Hello, ladies and gentlemen. Thank you for standing by for KE Holdings, Inc.'s Fourth Quarter and Fiscal Year 2023 Earnings Conference Call. Please note that today's call, including the management's prepared remarks and question-and-answer session, will all be in English. Simultaneous interpretation in Chinese is 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. Today's conference call is being recorded. I would now like to turn the call over to your host, Ms. Siting Li, IR Director of the company. Please go ahead, Siting.

Thank you, operator. Good evening, and good morning, everyone. Welcome to KE Holdings, Inc. or Beike's fourth quarter and fiscal year 2023 earnings conference call. The company's financial and operating results were published in the press release earlier today, and are posted on our company's IR website, investors.ke.com. 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 Chief Financial Officer. Mr. Peng will provide an overview of our strategies and business development, and Mr. Xu will provide additional details on the Company's financial results. Before we continue, I refer you to our safe harbor statement in our earnings press release, which applies to this call as we will make forward-looking statements. Please also note that Beike's earnings press 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 conference call are in RMB. For today's call, management will use English as main language. Please note that the Chinese translation is for convenience purpose only. In the case of any discrepancy, management statements in their original language will prevail. With that, I will now turn the call over to our Chairman and CEO, Mr. Stanley Peng. Please go ahead, Stanley.

Thank you, Siting. Hello, everyone. Thank you for joining Beike's Fourth Quarter and Fiscal Year 2023 Earnings Conference Call. 2023 was a fruitful year for Beike, not just in terms of business growth, but more importantly, in our organization strength, which foster our team's deeper sense of purpose and buyer dedication in us to move forward and embrace more possibilities. Over the past few years, we have made a series of priority adjustments in our strategy and business operations in the face of challenges. We are gearing up for “crossing the next mountain” to capitalize on the promising residential market with a technology-driven one-stop residential services platform for better living. These efforts have created more hope for our future. Scale-wise, our One Body business has substantially outperformed the market, with our new initiatives are taking off. For profitability, our One Body business has reached historical highs and new initiatives have seen significant improvement in core cities. We have achieved breakthroughs in at least 5 cities in terms of integrated One Body to win business model with service consolidation and end-to-end appearance optimization. More importantly, our organization gain, unity and cohesion. The synergistic development in 2023, guided by the One Body, Three Wings strategy has laid a solid foundation for our company. It has fostered a shared understanding within our organization. We are more certain of the path ahead and our steps are firmer. Now let's take a more detailed look at our performance in 2023. Overall, we achieved strong results in the turbulence market. For full year 2023, we recorded a GTV of RMB3.14 billion on our platform, up 20% year-over-year GTV of existing home transactions grew by 29% year-over-year, with notable market penetration improvements in most of the core cities. Full year GTV of new home transaction rose 7% year-over-year, significantly outperforming the market as compared with a year-over-year decline of 6% in China total new home GTV according to the NBS and a decline of 18% in GTV of CRIC's top 100 developers. As for our new initiatives, pro forma contracted sales of our home renovation and furnishing services sold over 93% year-over-year. The number of units managed by our big rental services surpassed 210,000. Our full year total revenue increased by 28% year-over-year to RMB77.8 billion. It's the second highest level of the cost, with more than 20% attributable to our new initiatives. Regarding operation, operating efficiency, we have been reducing costs and enhancing efficiency while controlling risks over the past 2 years. It did cause a lot of sacrifices internally. These efforts paid off in 2023 as evidenced by the record high profitability we set across our existing and new home transaction sources as well as for the group as a whole. We have also seen great improvements in our earnings quality and operational cash flow. Our achievements in 2023 have given us greater safety margins and bolstered our confidence. Next, we maintain our solid strides in our One Body business in 2023 with some proactive actions to drive growth in the second half. By the end of 2023, our platform served a total of 43,800 connected stores, which of 42,000 active stores, up 12% year-over-year. The notable agents connected to on our platform was close to 428,000, and a number of active agents rose by 15% year-over-year to 397,000. Also, service providers on our platform achieved substantively improvements in efficiency and income as well as the 44% of per store revenue increase for Lianjia stores excluding Beijing and Shanghai, and a 31% increase for connected stores on a year-over-year basis. Moving to our new initiatives. At the heart of our achievements in scale this year, their progress, we affirm that we are headed in the right direction. We also get a clear picture of where we fall short, and the vast potential for improvement in these sectors. Our home renovation and furnishing services achieved greater breakthroughs in 2023. Beyond the numbers, what matter most is that we gain much deeper industry understanding and knowledge base. First, we developed a deep outstanding of customers’ mindsets. Their happiness, pain points and frustrations deeply motivating us to iterate our business models in line with the customer perspective. Past industry products emphasized a good centric installation process with logic similar to assembling a computer. Understanding our customers allows us to take initiatives from a human perspective, evolving our business logic and restructuring processes based on real customer needs, thereby creating competitive barriers and stickiness. We also understand that hunter-like sales model, commonly used as the early development stage of low frequency industries is not as sustainable. Only by keeping our roots, communities, winning long-term customer fast, customer recognition and word of mouth reference can be increased the transaction frequency and density. Now, turning to our Beike rental services, as it grew rapidly throughout 2023. New problems began to emerge at a faster pace, requiring a higher business sensitivity and accelerated model integration. We were successful on both fronts. Our Carefree Rental model recorded over 200,000 manager units, up from 70,000 in 2022, and our centralized long-term apartment rental services have managed over 10,000 units by the end of 2023 from 5,000 in 2022. We are evaluating meanings of rental orders on our platform every year from conventionally lower value-added rental brokerage services to higher value-added long-term rental property management services. The call behind us is, first, our understanding to the added value, which our homeowners and tenants' needs and the ability to serve. Second, our ability to control risks, which requires high operation efficiency. In 2023, we upgraded rental products to enhance value proposition to homeowners and strengthening risk control, and we redefine the roles of our key service providers. All of these efforts helped create a sustainable business model to emerge. Only by advancing our understandings of the fundamentals can we truly drive industry progress. For 2024, our goal is to achieve growth with stability, focus on quality and efficiency, and make decisions on long-termism. Strong balance between business growth and risk control is a fundamental challenge for every organization in our approach we need to respect the law of the market in the same way farmers honor the law of nature. We also must protect our sittings from storms to ensure a fruitful harvest. Over the past 2 years, we focused on mitigating risks and reducing uncertainties and meet external turbulence. This has significantly improved our safety margins and deepened our roles in the industry. On top of that, our future developments will come from innovation as we face a different environment now, with new changes, we need to find new solutions. The first challenge lies in shifting our priorities. For our One Body business, scale and agency income will win the most important factors. Now, efficiency and agents’ have become more important. As known, our ACN resource allocation mechanism help us within a large pool of talent, which form our competitive investors in the past. However, going forward, this advantage is scale may not be the key to help us meet customer demand or benefit the shareholders. As our agents mature, their needs are also changed from high income to work-life balance. As we navigate these challenges, we have already seen our frontline teams taking steps ahead. Let me share a few examples. Our platform showcased many distinguished home brokerage brands, large franchise brands like Fu Fang, they have plenty of their store count from 100 to 1,000 within 5 years. Their strategy focused on differentiated urban coverage and in-depth exploration in lower-tier market. Every aspect from store location selection and development planning to internal communication and team building follows a skillfully designed top-down approach. We are also honored to connect with a boutique franchise brand like Qingdao YouYiJia Real Estate, who have achieved full growth since joining Beike in 2019, defying the market trend, their growth strategy emphasized on collaborating with store owners and agents with quality services and rich experiences, especially those having rather hard times by efficiently leveraging brand resources. They are active in service model innovations. They serve the first transaction under our Youxianmai model, helping customers lock in new homes before old homes were sold. On the store front, we placed a strong emphasis on the large store strategy, which demand excellent leadership and management skills from store operators, taking our Lianjia branch of Lingnan Bridge Metro Station in Shanghai, as example. The store managers set clear plans for starting the operations, making each core business line led by the agent top in the corresponding business to ensure robust and comprehensive customer services during key services stage, such as face-to-face consultations with homeowners, the manager also helps the team to cultivate awareness of developing into homeowners' needs and developing a methodology with it to further strengthen the leadership skill of store operators, managing large stores, Lianjia has launched the Store Leadership Development Program SLDP this year. The three-year program aimed to reshape store manager's leadership model through operating planning, quality assurance, efficiency improvement, talent growth, team management and so on. By setting up a comprehensive certification system linked to career development and award incentives, SLDP aims to nurture versatile managers for the industry. On the agent side, our dedicated agents have been instrumental in introducing numerous innovation initiatives to enhance service quality and efficiency. We always say closing a transaction is just the beginning of a service case. This is not just a slogan. Our agent from Shanghai, Lianjia Peilin Zhu set a good example, she delivered a special photo album for homeowners upon property handover. The album documented details of the apartment during this agent's housing maintenance period, helping home sellers keep a good memory of their past home, inspired by Peilin’s idea. We have introduced the Peilin Album album company-wide at Lianjia, honoring the handover of home with this precious memories. This example of our ongoing exploration of a new path for quality and efficiency, growth with deepening our marketing presence going forward, the advancement and wide spread adoption of technology may be the key. As such, in 2024, we need to open our minds in understanding the relationship with agents and technology, embrace and create changes. New media is another powerful force. We want to better deploy and leverage. Finally, business model innovation is another possible solution. In an effort to advance our on-store residential services model for better living, we explore initiatives such as membership system and flagship stores. These mechanisms will foster deeper synergies under the One Body, Two Wings strategy, energizing our business holistically. -- giving Beijing is our mother ship and stand at the top of scale in many ways, we believe it's both the best innovation ground, and we plan to conduct more efficiency and model improvement trails there. For our emerging business, our main focus in 2024 is on quality. For home renovation and furnishing, the new -- the next step is to continually enhance our understanding of our customer needs. This involves deepening our capabilities in quality, products, process innovation, technology, and supply chain management, thereby cultivating customer trust and driving future business growth. For Beike Rental Services, there's a huge market demand. Operationally, we establish a solid foundation on our store – our next step strategy is clear: enhancing efficiency through managing individual service capabilities varies, improving occupancy rates and profitability, and elevating service quality by various dedicated roles. What's more important for this business is to explore innovative model that balance risk and return better than we can replicate them, look to long-term growth prospects while safeguarding our bottom line. In terms of technology, we have the strongest data assets and the richest offline scenarios in the living industry, digitalization and technology hold the greatest potential to solve the long-term efficiency issues for agents. In 2024, we will further advance the digital digitalization across our business and in the industry, conduct more in-depth exploration and produce around technology-driven initiatives. Regarding quality, for us, it sets up limits on how much we can be motivated by our customers and represent our business bottom line. In 2024, we are doubling down on quality, exploring ways to enhance our ability to improve quality and create value through products, services, operations and commitments. For example, we are innovating supervisory systems and products to remove barriers between customers and our platform, making sure we are always open to hearing from our customers. These quality-centric products and capabilities represent the real value to our customers and the business, also namely long-termism, capabilities led the possible customer feedback to continually motivate us while turning customers’ satisfaction into our driving force to improve and evolve our organization. That's the real power of focusing on quality. Lastly, we never stop thinking forward. If we could stand in 20 years behind and look back to today, what strategies might not work anymore and what new wins will open up our mind to reflect and address these core long-term issues is a major task for us in 2024. We’re on solid growth with ample opportunities to meet our mark-to-market in a vast residential sector, backed by team vicinity and trust from slow battles fought together. Moving forward, we will continue to focus on the sales and hence, encouraging, supporting and learning from each other, and growing together by lending strength to one another. We are increasing resembling an invincible team. 2024 is about welcoming new possibilities and challenges, which when guiding us towards more promising opportunities and helping us across next mountain. Thank you next, I would like to turn the call over to our CFO, Tao Xu to review our fourth quarter and fiscal year 2023 financials. Thank you.

Thank you, Stanley. In 2023, the Chinese growth market deepened with the transformation. So the year started with a concentrated release of untapped demand before moving to gradual normalization middle year. A transient rebound followed in the second half of 2023, built by enticing support policies. The existing new home market shows the differentiating performance with later being affected by the risk associated with the real estate developer stat and limited effect of supply, resulting in continued weakness in supply and demand. In contrast, both GFA and GTV of existing home transaction increased significantly year-over-year, showing homebuyers' preference for rapidly available home. This is an inevitable trend that China's real estate market approaches maturity. Houses are returning to their original purpose of providing a comfortable living environment, bringing earth closer to the vision of joint living. Business involving actual environment, our performance in 2023 demonstrated remarkable resilience guided by our goal of achieving high-quality groups, our series of measures to reduce costs, enhance efficiency and mitigate risk have brought us to significant operating leverage. Our full year revenue reached RMB77.8 billion, up 28.2 percentage points year-over-year. Revenues from existing and the new home transaction services grew by 15.9% and 6.7% year-over-year, respectively. Our home transaction services maintained steady growth with a solid foundation. Revenue from our home renovation and furniture, emerging and other services become new engine growth contributed 24.7% of the total in 2023, an increase of 11.7 percentage points from 2022. Subsequently, revenue from the home renovation and furnishing business was RMB10.9 billion, rising by 74.3% year-over-year on a pro forma basis. Our profitability also increased substantially in 2023. Contribution margin grew by 7.3%, to 47.2% for the existing home transaction services, and a 2.9 percentage points to 26.66% for the new home transaction services, both setting new historical highs. Our adjusted operating expense ratio dropped by 2.1 percentage points year-over-year with an adjusted operating margin of 11.2% for the year. Our adjusted net margin increased by 7.9 percentage points to reach 12.6%, bringing our full year adjusted net income to RMB9.8 billion. Earnings cost improved meaningfully as well. We realized a net operating cash inflow of RMB11.2 billion in 2023, 1.14x of adjusted net income for the year. And DSO fell by 50 days year-over-year to 55 days. We believe we have delivered commendable results in 2023. Turning to our performance in Q4. Our top line and bottom line each grew by double digits on a year-over-year basis. The revenue for the quarter increased by 20.6% year-over-year to RMB28.2 billion, between the top end of our guidance, primarily attributable to the better-than-expected performance for our new home transaction services, home renovation and emergency services. Our gross margin reached 25.5%, up 1 percentage point year-over-year. Our GAAP net income rose by 80.2% year-over-year to RMB670 million, and our non-GAAP net income increased by 10.8% year-over-year to reach RMB1.71 billion. For home transaction services, the fourth quarter witnessed a pronounced the contrast of performance between new and the in-home market nationwide. The existing home market has seen a year-on-year increase, driven by the lower base effect caused by year of 2022's pandemic, and an increased activity in the existing home market in second and third tier cities. Sequentially, the existing home market has been relatively stable since October, benefiting from favorable policies and increasing market maturity. Revenue from existing home transaction reached RMB6 billion, up 14.6%, with GTV reaching RMB468.1 billion, up 30.1%, both on a year-on-year basis. Notably, GTV served by connected stores showed even more robust growth at 41.1% year-over-year. Our strategic functions through more connected store and the positive performance from the second-tier cities and the below in new home market, fueled by the increased proportion of GTV served by the connected stores. Meanwhile, this structure change contributed to a lower growth in revenue in GTV for existing home transaction services. The contribution market for the new home transaction services reached 44.5%, circling by 7.4 percentage points year-over-year, mainly attributable to the low base in the same period of 2022, where operations were nearly impossible because of the pandemic. The contribution margin grew by 4.1 percentage points quarter-over-quarter, primarily due to the bonus issued in Q4. In terms of new home transaction services, as I mentioned, the national new home market remained sluggish. CRIC shows the sales from the top 100 developers declined by 32% in Q4 year-over-year, and increased by 12% quarter-over-quarter. The industry is still undergoing process of supply construction and the risks being cleared. While maintaining our risk threshold, we proactively and strategically expand our channels in Q4. Our new home GTV reached RMB238 billion, dropped by 9.7% year-over-year and grew 23.9% sequentially, significantly outperforming the market. Revenue from the new home transaction was RMB7.6 billion, down 8.5% year-over-year, and up 28.2% sequentially outpacing GTV growth. This is a reflection of our steady condition capability in a market downturn. The contribution margin for new home transaction services slightly increased year-over-year, maintaining a high level of 26.4%. Our ability to grow contribution margin despite the decline in the revenue is another testament to our operational resilience. In Q4, the percentage of commission income from SOE developers rose from 46% in Q3 to 53% in Q4. Projects with the Commission in Advance model also remained at a high level, accounting for 53% of total commission revenue. I would like to emphasize that, we have never and will never compromise on risk control to outperform the market. Revenue from home renovation and furnishing, emerging and other services grew by 106.6% year-over-year in Q4, accounting for an increased portion of our total revenue at 32.6%, significantly increased by 13.5 percentage points from the same period of 2022. Our home renovation and furnishing business continued to grow at a fast pace, with further breakthroughs in both scale and efficiency. In Q4, contracted sales reached RMB3.9 billion, up 99.7% year-over-year at 19.7% quarter-over-quarter. Revenue reached a new high of RMB3.6 billion, increasing 73.9% year-over-year. The percentage of contracted sales contributed by our home transaction services continued to increase to about 47% of total GTV in Q4, further demonstrating the synergy between our housing transaction and other residential services. Moreover, our home renovation and furniture business has grown more diverse, with furniture and home furnishing, sales reached RMB1.15 billion in Q4, accounting for around 29% of total contracted sales, making a 3.4 percentage improvement from the same period of 2022. In Q4, our net revenue from emerging and other service increased by 169.3% year-over-year, under 21.2% quarter-over-quarter to RMB2.9 billion, primarily propelled by the rapid expansion of our rental property maintenance services. Our store costs were RMB727 million, remaining almost stable in Q4 compared with the same period of 2022. Other costs rose subsequently to RMB548 million year-over-year due to the increase of human resources-related costs, maintenance costs of the rental property management services and the share-based compensation expenses. As a result of our increased operating leverage, our gross profit grew by 25.7% year-over-year, reaching RMB5.1 billion. Our gross margin ticked up 1 percentage point year-over-year to 25.5%. While falling by 1.9 percentage points quarter-over-quarter due to lower contribution margin of the existing home transaction and a smaller proportion of revenue from this business. In terms of expenses, our GAAP operating expenses for Q4 totaled RMB5.3 billion, up 43.5% year-over-year. Specifically, G&A expenses rose by 47.7% year-over-year to RMB2.6 billion, mainly due to an increase in provision for buyback from 1 single developer for new home transaction services, and the increase in personnel costs. With regards to the new home receivable provisions, we have done a more cautious assessment of the realization value of the single collateral assets provided by Sunac earlier for its unpaid amount to Beike. This asset is expected to be impacted by over 50%. Based on this, in the fourth quarter, we made additional provision for bad debt amounting to around RMB400 million, which represents the over 50% provision on set receivable and other outstanding amounts corresponding to this collateral asset. As a result, apart from Sunac’s portion of secured receivables, the average provision ratio for the bad debt related to receivables from 68 high-risk developers on our platform has exceeded 95%. Sales and marketing expenses grew by 56.1% year-over-year to RMB2.1 billion. The rapid development of our full service renovation business led to a fast parallel increase in our sales and marketing expenses. The increase was a result of the right marketing expenses in our housing transaction services business. R&D expenses grew by 4.9% year-over-year to RMB534 million, mainly due to the salary increase of the R&D personnel. On the profitability front, GAAP income from the operations amounted to a loss of RMB173 million in Q4, compared with RMB387 million from the same period of 2022. GAAP operation margin was negative 0.9% compared with 2.3% from Q4 of 2022. Non-GAAP income from operations was RMB856 million, compared with RMB1.34 billion from the same period of 2022. Non-GAAP operating margin was 4.2% compared with 8% from Q4 of 2022. The year-over-year reduction in operating margin was mainly due to a higher operating expenses ratio. In Q4, GAAP net income was RMB670 million, up 80.2% year-over-year. Non-GAAP net income was RMB1.71 billion, a year-over-year increase of 10.8%. Moving to cash flow and the balance sheet metrics. We realized a net operating cash inflow of RMB1.77 billion in Q4. New home DSO for Q4 was only 43 days, dropping below 50 days for the first time. This is a testament to our effective risk control. On top of approximately US$173 million we spent on the share repurchase this quarter, our total cash liquidity which excludes customer deposit payable, still amounted to RMB79.1 billion, remaining at a high level. While we achieved excellent results in 2023, we also placed a great emphasis on shareholder returns. We spent approximately US$718.7 million in a strong buyback program and fully canceled all purchased shares. The total number of the repurchased share accounted for around 3.7% of the company's total share before the start of buyback program. We also initiated our fourth special cash dividend of around US$200 million during the year. On the basis of such positive shareholder returns, we'd like to announce our fourth final cash dividend plan, which has been approved by the Board at US$0.117 per ordinary share or US$0.351 per ADS to holders of ordinary shares and holders of ADS of record as of April 5, 2024, respectively. The amount paid for the final dividend will be approximately US$400 million, which will be funded by our surplus cash on our balance sheet. As of year-end, our total shareholder return for 2023 significantly exceeded our net income, accounting for around 159% of our net income for the year. In addition, we are developing a long-term, proactive, stable total shareholder return plan, aiming to share the value we create with our long-term shareholders. In doing so, we aim to provide our shareholders with certainty of returns in an uncertain external environment. Market confidence has yet to recover in 2024. Despite market uncertainties, we remain undeterred and will continue to strive for excellence as our One Body, Two Wings business develop at a fast pace, gradually forming a positive cycle of scale, efficiency and quality, while required to strengthen our financial prudence, improve resources allocation and refine our operations. So in terms of the financial strategy, we will continue to enhance the financial infrastructure of business and provide comprehensive support through our financial expertise. We remain on well-being in efforts to prevent risks and establish regulations. For our new home transaction services, we will proactively control risks and strictly follow developer ranking and accounts receivable management. Regarding to our new business, including home renovation and furnishing and the rental property management, as we see the rapid function, we will replicate our solid integrated business and the financial system, management capability from our primary business to the new business. This will improve financial process automation rates and bolster data analysis and possessing the ability for those business lines. In addition to actively rewarding shareholders, we consistently prioritize the safety of our reforms in cash management. We meticulously select on the right assets and establish clear investment strategy and the risk preference. Currently, the majority of our cash investments are in deposit-based products. We believe our excellent financial management capability will serve as a safeguard for the healthy growth of the organization, helping us to navigate through cyclical fluctuations and overcome challenges, enabling more organic and efficient business development. Furthermore, our proactive shareholder returns were all long-term investors, who have accompanied us on this journey to better sharing the fruits of the company's growth. Thank you.

[Operator Instructions] Your first question comes from Timothy Zhao with Goldman Sachs.

My question is regarding the home renovation and furnishing business, as I noticed, the 2023, you had a very strong growth year in this business line. Can management further elaborate what is the driver behind? And what are the key operating metrics that you are focusing on? And in 2024, what is your key focus in the operation of this business?

Yes, we achieved big breakthrough in our home renovation and furnishing business in 2023. As for scale, our contracted sales reach RMB13.3 billion up 93% year-on-year on non-pro forma basis, with revenue growing by 74% to reach RMB10.9 billion. As for profitability, we have 11 cities reported operating profits in 2023. In the 4 cities achieving operation, operating profits of RMB10 million. On the operations side, around 43% of the total contracted sales were attributable to customer referrals from real estate agents in 2023, a remarkable increase of 9.9 percentage points from 2022. Our product portfolio are also more diverse. With our contracted sales of furniture and home furnishings reaching about RMB3.6 billion in 2023, accounting for 27% of total contracted sales, showing a 5.8 percentage point increase from 2022 on pro forma basis assets. These achievements were the result of improvements across our business operations. Our overall expansion was mainly driving -- driven by rapid expansion in core cities. In Beijing and Hangzhou contracted sales exceeded RMB2 billion, and in Shanghai, exceeded RMB1 billion. There were also 6 cities that have contracted sales of RMB500 million. Our breakthrough in scales for the home renovation and furnishing business remaining, I think it's due to 3 reasons. The first, high efficiency -- high efficient synergies between our core and emerging business. The second is more diversified product portfolio and the higher delivery capabilities. Yes, so the business outlook for 2024, we achieved breakthroughs in scale in 2023 for our business to be successful and recognized by customers. The more important thing is customer buying, and the key to this, that is quality. So in 2024, while ensuring steady scale expansion, we have chosen quality as our key word. High-quality delivery is a competitive device in the home renovation industry. For now, we can provide the customer guarantee when facing problems. Going forward, we plan to take preventive measures to reduce problem frequency, finally offering customers a truly hassle-free experience and creating a positive cycle on quality. Right now, the main problem regarding innovation, including construction delays and response slowness and so on, we will take a serious measures to address its pain points in 2024. The first is shortening construction time line by completing more simultaneously. The second is, we will establish roles in charging of the quality control with online and website services to identify and resolve problems as early as possible. While enhancing quality, we aim to achieve further breakthroughs in the scale and operational model in 2024, then we are replicating our model in more cities going forward. Yes, that's my answer to your question.

Your next question comes from John Lam with UBS.

What was the Beike’s penetration rate in the existing home market for 2023? And also, what is the overall focus for the company's existing home business for 2024 this year? We've also noticed that the company's plan to expand the store network, can you share more color on this? Can management also share some insight regarding on this year's strategy for the connected brokerage brands and store.

In 2023, we did quite well in the new home business, achieving significant improvement in scale, efficiency and profitability. In terms of the state market adjustment, we managed to retain quality service providers, that’s been a big reason why we could jump on when the market rebounded at the beginning of last year. On top of that, we actively connect with more quality brands, stores and agents in the second half of last year, while refining our operational strategy and the infrastructure for better efficiency. In 2023, our new home GTV was up 29% year-over-year, and the revenue was up 16% simultaneously. We also significantly increased our market penetration in more cities including like Beijing, Shanghai, Nanjing, Hefei, Hangzhou, Jinan, Changsha and Qingdao, so on and so forth. Specifically, we're focused on a few key areas to boost our existing home business in 2023. We expand our store and agent network. By the end of 2023, the total number of active stores on our platform reached over 42,000, just an increase of 12% year-over-year. The number of active agents on bigger platform was over 397,000, an increase of 14% year-over-year. And we also enhanced our operational efficiency through the following refined strategies, like first, in the face of lots of new and previously inactive listings, we are developing the ability to identify the public listings. We aim to create a virtual cycle of securing high-quality listings by establishing efficient matching tools and the cooperation between the buyers and the sellers agent to ensure they quickly sell and achieving the high customer satisfaction, leading us to secure more high-quality listings and boost our efficiency. And second, we adopt diverse online tools to optimize efficiency. For example, we introduced AI systems to help agents improve their responsive time to the clients and their ability to accurately recommend the listing. As a result, the store and agent productivity on Beike platform improved subsequently -- very well. In 2023, the average GTV per store increased by 29%. And the GTV per agent was up by 25%. The average income per connected store increased by 31% year-on-year and infact our property brand, Lianjia in Beijing, Shanghai. The store churn rate decreased by 34 percentage points and the agent churn rate decreased by 21%. Our focus in 2024 is on growth and ecosystem. Even with the ongoing uncertainties in the market this year, we are set on growing our business confidence, very confident. For growth, we see big opportunities to expand our network in many cities in the year of 2023. We're expected to connect over 5,000 new stores in this year, in a few cities where we have the longer operation history like Beijing, we have attracted more customers and increase our market penetration since adopting our commission rules last year. This year, we will expand our coverage. For the first time, home buyers in the city, and also seizing the most starting point of the team of the home-upgrade. In addition, we will also continue to grow through the refined operations. We will transform our agents from just making sellers to become experts who truly understood what the customer needs. We are looking to increase our presence on the customer side by exploring different channels to bring in more online traffic. For service providers, we are working hard to create a more harmonious ecosystem. We are moving from a strong focus on the profitability to providing more targeted support. This change aims to have less efficient stores start making deals and ensure higher productivity, store received a better return. We will foster the collaboration and share management with the store owners, improving the operational environment for stores and also increasing their satisfaction with our platform. And also for our self-owned business, Lianjia in terms of the store strategy, we will respond with a large store model. We'll also open some small stores in the key areas to increase our service coverage and ensure our penetration in this hotspots. In addition, for our Lianjia strategy, we have launched Old Soldier Plan to bring back the former agents, and are opening up to recruiting for the experienced agent from the industry to strengthen our Lianjia team. In 2024, we will focus on improving agent expertise through the team and talent nurturing, building a talent pool for our One Body, Three Wings business strategy.

Your next question comes from Griffin Chan with Citi.

Thanks management for the opportunity. Congratulations, first, on the solid 2023 results and improving shareholders' return. So my question is that, how do you view the overall real estate market in 2023? How did the market perform recently? With a notable outperformance of the existing housing market compared to the new home market, how does the management think of the underlying reasons? And how is the churn expected for the new and existing housing market in 2024? Will they continue to differentiate?

Regarding the market situation in 2023, there was a lot of turbulence in diverse markets. And overall, it is still in the middle of the deep adjustment. Tariffs virtually be observed. The market is shifting towards existing homes at a faster pace. Full-year existing home GTV nationwide rose by around 20-30% year-over-year. Official data showed that new homes accounted for nearly 40% of the full year real estate transaction volume. This is historical high. The new home market recovery fell short. According to official data, national new home sales declined by 6% year-over-year, while for the new home sales of the Top 100 Real Estate developers dropped by 18% year-over-year. New home sales saw some mild recovery in the first quarter of last year, but then it dropped again, and has been hovering there at a very low level ever since. Housing price continue to adjust. Fourth tier cities home prices saw a faster decline in fourth quarter last year. But overall, fourth tier cities, we see home prices was still higher than the year of 2019. New home prices are stable on hold, primarily due to the structural shift towards high-tier cities. The market supply and demand continue to evolve, leading to what we observe the polarization of the market. For demand side, demand structure keeps changing. Demand for the home upgrade becomes dominant, making up 60% of total housing demand with first-time home buying demand at 30%, and investment demand narrowing to around 10%. Consumers are more inclined to purchase these new homes. Our survey showed customer preference for its new home purchase grew from 23% in June 2022 to 35% in December 2023, while interest in new homes dropped from 31% to 18% over the same time period. Basically, existing home are meeting already first home buying demand and the people who want to upgrade their homes by selling 1 property to buy other also enter into the existing home market first. For new homes, there’s a lack of demand due to the location and project issue as well as presale model and the product design, we're starting to align with the current consumers' needs. Nevertheless, buyers are still interested in the properties located in scarce areas towards good designs. The demand for large size and the higher price, the new home are more stable. Overall, the demand is resilient, but it didn't translate into the transaction. There is still a wait and see momentum among homebuyers. In 2023, the total number of clients viewing the properties exceeded the total number of newly listed properties on bigger platform, indicating there is the number of people looking to buy homes. In cities where there's a solid foundation, such as Shenzhen and Hangzhou, we offer the situation where there was a solid home purchase demand. But consumers are hesitating to enter into the market because the market with abundant home listings or down trending prices, there is need for them to restore confidence among homebuyers. Overall, in fourth quarter, home prices were lowered while people were still willing to make a transaction, indicating the resilience of the demand. Regarding the supply side, we noticed the investors are paying attention to the number of existing home listings, concerned about the high inventory. The number of existing home listing did reach an all-time high in 2023. It is a natural result of the growth of the existing home market. It also reflects the accelerated release home-upgrade demand under policy encouragement. In first-tier cities, more than 70% of sellers were also the buyer. An increase in home listing is typically the early sign of the growth in demand. In addition, not all home listings are the real supply. Some home owners with their homes, therefore, give it a try manner. Moreover, a portion of the old housing stock remains listed through the year with very low liquidity, leading to a continued increase in the total volume of listing profitability. For new homes, there are still a mismatch between the supply and demand. New homes, with their prices, lower than the neighboring existing homes in the core area of the top cities are still favored and contribute to the mobility of the sales. But for new home supply, key areas are limited. The supply is small, concentrated in far away suburbs where demand is weaker. So in higher-tier cities, more demand is more fulfilled by existing home supply. The overall make of the demand for new homes also caused a prolonged inventory clearing period on supply side. For recent marketing update, the policies continued to support the market stabilization: Recently, multiple cities have continued to optimize our policies in terms of process restriction loosening like today's news for the Hangzhou City, and more financial support. The supply side, funding conditions could improve and the mortgage rate lowered down, also the efforts of the policy boosts sometimes are marginal in short term. The massive build-up of the easing policy since 2022 should bolster the reliability of today's in-home market. For existing home market, overall GTV of the existing home has been very stable since October 2023. During the Chinese New Year, average data transaction volume of existing home on our platform rose over by 70% year-over-year. For example, after the Spring Festival, in first-tier cities such as Shenzhen, to second-tier cities like Chengdu, Chongqing, Hefei, Dalian the average existing home sales in the 2 weeks, right after holiday, exceeded the weak average from the December to January. This aligns with historical trend, indicating that the existing home business is operating relatively stable. All listings are leading indicators. The daily average home showing under transaction volume exhibited parallel changes during the Chinese New Year, with average ratio of the showing churn transaction performed better than the same period of last year. The Beike prospect index based on the listing and the price adjustment behavior of homeowners on our platform has been bolting out at the beginning of the year with fluctuations. The frontline brokerage managers confidence index has been steadily recovering since this February. In terms of the housing prices, the month-on-month decline in the existing home price index for the key 50 cities from January to February in 2024 continue to narrow to reaching 1% in February. The number of cities experiencing a decline in home prices also reduced. For this reason, the new home market, according to CRIC, the sales of the Top 100 Developers declined 49% year-on-year in January to February, with a 50% drop in February alone. So continued weak demand for the new homes has led to a low enthusiasm among developers to promote their projects. Looking ahead into 2024, to real estate market in the second and in the third-tier cities accelerates its transaction to new homes. All existing home transaction volume will all gather momentum for structure environment. Here, we believe using home GTV will remain relatively stable. As for new homes, demand remains the key, and the market will continue to fluctuate as it bottoms out. On the supply side, on the uncertain environment, we believe developers will take active measures to adapt and focusing on enhancing product capabilities and sell-through.

Your next question comes from Thomas Chong with Jefferies.

My question is about home housing rental business, which has experienced rapid growth in 2023. Could management team please provide more color on what we have accomplished in this business during the year, last year? And how are we managing the risk about expanding our scale? What is the development plan for the year 2024?

Yes. Let me first summarize the business in 2023. Our goal is to provide homeowners with careful rental services and reliable property management services, also provide tenants with safer and more reliable living experience. And 2023 was a key year for establishing our fundamental capabilities. We prudently expanded our operations scale with our decentralized rental management services. Carefree Rent growing from 70,000 units by end of 2022 to over 200,000 units by end of 2023. We also enhanced our asset operation efficiency and rental service qualities. By end of 2023, so occupation rate of tariff free rent increased by 6 percentage points compared to the year of 2022, reaching 95.1%. The increase in the sales and the lifetime rental property management operations placed a new demand on our operating capabilities. In 2023, we make the following iterations. Number one, we made a significant upgrade to our Carefree Rent model, which greatly reduced the seasonal fluctuations and the risks associated with the failure to release. It also better resisted the rate of continued market downturn on rental prices. Number two, we implemented a refined operation by redefining core roles around the full cycle of rental management, ensure proper starting to smooth out our operation process. Number three, we comprehensively enhanced the service quality around the 7 major pain points of tenants, continually improving our standardized service capabilities. We enhanced our service team's response time and the encouraging pre-emptive problem solving. So in 2013, our -- in addition, in 2023, our apartment business also expanded in SKU and efficiency, with almost than 10,000 housing units on our management. For 2024, first, we have ambitious goals for the scale we manage. Our focus will be primarily is core cities, Beijing, Shanghai and Chengdu will be the key targets for the major growth. Second, we aim to robustly establish our business at all levels, including achieving operational breakeven in this core cities, and are continuously improving overall operational efficiency and quality, just requiring building and strengthening a range of capabilities. Improving efficiency, we are aiming for operational breakeven in the leading cities, and we also target to increase the productivity. In 2023, the average property signed-up productivity per manager had reached 100 units in this year. We aim to reduce the capability values and have more rental product managers achieve that level. In addition, we will also solidify the quality. First, we secured the safety bottom-line by identifying the potential risks in advance and establishing a mechanism for handling process. Second, we work on making our service both standardized and the cost revised. We do this by clearly defining the distinct roles and enhancing our online capability to keep our rental service variable and standardized. We also pay attention to the community demand and customer needs based on their demographics so we can offer them right-fit services. And we will also build the technology and service capability around 5 key strategies. They are unit sales, unit occupation, rental management, operations and the reputation to make sure our business can achieve the sustained growth in the long term.

Your next question comes from Eddy Wang with Morgan Stanley.

My question is regarding the new home business. So we have seen that our new home business have been significantly outperformed the industry performance. So what's the reason behind? And considering that the sales of the new home has been more difficult going forward. Do we expect the penetration rate of the brokerage channel to keep going up? And what's our strategy and outlook for the new home business in this year?

As you said, the China new home market faced a big challenge in the year of 2023. In such a tough market, Beike, we achieved around 7% growth in full year of new home GTV, significantly outperforming the industry. Our operating metrics also reached historical highs. Throughout the year, we deepened our insights into the new home business as the market evolves, and our efforts in the operation and business management also paid off. Operationally, the industry is still on a strong move, shifting to a buyers’ market. Consumers now need more professional services. In the past, with the home pricing was always going up, agents get used to just focusing on listing and to find buyers. This approach is not effective anymore because there is the lack of understanding and insight into the customer needs. To boost the sales conversion, it's the key for agent to think from the buyer side, identify who is buying the new homes and what thereafter. Meanwhile, on the device side, with the weak demand, traditional promotional methods such as the price cards are not working anymore. Developers have a stronger need for the broker services. In the 20 key cities we manage, the proportion of the project developers choose to cooperate with brokerage sales channel reached 82% at the second half of 2023. This is an increase of 11 percentage points compared to the first half of last year. Given this context, and in line with our group's strategy adjustment, last year, we have shifted our new home strategy from a defensive to a proactive manner with a focus on growth and its quality. We deepened our online consumer coverage and insights and established better online presence with initiatives like the live streaming for quality homes. Based on our consumer insights, accumulated user data and a close connection with existing home customers, in the second half of 2023, we started to build new type of partnership with developers. We introduced innovative services on marketing and sales. This helped boost our coverage of the high-quality new home projects. In 2023, our new home cooperation project coverage ratio improved significantly to 51% in Q4, up by 10 percentage points from Q1 in the same year. We remain committed to strengthening our ecosystem development. In 2023, more than 6,500 new projects have been covered by the commitment with both developers and the platform to transparent operations. Over 3,500 cooperating new home projects have embraced the private phone number protection services. On our financial management, in the first half of 2023, our focus on the risk control and the profitability as core KPIs, strictly manage receivable collection and the financial safety. In the second half of 2023, while maintaining a strict risk baseline, we specifically emphasize the commission amount model and collection management for the hybrid developers. Thanks to these efforts, our new home DSO shortened to only 43 days in Q4. Commissioning advanced model accounted for 53% of total new home revenue improved Q4 last year. The percentage of commission income from SOE developers reached at 43% level. Our new home commission rate in the fourth quarter also increased modestly. Based on our outlook regarding the new home market, we will change the following steps to improve the operations. Number one, on the supply side, we will further promote new strategic collaborations with high-quality developers to secure higher-quality new home supply for our services. On sell-through side, we aim to empower our service providers on both the productivity and the job satisfactory. We will probably raise the commission rate for downstream brokers. We will also enhance operations for our actual new home sales channel and optimize our product offer to brokers. And number three, we'll also strengthen our infrastructure, including our new home housing dictionaries, ecosystems and online new home content development, giving our richer and higher quality new home listings, deeper customer understanding and stronger sales through capabilities. We believe, our new home business will consistently outperform the market. Thank you.

We are now approaching the end of the conference call. I will now turn the call over to your speaker host today, Ms. Siting Li for closing remarks.

Thank you, operator. Thank you once again for joining us today. If you have any further questions, please feel free to contact Beike's Investor Relations team through the contact information provided on our website. This concludes today's call, and we look forward to speaking with you next quarter again. Thank you, and goodbye.