Ke holdings inc. announces second quarter 2021 unaudited financial results
Beijing--(business wire)--ke holdings inc. (“beike” or the “company”) (nyse: beke), a leading integrated online and offline platform for housing transactions and services, today announced its unaudited financial results for the second quarter ended june 30, 2021. business highlights for the second quarter of 2021 gross transaction value (gtv)1 was rmb1,220.8 billion (us$189.1 billion), an increase of 22.2% year-over-year. gtv of existing home transactions was rmb652.0 billion (us$101.0 billion), an increase of 11.7% year-over-year. gtv of new home transactions was rmb498.3 billion (us$77.2 billion), an increase of 32.3% year-over-year. gtv of emerging and other services was rmb70.6 billion (us$10.9 billion), an increase of 80.5% year-over-year. net revenues were rmb24.2 billion (us$3.7 billion), an increase of 20.0% year-over-year. net income was rmb1,116 million (us$173 million). adjusted net income2 was rmb1,638 million (us$254 million). number of stores was 52,868 as of june 30, 2021, a 25.1% increase from one year ago. number of agents was 548,600 as of june 30, 2021, a 20.3% increase from one year ago. mobile monthly active users (mau)3 averaged 52.1 million, an increase of 33.5% year-over-year. “we are pleased with our strong performance in the second quarter, backed by our commitment to contribute to a better industry and a better society,” said mr. stanley yongdong peng, chairman of the board and chief executive officer of beike. “guided by our dedication to protect our customers’ rights and interests while fulfilling their expectations for joyful living, beike delivered solid results while adhering to the national policy that 'housing is for living in, not for speculation', as evidenced by the total gtv of rmb2.29 trillion in the first half of 2021, up 72.3% year-over-year.” “during the second quarter, we continued to upgrade our agent specialization strategy and expand our professional contract service centers to 287 locations to enhance efficiency and collaborations, resulting in gtv of existing home transaction services of rmb652.0 billion, representing 11.7% growth year-over-year. gtv of new home transaction services rose by 32.3% year-over-year, reaching rmb498.3 billion, and 42.8% of the gtv growth derived from connected stores and other sales channels as we further enriched our new home related online content and made steady progress with our ‘new home business conduct improvement plan’. at the same time, we sustained our rapid growth momentum in emerging services during the second quarter. we announced our proposed acquisition of shengdu to accelerate our home renovation business development, and launched home saas system 1.0 to further enhance the end-to-end standardization and digitalization of our home renovation services.” “looking ahead, we plan to leverage our quality, talent and technological resources to stimulate inspirations and explore growth and development opportunities, which has been key to our success during each of the past market corrections. in the future, housing is expected to be an increasingly important field of people’s livelihood, as we believe there will always be the consumers’ long-term demand for better living. given the relative inefficiencies that persist in the housing industry, with low user satisfaction, and problems such as lack of standardization, digitalization, and internet penetration, we still see tremendous opportunities for value creation and increasing need for our innovative solutions. we will always look inward for source of strength and outward for value creation opportunities, with both perseverance and optimism for a bright future. with this in mind, we will continue to grow our business operations with a focus on long-term ‘better living’ by promoting our one-stop quality home services for the 300 million households in china,” concluded mr. peng. mr. tao xu, executive director and chief financial officer of beike, further commented, “driven by the strong growth in gtv of both existing home and new home transaction services, we achieved a 20.0% year-over-year increase in net revenues to rmb24.2 billion in the second quarter, beating both the high end of our guidance and the street consensus. during the second quarter, a slew of city-specific policies and severe market-cooling measures were rolled out in china. those measures help promote a stable and healthy development of real estate market in the long run, but may bring about short-term market uncertainties. despite this challenge, we firmly uphold those policies and measures, and support government to crack down on housing speculation in certain overheated cities to stabilize the market. we believe that the longing for joyful living and better housing creates firm demand from the consumers. looking into the second half of this year, we will continue to invest in the company’s infrastructure and emerging services. and we strongly believe in what lao zuo mentioned in our prospectus - marching through noises and market volatility, we believe it is our fundamental value, rather than external circumstances, that is the key to the continuing success of beike. compared to our near-term financial performance, we devote more efforts in developing and investing in our long-term capabilities, even though it might take time to achieve financial returns on these investments. in fact, the longer it takes and the more difficult it is, the more excited we become.” second quarter 2021 financial results net revenues net revenues increased by 20.0% to rmb24.2 billion (us$3.7 billion) in the second quarter of 2021 from rmb20.1 billion in the same period of 2020. the increase was driven by the total gtv growth of 22.2% to rmb1,220.8 billion (us$189.1 billion) in the second quarter of 2021 from rmb999.2 billion in the same period of 2020. for the first half of 2021, net revenues increased by 64.6% to rmb44.9 billion (us$7.0 billion) from rmb27.3 billion in the first half of 2020. the increase was driven by the total gtv growth of 72.3% to rmb2,290.4 billion (us$354.7 billion) in the first half of 2021 from rmb1,329.1 billion in the first half of 2020. net revenues from existing home transaction services increased by 4.9% to rmb9.6 billion (us$1.5 billion) in the second quarter of 2021 from rmb9.2 billion in the same period of 2020, primarily attributable to a 11.7% increase in gtv of existing home transactions to rmb652.0 billion (us$101.0 billion) in the second quarter of 2021 from rmb583.5 billion in the same period of 2020. for the first half of 2021, net revenues from existing home transaction services increased by 57.9% to rmb19.8 billion (us$3.1 billion) from rmb12.6 billion in the first half of 2020, driven by a 70.1% increase in gtv of existing home transactions to rmb1,325.4 billion (us$205.3 billion) in the first half of 2021 from rmb779.2 billion in the first half of 2020. among that, (i) the revenues derived from platform service, franchise service and other value-added services, which are mostly charged to connected stores and agents on the company’s platform, increased by 29.1% to rmb1.1 billion (us$0.2 billion) in the second quarter of 2021 from rmb0.9 billion in the same period of 2020, primarily due to the increased gtv of existing home transactions served by connected agents on the company’s platform by 25.6% to rmb342.5 billion (us$53.0 billion) in the second quarter of 2021 from rmb272.7 billion in the same period of 2020, and a moderate increase in existing home transaction commission rate charged by connected stores; (ii) commission revenue increased by 2.4% to rmb8.5 billion (us$1.3 billion) in the second quarter of 2021 from rmb8.3 billion in the same period of 2020, driven by a moderate increase in existing home transaction services commission rate charged by lianjia stores, while gtv of existing home transactions served by lianjia stores was rmb309.5 billion (us$47.9 billion) in the second quarter of 2021, compared to rmb310.9 billion in the same period of 2020 as a meaningful portion of transactions were concentrated in the second quarter of 2020 under the impact of covid-19 outbreak. net revenues from new home transaction services increased by 31.9% to rmb13.9 billion (us$2.2 billion) in the second quarter of 2021 from rmb10.5 billion in the same period of 2020, primarily attributable to an increase of 32.3% in gtv of new home transactions to rmb498.3 billion (us$77.2 billion) in the second quarter of 2021 from rmb376.6 billion in the same period of 2020. the gtv of new home transaction services completed on beike platform through connected agents and other sales channels increased by 42.8% to rmb414.5 billion (us$64.2 billion) from rmb290.3 billion in the same period of 2020, while the gtv of new home transactions served by lianjia brand was rmb83.8 billion (us$13.0 billion) in the second quarter of 2021, compared to rmb86.3 billion in the same period of 2020. for the first half of 2021, net revenues from new home transaction services increased by 70.4% to rmb23.8 billion (us$3.7 billion) from rmb14.0 billion in the first half of 2020, driven by the increased gtv of new home transactions by 70.7% to rmb841.7 billion (us$130.4 billion) in the first half of 2021 from rmb493.1 billion in the first half of 2020. net revenues from emerging and other services increased by 50.6% to rmb0.7 billion (us$0.1 billion) in the second quarter of 2021 from rmb0.4 billion in the same period of 2020. the increase was primarily attributable to the increase of penetration level in the company’s financial services around the housing transaction services, and an increased number of home renovation units completed through the company’s platform. for the first half of 2021, net revenues from emerging and other services increased by 68.9% to rmb1.2 billion (us$0.2 billion) from rmb0.7 billion in the same period of 2020. cost of revenues total cost of revenues increased by 38.6% to rmb18.8 billion (us$2.9 billion) in the second quarter of 2021 from rmb13.6 billion in the same period of 2020. commission - split. the company’s cost of revenues for commissions to connected agents and other sales channels increased by 51.4% to rmb9.4 billion (us$1.5 billion) in the second quarter of 2021 from rmb6.2 billion in the same period of 2020. the increase was primarily due to the incremental increase in the number of new home transactions completed through connected agents and other sales channels. commission and compensation - internal. the company’s cost of revenues for internal commission and compensation increased by 19.9% to rmb7.6 billion (us$1.2 billion) in the second quarter of 2021 from rmb6.4 billion in the same period of 2020. the increase was primarily due to the increase in the number of new home transactions completed through dedicated agents with the expertise on new home transaction services, and the increase of fixed personnel costs in line with the increase in the number of lianjia agents. cost related to stores. the company’s cost related to stores increased by 31.2% to rmb0.9 billion (us$0.1 billion) in the second quarter of 2021 compared to rmb0.7 billion in the same period of 2020, mainly due to an increase in the number of stores for lianjia brand, and the incremental rise in rental fees of contract service centers opened in 2021. other costs. the company’s other costs increased by 193.6% to rmb0.8 billion (us$0.1 billion) in the second quarter of 2021 compared to rmb0.3 billion in the same period of 2020, mainly due to an increase in share-based compensation expenses, and an increase in training costs along with the increase of offline training activities compared to the same period of 2020 under the impact of covid-19 outbreak. gross profit gross profit was rmb5.3 billion (us$0.8 billion) in the second quarter of 2021, compared to rmb6.6 billion in the same period of 2020. gross margin was 22.1% in the second quarter of 2021, compared to 32.5% in the same period of 2020. the decrease in gross margin was mainly because: 1) market in the second quarter of 2021 had more ordinary performance compared to the same period of 2020, as a significant portion of transactions, especially existing home transactions, shifted from the first quarter to the second quarter of 2020 due to the covid-19 pandemic, resulting in a high base of gross margin; 2) in the second quarter of 2021, existing home sales market was affected by a series of market-cooling measures that led to a relatively lower contribution from existing home transactions revenues to total net revenues, resulting in a lower total contribution margin compared to the same period of 2020; and 3) the proportion of new home transactions completed by connected agents and other sales channels increased in the second quarter of 2021 compared to the same period of 2020, resulting in a lower new home contribution margin in the second quarter of 2021. for the first half of 2021, gross profit increased by 43.9% to rmb10.1 billion (us$1.6 billion) from rmb7.1 billion in the first half of 2020. income (loss) from operations total operating expenses were rmb4.2 billion (us$0.7 billion) in the second quarter of 2021, compared to rmb3.3 billion in the same period of 2020. general and administrative expenses were rmb2,202 million (us$341 million) in the second quarter of 2021, compared to rmb1,951 million in the same period of 2020, mainly due to an increase in share-based compensation expenses. sales and marketing expenses were rmb1,241 million (us$192 million) in the second quarter of 2021, compared to rmb788 million in the same period of 2020, mainly due to the increase of the online and offline advertisement and branding campaigns as well as the increase of headcount in business development personnel. research and development expenses were rmb775 million (us$120 million) in the second quarter of 2021, compared to rmb524 million in the same period of 2020, mainly due to the increase of headcount in experienced research and development personnel and increased share-based compensation expenses. income from operations was rmb1,116 million (us$173 million) in the second quarter of 2021, compared to rmb3,287 million in the same period of 2020. operating margin was 4.6% in the second quarter of 2021, compared to 16.3% in the same period of 2020, primarily due to a relatively higher gross profit margin in the second quarter of 2020, and less operating expenses incurred in the second quarter of 2020 due to travel and offline events restrictions. for the first half of 2021, income from operations increased by 28.6% to rmb2,129 million (us$330 million) from rmb1,656 million in the first half of 2020. adjusted income from operations4 was rmb1,669 million (us$258 million) in the second quarter of 2021, compared to rmb3,443 million in the same period of 2020. adjusted operating margin5 was 6.9% in the second quarter of 2021, compared to 17.1% in the same period of 2020. adjusted ebitda6 was rmb2,555 million (us$396 million) in the second quarter of 2021, compared to rmb3,792 million in the same period of 2020. for the first half of 2021, adjusted income from operations increased by 64.6% to rmb3,233 million (us$501 million) from rmb1,965 million in the first half of 2020. net income (loss) net income was rmb1,116 million (us$173 million) in the second quarter of 2021, compared to rmb2,839 million in the same period of 2020. for the first half of 2021, net income increased by 35.3% to rmb2,174 million (us$337 million) from rmb1,607 million in the same period of 2020. adjusted net income was rmb1,638 million (us$254 million) in the second quarter of 2021, compared to rmb2,951 million in the same period of 2020. for the first half of 2021, adjusted net income increased by 68.8% to rmb3,140 million (us$486 million) from rmb1,861 million in the same period of 2020. net income (loss) attributable to ke holdings inc.’s ordinary shareholders net income attributable to ke holdings inc.’s ordinary shareholders increased by 5.6% to rmb1,112 million (us$172 million) in the second quarter of 2021 from rmb1,053 million in the same period of 2020. for the first half of 2021, net income attributable to ke holdings inc.’s ordinary shareholders increased by 2,106.0% to rmb2,170 million (us$336 million) from rmb98 million in the first half of 2020. adjusted net income attributable to ke holdings inc.7 was rmb1,635 million (us$253 million) in the second quarter of 2021, compared to rmb2,948 million in the same period of 2020. for the first half of 2021, adjusted net income attributable to ke holdings inc. increased by 68.7% to rmb3,136 million (us$486 million) from rmb1,860 million in the first half of 2020. net income (loss) per ads diluted net income per ads attributable to ke holdings inc.’s ordinary shareholders8 was rmb0.93 (us$0.14) in the second quarter of 2021, compared to rmb2.12 in the same period of 2020. adjusted diluted net income per ads attributable to ke holdings inc.’s ordinary shareholders9 was rmb1.37 (us$0.21) in the second quarter of 2021, compared to rmb2.23 in the same period of 2020. cash, cash equivalents, restricted cash and short-term investments as of june 30, 2021, the combined balance of the company’s cash, cash equivalents, restricted cash and short-term investments amounted to rmb59.2 billion (us$9.2 billion). business outlook for the third quarter of 2021, the company expects total net revenues to be between rmb14.5 billion (us$2.2 billion) and rmb15.5 billion (us$2.4 billion), representing a decrease of approximately 24.6% to 29.4% from the same quarter of 2020. this forecast considers the potential impact of the recent real estate related policies and measures, and the company’s current and preliminary view on the business situation and market condition, which is subject to change. conference call information the company will hold a conference call on 9:00 pm u.s. eastern time on wednesday, august 11, 2021 (9:00 am beijing/hong kong time on thursday, august 12, 2021) to discuss the financial results. details for the conference call are as follows: event title: beike’s second quarter 2021 earnings conference call conference id: 1752298 all participants must use the link provided below to complete the online registration process in advance of the conference call. upon registering, each participant will receive a set of participant dial-in numbers, the direct event pass code, and a unique registrant id by email. pre-register link: http://apac.directeventreg.com/registration/event/1752298 a live and archived webcast of the conference call will also be available at the company’s investor relations website at http://investors.ke.com/. the replay will be accessible through august 19, 2021, by dialing the following numbers: united states toll free: +1-855-452-5696 mainland, china: 400-602-2065 hong kong, china: +852-3051-2780 international: +61-2-8199-0299 conference id: 1752298 exchange rate this announcement contains translations of certain rmb amounts into u.s. dollars ("us$") at specified rates solely for the convenience of the reader. unless otherwise stated, all translations from rmb to us$ were made at the rate of rmb6.4566 to us$1.00, the noon buying rate in effect on june 30, 2021, in the h.10 statistical release of the federal reserve board. the company makes no representation that the rmb or us$ amounts referred could be converted into us$ or rmb, as the case may be, at any particular rate or at all. for analytical presentation, all percentages are calculated using the numbers presented in the financial statements contained in this earnings release. non-gaap financial measures the company uses adjusted income (loss) from operations, adjusted net income (loss), adjusted net income (loss) attributable to ke holdings inc., adjusted operating margin, adjusted ebitda and adjusted net income (loss) per ads attributable to ke holdings inc.’s ordinary shareholders, each a non-gaap financial measure, in evaluating its operating results and for financial and operational decision-making purposes. beike believes that these non-gaap financial measures help identify underlying trends in the company's business that could otherwise be distorted by the effect of certain expenses that the company includes in its net income (loss). beike also believes that these non-gaap financial measures provide useful information about its results of operations, enhance the overall understanding of its past performance and future prospects and allow for greater visibility with respect to key metrics used by its management in its financial and operational decision-making. a limitation of using these non-gaap financial measures is that these non-gaap financial measures exclude share-based compensation expenses that have been, and will continue to be for the foreseeable future, a significant recurring expense in the company’s business. the presentation of these non-gaap financial measures should not be considered in isolation or construed as an alternative to gross profit, net income (loss) or any other measure of performance or as an indicator of its operating performance. investors are encouraged to review these non-gaap financial measures and the reconciliation to the most directly comparable gaap measures. the non-gaap financial measures presented here may not be comparable to similarly titled measures presented by other companies. other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to the company’s data. beike encourages investors and others to review its financial information in its entirety and not rely on a single financial measure. adjusted income (loss) from operations is defined as income (loss) from operations, excluding (i) share-based compensation expenses, and (ii) amortization of intangible assets resulting from acquisitions and business cooperation agreement. adjusted operating margin is defined as adjusted income (loss) from operations as a percentage of net revenues. adjusted net income (loss) is defined as net income (loss), excluding (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from acquisitions and business cooperation agreement, (iii) changes in fair value from long term investments, loan receivables measured at fair value and contingent consideration, and (iv) tax effects of the above non-gaap adjustments. adjusted net income (loss) attributable to ke holdings inc. is defined as net income (loss) attributable to ke holdings inc., excluding (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from acquisitions and business cooperation agreement, (iii) changes in fair value from long term investments, loan receivables measured at fair value and contingent consideration, (iv) tax effects of the above non-gaap adjustments, and (v) effects of non-gaap adjustments on net income (loss) attributable to non-controlling interests shareholders. adjusted ebitda is defined as net income (loss), excluding (i) interest income, net, (ii) income tax expense (benefit), (iii) depreciation of property and equipment, (iv) amortization of intangible assets, (v) share-based compensation expenses, and (vi) changes in fair value from long term investments, loan receivables measured at fair value and contingent consideration. adjusted net income (loss) per ads attributable to ke holdings inc.’s ordinary shareholders is defined as adjusted net income (loss) attributable to ke holdings inc.’s ordinary shareholders divided by weighted average number of ads outstanding during the periods used in calculating adjusted net income (loss) per ads, basic and diluted. please see the “unaudited reconciliation of gaap and non-gaap results” included in this press release for a full reconciliation of each non-gaap measure to its respective comparable gaap measure. about ke holdings inc. ke holdings inc. is a leading integrated online and offline platform for housing transactions and services. the company is a pioneer in building the industry infrastructure and standards in china to reinvent how service providers and housing customers efficiently navigate and consummate housing transactions, ranging from existing and new home sales, home rentals, to home renovation, real estate financial solutions, and other services. the company owns and operates lianjia, china’s leading real estate brokerage brand and an integral part of its beike platform. with 20 years of operating experience through lianjia since its inception in 2001, the company believes the success and proven track record of lianjia pave the way for it to build the industry infrastructure and standards and drive the rapid and sustainable growth of beike. safe harbor statement this press release contains statements that may constitute “forward-looking” statements pursuant to the “safe harbor” provisions of the u.s. private securities litigation reform act of 1995. these forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “aims,” “future,” “intends,” “plans,” “believes,” “estimates,” “likely to,” and similar statements. among other things, the business outlook and quotations from management in this press release, as well as beike’s strategic and operational plans, contain forward-looking statements. beike may also make written or oral forward-looking statements in its periodic reports to the u.s. securities and exchange commission (the “sec”), in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. statements that are not historical facts, including statements about ke holdings inc.’s beliefs, plans, and expectations, are forward-looking statements. forward-looking statements involve inherent risks and uncertainties. a number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: beike’s goals and strategies; beike’s future business development, financial condition and results of operations; expected changes in the company’s revenues, costs or expenditures; beike’s ability to empower services and facilitate transactions on beike’s platform; competition in our industry; relevant government policies and regulations relating to our industry; beike’s ability to protect the company’s systems and infrastructures from cyber-attacks; beike’s dependence on the integrity of brokerage brands, stores and agents on the company’s platform; general economic and business conditions in china and globally; and assumptions underlying or related to any of the foregoing. further information regarding these and other risks is included in ke holdings inc.’s filings with the sec. all information provided in this press release is as of the date of this press release, and ke holdings inc. does not undertake any obligation to update any forward-looking statement, except as required under applicable law. ke holdings inc. unaudited interim condensed consolidated balance sheets (all amounts in thousands, except for share, per share data) as of december 31, as of june 30, 2020 2021 rmb rmb us$ assets current assets cash and cash equivalents 40,969,979 30,544,499 4,730,740 restricted cash 8,567,496 10,821,984 1,676,112 short-term investments 15,688,321 17,881,501 2,769,492 short-term financing receivables, net of allowance for credit losses of rmb113,905 and rmb237,284 as of december 31,2020 and june 30,2021, respectively 3,931,641 4,357,891 674,951 accounts receivable, net of allowance for credit losses of rmb1,122,218 and rmb1,268,794 as of december 31,2020 and june 30,2021, respectively 13,183,559 13,832,098 2,142,319 amounts due from and prepayments to related parties 484,349 532,524 82,477 loan receivables from related parties 36,378 34,775 5,386 prepayments, receivables and other assets 4,677,378 4,321,616 669,333 total current assets 87,539,101 82,326,888 12,750,810 non-current assets property and equipment, net 1,472,460 1,909,573 295,755 right-of-use assets 6,821,100 7,760,126 1,201,890 long-term financing receivables, net of allowance for credit losses of rmb13,414 and rmb 7,058 as of december 31,2020 and june 30,2021, respectively 218,018 134,234 20,790 long-term investments, net 3,140,315 10,534,929 1,631,653 intangible assets, net 1,642,651 1,397,151 216,391 goodwill 2,467,497 2,504,843 387,951 other non-current assets 994,394 988,188 153,051 total non-current assets 16,756,435 25,229,044 3,907,481 total assets 104,295,536 107,555,932 16,658,291 ke holdings inc. unaudited interim condensed consolidated balance sheets (continued) (all amounts in thousands, except for share, per share data) as of december 31, as of june 30, 2020 2021 rmb rmb us$ liabilities current liabilities accounts payable 6,594,846 6,052,121 937,354 amounts due to related parties 254,255 415,141 64,297 employee compensation and welfare payable 11,231,800 9,878,847 1,530,039 customer deposits payable 6,743,256 9,363,182 1,450,172 income taxes payable 986,465 436,538 67,611 lease liabilities current portion 2,625,979 2,900,471 449,226 short-term funding debt 1,512,510 577,700 89,474 contract liabilities 734,157 840,912 130,241 accrued expenses and other current liabilities 2,950,078 3,058,061 473,634 total current liabilities 33,633,346 33,522,973 5,192,048 non-current liabilities deferred tax liabilities 17,289 17,289 2,678 lease liabilities non-current portion 3,833,914 4,553,756 705,287 long-term funding debt 15,000 7,500 1,162 other non-current liabilities 3,471 2,682 414 total non-current liabilities 3,869,674 4,581,227 709,541 total liabilities 37,503,020 38,104,200 5,901,589 ke holdings inc. unaudited interim condensed consolidated balance sheets (continued) (all amounts in thousands, except for share, per share data) as of december 31, as of june 30, 2020 2021 rmb rmb us$ shareholders’ equity ke holdings inc. shareholders’ equity ordinary shares (us$0.00002 par value; 25,000,000,000 ordinary shares authorized, comprising of 23,614,698,720 class a ordinary shares, 885,301,280 class b ordinary shares and 500,000,000 shares each of such classes to be designated, 2,666,966,855 and 2,687,391,656 class a ordinary shares issued and outstanding as of december 31, 2020 and june 30, 2021; 885,301,280 class b ordinary shares issued and outstanding as of december 31, 2020 and june 30, 2021) 482 488 76 additional paid-in capital 77,433,882 78,302,735 12,127,549 statutory reserves 392,834 394,173 61,050 accumulated other comprehensive loss (1,834,087) (2,234,458) (346,073) accumulated deficit (9,227,664) (7,065,309) (1,094,279) total ke holdings inc. shareholders' equity 66,765,447 69,397,629 10,748,323 non-controlling interests 27,069 54,103 8,379 total shareholders' equity 66,792,516 69,451,732 10,756,702 total liabilities and shareholders’ equity 104,295,536 107,555,932 16,658,291 ke holdings inc. unaudited condensed consolidated statements of operations (all amounts in thousands, except for share, per share data, ads and per ads data) three months ended six months ended june 30, 2020 june 30, 2021 june 30, 2021 june 30, 2020 june 30, 2021 june 30, 2021 rmb rmb us$ rmb rmb us$ net revenues existing home transaction services 9,179,869 9,628,335 1,491,239 12,555,201 19,824,630 3,070,444 new home transaction services 10,523,977 13,885,811 2,150,638 13,976,712 23,814,158 3,688,343 emerging and other services 437,813 659,383 102,125 729,505 1,231,790 190,780 total net revenues 20,141,659 24,173,529 3,744,002 27,261,418 44,870,578 6,949,567 cost of revenues commission-split (6,237,815) (9,446,401) (1,463,061) (8,378,251) (16,338,521) (2,530,515) commission and compensation-internal (6,355,403) (7,618,392) (1,179,939) (9,910,020) (14,955,363) (2,316,291) cost related to stores (709,958) (931,324) (144,244) (1,427,620) (1,777,638) (275,321) others (287,608) (844,447) (130,788) (493,120) (1,649,534) (255,480) total cost of revenues(1) (13,590,784) (18,840,564) (2,918,032) (20,209,011) (34,721,056) (5,377,607) gross profit 6,550,875 5,332,965 825,970 7,052,407 10,149,522 1,571,960 operating expenses sales and marketing expenses(1) (788,335) (1,240,608) (192,146) (1,365,430) (2,297,778) (355,880) general and administrative expenses(1) (1,951,496) (2,201,634) (340,990) (3,056,525) (4,309,749) (667,495) research and development expenses(1) (523,670) (774,958) (120,025) (974,431) (1,412,964) (218,840) total operating expenses (3,263,501) (4,217,200) (653,161) (5,396,386) (8,020,491) (1,242,215) income from operations 3,287,374 1,115,765 172,809 1,656,021 2,129,031 329,745 interest income, net 58,486 68,906 10,672 136,695 150,764 23,350 share of results of equity investees 764 14,387 2,228 (2,326) 34,107 5,283 fair value changes in investments, net 83,886 371,937 57,606 (20,309) 346,163 53,614 foreign currency exchange gain/(loss) 1,921 (3,870) (599) 7,412 7,588 1,175 other income, net 188,097 317,315 49,146 462,787 699,229 108,297 income before income tax expense 3,620,528 1,884,440 291,862 2,240,280 3,366,882 521,464 income tax expense (781,715) (768,838) (119,078) (632,854) (1,192,509) (184,696) net income 2,838,813 1,115,602 172,784 1,607,426 2,174,373 336,768 net (income)/loss attributable to non-controlling interests shareholders (2,245) (3,715) (575) 492 (3,900) (604) net income attributable to ke holdings inc. 2,836,568 1,111,887 172,209 1,607,918 2,170,473 336,164 accretion on convertible redeemable preferred shares to redemption value (715,782) - - (1,409,085) - - income allocated to participating preferred shareholders (1,067,884) - - (100,443) - - net income attributable to ke holdings inc.’s ordinary shareholders 1,052,902 1,111,887 172,209 98,390 2,170,473 336,164 net income 2,838,813 1,115,602 172,784 1,607,426 2,174,373 336,768 currency translation adjustments (20,629) (607,235) (94,049) 150,383 (397,662) (61,590) unrealized gains (losses) on available-for-sale investments, net of reclassification - (2,709) (420) - (2,709) (420) total comprehensive income 2,818,184 505,658 78,315 1,757,809 1,774,002 274,758 comprehensive (income)/loss attributable to non-controlling interests shareholders (2,245) (3,715) (575) 492 (3,900) (604) comprehensive income attributable to ke holding inc. 2,815,939 501,943 77,740 1,758,301 1,770,102 274,154 accretion on convertible redeemable preferred shares to redemption value (715,782) - - (1,409,085) - - income allocated to participating preferred shareholders (1,067,884) - - (100,443) - - comprehensive income attributable to ke holding inc.’s ordinary shareholders 1,032,273 501,943 77,740 248,773 1,770,102 274,154 ke holdings inc. unaudited condensed consolidated statements of operations (continued) (all amounts in thousands, except for share, per share data, ads and per ads data) june 30, june 30, june 30, june 30, june 30, june 30, 2020 2021 2021 2020 2021 2021 rmb rmb us$ rmb rmb us$ 1,489,569,980 3,522,427,632 3,522,427,632 1,479,868,335 3,521,948,998 3,521,948,998 1,492,757,856 3,586,824,279 3,586,824,279 1,492,619,841 3,590,416,704 3,590,416,704 496,523,327 1,174,142,544 1,174,142,544 493,289,445 1,173,982,999 1,173,982,999 497,585,952 1,195,608,093 1,195,608,093 497,539,947 1,196,805,568 1,196,805,568 0.71 0.32 0.05 0.07 0.62 0.1 0.71 0.31 0.05 0.07 0.60 0.09 2.12 0.95 0.15 0.2 1.85 0.29 2.12 0.93 0.14 0.2 1.81 0.28 - 124,880 19,342 - 234,272 36,284 - 35,793 5,544 - 70,130 10,862 - 153,914 23,838 - 338,977 52,501 - 121,650 18,841 - 225,473 34,921 ke holdings inc. unaudited reconciliation of gaap and non-gaap results (all amounts in thousands, except for share, per share data, ads and per ads data) three months ended six months ended june 30, 2020 june 30, 2021 june 30, 2021 june 30, 2020 june 30, 2021 june 30, 2021 rmb rmb us$ rmb rmb us$ income from operations 3,287,374 1,115,765 172,809 1,656,021 2,129,031 329,745 share-based compensation expenses - 436,237 67,565 - 868,852 134,568 amortization of intangible assets resulting from acquisitions and business cooperation agreement 155,554 116,885 18,103 308,601 235,119 36,415 adjusted income from operations 3,442,928 1,668,887 258,477 1,964,622 3,233,002 500,728 net income 2,838,813 1,115,602 172,784 1,607,426 2,174,373 336,768 share-based compensation expenses - 436,237 67,565 - 868,852 134,568 amortization of intangible assets resulting from acquisitions and business cooperation agreement 155,554 116,885 18,103 308,601 235,119 36,415 changes in fair value from long term investments, loan receivables measured at fair value and contingent consideration (41,808) (30,496) (4,723) (54,531) (138,660) (21,476) tax effects on non-gaap adjustments (1,510) 237 37 (815) 613 95 adjusted net income 2,951,049 1,638,465 253,766 1,860,681 3,140,297 486,370 net income 2,838,813 1,115,602 172,784 1,607,426 2,174,373 336,768 income tax expense 781,715 768,838 119,078 632,854 1,192,509 184,696 share-based compensation expenses - 436,237 67,565 - 868,852 134,568 amortization of intangible assets 162,587 123,693 19,158 320,068 247,739 38,370 depreciation of property and equipment 109,597 210,122 32,544 223,961 375,621 58,176 interest income, net (58,486) (68,906) (10,672) (136,695) (150,764) (23,350) changes in fair value from long term investments, loan receivables measured at fair value and contingent consideration (41,808) (30,496) (4,723) (54,531) (138,660) (21,476) adjusted ebitda 3,792,418 2,555,090 395,734 2,593,083 4,569,670 707,752 net income attributable to ke holdings inc. 2,836,568 1,111,887 172,209 1,607,918 2,170,473 336,164 share-based compensation expenses - 436,237 67,565 - 868,852 134,568 amortization of intangible assets resulting from acquisitions and business cooperation agreement 155,554 116,885 18,103 308,601 235,119 36,415 changes in fair value from long term investments, loan receivables measured at fair value and contingent consideration (41,808) (30,496) (4,723) (54,531) (138,660) (21,476) tax effects on non-gaap adjustments (1,510) 237 37 (815) 613 95 effects of non-gaap adjustments on net income attributable to non-controlling interests shareholders (619) (7) (1) (1,503) (14) (2) adjusted net income attributable to ke holdings inc. 2,948,185 1,634,743 253,190 1,859,670 3,136,383 485,764 accretion on convertible redeemable preferred shares to redemption value (715,782) - - (1,409,085) - - adjusted net income allocated to participating preferred shares (1,124,087) - - (227,621) - - adjusted net income attributable to ke holdings inc.’s ordinary shareholders 1,108,316 1,634,743 253,190 222,964 3,136,383 485,764 ke holdings inc. unaudited reconciliation of gaap and non-gaap results (continued) (all amounts in thousands, except for share, per share data, ads and per ads data) three months ended six months ended june 30, 2020 june 30, 2021 june 30, 2021 june 30, 2020 june 30, 2021 june 30, 2021 rmb rmb us$ rmb rmb us$ weighted average number of ads used in computing net income per ads, basic and diluted —basic 496,523,327 1,174,142,544 1,174,142,544 493,289,445 1,173,982,999 1,173,982,999 —diluted 497,585,952 1,195,608,093 1,195,608,093 497,539,947 1,196,805,568 1,196,805,568 weighted average number of ads used in calculating adjusted net income per ads, basic and diluted —basic 496,523,327 1,174,142,544 1,174,142,544 493,289,445 1,173,982,999 1,173,982,999 —diluted 497,585,952 1,195,608,093 1,195,608,093 497,539,947 1,196,805,568 1,196,805,568 net income per ads attributable to ke holdings inc.'s ordinary shareholders —basic 2.12 0.95 0.15 0.20 1.85 0.29 —diluted 2.12 0.93 0.14 0.20 1.81 0.28 non-gaap adjustments to net income per ads attributable to ke holdings inc.'s ordinary shareholders —basic 0.11 0.44 0.07 0.25 0.82 0.12 —diluted 0.11 0.44 0.07 0.25 0.81 0.13 adjusted net income per ads attributable to ke holdings inc.’s ordinary shareholders —basic 2.23 1.39 0.22 0.45 2.67 0.41 —diluted 2.23 1.37 0.21 0.45 2.62 0.41 ke holdings inc. unaudited interim condensed consolidated statements of cash flows (all amounts in thousands) three months ended six months ended june 30, 2020 june 30, 2021 june 30, 2021 june 30, 2020 june 30, 2021 june 30, 2021 rmb rmb us$ rmb rmb us$ net cash provided by operating activities 9,133,566 1,001,317 155,086 5,044,465 3,474,372 538,110 net cash provided by/(used in) investing activities 2,751,829 1,117,225 173,036 (2,424,534) (10,396,836) (1,610,265) net cash provided by/(used in) financing activities 329,069 (12,199) (1,890) (569,320) (943,174) (146,079) effect of exchange rate change on cash, cash equivalents and restricted cash (14,448) (503,955) (78,054) 116,944 (305,354) (47,292) net increase/(decrease) in cash and cash equivalents and restricted cash 12,200,016 1,602,388 248,178 2,167,555 (8,170,992) (1,265,526) cash, cash equivalents and restricted cash at the beginning of the period 21,898,115 39,764,095 6,158,674 31,930,576 49,537,475 7,672,378 cash, cash equivalents and restricted cash at the end of the period 34,098,131 41,366,483 6,406,852 34,098,131 41,366,483 6,406,852 ke holdings inc. unaudited segment contribution measure (all amounts in thousands) three months ended six months ended june 30, 2020 june 30, 2021 june 30, 2021 june 30, 2020 june 30, 2021 june 30, 2021 rmb rmb us$ rmb rmb us$ existing home transaction services net revenues 9,179,869 9,628,335 1,491,239 12,555,201 19,824,630 3,070,444 less: commission and compensation (4,881,915) (5,646,746) (874,570) (7,708,636) (11,763,191) (1,821,886) contribution 4,297,954 3,981,589 616,669 4,846,565 8,061,439 1,248,558 new home transaction services net revenues 10,523,977 13,885,811 2,150,638 13,976,712 23,814,158 3,688,343 less: commission and compensation (7,649,993) (11,300,400) (1,750,209) (10,473,121) (19,306,429) (2,990,185) contribution 2,873,984 2,585,411 400,429 3,503,591 4,507,729 698,158 emerging and other services net revenues 437,813 659,383 102,125 729,505 1,231,790 190,780 less: commission and compensation (61,310) (117,647) (18,221) (106,514) (224,264) (34,735) contribution 376,503 541,736 83,904 622,991 1,007,526 156,045 1 gtv for a given period is calculated as the total value of all transactions which the company facilitated on the company’s platform and evidenced by signed contracts as of the end of the period, including the value of the existing home transactions, new home transactions and emerging and other services, and including transactions that are contracted but pending closing at the end of period. 2 adjusted net income (loss) is a non-gaap financial measure, which is defined as net income (loss), excluding (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from acquisitions and business cooperation agreement, (iii) changes in fair value from long term investments, loan receivables measured at fair value and contingent consideration, and (iv) tax effects of the above non-gaap adjustments. please refer to the section titled “unaudited reconciliation of gaap and non-gaap results” for details. 3 mobile monthly active users" or "mobile mau" are to the sum of (i) the number of accounts that have accessed our platform through our beike or lianjia mobile app (with duplication eliminated) at least once during a month, and (ii) the number of weixin users that have accessed our platform through our weixin mini programs at least once during a month. average mobile mau for any period is calculated by dividing (i) the sum of the company’s mobile maus for each month of such period, by (ii) the number of months in such period. 4 adjusted income (loss) from operations is a non-gaap financial measure, which is defined as income (loss) from operations, excluding (i) share-based compensation expenses and (ii) amortization of intangible assets resulting from acquisitions and business cooperation agreement. please refer to the section titled “unaudited reconciliation of gaap and non-gaap results” for details. 5 adjusted operating margin is adjusted income (loss) from operations as a percentage of net revenues. 6 adjusted ebitda is a non-gaap financial measure, which is defined as net income (loss), excluding (i) interest income, net, (ii) income tax expense (benefit), (iii) depreciation of property and equipment, (iv) amortization of intangible assets, (v) share-based compensation expenses, and (vi) changes in fair value from long term investments, loan receivables measured at fair value and contingent consideration. please refer to the section titled “unaudited reconciliation of gaap and non-gaap results” for details. 7 adjusted net income (loss) attributable to ke holdings inc. is a non-gaap financial measure and represents adjusted income (loss) attributable to ke holdings inc.’s ordinary shareholders and preferred shareholders, and all preferred shares of ke holdings inc. had been automatically converted to ordinary shares upon initial public offering of ke holdings inc. on a one-for-one basis. adjusted net income (loss) attributable to ke holdings inc. is defined as net income (loss) attributable to ke holdings inc., excluding (i) share-based compensation expenses, (ii) amortization of intangible assets resulting from acquisitions and business cooperation agreement, (iii) changes in fair value from long term investments, loan receivables measured at fair value and contingent consideration, (iv) tax effects of the above non-gaap adjustments, and (v) effects of non-gaap adjustments on net income (loss) attributable to non-controlling interests shareholders. please refer to the section titled “unaudited reconciliation of gaap and non-gaap results” for details. 8 ads is american depositary share. each ads represents three class a ordinary shares of the company. diluted net income (loss) per ads attributable to ke holdings inc.’s ordinary shareholders is net income (loss) attributable to ordinary shareholders divided by weighted average number of diluted ads. 9 adjusted net income (loss) per ads attributable to ke holdings inc.’s ordinary shareholders is a non-gaap financial measure, which is defined as adjusted net income (loss) attributable to ke holdings inc.’s ordinary shareholders divided by weighted average number of ads outstanding during the periods used in calculating adjusted net income (loss) per ads, basic and diluted. please refer to the section titled “unaudited reconciliation of gaap and non-gaap results” for details.
