KE Holdings Inc. Announces Third Quarter 2021 Unaudited Financial Results

Rhea-AI Summary

KE Holdings Inc. (BEKE) reported third-quarter 2021 results showing a 20.9% decline in gross transaction value (GTV) at RMB830.7 billion (US$128.9 billion) year-over-year. Net revenues decreased by 11.9% to RMB18.1 billion (US$2.8 billion), with a significant net loss of RMB1,766 million (US$274 million). Despite these challenges, the company saw a 20.2% increase in the number of stores and agents, reflecting its operational resilience. Looking forward, guidance for fourth-quarter revenues anticipates a decline of 31.6% to 36.0% compared to the previous year.

Positive

• Number of stores increased by 20.2% year-over-year to 53,946.
• Number of active agents rose by 7.9% to 515,486.
• Net revenues from new home transaction services increased by 2.5% to RMB11.3 billion.

Negative

• Gross transaction value (GTV) decreased by 20.9% year-over-year.
• Net loss of RMB1,766 million (US$274 million) compared to net income of RMB75 million in Q3 2020.
• Adjusted net loss was RMB888 million, down from an adjusted net income of RMB1,858 million a year ago.
• Guidance for fourth-quarter revenue anticipates a decrease of 31.6% to 36.0% from Q4 2020.

BEIJING--(BUSINESS WIRE)-- 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 third quarter ended September 30, 2021.

Business Highlights for the Third Quarter of 2021

• Gross transaction value (GTV)¹ was RMB830.7 billion (US$128.9 billion), a decrease of 20.9% year-over-year. GTV of existing home transactions was RMB378.2 billion (US$58.7 billion), a decrease of 34.3% year-over-year. GTV of new home transactions was RMB410.1 billion (US$63.7 billion), a decrease of 2.5% year-over-year. GTV of emerging and other services was RMB42.3 billion (US$6.6 billion), a decrease of 20.4% year-over-year.
• Net revenues were RMB18.1 billion (US$2.8 billion), a decrease of 11.9% year-over-year.
• Net loss was RMB1,766 million (US$274 million). Adjusted net loss² was RMB888 million (US$138 million).
• Number of stores was 53,946 as of September 30, 2021, a 20.2% increase from one year ago. Number of active stores³ was 49,468 as of September 30, 2021, a 20.2% increase from one year ago.
• Number of agents was 515,486 as of September 30, 2021, a 7.9% increase from one year ago. Number of active agents⁴ was 468,014 as of September 30, 2021, a 13.1% increase from one year ago.
• Mobile monthly active users (MAU)⁵ averaged 46.1 million, compared to 47.9 million in the same period of 2020.

Mr. Stanley Yongdong Peng, Chairman of the Board and Chief Executive Officer of Beike, commented, “The third quarter was challenging and difficult for the industry with corrective and sweeping adjustments to safeguard and bring about a long-term healthy development of the real-estate market in China. Under the guidance of national policies on stabilizing housing price, curbing speculation and promoting common prosperity, Beike remained committed to our mission of ‘admirable service, joyful living’. Our third quarter results reflected both the broad macroenvironment challenges the industry is facing and the resiliency of our business, with a total GTV of RMB830.7 billion for the quarter, decreasing 20.9% year over year while still outperforming the market.”

“In the third quarter, we continued to execute our Agent Specialization Strategy and make further strides in digital empowerment by launching the ‘Xiaobei existing home sales training camp’, which helps agents to develop new skills to provide premium and focused services through highly efficient collaboration. For new home transaction services, we carried out stringent new home risk control measures, deepened digitalization, enriched online content, and persisted in pursuing top-quality service with a continued emphasis on new home business conduct. For home renovation business, in Beijing, we opened Craftsman (Jinggong) Academy as the industry’s first full-service vocational training base and Beiwoo, our home renovation brand, launched ten ‘heart-to-heart’ service commitments to address the renovation industry’s key pain points. Shengdu, the home renovation business we proposed to acquire, also maintained rapid growth in the East China market. Its future potential integration with the Company will further enhance our competitiveness in the renovation business.”

“We believe that China’s recently announced pilot program of a five-year property tax will contribute to a healthier, more stable development of China’s real estate market and the formulation of a long-term mechanism for growth, which is also a favorable environment for the Company’s future growth. Followed by the acceleration of the era of quality service for housing industry, we will continue to take more social responsibilities and focus on the overall service quality improvement and technological empowerment to our connected service providers, and strive for our vision of providing quality housing services to 300 million families in China,” concluded Mr. Peng.

Mr. Tao Xu, Executive Director and Chief Financial Officer of Beike, added, “During the third quarter, we generated RMB18.1 billion of net revenues, down 11.9% year over year, as we saw the GTV for both existing home and new home transaction services experiencing downward trends amidst necessary market corrections. While we strongly believe the new regulatory measures will benefit the industry, the broader economy and the society in the long term, we adopted multiple initiatives to enhance service quality and ensure good business conduct, with a view to contributing to the establishment of a sustainable housing market. We will stick to our path with full commitment to serve our customers better, and we are confident that we would stay resilient and have our values recognized.”

Third Quarter 2021 Financial Results

Net Revenues

Net revenues decreased by 11.9% to RMB18.1 billion (US$2.8 billion) in the third quarter of 2021 from RMB20.5 billion in the same period of 2020. The decrease was primarily attributable to the decline in total GTV of 20.9% to RMB830.7 billion (US$128.9 billion) in the third quarter of 2021 from RMB1,050.0 billion in the same period of 2020.

• Net revenues from existing home transaction services were RMB6.1 billion (US$0.9 billion) in the third quarter of 2021, compared to RMB8.8 billion in the same period of 2020, primarily due to a 34.3% decrease in GTV of existing home transactions to RMB378.2 billion (US$58.7 billion) in the third quarter of 2021 from RMB576.1 billion in the same period of 2020, led by a slow-down of the existing home market which was affected by a series of market-cooling measures in the third quarter of 2021.
  
  Among that, (i) the revenues 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, were RMB0.8 billion (US$0.1 billion) in the third quarter of 2021, compared to RMB0.9 billion in the same period of 2020, primarily because the GTV of existing home transactions served by connected agents on the Company’s platform decreased by 33.6% to RMB192.9 billion (US$29.9 billion) in the third quarter of 2021 from RMB290.4 billion in the same period of 2020. The downtrend was partially offset by a moderate increase in existing home transaction commission rate charged by connected stores due to the increased percentage of rental transactions with a relatively higher commission rate;
  
  (ii) commission revenue was RMB5.3 billion (US$0.8 billion) in the third quarter of 2021, compared to RMB7.9 billion in the same period of 2020, primarily due to a decrease in GTV of existing home transactions served by Lianjia stores to RMB185.3 billion (US$28.8 billion) in the third quarter of 2021, compared to RMB285.7 billion in the same period of 2020.

• Net revenues from new home transaction services increased by 2.5% to RMB11.3 billion (US$1.8 billion) in the third quarter of 2021 from RMB11.1 billion in the same period of 2020, primarily attributable to a moderate increase of new home transactions commission rate, while the GTV of new home transactions was RMB410.1 billion (US$63.7 billion) in the third quarter of 2021, compared to RMB420.7 billion in the same period of 2020. The GTV of new home transaction services completed on Beike platform through connected agents and other sales channels was RMB337.6 billion (US$52.4 billion), compared to RMB337.9 billion in the same period of 2020, while the GTV of new home transactions served by Lianjia brand was RMB72.6 billion (US$11.3 billion) in the third quarter of 2021, compared to RMB82.8 billion in the same period of 2020.

• Net revenues from emerging and other services was RMB610 million (US$94.6 million) in the third quarter of 2021 from RMB625 million in the same period of 2020, primarily due to a decrease of net revenues for financial services around the existing housing transaction services, while it was partially offset by a 29.4% increase of net revenues from renovation service.

Cost of Revenues

Total cost of revenues was RMB15.3 billion (US$2.4 billion) in the third quarter of 2021, compared to RMB16.2 billion in the same period of 2020.

• Commission - split. The Company’s cost of revenues for commissions to connected agents and other sales channels was RMB7,689 million (US$1,193 million) in the third quarter of 2021, compared to RMB7,737 million in the same period of 2020, along with the relatively stable number of new home transactions completed through connected agents and other sales channels in the third quarter of 2021 compared with the same period of 2020.

• Commission and compensation - internal. The Company’s cost of revenues for internal commission and compensation was RMB6.0 billion (US$0.9 billion) in the third quarter of 2021, compared to RMB6.6 billion in the same period of 2020, primarily due to the decrease in the number of exiting home and new home transactions completed through Lianjia agents.

• Cost related to stores. The Company’s cost related to stores increased by 19.7% to RMB1.0 billion (US$0.2 billion) in the third quarter of 2021 compared to RMB0.8 billion in the same period of 2020, mainly due to an increase in the number of stores for Lianjia brand and the incremental rise in rental fees of contract service centers opened in 2021.

• Other costs. The Company’s other costs decreased by 28.1% to RMB0.7 billion (US$0.1 billion) in the third quarter of 2021 from RMB1.0 billion in the same period of 2020, mainly due to the decrease in share-based compensation expenses.

Gross Profit

Gross profit was RMB2.8 billion (US$0.4 billion) in the third quarter of 2021, compared to RMB4.4 billion in the same period of 2020. Gross margin was 15.2% in the third quarter of 2021, compared to 21.3% in the same period of 2020. The decrease in gross margin was mainly due to a lower contribution margin of existing home transactions led by the decreased net revenues from existing home transactions and the relatively flat fixed compensation costs for Lianjia agents.

Income (Loss) from Operations

Total operating expenses were RMB5.1 billion (US$0.8 billion) in the third quarter of 2021, compared to RMB4.5 billion in the same period of 2020.

• General and administrative expenses were RMB2,412 million (US$374 million) in the third quarter of 2021, compared to RMB2,649 million in the same period of 2020, mainly due to the decrease in share-based compensation expenses, partially offset by the increase of personnel costs and bad debt provision.

• Sales and marketing expenses were RMB1,202 million (US$187 million) in the third quarter of 2021, compared to RMB1,026 million in the same period of 2020, mainly due to the increase of headcount in business development personnel.

• Research and development expenses were RMB1,043 million (US$162 million) in the third quarter of 2021, compared to RMB789 million in the same period of 2020, mainly due to the increase of headcount in experienced research and development personnel, partially offset by the decrease of share-based compensation expenses.

• Impairment of goodwill and intangible assets was RMB397 million (US$62 million) in the third quarter of 2021, compared to nil in the same period of 2020, mainly due to recent market downtrend and the Company’s long term view of the outlook of the businesses in the qualitative goodwill impairment assessments, as it is more likely than not that the carrying amount of certain acquired businesses exceeded their fair value. The Company will continue to monitor and evaluate the fair value of goodwill, and should facts and circumstances change, additional non-cash impairment charge could be recorded in the future.

Loss from operations was RMB2,300 million (US$357 million) in the third quarter of 2021, compared to RMB81 million in the same period of 2020. Operating margin was negative 12.7% in the third quarter of 2021, compared to negative 0.4% in the same period of 2020, primarily due to 1) a relatively lower gross profit margin in the third quarter of 2021 compared to the same period of 2020; and 2) an increase of the percentage of total operating expenses as of net revenues in the third quarter of 2021, primarily due to decreased net revenues along with the relatively flat recurring operating expenses, and additional impairment of goodwill as well as severance provision of RMB250 million incurred in the third quarter of 2021 compared to the same period of 2020.

Adjusted loss from operations⁶ was RMB1,435 million (US$223 million) in the third quarter of 2021, compared to adjusted income from operations RMB1,740 million in the same period of 2020. Adjusted operating margin⁷ was negative 7.9% in the third quarter of 2021, compared to 8.5% in the same period of 2020. Adjusted EBITDA⁸ was negative RMB550 million (US$85 million) in the third quarter of 2021, compared to RMB2,248 million in the same period of 2020.

Net Income (Loss)

Net loss was RMB1,766 million (US$274 million) in the third quarter of 2021, compared to net income RMB75 million in the same period of 2020.

Adjusted net loss was RMB888 million (US$138 million) in the third quarter of 2021, compared to adjusted net income RMB1,858 million in the same period of 2020.

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

Net loss attributable to KE Holdings Inc.’s ordinary shareholders was RMB1,765 million (US$274 million) in the third quarter of 2021, compared to RMB271 million in the same period of 2020.

Adjusted net loss attributable to KE Holdings Inc.⁹ was RMB887 million (US$138 million) in the third quarter of 2021, compared to adjusted net income attributable to KE Holdings Inc. RMB1,857 million in the same period of 2020.

Net Income (Loss) per ADS

Diluted net loss per ADS attributable to KE Holdings Inc.’s ordinary shareholders¹⁰ was RMB1.50 (US$0.23) in the third quarter of 2021, compared to RMB0.33 in the same period of 2020.

Adjusted diluted net loss per ADS attributable to KE Holdings Inc.’s ordinary shareholders¹¹ was RMB0.75 (US$0.12) in the third quarter of 2021, compared to adjusted diluted net income per ADS attributable to KE Holdings Inc.’s ordinary shareholders RMB1.38 in the same period of 2020.

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

As of September 30, 2021, the combined balance of the Company’s cash, cash equivalents, restricted cash and short-term investments amounted to RMB52.7 billion (US$8.2 billion).

Business Outlook

For the fourth quarter of 2021, the Company expects total net revenues to be between RMB14.5 billion (US$2.3 billion) and RMB15.5 billion (US$2.4 billion), representing a decrease of approximately 31.6% to 36.0% from the same quarter of 2020. This forecast considers the potential impact of the recent real estate related policies and measures, and 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 8:00 PM U.S. Eastern Time on Monday, November 8, 2021 (9:00 AM Beijing/Hong Kong Time on Tuesday, November 9, 2021) to discuss the financial results. Details for the conference call are as follows:

Event Title: Beike’s Third Quarter 2021 Earnings Conference Call
Conference ID: 2491775

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 pass code, and a unique registrant ID by email.

PRE-REGISTER LINK:
http://apac.directeventreg.com/registration/event/2491775

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 November 16, 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:		2491775

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 RMB6.4434 to US$1.00, the noon buying rate in effect on September 30, 2021, in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or US$ 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, and (iii) 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, and (v) 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) tax effects of the above non-GAAP adjustments, and (vi) 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) impairment of goodwill and intangible assets, and (vii) changes in fair value from long term investments, loan receivables measured at fair value and contingent consideration. 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 20 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 INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (All amounts in thousands, except for share, per share data)
		As of		As of
		December 31,		September 30,
		2020		2021
		RMB		RMB		US$
ASSETS
Current assets
Cash and cash equivalents		40,969,979		21,780,230		3,380,239
Restricted cash		8,567,496		7,620,062		1,182,615
Short-term investments		15,688,321		23,344,042		3,622,939
Short-term financing receivables, net of allowance for credit losses of RMB113,905 and RMB250,242 as of December 31, 2020 and September 30, 2021, respectively		3,931,641		2,616,323		406,047
Accounts receivable, net of allowance for credit losses of RMB1,122,218 and RMB1,642,883 as of December 31, 2020 and September 30, 2021, respectively		13,183,559		10,516,025		1,632,061
Amounts due from and prepayments to related parties		484,349		583,138		90,502
Loan receivables from related parties		36,378		46,055		7,148
Prepayments, receivables and other assets		4,677,378		3,805,474		590,600
Total current assets		87,539,101		70,311,349		10,912,151
Non-current assets
Property and equipment, net		1,472,460		2,031,300		315,253
Right-of-use assets		6,821,100		7,730,585		1,199,768
Long-term financing receivables, net of allowance for credit losses of RMB13,414 and RMB 1,633 as of December 31, 2020 and September 30, 2021, respectively		218,018		43,674		6,778
Long-term investments, net		3,140,315		17,650,777		2,739,358
Intangible assets, net		1,642,651		1,280,315		198,702
Goodwill		2,467,497		2,107,777		327,122
Other non-current assets		994,394		985,297		152,916
Total non-current assets		16,756,435		31,829,725		4,939,897
TOTAL ASSETS		104,295,536		102,141,074		15,852,048

KE Holdings Inc. UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (Continued) (All amounts in thousands, except for share, per share data)
		As of		As of
		December 31,		September 30,
		2020		2021
		RMB		RMB		US$
LIABILITIES
Current liabilities
Accounts payable		6,594,846		5,309,823		824,072
Amounts due to related parties		254,255		493,352		76,567
Employee compensation and welfare payable		11,231,800		10,048,545		1,559,510
Customer deposits payable		6,743,256		6,074,677		942,775
Income taxes payable		986,465		266,335		41,335
Short-term borrowings		-		260,000		40,351
Lease liabilities current portion		2,625,979		2,884,426		447,656
Short-term funding debt		1,512,510		397,000		61,613
Contract liabilities		734,157		1,024,196		158,953
Accrued expenses and other current liabilities		2,950,078		2,634,461		408,863
Total current liabilities		33,633,346		29,392,815		4,561,695
Non-current liabilities
Deferred tax liabilities		17,289		17,289		2,683
Lease liabilities non-current portion		3,833,914		4,572,826		709,691
Long-term funding debt		15,000		-		-
Other non-current liabilities		3,471		2,491		387
Total non-current liabilities		3,869,674		4,592,606		712,761
TOTAL LIABILITIES		37,503,020		33,985,421		5,274,456

KE Holdings Inc. UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (Continued) (All amounts in thousands, except for share, per share data)
		As of		As of
		December 31,		September 30,
		2020		2021
		RMB		RMB		US$
SHAREHOLDERS’ EQUITY
KE Holdings Inc. shareholders’ equity
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, 2,666,966,855 and 2,687,391,656 Class A ordinary shares issued and outstanding as of December 31, 2020 and September 30, 2021; 885,301,280 Class B ordinary shares issued and outstanding as of December 31, 2020 and September 30, 2021)		482		489		76
Additional paid-in capital		77,433,882		78,652,334		12,206,651
Statutory reserves		392,834		392,834		60,967
Accumulated other comprehensive loss		(1,834,087)		(2,121,041)		(329,180)
Accumulated deficit		(9,227,664)		(8,822,111)		(1,369,170)
Total KE Holdings Inc. shareholders' equity		66,765,447		68,102,505		10,569,344
Non-controlling interests		27,069		53,148		8,248
TOTAL SHAREHOLDERS' EQUITY		66,792,516		68,155,653		10,577,592
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		104,295,536		102,141,074		15,852,048

KE Holdings Inc. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (All amounts in thousands, except for share, per share data, ADS and per ADS data)
		Three months ended						Nine months ended
		September 30,		September 30,		September 30,		September 30,		September 30,		September 30,
		2020		2021		2021		2020		2021		2021
		RMB		RMB		US$		RMB		RMB		US$
Net revenues
Existing home transaction services		8,849,706		6,138,020		952,606		21,404,907		25,962,650		4,029,340
New home transaction services		11,074,424		11,348,472		1,761,255		25,051,136		35,162,630		5,457,155
Emerging and other services		624,785		609,648		94,616		1,354,290		1,841,438		285,787
Total net revenues		20,548,915		18,096,140		2,808,477		47,810,333		62,966,718		9,772,282
Cost of revenues
Commission-split		(7,736,904)		(7,688,787)		(1,193,281)		(16,115,155)		(24,027,308)		(3,728,980)
Commission and compensation-internal		(6,624,055)		(5,956,798)		(924,481)		(16,534,075)		(20,912,161)		(3,245,516)
Cost related to stores		(832,719)		(996,936)		(154,722)		(2,260,339)		(2,774,574)		(430,607)
Others		(972,007)		(698,988)		(108,481)		(1,465,127)		(2,348,522)		(364,485)
Total cost of revenues(1)		(16,165,685)		(15,341,509)		(2,380,965)		(36,374,696)		(50,062,565)		(7,769,588)
Gross profit		4,383,230		2,754,631		427,512		11,435,637		12,904,153		2,002,694
Operating expenses
Sales and marketing expenses(1)		(1,026,479)		(1,202,248)		(186,586)		(2,391,909)		(3,500,026)		(543,196)
General and administrative expenses(1)		(2,648,678)		(2,412,235)		(374,373)		(5,705,203)		(6,721,984)		(1,043,236)
Research and development expenses(1)		(789,089)		(1,042,906)		(161,856)		(1,763,520)		(2,455,870)		(381,145)
Impairment of goodwill and intangible assets		-		(397,066)		(61,624)		-		(397,066)		(61,624)
Total operating expenses		(4,464,246)		(5,054,455)		(784,439)		(9,860,632)		(13,074,946)		(2,029,201)
Income/(loss) from operations		(81,016)		(2,299,824)		(356,927)		1,575,005		(170,793)		(26,507)
Interest income, net		22,231		90,717		14,079		158,926		241,481		37,477
Share of results of equity investees		7,138		10,785		1,674		4,812		44,892		6,967
Fair value changes in investments, net		76,277		97,557		15,141		55,968		443,720		68,864
Foreign currency exchange gain/(loss)		(8,096)		12,068		1,873		(684)		19,656		3,051
Other income, net		317,798		526,336		81,686		780,585		1,225,565		190,205
Income/(loss) before income tax expense		334,332		(1,562,361)		(242,474)		2,574,612		1,804,521		280,057
Income tax expense		(258,991)		(203,514)		(31,585)		(891,845)		(1,396,023)		(216,659)
Net income/(loss)		75,341		(1,765,875)		(274,059)		1,682,767		408,498		63,398
Net (income)/loss attributable to non-controlling interests shareholders		(644)		955		148		(152)		(2,945)		(457)
Net income/(loss) attributable to KE Holdings Inc.		74,697		(1,764,920)		(273,911)		1,682,615		405,553		62,941
Accretion on convertible redeemable preferred shares to redemption value		(346,143)		-		-		(1,755,228)		-		-
Net income/(loss) attributable to KE Holdings Inc.’s ordinary shareholders		(271,446)		(1,764,920)		(273,911)		(72,613)		405,553		62,941
Net income/(loss)		75,341		(1,765,875)		(274,059)		1,682,767		408,498		63,398
Currency translation adjustments		(745,045)		117,994		18,312		(594,662)		(279,668)		(43,404)
Unrealized losses on available-for-sale investments, net of reclassification		-		(4,577)		(710)		-		(7,286)		(1,131)
Total comprehensive income/(loss)		(669,704)		(1,652,458)		(256,457)		1,088,105		121,544		18,863
Comprehensive (income)/loss attributable to non-controlling interests shareholders		(644)		955		148		(152)		(2,945)		(457)
Comprehensive income/(loss) attributable to KE Holdings Inc.		(670,348)		(1,651,503)		(256,309)		1,087,953		118,599		18,406
Accretion on convertible redeemable preferred shares to redemption value		(346,143)		-		-		(1,755,228)		-		-
Comprehensive income/(loss) attributable to KE Holdings Inc.’s ordinary shareholders		(1,016,491)		(1,651,503)		(256,309)		(667,275)		118,599		18,406

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)
		Three months ended						Nine months ended
		September 30,		September 30,		September 30,		September 30,		September 30,		September 30,
		2020		2021		2021		2020		2021		2021
		RMB		RMB		US$		RMB		RMB		US$
Weighted average number of ordinary shares used in computing net income/(loss) per share, basic and diluted
—Basic		2,470,138,350		3,533,752,811		3,533,752,811		1,812,367,756		3,526,805,332		3,526,805,332
—Diluted		2,470,138,350		3,533,752,811		3,533,752,811		1,812,367,756		3,579,020,205		3,579,020,205
Weighted average number of ADS used in computing net income/(loss) per ADS, basic and diluted
—Basic		823,379,450		1,177,917,604		1,177,917,604		604,122,585		1,175,601,777		1,175,601,777
—Diluted		823,379,450		1,177,917,604		1,177,917,604		604,122,585		1,193,006,735		1,193,006,735
Net income/(loss) per share attributable to KE Holdings Inc.'s ordinary shareholders
—Basic		(0.11)		(0.50)		(0.08)		(0.04)		0.11		0.02
—Diluted		(0.11)		(0.50)		(0.08)		(0.04)		0.11		0.02
Net income/(loss) per ADS attributable to KE Holdings Inc.'s ordinary shareholders
—Basic		(0.33)		(1.50)		(0.23)		(0.12)		0.34		0.05
—Diluted		(0.33)		(1.50)		(0.23)		(0.12)		0.34		0.05
(1)Includes share-based compensation expenses as follows:
Cost of revenues		435,021		65,196		10,118		435,021		299,468		46,477
Sales and marketing expenses		47,362		22,512		3,494		47,362		92,642		14,378
General and administrative expenses		901,692		144,263		22,389		901,692		483,240		74,998
Research and development expenses		284,120		117,628		18,256		284,120		343,101		53,248

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)
		Three months ended						Nine months ended
		September 30,		September 30,		September 30,		September 30,		September 30,		September 30,
		2020		2021		2021		2020		2021		2021
		RMB		RMB		US$		RMB		RMB		US$
Income/(loss) from operations		(81,016)		(2,299,824)		(356,927)		1,575,005		(170,793)		(26,507)
Share-based compensation expenses		1,668,195		349,599		54,257		1,668,195		1,218,451		189,101
Amortization of intangible assets resulting from acquisitions and business cooperation agreement		152,685		118,191		18,343		461,286		353,310		54,833
Impairment of goodwill and intangible assets		-		397,066		61,624		-		397,066		61,624
Adjusted income/(loss) from operations		1,739,864		(1,434,968)		(222,703)		3,704,486		1,798,034		279,051
Net income/(loss)		75,341		(1,765,875)		(274,059)		1,682,767		408,498		63,398
Share-based compensation expenses		1,668,195		349,599		54,257		1,668,195		1,218,451		189,101
Amortization of intangible assets resulting from acquisitions and business cooperation agreement		152,685		118,191		18,343		461,286		353,310		54,833
Changes in fair value from long term investments, loan receivables measured at fair value and contingent consideration		(36,499)		11,160		1,732		(91,030)		(127,500)		(19,788)
Impairment of goodwill and intangible assets		-		397,066		61,624		-		397,066		61,624
Tax effects on non-GAAP adjustments		(1,510)		1,604		249		(2,325)		2,217		344
Adjusted net income/(loss)		1,858,212		(888,255)		(137,854)		3,718,893		2,252,042		349,512
Net income/(loss)		75,341		(1,765,875)		(274,059)		1,682,767		408,498		63,398
Income tax expense		258,991		203,514		31,585		891,845		1,396,023		216,659
Share-based compensation expenses		1,668,195		349,599		54,257		1,668,195		1,218,451		189,101
Amortization of intangible assets		155,728		121,776		18,899		475,796		369,515		57,348
Depreciation of property and equipment		148,061		223,668		34,713		372,022		599,289		93,008
Interest income, net		(22,231)		(90,717)		(14,079)		(158,926)		(241,481)		(37,477)
Changes in fair value from long term investments, loan receivables measured at fair value and contingent consideration		(36,499)		11,160		1,732		(91,030)		(127,500)		(19,788)
Impairment of goodwill and intangible assets		-		397,066		61,624		-		397,066		61,624
Adjusted EBITDA		2,247,586		(549,809)		(85,328)		4,840,669		4,019,861		623,873
Net income/(loss) attributable to KE Holdings Inc.		74,697		(1,764,920)		(273,911)		1,682,615		405,553		62,941
Share-based compensation expenses		1,668,195		349,599		54,257		1,668,195		1,218,451		189,101
Amortization of intangible assets resulting from acquisitions and business cooperation agreement		152,685		118,191		18,343		461,286		353,310		54,833
Changes in fair value from long term investments, loan receivables measured at fair value and contingent consideration		(36,499)		11,160		1,732		(91,030)		(127,500)		(19,788)
Impairment of goodwill and intangible assets		-		397,066		61,624		-		397,066		61,624
Tax effects on non-GAAP adjustments		(1,510)		1,604		249		(2,325)		2,217		344
Effects of non-GAAP adjustments on net income attributable to non-controlling interests shareholders		(90)		(7)		(1)		(1,593)		(21)		(3)
Adjusted net income/(loss) attributable to KE Holdings Inc.		1,857,478		(887,307)		(137,707)		3,717,148		2,249,076		349,052
Accretion on convertible redeemable preferred shares to redemption value		(346,143)		-		-		(1,755,228)		-		-
Adjusted net income allocated to participating preferred shares		(342,033)		-		-		(799,341)		-		-
Adjusted net income/(loss) attributable to KE Holdings Inc.’s ordinary shareholders		1,169,302		(887,307)		(137,707)		1,162,579		2,249,076		349,052

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)
		Three months ended						Nine months ended
		September 30,		September 30,		September 30,		September 30,		September 30,		September 30,
		2020		2021		2021		2020		2021		2021
		RMB		RMB		US$		RMB		RMB		US$
Weighted average number of ADS used in computing net income/(loss) per ADS, basic and diluted
—Basic		823,379,450		1,177,917,604		1,177,917,604		604,122,585		1,175,601,777		1,175,601,777
—Diluted		823,379,450		1,177,917,604		1,177,917,604		604,122,585		1,193,006,735		1,193,006,735
Weighted average number of ADS used in calculating adjusted net income/(loss) per ADS, basic and diluted
—Basic		823,379,450		1,177,917,604		1,177,917,604		604,122,585		1,175,601,777		1,175,601,777
—Diluted		844,473,061		1,177,917,604		1,177,917,604		617,202,590		1,193,006,735		1,193,006,735
Net income/(loss) per ADS attributable to KE Holdings Inc.'s ordinary shareholders
—Basic		(0.33)		(1.50)		(0.23)		(0.12)		0.34		0.05
—Diluted		(0.33)		(1.50)		(0.23)		(0.12)		0.34		0.05
Non-GAAP adjustments to net income/(loss) per ADS attributable to KE Holdings Inc.'s ordinary shareholders
—Basic		1.75		0.75		0.11		2.04		1.57		0.25
—Diluted		1.71		0.75		0.11		2.00		1.55		0.24
Adjusted net income/(loss) per ADS attributable to KE Holdings Inc.’s ordinary shareholders
—Basic		1.42		(0.75)		(0.12)		1.92		1.91		0.30
—Diluted		1.38		(0.75)		(0.12)		1.88		1.89		0.29

KE Holdings Inc. UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (All amounts in thousands)
		Three months ended						Nine months ended
		September 30,		September 30,		September 30,		September 30,		September 30,		September 30,
		2020		2021		2021		2020		2021		2021
		RMB		RMB		US$		RMB		RMB		US$
Net cash provided by/(used in) operating activities		3,213,000		(1,158,435)		(179,786)		8,257,465		2,315,937		359,428
Net cash used in investing activities		(6,945,255)		(10,964,521)		(1,701,667)		(9,369,789)		(21,361,357)		(3,315,231)
Net cash provided by/(used in) financing activities		16,565,408		71,801		11,143		15,996,088		(871,373)		(135,235)
Effect of exchange rate change on cash, cash equivalents and restricted cash		(815,884)		84,964		13,187		(698,940)		(220,390)		(34,204)
Net increase/(decrease) in cash and cash equivalents and restricted cash		12,017,269		(11,966,191)		(1,857,123)		14,184,824		(20,137,183)		(3,125,242)
Cash, cash equivalents and restricted cash at the beginning of the period		34,098,131		41,366,483		6,419,977		31,930,576		49,537,475		7,688,096
Cash, cash equivalents and restricted cash at the end of the period		46,115,400		29,400,292		4,562,854		46,115,400		29,400,292		4,562,854

KE Holdings Inc. UNAUDITED SEGMENT CONTRIBUTION MEASURE (All amounts in thousands)
		Three months ended						Nine months ended
		September 30,		September 30,		September 30,		September 30,		September 30,		September 30,
		2020		2021		2021		2020		2021		2021
		RMB		RMB		US$		RMB		RMB		US$
Existing home transaction services
Net revenues		8,849,706		6,138,020		952,606		21,404,907		25,962,650		4,029,340
Less: Commission and compensation		(5,133,485)		(4,394,794)		(682,061)		(12,842,121)		(16,157,985)		(2,507,680)
Contribution		3,716,221		1,743,226		270,545		8,562,786		9,804,665		1,521,660
New home transaction services
Net revenues		11,074,424		11,348,472		1,761,255		25,051,136		35,162,630		5,457,155
Less: Commission and compensation		(9,128,976)		(9,117,892)		(1,415,075)		(19,602,097)		(28,424,321)		(4,411,385)
Contribution		1,945,448		2,230,580		346,180		5,449,039		6,738,309		1,045,770
Emerging and other services
Net revenues		624,785		609,648		94,616		1,354,290		1,841,438		285,787
Less: Commission and compensation		(98,498)		(132,899)		(20,626)		(205,012)		(357,163)		(55,431)
Contribution		526,287		476,749		73,990		1,149,278		1,484,275		230,356

¹GTV 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.
²Adjusted net income (loss) is a non-GAAP financial measure, which 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, and (v) tax effects of the above non-GAAP adjustments. Please refer to the section titled “Unaudited reconciliation of GAAP and non-GAAP results” for details.
³Based on our accumulated operational experience, we have introduced the number of active agents and active stores on our platform which can better reflect the operational activeness of stores and agents on our platform.
“Active stores” as of a given date is defined as stores on our platform excluding the stores which (i) have not facilitated any housing transaction during the preceding 60 days, (ii) do not have any agent who has engaged in any critical steps in housing transactions (including but not limited to introducing new properties, attracting new customers and conducting property showings) during the preceding seven days, or (iii) have not been visited by any agent during the preceding 14 days. The numbers of active stores on our platform are 41,152, 43,436, 44,937 and 49,046 as of September 30, 2020, December 31, 2020, March 31, 2021 and June 30, 2021, respectively.
⁴“Active agents” as of a given date is defined as agents on our platform excluding the agents who (i) delivered notice to leave but have not yet completed the exit procedures, (ii) have not engaged in any critical steps in housing transactions (including but not limited to introducing new properties, attracting new customers and conducting property showings) during the preceding 30 days, or (iii) have not participated in facilitating any housing transaction during the preceding three months. The numbers of active agents on our platform are 413,732, 445,438, 479,308 and 499,690 as of September 30, 2020, December 31, 2020, March 31, 2021 and June 30, 2021, respectively.
⁵"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.
⁶Adjusted 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 and (iii) impairment of goodwill and intangible assets. Please refer to the section titled “Unaudited reconciliation of GAAP and non-GAAP results” for details.
⁷Adjusted operating margin is adjusted income (loss) from operations as a percentage of net revenues.
⁸Adjusted 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, and (vii) impairment of goodwill and intangible assets. Please refer to the section titled “Unaudited reconciliation of GAAP and non-GAAP results” for details.
⁹Adjusted 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) tax effects of the above non-GAAP adjustments, and (vi) 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.
¹⁰ADS 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.
¹¹Adjusted 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211108005851/en/

For investor and media inquiries:

In China:

KE Holdings Inc.

Investor Relations

Matthew Zhao

Siting Li

E-mail: ir@ke.com

The Piacente Group, Inc.

Ross Warner

Tel: +86-10-6508-0677

E-mail: ke@tpg-ir.com

In the United States:

The Piacente Group, Inc.

Brandi Piacente

Tel: +1-212-481-2050

E-mail: ke@tpg-ir.com

Source: KE Holdings Inc.

FAQ

What were KE Holdings' Q3 2021 financial results?

In Q3 2021, KE Holdings reported net revenues of RMB18.1 billion (US$2.8 billion), a decrease of 11.9% year-over-year, with a net loss of RMB1,766 million (US$274 million).

What is the outlook for KE Holdings in Q4 2021?

KE Holdings expects Q4 2021 revenues between RMB14.5 billion (US$2.3 billion) and RMB15.5 billion (US$2.4 billion), indicating a decrease of approximately 31.6% to 36.0% from Q4 2020.

How much did KE Holdings' gross transaction value decline in Q3 2021?

KE Holdings' gross transaction value (GTV) declined by 20.9% year-over-year to RMB830.7 billion (US$128.9 billion) in Q3 2021.

What are the key figures for KE Holdings' existing home transaction services?

Net revenues from existing home transaction services were RMB6.1 billion (US$0.9 billion), down from RMB8.8 billion a year ago, as GTV fell by 34.3% to RMB378.2 billion (US$58.7 billion).