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01/11 03:18
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a mixed picture. While there are positive aspects like growth in new home transactions and home renovation revenue, there are significant declines in gross margin and net income. The Q&A highlights management's focus on efficiency and AI, but also reveals concerns over policy uncertainties and vague responses on future market trajectories. The shareholder return plan and cash liquidity are positives, but the overall sentiment, considering the market outlook and financial metrics, remains neutral.
Total GTV RMB 878.7 billion, representing a year-over-year increase of 4.7%. The increase was attributed to the platform's agent and store network scaling along with refined operations and ecosystem improvements.
Revenue RMB 26 billion, up 11.3% year-over-year. The growth was driven by diversified growth drivers, including non-housing transaction services accounting for 41% of total revenue.
Gross Margin 21.9%, declined by 6 percentage points year-over-year. The decline was due to a decrease in contribution margin from leasing home caster services.
GAAP Net Income RMB 1.31 billion, falling 31.2% year-over-year. The decline was attributed to higher fixed labor costs and the lasting impact of the agent welfare improvement strategy implemented since last year.
Non-GAAP Net Income RMB 1.82 billion, down 32.4% year-over-year. The decline was due to similar reasons as GAAP Net Income, including higher fixed labor costs.
Existing Home Transactions Revenue RMB 6.7 billion, down 8.4% year-over-year. The decline was due to a higher GTV contribution from existing home transaction services facilitated by connected agents, for which revenue is recorded on a net basis.
New Home Transactions Revenue RMB 8.6 billion, rising by 8.6% year-over-year. The growth was attributed to steady monetization capabilities and refined operations.
Home Renovation and Furniture Business Revenue RMB 4.6 billion, increasing by 13% year-over-year. The growth was driven by an increase in home renovation orders and higher average revenue per order.
Home Rental Services Revenue RMB 5.7 billion, up 78% year-over-year. The growth was driven by the rapid increase in the number of rental units under management.
Emerging and Other Services Revenue RMB 432 million, decreased by 50.6% year-over-year. The decline was not elaborated upon in detail.
Home Renovation and Furniture Business: Introduced modular renovation products, leveraging customer data for smarter designs. Enhanced supply chain with digital infrastructure, centralized procurement, and reduced unit purchase price. Revenue increased by 13% year-over-year to RMB 4.6 billion.
Home Rental Services: Launched new product to address homeowners' needs. Leveraged AI for intelligent pricing and operational efficiency. Revenue reached RMB 5.7 billion, up 78% year-over-year.
Existing Home Sales: Outperformed market with a 26% increase in sales, compared to market growth of 19%. Share of existing home sales rose to 76% of total transactions.
New Home Transactions: New home orders increased by 19%, outperforming the market, which declined by 6%. Revenue from new home transactions rose by 8.6% year-over-year to RMB 8.6 billion.
Agent and Store Network Expansion: Active stores increased by 30%, and active agents grew by 19.5% year-over-year. Non-Lianjia stores and agents saw significant growth.
AI-Driven Operations: Implemented AI tools for home listing, customer acquisition, and transaction efficiency. Enhanced productivity and operational efficiency across various business segments.
Shift from Scale to Efficiency: Focused on improving productivity per store and agent while maintaining network scale. Leveraged AI and operational refinements to address evolving consumer needs.
Community-Centric Operations: Piloted premium home renovation stores in Beijing, emphasizing localized services and customer engagement. Shifted focus from traffic-driven to community-centric approach.
Real Estate Market Slowdown: The real estate market experienced a slowdown in Q2 2025 due to international trade friction and the fading impact of earlier policy measures, leading to a year-over-year decline in the market.
Gross Margin Decline: Gross margin declined by 6 percentage points year-over-year to 21.9%, primarily due to higher fixed labor costs and the impact of agent welfare improvement strategies.
Profitability Challenges: GAAP net income fell by 31.2% year-over-year, and non-GAAP net income decreased by 32.4% year-over-year, reflecting challenges in maintaining profitability.
Efficiency Issues in Housing Transactions: Softness in efficiency indicators for housing transaction services was observed, necessitating a shift from scale to efficiency to improve productivity per store and agent.
Agent Welfare Costs: Higher fixed labor costs and agent welfare improvement strategies have negatively impacted contribution margins in both existing and new home transaction services.
Home Renovation Business Challenges: The home renovation business faces uncertainty in customer decision-making due to traditional pain points like unclear costs and service reliability, requiring innovative solutions to build trust.
Home Rental Business Complexity: The home rental business faces diseconomies of scale, non-standardized operations, and low efficiency, which challenge profitability and scalability.
Increased Operating Expenses: Operating expenses, including G&A and R&D, increased year-over-year, driven by higher personnel costs, technical service fees, and bad debt provisions.
Regulatory and Market Risks: The company operates in a highly regulated real estate market, which could pose risks to its operations and strategic initiatives.
Real Estate Market Outlook: The company anticipates a continued recovery in the real estate market, although the pace may be influenced by international trade frictions and the impact of earlier policy measures.
Existing Home Transactions: Focus on improving operational efficiency and leveraging AI-driven technology to enhance productivity and transaction efficiency. The company aims to maintain its competitive edge in the existing home market.
New Home Transactions: Plans to refine management of new home projects using AI and improve customer demand stimulation and matching efficiency. Revenue growth is expected to align with GTV growth.
Home Renovation and Furniture Business: The company is piloting a community-centric premium store model to enhance customer engagement and operational efficiency. Focus on modular renovation products and centralized procurement to drive growth.
Home Rental Services: Plans to expand the use of AI to optimize resource dispatching, inventory, and occupancy rates. The company aims to build an AI-driven rental platform to improve operational efficiency and scalability.
Beihaojia Business: The company will not adopt an asset-heavy model but will focus on leveraging customer insights and AI-powered capabilities to add value to real estate projects. The goal is to offer differentiated products tailored to customer needs.
Shareholder Returns: The company has expanded its share repurchase program to USD 5 billion, extended to August 31, 2028, demonstrating a commitment to long-term value creation for shareholders.
Cash Dividend Distribution: Distributed USD 400 million for 2024 final cash dividend during Q2.
Share Repurchase Program: Spent approximately USD 254 million for share repurchase in Q2. Repurchased around USD 394 million worth of shares in 2025, accounting for around 1.7% of the company's total share outstanding at the end of 2023. Since the launch of the share repurchase program in September 2022, repurchased around USD 2 billion in shares as of June 2025, accounting for about 10.3% of total share outstanding before the program began. The Board has approved an expansion of the existing share repurchase program, increasing the authorization to USD 5 billion and extending the program to August 31, 2028.
The earnings call presents a mixed outlook. Positive aspects include strong growth in home rental services and cost control measures. However, the decline in gross profit and operating margins, coupled with unclear guidance on new home business growth, tempers enthusiasm. The Q&A section reveals concerns about market volatility and management's vague responses, which may cause investor uncertainty. The expanded share repurchase program is a positive signal, but without market cap information, the overall impact remains neutral.
The earnings call presents a mixed picture. While there are positive aspects like growth in new home transactions and home renovation revenue, there are significant declines in gross margin and net income. The Q&A highlights management's focus on efficiency and AI, but also reveals concerns over policy uncertainties and vague responses on future market trajectories. The shareholder return plan and cash liquidity are positives, but the overall sentiment, considering the market outlook and financial metrics, remains neutral.
The earnings report shows mixed signals: strong revenue growth and a significant increase in net income, but a decline in gross margins and net operating cash outflow raise concerns. The Q&A section reveals cautious optimism with some uncertainty in the housing market due to international trade frictions. The share repurchase program is a positive, but the lack of clear guidance on market impact and future margins tempers enthusiasm. Overall, the sentiment remains balanced, leading to a neutral prediction for stock price movement.
Despite some challenges like supply chain issues and economic factors, the company's strong financial performance, including significant revenue growth and a robust share repurchase program, indicates a positive outlook. The AI integration and expansion plans further bolster this sentiment. The Q&A section highlighted positive growth expectations and strategic focus on efficiency, which should support stock price appreciation. However, margin declines and operational cash outflow are concerns, but optimistic guidance and strategic initiatives should mitigate these. Overall, the stock is likely to see a 2% to 8% increase.
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