Hello ladies and gentlemen. Thank you for standing by for KE Holdings, Inc. Second Quarter 2024 Earnings Conference Call. Please note that today's call, including the management's prepared remarks and question-and-answer session will all be in English. Simultaneous interpretation in Chinese is available on a separate line for the duration of the call. To access the call in Chinese, you will need to dial into the Chinese language line. At this time, all participants are in listen-only mode. Today's conference call is being recorded. I'll 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., or Beike's Second Quarter 2024 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 Tao Xu, our Executive Director and Chief Financial Officer. Mr. Peng will provide an overview of our strategies and business developments and Mr. Xu will provide additional details on the company's financial results. 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 these conference calls 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 call are in RMB. Certain statistical and other information relating to the industry in which the company is engaged to be mentioned in these calls has been obtained from various publicly available official or unofficial sources. Neither the company nor any of its representatives have 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 English as the main language. Please note that the Chinese translation is for convenience purposes only, and in case of any discrepancy, management statements in their original language will prevail. With that, I will now turn the call over to our Chairman, CEO, Mr. Stanley Peng. Please go ahead, Stanley.

Thank you, Siting. Hello everyone. Thank you for joining Beike's second quarter and interim 2024 earnings conference call. In the second quarter, we continued to outpace the broader market. Since the beginning of the year, we have made strategic efforts to boost growth, foster our ecosystem, and transform our business into a technology-powered, one-stop residential services platform model. These efforts have paid off, and we achieved high quality performance across the board. A set of supportive policies generated overall market recovery in the second quarter. Notably, the existing home market, especially in fourth tier cities, rebounded sharply in May and June. Our home transaction business performed well within this favorable market environment with both our existing and new home transactions surpassing broader market performance. More specifically, in May, existing home transactions on Beike's platform saw positive GTV growth compared to the previous year. In June, growth surged by nearly 70% year-over-year. According to estimates from data disclosed by the housing bureaus and housing associations of the four first-tier cities, the total number of online restricted transactions for existing homes grew by around 16% year-over-year in the second quarter of 2024. For reference, while online restorative transactions on Beike's platform grew by 40% year-over-year, for new home transactions the contraction rate on Beike's platform narrowed to 25% year-over-year in May from contracted transaction value. And in June, GTV turned positive with the contract transaction value growing over 12% year-over-year. For the second quarter, GTV or CRIC's top 100 real estate companies declined by 35% year-over-year, while GTV contraction of Beike's platform narrowed to 20%. The improvements in the second quarter this year were partly due to the high base we saw in the fourth quarter. More importantly, our scientific management and proactive operational initiatives focused on improving our performance against internal benchmarks underpinned our ability to outperform in a relatively stable market. I'd like to share some color on our existing home business. In 2024, we have placed more emphasis on our operations in scaling up store and agency networks. Enriching community outreach and managing key housing projects to broaden our customer base and home listing coverage. Since the end of 2023, our platform has seen a net increase of over 2,400 active stores, or a 6% increase and a net increase of over 40,000 active agents. As we expand our touchpoints, we are also putting more effort into high-quality management, concentrating on quality home listings and exploring different ways to tap into new media-based opportunities for customer acquisition and conversion. All these initiatives have improved customer and home listing conversion rates. We also boost collaboration efficiency with efforts such as region-based core governance communities and reinforce business conduct governance by preventing private offline deals, improving closed loop management on our platform. On the new home business front, we doubled down on our efforts to increase the number of cooperative projects and strengthen our sales conversion capabilities. In terms of expanding our co-operation with more new home projects, we established an end-to-end monitoring process for all projects and are focused on managing key housing projects and developers to improve the quality of new home projects. To improve sales conversions, we overhauled our sales process this year. Our approach to new home sales used to follow a huge crowd strategy, focusing more on properties than on customers. This year, we are adopting a more precise approach driven by customer demands. In addition, we started monitoring and analyzing conversion data from our co-operation with upstream and downstream value chain partners on a daily basis. We also delivered impressive results in our non-home transaction business, or home renovation and furnishings and home rental services. Despite the challenging market, in the first half of the year, revenues from our home renovation and furnishings business and home rental services grew close to 60% and 177%, respectively, compared to a year ago and gross margins continued to improve. In fact, this year, we intentionally slowed down our pace in the home renovation and furnishing business against the rapid growth in scale we achieved last year. To give you some context, when exploring new business within a big organization, building confidence in business viability and continuity is the first and most important challenge. That's why last year was all about accelerating our scale, where we succeeded without compromising quality or reputation. This proves the business was viable, making a crucial first step. However, if you run too fast, you risk sacrificing quality and losing customer trust. How to balance scale and quality, and build trust is the second challenge to developing new business. Having confirmed the business's viability with last year's strong performance, we slowed down this year to ensure we are growing in the right way while addressing these critical challenges. This year, we have been focused on two areas. First, we enhanced our capability to deliver comprehensive well-thought-out service solutions. This includes improving our development of full-service complete renovation products, our management capabilities with service providers, supply chains, and the integrated delivery, as well as building the corresponding system infrastructure. Second, we activated and promoted the Home SaaS 2.5 system. We integrated these well-thought-out service capabilities we developed in Beijing into Home SaaS 2.5, which can handle up to 5,000 simultaneous construction orders. We also iterated the BIM SSC, middle office, and the integrated material fulfillment model. Our goal this year is to roll out these advanced capabilities nationwide through the Home SaaS 2.5 system. This year, we continue ramping up our ability to connect new suppliers on our platform. The number of stores for our housing transaction services is steadily increasing, and the number of service providers for our new initiatives is also growing rapidly. Without these new suppliers, our customers will face limited options, and our sourcing capability could be constrained. Expanding supply also inevitably forces us to consider how best to manage it, ensuring quality and improvement. Our biggest challenge is to leverage certain rules to help these suppliers achieve better outcomes. We view these suppliers on our platform as targets for transformation, not monetization. This means that once the suppliers, including service providers, join our platform, we must enhance them. As a result, we are consistently investing in training for stores, operators, and implementing robust operations for home listings, customer engagement, and our ecosystem to enhance resource conversion efficiency. Regarding our new businesses, we have made significant efforts to reform the incentive mechanism for service providers through rule-based order dispatch and service provider rankings. By fostering a transparent and benign competitive environment, they ensure resources are allocated more efficiently to the most capable talent. In the next era, customers will become more selective about services, allowing high-quality service providers to stand out and service variance will decrease. Customer needs will be more diverse, and new, more segmented needs will emerge. These two points guide our efforts to upgrade our products and services and deepen our operations. There remains tremendous potential for growth and efficiency improvement in both our relatively mature housing transaction services and our emerging business ventures. One solution is to focus on community-based business. By leveraging in-depth community knowledge and understanding residents' profiles and their needs for home purchase, rental, and renovation, we can offer more targeted products and services. This approach will lead to changes in customer acquisition channels, organizational structures, and supply chains, allowing us to differentiate ourselves from the traditional residential industry. More importantly, these changes will help us build trust in our low-frequency transaction industry. The key to community-based business is high service density. To that end, we launched more stores and organizational innovations in communities this year to increase supply. For example, in Shanghai, we added a number of community convenience service store stations affiliated with Lianjia stores, and other cities are replicating this model. Additionally, we are integrating home renovation and rental services with Lianjia stores. We have deployed home renovation expert agents in over 1,200 Lianjia stores and are showcasing renovation technicians and hosting install designers in pilot stores. Our coverage of existing home listings in Shanghai grew from 76% last year to 87% in areas that we operate in, and the revenues from our home renovation and carefree rental business in Shanghai this Q2 grew by 63% and 140% year-over-year respectively. In Chengdu, we piloted our strategy focusing on key housing projects for our home renovation and furnishing business. Our operational team shifted back to intensive community engagement rather than dispersed services, rebuilding our community-based services process and product logic. These pilot projects have demonstrated impressive improvements in conversion efficiency and productivity. In the second half of this year, the external macro environment will continue to pose many challenges to our business. Faced with these challenges, our core goal has always been to build capabilities that will keep the organization constantly moving forward from one success to the next. Over the past month, we have been fortunate to validate with minimal trial and error that our home renovation and furnishing model, as well as our rental business model, can drive growth in our organization. At the same time, our One Body business has shown further growth potential through proactive market outreach, providing support for store owners and agents to achieve great success. By integrating our new initiatives, we can drive even greater growth. In this context, our next step is to address issues related to the appropriate phase of each business and the balance between scale, quality, and efficiency. Thank you. Next, I would like to turn the call over to our CFO, Tao Xu, to review our second quarter 2024 financials. Thank you.

Thank you, Stanley, and thank you everyone for joining us. Before we dive into our Q2 performance, I would like to briefly touch on some updates in the housing market. In the first half of the year, the central and local authorities implemented easing policy intensively. This included further relaxing purchase restrictions, lowering down payment ratios, and cutting mortgage rates. The real estate financing condition mechanism was established and put into practice at an accelerated pace. The central bank launched the relending tools to support local SOEs in acquiring existing commercial homes, facilitating the nationwide implementation of old for new housing through various programs. In the first half of the year, the market showed a gradual recovery. Although market performance was muted due to the seasonality at the beginning of the year, all these positive policies contributed to the market's gradual improvements, with the high base effect from early last year records receding. In Q2, the in-home market performed well, especially in first-tier and some key second-tier cities, where market activity notably improved. The new home market remains gradually subdued even as its year-over-year decline narrowed month-over-month in Q2, with the backdrop of an incremental rebound in market sentiment. We continue to uphold a market neutral view and focus on improving our performance by continuously deepening operations, further empowering service providers and store owners, and promoting rapid growth of our new initiatives. The combination of these endeavors led to our excellent financial and operating results in this Q2. For Q2, the total GTV reached RMB839 billion, up 7.5% year-over-year. Net revenue was RMB23.4 billion, representing a year-over-year increase of 19.9%. Gross margin improved by 0.5 percentage points year-over-year to 27.9%. GAAP net income reached RMB1.9 billion, rising by 46.2% year-over-year. Non-GAAP net income grew by 13.9% year-over-year to RMB2.69 billion. Both revenue and non-GAAP income exceeded market consensus. Moving to our home transaction services for Q2, as the overall market gradually recovers alongside our strong operational growth and the store network function this year, our existing and new home business both demonstrated outstanding performance. Revenue from existing home transactions reached RMB7.3 billion, up 14.3% year-over-year and 28.1% quarter-over-quarter. GTV was RMB570.7 billion, increasing 25% year-over-year and 25.9% quarter-over-quarter. Our GTV and revenue growth rates were closely aligned, keeping our monetization capability relatively stable. Year-over-year GTV growth surpassed revenue, primarily due to the adjustment in the commission rate of Lianjia which started in the third quarter of 2023, affecting the commission for existing homes. The contribution margin from existing home transaction services reached 47.5%, climbing 1.9 percentage points year-over-year and under 3 percentage points quarter-over-quarter. The growth was mainly due to stronger leverage from the increased revenue coupled with relatively stable fixed labor costs. In terms of new home transaction services, despite the market downtrend, we significantly outperformed the market across multiple metrics. CRIC shows that the sales from the top 100 developers decreased by around 35% year-over-year in Q2, but grew by about 38% quarter-over-quarter. Notably, sales in June dropped by approximately 22% year-over-year, with year-over-year decline narrowing month-by-month. In comparison, our new home GTV reached RMB235.3 billion, grew by only 28.2% year-over-year, and rose by 55% sequentially in Q2, benefiting from the higher penetration of developers in China, deeper cooperation with developers, and the increase of collaborative projects, as well as systematic improvements in our operational and sales capabilities. In particular, the amount of the contracted transaction volume from new home business increased 12% year-over-year in June, and this exceptional performance stands in stark contrast to the industry. Revenue from the new home content service declined by 8.8% year-over-year to RMB7.9 billion while increasing 61.4% quarter-over-quarter. Year-over-year, the sequential revenue growth outpaced year-over-year GTV growth, once again demonstrating our strong and steady monetization capabilities in new home transactions. The contribution margin for new home transaction services recovered to 25%, falling by 2.2 percentage points year-over-year, mainly due to the strategic increase in variable commission under our strategy this year to improve our ecosystem. New home contribution margin grew sequentially by 2.8 percentage points as we gained more leverage from the relatively stable fixed labor cost and higher revenue. In Q2, the commission income percentage from SOE developers rose by 55% and the proportion of Commission in Advance projects maintained at a relatively high level at 49%. Revenues from home renovation and furnishing, home transactions services, emerging and other services grew by 85.3% year-over-year in Q2, reaching 34.7% of total revenue, surging 12.2 percentage points from the same period in 2023. Our home renovation and furnishing business maintained steady growth. In Q2, contracted sales reached RMB4.2 billion, up 22.3% year-over-year. Revenue reached RMB4 billion, rising by 53.9% year-over-year. The revenue growth rate outpaced that of contracted sales, largely due to improved delivery efficiency. The contribution margin for the home renovation and furnishing business was 31.3%, up 1.7 percentage points year-over-year and 0.7 percentage points sequentially. This was mainly due to improvements in the gross margins of our retail business. The contracted sales of the furniture and home furnishing retail, which are outside of our home renovation package, reached around RMB1.2 billion in Q2, accounting for around 29% of total contracted sales, improving by 3.5 percentage points from the same period in 2023. Our home rental facilities continue to grow at an accelerated pace. In Q2, its revenue reached RMB3.2 billion, up 167.1% year-over-year, mainly due to the rapid growth in the number of rental units under management. By the end of Q2, the number of units managed by our home rental services exceeded 310,000. Specifically, the number of rental units managed by our Carefree Rent reached around 300,000, compared with around 120,000 in the same period last year as the contribution margin held steady at 5.8% from the previous quarter. In Q2, our net revenue from emerging and other services increased by 57.8% year-over-year to RMB874 million. Next, let's move on to our other costs and expenses in Q2. Our store costs remain stable year-over-year and quarter-over-quarter at RMB681 million. Other costs increased by 18.6% year-over-year to RMB511 million, primarily due to higher taxes and surcharges and basic maintenance costs for rental services. Sequentially, it rose by 34.8%, mainly due to the increase in taxes and surcharges and professional service fees. Gross profit rose by 22% year-over-year to RMB6.5 billion. Gross margin came in at 27.9%, up 0.5 percentage points year-over-year. The primary reason for this upbeat performance was from the higher proportion of revenue and the increased contribution margin year-over-year in non-housing transaction services business. Our store costs are also relatively fixed, all of which gained a small leverage and partially offset the decline in our new home contribution margin year-over-year. Quarter-over-quarter, gross margin rose by 2.7 percentage points, largely driven by a sequential improvement in the new home contribution margin and an increase in its revenue share. Combined with overall revenue growth and stable store cost, this further amplifies the leverage effect. In Q2, our GAAP operating expenses totaled RMB4.5 billion, up 5.6% year-over-year and 9.5% sequentially. G&A expenses were relatively stable both year-over-year and sequentially at RMB2.1 billion. Sales and marketing expenses grew by 14.1% year-over-year and 15.9% quarter-over-quarter to RMB1.9 billion, as we invest in the rapid expansion of our home renovation and furnishing services, increasing associated sales and marketing expenses. Our R&D expenses were RMB505 million, rising by 6.3% year-over-year and 8% sequentially, mainly due to increased R&D expenses in our home transaction business. In terms of profitability, GAAP income from operations totaled RMB2 billion in Q2, up 86.4% year-over-year. That follows the GAAP income from operations of RMB11.9 million in the fourth quarter, which increased substantially quarter-over-quarter. GAAP operating margins were 8.6%, an increase of 3.1 percentage points and 8.6 percentage points from Q2 2023 and Q1 2024, respectively. Non-GAAP income from operations totaled RMB2.8 billion, climbing 31% from the same period last year and 193% quarter-over-quarter. Non-GAAP operating margin reached 12%, up 1 percentage point and 6.2 percentage points from Q2 2023 and Q1 2024, respectively. The rising operating margin was mainly due to our remarkable operating leverage, which lowered the operating expense ratio. GAAP net income totaled RMB1.9 billion in Q2, showing a 46.2% improvement year-over-year and 339.8% quarter-over-quarter. Non-GAAP net income reached RMB2.7 billion, up 13.9% year-over-year and 93.5% quarter-over-quarter. Moving to our cash flow and balance sheet. We realized a net operating cash inflow of RMB4.8 billion in Q2. New home DSO was 45 days in Q2, a testament to our effective risk management on top of approximately $100 million allocated to share repurchase during Q2. Our total cash equity remains at a high level of RMB75.5 billion, which excludes customer deposits payable. Overall, our Q2 results showcased our strong execution and ability to outperform the market in a stable market environment. Both our existing and new home business significantly exceeded market expectations. Moreover, our platform's overall monetization capability has remained stable with notable improvement in the monetization of new home. We also saw a significant rebound in the contribution margin of our core business, with more impact of the one-time effect of last year's high baseline in the first quarter. Additionally, our non-housing transaction services are rapidly expanding, with both our home renovation and furniture and rental business continuing to achieve record highs in scale and revenue. We maintain our commitment to cost efficiency under refined operational measures. Despite double-digit revenue growth, our GAAP operating expenses have remained nearly flat, both sequentially and year-over-year, leading to a substantial recovery in profitability. With our robust cash reserve, we will continue to increase shareholder return through active share buybacks, further optimizing capital allocation and enhancing capital operation efficiency, sharing the benefits of our developments with investors. As of today, we had repurchased around $480 million worth of shares, which accounts for about 2.7% of the company's total shares outstanding at the end of 2023. We have consistently delivered on our promise to reward shareholders. Since the launch of our share repurchase program in September 2022, we have repurchased around $1.39 billion worth of shares as of today, accounting for about 7.5% of the company's total shares outstanding before the program began. Today, we are pleased to announce that our Board has approved an expansion of the existing share repurchase program. The amortization has been increased from $2 billion to $3 billion with the program now extended until August 31st, 2025. Going forward, we will continue to reward our shareholders who have grown with us, sharing the value created by the company. As our business becomes more diverse and expands in scale, we will continue to fortify our fundamental capabilities while actively and efficiently investing in our infrastructure. Our financial strategy remains committed to a prudent approach and focus on investing in areas that can generate key business output and long-term value. For home transaction services, as we expanded our store network, agent productivity will remain our key evaluation metric. We also amplify the operational and financial capability empowerment and the training for our platform partners to strengthen our middle to back office competency in finance. Our new initiatives have built up middle to back office virtualization ability across the board to further improve the automation rate of our financial processes as well as our data analysis and processing capabilities. Simultaneously, we have set higher requirements for contribution margins and core financial indicators to promote the long-term steady and strong development of our business. Our risk threshold control measures remain strongly in place. This ensures the seeds we plant today will blossom, so that we can share the rich fruits with our loyal shareholders. This concludes my prepared remarks for today. Operator, we are now ready to take questions. Thank you.

Your first question comes from Harry Chen with Citigroup. Please go ahead.

Congratulations to the company on a solid second quarter result, and thank you to the management for answering my question. With the supportive property policies that have been implemented since the second quarter, particularly after May 17th, what changes have been observed in the real estate market? Do the new home and existing home markets show different performance trends? How sustainable are transactions following these policies? Additionally, what is your perspective on the transaction outlook for the second half of this year? Thank you.

Thank you, Harry. Let me answer your question. In Q2, the housing market showed steady month-by-month improvement with an actual boost to in-home transaction volume since the new policy introduced on May 17th. Notably, the in-home prices also saw a narrow decline in June. Although the new home market has yet to show any non-seasonal improvement, the year-over-year sales decline in Q2 narrowed month-by-month. The significant market downturn in Q1 due to the higher base and seasonal factor has gradually faded. Market transactions continue to shift from new homes to existing homes. The proportion of national GTV from existing home transactions has increased from around 40% of total GTV last year to approximately 44% in the first half of this year. Now let me further elaborate. Further policy relaxation continued in the first half of the year, particularly after the inventory reduction policy cycle began. Particularly, the May 17th policy package focused on reducing housing inventory, reviving existing homes under relaxed mortgage conditions with high-tier cities continuously relaxing purchase restrictions. Regarding the existing home market, transaction volume in Q2 showed notable recovery. Volumes on bigger platforms in May and June increased month-by-month, outperforming the typical seasonal trend. The number of transactions in June reached the highest level of the same period since 2020. This rebound was especially strong in the first-tier cities, stimulated by fewer purchase restrictions under relaxed mortgage conditions since the end of May. In June, transaction volumes in Tier 1 cities were 46% higher than in April and increased 132% year-over-year, especially in Shanghai. Shanghai registered an increase of nearly 80% from April to June due to the extensive policy easing, reaching the highest peak we have seen since early 2021. And for Tier 2 and Tier 3 cities, due to prior rounds of policy relaxation, the impact and the market response to this latest round of policy was relatively limited. Regarding the transaction structure, the demand for home upgrades continues to lead the market, especially in the first-tier cities, where upgrades make up 60% to 80% of transactions. One notable feature of this market recovery is the increase in the proportion of home buying driven by the rising demand in key cities. Following housing price decline, the ratio of housing prices to incomes has significantly improved. With lower down payment ratios and mortgage rates, housing profitability has substantially increased. The relaxed purchase restrictions, in turn, attracted more first-time buyers to the market. For example, in Shanghai, the proportion of non-local buyers increased from nearly 30% to nearly 40% in June, and buyers who are single increased by 6 percentage points. This policy has significantly stimulated demand relief within the tough demographics. On home prices, we are also seeing positive signs despite the ongoing price decline in the single market. According to the Beike Research Institute, the pace of month-over-month decline in national existing home prices slowed in June, narrowing to negative 1.2% from negative 1.7% in May. Prices also stabilized in Tier 1 cities. Housing prices in Beijing and Shanghai increased by 0.4% and 1.2% month-over-month, respectively, in June, and we also slightly improved in second-tier cities. Sellers also became more rational about lowering prices. The proportion of homeowners rushing to sell at significantly reduced prices decreased by 8% from March to June. However, most of the potential buyers are still in a wait-and-see mood. Many hope for a further price decline before entering the market. This market shows a significant difference from the response to the previous policy round in the second half of 2023. Although the existing home market has become more active, there hasn't been a sharp drop in housing prices. This suggests two things. Firstly, in high-tier cities, abundant demand coupled with improved affordability and lowering buying costs is driving buyers out of their wait-and-see approach, and into active participation, which in turn sustains local housing prices. Secondly, the effect of these policies has been validated to some extent given the cumulative impact of relaxed policies over the past two to three years. In the new home market, the year-over-year decline in new home sales narrowed month-by-month in this Q2, but did not particularly improve overall. CRIC indicates that the top 100 developers' sales grew by 42% year-over-year in the first half, narrowing to a negative 22% in June. Several factors are limiting the recovery of the new home market. Number one, in the past, existing homes had a higher price of tax than new homes. That advantage is no longer the case. Number two, pre-sold housing supply couldn't meet demand for immediate housing needs. Number three, readily available supply of larger and more luxurious new homes did not align with what home buyers with the rising demand in first-tier cities were looking for. Number four, the surprising influx of nearly new homes, which are homes from a few years ago now entering the single market, are satisfying more of the current market demand, given their close match to new homes but with the advantage of ready availability and lower prices. With all of these factors at play, more positive forces are needed for the stabilization and recovery of the new home market. Regarding the outlook for the second half of the year, starting from July, the volume of existing home transactions declined due to the combined effect of policy impact and seasonal summer factors. The effect of the policy lasted about two months. In first-tier cities, the transaction volume in July remained about 5% higher than in April, while year-over-year, there was still significant growth. In the last week of July, transaction volume was over 30% higher compared to the same period last year. In July, existing home prices continued to drop, while the month-on-month rate of decline in the first-tier cities narrowed compared to the period prior to policy implementation. For the second half of the year, as the higher base effects diminished, the existing home market remained stable. Transaction volumes in first-tier cities are likely to stabilize after a spike-like recovery, providing some support for prices as well. However, expectations for further price drops and various cultural sentiments may still constrain the market recovery to some extent. Policy change will be a key variable in shaping market trends. On the demand side, more easing of purchase restrictions and the optimization of the housing demand will help, while supply-side measures to support developers and reduce unit rates will help accelerate market stabilization. Thank you.

Thank you. Your next question comes from Thomas Chong with Jefferies. Please go ahead.

Thank you to management for taking my question. I would like to ask about our new home business. Can management explain why our new home business is performing better than the industry? Additionally, can we discuss the output of new home sales and the trends regarding the monetization rate? Thank you.

Thank you, Thomas. In the first half of the year, our new home business continued to significantly outperform the industry. Supported by our robust operational and execution capability, our housing transaction business continued to achieve our target of outperforming the market and consistently generating strong returns. In Q2, our new home GTV reached RMB235.3 billion, down 20% year-over-year, but was up 55% quarter-over-quarter. GTV of CRIC's Top 100 real estate developers grew by 35% year-over-year in Q2. In June, our new home's contract transaction volume increased by 12% year-over-year, compared with the industry's 22% drop, notably outpacing the market. In addition, our revenue in Q2 surpassed our GTV. This indicates, first, that we have not compromised our monetization capability to gain market share. On the contrary, our stable monetization capabilities have been validated. Second, in a buyer's market, by helping downstream agents with special incentives for new home sales can facilitate more efficient sell-through in the current market. The certainty of our business momentum stems primarily from our channel service coverage function and enhanced sell-through capabilities. In terms of cooperation with real estate companies, the relationship between brokerage channels and developers is setting the stage for a new mutual beneficial model. Historically, brokerage channels and developers had a more competitive relationship. However, as the new home market becomes a buyer's market, selling homes has been more challenging, and customer needs have changed substantially. The role of the sales channel in the industry transitioned from simply mixing deals to providing deep insights into customer needs and collaborating with developers to address new buyers' pain points. Riding this trend, we have been advancing our reach and evaluating the depth and breadth of our partnership with top-tier developers. This year, we further expanded the coverage of core state-owned developers and high-quality leading real estate companies, better meeting their needs with innovative new home services. By the end of Q2, we doubled the number of developers we have strategic collaboration with to 25 from 13 in Q2 last year. The sales from our strategic partner developers accounted for 26% of our total new home GTV in June, 11 percentage points higher than the same period last year. In June, the number of our cooperative new home projects accounted for 62% of all new home projects across cities where we operate, excluding Beijing and Shanghai, compared with 49% in the same period last year. Regarding our focused sell-through capabilities, previously, we relied on a labor-intensive approach. But this year, empowered by technology tools, we strengthened the refund operation and promoted the conversion of potential new home customers from the new home market. We continually boost the new home sell-through. In terms of manpower, the number of new home agents on our platform notably increased. This year, we expanded the role of comprehensive agents so that more agents can engage in both new and existing home businesses in parallel. For example, the number of new home agents in Zhengzhou for Q2 was around three times what it was during the same period last year. Incentivized by more competitive commission rates and the improved timely delivery of pre-sale homes, agents have increased their willingness to engage in new home sales. Technology-wise, we further iterated our potential customer products to help agents better identify high-potential new home buyers who are likely to make a near-term purchase, while uncovering potential new home buyers from these new home customers, accelerating the efficiency of new home transactions. In Q2, potential new home customers identified by this product accounted for around 5% of our overall new home sales, contributing about 70% of the new home sales. Additionally, through our innovative service solutions like the exchange of old homes for new ones, worry-free repayments, worry-free renovations, and the home rental option during housing replacement, we can attract diverse client needs surrounding new home challenges, improving the efficiency of the new home sell-through. Thank you.

Thank you. Your next question comes from Eddy Wang with Morgan Stanley. Please go ahead.

Thank you for taking my question. My question is about the growth strategy of our home transaction service, specifically the emphasis on Lianjia. What feedback have we received from the store level so far? Additionally, what innovations are being implemented in the cities where our business is quite stable? Thank you.

Thank you, Eddy. This year, our core strategy for home construction business is promoting growth and building a harmonious ecosystem. In the first half of this year, we achieved notable results in scaling connected stores and exploring innovative models. In terms of scaling our agent and store network, by the end of Q2, the total number of active non-Lianjia stores on our platform increased to 38,900 and the number of active Lianjia agents rose to 308,000, up by 6% and 2.8%, respectively, compared to the end of 2023. In the first half of this year, we added 48 new major brands. During this period, over 6,500 new stores were signed with our platform, averaging around 1,200 new signings per month, with a six-month retention rate of 93% for these new stores. For the newly connected stores, we provided fee discounts, installment plans, and other support for those brands. We also added their operations with experienced store owners and tailor-made integration plans. In terms of efficiency, three months after signing up, the productivity of agents in the new stores connected since last September reached over 80% of the productivity of the agent in-store platform. Additionally, we helped stores in some key cities enhance efficiency through refined operations, such as property inventory checks, quality home listing focusing, verification, and reviewing. This was also aided by technology-driven tools, including our AI housing matching and smart home listing mechanism assistance. We're also seeing good returns from the investment in stores function. The new stores signed in Q4 of last year have achieved a positive ROI as of June this year. Four new stores opened in Q1 this year. Their net revenue contribution in the first half of the year has already covered the estimated expenses. The continued scaling of our regional store network, as well as diversifying our business from housing transaction to one-stop residential services, helps place higher and more urgent demands on our platform ecosystem. This year, we further extended the coverage of the Regional Core Governance Council to 74 cities by the end of Q2. By working with mainly service providers, we gather valuable suggestions for its rating platform rules, granting more power to store owners and agents regarding their business and governance while fostering healthy industry competition. With Lianjia as a testing ground for our platform, we have explored a series of innovations in the agents' store model to facilitate our transformation to one-stop residential services, focusing on improving agents' income and the large store model. At the first half of the year, around 51% of stores had more than 18 agents, an increase of 5.4 percentage points from last year. Consequently, the attrition rate for Lianjia agents decreased to under 4%. This success was also the result of Lianjia's strategic approach to the large store model. Alongside the large store model, we are implementing various store formats to better serve demand in different community settings. Shanghai Lianjia, for instance, explored different store types, specifically by leveraging low-cost convenience stores that boost fast investments and target coverage. Shanghai Lianjia increased this service density. By the end of Q2, our coverage rate of the home listing in the operational area in Shanghai increased to 87% from 76% during the same period last year. Simultaneously, we established flagship stores with more home-related elements, becoming gateways for one-stop residential services. In addition, we are exploring higher frequency community connections by brand crossover line stores. Among our ventures, we have launched store staff with agents who have home renovation expertise and standards completed by the display of the renovation process and the technique. This approach promotes early customer acquisition for our home renovation business and forges closer ties with the community. Regarding talent development, Lianjia has segmented the recruitment into three key areas including college graduates, call center professionals, and community experts. We offer a variety of programs to support newcomers through their initial growth period, helping to build a high-quality team of service professionals. Moving on to store management leadership. As a cornerstone of our One Body, Three Wings strategy, Lianjia has also rolled out a leadership program for store operators designed to train well-rounded management talent, specialized in residential services, and promote long-term career development for service providers. Thank you.

Thank you. Your next question comes from Timothy Zhao with Goldman Sachs. Please go ahead.

Great. Thank you, management, for taking my question, and congrats on the very robust result. And my question is on your non-home transaction business, including the home renovation and furnishing as well as the home rental business. And I'm pretty glad to see that the contribution margin of both businesses expanded year-on-year in the second quarter. So may I ask about the home renovation, what management's key operating focus is for this year? And what is the progress so far? And on the home rental business, could you share some color on how we should look at the unit economics of this business? And what are the key drivers behind the profitability improvement? Thank you.

Thank you, Timothy. In response to your first question regarding home renovation, our home renovation business generated over RMB10 billion in revenue last year, showing excellent performance in major cities that confirmed our business capabilities and model. This year, we're concentrating on developing essential infrastructure and capabilities, which include enhancing our digital fundamental capabilities and reworking processes through our Home SaaS system, as well as improving our construction delivery and customized furniture delivery capabilities. Mid-office digitalization is crucial to our entire home renovation operations, linking service providers and ensuring that all activities run efficiently under our continuously refined and standardized processes. Through our Home SaaS system, we have upgraded to Version 2.5 this year and are promoting it across the country, with successful implementation in Beijing, Shanghai, and Chengdu. Home SaaS encompasses five major sectors: customer sales systems, central control systems, construction delivery systems, and supply chain systems. The newer version particularly upgrades two modules: the BIM shared service center mid-office module and the integrated material fulfillment module. The BIM module can automatically generate renovation price codes from standardized construction drawings, enhancing designer efficiency and reducing errors. All design and construction data will be stored centrally for future use. To enhance our delivery capability, we've reduced delivery timelines and introduced proactive maintenance for construction deliveries. This year, we achieved high order dispatch efficiency and streamlined construction processes, decreasing the overall construction period from about 111 days last year to around 100 days in Q2. Additionally, we now offer proactive maintenance services nationwide, providing free maintenance and repairs for common issues like wall cracks two months and five months after construction. This year, our upsales team expanded from over 200 members at the end of last year to more than 400 by June, with plans for further growth. We've also significantly improved our customized furniture delivery capabilities, achieving an installation success rate of about 80% in the first half of this year through better standards and training. The home renovation process is intricate, involving various personnel and products, and industry transformation requires continual development across middle-office digitalization, project delivery, and product development. Over time, this will lead to high-quality changes. Regarding your second question on our rental business, in Q2, revenue from the large rental service reached RMB3.19 billion, marking a 167% year-over-year increase and a 21% quarter-over-quarter rise. This growth is attributed to the rapidly increasing number of home units we manage under our Carefree Rent model. We managed over 300,000 units by the end of Q2, up from over 240,000 last quarter and over 120,000 the same time last year. The number of units under our centralized long-term apartment system reached over 14,000 by the end of Q2, compared to over 7,000 a year ago. In our Carefree Rent model, we've improved business unit economics by addressing major tenant pain points such as home maintenance and rental changes, leading to a roughly 20% decrease in customer compliance in June compared to earlier in the year. We've also improved leasing efficiency and reduced vacancy costs through various initiatives. First, we've continued to expand our new home product model, which incurs no vacancy period, increasing its share by about 6 percentage points in Q2 from Q1, reaching 26%. This has effectively cut vacancy costs and bolstered our resilience against rental price fluctuations. Second, the success rate for first-time rentals after starting our property management contracts rose from 82.2% in Q1 to 86.6% in Q2, alongside a decrease in amortized compensation costs per unit. Third, as we refine our Carefree Rent model, we've shifted our operational focus from first-time rentals to re-renting, emphasizing lease renewals and pre-sales. This proactive approach has increased the turnover rate of re-rented properties from 3.1% in Q1 to 3.9% in Q2, and we've shortened the rental time for a property to be rented out a second time, reducing it from 9.8 days at the end of Q1 to 7.5 days at the end of Q2, thus improving rental efficiency and lowering vacancy costs. Lastly, we've built rental capacity through dedicated roles and enhanced productivity by strengthening our dedicated rental agents and creating a specialized team to improve tenant occupancy, leading to greater efficiency in utilizing business leads and key listings while decreasing vacancy rates. The productivity of our account managers in facilitating rentals grew from an average of 8.8 units per month at the end of Q1 to 10.2 units at the end of Q2. In Q2, the proportion of total rental occupancy managed by dedicated rental agents and account managers rose to 6%, a 6 percentage point increase from Q1. Moreover, we achieved breakeven in Beijing in the first half of the year based on managerial accounting at the city level. By the end of June, the number of units managed in Beijing reached nearly 76,000 with an occupancy rate of 98.2%. Even as we expanded the properties under management, which initially increased costs, we reached breakeven in Beijing, significantly boosting our confidence in the business. Thank you.

Thank you. We are now approaching the end of the conference call. I will now turn the call 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.