KE Holdings Inc. reported third‑quarter 2025 results that showed net revenue of RMB 23.1 billion, a 2.1% year‑over‑year increase, but a 36% decline in net income to RMB 747 million. Adjusted earnings per share of $0.16 beat consensus estimates of $0.15 by $0.01, or 6.7%, while revenue fell short of the $23.58 billion estimate by RMB 0.48 billion, a 2% miss.
Revenue growth was driven almost entirely by the home‑rental segment, which grew 45.3% year‑over‑year to RMB 5.7 billion. In contrast, new‑home transaction services saw a 13.7% decline in gross transaction volume and a 14.1% drop in net revenue, while existing‑home transaction services experienced a 5.8% volume increase but a 3.6% revenue decline, underscoring the shift in the company’s business mix toward higher‑margin rentals.
Operating margin, measured on an adjusted basis, slipped to 5.1% from 6.0% in the same quarter of 2024, reflecting higher agent‑related costs and a less favorable mix of transaction services. Gross margin settled at 22.15%, down from 22.7% in the prior year, as the cost of delivering transaction services rose and the rental segment, while higher‑margin, has a lower gross‑margin profile.
Cash, cash equivalents, restricted cash and short‑term investments totaled RMB 55.7 billion at quarter‑end, giving the company a strong liquidity cushion. The share‑repurchase program continued, with RMB 281 million spent in the quarter and a cumulative repurchase of approximately RMB 2.3 billion since the program’s launch, signaling management’s confidence in the business’s long‑term value.
Chairman and CEO Stanley Yongdong Peng said the company is “exploring ways to improve operational efficiency and enhance customer experience through organizational optimization, process restructuring, and technological innovation.” The comments highlight a focus on cost discipline and AI‑driven efficiencies to counter margin pressure while expanding the rental portfolio.
Investors reacted positively to the earnings, largely because the adjusted EPS beat expectations and the company’s cash position and share‑repurchase activity reinforced confidence in its long‑term strategy. The market’s response also reflected the strong performance of the rental segment, which offsets headwinds in traditional transaction services.
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