shellWhat did the first financial report after listing reveal?

In 2020, three of the leading Internet companies have doubled their market capitalization, of which the most eye-catchingMeituan和PingduoduoThere is also KE Holdings Inc, which has just landed in the capital market. The less well-known KE Holdings Inc., whose market capitalization climbed from $22.55 billion to $69.94 billion in the first 100 days of listing on the New York Stock Exchange, secretly created a new growth story for Chinese stocks.

In fact, there was a lot of discussion all the way around KE Holdings Inc.. 19 years of jogging, transformed from Lianjia to KE Holdings Inc., KE Holdings Inc. 's pace is not too slow? Whether KE Holdings Inc. 's platform is successful, and whether the scale effect appears? Does KE Holdings Inc. 's service quality continue to improve in exchange for industry benefits and user recognition?

KE Holdings Inc. released his first financial report 100 days after listing, which also provided answers to these questions. According to KE Holdings Inc. 's Q3 financial report, the total transaction volume (GTV) of its platform reached 1.05 trillion yuan, a year-on-year increase of 87.2%. Operating income in the third quarter reached 20.5 billion yuan (about US $3 billion), an increase of 70.9% from a year earlier. After adjustment in the third quarterNet profitIt was 1.858 billion yuan, up 210.6% from the same period last year.

Behind the good start of the financial results, the "flywheel effect" mentioned by Peng Yongdong, co-founder of KE Holdings Inc and CEO, at the 2020 New Brokers Summit in Sanya, Hainan, began to turn: quality drives efficiency, efficiency brings scale, and scale feeds quality. Instead of the familiar "speed", KE Holdings Inc., a "slow company", seems to represent a path for Chinese Internet companies to prefer "long-term operation". Dismantling KE Holdings Inc. 's first financial report, this article attempts to restore how KE Holdings Inc. leapfrogged the "triple door" of long-term operation in the endurance race.

The first door: from competition to cooperation, KE Holdings Inc. has become

Real estate transaction is a 22 trillion low-frequency market, the existence of middleman economy is conducive to the flow and matching of industry information. However, to a certain extent, the traditional manpower intensive mode has also become an obstacle to the improvement of efficiency.

Just as Ford built its first Model T car with an assembly line, the changes made by KE Holdings Inc. can be summed up as "dual networks and dual cores." That is, an online network that provides digital solutions to improve efficiency. An offline network to expand the network of community-centered stores. What is more important is that the two cores-the "ACN network" (Agent Cooperation Network) make the cooperation between brokers "rules to follow", thus opening the valve for efficiency improvement. The "shop model" allows the superimposed development of residential business and broadens the boundary.

Of course, KE Holdings Inc. has come a long way to change the "rules of the industry".

In the early days of Lianjia, the phenomenon of "eating price gap" was widespread in the whole intermediary service industry. in 2004, Lianjia took the lead in the industry to clearly put forward the sunny operation mode of "transparent transaction, signing tripartite contracts and not eating price differences". Trying to solve the malpractice of "information asymmetry" in the intermediary industry.

In 2006, Lianjia began to set up a professional training system for brokers and implement semi-militarized management, which led to industry news such as "undergraduates can be brokers" and "one hundred for one false". But the real measure to change the nature of intermediary service is the "ACN network".

ACN is actually a whole set of rules. Under ACN, the role of the intermediary is subdivided into more than 10 positions, such as "housing entrant", "housing maintainer", "customer discoverer", "dealmaker" and so on. The commission is distributed according to the role, and we all work together to complete the transaction. According to this model, the relationship among brokers, real estate stores and even real estate companies has changed from competition to cooperation.

Many people think that this plan is too idealized, after all, the domestic market does not have the mature MLS system of the US real estate market, but KE Holdings Inc. still firmly promotes the landing of this plan. Since its operation in April 2018, it has become the core model of KE Holdings Inc., and the business system is still expanding rapidly.

As of September 30, Q3, the number of KE Holdings Inc stores was 44883, an increase of 41.7 percent over the same period last year, and the total number of KE Holdings Inc brokers was 477810, an increase of 50.7 percent over the same period last year, according to the financial report.

From the data, KE Holdings Inc. platform no matter the number of brokers, or real estate stores and consumers are maintaining a large increase. This shows that the ACN network effect is emerging, especially the number of brokers with the most interests is still growing, and it also confirms that this model has matured.

Based on the ACN network, what KE Holdings Inc. mentioned most after launching was "reshaping the infrastructure of the industry", that is, transforming the service process by Internet means to make the service process standardized, online and intelligent. At the same time, through a series of mobile Internet era tools, empower service providers, reduce service variance, so that every home buyer can experience the same quality of high-level service.

The effect of this, like the subversion of the retail industry by e-commerce, has made buying a house as reliable as online shopping.

In the Singles' Day in 2020, KE Holdings Inc subscribed for a total of 36.79 billion yuan and 24699 sets in seven days (November 5-November 11). Not only is the transaction volume staggering, but the real estate transaction service has also introduced the iconic e-commerce service "three days without reason for a refund" for the first time. By the end of September, the commitment had covered more than 3000 projects in 70 cities across the country.

You don't have to put it 10 years ago, and even five years ago it was unthinkable. Sales lead to a customer transaction, "three days no reason to refund" will not make its previous efforts wasted? KE Holdings Inc. 's strength undoubtedly comes from the belief of "long-term operation"-a more rational and stable market is the guarantee for the rapid development of the industry. Don't destroy a track just because of temporary high profits.

The second door: from self-management to opening up, the industry has recognized it.

From Lianjia to KE Holdings Inc., from self-management to open platform, KE Holdings Inc. 's imagination has become larger.

On KE Holdings Inc. 's open platform, there are not only Lianjia, but also Deyou and Zhongyuan Real Estate. KE Holdings Inc. is now stationed in more than 300 cities across the country, connecting 265 new brokerage brands. The fundamental reason to attract more real estate companies is to believe that the transaction efficiency of KE Holdings Inc. 's open platform is higher than that of fighting alone.

According to the financial report data, the total platform transaction volume (GTV) of Q3 KE Holdings Inc. reached 1.05 trillion yuan, a year-on-year increase of 87.2%. In the first three quarters, KE Holdings Inc. 's platform total transaction volume (GTV) has exceeded 2 trillion yuan (about 2.38 trillion), exceeding last year's total (2.1 trillion). The trillion-yuan transaction size can still maintain a growth rate of more than 40%, and KE Holdings Inc. shows its potential.

What is worth integrating, of course, is that KE Holdings Inc. 's GTV is not obtained from large-scale marketing activities. Sales and marketing spending is 1.026 billion yuan ($151 million), compared with 737 million yuan in the same period last year, according to financial data. The only growth is due to brand advertising and option incentive spending.

The scale effect of KE Holdings Inc. 's open platform is playing a role, and more and more real estate companies have joined, expanding the SKU of the platform and greatly improving the matching efficiency. For example, if the buyer wants a house near the company, but also wants a nursery, or even a basketball court near the neighborhood. These conditions are difficult to find suitable housing in a real estate company, but KE Holdings Inc. 's open platform brings together Lianjia, Central Plains Real Estate and many other housing sources, which can be matched quickly.

Behind the improvement of transaction efficiency, the benefits of KE Holdings Inc. platform are also showing. Revenue in the third quarter was 20.5 billion yuan ($3 billion), up 70.9 percent from a year earlier, while adjusted net profit was 1.858 billion yuan, up more than 200 percent from a year earlier, according to financial data.

The open platform created by KE Holdings Inc. also has its new harvest.

At present, revenue from new housing transactions has accounted for nearly 54% of total revenue, surpassing KE Holdings Inc. 's stock housing business. In the third quarter, the GTV of new housing transactions increased by 105% compared with the same period last year, and revenue from new housing transactions increased by 95% to 11.1 billion yuan.

Of KE Holdings Inc. 's 46.015 billion commission income in 2019, the second-hand intermediary fee is 24.569 billion and the first-hand drainage fee is 20.274 billion. New housing transactions have contributed nearly half of the revenue, to now new housing transactions have become one of the twin engines, KE Holdings Inc. 's platform benefits began to show.

It is not difficult to understand that the theoretical industry of "first-and second-hand linkage" has been imagined for many years, but it lacks a set of powerful system-driven implementation, and the other core of KE Holdings Inc. 's model, the shop model, happens to meet the continuous superposition of residential service business. After all, whether it is new or second-hand, what needs to be solved is the matching of housing and customers, the efficiency and quality of service.

The third door: from transaction to service, users are inseparable.

From the beginning of the "real housing", to the full housing, and then to VR housing, online signing, buyers gradually get used to "shell-style house purchase." From this point of view, KE Holdings Inc. 's service attribute is gradually stronger than the transaction attribute.

And the key word of "shell-type house purchase" must be digital.

KE Holdings Inc. 's digitization started very early. In 2008, the company's headquarters hired hundreds of people to count houses in different neighborhoods in more than 30 cities. Promoting the basic work of the hard-working "Housing Census" has gradually accumulated into a real housing information that KE Holdings Inc now covers 233 million sets of housing information recorded in the database in China. It has become the domestic housing information database with the largest amount of data, the widest coverage and the finest granularity-- the Real Estate Dictionary.

At that time, the "real estate dictionary" was internally defined as a development project "regardless of cost input", so it was difficult to judge when it would generate value and recover the investment. But it is this "real estate dictionary", which took 10 years to build, that took the lead in formulating the standard of real estate supply in the real estate industry.

Without a "real estate dictionary", users will not be able to match many houses online. Such an Internet real estate service platform is undoubtedly a "castle in the air" without support, and 12 years of digital assets have precipitated. Only then can KE Holdings Inc. regard "authenticity and efficiency" as the first characteristic of the user experience.

In 2015, KE Holdings Inc. started the research on VR, and officially launched the VR housing function in 2018, allowing VR technology to achieve the first large-scale application in the field of residential services. The sudden epidemic this year has further accelerated the popularity of VR. In September this year, KE Holdings Inc. VR accounted for more than 40% of the total viewing volume, and nearly half of the home buyers experienced cloud shopping. At the same time, in this quarter, KE Holdings Inc. comprehensively promoted the VR Lite lightweight collection scheme, so that panoramic cameras and mobile phones can complete VR recording, suitable for rental and other scenes.

The key to KE Holdings Inc. 's final completion of the closed-loop transaction in the digital scene is to land the online contract by technical means. Through online verification rooms and other products, KE Holdings Inc. integrates real-name authentication, face recognition, electronic signature, OCR automatic recognition and other technologies to online the process of face-to-face interviews, information collection, and material signing, which reduces the loan interview time by an average of 19%.

Online loan signatures already account for 30 per cent of the total number of commercial mortgage services brokered by KE Holdings Inc.. By the end of September, the Shell online loan service has covered more than 1000 branches of 45 cities and 66 cooperative banks across the country. Many cities can experience this convenient service.

Back in 2010, Lianjia held a forum at Quintiles Hotel. At the meeting, a financial reporter's speech made Zuohui feel uncomfortable: "every profession has its own value, and the real estate brokerage industry is no exception." Valuable companies in the industry should help consumers clear mines in the process of housing transactions, but it is a pity that most real estate agents now bury mines. " Taking fake housing as an example, the reporter talked about the difficulties in finding a house. On the 20-minute journey back to Lianjia from Quintiles, Zuohui didn't say a word. When he got to the door of the company, he was determined to change the industry.

After that, Lianjia and KE Holdings Inc. began a 10-year process of penetrating the triple door of long-term operation. On the night of IPO, Zuohui called the journey "a long way to open up the mountains and forests." Today, I wonder if Zuohui would want to say to that reporter, "We have made some changes."