Hello, ladies and gentlemen. Thank you for standing by for KE Holdings Inc.’s First Quarter 2025 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 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., or Beike’s first quarter 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. Tao Xu, our Executive Director and Chief Financial Officer. Mr. Xu will provide an overview of our strategies and business developments on behalf of Mr. Stanley Peng, our Co-Founder, Chairman and Chief Executive Officer. And then, Mr. Xu will discuss the financials in more detail. Before we continue, I refer you to our safe harbor statements 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 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. In the case of any discrepancy, management's 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, Tao.

Thank you, Siting. Hello, everyone. Thank you for joining Beike's first quarter 2025 earnings conference call. In the first quarter, our business continued to deliver rapid growth. This expansion was partially based on the market momentum that was built by the supportive policies since last September. It was also consistently driven by our active growth strategy that we started in the second half of 2023. In the fourth quarter, GTV on our platform increased by 34% and revenue rose by 42% both on a year-over-year basis. Our business continued to outperform the market in the fourth quarter across multiple metrics. Notably, GTV for our in-home transaction business increased by 28% year-over-year in the fourth quarter. According to Beike Research Institute data, the year-over-year growth of the national GTV in this segment was about 60%. GTV for our new home transaction business increased by 53% year-over-year versus a 0.4% nationwide decline year-on-year reported by the NBS data. While the top 100 developers' GTV for new home sales also fell by approximately 7% in the first quarter. We continue to see strong momentum in the growth of connected stores and our agent platform. In the fourth quarter, the number of active stores surpassed 55,200, a record high, increasing over 12,600 from the same period one year ago. Of those, the number of connected stores increased by more than 12,300. On the agent side, the number of active agents grew by 23% year-over-year, representing a net addition of over 90,000 agents compared with the same period last year, with active agents in connected stores growing by more than 73,000 year-over-year to reach a record high. We've also seen a steady improvement in efficiency at the store and data level. In the fourth quarter, GTV per store per agent rose by 8% and 14% respectively, marking the fourth consecutive quarter of year-over-year increases. For connected stores, GTV per agent was up by 18% year-over-year, translating into stronger revenue for both stores and agents. Our platform's operational support ratio remained high with impressive year-over-year improvement. This year, we are focused on driving both scale and efficiency as key priorities of our growth strategy. In the first quarter, traffic leads for our new home transaction services hit a new record. The strong active market helped drive more traffic leads, benefiting from the higher customer satisfaction from the search results and the more personalized recommendations. By tailoring the broader experience to each user scenario and profile, it will make it easier for people to install home listings in our apps that fit their needs. This improving performance also reflects users' current preference to build more home listings before making purchase decisions. For our new home transaction business, this year, we are focusing on optimizing our collaboration with developers to better support their sales and needs while improving agent efficiency in matching customers to suitable new home projects. In the fourth quarter, we concentrated our efforts on high-end projects in the market. At the same time, we continue to drive greater participation from our stores in the new home business through the incentive mechanism. Our One Body, Three Wings strategy maintained stronger performance traction. For the home renovation and furniture business, we have adjusted our pace this year to strategically focus on reshaping our product and delivery capabilities. Our primary goal is to make them more customer-oriented, while enhancing our organizational structure for greater efficiency. On the product front, we significantly advanced the design of our new Home Group renovation products in the first quarter. On the delivery side, we rolled out the project manager professional programs into several cities. This drove a 156% year-over-year increase in average monthly order intake for project managers, reaching 2.97 compared with previously 1.16 in 2024. We also carried out a worker-sharing model as a result top-performing project managers improved their personnel income, enabling them to focus on better service delivery and quality. In the first quarter, over 4% of our total home renovation projects came from referrals by previous customers. In addition, our front-end organizational management efficiency improved markedly. The average monthly order volume per home renovation increased by almost 33%, moving from 0.79 in 2024 to 1.05 in the first quarter of this year, and outpacing total order growth year-over-year in the home renovation business. Our home rental services continue to achieve significant breakthroughs in the first quarter with more than 500,000 rental units under our management. We also made solid progress in improving both default management and increasing our renewal rate. Last quarter, Stanley shared some thoughts on our AI deployment plan. Next, I'd like to provide an update on our use of AI in the first quarter. In our housing transaction business, in terms of service to end customers, we conducted testing of our AI-powered home-seeking assistant, which is already accessible to 40% of our traffic on our homepage. Developed based on the DeepSeek R1 using our massive platform data sets and proprietary knowledge growth, we are actively building an industry vertical database based on the large model to improve smart response accuracy and improve multi-module display capability to optimize interactions between the service provider and customers. We believe that the smart AI system will empower both homeowners and buyers with more tailored solutions for their home-making and decision-making processes. We are also helping service providers identify more accurate leads. In terms of AI tools for service providers, our agent service-based homebuyers were introduced to an AI-based agent assistant that offers a full suite of features including customer acquisition, home selection, and smart follow-ups. These tools empower agents to activate customers, enhance their professional service capabilities, and improve efficiency in connecting with customers. By the end of March 2025, over 200,000 agents nationwide have used this assistant, collectively managing over 2.5 million customers with impressive efficiency improvements. The conversion rate from leads to formal client mandates increased by over 30%, and the mandate-to-transaction conversion rate rose over 10%. Agents effectively using this AI tool achieved a mandate to transaction conversion rate that was three times higher than those not using this product. For agents serving homeowners, we identified a common issue: many home listings were not being properly maintained on the platform due to agents' limited time and attention, which reduced sales efficiency. To solve this, we leveraged the AI property maintenance assistant, which helps agents match listings more efficiently and improve the experience for homeowners. Within the homeowner-dedicated AI service group, the assistant offers smart replies, market trend insights, report analysis, and impacted voice-based promotions. As of the end of March 2025, the product has been adopted by 110,000 agents and has served 400,000 homeowners cumulatively. Home testing maintained with our paid assets achieved a transaction conversion rate four times that of those without it. Additionally, our digital partner utilized their ability to enhance critical operation workflow from contract quality inspection to automate post-signing follow-ups. The solution driven improvements in online service quality and efficiency delivered over 30,000 cumulative hours in productivity savings. In our home renovation business, we launched the AI customer maintenance system to strengthen product lead conversion during the most critical two-week window in home renovation marketing. The AI-based lightweight BIM and intelligent marketing solution have improved efficiency in both design and marketing. For our home rental services, our AI system for post-rental support has been tested online in 30 cities. It is successfully handling 25% of tenant requests through intelligent automation, providing tenants with a more responsive service experience. At the same time, it has enhanced efficiency through better collaboration among the various roles involved in the recent progress. I shared lots of numbers on the total volume and the average efficiency rate of our business, but these are not the key items we focus on. We care deeply about every individual customer's experience and will remain committed to enhancing our service quality. Since 2024, we introduced the fund custody system in our home renovation business, giving customers greater control and peace of mind. Under this model, renovation funds are frozen in the customer's personal bank account and only released after project milestones have been completed and approved by customers, including plumbing and electrical checks based on renovation and final acceptance. This model shifts away from the traditional pay-first renovation approach in the industry. Through the system integration, customers can track their funds online in real-time with full visibility and traceability. Any interest earned during the custody period is returned to the customer. In 2025, we rolled out our renovation fund custody services in several cities including Beijing and Wuhan. On top of that, we have developed a fund custody solution plan framework that can be utilized by other industry peers, underscoring our commitment to driving the industry's progress. Finally, we are encouraged by China's technical advances, and we are closely watching the evolving external microenvironment. While we remain confident in our platform's ability to deliver sustained growth over the long term under our one-body-driven strategy, we are approaching the shortcomings with cautious optimism. That is why we will continue to invest firmly in AI while taking a more measured approach to other investments this year. Following last year's rapid investment in U.S.-wide subsidies, we are now setting clear short and medium-ROI benchmarks to ensure disciplined capital allocation. This balanced strategy will help us better position ourselves to capitalize on both market recovery opportunities and AI-driven productivity leaps while safeguarding operational stability and protecting the interests of the shareholders who share our long-term vision. In line with that commitment, this year we will continue with active shareholder returns. Thank you. Next, I will review our first quarter 2025 financials. Once again, thank you everyone for joining us. Before I dive into our Q1 performance, I'd like to briefly touch upon some updates in the housing market. In Q1, the market performance was very stable, perpetuating the continued policy influence resulting from policy implemented in September last year. The threshold cost for home purchases was further lowered, exerting a stronger incentive effect on homebuyers. According to the National Bureau of Statistics, new home sales remained relatively flat year-over-year in Q1, better than the substantial year-over-year decline in the same period last year. Meanwhile, the in-home market remained at a high level of activity, excluding the impact of the holidays. Benefiting from the readily available nature of unforeseen homes, according to the Beike Research Institute, in Q1, existing home GTV grew by around 16% and the number of home transactions climbed by around 28% both year-over-year. With the growth in the transaction volume, the overall supply-demand relationship improved, and housing prices showed a signal of bottoming out, instilling more confidence in potential homebuyers to enter the market. The demand for upgrades was even more robust amongst single home sales in key cities. The share of three-bedroom and larger homes continued to rise year-over-year in Q1. Turning to our Q1 financial performance. Our total GTV was RMB844.2 billion, representing a year-over-year increase of 34%. Net revenue reached RMB23.3 billion, up 42.4% year-over-year. Gross margin declined by 4.5 percentage points year-over-year to 28.7%. GAAP net income was RMB855 million, increasing 97.9% year-over-year. Non-GAAP net income reached RMB1.39 billion remaining stable year-over-year. Looking at our housing transaction services, revenue from in-home transactions reached RMB6.9 billion in Q1, up 20% year-over-year and down 23% quarter-over-quarter. GTV was RMB580.3 billion, rising by 28.1% year-over-year and declining by 22.1% quarter-over-quarter. GTV growth outpaced revenue year-over-year, mainly due to a decline in the revenue share of the rental brokerage services and a high contribution from the in-home transaction service GTV facilitated by connected agents. Revenue recorded as net revenues derived from platform services. The contribution margin from the in-home transaction services was 38.1% in Q1, representing a decline of 6.4 percentage points year-over-year primarily due to the increased support and improved welfare for the service providers. This is part of our long-term strategy to build a harmonious ecosystem. Sequentially, the contribution margin dropped by 2.3 percentage points, attributable to negative leverage influence due to the decline in revenue exceeding that in fixed labor cost. In terms of the new home transaction services, we still outperformed the market. Reports indicate that the sales from the top 100 developers grew by around 7% year-over-year and 41% sequentially in Q1. In comparison, our new home GTV reached RMB232.2 billion in Q1, up 53% year-over-year and down 34.6% quarter-over-quarter, once again outperforming the industry. This was mainly due to the deepening of our collaboration with developers and our finely tuned operational capability and more sales confirmation from partial subscriptions in the last quarter. Revenue from new home transactions was RMB8.1 billion in Q1, rising by 64.2% year-over-year and dropping by 38.2% from the previous quarter. Revenue outperformed GTV year-over-year, demonstrating our stronger amortization capabilities, while GTV growth outpaced revenue growth sequentially due to seasonality. The contribution margin from the new home transaction services rose by 1.1 percentage points year-over-year to 23.4% as we gained leverage from the revenue growth exceeding that of the fixed costs. Sequentially, the new home contribution margin declined by 2.2 percentage points, largely attributable to the seasonality effect. In Q1, SOE developers contributed around 54% of our new home sales revenue, increasing by around 4 percentage points year-over-year. Revenue from home renovation, furniture, and emerging other services grew by 46.2% year-over-year in Q1. It accounted for 35.9% of our total revenue compared to 35% in the same period last year. The contribution profit from this business accounted for 32.7% of our total gross profit. Revenue for our home renovation and furniture business reached RMB2.9 billion, increasing by 22.3% year-over-year, mainly due to increased orders from home renovation. The contribution margin for the home renovation and furniture business reached a record high of 32.6%, up 2 percentage points year-over-year and 2.8 percentage points quarter-over-quarter, primarily driven by the increased gross margin of our home renovation business. Our home rental services business continued to grow at an accelerated pace. In Q1, its revenue reached a record high of RMB5.1 billion, up 93.8% year-over-year, mainly benefiting from the rapid growth in the number of rental units under management. By the end of Q1, the number of rental units under management exceeded 500,000 compared with over 250,000 in the same period of 2024. The contribution margin for the home rental services was 6.7%, up 1.2 percentage points year-over-year and 2.1 percentage points quarter-over-quarter, largely due to the improved gross profit of our Carefree Rent business. As we continue to refine the Carefree Rent business model based on feedback from the business contract, the revenue from newly managed rental units was recorded as net revenues derived from the service fee in this quarter. In Q1, our revenue from emerging and other services decreased by 50% year-over-year and 20.3% quarter-over-quarter to RMB350 million. Next, let's move on to our other cost expenses in Q1. Our store costs reached only RMB717 million, remaining relatively stable year-over-year and dropping by 8.8% quarter-over-quarter. The sequential decrease was mainly from the lower store rental costs. Other costs were RMB547 million, up 44.4% year-over-year primarily due to increased tax, surcharges, financial service reserves, and credit losses. Sequentially, other costs declined by 26.7% largely driven by decreases in tax and supplies expenses, financial services reserves, credit losses, and share-based compensation. Gross profit rose by 17% year-over-year to RMB4.82 billion. Gross margin was 20.7%, down 4.5 percentage points year-over-year. The primary reason for the decline was the decrease in contribution margin from the in-home transaction services. Gross margin grew by 2.4 percentage points sequentially in Q1, mainly due to the structural decrease as the revenue contribution from new home construction service declined. In Q1, our GAAP operating expenses totaled RMB4.2 billion, up 2.9% year-over-year and down 31.3% sequentially. Notably, G&A expenses were RMB1.9 billion, decreasing by 7.2% year-over-year mainly due to reduced share-based compensation expenses. G&A expenses dropped by 36.7% quarter-on-quarter, primarily attributable to lower personnel expenses and decreased bad debt provisions. Sales and marketing expenses increased by 9.2% year-over-year to RMB1.8 billion, resulting from increased expenses for the home renovation and furniture business. Total sales and marketing expenses fell by 24.4%, mainly due to a decline in market expenses for home construction services and reduced personnel expenses. Our R&D expenses were RMB584 million, up 24.9% year-over-year, driven by higher personnel expenses and technical service fees. Sequentially, R&D expenses dropped by 21%, largely as a result of reduced personnel expenses. In terms of profitability, GAAP income from operations totaled RMB591 million in Q1, a remarkable increase compared with the same period of last year and decreasing by 41.6% sequentially. GAAP operating margin was 2.5%, increasing by 2.5 percentage points from Q1 2024, and falling by 0.7 percentage points quarter-over-quarter. Non-GAAP income from operations totaled RMB1.15 billion, growing by 19.6% from the same period last year and dropping by 34.6% sequentially. Non-GAAP operating margin reached 4.9%, down 0.9 percentage points from Q1 2024 and 0.7 percentage points from the previous quarter, mainly attributable to the gross margin decreased both year-over-year and quarter-over-quarter. GAAP net income totaled RMB855 million in Q1, rising by 97.9% year-over-year and 48.2% quarter-over-quarter. Non-GAAP net income was RMB1.39 billion, remaining stable year-over-year and increasing by 3.7% quarter-over-quarter. Moving to our cash flow and balance sheet, we realized a net operating cash outflow of RMB4 billion in Q1. New home DSO reached 63 days in Q1, remaining at a healthy level on top of approximately $139 million allocated to share repurchase during Q1. Our total cash liquidity remained at a high level of RMB74.3 billion, which excludes customer deposit payable. With our robust cash reserves, we continue to reward our shareholders who have grown with us through active share buybacks, enhancing capital operation efficiency and sharing the benefit of our development with investors. In Q1, we repurchased around $139 million worth of shares, which accounted for around 0.6% of the company's total shares outstanding at the end of 2024. We have consistently delivered our promise to reward shareholders. Since the launch of our share repurchase program in September 2022, we have repurchased roughly $1.76 billion in shares at the end of Q1 2025, accounting for around 9.2% of our total shares outstanding before the program began. This year, our business will focus on efficiency improvements in financial strategy. We will ensure that our investments are made more efficiently to improve personnel and store productivity. We will respect advocating and make sure the money spent yields visible results while maintaining disciplined cost expense control. We will continue to support long-term business development by fully backing our onboarding surveillance strategy initiatives and actively exploring AI technology. At the same time, we possess naturally driven resources to consistently offer stable and sustainable returns to our shareholders. This concludes my prepared remarks for today. Operator, we are ready to take questions.

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

Thank you, management, for addressing my questions. I would like to know about the outlook for the property market moving forward. We've observed a strong rebound in property market transactions following Chinese New Year. I'm curious about your expectations for the property market from the second quarter onward, considering the current macro dynamics and the effects of the U.S. tariff. Thank you.

Thank you, Timothy. For Q1 market performance, with the central government's continuous efforts to stabilize the real estate market, the existing home market saw a relatively strong recovery after Chinese New Year and the new home market also performed stably. Let me give some details. The existing home market rebounded after Chinese New Year as expected. According to Beike Research Institute, nationwide existing home GTV grew by 16% year-over-year in Q1, sustaining the momentum fueled by the September '26 policy stimulus. This growth was mainly due to the cumulative impact of the early stimulus policies, which substantially lowered the threshold and the cost of home purchases, motivating more people to buy. Rising transaction volume also helped to balance supply and demand in the short term, narrowing the decline in home prices year-over-year and bringing cautious buyers back to the market. Leasing home prices have stayed mostly stable, dipping by 0.5% month-over-month in March in first-tier cities like Beijing and Shanghai, as well as second-tier cities with strong net population inflows and steady increases in housing demand in recent years, such as Hangzhou and Chengdu, where leasing home prices have picked up slightly month-over-month. For the new home market in Q1, it is also very stable. According to MBS data, Q1 new home sales were overall flat year-over-year, down 0.4%. GTV of 1,200 real estate developers dropped by 7% year-over-year in Q1. Notably, the sales by floor area decreased by over 15% year-over-year. Since Q2, after Chinese New Year, the market followed its typical seasonal pattern. The existing home transaction volume peaked in early March, then gradually declined through April. The month-over-month decrease of existing home prices expanded somewhat with a 1.3% drop in April as transaction volume reduced. From a supply-demand standpoint, the total number of existing home listings on the Beike platform rose in Q1, up from Q4 of last year. This aligns with the seasonal trend of lower inventory at year-end and higher inventory at the start of the year. It is also a natural result of existing home market dysfunction and the lifting of sales restrictions, which have released more housing supply. The faster the supply of nearly new existing homes into the market has also improved overall listing supply quality and created better conditions for buyers looking for home upgrades. Meanwhile, we observed that increases in market demand outpaced the increase in inventory. In April, the ratio of home viewings to inventory was at 1.8, which is at the higher end of the historical range of 1.6 to 1.9. This indicates stronger buyer interest and plenty of demand with the market able to absorb new inventory. However, the conversion from home viewings to transactions has slowed, mainly due to short-term uncertainties affecting buyer expectations, including external factors such as geopolitical tension. This has led to some softening of housing price expectations, causing buyers to hesitate to enter the market. For future market outlook, we believe the market outlook will depend on two main factors: the impact of international trade frictions on housing transactions and the strength and timing of domestic countermeasures. On a neutral scenario, we expect a typical seasonal slowdown in Q2 on a sequential quarter basis. Year-over-year, however, the existing home market is expected to see a slight increase in existing home transaction volume, albeit at a slower pace than Q1. This is supported by the higher transaction volume in Q1, the growing supply of high-quality nearly new existing homes, and the year-over-year increase in customer home building. As the market experienced a quarter-on-quarter decline in Q2, and if external trade pressures intensify in Q3, indicators such as housing prices, transaction volume, and development investment may weaken. This could create room for further supportive policy measures in the second half of the year, which would help improve both supply and demand in the property market and support stable market development. We are also closely monitoring the impact of the change in global trade on the real estate market. In terms of home listings, the overall number of new listings on the Beike platform remained stable in April with no signs of homeowners rushing to sell. The number of home viewings for both existing and new homes still showed a notable year-over-year increase in April. When categorizing the cities that we covered by high and low trade dependency, we observed that since the tariff took effect in early April, cities with high trade dependency have shown weaker year-over-year and month-over-month home viewing performance compared to cities with low trade dependency. This indicates that while trade frictions have caused some short-term disruption in buyer expectations in certain cities, there has not been a significant trend of divergence overall and homeowner sentiment remains stable. Moving forward, we will continue to monitor the potential impact of trade frictions on the housing market through lead indicators such as home viewings, customer traffic, and listing volume. We observed a notable de-escalation in recent U.S.-China trade tensions, which should help stabilize business and consumer expectations in the near term. In our view, we believe that international trade frictions represent a long-term dynamic process with uncertainties and the potential for improvement. During the upcoming 90-day negotiation window, we will closely monitor the development, track the resulting impact, and assess the potential implications for both the real estate market and our company on an ongoing basis. In the medium to long term, we maintain a cautiously optimistic outlook, trusting both China and the U.S. will continue to move together based on the positive progress made so far. Meanwhile, the continued implementation of domestic supportive policies is expected to further boost customer confidence. Together, this is expected to mitigate the impact of the trade risk on the property market, helping to consolidate the initial stabilization of the existing home market and ease pressure on the new home market. Thank you.

Thank you. Your next question comes from Xiaodan Zhang from CICC. Please go ahead.

Thank you to management for addressing my questions. I would like to ask about the housing transaction services business. Could management provide more details on the expansion plan for this year regarding housing agents and agency stores? Additionally, how will you work to improve the efficiency of both existing and newly connected agents and stores on the platform? Thank you.

Thank you, Xiaodan. This year, we will continue to promote the healthy growth of our agency store network to support the sustained expansion of our housing transaction services. At the same time, we will place greater emphasis on the cost-effectiveness of store expansion. Our aim is to enhance the efficiency and income of platform stores and agents, thereby increasing the stability of agent careers, providing better services to customers, and achieving more sustainable long-term growth for our platform. In terms of the agent and store network expansion, by the end of this Q1, the number of active stores on our platform increased by nearly 30% year-over-year, and the number of active agents grew by 23% year-over-year. This growth was mainly driven by the non-Lianjia segment, with a 33% year-over-year increase in active non-Lianjia stores and a 24% year-over-year increase in active non-Lianjia agents on our platform. In Q1, several major brands joined our platform. This includes our collaboration with a brokerage company in Kunshan, Suzhou. This shows the core value of our platform in the buy-side market, which is our stronger existing home business operation, agent connection network, and digital empowerment capabilities. In Q1, our efficiency efforts paid off in the stable market environment. The average number of transactions per agent rose notably in Q1. This helped offset the decline in average housing unit prices. As a result, in-home GTV per agent grew by over 9% year-over-year in Q1. The average number of agents also rose by 18% year-over-year. Together, these factors led to a 28% year-over-year increase in existing home GTV on our platform, clearly outperforming the 16% increase in nationwide GTV as estimated by the Beike Research Institute. Our platform's efficiency-focused mechanism also started to show results. The share of high-performing stores increased from 16.7% at the end of 2024 to 18.4% in Q1. However, the stores were about 2.5 times more productive than those not on the platform in their respective cities. To improve efficiency, we refined our internal management. We used digital tools such as online store owner workshops and the AI property listing assistant, along with offline property listing sessions to facilitate home listings and accelerate sales. We also improved platform operations through building mechanisms like a point-based incentive program and regional co-governance councils. This encourages store owners to continue growing their business and work more closely with each other. Our store retention rate remained healthy for both old and new stores. Our in-home attrition rate dropped to 2.9% in Q1, down 6% sequentially and 38% year-over-year. The six-month retention rate for newly connected stores in the first half of 2024 was 94%, showing the long-term value of our platform support. For the full year, we reasonably foresee that the number of Lianjia agents and stores will remain largely stable. Meanwhile, we expect a modest increase in the scale of non-Lianjia agent stores, targeting expansion in certain key regions. On top of the stable agent store network, improving efficiency will be our core goal this year and beyond. This year, we will provide more targeted support to store owners to help them improve regional competitiveness. At the same time, under our points-based incentive system, we aim to develop more high-performing stores, upgrading the overall structure of our store network. In the long run, the large store model will be a key strategy for enhancing productivity. In the future, our platform will host more high-performing large stores, each with over 10 agents. These stores will attract more top talent. This model boosts high efficiency and strong staff retention, allowing store owners to achieve better income and stay in business longer. Those store owners can better support agents, ensure their income stability, and enable the owners to provide superior service to customers. The platform's various residential services will also offer agents diversified opportunities for additional income. Additionally, we firmly believe that breakthroughs in AI will present opportunities for transformative improvements in industry productivity. We have already developed a variety of AI applications to support our service providers, and we will continue to accelerate development to redefine the capabilities of quality service providers and drive efficiency gains. This year, in a volatile market, we aim to increase the average number of transactions per connected agent to maintain stable per capita commissions. Over the next two to three years, we plan to increase the proportion of large and high-quality stores. This approach will have more stable, high-performing agents with high efficiency, with store productivity being two to three times the current average. We anticipate that within three years, this will lead to approximately a 20% improvement in the efficiency of those connected agents on our platform. Thank you.

Thank you. Your next question comes from Jizhou Dong from Nomura. Please go ahead.

Bakers' home renovation and furnishing business achieved over 20% year-on-year growth in the first quarter with a 2 percentage point improvement in contribution margin. Could management provide more specifics on the segment's operations and the outlook for margins in the future? Additionally, management has discussed various ideas on how Beike can leverage AI to enhance its business and service quality. As we look ahead to the next few quarters, could management give us an update on Beike’s strategy and investment plan for AI from both the business-to-business and business-to-consumer perspectives? Thank you.

Thank you, Jizhou. Our home renovation and furnishings business demonstrated excellent performance in Q1. In terms of scale, revenue amounted to RMB2.9 billion, up 22.3% year-over-year. Cities such as Beijing, Guangzhou, and Zhengzhou performed especially well, each achieving over 50% year-over-year growth in revenue. Regarding profitability, the contribution margin for the home renovation and furnishing business reached 32.6% in Q1, an increase of 2 percentage points compared to the same period last year, reaching a record high and reflecting our capability for refined operation and management. We believe that AI has extensive application scenarios in home renovation and furnishing. We are also continuously deepening the application of AI, such as in contract conversion, construction processes, and internal management. Let me elaborate. First, in the early stages of contract conversion, previously, designers conducted initial communication with customers through two-dimensional black and white flow plans. The only professional drawing reduced the customer's perception and affected the efficiency of contract conversion. Currently, empowered by AI, when a customer visits our offline store for the first time, designers can rapidly formulate an IR proposal based on the customer's preference for decoration style and home layouts. This AI proposal encompasses various types of 3-dimensional color-rendered design drawings, dynamic and static space analysis, and smart device layout plans. This significantly enhances the experience of first-time store visitors and boosts contract conversion rates. In Wuhan, for example, the time from first-time store visit to signing a preliminary contract shortened from ten days to within six days in March. Secondly, in the construction process, we have developed an intelligent construction system. Real-time online inspections are realized by installing cameras on-site. AI can also conduct automatic measurement in core construction operations such as real-name drop certification, site cleanliness inspections, and noise recognition. In addition, by equipping staff with smart inspection devices, we assist in standardizing the home renovation acceptance process through AI recording technology. We can reconstruct the acceptance process, enabling principle and quantifiable evaluation of construction quality. In Beijing, for instance, the acceptance rate of actual risks has increased by more than 2 percentage points compared to before. Meanwhile, in terms of internal management, we have multiple AI employees. Our operating management AI employee enhances team management effectiveness by automatically summarizing and commenting on daily reports and demanding pending matters through AI. This feature has collected and commented on more than 20,000 daily reports, saving the team over 18,000 hours within half a year. A similarly fashioned order-following AI employee has realized functions such as information distribution and automatic order assignment through information collection and AI analysis capabilities, distributing information over 5,000 times and sending timely reminders more than 10,000 times within half a year. In the future, our AI exploration for the home renovation business will focus on more accurate insights and analysis of customer demands and more efficient design powered by AI. We aim to achieve better personalized solutions from demand to design and comprehensively enhance the professionalism and efficiency of our services.

Thank you. Your next question comes from John Lam from UBS. Please go ahead.

So let me translate my questions. My question is regarding Beihaojia. We see that Beihaojia has already participated in numerous new home projects. I just wanted to understand how Beihaojia contributes to new home development. Also, regarding the C2M business, how is it being reflected? Thank you.

Thank you, John. Beihaojia's business model provides a C2M new home product solution for partners like developers. We use intelligent algorithms and a massive database to deeply understand our target customers' needs and preferences. Our tools help predict the type of home customers want and the price they expect. Developers use this insight to guide project positioning and product design, making their new home offerings more catered to customer demands. So far, Beihaojia has participated in line purchases across different models. Our self-operated project is aimed at more comprehensive validation of our C2M capabilities. Back projects involve equity partners with Beihaojia primarily focused on product positioning. The projects are purely light asset models, where we do not engage in investment, but instead provide product positioning solutions to partners and charge a service fee. Regarding funding use across seven investment-involved projects, total investments have reached about RMB2.3 billion. By the end of this Q1, we have recovered nearly RMB500 million from these investments. Net investment from our funds stands over RMB1.8 billion. Among these, our first IP partnership, new home projects which we collaborated with PowerChina Real Estate on in Beijing City achieved a complete sellout of all initial units on the first day of launch. The project delivered an IRR of nearly 30% at the shareholder level, demonstrating how our C2M service capability provides partners with enhanced sales and operational certainty. In building C2M capabilities, we have two key advantages. First, we have a deep understanding of the needs of potential consumers. This came from our unique database built on massive online and offline traffic to our platform. It also draws from rich customer interactions in our brokerage, home renovation, and rental services. Together, they form the foundation of our core data infrastructure. With this data, we can analyze key indicators, such as the source, quantity, purchasing power, and specific product needs of potential customers in a timely, intuitive, and competitive manner. This level of detailed customer insight helps developers make more accurate decisions and allocate resources more effectively in areas such as land auction assessment, unit mix planning, and product sets, ultimately leading to greater operational certainty. Our second advantage is our strong market knowledge and price ability. We use actual transaction prices of new homes, along with real-time and upstream data like homeowners' listing prices and price adjustments. We then apply algorithm models to build a valuation framework for different geographic districts. These models can more accurately estimate project and sector values and update quickly based on changes in the market. This approach aligns more closely with the price formation logic in a buyer's market. New home prices are largely unaffected by policies from developers' strategies and instead result from a decentralized and free negotiation between buyers and sellers. In a market dominated by new home transactions, these prices often give a more accurate multilayered view of the market than new home market data, helping us better identify market trends. Based on these advantages, we have refined our core C2M tools. We will continue to improve their accuracy and proficiency over time. We also support our C2M model through more innovative ways to reach customers. While our agent network connects with customers, we are also building an online community called 'Building a Better Home Together' with our application. This enables users to directly participate in the evaluation and co-creation of new home product designs. For example, in our Hongqing project in Shanghai, users can visit the 'Building a Better Home Together' page to view and compare two home design plans and engage in the design process of their future dream homes. This model allows us to connect with customers much earlier than traditional methods and reflect their preferences in new home products. We have already provided our first C2M product solution service in a Xi'an project, through which we earned a service fee, showing stronger market recognition of our business approach. In the Xi'an project, Beihaojia provided a full set of product solutions, including customer service, product positioning, cost optimization, price forecasting, and market services. We also gave targeted project planning advice, such as optimizing elevator to household visuals, enhancing the landscape, and adjusting sizes, addressing key developer pain points such as fast capital recovery, product premium, and product competitiveness. Last but not least, as newcomers to the industry, Beihaojia remains humble and respectful of the market. Although this business line has been established for less than two years, we have already seen promising results in several projects. These early signs have gradually validated our capability path and strengthened our confidence in continuous optimization and moving forward.

Thank you. We are now approaching the end of the conference call. I will now turn the call over to your 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 next quarter. Thank you, and good-bye.