KE Holdings (BEKE) Q1 2025: New Home GTV Surges 53% as AI and Platform Scale Drive Outperformance

May 15, 2025 | By EarningsIQ Research

BEKE’s Q1 outpaced the broader real estate market, with new home GTV up 53% year-over-year, reflecting both policy tailwinds and platform execution. The company’s AI-driven productivity gains, agent network expansion, and disciplined capital allocation underpin a cautiously optimistic outlook, even as margin pressures and macro uncertainty remain. Investors should watch for continued efficiency improvements, AI adoption, and policy impacts on China’s property sector.

Summary

  • Platform Scale and AI Adoption: Record agent and store growth, plus rapid AI tool rollout, are redefining service productivity.
  • Margin Compression Signals Cost Trade-offs: Investment in agent welfare and platform support weighs on core transaction margins.
  • Capital Discipline and Cautious Optimism: Shareholder returns and measured investment signal a focus on sustainable growth amid policy and macro volatility.

Performance Analysis

KE Holdings delivered robust top-line growth in Q1, outpacing both national and developer benchmarks in China’s real estate market. Platform transaction value (GTV) rose 34% year-over-year, with revenue up 42%, driven by both in-home and new home segments. Notably, new home GTV surged 53% year-over-year, sharply outperforming the national market, which contracted slightly, and the top 100 developers, who saw a 7% decline. This divergence underscores BEKE’s differentiated platform and operational leverage in a challenging sector.

Agent and store network expansion was a standout, with active agents up 23% and active stores surpassing 55,200—a record high. Efficiency metrics also improved: GTV per agent and per store both posted year-over-year gains, reflecting the platform’s ability to drive higher productivity even as it scales. However, gross margin compressed by 4.5 percentage points year-over-year to 28.7%, largely due to increased support for service providers and a shift in business mix. Contribution margin in the in-home transaction segment fell, while new home and home renovation margins improved, highlighting the mixed impact of growth investments.

  • New Home Transaction Outperformance: Segment GTV up 53% versus national flat, with revenue growth outpacing GTV sequentially.
  • Home Renovation and Rental Momentum: Home renovation revenue up 22% with record margin; rental units managed doubled year-over-year.
  • Margin Pressure from Ecosystem Investment: In-home transaction margin fell 6.4 points, reflecting higher agent support and platform incentives.

Cash reserves remain robust, supporting continued share repurchases and providing a buffer against sector volatility. Management’s focus on ROI-driven investment and efficiency reflects a shift from aggressive expansion to sustainable, disciplined growth.

Executive Commentary

"This year, we are focused on driving both skill and efficiency as due priorities for our growth strategy. In the first quarter, traffic leads for our in-home transaction services hit a new record. The Enduroactive market helped with drive more traffic leads with additional benefits from the higher customer satisfaction from the search results and the more personalized recommendations."

Tao Xu, Executive Director & Chief Financial Officer

"While we remain confident in our platform ability to deliver sustained growth over the long-term on our one-body-three-win strategy. We are approaching the short-term with cautious optimism. That is why we still continue to invest formally in AI while taking a more measured approach to other investments this year."

Tao Xu, Executive Director & Chief Financial Officer

Strategic Positioning

1. Platform Scale and Network Effect

BEKE’s agent and store network expansion is central to its platform model, which aggregates real estate supply, demand, and services. The company added over 12,600 active stores and 90,000 agents year-over-year, with “Connect” stores—a designation for digitally integrated, high-productivity locations—showing particularly strong growth. Platform effects are visible in improved agent retention, higher transaction volumes, and the ability to attract major brokerage brands, reinforcing BEKE’s moat in a fragmented market.

2. AI-Driven Productivity and Service Innovation

AI deployment is rapidly moving from pilot to operational scale, with tools like Pudding (home-seeking assistant), Lyco (agent assistant), and AI property maintenance now reaching hundreds of thousands of users. These tools are materially increasing lead conversion, agent productivity, and customer satisfaction. For example, agents using Lyco saw a threefold increase in land-to-transaction conversion rates, while AI-driven maintenance support quadrupled transaction conversion for home visits. In home renovation, AI-powered design and project management tools are compressing sales cycles and improving quality control, with AR design proposals and intelligent construction systems cited as key differentiators.

3. Diversification into Renovation and Rental Services

Non-transaction services are becoming a larger share of revenue and profit, with home renovation and rental management both posting strong growth. Home renovation revenue rose 22% and margin hit a record 32.6%, driven by product innovation and operational efficiency. Rental unit management doubled year-over-year, with AI-enabled post-rental support (Xiaohui) automating a quarter of tenant requests. This diversification reduces reliance on volatile transaction volumes and creates cross-sell opportunities across the platform.

4. Capital Allocation and Shareholder Returns

Management is balancing investment in growth with capital returns, repurchasing over $1.1 billion in shares in Q1 and maintaining high cash liquidity. After last year’s aggressive expansion, BEKE is now setting explicit ROI benchmarks for new investments, particularly in AI, and taking a more measured approach to other spending. This discipline is designed to preserve cash, sustain shareholder returns, and maintain flexibility in an uncertain macro environment.

5. C2M (Consumer-to-Manufacturer) New Home Model

The “Beihaujia” C2M initiative leverages BEKE’s data and customer insights to help developers design and price new homes that match real demand. Early projects have demonstrated strong sales velocity and high IRRs for partners, validating the model’s ability to reduce inventory risk and improve capital efficiency. C2M also supports service fee-based revenue, diversifies business risk, and strengthens BEKE’s influence in new home development.

Key Considerations

Q1 results highlight both the strengths and trade-offs of BEKE’s platform-centric, technology-driven approach. Investors should weigh the following:

Key Considerations:

  • Margin Trade-Offs in Ecosystem Growth: Supporting agent welfare and platform incentives drives scale but compresses core transaction margins, a dynamic likely to persist as BEKE prioritizes ecosystem health.
  • AI Adoption as a Productivity Lever: Early evidence suggests AI tools are materially boosting agent and customer efficiency, but ongoing investment is needed to sustain the edge and realize full ROI.
  • Policy and Macro Sensitivity: Results benefited from supportive government policy and market stabilization, but future volatility remains a risk given China’s real estate policy environment and global trade tensions.
  • Capital Allocation Discipline: Management’s shift to ROI-based investment and continued share repurchases signal a maturing approach, balancing growth with returns.
  • Diversification Mitigates Transaction Volatility: Growth in home renovation and rental management adds resilience, but execution in these segments will be critical as they become larger contributors.

Risks

BEKE faces material risks from macro and policy headwinds, including potential real estate market softening, regulatory shifts, and trade friction impacts. Margin compression from rising agent support costs, as well as execution risk in scaling AI and new business lines, could pressure profitability. The company’s outlook is also exposed to consumer sentiment volatility and the pace of policy response in China’s property sector.

Forward Outlook

For Q2, BEKE expects:

  • Seasonal slowdown in transaction volumes, with year-over-year growth moderating from Q1 highs.
  • Continued investment in AI tools and efficiency initiatives, with measured expansion in agent and store network.

For full-year 2025, management maintained a cautiously optimistic outlook, citing confidence in long-term platform growth but highlighting near-term macro and policy uncertainty. Capital allocation will be disciplined, with explicit ROI benchmarks for new investments and continued shareholder returns through buybacks.

  • Efficiency and productivity gains prioritized over pure scale expansion.
  • Close monitoring of policy and trade developments to adjust strategy as needed.

Takeaways

BEKE’s Q1 demonstrates the power of platform scale and AI-driven execution, enabling outperformance in a tepid real estate market. Margin compression and macro risk are real, but the company’s diversification and capital discipline provide resilience.

  • Platform and AI Investment Drive Outperformance: Network expansion and rapid AI adoption are delivering tangible productivity gains and market share wins.
  • Margin Compression Reflects Strategic Choices: Supporting the agent ecosystem and investing in new services is weighing on core margins, but is key to long-term defensibility.
  • Outlook Hinges on Policy, Execution, and Efficiency: Investors should watch for sustained efficiency gains, AI ROI, and policy-driven demand signals in coming quarters.

Conclusion

KE Holdings’ Q1 2025 results reinforce its leadership in China’s real estate services through scale, technology, and disciplined capital management. While margin pressures and macro risks persist, the company’s strategic focus on AI, diversified services, and shareholder returns position it for resilient growth as the sector evolves.

Industry Read-Through

BEKE’s results signal that platform scale and technology adoption are critical levers for navigating China’s real estate volatility. Its rapid AI rollout and agent productivity gains set a new competitive bar for both traditional brokerages and emerging proptechs. The success of C2M and rental management diversification offers a blueprint for others seeking to reduce transaction cyclicality. For the broader sector, policy support remains a key swing factor, but operational agility and capital discipline are emerging as differentiators in a market where legacy models are under increasing strain.

BEKE Real Estate Brokerage AI Platform Diversification China