KE Holdings Inc. Announces Fourth Quarter and Fiscal Year 2021 Unaudited Financial Results

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 fourth quarter and fiscal year ended December 31, 2021.

Business and Financial Highlights for the Fourth Quarter and the Fiscal Year 2021

• Gross transaction value (GTV)¹ in 2021 was RMB3,853.5 billion (US$604.7 billion), an increase of 10.1% year-over-year. GTV of existing home transactions was RMB2,058.2 billion (US$323.0 billion), an increase of 6.1% year-over-year. GTV of new home transactions was RMB1,608.6 billion (US$252.4 billion), an increase of 16.3% year-over-year. GTV of emerging and other services was RMB186.6 billion (US$29.3 billion), an increase of 6.0% year-over-year.

  In the fourth quarter of 2021, GTV was RMB732.4 billion (US$114.9 billion), a decrease of 34.6% year-over-year. GTV of existing home transactions was RMB354.6 billion (US$55.6 billion), a decrease of 39.4% year-over-year. GTV of new home transactions was RMB356.8 billion (US$56.0 billion), a decrease of 24.0% year-over-year. GTV of emerging and other services was RMB21.0 billion (US$3.3 billion), a decrease of 68.2% year-over-year.

• Net revenues in 2021 were RMB80.8 billion (US$12.7 billion), an increase of 14.6% year-over-year.

  In the fourth quarter of 2021, net revenues were RMB17.8 billion (US$2.8 billion), a decrease of 21.5% year-over-year.

• Net loss in 2021 was RMB525 million (US$82 million). Adjusted net income² in 2021 was RMB2,294 million (US$360 million).

  In the fourth quarter of 2021, net loss was RMB933 million (US$146 million). Adjusted net income was RMB42 million (US$7 million).

• Number of stores was 51,038 as of December 31, 2021, a 8.7% increase from one year ago. Number of active stores³ was 45,339 as of December 31, 2021, a 4.4% increase from one year ago.

• Number of agents was 454,504 as of December 31, 2021, a 7.8% decrease from one year ago. Number of active agents⁴ was 406,794 as of December 31, 2021, a 8.7% decrease from one year ago.

• Mobile monthly active users (MAU)⁵ averaged 37.4 million, compared to 48.2 million in the same period of 2020.

Mr. Stanley Yongdong Peng, Chairman of the Board and Chief Executive Officer of Beike, commented, “Embracing the significant changes in 2021, we endeavored to look inward for answers and transform our organization, in response to the higher requirements put forward to us by consumers’ fast evolving demand, as well as our country and society in this era. At the end of 2021, we officially launched Beike’s ‘one body, two wings’ strategic upgrade. ‘One body’ refers to our core, which is our existing and new home transaction services business, while ‘two wings’ refers to our home renovation and furnishing offering, and our inclusive housing services.”

“Amidst the market-wide adjustments, our total GTV for the fiscal year of 2021 increased by 10.1% year-over-year to RMB3.85 trillion. Meanwhile, our ACN mechanism that advocated sharing and collaboration, as well as our cutting-edge SaaS system that enabled collaboration and professional development, provided agents and store owners with more stable income during the market downturn, and fostered strong retention and resilience. During the fourth quarter in our housing transaction service business, we continued to invest in industry infrastructure, empower our agents to be more focused and collaborative, and prioritize new home risk management while continuously improving sell-through efficiency. Leveraging our firmly grounded core strengths, we are now aiming higher and spreading our wings to establish broader capabilities that allow us to provide more satisfying solutions to consumers and bring changes to the housing related services industry.”

“We are resolute in our enduring mission and will strive forward in 2022 to become a one-stop housing related services provider that makes home a better place, simultaneously creating commercial value and contributing to the betterment of society.” concluded Mr. Peng.

Mr. Tao Xu, Executive Director and Chief Financial Officer of Beike, added, “We achieved topline growth of 14.6% for the full year 2021, demonstrating our resilience despite the sharp market downturn in the second half of last year. As the industry began shifting toward long-term, sustainable growth, we moved quickly in response to the unfolding changes, effectively turning obstacles into opportunities through initiatives to optimize operations and advance our strategies. ‘One body, two wings’ sets the framework for our initiatives going forward. We will continue to further hone efficiencies and meet the vast demand for our core, high quality housing transaction services. Simultaneously, we will move forward prudently, but dream big, as we commit to further invest in the immense and expanding industry of ‘better living’, such as our home renovation and furnishing services, and inclusive housing services. Certainly, as we forge ahead, the necessary investments for our new businesses will impact the overall group’s profitability in 2022. However, we remain confident that our determined efforts to bring customers a better experience around all fronts of ‘living’ and help service providers deliver higher quality services will pave the way for our long-term success and provide a positive catalyst for the change of housing related industry.”

Fourth Quarter 2021 Financial Results

Net Revenues

Net revenues decreased by 21.5% to RMB17.8 billion (US$2.8 billion) in the fourth quarter of 2021 from RMB22.7 billion in the same period of 2020. The decrease was primarily attributable to the decline in total GTV. Due to the market downturn, total GTV was RMB732.4 billion (US$114.9 billion) in the fourth quarter of 2021, representing a 34.6% decrease compared to RMB1,120.0 billion in the same period of 2020.

• Net revenues from existing home transaction services were RMB6.0 billion (US$0.9 billion) in the fourth quarter of 2021, compared to RMB9.2 billion in the same period of 2020, primarily due to a 39.4% decrease in GTV of existing home transactions to RMB354.6 billion (US$55.6 billion) in the fourth quarter of 2021 from RMB584.7 billion in the same period of 2020.

  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, decreased by 28.3% to RMB0.7 billion (US$0.1 billion) in the fourth quarter of 2021, from RMB1.0 billion in the same period of 2020, mainly due to a 43.7% decrease of GTV of existing home transactions served by connected agents on the Company’s platform to RMB159.7 billion (US$25.1 billion) in the fourth quarter of 2021 from RMB283.8 billion in the same period of 2020. The lower decline rate of revenues derived from platform service, franchise service and other value-added services compared to that of the GTV of existing home transactions served by connected agents was partially attributable to the increased penetration level of value-added services including transaction contracting services and a moderate increase in existing home transaction commission rate charged by connected stores;

  (ii) commission revenue was RMB5.3 billion (US$0.8 billion) in the fourth quarter of 2021, compared to RMB8.2 billion in the same period of 2020, primarily due to a decrease in GTV of existing home transactions served by Lianjia stores to RMB194.9 billion (US$30.6 billion) in the fourth quarter of 2021, compared to RMB300.9 billion in the same period of 2020.

• Net revenues from new home transaction services decreased by 12.2% to RMB11.3 billion (US$1.8 billion) in the fourth quarter of 2021 from RMB12.9 billion in the same period of 2020, primarily due to the decrease of GTV of new home transactions of 24.0% to RMB356.8 billion (US$56.0 billion) in the fourth quarter of 2021 from RMB469.2 billion in the same period of 2020. Among that, the GTV of new home transaction services completed on Beike platform through connected agents, dedicated sales team with the expertise on new home transaction services and other sales channels was RMB296.4 billion (US$46.5 billion), compared to RMB388.7 billion in the same period of 2020, while the GTV of new home transactions served by Lianjia brand was RMB60.4 billion (US$9.5 billion) in the fourth quarter of 2021, compared to RMB80.5 billion in the same period of 2020. The decline was partially offset by a moderate increase of new home transactions commission rate.

• Net revenues from emerging and other services decreased by 21.4% to RMB0.5 billion (US$0.1 billion) in the fourth quarter of 2021 from RMB0.6 billion in the same period of 2020, primarily attributable to the decrease of net revenues from financial services.

Cost of Revenues

Total cost of revenues was RMB14.9 billion (US$2.3 billion) in the fourth quarter of 2021, compared to RMB17.2 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 RMB7.8 billion (US$1.2 billion) in the fourth quarter of 2021, compared to RMB8.7 billion in the same period of 2020, primarily due to the decrease in the GTV of new home transactions completed through connected agents and other sales channels in the fourth 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 RMB5.4 billion (US$0.8 billion) in the fourth quarter of 2021, compared to RMB6.8 billion in the same period of 2020, primarily due to the decrease in the GTV of exiting home and new home transactions completed through Lianjia agents.

• Cost related to stores. The Company’s cost related to stores increased by 9.4% to RMB1.0 billion (US$0.2 billion) in the fourth quarter of 2021 compared to RMB0.9 billion in the same period of 2020, mainly due to the incremental rise in rental fees of contract service centers opened in 2021 and the increase of depreciation and amortization costs.

• Other costs. The Company’s other costs decreased by 17.6% to RMB0.6 billion (US$0.1 billion) in the fourth quarter of 2021 from RMB0.8 billion in the same period of 2020, mainly due to a decrease of business taxes and surcharges along with the decrease of net revenues and the decreased offline activities costs due to some regional instances of COVID-19 infections and the corresponding restrictive measures.

Gross Profit

Gross profit was RMB2.9 billion (US$0.5 billion) in the fourth quarter of 2021, compared to RMB5.4 billion in the same period of 2020. Gross margin was 16.4% in the fourth quarter of 2021, compared to 23.9% in the same period of 2020. The decrease in gross margin was mainly due to: 1) a continuing shift of revenue mix towards new home transaction services with lower contribution margin; 2) a lower contribution margin of existing home transactions led by a relatively higher percentage of fixed compensation costs for Lianjia agents; and 3) a relatively higher percentage of costs related to store of net revenues in the fourth quarter of 2021 as a result of the incremental rise in rental fees of contract service centers opened in 2021 and the increased depreciation and amortization costs.

Income (Loss) from Operations

Total operating expenses were RMB4.1 billion (US$0.6 billion) in the fourth quarter of 2021, compared to RMB4.2 billion in the same period of 2020.

• General and administrative expenses were RMB2,202 million (US$346 million) in the fourth quarter of 2021, compared to RMB1,884 million in the same period of 2020, mainly due to the increase of provision for credit losses.

• Sales and marketing expenses were RMB809 million (US$127 million) in the fourth quarter of 2021, compared to RMB1,323 million in the same period of 2020, mainly due to the decrease of the brand advertising and promotional marketing activities.

• Research and development expenses were RMB738 million (US$116 million) in the fourth quarter of 2021, compared to RMB714 million in the same period of 2020, mainly due to the increase of headcount in experienced research and development personnel, which was partially offset by the decrease of share-based compensation expenses.

Loss from operations was RMB1,184 million (US$186 million) in the fourth quarter of 2021, compared to income from operations of RMB1,267 million in the same period of 2020. Operating margin was negative 6.7% in the fourth quarter of 2021, compared to 5.6% in the same period of 2020, primarily due to 1) a relatively lower gross profit margin in the fourth 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 fourth quarter of 2021, primarily due to decreased net revenues along with the relatively flat operating expenses in the fourth quarter of 2021, compared to the same period of 2020.

Adjusted loss from operations⁶ was RMB398 million (US$62 million) in the fourth quarter of 2021, compared to adjusted income from operations of RMB2,231 million in the same period of 2020. Adjusted operating margin⁷ was negative 2.2% in the fourth quarter of 2021, compared to 9.8% in the same period of 2020. Adjusted EBITDA⁸ was RMB484 million (US$76 million) in the fourth quarter of 2021, compared to RMB2,897 million in the same period of 2020.

Net Income (Loss)

Net loss was RMB933 million (US$146 million) in the fourth quarter of 2021, compared to net income of RMB1,096 million in the same period of 2020.

Adjusted net income was RMB42 million (US$7 million) in the fourth quarter of 2021, compared to RMB2,001 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 RMB930 million (US$146 million) in the fourth quarter of 2021, compared to net income attributable to KE Holdings Inc.’s ordinary shareholders of RMB1,095 million in the same period of 2020.

Adjusted net income attributable to KE Holdings Inc.⁹ was RMB45 million (US$7 million) in the fourth quarter of 2021, compared to RMB2,000 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 RMB0.78 (US$0.12) in the fourth quarter of 2021, compared to diluted net income per ADS attributable to KE Holdings Inc.’s ordinary shareholders of RMB0.93 in the same period of 2020.

Adjusted diluted net income per ADS attributable to KE Holdings Inc.’s ordinary shareholders¹¹ was RMB0.04 (US$0.01) in the fourth quarter of 2021, compared to RMB1.71 in the same period of 2020.

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

As of December 31, 2021, the combined balance of the Company’s cash, cash equivalents, restricted cash and short-term investments amounted to RMB56.1 billion (US$8.8 billion).

Fiscal Year 2021 Financial Results

Net Revenues

Net revenues increased by 14.6% to RMB80.8 billion (US$12.7 billion) in 2021 from RMB70.5 billion in 2020. The increase was driven by the total GTV growth by 10.1% to RMB3,853.5 billion (US$604.7 billion) in 2021 from RMB3,499.1 billion in 2020.

• Net revenues from existing home transaction services increased by 4.5% to RMB31.9 billion (US$5.0 billion) in 2021 from RMB30.6 billion in 2020, primarily attributable to a 6.1% increase in GTV of existing home transactions to RMB2,058.2 billion (US$323.0 billion) in 2021 from RMB1,940.0 billion in 2020. The higher growth rate of GTV of existing home transaction services was primarily attributable to the shift in GTV mix in existing home transaction services from GTV served by Lianjia brand, for which revenue is recorded on a gross commission revenue basis, towards GTV served by connected agents on the Company’s platform, for which 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 19.3% to RMB3.6 billion (US$0.6 billion) in 2021 from RMB3.0 billion in 2020, as the GTV of existing home transactions served by connected agents on the Company’s platform increased by 10.3% to RMB1,023.4 billion (US$160.6 billion) in 2021 from RMB928.1 billion in 2020, as well as a moderate increase in existing home transaction commission rate charged by connected stores;

  (ii) commission revenue increased by 2.9% to RMB28.4 billion (US$4.5 billion) in 2021 from RMB27.6 billion in 2020, driven by the GTV of existing home transactions served by the Company’s Lianjia brand increased by 2.3% to RMB1,034.8 billion (US$162.4 billion) in 2021 from RMB1,011.9 billion in 2020.

• Net revenues from new home transaction services increased by 22.5% to RMB46.5 billion (US$7.3 billion) in 2021 from RMB37.9 billion in 2020, primarily attributable to an increase of 16.3% in the GTV of new home transactions to RMB1,608.6 billion (US$252.4 billion) in 2021 from RMB1,383.0 billion in 2020. Among that, the GTV of new home transaction services completed on the Company’s platform through connected agents, dedicated sales team with the expertise on new home transaction services and other sales channels increased by 20.6% year-over-year to RMB1,334.6 billion (US$209.4 billion) from RMB1,106.3 billion in 2020, while the GTV of new home transactions served by Lianjia brand was RMB274.1 billion (US$43.0 billion), compared to RMB276.7 billion in 2020. And a moderate increase of new home transactions commission rate also contributed to the increase of net revenues from new home transaction services in 2021.

• Net revenues from emerging and other services increased by 17.9% to RMB2.3 billion (US$0.4 billion) in 2021 from RMB2.0 billion in 2020. The increase was primarily attributable to the increase of net revenues of home renovation services and rental property management services.

Cost of Revenues

Total cost of revenues increased by 21.1% to RMB64.9 billion (US$10.2 billion) in 2021 from RMB53.6 billion in 2020, primarily due to the increase in both split commissions 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 28.1% to RMB31.8 billion (US$5.0 billion) in 2021 from RMB24.8 billion in 2020, primarily due to the increase in the GTV of new home transactions completed through connected agents and other sales channels 2021 compared to 2020.

• Commission and compensation – internal. The Company’s cost of revenues for internal commission and compensation increased by 12.8% to RMB26.3 billion (US$4.1 billion) in 2021 from RMB23.3 billion in 2020, primarily due to the increase in the GTV of exiting home transactions completed through Lianjia agents and the expansion of the dedicated sales team with the expertise on new home transaction services.

• Cost related to stores. The Company’s cost related to stores increased by 18.8% to RMB3.8 billion (US$0.6 billion) in 2021 from RMB3.2 billion in 2020, primarily due to an increase in the average number of stores for Lianjia brand and the incremental rise in rental fees of contract service centers opened in 2021.

• Other cost. The Company’s other cost increased by 33.3% to RMB3.0 billion (US$0.5 billion) in 2021 from RMB2.2 billion in 2020, mainly due to the increase of rental property management services costs, outsourcing professional services costs and training costs.

Gross Profit

Gross profit decreased by 6.2% to RMB15.8 billion (US$2.5 billion) in 2021 from RMB16.9 billion in 2020. Gross margin was 19.6% in 2021, compared to 23.9% in 2020. The decrease in gross margin was mainly due to: 1) a continuing shift in revenue mix towards new home transaction services with lower contribution margin, 2) a lower contribution margin of existing home transactions as a result of the higher percentage of the fixed compensation costs for Lianjia agents and the compensation costs for transaction support staff, and 3) a lower contribution margin of new home transactions led by the increased proportion of new home transactions completed by connected agents and other sales channels, and incremental rise in fixed compensation costs for expansion of dedicated sales teams with the expertise on new home transaction services in 2021.

Income (Loss) from Operations

Total Operating expenses increased by 22.5% to RMB17.2 billion (US$2.7 billion) in 2021 from RMB14.0 billion in 2020.

• General and administrative expenses were RMB8.9 billion (US$1.4 billion) in 2021, compared to RMB7.6 billion in 2020, mainly due to the increase in payroll and overhead expenses as the business expanded and the increase in provision for credit losses during the market downturn, which was partially offset by a decrease in share-based compensation expenses.

• Sales and marketing expenses were RMB4.3 billion (US$0.7 billion) in 2021, compared to RMB3.7 billion in 2020, mainly due to the increase of the average headcount of business development personnel.

• Research and development expenses were RMB3.2 billion (US$0.5 billion) in 2021, compared to RMB2.5 billion in 2020, mainly due to the increase in the headcount of experienced research and development personnel as the business expanded.

• Impairment of goodwill, intangible assets and other long-lived assets was RMB747 million (US$117 million) in 2021, compared to RMB236 million in 2020, mainly as a result of the goodwill impairment triggered by the market downturn and its impact on Company’s operations in the second half year of 2021.

Loss from operations was RMB1.4 billion (US$0.2 billion) in 2021, compared to income from operations of RMB2.8 billion in 2020. Operating margin was negative 1.7% in 2021, compared to 4.0% in 2020, primarily due to: 1) a relatively lower gross profit margin in 2021 compared to 2020; and 2) an increase of the percentage of total operating expenses as of net revenues in 2021, primarily due to the increase of staff-related expenses, provision for credit losses, and impairment of goodwill incurred in 2021 compared to 2020.

Adjusted income from operations was RMB1.4 billion (US$0.2 billion) in 2021, compared to RMB5.9 billion in 2020. Adjusted operating margin was 1.7% in 2021, compared to 8.4% in 2020. Adjusted EBITDA was RMB4.5 billion (US$0.7 billion) in 2021, compared to RMB7.7 billion in 2020.

Net Income (Loss)

Net loss was RMB525 million (US$82 million) in 2021, compared to net income of RMB2,778 million in 2020.

Adjusted net income was RMB2,294 million (US$360 million) in 2021, compared to RMB5,720 million in 2020.

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

Net loss attributable to KE Holdings Inc.’s ordinary shareholders was RMB524 million (US$82 million) in 2021, compared to net income attributable to KE Holdings Inc.’s ordinary shareholders of RMB720 million in 2020.

Adjusted net income attributable to KE Holdings Inc. was RMB2,295 million (US$360 million) in 2021, compared to RMB5,717 million in 2020.

Net Income (Loss) per ADS

Diluted net loss per ADS attributable to KE Holdings Inc.’s ordinary shareholders was RMB0.44 (US$0.07) in 2021, compared to diluted net income per ADS attributable to KE Holdings Inc.’s ordinary shareholders of RMB0.95 in 2020.

Adjusted diluted net income per ADS attributable to KE Holdings Inc.’s ordinary shareholders was RMB1.92 (US$0.30) in 2021, compared to RMB3.69 in 2020.

Business Outlook

For the first quarter of 2022, the Company expects total net revenues to be between RMB11.

Contacts

For investor and media inquiries, please contact:

In China:

KE Holdings Inc.

Investor Relations

Matthew Zhao

Siting Li

E-mail: ir@ke.com

The Piacente Group, Inc.

Yang Song

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

Read full story here