KE Holdings Inc.

Reported Q1 2026 results: GTV of RMB 711.2 billion, down 15.6% year over year; revenue of RMB 18.9 billion, down 19% year over year; gross margin of 24.1%, up 3 percentage points year over year; GAAP net income of RMB 1.26 billion, up 46.7% year over year; non-GAAP net income of RMB 1.61 billion, up 15.7% year over year; non-GAAP operating profit of RMB 1.67 billion, up 45.1% year over year; non-GAAP operating margin of 8.8%. Existing home transaction services had GTV of RMB 534.4 billion, down 7.9%, and revenue of RMB 6.1 billion, down 10.7%; new home revenue was RMB 5.1 billion, down 37%; home renovation and furnishing revenue was RMB 2.3 billion, down 20.6%; home rental revenue was RMB 500 million, down 1.5%. Store costs were RMB 571 million, operating expenses were RMB 3.3 billion, and broader cash balances excluding customer deposits were approximately RMB 65.6 billion. Management said it spent around USD 195 million on share repurchases in the quarter and about USD 2.7 billion cumulatively since September 2022. Guidance/commentary: The company did not provide formal numeric forward guidance, but management said existing home transaction volumes should continue to grow year over year in Q2, while broader nationwide price stabilization will need more months of data to confirm. Management also said full-year margins should improve year over year, though quarterly margins may fluctuate seasonally.

Stanley Peng framed the quarter as evidence that the housing service industry is shifting from “finding listings” to “making decisions,” and said KE is repositioning itself from organizing transactions to supporting higher-quality residential decisions. He emphasized a multi-year transformation centered on AI, front-line managers, and productizing services for buyers and sellers rather than relying on a single transaction playbook. His tone was constructive and confident, but he repeatedly noted the company is not over-reading one quarter and that the transformation will take time.

Xu Tao highlighted a sharp improvement in profitability despite lower revenue, pointing to non-GAAP operating profit of RMB 1.67 billion, non-GAAP operating margin of 8.8%, gross margin of 24.1%, and GAAP net income of RMB 1.26 billion. He said the quarter benefited from lower operating expenses of RMB 3.3 billion, including G&A of RMB 1.7 billion, sales and marketing of RMB 1.1 billion, and R&D of RMB 493 million, all lower year over year. He also stressed cash discipline, noting about USD 195 million of buybacks in the quarter, roughly RMB 65.6 billion in cash excluding customer deposits, and a net operating cash outflow of RMB 1.5 billion mainly due to timing of accrued compensation payments.

Analysts asked about the spring rebound in the existing home market, the “Commit to Sell” pilot, the decline in home renovation and furnishing, and whether the recent margin improvement is sustainable. Management said the existing-home recovery is stronger than prior rebounds because it reflects real demand release, price stabilization, and improving seller behavior, and noted platform existing-home transactions rose 12% year over year in Q1 and over 30% in April. On Commit to Sell, management said it is still in early pilot but has already shortened transaction cycles and improved homeowner satisfaction; on renovation, they said revenue weakness reflects business exits, city pruning, and market softness, while the focus is now on standardization, profitability, and better fulfillment rather than scale. On margins, management said the improvement came from broad-based efficiency actions and believes year-over-year margin improvement is achievable for the full year, though quarterly results may vary.