KE Holdings Inc. Announces Fourth Quarter and Fiscal Year 2020 Unaudited Financial Results

Rhea-AI Summary

KE Holdings Inc. (BEKE) reported strong financial results for Q4 and FY 2020. Gross transaction value (GTV) surged 65.4% YoY to RMB 1,120 billion (US$171.6 billion) in Q4, while net revenues increased 57.6% YoY to RMB 22.7 billion (US$3.5 billion). The company's net income reached RMB 1,096 million (US$168 million). For FY 2020, GTV was RMB 3.5 trillion (US$536.3 billion), net revenues climbed to RMB 70.5 billion (US$10.8 billion), and adjusted net income rose by 245.4% YoY to RMB 5.7 billion (US$877 million). BEKE anticipates Q1 2021 revenues between RMB 18.5 billion and RMB 19.5 billion.

Positive

• Q4 2020 GTV increased by 65.4% YoY to RMB 1,120 billion (US$171.6 billion).
• Net revenues grew by 57.6% YoY to RMB 22.7 billion (US$3.5 billion).
• Net income reached RMB 1,096 million (US$168 million) in Q4 2020.
• FY 2020 GTV was RMB 3.5 trillion (US$536.3 billion), up 64.5% YoY.
• Adjusted net income surged by 245.4% YoY to RMB 5.7 billion (US$877 million).
• Q1 2021 revenue guidance suggests growth of approximately 159.8% to 173.9% YoY.

Negative

• Gross margin decreased to 23.9% in FY 2020 from 24.5% in 2019.
• Operating expenses increased by 7.4% YoY to RMB 14.0 billion (US$2.1 billion) in 2020.

KE Holdings Inc. (“Beike” or the “Company”) (NYSE: BEKE), a leading integrated online and offline platform for housing transactions and services, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2020.

Business Highlights for the Fourth Quarter of 2020

• Gross transaction value (GTV)¹ was RMB1,120.0 billion (US$171.6 billion), an increase of 65.4% year-over-year. GTV of existing home transactions was RMB584.7 billion (US$89.6 billion), an increase of 69.8% year-over-year. GTV of new home transactions was RMB469.2 billion (US$71.9 billion), an increase of 55.5% year-over-year. GTV of emerging and other services was RMB66.1 billion (US$10.1 billion), an increase of 113.2% year-over-year.
• Net revenues were RMB22.7 billion (US$3.5 billion), an increase of 57.6% year-over-year.
• Net income was RMB1,096 million (US$168 million). Adjusted net income² was RMB2,001 million (US$307 million), an increase of 4,424.8% year-over-year.
• Number of stores was 46,946 as of December 31, 2020, a 25.1% increase from one year ago.
• Number of agents was 493,088 as of December 31, 2020, a 37.9% increase from one year ago.
• Mobile monthly active users (MAU)³ averaged 48.2 million, an increase of 88.3% year-over-year.

Business Highlights for the Fiscal Year 2020

• GTV was RMB3,499.1 billion (US$536.3 billion), an increase of 64.5% year-over-year. GTV of existing home transactions was RMB1,940.0 billion (US$297.3 billion), an increase of 49.5% year-over-year. GTV of new home transactions was RMB1,383.0 billion (US$211.9 billion), an increase of 85.0% year-over-year. GTV of emerging and other services was RMB176.1 billion (US$27.0 billion), an increase of 113.0% year-over-year.
• Net revenues were RMB70.5 billion (US$10.8 billion), an increase of 53.2% year-over-year.
• Net income was RMB2,778 million (US$426 million). Adjusted net income was RMB5,720 million (US$877 million), an increase of 245.4% year-over-year.

Mr. Stanley Yongdong Peng, Co-founder and Chief Executive Officer of Beike, commented, “We achieved exceptional growth in 2020, closing the year with solid fourth quarter operational and financial results. Our massive scale, operating efficiency and high-quality services, combined with strong network effects, have created a virtuous cycle, spurring a 64.5% year-over-year jump in our full year GTV to RMB3.5 trillion. The ground we’ve covered in the past year has cemented our confidence that the value brought by our commitment to doing the right thing even if it’s difficult, is the foundation for all our achievements.

With a focus on creating value for our customers and empowering stores and agents, our GTV for existing home transaction services grew by a substantial 49.5% to RMB1.94 trillion in 2020. Our platform vigorously promoted 8 core commitments to our customers, including authentic listing guarantees and transaction fund escrow services, which penetrated 84% of stores in the top 30 cities in the fourth quarter of 2020. GTV for new home transaction services climbed by 85% to RMB1.38 trillion in 2020, owing to our three-pronged approach of ensuring satisfaction of customers’ needs, supporting service providers, and establishing relationships with an increasing number of real estate developers and providing more tailored and more efficient services that cater to their needs. We extended commission advances covering more than 40% of new home sales commission-split to connected stores and other platform participants in 2020, and successfully brought the whole process online. During the year, we also made solid headway in home decoration and renovation services, as well as financial services in preparation for our next phase of growth.

For 2021, we have five focus areas - taking care of our customers, supporting service providers, cultivating our emerging services, creating social value, and enhancing technology’s critical role in this broad market opportunity. We are confident of our growth trajectory, as we move closer to realizing our vision of providing comprehensive and trusted housing services to 300 million families in China,” concluded Mr. Peng.

Mr. Tao Xu, Chief Financial Officer of Beike, further commented, “We delivered another quarter of solid financial results, marked by high revenue growth and strong profitability. Our total net revenues in the fourth quarter increased by 57.6% year-over-year to RMB22.7 billion, exceeding the high end of our previous guidance range. We are also very pleased to witness that over 30% of stores on Beike platform had an annual GTV of RMB50 million or more in 2020, which we believe is an adequate level to support sustainable growth of the stores, compared to 19% in prior year, demonstrating the strong network effects of our agent cooperation network (ACN). Going forward, we will remain focused on taking better care of consumers and support platform participants such as brokerage brands, store owners, agents and real estate developers to take better care of consumers, while continuously strengthening our competitive moat and growing our business at a fast pace. As we continue to invest in our ACN infrastructure, user base expansion and innovative A.I. technologies, we are confident that we will further enhance our monetization capabilities and deliver sustainable growth.”

Fourth Quarter 2020 Financial Results

Net Revenues

Net revenues increased by 57.6% to RMB22.7 billion (US$3.5 billion) in the fourth quarter of 2020 from RMB14.4 billion in the same period of 2019. The increase was driven by the total GTV growth of 65.4% to RMB1,120.0 billion (US$171.6 billion) in the fourth quarter of 2020 from RMB677.1 billion in the same period of 2019.

• Net revenues from existing home transaction services increased by 56.1% to RMB9.2 billion (US$1.4 billion) in the fourth quarter of 2020 from RMB5.9 billion in the same period of 2019, primarily attributable to a 69.8% increase in GTV of existing home transactions to RMB584.7 billion (US$89.6 billion) in the fourth quarter of 2020 from RMB344.3 billion in the same period of 2019.
  
  Among that, (i) the revenue derived from platform service, franchise service and other value-added services, which are mostly charged to connected stores and agents on the Company’s platform increased by 64.8% to RMB1.0 billion (US$0.2 billion) in the fourth quarter of 2020 from RMB0.6 billion in the same period of 2019, as the GTV of existing home transactions served by connected agents on the Company’s platform increased by 95.4% to RMB283.8 billion (US$43.5 billion) in the fourth quarter of 2020 from RMB145.2 billion in the same period of 2019, as well as moderate increase in existing home transaction commission rate charged from connected stores. The growth rate of GTV of existing home transactions served by connected agents exceeded that of the revenue derived from platform service, franchise service and other value-added services, primarily due to fee remission on recruiting, training and other VAS services, as well as a decrease in the total amount of upfront onboard fee charged to newly connected stores; and
  
  (ii) commission revenue increased by 55.1% to RMB8.2 billion (US$1.3 billion) in the fourth quarter of 2020 from RMB5.3 billion in the same period of 2019, driven by the GTV of existing home transactions served by the Company’s Lianjia brand increased by 51.l% to RMB300.9 billion (US$46.1 billion) in the fourth quarter of 2020 from RMB199.1 billion in the same period of 2019.

• Net revenues from new home transaction services increased by 58.8% to RMB12.9 billion (US$2.0 billion) in the fourth quarter of 2020 from RMB8.1 billion in the same period of 2019, primarily attributable to an increase of 55.5% in the GTV of new home transactions to RMB469.2 billion (US$71.9 billion) in the fourth quarter of 2020 from RMB301.7 billion in the same period of 2019. The GTV of new home transactions served by Lianjia brand increased by 26.0% to RMB80.5 billion (US$12.3 billion) from RMB63.8 billion in the same period of 2019, while the GTV of new home transaction services completed on Beike platform through connected agents and other sales channels increased by 63.4% to RMB388.7 billion (US$59.6 billion) from RMB237.9 billion in the same period of 2019.

• Net revenues from emerging and other services increased by 58.1% to RMB0.6 billion (US$0.1 billion) in the fourth quarter of 2020 from RMB0.4 billion in the same period of 2019. The increase was primarily attributable to the increase of penetration level in the Company’s financial services around the housing transaction services, as well as increased number of home decorations units completed through the Company’s platform.

Cost of Revenues

Total cost of revenues increased by 48.2% to RMB17.2 billion (US$2.6 billion) in the fourth quarter of 2020 from RMB11.6 billion in the same period of 2019, primarily attributable to the increase in both split commission to connected agents and other sales channels, and internal commission and compensation.

• Commission - split. The Company’s cost of revenues for commissions to connected agents and other sales channels increased by 59.2% to RMB8.7 billion (US$1.3 billion) in the fourth quarter of 2020 from RMB5.5 billion in the same period of 2019. The increase was primarily attributable to the incremental increase in the number of new home transactions completed through connected agents and other sales channels.

• Commission and compensation - internal. The Company’s cost of revenues for internal commission and compensation increased by 38.6% to RMB6.8 billion (US$1.0 billion) in the fourth quarter of 2020 from RMB4.9 billion in the same period of 2019. The increase was primarily attributable to the increase in the number of new and existing home transactions completed through Lianjia brand.

• Cost related to stores. The Company’s cost related to stores increased by 19.0% to RMB0.9 billion (US$0.1 billion) in the fourth quarter of 2020 as compared to RMB0.8 billion in the same period of 2019, mainly due to the increase in the number of stores under Lianjia brand in top tier cities with higher rental cost, as well as a moderate increase in store level rental cost year-over-year.

• Other cost. The Company’s other cost increased by 71.0% to RMB0.8 billion (US$0.1 billion) in the fourth quarter of 2020 as compared to RMB0.5 billion in the same period of 2019, mainly due to the increase in share-based compensation.

Gross Profit

Gross profit increased by 97.4% to RMB5.4 billion (US$0.8 billion) in the fourth quarter of 2020 from RMB2.7 billion in the same period of 2019. Gross margin increased to 23.9% in the fourth quarter of 2020 from 19.1% in the same period of 2019. The increase in gross margin was mainly attributable to the decrease of internal commission and compensation as percentage of net revenues from existing home transactions services completed through Lianjia brand, as well as the decrease of commission split as percentage of net revenues from new home transactions services completed through connected agents and other sales channels.

Income (Loss) from Operations

Total operating expenses decreased to RMB4.2 billion (US$0.6 billion) in the fourth quarter of 2020 from RMB5.9 billion in the same period of 2019.

• General and administrative expenses were RMB1,884 million (US$289 million) in the fourth quarter of 2020, compared to RMB4,562 million in the same period of 2019, mainly due to the decrease of share-based compensation expenses.

• Sales and marketing expenses were RMB1,323 million (US$203 million) in the fourth quarter of 2020, compared to RMB831 million in the same period of 2019, mainly due to the increase of the brand advertising and promotional marketing activities.

• Research and development expenses were RMB714 million (US$109 million) in the fourth quarter of 2020, compared to RMB478 million in the same period of 2019, mainly due to the increase of share-based compensation expenses.

Income from operations was RMB1,267 million (US$194 million) in the fourth quarter of 2020, compared to loss from operations of RMB3,123 million in the same period of 2019. Operating margin was 5.6% in the fourth quarter of 2020, compared to negative 21.7% in the same period of 2019, primarily due to the decrease of share-based compensation expenses.

Adjusted income from operations⁴ was RMB2,231 million (US$342 million) in the fourth quarter of 2020, compared to adjusted loss from operations of RMB80 million in the same period of 2019. Adjusted operating margin⁵ was 9.8% in the fourth quarter of 2020, compared to negative 0.6% in the same period of 2019, mainly attributable to the increase of gross margin and improvement of operating leverage. Adjusted EBITDA⁶ increased by 2,183.9% to RMB2,897 million (US$444 million) in the fourth quarter of 2020 from RMB127 million in the same period of 2019.

Net Income (Loss)

Net income was RMB1,096 million (US$168 million) in the fourth quarter of 2020, compared to net loss of RMB3,121 million in the same period of 2019.

Adjusted net income increased by 4,424.8% to RMB2,001 million (US$307 million) in the fourth quarter of 2020 from RMB44 million in the same period of 2019.

Net Income (Loss) attributable to KE Holdings Inc.’s ordinary shareholders

Net income attributable to KE Holdings Inc.’s ordinary shareholders was RMB1,095 million (US$168 million) in the fourth quarter of 2020, compared to net loss attributable to KE Holdings Inc.’s ordinary shareholders of RMB3,699 million in the same period of 2019.

Adjusted net income attributable to KE Holdings Inc.⁷ increased by 4,508.2% to RMB2,000 million (US$307 million) in the fourth quarter of 2020 from RMB43 million in the same period of 2019.

Net Income (Loss) per ADS

Diluted net income per ADS attributable to KE Holdings Inc.’s ordinary shareholders⁸ was RMB0.93 (US$0.14) in the fourth quarter of 2020, compared to diluted net loss per ADS attributable to KE Holdings Inc.’s ordinary shareholders of RMB7.99 in the same period of 2019.

Adjusted diluted net income per ADS attributable to KE Holdings Inc.’s ordinary shareholders⁹ was RMB1.71 (US$0.26) in the fourth quarter of 2020, compared to adjusted diluted net loss per ADS attributable to KE Holdings Inc.’s ordinary shareholders of RMB1.15 in the same period of 2019.

Cash, Cash Equivalents, Restricted Cash and Short-Term Investments

As of December 31, 2020, the combined balance of the Company’s cash, cash equivalents, restricted cash and short-term investments amounted to RMB65.2 billion (US$10.0 billion).

Fiscal Year 2020 Financial Results

Net Revenues

Net revenues increased by 53.2% to RMB70.5 billion (US$10.8 billion) in 2020 from RMB46.0 billion in 2019. The increase was driven by the robust total GTV growth by 64.5% to RMB3,499.1 billion (US$536.3 billion) in 2020 from RMB2,127.7 billion in 2019.

• Net revenues from existing home transaction services increased by 24.4% to RMB30.6 billion (US$4.7 billion) in 2020 from RMB24.6 billion in 2019, primarily attributable to a 49.5% increase in GTV of existing home transactions to RMB1,940.0 billion (US$297.3 billion) in 2020 from RMB1,297.4 billion in 2019. The higher growth rate of GTV of existing home transaction services was primarily attributable to the GTV mix shift in existing home transaction services from GTV served by Lianjia brand where revenue is recorded on a gross commission revenue basis, towards GTV served by connected agents on the Company’s platform, where revenue is recorded on a net basis from platform service, franchise service and other value-added services.
  
  Among that, (i) the revenue derived from platform service, franchise service and other value-added services increased by 94.3% to RMB3.0 billion (US$0.5 billion) in 2020 from RMB1.5 billion in 2019, as the GTV of existing home transactions served by connected agents on the Company’s platform increased by 109.9% to RMB928.1 billion (US$142.2 billion) in 2020 from RMB442.1 billion in 2019, as well as moderate increase in existing home transaction commission rate charged from connected stores; and
  
  (ii) commission revenue increased by 19.7% to RMB27.6 billion (US$4.2 billion) in 2020 from RMB23.0 billion in 2019, driven by the GTV of existing home transactions served by the Company’s Lianjia brand increased by 18.3% to RMB1,011.9 billion (US$155.1 billion) in 2020 from RMB855.3 billion in 2019.

• Net revenues from new home transaction services increased by 87.1% to RMB37.9 billion (US$5.8 billion) in 2020 from RMB20.3 billion in 2019, primarily attributable to an increase of 85.0% in the GTV of new home transactions to RMB1,383.0 billion (US$211.9 billion) in 2020 from RMB747.6 billion in 2019. The GTV of new home transactions served by Lianjia brand increased by 37.2% to RMB276.7 billion (US$42.4 billion), while the GTV of new home transaction services completed on the Company’s platform through connected agents and other sales channels increased by 102.7% year-over-year to RMB1,106.3 billion (US$169.5 billion).

• Net revenues from emerging and other services increased by 68.7% to RMB2.0 billion (US$0.3 billion) in 2020 from RMB1.2 billion in 2019. The increase was primarily attributable to the increase of service penetration level in the Company’s financial services around the housing transaction services, as well as the increase in revenues from other services.

Cost of Revenues

Total cost of revenues increased by 54.3% to RMB53.6 billion (US$8.2 billion) in 2020 from RMB34.7 billion in 2019, primarily due to the increase in both split commission to connected agents and other sales channels, and internal commission and compensation.

• Commission - split. The Company’s cost of revenues for commissions to connected agents and other sales channels increased by 122.7% to RMB24.8 billion (US$3.8 billion) in 2020 from RMB11.2 billion in 2019.

• Commission and compensation - internal. The Company’s cost of revenues for internal commission and compensation increased by 20.0% to RMB23.3 billion (US$3.6 billion) in 2020 from RMB19.4 billion in 2019.

• Cost related to stores. The Company’s cost related to stores increased by 4.2% to RMB3.2 billion (US$0.5 billion) in 2020 from RMB3.1 billion in 2019.

• Other cost. The Company’s other cost increased by 109.8% to RMB2.2 billion (US$0.3 billion) in 2020 from RMB1.1 billion in 2019, mainly due to the increase in share-based compensation.

Gross Profit

Gross profit increased by 49.6% to RMB16.9 billion (US$2.6 billion) in 2020 from RMB11.3 billion in 2019. Gross margin was 23.9% in 2020, compared to 24.5% in 2019. The decrease in gross margin was mainly due to a continuing revenue mix shift towards new home transaction services.

Income (Loss) from Operations

Total Operating expenses increased by 7.4% to RMB14.0 billion (US$2.1 billion) in 2020 from RMB13.1 billion in 2019.

• General and administrative expenses were RMB7,589 million (US$1,163 million) in 2020, compared to RMB8,377 million in 2019, mainly due to the decrease of share-based compensation expenses.

• Sales and marketing expenses were RMB3,715 million (US$569 million) in 2020, compared to RMB3,106 million in 2019, mainly due to the increase of the brand advertising and promotional marketing activities.

• Research and development expenses were RMB2,478 million (US$380 million) in 2020, compared to RMB1,571 million in 2019, mainly due to the increase of share-based compensation expenses, and the increase in headcount of experienced research and development personnel.

Income from operations was RMB2,842 million (US$436 million) in 2020, compared to loss from operations of RMB1,786 million in 2019. Operating margin was 4.0% in 2020, compared to negative 3.9% in 2019, primarily attributable to the decrease of share-based compensation expenses.

Adjusted income from operations increased by 206.2% to RMB5,935 million (US$910 million) in 2020 from RMB1,938 million in 2019. Adjusted operating margin increased to 8.4% in 2020 from 4.2% in 2019. Adjusted EBITDA increased by 165.2% to RMB7,738 million (US$1,186 million) in 2020 from RMB2,917 million in 2019.

Net Income (Loss)

Net income was RMB2,778 million (US$426 million) in 2020, compared to net loss of RMB2,180 million in 2019.

Adjusted net income increased by 245.4% to RMB5,720 million (US$877 million) in 2020 from RMB1,656 million in 2019.

Net Income (Loss) attributable to KE Holdings Inc.’s Ordinary Shareholders

Net income attributable to KE Holdings Inc.’s ordinary shareholders was RMB720 million (US$110 million) in 2020, compared to net loss attributable to KE Holdings Inc.’s ordinary shareholders of RMB4,050 million in 2019.

Adjusted net income attributable to KE Holdings Inc. increased by 246.3% to RMB5,717 million (US$876 million) in 2020 from RMB1,651 million in 2019.

Net Income (Loss) per ADS

Diluted net income per ADS attributable to KE Holdings Inc.’s ordinary shareholders was RMB0.95 (US$0.15) in 2020, compared to diluted net loss per ADS attributable to KE Holdings Inc.’s ordinary shareholders of RMB8.82 in 2019.

Adjusted diluted net income per ADS attributable to KE Holdings Inc.’s ordinary shareholders was RMB3.69 (US$0.57) in 2020, compared to adjusted diluted net loss per ADS attributable to KE Holdings Inc.’s ordinary shareholders of RMB0.47 in 2019.

Business Outlook

For the first quarter of 2021, the Company expects total net revenues to be between RMB18.5 billion (US$2.8 billion) and RMB19.5 billion (US$3.0 billion), representing an increase of approximately 159.8% to 173.9% from the same quarter of 2020. This business outlook reflects the Company’s current and preliminary view on the business situation and market condition, which is subject to change.

Conference Call Information

The Company will hold a conference call on 9:00 PM U.S. Eastern Time on Monday, March 15, 2021 (9:00 AM Beijing/Hong Kong Time on Tuesday, March 16, 2021) to discuss the financial results. Details for the conference call are as follows:

Event Title: KE Holdings Inc. Fourth Quarter and Fiscal Year 2020 Earnings Conference Call

Conference ID: 5058058

All participants must use the link provided below to complete the online registration process in advance of the conference call. Upon registering, each participant will receive a set of participant dial-in numbers, the Direct Event passcode, and a unique registrant ID by email.

PRE-REGISTER LINK:

http://apac.directeventreg.com/registration/event/5058058

A live and archived webcast of the conference call will also be available at the Company’s investor relations website at http://investors.ke.com/.

The replay will be accessible through March 23, 2021, by dialing the following numbers:

United States Toll Free:		+1-855-452-5696
Mainland, China:		400-602-2065
Hong Kong, China:		+852-3051-2780
International:		+61-2-8199-0299
Conference ID:		5058058

Exchange Rate

This announcement contains translations of certain RMB amounts into U.S. dollars ("US$") at specified rates solely for the convenience of the reader. Unless otherwise stated, all translations from RMB to US$ were made at the rate of RMB6.5250 to US$1.00, the noon buying rate in effect on December 31, 2020, in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ amounts referred could be converted into US$ or RMB, as the case may be, at any particular rate or at all. For analytical presentation, all percentages are calculated using the numbers presented in the financial statements contained in this earnings release.

Non-GAAP Financial Measures

The Company uses adjusted income (loss) from operations, adjusted net income (loss), adjusted net income (loss) attributable to KE Holdings Inc., adjusted operating margin, adjusted EBITDA and adjusted net income (loss) per ADS attributable to KE Holdings Inc.’s ordinary shareholders, each a non-GAAP financial measure, in evaluating its operating results and for financial and operational decision-making purposes. Beike believes that these non-GAAP financial measures help identify underlying trends in the Company's business that could otherwise be distorted by the effect of certain expenses that the Company includes in its net income (loss). Beike also believes that these non-GAAP financial measures provide useful information about its results of operations, enhance the overall understanding of its past performance and future prospects and allow for greater visibility with respect to key metrics used by its management in its financial and operational decision-making. A limitation of using these non-GAAP financial measures is that these non-GAAP financial measures exclude share-based compensation expenses that have been, and will continue to be for the foreseeable future, a significant recurring expense in the Company’s business.

The presentation of these non-GAAP financial measures should not be considered in isolation or construed as an alternative to gross profit, net income (loss) or any other measure of performance or as an indicator of its operating performance. Investors are encouraged to review these non-GAAP financial measures and the reconciliation to the most directly comparable GAAP measures. The non-GAAP financial measures presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to the Company’s data. Beike encourages investors and others to review its financial information in its entirety and not rely on a single financial measure. Adjusted income (loss) from operations is defined as income (loss) from operations, excluding (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from acquisitions and business cooperation agreement, (iii) changes in fair value of financial assets recognized as deemed marketing expenses and (iv) impairment of goodwill and intangible assets. Adjusted operating margin is defined as adjusted income (loss) from operations as a percentage of net revenues. Adjusted net income (loss) is defined as net income (loss), excluding (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from acquisitions and business cooperation agreement, (iii) changes in fair value from long term investments, loan receivables measured at fair value and contingent consideration, (iv) impairment of goodwill and intangible assets, (v) impairment of investments and (vi) tax effects of the above non-GAAP adjustments. Adjusted net income (loss) attributable to KE Holdings Inc. is defined as net income (loss) attributable to KE Holdings Inc., excluding (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from acquisitions and business cooperation agreement, (iii) changes in fair value from long term investments, loan receivables measured at fair value and contingent consideration, (iv) impairment of goodwill and intangible assets, (v) impairment of investments, (vi) tax effects of the above non-GAAP adjustments, and (vii) effects of non-GAAP adjustments on net income (loss) attributable to non-controlling interests shareholders. Adjusted EBITDA is defined as net income (loss), excluding (i) interest income, net, (ii) income tax expense (benefit), (iii) depreciation of property and equipment, (iv) amortization of intangible assets, (v) share-based compensation expenses, (vi) changes in fair value from long term investments, loan receivables measured at fair value and contingent consideration, (vii) impairment of goodwill and intangible assets and (viii) impairment of investments. Adjusted net income (loss) per ADS attributable to KE Holdings Inc.’s ordinary shareholders is defined as adjusted net income (loss) attributable to KE Holdings Inc.’s ordinary shareholders divided by weighted average number of ADS outstanding during the periods used in calculating adjusted net income (loss) per ADS, basic and diluted.

Please see the “Unaudited reconciliation of GAAP and non-GAAP results” included in this press release for a full reconciliation of each non-GAAP measure to its respective comparable GAAP measure.

About KE Holdings Inc.

KE Holdings Inc. is a leading integrated online and offline platform for housing transactions and services. The Company is a pioneer in building the industry infrastructure and standards in China to reinvent how service providers and housing customers efficiently navigate and consummate housing transactions, ranging from existing and new home sales, home rentals, to home renovation, real estate financial solutions, and other services. The Company owns and operates Lianjia, China’s leading real estate brokerage brand and an integral part of its Beike platform. With more than 19 years of operating experience through Lianjia since its inception in 2001, the Company believes the success and proven track record of Lianjia pave the way for it to build the industry infrastructure and standards and drive the rapid and sustainable growth of Beike.

Safe Harbor Statement

This press release contains statements that may constitute “forward-looking” statements pursuant to the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “aims,” “future,” “intends,” “plans,” “believes,” “estimates,” “likely to,” and similar statements. Among other things, the business outlook and quotations from management in this press release, as well as Beike’s strategic and operational plans, contain forward-looking statements. Beike may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about KE Holdings Inc.’s beliefs, plans, and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Beike’s goals and strategies; Beike’s future business development, financial condition and results of operations; expected changes in the Company’s revenues, costs or expenditures; Beike’s ability to empower services and facilitate transactions on Beike’s platform; competition in our industry; relevant government policies and regulations relating to our industry; Beike’s ability to protect the Company’s systems and infrastructures from cyber-attacks; Beike’s dependence on the integrity of brokerage brands, stores and agents on the Company’s platform; general economic and business conditions in China and globally; and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in KE Holdings Inc.’s filings with the SEC. All information provided in this press release is as of the date of this press release, and KE Holdings Inc. does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

KE Holdings Inc.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in thousands, except for share, per share data)
		As of December 31,		As of December 31,
		2019		2020
		RMB		RMB		US$
ASSETS
Current assets
Cash and cash equivalents		24,319,332		40,969,979		6,278,924
Restricted cash		7,380,341		8,567,496		1,313,026
Short-term investments		1,844,595		15,688,321		2,404,340
Short-term financing receivables, net of allowance for
credit losses of RMB92,223 and RMB113,905 as of
December 31, 2019 and 2020, respectively		2,125,621		3,931,641		602,550
Accounts receivable, net of allowance for credit losses
of RMB460,962 and RMB1,122,218 as of
December 31, 2019 and 2020, respectively		8,093,219		13,183,559		2,020,469
Amounts due from and prepayments to related parties		927,306		484,349		74,230
Loan receivables from related parties		1,929,076		36,378		5,575
Prepayments, receivables and other assets		5,292,996		4,677,378		716,840
Total current assets		51,912,486		87,539,101		13,415,954
Non-current assets
Property and equipment, net		1,134,228		1,472,460		225,664
Right-of-use assets		5,625,015		6,821,100		1,045,380
Long-term financing receivables, net of allowance for
credit losses of RMB847 and RMB13,414 as of
December 31, 2019 and 2020, respectively		265,868		218,018		33,413
Long-term investments, net		2,333,745		3,140,315		481,274
Intangible assets, net		2,560,442		1,642,651		251,747
Goodwill		2,477,075		2,467,497		378,160
Non-current restricted cash		230,903		-		-
Other non-current assets		725,550		994,394		152,398
Total non-current assets		15,352,826		16,756,435		2,568,036
TOTAL ASSETS		67,265,312		104,295,536		15,983,990

KE Holdings Inc.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
(All amounts in thousands, except for share, per share data)
		As of December 31,		As of December 31,
		2019		2020
		RMB		RMB		US$
LIABILITIES
Current liabilities
Accounts payable		4,212,705		6,594,846		1,010,704
Amounts due to related parties		263,659		254,255		38,966
Employee compensation and welfare payable		9,113,011		11,231,800		1,721,349
Customer deposits payable		4,382,803		6,743,256		1,033,451
Income taxes payable		994,815		986,465		151,182
Short-term borrowings		720,000		-		-
Lease liabilities current portion		2,222,745		2,625,979		402,449
Short-term funding debts		2,291,723		1,512,510		231,802
Contract liabilities		593,373		734,157		112,514
Accrued expenses and other current liabilities		3,002,841		2,950,078		452,119
Total current liabilities		27,797,675		33,633,346		5,154,536
Non-current liabilities
Deferred tax liabilities		22,446		17,289		2,650
Lease liabilities non-current portion		2,914,240		3,833,914		587,572
Long-term borrowings		4,890,030		-		-
Long-term funding debts		7,500		15,000		2,299
Other non-current liabilities		97,829		3,471		532
Total non-current liabilities		7,932,045		3,869,674		593,053
TOTAL LIABILITIES		35,729,720		37,503,020		5,747,589

KE Holdings Inc.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
(All amounts in thousands, except for share, per share data)
		As of December 31,		As of December 31,
		2019		2020
		RMB		RMB		US$
MEZZANINE EQUITY
Series B convertible redeemable preferred shares
(US$0.00002 par value; 750,000,000 shares authorized,
298,483,760 issued and outstanding with redemption value
of RMB6,406,056 as of December 31, 2019; nil
authorized, issued and outstanding as of December 31,
2020)		6,406,056		-		-
Series C convertible redeemable preferred shares
(US$0.00002 par value; 750,000,000 shares authorized,
470,568,175 issued and outstanding with redemption value
of RMB12,118,251 as of December 31, 2019; nil
authorized, issued and outstanding as of December 31,
2020)		12,118,251		-		-
Series D convertible redeemable preferred shares
(US$0.00002 par value; 1,000,000,000 shares
authorized,430,835,530 issued and outstanding with
redemption value of RMB11,831,223 as of December 31,
2019; nil authorized, issued and outstanding as of
December 31, 2020)		11,831,223		-		-
Series D+ convertible redeemable preferred shares
(US$0.00002 par value; 750,000,000 shares authorized,
310,879,155 issued and outstanding with redemption value
of RMB10,017,365 as of December 31, 2019; nil
authorized, issued and outstanding as of December 31,
2020)		10,017,365		-		-
TOTAL MEZZANINE EQUITY		40,372,895		-		-
SHAREHOLDERS’ EQUITY (DEFICIT)
KE Holdings Inc. shareholders’ equity (deficit)
Ordinary Shares (US$0.00002 par value; 25,000,000,000
ordinary shares authorized, comprising of 23,614,698,720
Class A ordinary shares, 885,301,280 Class B ordinary
shares and 500,000,000 shares each of such classes to be
designated, 584,865,410 and 2,666,966,855 Class A
ordinary shares issued and outstanding as of December 31,
2019 and December 31, 2020; 885,301,280 Class B
ordinary shares issued and outstanding as of December 31,
2019 and December 31, 2020)		202		482		74
Additional paid-in capital		2,533,889		77,433,882		11,867,262
Statutory reserves		253,732		392,834		60,204
Accumulated other comprehensive income (loss)		63,308		(1,834,087)		(281,086)
Accumulated deficit		(11,775,637)		(9,227,664)		(1,414,202)
Total KE Holdings Inc. shareholders' equity
(deficit)		(8,924,506)		66,765,447		10,232,252
Non-controlling interests		87,203		27,069		4,149
TOTAL SHAREHOLDERS' EQUITY (DEFICIT)		(8,837,303)		66,792,516		10,236,401
TOTAL LIABILITIES, MEZZANINE EQUITY
AND SHAREHOLDERS’ EQUITY		67,265,312		104,295,536		15,983,990

KE Holdings Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(All amounts in thousands, except for share, per share data, ADS and per ADS data)
		For the three months ended						For the year ended
		December 31, 2019		December 31, 2020		December 31, 2020		December 31, 2019		December 31, 2020		December 31, 2020
		RMB		RMB		US$		RMB		RMB		US$
Net revenues
Existing home transaction services		5,869,149		9,159,677		1,403,782		24,568,508		30,564,584		4,684,227
New home transaction services		8,117,637		12,886,750		1,974,981		20,273,860		37,937,886		5,814,235
Emerging and other services		394,756		624,218		95,666		1,172,538		1,978,508		303,220
Total net revenues		14,381,542		22,670,645		3,474,429		46,014,906		70,480,978		10,801,682
Cost of revenues
Commission-split		(5,485,217)		(8,731,868)		(1,338,217)		(11,154,698)		(24,847,023)		(3,807,972)
Commission and compensation-internal		(4,898,538)		(6,790,070)		(1,040,624)		(19,444,127)		(23,324,145)		(3,574,582)
Cost related to stores		(794,958)		(946,262)		(145,021)		(3,078,672)		(3,206,601)		(491,433)
Others		(455,068)		(778,225)		(119,268)		(1,069,365)		(2,243,352)		(343,809)
Total cost of revenues(1)		(11,633,781)		(17,246,425)		(2,643,130)		(34,746,862)		(53,621,121)		(8,217,796)
Gross profit		2,747,761		5,424,220		831,299		11,268,044		16,859,857		2,583,886
Operating expenses
Sales and marketing expenses(1)		(830,923)		(1,323,369)		(202,815)		(3,105,899)		(3,715,278)		(569,391)
General and administrative expenses(1)		(4,561,650)		(1,883,606)		(288,676)		(8,376,531)		(7,588,809)		(1,163,037)
Research and development expenses(1)		(478,065)		(714,391)		(109,485)		(1,571,154)		(2,477,911)		(379,756)
Impairment of goodwill and intangible assets		-		(236,050)		(36,176)		-		(236,050)		(36,176)
Total operating expenses		(5,870,638)		(4,157,416)		(637,152)		(13,053,584)		(14,018,048)		(2,148,360)
Income (loss) from operations		(3,122,877)		1,266,804		194,147		(1,785,540)		2,841,809		435,526
Interest income, net		61,961		4,674		716		230,339		163,600		25,073
Share of results of equity investees		(3,049)		(42,386)		(6,496)		11,382		(37,574)		(5,758)
Fair value changes in investments, net		(121,018)		304,156		46,614		(109,193)		360,124		55,191
Foreign currency exchange gain (loss)		(33,199)		4,190		642		(54,052)		3,506		537
Other income, net		101,641		275,069		42,156		431,300		1,055,654		161,786
Income (loss) before income tax expense		(3,116,541)		1,812,507		277,779		(1,275,764)		4,387,119		672,355
Income tax expense		(4,859)		(716,951)		(109,878)		(904,363)		(1,608,796)		(246,558)
Net income (loss)		(3,121,400)		1,095,556		167,901		(2,180,127)		2,778,323		425,797

KE Holdings Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)
(All amounts in thousands, except for share, per share data, ADS and per ADS data)
		For the three months ended						For the year ended
		December 31, 2019		December 31, 2020		December 31, 2020		December 31, 2019		December 31, 2020		December 31, 2020
		RMB		RMB		US$		RMB		RMB		US$
Net loss (income) attributable to non-controlling interests shareholders		69		(579)		(89)		(3,419)		(731)		(112)
Net income (loss) attributable to KE Holdings Inc.		(3,121,331)		1,094,977		167,812		(2,183,546)		2,777,592		425,685
Accretion on convertible redeemable preferred shares to redemption value		(577,842)		-		-		(1,866,528)		(1,755,228)		(269,000)
Income allocation to participating preferred shares		-		-		-		-		(301,898)		(46,268)
Net income (loss) attributable to KE Holdings Inc.’s ordinary shareholders		(3,699,173)		1,094,977		167,812		(4,050,074)		720,466		110,417
Net income (loss)		(3,121,400)		1,095,556		167,901		(2,180,127)		2,778,323		425,797
Currency translation adjustments		(153,149)		(1,302,733)		(199,653)		63,442		(1,897,395)		(290,789)
Total comprehensive income (loss)		(3,274,549)		(207,177)		(31,752)		(2,116,685)		880,928		135,008
Comprehensive loss (income) attributable to non-controlling interests shareholders		69		(579)		(89)		(3,419)		(731)		(112)
Comprehensive income (loss) attributable to KE Holdings Inc.		(3,274,480)		(207,756)		(31,841)		(2,120,104)		880,197		134,896
Accretion on convertible redeemable preferred shares to redemption value		(577,842)		-		-		(1,866,528)		(1,755,228)		(269,000)
Income allocation to participating preferred shares		-		-		-		-		(301,898)		(46,268)
Comprehensive loss attributable to KE Holdings Inc.’s ordinary shareholders		(3,852,322)		(207,756)		(31,841)		(3,986,632)		(1,176,929)		(180,372)

KE Holdings Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)
(All amounts in thousands, except for share, per share data, ADS and per ADS data)
		For the three months ended						For the year ended
		December 31, 2019		December 31, 2020		December 31, 2020		December 31, 2019		December 31, 2020		December 31, 2020
		RMB		RMB		US$		RMB		RMB		US$
Weighted average number of ordinary shares used in computing net income (loss) per share, basic and diluted
—Basic		1,388,889,436		3,440,878,087		3,440,878,087		1,378,235,522		2,226,264,859		2,226,264,859
—Diluted		1,388,889,436		3,516,042,957		3,516,042,957		1,378,235,522		2,267,330,891		2,267,330,891
Weighted average number of ADS used in computing net income (loss) per ADS, basic and diluted
—Basic		462,963,145		1,146,959,362		1,146,959,362		459,411,841		742,088,286		742,088,286
—Diluted		462,963,145		1,172,014,319		1,172,014,319		459,411,841		755,776,964		755,776,964
Net income (loss) per share attributable to KE Holdings Inc.'s ordinary shareholders
—Basic		(2.66)		0.32		0.05		(2.94)		0.32		0.05
—Diluted		(2.66)		0.31		0.05		(2.94)		0.32		0.05
Net income (loss) per ADS attributable to KE Holdings Inc.'s ordinary shareholders
—Basic		(7.99)		0.95		0.15		(8.82)		0.97		0.15
—Diluted		(7.99)		0.93		0.14		(8.82)		0.95		0.15
(1) Includes share-based compensation expenses as follows:
Cost of revenues		-		76,616		11,742		-		511,637		78,412
Sales and marketing expenses		-		30,212		4,630		-		77,574		11,889
General and administrative expenses		2,846,304		229,643		35,194		2,955,590		1,131,335		173,385
Research and development expenses		-		247,923		37,996		-		532,043		81,539

KE Holdings Inc.
UNAUDITED RECONCILIATION of GAAP AND NON-GAAP RESULTS
(All amounts in thousands, except for share, per share data, ADS and per ADS data)
		For the three months ended						For the year ended
		December 31, 2019		December 31, 2020		December 31, 2020		December 31, 2019		December 31, 2020		December 31, 2020
		RMB		RMB		US$		RMB		RMB		US$
Income (loss) from operations		(3,122,877)		1,266,804		194,147		(1,785,540)		2,841,809		435,526
Share-based compensation expenses		2,846,304		584,394		89,562		2,955,590		2,252,589		345,225
Amortization of intangible assets resulting from acquisitions and business cooperation agreement		153,386		143,520		21,995		450,413		604,806		92,691
Changes in fair value of financial assets recognized as deemed marketing expenses		43,157		-		-		317,929		-		-
Impairment of goodwill and intangible assets		-		236,050		36,176		-		236,050		36,176
Adjusted income (loss) from operations		(80,030)		2,230,768		341,880		1,938,392		5,935,254		909,618
Net income (loss)		(3,121,400)		1,095,556		167,901		(2,180,127)		2,778,323		425,797
Share-based compensation expenses		2,846,304		584,394		89,562		2,955,590		2,252,589		345,225
Amortization of intangible assets resulting from acquisitions and business cooperation agreement		153,386		143,520		21,995		450,413		604,806		92,691
Changes in fair value from long term investments, loan receivables measured at fair value and contingent consideration		165,514		(84,085)		(12,887)		428,422		(175,115)		(26,838)
Impairment of goodwill and intangible assets		-		236,050		36,176		-		236,050		36,176
Impairment of investments		-		26,650		4,084		-		26,650		4,084
Tax effects on non-GAAP adjustments		415		(1,274)		(195)		1,705		(3,599)		(552)
Adjusted net income		44,219		2,000,811		306,636		1,656,003		5,719,704		876,583
Net income (loss)		(3,121,400)		1,095,556		167,901		(2,180,127)		2,778,323		425,797
Income tax expense		4,859		716,951		109,878		904,363		1,608,796		246,558
Share-based compensation expenses		2,846,304		584,394		89,562		2,955,590		2,252,589		345,225
Amortization of intangible assets		166,350		145,378		22,280		477,323		621,174		95,199
Depreciation of property and equipment		127,181		180,776		27,705		561,995		552,798		84,720
Interest income, net		(61,961)		(4,674)		(716)		(230,339)		(163,600)		(25,073)
Changes in fair value from long term investments, loan receivables measured at fair value and contingent consideration		165,514		(84,085)		(12,887)		428,422		(175,115)		(26,838)
Impairment of goodwill and intangible assets		-		236,050		36,176		-		236,050		36,176
Impairment of investments		-		26,650		4,084		-		26,650		4,084
Adjusted EBITDA		126,847		2,896,996		443,983		2,917,227		7,737,665		1,185,848

KE Holdings Inc.
UNAUDITED RECONCILIATION of GAAP AND NON-GAAP RESULTS (Continued)
(All amounts in thousands, except for share, per share data, ADS and per ADS data)
		For the three months ended						For the year ended
		December 31, 2019		December 31, 2020		December 31, 2020		December 31, 2019		December 31, 2020		December 31, 2020
		RMB		RMB		US$		RMB		RMB		US$
Net income (loss) attributable to KE Holdings Inc.		(3,121,331)		1,094,977		167,812		(2,183,546)		2,777,592		425,685
Share-based compensation expenses		2,846,304		584,394		89,562		2,955,590		2,252,589		345,225
Amortization of intangible assets resulting from acquisitions and business cooperation agreement		153,386		143,520		21,995		450,413		604,806		92,691
Changes in fair value from long term investments, loan receivables measured at fair value and contingent consideration		165,514		(84,085)		(12,887)		428,422		(175,115)		(26,838)
Impairment of goodwill and intangible assets		-		236,050		36,176		-		236,050		36,176
Impairment of investments		-		26,650		4,084		-		26,650		4,084
Tax effects on non-GAAP adjustments		415		(1,274)		(195)		1,705		(3,599)		(552)
Effects of non-GAAP adjustments on net income attributable to non-controlling interests shareholders		(884)		(73)		(11)		(1,481)		(1,666)		(255)
Adjusted net income attributable to KE Holdings Inc.		43,404		2,000,159		306,536		1,651,103		5,717,307		876,216
Accretion on convertible redeemable preferred shares to redemption value		(577,842)		-		-		(1,866,528)		(1,755,228)		(269,000)
Adjusted net income allocated to participating preferred shares		-		-		-		-		(1,169,981)		(179,307)
Adjusted net income (loss) attributable to KE Holdings Inc.’s ordinary shareholders		(534,438)		2,000,159		306,536		(215,425)		2,792,098		427,909

KE Holdings Inc.
UNAUDITED RECONCILIATION of GAAP AND NON-GAAP RESULTS (Continued)
(All amounts in thousands, except for share, per share data, ADS and per ADS data)
		For the three months ended						For the year ended
		December 31, 2019		December 31, 2020		December 31, 2020		December 31, 2019		December 31, 2020		December 31, 2020
		RMB		RMB		US$		RMB		RMB		US$
Weighted average number of ADS used in computing net income (loss) per ADS, basic and diluted
—Basic		462,963,145		1,146,959,362		1,146,959,362		459,411,841		742,088,286		742,088,286
—Diluted		462,963,145		1,172,014,319		1,172,014,319		459,411,841		755,776,964		755,776,964
Weighted average number of ADS used in calculating adjusted net income (loss) per ADS, basic and diluted
—Basic		462,963,145		1,146,959,362		1,146,959,362		459,411,841		742,088,286		742,088,286
—Diluted		462,963,145		1,172,014,319		1,172,014,319		459,411,841		755,776,964		755,776,964
Net income (loss) per ADS attributable to KE Holdings Inc.'s ordinary shareholders
—Basic		(7.99)		0.95		0.15		(8.82)		0.97		0.15
—Diluted		(7.99)		0.93		0.14		(8.82)		0.95		0.15
Non-GAAP adjustments to net income per ADS attributable to KE Holdings Inc.'s ordinary shareholders
—Basic		6.84		0.79		0.12		8.35		2.79		0.43
—Diluted		6.84		0.78		0.12		8.35		2.74		0.42
Adjusted net income (loss) per ADS attributable to KE Holdings Inc.’s ordinary shareholders
—Basic		(1.15)		1.74		0.27		(0.47)		3.76		0.58
—Diluted		(1.15)		1.71		0.26		(0.47)		3.69		0.57

KE Holdings Inc.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(All amounts in thousands)
		For the three months ended						For the year ended
		December 31, 2019		December 31, 2020		December 31, 2020		December 31, 2019		December 31, 2020		December 31, 2020
		RMB		RMB		US$		RMB		RMB		US$
Net cash provided by (used in) operating activities		(626,908)		1,104,484		169,270		112,626		9,361,949		1,434,781
Net cash used in investing activities		(2,368,198)		(5,607,829)		(859,437)		(3,873,722)		(14,977,618)		(2,295,420)
Net cash provided by financing activities		19,194,252		9,410,162		1,442,170		23,026,396		25,406,250		3,893,678
Effect of exchange rate change on cash, cash equivalents and restricted cash		(228,701)		(1,484,742)		(227,547)		(94,922)		(2,183,682)		(334,664)
Net increase in cash and cash equivalents and restricted cash		15,970,445		3,422,075		524,456		19,170,378		17,606,899		2,698,375
Cash, cash equivalents and restricted cash at the beginning of the period		15,960,131		46,115,400		7,067,494		12,760,198		31,930,576		4,893,575
Cash, cash equivalents and restricted cash at the end of the period		31,930,576		49,537,475		7,591,950		31,930,576		49,537,475		7,591,950

KE Holdings Inc.
UNAUDITED CONTRIBUTION MEASURE
(All amounts in thousands)
		For the three months ended						For the year ended
		December 31, 2019		December 31, 2020		December 31, 2020		December 31, 2019		December 31, 2020		December 31, 2020
		RMB		RMB		US$		RMB		RMB		US$
Existing home transaction services
Net revenues		5,869,149		9,159,677		1,403,782		24,568,508		30,564,584		4,684,227
Less: Commission and compensation		(3,686,676)		(5,223,330)		(800,510)		(15,014,264)		(18,065,451)		(2,768,651)
Contribution		2,182,473		3,936,347		603,272		9,554,244		12,499,133		1,915,576
New home transaction services
Net revenues		8,117,637		12,886,750		1,974,981		20,273,860		37,937,886		5,814,235
Less: Commission and compensation		(6,613,091)		(10,185,864)		(1,561,052)		(15,355,160)		(29,787,961)		(4,565,205)
Contribution		1,504,546		2,700,886		413,929		4,918,700		8,149,925		1,249,030
Emerging and other services
Net revenues		394,756		624,218		95,666		1,172,538		1,978,508		303,220
Less: Commission and compensation		(83,988)		(112,744)		(17,279)		(229,401)		(317,756)		(48,698)
Contribution		310,768		511,474		78,387		943,137		1,660,752		254,522

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1 GTV for a given period is calculated as the total value of all transactions which the Company facilitated on the Company’s platform and evidenced by signed contracts as of the end of the period, including the value of the existing home transactions, new home transactions and emerging and other services, and including transactions that are contracted but pending closing at the end of period.

2 Adjusted net income (loss) is a non-GAAP financial measure, defined as net income (loss), excluding (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from acquisitions and business cooperation agreement, (iii) changes in fair value from long term investments, loan receivables measured at fair value and contingent consideration, (iv) impairment of goodwill and intangible assets, (v) impairment of investments and (vi) tax effects of the above non-GAAP adjustments. Please refer to the section titled “Unaudited reconciliation of GAAP and non-GAAP results” for details.

3 "Mobile monthly active users" or "mobile MAU" are to the sum of (i) the number of accounts that have accessed our platform through our Beike or Lianjia mobile app (with duplication eliminated) at least once during a month, and (ii) the number of Weixin users that have accessed our platform through our Weixin mini programs at least once during a month. Average mobile MAU for any period is calculated by dividing (i) the sum of the Company’s mobile MAUs for each month of such period, by (ii) the number of months in such period.

4 Adjusted income (loss) from operations is a non-GAAP financial measure, which is defined as income (loss) from operations, excluding (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from acquisitions and business cooperation agreement, (iii) changes in fair value of financial assets recognized as deemed marketing expenses and (iv) impairment of goodwill and intangible assets. Please refer to the section titled “Unaudited reconciliation of GAAP and non-GAAP results” for details.

5 Adjusted operating margin is adjusted income (loss) from operations as a percentage of net revenues.

6 Adjusted EBITDA is a non-GAAP financial measure, which is defined as net income (loss), excluding (i) interest income, net, (ii) income tax expense (benefit), (iii) depreciation of property and equipment, (iv) amortization of intangible assets, (v) share-based compensation expenses, (vi) changes in fair value from long term investments, loan receivables measured at fair value and contingent consideration, (vii) impairment of goodwill and intangible assets and (viii) impairment of investments. Please refer to the section titled “Unaudited reconciliation of GAAP and non-GAAP results” for details.

7 Adjusted net income (loss) attributable to KE Holdings Inc. is a non-GAAP financial measure and represents adjusted income (loss) attributable to KE Holdings Inc’s ordinary shareholders and preferred shareholders, and all preferred shares of KE Holdings Inc. had been automatically converted to ordinary shares upon initial public offering of KE Holdings Inc. on a one-for-one basis. Adjusted net income (loss) attributable to KE Holdings Inc. is defined as net income (loss) attributable to KE Holdings Inc., excluding (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from acquisitions and business cooperation agreement, (iii) changes in fair value from long term investments, loan receivables measured at fair value and contingent consideration, (iv) impairment of goodwill and intangible assets, (v) impairment of investments, (vi) tax effects of the above non-GAAP adjustments, and (vii) effects of non-GAAP adjustments on net income (loss) attributable to non-controlling interests shareholders. Please refer to the section titled “Unaudited reconciliation of GAAP and non-GAAP results” for details.

8 ADS is American Depositary Share. Each ADS represents three Class A ordinary shares of the Company. Diluted net income (loss) per ADS attributable to KE Holdings Inc.’s ordinary shareholders is net income (loss) attributable to ordinary shareholders divided by weighted average number of diluted ADS.

9 Adjusted net income (loss) per ADS attributable to KE Holdings Inc.’s ordinary shareholders is a non-GAAP financial measure, which is defined as adjusted net income (loss) attributable to KE Holdings Inc.’s ordinary shareholders divided by weighted average number of ADS outstanding during the periods used in calculating adjusted net income (loss) per ADS, basic and diluted. Please refer to the section titled “Unaudited reconciliation of GAAP and non-GAAP results” for details.

 

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FAQ

What were KE Holdings Inc.'s Q4 2020 earnings results?

KE Holdings Inc. reported a 57.6% YoY increase in net revenues for Q4 2020, totaling RMB 22.7 billion (US$3.5 billion), with a net income of RMB 1,096 million (US$168 million).

What was the GTV for KE Holdings in FY 2020?

The gross transaction value (GTV) for KE Holdings in FY 2020 was RMB 3.5 trillion (US$536.3 billion), representing a 64.5% YoY increase.

What is the revenue guidance for KE Holdings in Q1 2021?

KE Holdings expects total net revenues for Q1 2021 to be between RMB 18.5 billion and RMB 19.5 billion, indicating a growth of approximately 159.8% to 173.9% YoY.

How did KE Holdings' adjusted net income perform in FY 2020?

KE Holdings' adjusted net income for FY 2020 increased by 245.4% YoY to RMB 5.7 billion (US$877 million).

What challenges did KE Holdings face in 2020?

KE Holdings experienced a decrease in gross margin to 23.9% in FY 2020 from 24.5% in 2019, and operating expenses increased by 7.4% YoY.