Hello, ladies and gentlemen. Thank you for standing by for K.E. Holdings' second quarter 2026 earnings conference call. I am Siting Li, higher director of K.E. Holdings. Please know that today's call, including the management's prepared remarks and Q&A session, will all be in Chinese. Simultaneous interpretation in English will be available on a separate line for the duration of the call. To access the call in Chinese, you will need to dial into the Chinese language line. At this time, all participants are in listen-only mode. to this conference call is being recorded. The company's financial and operating results were published in the press release earlier today and are posted on the company's IR website. On today's call, we have Mr. Stanley Peng, our co-founder chairman and chief executive officer, and Mr. Tao Xu, our executive director and CFO. Mr. Xu will provide an overview of our business update and financial performance. Then Mr. Peng will share more on the progress of our strategic transformation. Before we continue, I refer you to our safe harbor statement in our earnings price release which applies to this call as we will make forward-looking statements. Please note that Baker's earnings price release and this conference call include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial measures Please refer to the company's press release which contains a reconciliation of the unaudited non-GAAP measures to comparable GAAP measures. Lastly, unless otherwise stated, all figures mentioned during this call are all in RMB. Certain statistical and other information relating to the industry in which the company is engaged to be mentioned in this call has been obtained from various publicly available official or unofficial sources Neither the company nor any of its representatives has independently verified such data, which may involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such information and estimates. For today's call, management will use Chinese as the main language. Please note that English translation is for convenience purposes only. In case of any discrepancy, management's statements in their original language will prevail. We now turn the call over to our CFO, Mr. Tao Xu. Thank you, Siting. Hello, everyone. Welcome to our Q2 2026 earnings call. Let me begin with the key financial takeaways. Our total GDP return to growth, despite a modest year-over-year revenue decline, profits increased significantly, materially outperforming both GTV and revenue. In Q2, GTV increased 6.3% a year-to-year, while revenue decreased 5.7% a year-to-year. This revenue decline stems primarily from adjustments in our home renovation and furnishing business. Revenue recognition impacts from iterative product modeling in the home renovation services. Non-GAAP net income grew 74.9% a year-to-year to $3.185 billion. Non-GAAP net margin reached a 13% up 6 percentage points a year-to-year, a three-year high. Profit improvements were driven by a healthier cost structure, strict financial discipline, and a higher operating efficiency. Contribution margins across all core business lines improved year-over-year and quarter-over-quarter, driving the group's gross margin up 6.7 percentage points year-over-year to 28.6%. Simultaneously, gap operating expenses fell 14.1% year-over-year This combination of gross margin expansion and a lower operating expenses fuels our profit growth. Next, I'll review our segment financial performance. First, existing home transaction services. Q2 scale return to growth and profitability improved significantly. GTV reached $629.89 billion, up 8% year-over-year, and 17.9% quarter-over-quarter. Revenue was $7.02 billion up, 4.5% year-over-year, and 14.5% quarter-over-quarter. GTV outpaced revenue growth year-over-year, primarily because non-lianjiao GTV, where platform service fees are recognized on a net base, accounted for a larger share. This quarter, non-lianjiao platform service revenue increased to 27.8% year-over-year and 29.8% quarter-over-quarter. With a stable network scale, we advanced refined our operations to boost per store output, helping connected stores outperform the market in enhancing overall platform efficiency. Q2 contribution margin reached a 46.1% up, 6.1 percentage points a year driven by a lower fixed labor costs and a structural shift toward a higher margin platform service revenue. It also raised 4.8 percentage points quarter-over-quarter, benefiting from operating leverage amid revenue recovery and further business mix improvements. Second, the new home business. Q2 scale remained stable year-over-year, while profitability continued to improve. GTV reached $258.39 billion, up 1.2% year-over-year, and 77% Hsueh-Hsueh-Hsueh-Hsueh. Contribution margin reached 28.8% up, 4.4 percentage points a year driven by cost structure optimization from refined operations. It also raised 3.1 percentage points a quarter of a quarter benefiting from the same factors plus operating leverage from revenue growth. Third, home renovation and furnishing. Q2 revenue was 3.19 billion, down 30.1% year-over-year and up 36.4% quarter-over-quarter. The year-over-year decline reflects our proactive adjustments of inefficient customer acquisition channels and exits from cities with a weak unit economics. New home market pressures also dampened renovation demand. The quarter-over-quarter revenue increase reflects seasonal business recovery. Q2 contribution margin was 39.6%, up 7.5 percentage points year-over-year, and 3.4 percentage points quarter-over-quarter, driven by lower material costs through centralized procurement and refined cost management.

Fourth, home rental services.

Q2 revenue was 4.83 billion, down 14.8% year-over-year, and 3.6% quarter-over-quarter. This stemmed from transitioning and Sharefree ran to a lighter, low-risk product model utilizing net basis revenue recognition. While this reduces reported accounting revenue, managed rental units continued rapid growth. By end of Q2, managed units exceeded 790,000, up approximately 34% every year, with a net base product comprising over 50%. Q2 contribution margin reached 15.3%, up 6.9 percentage points year-over-year. This reflects a favorable product mix shift in operating improvement from lower labor, installation, and post-lease costs. Quarter-over-quarter contribution margin rose 0.5 percentage points, driven by continued increase in net base products. This emerging in other businesses. Q2 revenue reached 550 million RMB up 26.4% a year-over-year, and 70% quarter-over-quarter. Next, turning to Costs, Expenses, and Profits. Q2 store-related costs were 560 million RMB down, 25.9% a year-over-year, and broadly stable quarter-over-quarter. The year-over-year decline reflects a lean just rent cost optimization and network adjustments. Total Q2 gap Operating expenses were 3.989 billion RMB, down 14.1% year-over-year, driven by improved organizational efficiency, optimized marketing spend, and continued financial display. Operating expenses rose 21.3% in Q2 due to higher selling expenses from the home renovation seasonal recovery and the bad debt provisions in new home business. Specifically, G&A expenses were $2.04 billion, down 2.1% year-over-year. The 18.9% quarter-to-quarter increase resulted from a full debt provision of around $280 million following a prudent assessment of SINAC-related receivables and collateral value. So, the marketing expenses were 1.4 billion, down 26.1% a year due to optimized sales, personnel costs, and refunded marketing spend, but rose 29.6% a quarter from seasonal and higher home renovation and selling expenses. R&D expenses were 550 million RMB, down 13.4% a year due to lower labor and technical service costs. 11.4% quarter-over-quarter due to increased technical service fees. On the bottom line, Q3 gap operating profit reached 3.026 billion RMB up, 185.6% year-on-year. Non-gap operating profit was 3.592 billion, up 123.6% year-on-year. Gap operating profit rose 137.8% quarter-over-quarter with a 12.3% margin, up 8.3 percentage points year-over-year and 5.6 percentage points quarter-over-quarter. Non-GAAP operating profit grew 115.7% quarter-over-quarter with a 14.6% margin, up 8.5 percentage points year-over-year and 5.8 percentage points quarter-over-quarter. This year-on-year and quarter-by-quarter margin expense was driven mainly by higher gross margins and lower operating expenses ratios. Q2 GAAP net income was 2.624 billion, up 100.8% year-over-year, and 109.1% quarter-by-quarter. Non-GAAP net income was 3.185 billion RMB, up 74.9% year-over-year, 97.6% a quarter per quarter. Final turning to cash flow, balance sheet, and shareholder returns. Our Q2 net operating cash inflow was a 6.61 billion RMB net. A new home account receivable turnover was around 39 days down, around a 12-day review reflecting effective risk management. Excluding customer deposits, our end of Q2 broad cash balance remained at around and 67.3 billion RMB. This ample liquidity strengthened our risk of resilience while supporting business development and shareholder returns. In Q2, we spent around $250 million on share repurchases, including our first buyback in Hong Kong market. In the first half, we spent around $450 million on repurchases up around 14% a year representing around 2.4% of our year-end 2025 outstanding shares. Since launch of this share repurchase program in September 2022 through Q2 2020, we have repurchased around 2.99 billion US dollars in shares representing around 14.8% of outstanding shares prior to the program start. In summary, Q2 profitability improvements reflect combined cost optimizations, operating enhancements, and a favorable business mix. Looking ahead, maintaining a solid balance sheet and ample liquidity will anchor our long-term growth. Across all core new and technical investments, we will enforce strict ROI discipline and take customer value, operating efficiency, and sustainable returns as our Wang, and Zeng Li. Next, I'll turn the call over to our chairman and CEO, Mr. Stanley Peng. Please go ahead.

Thank you, investors and analysts. Good evening. So, last quarter, we discussed our shift toward a consumer-centric transformation. This quarter, I will talk about how the changes translate into our operations. In Q2, I observed two trends. Our operation foundation stabilized and our organization truly mobilized. So this foundation enables the long-term change. I will address five key questions. The first one, what changes as transformation enters daily operations? Second, does being consumer-centric mean bypassing agents? Thirdly, will agents become obsolete? Fourthly, how is AI applied in our business and what is the results? Fifthly, how will we know we are on the right track moving forward? So for the first question, what change as transformation enters daily operation? In this quarter, I spend a lot of time on the frontline, visiting stores, properties, construction sites, and discussing issues with clients, agents, and store owners. The changes boil down to three areas. First, refined operation. We are shifting from the one-size-fits-all approach to the district-specific and the project-specific strategies. So rather than tracking A single city-wide metric, we analyze specific districts or projects to tailor solutions and what is the solution for each community. For example, in a high-end community, where clients view property across districts, our legacy geographic-bound model field and the We regrouped operational units based on actual clients' viewing path, assigning project experts for professional presentations and client experts to address specific family needs. So with 600 projects driving half the city's volume, standardizing these professional judgments into a clear division of labor allow us to replicate this model. and other cities have become similar operations explorations. Second shift in the metrics, skill and markets share still matter. But now we focus more on consistent agent transactions, rising agent efficiency and income healthy store profitability and stable service quality. So leasing illustrates this perfectly. In 2025, we have At most, 700 agents for leasing at the peak. And the average agent efficiency fell below two transactions. Instead of adding head accounts, we divided the city into smaller blocks, rematching properties, clients, and agents based on familiarity and the capabilities. So from April to July, average agent efficiency jumped from three to 5.6 transactions and a zero transaction ratio dropped from nearly 25% to under 10%. So I think what matters is that the effective organization matters more than mere headcount. Thirdly, mobilize the people. Managers have left meeting rooms for the front line. These quarter managers personally sold stale listings. and accompanied agents to signing centers. And my only requirement for a manager is true presence. You cannot learn to swim without getting in the water. So in short, operationalizing transformation means refined of Operations, Shifted Metrics, and Mobilize the People. So this stems from a same-goal approach, solving real consumer and frontline problem first, then reorganizing our people, resources, and platform. So we are moving towards the changes, and that they are now being seen in operational units. The second question is, does being consumer-centric mean bypassing agents? So this assumes that If the platform moves closer to the consumer, it must take from the agent. Historically, we only split a single transaction commission, which is a zero sign game. So this is what we did in the past. But to break this equation, we must create more light create more high-value tasks, not just re-dividing the same money. Consumers are changing. Good used to be a static property attribute. Today, biting good means a proper match. The variables determine goods, expanded from one to three. The property, the family's situation, and also the service provider. So the service provider is now a vital variable, not just a conduit. So as decisions become harder, tasks must be segmented. There are three reasons. First, the required knowledge exceeds one's personal capacity. For example, we need to know the properties, client circumstances, and the Renovations and Affirmations business. So this exceeds one's capacity. Second, the building expertise requires a mutually exclusive path. You must either deeply root yourself in one project or follow a group of clients. So you cannot do both simultaneously. So there is The third one is the most valuable action has shifted from providing options to confidently eliminating them. I think we are not only offering more choices to the consumers and instead we needed to help them to filter. However, filtering does not mean transaction. So as long as income relies solely on closings, true professionalism won't develop. I think professionalism must be financially viable. So therefore we are tethering those income from closed deals, lining them entirely with the buyers or seller. This AR assisted role is the client manager. So previously, platform in fact stopped once a lead regional agent, the client manager, ensures continuity. AI organizes data and, while human, assesses the client's stage and needs. The agent receives fully provided clients because the client managers are not paid per transaction and that they remain purely objective. As I have mentioned, The managers are not paid per transaction. So from May to July, this row handled over 50,000 leads, achieving a 7.4% lead to showing conversion rate, outperforming the broader market's 5%. So the platform's mission is evolving from splitting commission to building a structure where every specialized skill is independently verified and compensated. ACN is shifting from a single listing workflow to a modular ecosystem, which includes consulting, showing, contracting, reporting, marketing, materials renovation, and leasing, and so on. So anyone creating incremental value is a service provider. And this is our definition, which is expanded. So the main goal is enabling professional service providers to win in the long term. So being consumer centric means transforming a single agent into a group of independently valuable specialized roles. And now we have the help of AI, which give us more impetus. So the question, as AI advances, will agents become obsolete? So this assumes agents only sell static information easily. fetched by AI. However, technology reshuffles value. And some things depreciate while others become scarce. So we should ask, what is depreciating and what is becoming more scarce? So for the scarcest part, what kind of progress that platform and service provider can make? So what is depreciating? static information, bedrooms, price, and year built, and also the layout of the house. So I think this kind of information cannot support the decision making, and it is very easy to get. So if we only transmit, or we only transport the information, We may have no more opportunities going forward. So what is scarce, dynamic, deep, inspiring insights, and they cannot be fabricated? For example, the reason of selling, renovation potential, or local market assessment from seasoned managers, and how is the situation in the communities by the managers, and what is the closings, and how is the deal last time? Wei. This information lives in people's minds, and the industry lacks the pipeline to capture and reuse it. And fundamentally, AI does not bear the consequence of poor decisions, and AI may not take any accountabilities. So as the cost of housing, mistake rises, consumer needed to reduce uncertainty in growth. Therefore, three things will happen. Firstly, the industry becomes more valuable by mitigating uncertainty. Secondly, creating value is hard, requiring deep data and deep surveys. The third thing is those who transform in the direction become more valuable, including platforms and their managers. So we do not need information, we're players. We need professionals who dare to make judgments and take responsibility. So the previous question is about the industry and the service provider. And if we look around, and if we look inward, then it comes to the question for how is AI applied in our business and with what results? Actually, the business itself is a production function. What is our input and what is our output? and there is human, capital and labor, capital and technology in the function. So in today's AI, we should know the situation of AI in the industry. So is AI a sub-item or a direct variable? So if it's a sub-item, it is an efficiency tool or if it's a direct variable, it requires a total rewrite. So we needed to change attitudes in the first. We now also opened some of the foundational data. And we are lowering the threshold. So we are worried about whether there will be disruption. And we are thinking about how AI can be a new production factor rather than an opponent enables

So I think the consumers finally pay the value.

I think the consumers need a better experience, and we need to solve the problems of consumers. The second is it changes management. In the recent 200 years, we have improvement in the science and management, and we need quantifiable data in the management. and I think we all benefit from this methodology in KE Holdings and also Lianjia. We need standard and we also need tools for improvement. However, for the unquantifiable, they cannot be measured. This is also a big problem. But sometimes, we may only focus on the numbers and we find that sometimes we find that the numbers are too abstract and that consumers now become the numbers and also become the number one in the standard. However, with the help of AI, AI brings the unstructured data and writing language and the numbers are totally different information and signals. and the granularity shifts from the managing average to managing individual properties, clients and agents. Previously, we managed the average, but now we have the computation powers and the knowledge, and we can have the tailored solution for each individual. And this third part is about Chen, and Zeng. We talked about the segmentation of the task in the company by AI. Now we have the scenarios which includes financial, human resource products, technology, and also from the stage-by-stage and the computation power. Now we have AI breaking down the threshold, and all of them are in the computation power of AI. And previously, so the old division vanished and the new ones emerged.

So now we're changing new home business. We shifted the labor between humans and AI. AI helps agents compare proposals using a dynamic knowledge base, allowing agents to focus on understanding clients, so the agents could fine-tune their understanding of the clients. This produces both close deals and also reusable organizational capabilities. These only come from the front line. This disruption reshapes the organization. So it concerns on four things. First is cost. You know, AI lowers fixed costs and increases variable costs, enabling rapid iteration. So whoever iterates fast, who creates more value. And the next is the trial and error. So in the past it takes a lot of efforts. Right now, throughout the you know it takes a long path to evaluate test validate a proposal so the bigger the organization I mean the longer the chain is so many people just hesitate so right now AI shifts innovation from heavy slow investments into a high frequency and low cost probability gains so this allows us to trial and test multiple models at the same time, and we have a higher probability of winning out the game. Next is the front line and the mid office. So the front line workers armed with AI can rapidly build and test the solutions. The mid office can then scale them. Last but not least, managers. So in the past, The bigger the organization, so the lower the efficiency is. Right now, I actually talked to a lot of managers. They don't feel like a lot of a sense of value. Right now, AI flattens the organization. It's changing the role, handling the reporting, forcing managers to stop being megaphones and start creating real business value. So they're not just simply just presenting the numbers. They are actually creating real genuine value from the front line. Because they're in the process of creating the value. Finally, the bottlenecks, the shifts to humans. Look at KE. We have a long industrial process. AI can perfect a lot of the workflows. and those that with the human intervention becomes the bottleneck. So there's this human and human interaction that AI can have to replace. So whether we can unite people together and provide them with the training, allow them to work efficiently with AI. So one is culture, the other is evolution. So this is essentially A change that we're talking about towards the whole industry. Now back to the very first question, whether AI is a direct variable? Because it changes who we serve, our judgments, our process, and our organization. So this is a direct variable. That means we're not simply installing AI into the company. We are reworking the company with AI. Looking into the next phase, how we will know we're on the right track moving forward. We must separate two things, where we need to place heavy bets from where we seek answers. I think there are three areas we're placing heavy bets, deep service, deep data, and a platform ecosystem. As information democratic side, deep data becomes the scarce and the harder the decision making becomes, and the deeper service becomes more valuable. As labor specializes, a platform is needed to orchestrate it. So while we're thinking, so the one where we're still seeking answers, AI's final form and the ultimate structures of management and expertise remain uncertain. Directional matters require unwavering bets. So how do we capture users' evolving needs? So management, of course, carries this value. So more thorough logical matters require small investments, rapid testing, and cutting losses early. So why do we need to separate these things by uncertainty? Because again, we have already proven that directive matters requires unwavering bets. whereas the morphological matters request more investment in record testing. So looking back at the past two quarters, we have approved in some areas that keeping investment in areas with low marginal returns is meaningless. The purely skill-driven model is dead. We should stop those meaningless investments. Most of all, we must validate four things. First, professional. Facing AI, whether they can use it directly or indirectly to create a value. Do they have new definitions for what is professionalism and whether they're committed to this concept? And second, for managers, whether they can return to the front line and produce high quality judgments to recreate this sense of value. The third is the processes and judgments. With the deeper services, can they earn the trust from their customers? whether they can earn a better recognition or trust. Number four, organizational capabilities. Can we turn a single success into a replicable capability? So in such a discontinuous transformation, for many industries, they are pretty much faced with the same challenge. The way I see it, human conviction is the leading indicator. Numbers are the lagging indicator. So many of the management tend to hide their expertise within themselves. So without the open sharing, we cannot make that into a replicable, successful model. So our core test is whether we can consistently execute consumer centricity and enable professionalism to win. This must be embedded in our culture and our workflows. So we'll measure these success across four pillars, customer, service provider, operations, and replicability, all four must co-choose. So if you look at these five things, we have to redefine our playbook. So consumers are facing harder decisions to make, so that is driving deeper specialization. So the AI is depreciating role info into while elevating true expertise in reorganizational internal work. So our direction is certain, deep service, deep data, and a platform ecosystem. So Q2 is not the conclusion, it is just the beginning. Thank you. I'll now turn the call to the analysts for a Q&A.

Thank you, Stanley,

As a reminder, we only accept questions on the Chinese language line. If you would like to ask a question, please press star one. If you would like to cancel your request, please press the pound key. For the benefit of all participants on today's call, please limit yourself to one question. And if you have additional questions, you can re-enter the queue. The first question comes from from Goldman Sachs. Please go ahead. Thank you, for taking my question. Congratulations on the strong Q2 results. My question is on the overall property market. It saw a diverging trend in volume and price in Q2, with some fluctuations in momentum in Q3. Given the uncertainty ahead, What controllable levers does the company have for Q3 and the full year? Thank you, Tennessee. In the first half, the existing home market showed a structural recovery in transactions with the prices bottoming. In Q2, this recovery became more evident. Now the pace varied across cities and price segments. By city tier, transaction volumes recovered faster in tier one cities, where the first half prices also showed a greater sequential resilience. In Q2, yielding worth in registered existing home transactions in tier one cities outpaced other cities. According to Baker Research Institute, in the first half, tier one existing home prices rose and Zeng Shui, and many more. and others. In the new home market, the overall Q2 volume remained under pressure, though projects in core cities with strong product offerings showed better support. Structurally, Existing homes accounted for over 50% of the total national residential transaction area in the first half, becoming the market mainstay for housing demand. Overall, we see a structural transaction recovery while prices continue to bottom. Core cities and high quality supply are more resilient, but the market remains polarized. With more property choices, customers are deciding cautiously. Wang, Wang, Wang, Wang, Wang, allocate resources based on market performance across cities, customer groups, and property tax reinforcing coverage in higher tier cities. Meanwhile, centered around content-driven engagement, precise matching, and professional execution will help customers make better decisions and convert genuine demand into transactions.

Second,

will continue to reinforce financial displaying and flexible resource allocation. Our leaner cost structure improves our ability to hedge against or fend off market volatility. If pressure persists, we will dynamically allocate resources, prioritizing our core professional service provider network over short-term profits. Even if the market improves, we will not return to extensive expansion. New investments must pass stage-gated ROI and service validation before scaling, ensuring transactions translate efficiently into profit and cash flow. Third, we'll also prioritize cash flow and a solid balance sheet. will strictly manage receivables and collections, control risk exposure, and limit non-essential investments to preserve flexibility. Therefore, our second half operations will not rely on market bets. On the revenue side, better decision support will help us win more customers. On the financial side, our healthier cost structure will protect cash flow and abhor and others. Thank you.

Our next question comes from Jung Lam from UBS. Please go ahead. Thank you, Mr. Tao, for your answering. So my question is that in Q2, the profit outpaced revenue growth significantly. So could a management break down the impact of business performance, operating efficiency, expense baselines, if there is any one-off factors? And for those improvements, how sustainable are they in the long run? Thank you for your question. In Q2, the profit improvements were mainly driven by higher contribution margins across the core business and the lower operating expenses. For the core business contribution margins, they improve year-on-year and quarter-on-quarter, driving the group's gross margin up 6.7 percentage points year-on-year to 28.6%. At the same time, the gap operating expenses fell 14.1% during the year. There are three drivers. First, a lower cost and expenses baseline. Over the past few years, we optimized Li and Jia's store and agent structure by expanding management expense, consolidating resources, and reducing low productivity investment. And this lowered the fixed labor cost and our break-even point. So we... also have a persistent baseline. Second, improved operating efficiency in housing, transaction in new homes, channeling coverage of high-quality projects, and improving customer conversion, enhanced transaction resilience. We also have stable monetization and a better channel efficiency drove profit growth. and for the existing homes focusing on the priority listings and the refund operational support for connected stores significantly boosted connected store revenue and the profit contribution. Thirdly, improve the units, economics and the business mix in new business. We have centralized procurement and refined cost management, lowered the material cost ratios in home renovation. In rental services, the contribution margin improved due to a mixed shift toward net basis revenue products alongside the generally operating improvements in labor installation and post-lease cost. Looking ahead to the next two quarters, under a neutral market assumption, the lower cost cost baseline will contribute to support profits. However, marketing channel incentives and a certain front line sales cost may fluctuate quarter on quarter due to revenue scale, mix, and also seasonality. We will not simply extrapolate a single quarter's profits, but focus on achieving balanced revenue and profit growth. So if the market improves, Incremental revenue will release stronger operating revenues from the lower baseline, creating greater profit upside. If pressure continues to overheal, their constant structure reduces profit sensitivity to market volatility. Simply put, our current structure increases both upside potential and downside protection. In the long run, this optimization builds a healthy operating foundation, this step This is step one of our strategic transformation, optimizing resources allocation for current markets. And this is how we can tip with the uncertainty. Step two is directing limited resources toward initiatives that create customer value rather than just a cutting cost. and ultimately through workflows, evaluations, incentives and the platform tools, we will embed efficient resource allocation into our daily organizational capacities to support a sustainable growth. Thank you, Mr. Tao. The next question comes from Xiaodan Zhang from CITC. Please go ahead. Good evening, Mr. Tao. Thank you for taking my question. Congratulations on your strong performance on Q2. So the question is about existing homes. In Q2, the existing home GDP increased 8% year-on-year with contribution margin up 6.1 percentage points. So how much of this stems from market recovery versus company operations? And what metrics demonstrates this operating alpha? Thank you. Thank you, Sheldon. I am happy to hear your voice. In short, while the market recovery provided a foundation for transaction volume, our existing home operating offer didn't come from expanding our network or rising prices. It came primarily from higher unit productivity within a stable network and a better conversion of platform service value into revenue. The simultaneous margin improvement confirms we didn't sacrifice profitability for growth. Specifically in Q2, the existing home transaction volume in our key cities recovered moderately, with sequential price stabilization providing some external support. We have that as the external support. However, the year-on-year average transaction price remained in adjustment, offering no price tailwind. In this backdrop, our Q2 existing home GDP grew 85% year-on-year, and the transaction volume grew nearly 25% year-on-year, significantly outperforming the market. More direct alpha source with higher unit productivity in our connected store network. In Q2, the connected store transaction volume grew nearly 30% year-on-year. Network scale didn't expand. The active stores and agents remained broadly stable year-on-year, but average transaction per active connected store rose 26%. This shows that our network is shifting from expansion to high-quality operations. as earlier connected stores mature and the platform collaboration deepens and that network volume translates directly into higher per store output and high efficiency. The second alpha was improved Wangan Xu, Wangan Xu, Wangan Xu, Wangan Xu, Wangan Xu, At the same time, the existing home contribution margin rose 6.1 percentage points beyond year 2 to 46.1%, confirming growth wasn't bought at the expense of profitability. Going ahead, we will monitor if connected store output and the platform service revenue conversion remain stable across different markets. and going forward we will focus more on the output of the connected store and also whether the conversion remains stable across different markets to validate the sustainability of this alpha. Thank you, Mr. Tao. Our next question comes from Alvin from CLSA. Please go ahead. So thank you. for taking my question. So for the new home business, it is also amazing. So what does the Q2 New Home Alpha as the operation upgrade from traditional channel collaboration to integrated marketing and the project service? So what capabilities sustainably create value? and also in the process, how do you balance growth margins, contribution margin, collection cycles and developer's credit risk. Thank you, Elvin, good evening. So in the first half of this year, the newborn market remained under pressure. But in Q2, there was the improvement with the year-on-year sales declining among top 100 developers, narrowing to 9.3% demand. And the new supply increasingly concentrated in core cities, high-quality projects, and upgrade-oriented products. So in this backdrop, our Q2 new home GDP grew by 1.2% year-on-year, driven mainly by improved coverage of high-quality projects and higher conversion efficiency. Firstly, we identified and collaborated with high-quality and newly launched projects earlier, improving our coverage and performance in market-leading projects. Secondly, we have refined needs identification and project matching. We effectively allocated resources to high potential projects boosting conversion rate. So for the second half of this year, we assume the market will remain in adjustment with cautious customers focusing on optimizing project mix and the conversion to improve controllable operating efficiency. In the long run, Our new home business aims to solve customer housing decisions, not just extend the service chain. So in buyers market, consumers face complex choice and multiple choice, and they need more than just access to the projects. So I think they need to understand the project's scalability, product value, and the comparisons with the nearby options and alternatives. in terms of price layout and also the amenities and whether their needs can be met. And we are also evolving from the transaction channel to the customer-centric four-cycle project services. So what we hope is that we want to be consumer-centric. We want to provide full-cycle services and integrating consumer insights into project research, repositioning, and sales, and also the decision-making to support the consumers. Consumer value drives this upgrade. Developer value follows from us, serving consumers better. So in this direction, we are also building three capacities. Firstly, we have earlier consumer insights and matching. We're using data from existing form transactions, searches, and viewings. We understand the demand to aid a project's positioning and marketing, reducing the mismatch between developer products and actual demand. Second, we translate product value into comparable decision metrics. We turn complex factors like location, layout, and natural light and amenities into intuitive content. And we also have the explanation and also and other services to help the decision making. For example, at Guangzhou Star River make levels, we have 3D community presentations and the layout analysis, which help consumers intuitively understand the products, improving on-site conversion. Thirdly, we have end-to-end projects operating capacities based on customer feedback. Now we link customer analysis, content and the channel sales for our project. And we also have the time adjustment and the resources allocation. For example, for our project in ,, the developer helped to gain a local market knowledge. We re-analyzed target consumers. We adjusted the feedback from the market. And we adjusted the sales strategy and the link channel acquisition with on-site conversion boosting the sales efficiency. But I think that these capacities remain in early validation. We will tailor them per project, validating consumer value, operating results, and economics before scaling. In all of those projects, I think we need a sustainable validation and we can have better replication as we expand our services and as our service scope deepens we will manage payment terms and the developer credit the risk even more prudently avoiding the unreasonable risks just to expand the GTV. So in the long term the growth will be built on deeper consumer understanding and accurate matching, ultimately translating into high-quality revenue, healthy profitability, and strong cash collection, and we can have high-quality growth. Thank you.

Thank you, Mr. Xu. The last question comes from Griffin from CLIC. from CITIC. My question is on home renovation and carefree. So our Q2 home renovation revenue declined faster year to year, but contribution margins improved significantly. What drove this decline, and are earlier adjustments largely complete? When will revenue recover? And how do you balance scale, contribution margins, and delivery quality? Carefree rent profitability or margin significantly improves, and how do we ensure the sustainability? Thank you, Grayson, for your question. The industry is undergoing a profound supply-demand restructuring as property adjustments feed into renovation. New home deliveries have dropped. So companies that previously focused on new homes are flooding into the existing home market, intensifying the competition. In such an environment, navigating the cycle depends on the operating quality, product competitiveness, and delivery quality, not just scale. So the Q2 revenue decline stems from two factors. First, we proactively exited inefficient cities, stores, and acquisition channels over the past year. Second, overall demand remains pressured due to fewer new home deliveries, which directly weighs on the home renovation business, while competitors use price cuts and high channel incentives to fight for existing home customers. So this proactive adjustment is now largely complete. We expect no further broad-based contractions this year. Despite pressured revenue, contribution margins improved significantly. Centralized procurement and supply chain optimization meaningfully lowered material costs. Surface provider productivity per store also improved year-over-year, and also store costs were optimized, indicating a healthier retained capacity and cost structure. Regarding revenue recovery, the contract value is a leading indicator, while reported revenue lags due to construction cycles. Positively, front-end metrics like July showroom visits improved quarter over quarter due to restored internal cooperation incentives, though it will take time to translate to revenue. Going forward, we will not trade profitably for scale. Launch and Growth relies on delivery quality via frequent inspections. It also enhances the user experience, product competitiveness, which will be achieved through tailored renovation packages, as well as an integrated showrooms at transaction centers. We are pursuing quality products and healthy profitability as three pillars, a growth strategy that will drive our deep growth in revenue and profit. On carefree rent, so the units under management gradually grow steadily to less than 790,000, up 34% a year to year. Revenue was around 4.83 billion RMB. with a 15.3% contribution margin, up 6.9% percentage point per year. The year-over-year revenue decline reflects carefree strength iteration toward a lighter net-based revenue product. Profitability improved due to the structural shift and general operating optimizations in labor installation and post-lease costs. On top of this, whether we can sustain this profitability, I think that requires more than just acquiring more units. It requires managing an asset pool with a lower churn, fewer releases, and higher renewals. So this way, the costs related to labor and channel will grow slower than actual revenue. So going forward, I think we'll focus on three areas. First, stabilizing the units under management portfolio to reduce the re-leasing channel costs. As we see more units under management, more units are entering renewal. Our existing homes are going for releases. We're going to take proactive lease management and deliver quality service. This will boost renewal and also boost retention in Q2. The owner renewal rate hit 74% up 4 percentage points and the tenant renewal rate hit 56% up 1 percentage point a year. Second, improving efficiency to lower per unit labor cost. Due to management units per asset manager rose 40% year-over-year to around 170%. Going forward, we will pilot separating transition tasks such as sourcing and leasing from management tasks such as renewal and post-lease to boost specialization and personnel efficiency. AI also can come into play. We can use AI planning to manage scale complexity by optimizing service areas and matching task scheduling as well as many other refined operational measures. Third, improving incremental scale quality. We'll increase asset-light products to withstand rental fluctuations. Additionally, tailored to different cities, we're going to adopt a differentiated product solution that will achieve healthier unit economics. Most importantly, service quality underpins all of these improvements. So whether tenants or owner decides to renew, I mean, hinges on the reputation, repurchase, and also the channel cost. So we're going to pay special attention to reputation and lower channel costs. So we believe profitability is only sustainable when service experience renewal and efficiency forms a positive cycle. So we're solidifying this foundation to translate our scale growth directly into profit growth. Thank you. Thank you, Mr. Xu. That concludes our Q&A session. Thank you once again for joining us today. If you have further questions, please feel free to contact Baker's IR team through the contact information provided on our website. That concludes today's call and we look forward to speaking with you next time. Thank you and goodbye.