Beike's net profit in the third quarter increased by 63.4% YoY, nearly 10 times the expected amount | Earnings Report

Beike, the Chinese real estate trading and service platform, has delivered impressive results this quarter, with its net profit in the third quarter exceeding expectations due to operational efficiency.

On November 8th, before the US stock market opened, Beike released its third-quarter earnings report. According to the report, Beike's Gross Transaction Value (GTV) in the third quarter was RMB 655.2 billion (USD 89.8 billion), a decrease of 11.1% compared to the same period last year. Net revenue was RMB 17.8 billion (USD 2.4 billion), an increase of 1.2% year-on-year, surpassing the expected RMB 15.9 billion. Net profit was RMB 1.17 billion, a significant increase of 63.4% year-on-year, nearly 10 times the expected RMB 125 million. Adjusted net profit was RMB 2.159 billion.

Cumulative revenue for the first three quarters was RMB 57.573 billion, a 31.08% increase compared to RMB 43.922 billion in the same period last year. Cumulative net profit for the first three quarters was RMB 5.22 billion, while it was a net loss of RMB 1.769 billion in the same period last year.

Beike's main business is divided into four parts: existing home transactions, new home transactions, home decoration and furnishings, and emerging businesses and others.

In the third quarter, the total transaction value of existing home transactions was RMB 439 billion (USD 60.2 billion), a decrease of 2.2% year-on-year. The total transaction value of new home transactions was RMB 192.1 billion (USD 26.3 billion), a decrease of 26.5% year-on-year. The total transaction value of home decoration and furnishings was RMB 3.3 billion (USD 400 million), an increase of 65.6% year-on-year. The total transaction value of emerging businesses and others was RMB 20.7 billion (USD 2.8 billion), a decrease of 16.0% year-on-year.

As of September 30, 2023, the number of Beike stores was 43,000, an increase of 3.9% compared to the same period last year. The number of active stores as of September 30, 2023, was approximately 41,000, an increase of 3.0% compared to the same period last year.

Peng Yongdong, co-founder, chairman, and CEO of Beike, stated that people have shifted their focus from "buying a house" to "living" itself. Beike also needs to evolve from being transaction-focused to focusing on how to improve people's living conditions, which is a blue ocean:

To achieve this, we have upgraded our corporate strategy to "One Body, Three Wings," which is an important step for us to become a one-stop new residential service platform. Based on our deep industry experience, we look forward to connecting with more partners in the industry, gaining a deeper understanding of the industry during rapid growth, continuously iterating our service capabilities, and establishing a sustainable and harmonious ecosystem with all industry participants. We will always be driven by the core mission of "making the industry better," committed to improving industry standards, better meeting consumer demands for service and quality, and promoting the overall quality of the housing industry. "After the release of the earnings report, Beike's Executive Director and CFO, Xu Tao, stated:

"With the active implementation of our 'One Body, Three Wings' growth strategy, we achieved steady performance in the third quarter, further highlighting our profitability resilience. Beike's ability to balance scale, efficiency, and financial security has been effectively validated in the market fluctuations of the past few years, resulting in continuous growth in business, profitability, and cash. Looking ahead, we will continue to exercise prudence in financial management, continuously improve capital allocation efficiency, prioritize investment in areas that can generate key business output and value, and share the dividends of development with our shareholders."

After the release of the earnings report, Beike's stock price in the US market rose by 4% in pre-market trading, reaching approximately $15.33.

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