the centralized procurement has led to a sustained savings in material costs. Turning to our home rental services. Revenue reached RMB 5.4 billion in Q4, a year-on-year increase of 18.1% with profitability improved. The growth in revenue was mainly driven by the rapid growth in the number of the rental units under management. At the end of Q4, we had over 700,000 rental units under management, a year-on-year increase of around 62%. On a sequential basis, revenue saw a slight decrease of 5.5%, mainly due to change in accounting method brought by product model upgrade. The Carefree Rent business has continued to iterate towards lighter and lower rates of product model, leading to an increase in the proportion of rental units with revenue recognized on a net basis, which has a temporary impact on the revenue scale. However, this does not change the robust growth trajectory of our management scale or the service capability. Meanwhile, the contribution margin from rental services was 10.4% in Q4, up 5.9 percentage points year-on-year and 1.7 percentage points sequentially, mainly driven by 2 factors: first, the structural improvement from the ongoing shift towards a lighter product model. As of the end of 2025, the proportion of rental units with revenue recognized on a net basis has exceeded 30%. Second, operational efficiency gains that optimized our unit economy model. Through the process restructuring and professional role specialization, we have significantly improved the productivity of the property managers, leading to a notable optimization of labor costs. In addition, the gradual penetration of AI technology across the entire operation value chain has laid the foundation for the large-scale expansion and the sustained profitability of the business. In Q4, our revenue from emerging and other services increased by 4.5% year-on-year and 16% quarter-on-quarter to RMB 459 million. Now moving to other financial metrics in Q4, including other costs and expenses, profitability and cash flow. Our store costs were RMB 710 million in Q4, a year-on-year decrease of 9.6%. This was primarily driven by the optimization of rental cost for our Lianjia stores and the refinement of our store structure. On a sequential basis, store costs increased by 7.2%, primarily due to one-off expenses from the store closures. Q4 gross profit decreased by 33.7% year-on-year to RMB 4.8 billion, remaining relatively flat sequentially. The gross margin was 21.4%, a year-on-year decrease of 1.6 percentage points, mainly due to the declining revenue contribution of the existing home and the new home segments, which have relatively higher contribution margins. This impact was partially offset by the year-on-year gross profit margin expansion of the home rental business. Our gross margin was relatively flat quarter-on-quarter. In Q4, GAAP operating expenses were RMB 4.9 billion, a year-on-year decrease of 20.4% and a sequential increase of 13.3%. The quarter-on-quarter increase was mainly due to one-off expenses related to the cost optimization initiatives. Excluding this nonrecurring impact, the trend of operating expenses is fully consistent with our efficiency improvement efforts. This expense optimization initiatives position us for greater operating leverage moving forward. To break down the components, G&A expenses were RMB 2.3 billion, down 23.9% year-on-year, mainly due to the reduced bad debt provisions and lower share-based compensation. The 20.8% sequential increase was mainly due to the aforementioned one-off optimization costs. Sales and marketing expenses were RMB 1.9 billion, down 17.7% year-on-year, mainly due to the lower personnel-related expenses driven by operational efficiency improvements. The 11.7% sequential decrease was mainly due to the seasonal marketing and promotion expenses. R&D expenses were RMB 715 million, relatively flat year-on-year and up 10.3% quarter-on-quarter, mainly due to the aforementioned one-off optimization costs. Moving to our bottom line performance. Our GAAP operating losses was RMB 147 million in Q4 compared with a profit of RMB 1.01 billion in Q4 of 2024 and RMB 608 million in Q3. The operating margin was negative 0.7%, a year-on-year decrease of 3.9 percentage points and a sequential decrease of 3.3 percentage points. The non-GAAP income from operations totaled RMB 323 million, decreasing 81.6% year-on-year and 72.5% quarter-on-quarter. The non-GAAP operating margin was 1.5%, a year-on-year decrease of 4.2 percentage points and a sequential decrease of 3.6 percentage points, mainly due to the increase in the operating expenses ratio. Finally, GAAP net income totaled RMB 82 million in Q4, down 85.7% year-on-year and 89% quarter-on-quarter. Non-GAAP net income was RMB 517 million, falling 61.5% year-on-year and 59.8% quarter-on-quarter. Moving to our cash flow and the balance sheet. We generated net operating cash inflow of RMB 1.9 billion in Q4. In 2025, our full year net operating cash flow was below the profit performance, mainly affected by the timing factors in working capital, including the payment of the accrued bonus from the previous year and the change in contract liability in our home renovation business due to order intake are moderated. Excluding the impact of above timing factors, our net operating cash flow performance was broadly consistent with the profitability. Our new home accounts receivable turnover days was 44 days in Q4, a sequential decrease of approximately 10 days, remaining at a healthy level. In addition to spending approximately USD 246 million on share repurchase during Q4, our total cash liquidity, excluding customer deposit payable remained at around RMB 68.7 billion. With a robust cash reserve, we placed a high importance on shareholder returns. We spent approximately USD 921 million on share repurchase for the full year of 2025, representing approximately 4.1% of total share outstanding at the end of 2024. Our track record reflects a consistent dedication to fulfilling our promise to shareholders. Since the launch of our share repurchase program in September 2022, we have repurchased a total of approximately USD 2.5 billion in shares at the end of 2025, a total reduction of approximately 12.6% of company's total issued share prior to the program launch. On top of this robust shareholder return, we are pleased to announce a final cash dividend plan totaling approximately USD 0.3 billion, which will be funded by surplus cash on our balance sheet. With this, our total shareholder return for 2025 significantly exceeded our non-GAAP net income, representing around 170% of our total -- of our non-GAAP net income for the year. Overall, in 2025, we placed a greater focus on improving operation quality and resources allocation efficiency, while continuing to optimize our business mix, cost structure and expense discipline. Our current cost structure is more streamlined. The profit model is clear and the profitability quality of each business segment has improved. We have also adopted a more comprehensive and prudent approach for the pace of our emerging business, heavy investments and risk control, which has ensured a sound balance sheet. Looking ahead to 2026, we will maintain prudent financial discipline and strike a balance between efficiency and growth. We will continue to improve our earning qualities, optimize our capital efficient structure while safeguarding our long-term competitiveness, thereby creating sustainable value for our shareholders. Thank you. Next, I would like to turn the call to our Chairman and CEO, Stanley.

Thank you, Tao. Good evening, everyone. Thank you for joining us today for Beike's Fourth Quarter and Full Year 2025 Earnings Conference Call. Over the past year, we have seen many changes in the market. For example, the transaction structure is evolving. The share of our existing home transaction in China's housing market continues to increase. In 2025, the number of existing home transactions nationwide hit a historical high. The new home market is also seeing greater differentiation with higher quality and new standard projects attracting stronger market demand. More and more young people are choosing to rent while rental yields are gradually improving. Customer transaction behavior is also changing. Housing information is becoming increasingly abundant, yet the decision-making process is becoming more complex. Both buyers and sellers are thinking are taking longer to complete transactions, the cost of making a mistake is much higher now and consumers are more and more cautious. Buying a home used to be a relatively easy decision. Today, it's a balancing act that can require a careful reallocation of family assets. At the same time, something have not changed. The overall demand for better living remains stable and consumers' demand for safe, professional, transparent and reliable services is still strong. By looking at what has changed and what has stayed consistent, we can tell two very important things: first, China's residential market remains the largest and most valuable housing market in the world; second, the housing service industry has made a fundamental shift in its approach. Today, the consumer needs more professional services that offer certainty in decision-making. The industry is entering a new stage where core competency will no longer be defined by resource scale, but by service capability and operational efficiency. Ultimately, creating value for customers will be the only stable source of our long-term growth. And this trend, we can continue to evolve in 2025. First, we improved our operational governance, creating more rooms for long-term strategic transformation and enabling us to continue driving progress across the residential service industry. Second, we upgraded our strategy, leveraging data and AI. We are rebuilding our service logic around consumer, customer value through greater value creation, we aim to improve the platform overall customer coverage, resource conversion efficiency and unit outputs. Our growth model is, therefore, shifting from when driving primarily by the scale of agents and stores to when driving by efficiency and value creation. In the past, we focused on expanding the number of stores, listing coverage and lead volume. Going forward, we will focus more on delivering greater certainty in transactions for customers, improving matching precision and strengthening the unit economics. Specifically, we are working in 4 key areas: first, upgrading transaction services into full process decision support services, improving professionalism and certainty in the service process; second, optimizing resource allocation through data and AI, so consumers can receive high-quality, better matching services; third, embedding AI capabilities into our service workflows, helping service providers and the platform deliver more professional, people-centric services; fourth, building diversified service capabilities across the broader residential ecosystem to meet customers' full range of housing needs. Next, I will walk you through the progress of our major business segments in 2025 and share some of our thinkings. For existing home business, the platform facilitated RMB 2.15 trillion in GTV from the existing home transaction in 2025. Within that total, the number of existing home sales transactions increased by more than 10% year-over-year, reaching a record high. At the same time, transaction volume from platform connected stores increased by 15% year-over-year. These 2 figures highlight the resilient demand in the existing home market and the strengthening of our platform model. The overall scale of agents and stores on the platform remained stable with more than 58,000 connected stores and over 445,000 agents at year-end. In terms of productivity, in 2025, the average number of the in-home transaction per connected agents increased by 6% year-over-year, rising from less than 2 transaction per agent in 2022 to more than 3. For our directly operated Lianjia business, we proactively optimized store networks and agent structure in 2025. We focus on high efficiency capability and deeper operations in core cities. O the adjustments, Lianjia's per agent productivity in core cities improved indicating we are gradually achieving a healthier balance between scale, discipline and productivity improvements. Operationally, we upgraded our lead allocation mechanisms and refine store services, ensuring that high-quality clients receive services better matched to their needs. We also continue upgrading our service model to adopt a more consultative approach, moving beyond simple property tools and matchmaking for a deeper support for decision-making. In today's market environment, customers do not like information. In today's market environment, customers are not short of information. What do they lack? It's the assistance in making judgment. AI is becoming a new productivity engine for our industry. Property transactions are not standardized commodity transactions. They involve both rational analysis and emotional judgment. They require both data support and real-world offline experience. In the past, the industry has not done a good job of structuring the rational parts of their process nor has it placed emotional aspects where they create the most value. In some cases, emotional judgment has even been used to replace decisions that should have been made rationally. When these 2 elements become into win, when it wins, it inevitably leads to a loss of efficiency. AI can make the rational part of the process extremely rational while amplifying the value of the human and emotional aspects that must be handled by people. In our industry, machines can process data, but true judgment, explanation and trust still need to come from people. AI cannot be ignored nor can humans be replaced. This is why our strategy is to combine human expertise with AI capabilities. We are embedding AI directly into our core operational scenarios across the platform. For example, in our housing transaction business, AI making marketing assistant help agents automatically generate marketing materials, AI simulated tools also help service providers through customer interaction scenarios and continuously improve their professional capabilities. Going forward, AI will attract as our copilot for service providers across the entire customer life cycle. This includes demand identification, precise matching between agents, homes and customers, pricing decision support and process automation. Over time, AI will help package the expertise of those top performing service providers so that these professional skills can be shared and used across the platform. New home business transitioning from channel dividend to structural efficiency. In our new home business, we are shifting from relying on channel distribution advantages to driving growth through structural efficiency improvement. In 2025, Beike facilitated RMB 890.8 billion (sic) [ RMB 890.9 billion ] in new home GTV, despite a volatile market environment, we see to outperform the broader market, building on our growing listing supply and channel sales scale, we are now driving sustainable growth by improving structural efficiency. This includes optimizing the mix of customers, projects and service providers as well as improving matching precision. For homebuyers, we are strengthening capabilities in customer demand identification, cross-project comparison, service providers matching and decision support. For developers, we are beginning to provide early-stage project positioning insights while also offering integrated marketing and sales services in the later stage of project sell-through. For service providers, we continue to refine evaluation system and operational tools and refine our resource allocation mechanisms, ensuring that agents with stronger conversion capabilities are matched with the right resources. Our goal is to upgrade the new home business from a model focused on traffic distribution to one that delivers greater certainty of results for all participants in the ecosystem. New business from scale exploration to profit quality and sustainable models. Beyond brokerage services, our home renovation and furnishing and home rental business both enter a healthier stage of development in 2025. Across both business segments, we are placing great emphasis on profit quality and on building sustainable and replicable operating models. This is the foundation for this business to scale over time. In the home renovation and furnishing segment, full year revenue grew by 4.4% to RMB 15.4 billion, while profitability improved meaningfully. Contribution margin increased to 31.4%, up 0.7 percentage points year-over-year and operating losses narrowed significantly. Over the past year, we have focused on advancing product standardization and design digitalization through our system called packager and modularized product offerings as well as AI enabled online design workflow, we are gradually turning design capabilities into system capabilities. This have reduced service variance and improve conversion efficiency. At the same time, we have been advancing supply chain integration and building standardized delivery systems while improving the customer experience. These efforts have also enhanced profitability, while gross margin increased losses narrowing significantly. And the home renovation business is evolving from a project-based model reliant on individual experience to a more scalable and replicable service model. We have also established a clear path toward long-term profitability. In our home rental services segment, the number of managed units exceed 700,000 by year-end, representing a 62% year-over-year increase. The business achieved full year profitability with contribution margin improved to 8.6%, up 3.6 percentage points year-over-year, demonstrating a meaningful improvement in profitability. We continue to upgrade the product structure towards lighter, more resilient and more controllable models while strengthening unit economics at the individual property level. By redesigning our workflows and introducing specialized roles, the operational efficiency of core service providers continues to improve. AI capabilities are gradually being embedded into key areas, including property sign-up, pricing support, leasing management and upgrading strategy. This helps reduce operational risk, including increased leasing efficiency and optimize cost structures. With this improvement, our rental business is forming a more stable profitability profile and more consistent cash flow. Overall, our new business are moving from a phase of scale exploration into a stage focused on business model validation and profitability improvement. As these models mature and technology adoption increase, that will further diversify our revenue structure, strengthen resilience across market cycle and better serve our consumer broader residential needs. At the organizational level, we are also advancing structure optimization and rebuilding capabilities. The purpose of our organization is not simple to manage metrics, but to continuously improve the customer experience. We are streamlining organizational structures, simplifying management layers that do not directly create customer value and encourage managers to move closer to the front line to better understand and create customer value in real operating scenarios. In terms of capital allocation, while maintaining a strong cash position and the ability to invest for the long term, we continue to deliver meaningful returns to shareholders. In 2025, we repurchased approximately USD 920 million in shares, representing about 4.5% of our total shares outstanding at the end of 2024. We also announced a final cash dividend. In total, shareholder return for the year was approximately USD 1.22 billion, significantly exceeding our non-GAAP net income for the year. I believe our long-term advantage lies in the combination of organizational efficiency and capability -- capital efficiency. For 2026, we maintain a neutral market view, given the scale of China's real estate market and the continued differentiation in demand structures, long-term value will not be driven by just buying staffing or adding more labor. Instead, it will be determined by how deeply we understand customer needs and by the systematic service capabilities we build around the entire customer life cycle. For Beike, 2026 will be a year of validating our decision support service model. We will focus on testing how this model improves conversion rates and unit economics. 2026 will also be a year of strengthening our service and organizational capabilities. This capability will allow us to demonstrate greater operational resilience as the industry stabilizes. In a new cycle, true leadership will not come from scale, but from capability. And the foundation of capability, we believe, ultimately lies in only one thing, that is continuously creating real and verifiable value for our customers. With that, we can now move to the Q&A session. Thank you.

[Operator Instructions] Your first question comes from Timothy Zhao with Goldman Sachs.

[Foreign Language] My question is regarding our operating efficiency enhancement on the store level and agent level. I was just wondering after the restructuring and investments, have we observed any change in terms of agent efficiency? And if this year, the overall market recovers, do we have enough power to gain share? And going forward, what are our execution plan in terms of future efficiency-driven growth strategy?

Thank you, Timothy. First, the strategic upgrade from scale-driven assumption to efficiency-driven growth is the natural and inevitable outcome of the evolution of our platform business. What this transition really means is upgrade in the way value is created, that created its great value for our customers. We aim to improve the penetration of community-based into residential services, increase the conversion efficiency of resources and ultimately drive the business growth. This is in fact the opposite of logic of simply cutting capacity or contracting the business. To understand this evolution, we need to ask a more fundamental question. What truly determines the capacity in our industry? What are the core production factors and the production function. What customers truly need is not simply more agents or more stores, but higher quality and more reliable decision support. This includes more precise matching, more effective marketing solutions and more comprehensive home buying planning solutions. What we are doing is reallocating resources from nominal capacity to effective capacity, concentrating our organizational efforts on areas that generally solve customer problems. Against this backdrop, in 2025, we have taken several stance around our agent and store network. First, we do believe in the business, we have a concentrated resources on high-performing stores and agents to improve operational efficiency. Going forward, we will further strengthen our management structure so that managers with the strongest customer service capability can stay closer to the front line to create value. At the same time, while confining and embedding the high-quality service capabilities into platform and is a division of labor system rather than leaving them dispersed among individuals. Second, on the broader platform side, we continue to expand the scale of agent stores, but with a greater emphasis on the quality and efficiency. By the end of 2025, the number of active connected stores and agents continue to grow significantly year-on-year, increasing by 29% and 27%, respectively. At the same time, we are optimizing the structure of the network by identifying and amplifying the value of high-performing high-rated store and agents. In the first quarter, agents activity improved sequentially. In cities, excluding Beijing and Shanghai, the digital conversion rate for its in-home sales increased by around 8% quarter-over-quarter, while average per agent commission income from existing and new home transactions increased by 2% sequentially. We are also improving the efficiency more platform-based capability, including AI-driven tools. Third, data and AI are the most important drivers behind this evolution, leveraging our data and AI capabilities, while redesigning many aspects of the platform, including resources allocation mechanism, the division of growth among service providers and the service process for both homeowners and buyers. In many areas, this represents a systematic redesign of how the platform operates. Meanwhile, as housing decisions become more complex for consumers, our opportunity to create value also grows, helping customers reduce the profitability of the [indiscernible] in one of their most important decisions of their lives, selling or buying a home or improving the overall service experience creates value for each individual customer. At the same time, it helps reduce the friction across the entire market and potentially increases market turnover, effectively expanding the size of our market. Therefore, to answer your question, the future growth and earnings elasticity of the platform will not depend on who has the largest headcount or store count. Instead, it will depend on the expansion of platform's capability boundary, as well as those of the service providers operating on the platform. Those stronger professional services and higher overall efficiency, we aim to earn the trust and choices of the more customers.

Your next question comes from Zhen Guo with Guangfa Securities.

[Foreign Language] Let me translate my question. My question is about the new home business. The new home market is facing multiple pressures, including developers struggle with sell-through, declining profitability and increasing market concentration among state-owned companies. Management mentioned innovations in marketing model in the new home business. How will the innovation change the company dynamics and the relationship with the company -- with the developers? How will the performance of the new home business be sustained?

Thank you, Zhen. Our view on the new home business starts from the structural change in industry. The level of the digital penetration in the new home sector remains relatively low. In the past, our operating model for the new home business was largely based on the traditional channel sales logic. This involved allocating resources around commissions and traffic and leveraging our massive channel traffic to solve developer sell issue for the core projects. This model was effectively -- this model was effective during the market expansion phase, but under current conditions, its boundary are more limited. It can only serve certain projects at certain buyers and the value creation for developers and especially for homebuyers is relatively constrained. We believe the new home market is entering a new stage. For homebuyers, the concern is not whether there is enough information, but whether they can be more certain about the purchase decision. For developers, the key concern is no longer simply gaining another sales channel, but whether they can achieve more predictable sales results within a constrained market. Accordingly, we are upgrading the role of our new home business from a channel player to an integrated capability platform. Number one, the level of online integration and digitalization in the new home segment remains relatively low. This represents a common pain point across the industry, but also a significant opportunity for upgrading. We are working to enhance the online decision-making support in new home journey through the stronger data and product capabilities, truly helping customers solve their most difficult decision-making pain points. Number two, we will further optimize allocation of the traffic resources by leveraging our data and system capabilities to improve the structural matching efficiency between purchase and potential buyers. We aim to expand service coverage among homebuyers, broaden the top of our funnel and ultimately improve the competitiveness and ultimately improve conversion. Number three, we view developers as our long-term clients rather than merely the channel sales partners. We aim to provide developers with an integrated solutions covering the product acquisition, customer acquisition, matching and the sales pace management, helping improve overall project efficiency and drive key pain points. In the long term, our goal is for the new home business to evolve beyond the transaction distribution layer and become an efficiency-enhancing platform between developers and homebuyers. As this capability evolves, our service offering and the revenue stream in the new home segment will become more diversified and our business model will become more resilient. We believe this evolution will be critical to sustaining our long-term competitiveness in the new home market. Thank you.

Your next question comes from Miranda Zhuang with BofA Securities.

[Foreign Language] my question is about AI. So with the recent rapid advancement of AI, how does the company view the potential impact of AI on the real estate sector? For Beike Company, how is AI being used to empower the different business lines? And what are the progress so far?

Thank you, Miranda, for your question. Recently, there have been many discussions about whether AI will bring a revolutionary impact to real estate brokerage industry. My view is that the key question is not whether AI will replace real estate agents, but rather how it will reshape the division of labor, value creation and organizational structure of the industry. A housing transaction is fundamentally not a short standard consumption decision. Instead, it's a long cycle, multistate and high complex decision-making process from searching for a property to make a decision to completing the transaction and then to move in operating the property and improve the living experience. There are many stages along the way where AI can significantly improve efficiency and in some cases, even automate the process. For example, information gathering, demand matching, process reminders, document generating, preliminary risk check and workflow coordination are all standardized and repetitive tasks governed by clear rules. In this area, AI can deliver significant productivity gains. We have already begun to see some very tangible changes internally. For example, in housing transaction services, agents previously spent a large amount of time organizing property information, creating marketing materials and responding to repetitive inquiries. With AI, we can now automatically generate AI video explanations, property interpretations and communication materials for clients, allowing agents to focus more of their time on understanding customer needs and supporting transaction decisions. In our rental business, AI is also beginning to participate in property acquisition decisions, rental pricing recommendations and leasing matching by analyzing historical transaction data, regional supply and demand and property characteristics, AI help our operators more quickly determine whether a property is suitable for acquisition, recommend a reasonable rental range and improve leasing efficiency while strengthening risk identification. Taken together, these capabilities essentially allow standardized tasks to be handled by the system, enabling service professionalism, professionals to focus more on complex decision-making and client service. At the same time, they are part of this value chain that are not easily replaced by AI. In fact, these areas may become even more important as AI develops. For example, someone still need to determine whether what the clients say they want truly reflects their underlying needs. Some may need to make pricing judgments to dynamically coordinate between buyers, sellers, mortgage providers, title transferring process and fulfillment risks and someone need to stabilize expectations and feeling at the final stage of a transaction. And ultimately, some may need to take responsibility. The core of this task is not simply information processing, but judgment, coordination, trust and accountability. This is where human value continue to lie. Therefore, our view is that AI will effectively split the workflow of this industry into two parts: one part will become highly automated with efficiency improving rapidly; the other part will increasingly concentrated on professional expertise, accountability and high-value services. From this perspective, the value of the traditional information intermediary will diminish, while the value of transaction responsibility and housing service infrastructure will become even more important. For Beike, this does not mean the opportunity becomes smaller, it actually become larger, because what Beike aims to build is not simply AI-driven efficiency. Our goal is to leverage AI to further upgrade ourselves into a comprehensive housing service infrastructure. On one hand, we want information matching processes and collaboration to become far more efficient. On the other hand, we want transaction responsibility, fulfillment assurance and service delivery to become more reliable. There is also another important characteristics of this industry. First, demand on the consumer side is difficult to fully articulate. Many clients cannot clearly express what they truly want at the beginning. Second, supply is highly nonstandardized. Homes are not fully standardized or commoditized products. Their pricing suitability and risk level all contain significant uncertainty because demand is difficult to articulate and supply is highly nonstandardized. This industry inherently requires people to interpret this plan, match, coordinate and ultimate take responsibility. Looking further ahead, AI's impact goes beyond this. As AI significantly improve the efficiency of standardized process, people will increasingly become the key variable that determine the upper bound of efficiency. In the past, inefficiency was often constrained by process, tools and information. But as these constraints are optimized by AI, the ultimate limit of our organization will increasingly depending on the capabilities of the service professional themselves. Moreover, the improvement in service professionals' capabilities is no linear. It has clear leverage effects as AI raise the efficiency baseline of the system, stronger service professionals can generate disproportionately greater marginal value. In other words, AI does not weaken service professionals. It differentiates them, amplifies the base events and makes the upgrading of the service capabilities itself, one of the most important growth levers. So for an organization, the real question is no matter whether they have AI, but whether they can organize people and organize people together with AI. In such an environment, organizational capabilities, collaboration mechanisms, culture and value become increasingly important. In highly efficient, transparent and collaborative systems, it becomes even more critical to have a stable set of value judgments, unified service standards and trusted behavior norms to connect every service professionals, every operational stages and every interaction with customers. From this perspective, the continued evolution of this industry will not be driven by a single force, but by 4 forces working together: the power of technology, which drives efficiency improvements and capability expansion; the professionalism of service provider, which determines judgment and service quality in complex scenarios; customer trust, which determine whether transaction can actually be complete and whether long-term relationship can be formed; and organizational culture and values, which determine whether the previous 3 forces can be continuously integrated into a stable, scalable and evolving system. In this sense, AI will indeed reshape the industry. It will eliminate information asymmetry, compress low-value competitive work, compress and amplify the value of professional services, transaction responsibility, customer trust and housing service infrastructure. Ultimately, what determines how far a platform can go is not simply whether it has AI, but whether it can truly integrate AI, professional service providers, customer trust and organizational culture into a continuously evolving model. Thank you.

Your next question comes from John Lam with UBS.

Stanley [Foreign Language]. So my question is regarding the new media. So how does the company look at the new media? And also, how does the company look at some of the KOL utilizing new media to facilitate the property transaction?

Thank you, John, for the question. Regarding the influence of influencers and public accounts on the company, my view is that whenever a phenomena continue to attract the attention of customers, it usually reflects some real demand. So rather than judging whether it is positive or negative, the more useful question is that needs, it is actually serving which customers it resonates with in which situations and what needs may not have been well addressed before. In my view, this also reflects a broader shift in the industry. In the past, the real estate industry was largely centered around the property itself. At that stage, the key question for many customers was simply whether there was a suitable home available and whether they could buy it. The property was the primary scarce resource and customer decision often revolved around the house itself. The personal needs and circumstances behind the decision were not always fully reflected in the process. Today, the situation has changed. The industry is moving from being centered on properties to being centered more on people. Customers are not just home buyers in an abstract sense. Each decision reflects a set of real-life considerations, including family structure, budget constraints, lifestyle preference, education needs, computing patterns, risk tolerance and plans for improving or relocation, buying, renting or upgrading a home may appear to be a real estate decision. But in many cases, it is essentially a decision about how people want to organize their lives. From this perspective, housing transactions have always involved complex decisions for a long time. However, the industry handled them more as a relatively light match-making process as customer needs become more complex and personalized. The decision is returning to its original nature. It requires understanding, explanation, judgment and trade-offs. Against this backdrop, the rise of self-media, influencers and public accounts is not simply about new media channels. What they provide is a different form of value. Their focus is not just on the properties itself, but on the person behind the decision. Through our content perspectives and explanations, they help customers better understand the market, compare options and reflect on their own needs. In doing so, they can help reduce decision costs and anxiety in making decisions. Customers follow them not simple to obtain more information, but because they hope someone can help them make judgment, compare alternatives and weigh different trade-offs. For our company, this phenomenon is both a reminder and an opportunity. The reminder that we should no longer think ourselves simply as an information platform that matches people with listings, instead, we need to become truly customer centered and focus on understanding the person behind the transaction. The opportunity that if we can combine content capabilities, professional service capabilities, execution capabilities and customer trust, we may be able to build a more durable and deeper competitive advantage. Influencers can provide our perspectives and influence. But in complex transactions, the responsibilities for execution, risk management and service delivery ultimately depending on a professional service system. So fundamentally, I do not think we -- the key question is whether self-media will negatively impact or not, company like ours, rather, what this phenomenon remind us is that customers today need more than probably information. What they increasingly need is decision support, professional judgment and trustworthy services centered around the individual. Company that can better meet these needs will be better positioned in the long run. Thank you.

Your next question comes from Eddy Wang with Morgan Stanley.

[Foreign Language] My question is regarding the renovation and furnishing business. We see the business has experienced slower revenue growth in 2025, but gross margin improved. What's the current status of the development in supply chain centralized procurement and the standardization execution? When should we expect to see the inflection point for the profitability in the home renovation business?

Thank you, Eddy. The slower revenue growth in 2025 was the result of our deliberate decision to control the pace of expansion. Home renovation is a delivery center business. If the underlying unit economy are not stable, progressive expansion itself becomes a risk. The liquidity challenges of certain industry players in 2025 further reinforce this pain point for us. As a result, our priority last year was repairing and validating the underlying profitability structure of the business. From the results we have seen so far, the contribution margin has improved and overall losses have narrowed significantly, which indicates that unit economics at the individual project level are becoming healthier. At the current scale of roughly RMB 15 billion in revenue, we break down improvements in unit economics into 3 main variables: product structure optimization, controlling explicit costs such as materials, labor efficiency and delivery efficiency, and the reduction of implicit costs, including rework, up sales issues and the reputation-related losses. In 2025, our primary focus was the cost side, on explicit costs. Centralized procurement across the supply chain has helped to optimize our material cost structure. We have completed the centralized national or regional procurement tenders for approximately 80% of our key materials and about 60% of our auxiliary materials. This has strengthened our buying power, improved long-term product quality stability and reduced exposure to the price volatility. At the same time, through the improvement in work order mismatch mechanism and also adoption of the digital design and modular tools, along with regular admission certification and rating system, we are building a dedicated pool for high-quality delivery teams. This has meaningfully improved the productivity of both project managers and designers. On interest and costs, we are even more focused on long-term fulfillment quality through measures such as fund escrow, service commitments and the greater standardization of an event collision detection, new design fees, we aim to reduce reward and delivery variability at the source, thereby improving the stability of the profitability at the project level. Looking into 2026, as unit economics continue to improve and our delivery capability become solidified, we plan to widen our funnel for the scale expansion in a disciplined manner. Our core approach is not simply to increase traffic, but to improve the traffic conversion efficiency. First, we will continue to optimize our product portfolio so that our offerings more precisely match the needs of different customer segments. Second, we will replicate the high conversion showroom model built around our selling centers, better connecting its in-home transaction with the renovation product experience and creating scenarios with higher certainty for decision-making. Third, we will deliver the neighborhood-focused operating model into more cities, leveraging collaboration between the brokerage agents and the renovation service providers within specific districts to improve the overall agent conversion efficiency. At the same time, as delivery becomes more standardized and the EPC costs continue to decline, improvements in customer satisfaction and reputation will create a positive feedback loop, providing a stronger foundation for the future scale expansion. Of course, it will take some time for this improvement to be fully reflected in our financial statements. Over the next 2 to 3 years, we will further integrate data flows across design, construction and operations. By leveraging BIM and the modular components and library to build product resource capability, we aim to gradually transform the home renovation from a project-based business into a replicable and scalable industrialized capacity system. Thank you.

Your next question comes from Brenda Zhao with CICC.

My question is related to the home rental business because in the past 2 years, the business has developed rapid profit growth, which has been a pleasant surprise. However, revenue has been contracted Q-on-Q due to the impact of the accounting treatment. I believe it may be fair to assess this business from the perspective of long-term unit economics. How does the company view the long-term UE trajectory and the potential for improvement in this business?

Thank you, Brenda. Regarding our rental business, I'd like to clarify 2 key aspects: the trend in business scale, and the profitability structure. First, from an accounting perspective, the short-term revenue contraction mainly results from the change in accounting treatment for the new product offering of our Carefree Rent business, which moved from gross revenue recognition to net revenue. Under in that method, we only recognize the service fee income, which more accurately reflect our growth as an asset management service provider. This accounting treatment, along with the lighter operating model and the substantially reduced risk profile under the new product offering. Importantly, this adjustment does not have a negative impact on our cash flow or the unit level profitability per managed of the property. If we look at the underlying business fundamentals, the scale of our managed rental unit continues to grow rapidly, both historically and looking ahead, the core operating metrics for this business, the number of units under management has maintained a strong expansion. By the end of 2025, our managed home units exceeded 700,000, representing a year-over-year increase of 62%. This growth reflects improvement in product competitiveness and the expansion of the market demand rather than any accounting change. Second, in terms of the profitability model, we focus more on the continuous improvement of the unit economics at the single unit level. In 2025, the rental business turned profitable for the full year after previous operating at a loss. The improvement in the profitability was not driven purely by the scale expansion. Looking ahead, we continue to see the room for the profit growth driven by the structural improvement in unit economics. This improvement mainly come from several factors. First, workforce productivity improvement, particularly improvement for the productivity of our key role, the property manager. In 2025, the average monthly number of the units acquired per property manager increased by 7% year-over-year, while the number of units managed per person increased by 42%. Second, lower customer acquisition cost per unit. This is driven by the improvement in channel efficiency and higher net conversion rates as well as stronger post-rental service experience and higher customer satisfaction, which led to improved renewal rates among both landlords and tenants, thereby reducing the cost of acquiring new customers. Third, optimization of the product structure. As a proportion of our life asset management product increased, risk-related costs declined significantly, in particular, the upgraded product structure has made our profitability model much less sensitive to rental price fluctuation. Overall, what we are seeing is a business where scale continues to grow rapidly, unit level profitability continue to improve and operational risk continues to decline. Looking ahead, the long-term evolution of the unit economics in the rental business will primarily be driven by product structure, upgrades that improve profitability stability and risk resilience, workforce productivity improvement, better channel efficiency, optimization of the customer acquisition costs and the continued benefit of scale expansion. From a financial perspective, we are building the rental business into a segment that is characterized by sustained scale expansion, improving profitability quality and increasingly stable cash flow. Thank you.

We are now approaching the end of the conference call. I will now turn the call back over to your speaker host today, Ms. Siting Li, for closing remarks.

Thank you once again for joining us today. If you have any further questions, please feel free to contact Beike's Investor Relations team through the contact information provided on our website. This concludes today's call, and we look forward to speaking with you again next quarter. Thank you, and goodbye.