Earnings Call: Q4 2020

Mar 16, 2021

Ladies and gentlemen, thank you for standing by for KE Holdings' 4th Quarter and Fiscal Year 2020 Earnings Conference Call. At this time, all participants are in a listen only mode. Today's conference call is being recorded. I will now turn the call over to your host, Mr. Matthew Zhao, IR Director of the company. Please go ahead, Matthew. Thank you, operator. Good evening and good morning, everyone. Welcome to Keo Holdings, Inc, our Baker's 4th quarter and fiscal year 2020 earnings conference call. The company's financial and operating results were published in the press release earlier today and are posted on the company's IR website, www.investors. Ke.com. On today's call, we have Mr. Stanley Yongdong Peng, our Co Founder and Chief Executive Officer and Mr. Tao Xu, our Chief Financial Officer. Mr. Peng will provide an overview of our strategies and business developments, and Mr. Xu will provide additional details on the company's financial results and discuss the financial outlook. Before we continue, I refer you to our Safe Harbor statement in our earnings press release, which apply to this call as we will make forward looking statements. Please also note that FICO'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 renminbi. With that, I will now turn the call over to our CEO, Mr. Stanley Pang. Please go ahead, sir. Thank you, Masu. Hello everyone and thank you for joining us today on our Q4 fiscal year 2020 earnings conference call. We achieved exceptional growth in 2020, closing the year with strong 4th quarter operational and financial results, our massive scale operating efficiency and the quality of services combined with the strong data work effects have created the self reinforcing virtual cycle. It drove our full year's GTV to increase by 64.5 percent to reach a historical high of RMB3.5 trillion and helped us solidify our leadership position at the largest housing transaction and services platform in China and the 2nd largest commerce platform across all industries in China. 2020 marked the 19th anniversary of Lianjia's operations and the 3rd year since the Beike platform's inception, the ground we have covered over the past years as well as our outstanding results in 2020 have provided for the affirmation of our belief that the path we are taking in doing the right thing, even if it is difficult is the right path. It also brings us closer to our vision of providing comprehensive and trusted housing services to 300,000,000 families in China. I would now like to provide you with a closer look at exactly what we accomplished over the past year. Looking back, 2020 was a challenging year for our business and for the world. Facing the COVID-nineteen pandemic, we worked hand in hand with the kinetic brands, stores, agents, developers and other platform participants to overcome with tremendous obstacles and emerge stronger. We carry out a series of measures to have our own and our connected agent persist during this difficult period. This included fee waivers, timely payments, supporting brand owners and store owners to ensure their agent continue to be paid and etcetera. With offline activities certainly hampered by the pandemic, we promoted online agent training, online VR property showings and online property sales when the pandemic just broke out. These initiatives supported aging capabilities to continue to push forward online, lock in sales opportunities and build out the inventory of potential buyers during the period as the impact from COVID-nineteen started to ease in China. The sales performance of Canadian stores and agents on our platform recovered rapidly, demonstrating the significant value of our platform. This period of shared adversity enhanced trust to brand owners, store owners and agents in the baker platform, while in turn contributed to accelerated momentum and improved operational efficiencies. In 2020, we focus on expanding the scale of our AC network with the quality growth. The total number of connected stores grew by 25.1% year over year, reaching 46.9,000 by the end of 2020, among which over 30% of our stores have annual GTV of RMB50 1,000,000 or more, which we believe is an adequate level to support sustainable growth of the stores compared to only 19% in 2019. The total number of agents on the vehicle platform grew by 37.9% to 4 193,100 by the end of 2020 and more than 30% of the agents In our Asian health college backgrounds, 75% of the total existing home transactions were completed through cross store collaborations, while Connecticut Stores contributed over 81% of existing home listings, indicating continuously enhanced cooperation on the platform. Our offline expansion was underpinned by increasing industry digitalization along with our growing online presence. We recorded data for almost 240,000,000 homes in our housing dictionary and the VR data for more than 9,000,000 homes, more than 73% of our existing home listed were covered by VR property assuring by the end of 2020. The number of VR property showing exceeded 66,000,000 in 2020 compared with 3,900,000 2019. Total MAUs of our platforms, apps and retail media programs increased by 88.3 percent to 48.2000000 in the 4th quarter 2020. While big scores were viewed online more than 1,100,000,000 times, growing almost 150 times year on year, which implies the increasing significance of the bigger score in assessing service quality for both consumers and agents. Next, let me give you more colors in terms of our existing home transaction services business. In the past year, we further solidified our competitive advantages in the existing home transactions market continued enhancing consumer experience and empowering brands, stores and agents to improve productivity and service quality and achieved substantial growth on multiple fronts. According to Feiqo's Research Institute, GTV of existing home transaction in China grew 6.7 percent to RMB9 1,000,000,000,000 in 2020, while including RMB7.5 trillion of existing home sales, increasing 11.8% year over year. On our platform, GTV, our existing home transaction grew 49.5 percent to RMB0.94 trillion in 2020. GTV of connected stores grew 109.9% year over year, accounting for 48% of total GTV from existing home transactions compared with 34% in 2019 as 3rd party stores are increasingly playing a vital role on our platform. We always focus on creating value for our customers and providing them with a wide range of commitments as well as value added services. We endeavor to promote the 8 core commitments, including authentic listing guarantees, no markup in pricing, transaction from escrow and Accenture. 84% of stores in top 30 major cities pledged to honor these 8 core commitments in the Q4 of 2020 and 100% of these stores had endorsed the most foundational commitments such as authentic listing guarantees. Given that consumer funds' safety has been one of the biggest concerns in home transactions. We strengthened the escrow services for transaction funds, which covered more than 80% of transactions, non mortgage payments volume at the end of December. In terms of value added services, One particular noteworthy was the premium package for home sellers services, through which for 45,000 housing transactions were completed. Our focus on quality services brought us not only recognition from customers and agents, but also financial rewards. As a result, in 2020, the commission rate of our existing home transaction services increased slightly for both Lianjia and and connected stores. Meanwhile, brands, stores and agents on our platform increasingly benefit from efficiency improvement as our AC network effect play out. In terms of operational enhancement, we vigorously promoted the store scoring and ranking system to find and reward the finest service providers and supporting them to flourish. We also deployed a series of digital operational tools to help both brand owners and store owners carry out systematic business and analysis and measures. As a result, unit store GTV of existing home sales for both Lianjia and the Canary stores achieved the mid to high teens percentage growth rate in 2020. Turning to the new home transaction services business. According to the National Bureau of Statistics, GTV of China overall, new home transaction grew by 10.8% to RMB15 RMB0.5 trillion in 2020. Our new home transaction services business delivered robust all around results reaching annual GTV of RMB1.38 trillion with 85% year over year growth. This solid performance was primarily driven by the strong GTV growth of Canadian stores and other channels. In order to take better care of our customers in 2020, we focused on advocating the 3 day free return commitment for new home sales, which we collaborated with developers to pioneer. In the Q4, this commitment was offered in 100 cities. We put a considerable effort to support brands, stores, owners and agents and put their experience in the new home transaction services, Thanks to our advanced risk control mechanism. Our AR turnover in new home transaction was 103 days in 2020, only slightly increased from 2019, which was an achievement given that the GTV or our new home transaction grew 85% from 2019 and the industry restored impact from COVID-nineteen pandemic. As such, agents on our platform will be able to receive their commissions on a timely basis. Meanwhile, to further support the agents, the commission advances we extended cover more than 40% of new home sales commission splits. We successfully brought to the Huo commission advance progress online and enable the 24 hours commission advances payments For operational enhancement in new home sales, we invested in online infrastructure and equipped agents with advanced tools and methodology. Leveraging our stronger capability to mobilize agents, we made concentrated sales forces possible for certain projects in order to increasing productivity and the project sell through certainty. These initiatives led to continuously improved capabilities of both our own and the Kinetics agents and resulted in more than 20 percent growth in term of unit store, GTV or new home sales. We have built relationship with an increasing number of real estate developers and have provided more tailored and efficient services. As of the end of 2020, The number of new home projects on sale listed on our platform reached 8,600 compared with 7,700 at the end of twenty nineteen. In the second half of twenty twenty, we directed I will emphasize to accelerate new home sell through promotion and promoting and implementing cross city and cross region sales. We are pleased that our efforts are bearing fruit and our market share and leadership position in the new home transaction services market have gone from strength to strength. A few comments on our emerging services. Regarding our new home renovation services in 2020, We focused on Beijing market to expand our capabilities and to provide meaningful results. We developed the beta version of the in house SaaS platform for service providers and an app for consumers as well as detailed SOPs management. We completed more than 1200 projects and connected more than 404,000,000 workers and 200 designers at the end of 2020. For real estate financial services, we have been continuously upgrading products and offerings to optimize customer growth and encouraging financial advisors to interact with customers at an easier stage of the transaction process to improve penetration and customer experience. In 2020, the penetration of our financial services averaged 8.4% and reached 10.5% in the 4th quarter. Looking to 2021, we have 5 key focus areas stepped in taking care of the customers, supporting the service providers, nurturing our emerging services, creating social value and fostering the critical role technology plays in the broad market opportunity. First, we continue to see clear sign of the rising power of customers. We have an unwavering commitment to consistently refine the consumer experience through increased digitalization and enhanced service quality. In 2021, we will leverage our capabilities in systematic data collection and artificial intelligence as well as our extensive offline network to enrich the content offering in new home sales to meet consumers' demand for abundant and accurate online information for new homes. We will start by building out The housing dictionary for new homes, new house, even house will have more than each house we will have more than 200 descriptions fields that incorporate basic housing informations as well details that our user insight tools have identified as particularly important to Chinese customers. Leveraging our AI technology, we can provide more extensive information even pinpointing the lighting and noising conditions on different floors. In terms of service quality, we intend to provide our customers and the platform participants with even more security and quality through the continuous construction of our platform's infrastructure. Specifically, we plan to make all customer complaints public for increased transparency and further improve customer satisfaction. 2nd, we are increasingly convinced of the tremendous value of service providers through tools that we plan to launch in 2021, such as 30 day churn rate, easy warning and intervention model and the professional scoring, ranking and the training framework for more platform participants. We aspire to identify and retain the finest service providers, including brand owners, strongers and agents and empowering them to flourish. 3rd, we will neutral the healthy development of emerging and other services. Our focus will be on building out our core competencies in home renovation services to achieve multi faceted customer satisfaction improvement by providing a seamlessly integrated transaction experience. Meanwhile, we will continuously upgrade the product and service offerings and increase the service efficiency of our real estate financial services. For example, we will launch the system to bring all of the financial advisor's daily operations online in 2021. 4th, we are committed to creating more social value. We believe it is our corporate responsibilities to assist in building a stable real estate market characterized by a neutral market view. Our social responsibilities extends to facilitating transition in the residential real estate market from an opportunistic went to a more orderly and a sustainable one. Meanwhile, we aim to fulfill our broader social responsibilities through a series of initiatives in 2021. For example, our platform will offer agent recruiting and retaining program to provide more job opportunities to the community, especially for new graduates. We will continue to upgrade our rental services, offering young tenants more convenient and affordable experience. Furthermore, since our deeply rooted community centric stores and agents have gradually become gathering points for local residents. We will continue to contribute in community services across the country. For example, we will continue the smartphone training sessions, volunteer our agents, which we offer to more than 140,000 elderly citizens in the past year. Lastly, on the technology front, in 2021, we will continue leverage our massive and authentic housing and transaction data and our deep understanding of business scenarios to innovate AI driven technologies that drive optimal alignment between agents, consumers and home through smart matching and personal recommendations in housing transaction. This will be implemented with products including our AI assistant, Xiaobei, Baker's Pick, VR and Accenture, we will also push forward data and AI driven intelligence operations such as the intelligent operations of Baker Kong in order to improve the overall platform operations efficiency. In summary, The market is rich with opportunity by ensuring consumers' needs and met while simultaneously supporting service providers online and offline, we are driving transformational industry change. The progress we made in 2020 show us we are on the right path. We are confident in our growth trajectory forward as we continue to expand our self reinforcing network that is greater than the sum of its parts. With this in mind, we will work to create further value for the consumers, agents, sellers, brands, real estate developers and all other platform participants. With that, I would like to turn the call over to our CFO, Qutao for a close view of our Q1 and full year financials. Thank you. Thank you, Stanley. Thank you, everyone, for joining us. I would like to provide a brief overview for our Q4 fiscal year 2020 financial We are pleased to deliver another strong quarter of financial results, marked by high revenue growth and strong profitability. Our net revenues reached is total high for the Q4 of 2020, driven by strong GTV growth. Our net revenue increased by 57.6% year over year to RMB22.7 billion in Q4, exceeding both high end of our guidance and the street consensus. The rapid growth of net revenue was driven by solid GTV growth of 65.4 percent year over year to RMB1.12 trading along with increased productivity and the continuously improved service cost of our platform. In particular, our net revenue from the spin home transaction services increased by 56.1% year over year to RMB9.2 billion in mainly due to a 69.8% year over year increase in GTV of a new home transaction to RMB584.7 billion in Our net revenue from new home construction services increased by 58.8% year over year to RMB12.9 billion in Q4, primarily due to a 55.5 percent year over year increase in GTV of new home transaction to RMB469.2 billion Q4. Our net revenue from Emergent and Other Services increased by 58.1% year over year to RMB0.6 billion in Q4. The increase was primarily due to the increase of penetration level in company's financial services around our housing transaction services as well as increased number of home decorating units completed through the company's platform. Cost of revenues increased by 48 0.2% year over year to RMB17.2 billion in Q4. Gross profit increased by 97.4% year over year to RMB5.4 billion in Q4. Gross margin increased to 23.9% from 19.1% in the same period of 2019. The increase of gross margin was mainly due to the decrease of internal commission and the compensation as a percentage of net revenue from the SlingHome transaction service company to Rianxia product as well as the secrets of commission submitted as a percentage of net revenue from new home transaction services, helping to connect agent and other sales channels. Operating expenses were RMB4.2 billion in Q4, compared to RMB5.9 billion in the same period of 2019. General and administrative expenses to RMB1.88 billion compared to RMB4.56 billion in the same period of 2019, mainly due to the decrease of share based compensation expenses. Sales and marketing expenses were RMB1.32 billion, compared to RMB831 1,000,000 in the same period of 2019, mainly due to the increase of brand advertising and the promotional marketing activities. Research and development expenses were RMB700 1,000,000 in Q4 compared to RMB478 1,000,000 in the same period of 2019, mainly due to the increase of share based compensation expenses. Income cushion was RMB1.27 billion in Q4 compared to loss from operation of RMB3.12 billion in the same period of 20 Operating margin was 5.6% in Q4 compared to negative 21.7% in the same period of 2019, primarily due to the decrease of share based compensation expenses. Excluding non GAAP items, our adjusted income from operations were RMB2.23 in Q4 compared to negative RMB18 1,000,000 in the same period of 2019. Adjusted operating margin was 9.8% in Q4 compared to negative 0.6% in the same period of 2019, mainly attributable to increased gross margin and improvement of operating leverage. Adjusted EBITDA increased by 2,183.9 percent year over year to RMB2.9 billion in Q4. Net income was RMB1.1 billion in Q4 compared to net loss of RMB31 1,000,000,000 in the same period of 2019. Excluding non GAAP items, our adjusted net income increased by 44124.8 percent year over year to RMB2 1,000,000,000 in Q4. Net income attributable to Credit Holdings Inc. Ordinary shareholders was RMB1.1 billion in Q4 compared to net of RMB3.7 billion in the same period of 2019. Adjusted net income attributable to Credit Holdings Inc. Increased by 4,508.2 percent year over to RMB2 1,000,000,000 in Q4. For the Q4 of 2020, diluted net income per ADS attributable to Credit Holdings Inc. Ordinary shareholders was RMB0.93 compared to negative RMB7.99 in the same period of 2019. Adjusted diluted net income per ADS attributable to Pro Holdings Inc. To Osim shareholders was RMB1.71 compared to RMB1.15 in the same period of 2019. As of December 31, 2020. The combined balance of our cash, cash equivalents, restricted cash and short investments amounted to RMB65.2 billion or $10,000,000,000 And for the full year of 2020, Our business achieved a robust operation and the financial growth and our GTV increased by 64.5% year over year to hit total high of RMB3.5 trillion from RMB2.13 trillion, enabling us to remain the 2nd largest e commerce platform across all industries in China and the 3rd market spending platform globally. Our net revenue increased by 53.2 percent year over year to hit circle high of RMB70.5 billion from RMB46 1,000,000,000. Our net income reached a total high of RMB2.78 billion compared to net loss of RMB2.18 billion in twenty Our adjusted net income increased by 245.4 percent year over year to a total high of RMB5.72 billion from RMB1.66 billion. Looking forward to our Q1 of 2021, we expect our net revenue to be between RMB18.5 billion and RMB19.5 billion, representing an increase approximately of 159.8 percent to 173.9% from the same quarter of 2020. The relatively high year over year growth of our revenue guidance is mainly due to the significant negative impact of COVID-nineteen for our business in the same period last year, which results a meaningful portion of transaction shipped from Q1 to Q2 last year. The business outlook reflects Congress' current preliminary view on the business situation and market conditions, which is starting to change. Last but not least, we believe the long run under the principle housing for living now for speculation. The real market in China will continue to shift toward the most stable and steady growth. This in turn will create a more favorable environment for us to carry out our commitment to reinvent the industry and deliver the highest brands, store owners, agents and real estate developers to take better care of the consumers will continue to strengthen our competitive modes and our growing business at a faster pace. As we continue to reinvent our agent copy line for infrastructure, user base function and innovative AI technologies. We are confident we will further enhance our monetization capability and deliver sustainable growth. That concludes our prepared remarks. We would like to now open the call to questions. Operator, please go ahead. Thank you so much. Ladies and gentlemen, we will now begin question and answer session. Question. Translation. Thank you so much. And your first question comes from the line of Elsie Cheng from Goldman Sachs. Elsie, your line is now open. Thank you, management, for taking my questions and congratulations on the strong results again. I have three questions here. One is really about the changing macro environment and Regulation in housing industry in China, how does it impact Beiko and its operations in major cities? And how should we think about the impact to our full year results? And the second is on the competitive landscape. It's been a while since Oobao got privatized and we also observed some developers are proactively building their own digitalized team. So can management share a little bit more color on your observation, the key trends in the industry and bigger strategy in sustaining the competitive mode? And the last one is about emerging businesses. We continue to see the GTV and revenue scale robustly in the segment. Can I just share a little bit more color into the progress of the operations in our home decoration and financial services? Thank you. Thank you, ILC. This is Xu Tao. Let me address your first question. Let me talk about some positive recently. So overall, the China's housing policy is aiming to promote housing for living, outflow speculation and preventing the financial systematic risks arising from the real estate market with the layered manner and city specific policies. So in Chinese, we call this as stable growth market is beneficial for the sustainable development for Beikelou and the industry as a whole. The so far policy we saw to slow the market from overtaking by using a relatively mild regulation and the implemented a traffic manner to prevent the most severe regulation measures and the greater and it also has the most volatility of the real estate market that was often seen in the past and it makes the competitive landscape more about From our observation, the recent housing policy has no significant or the right impact on the national real Since the policy has been limited to some over heated cities like Shenzhen and Shanghai, but the housing is still necessary and the rising demand in China. So let me talk about Shenzhen. In Beike, actually we have a business presence for All of our incremental revenue was mainly come from our newly connected iPhone business. So Shenzhen is a star city of Beike. Its market share improved from 70% in 2018 when we launched Beike to 29 in 20 That still counts low single digit percentage of total GTV in 2020. So we would like to say as President, we don't have centralization problem for special cities. And the baker is a platform company and our nationwide and Shanghai is a largely existing home sales market in China with the largest housing stock over 2,000,000. Measures in Shanghai are relatively mild with the limited impact on the transaction volume and the Weebly City will return to a housing market with active trading in due The recent matters in Shanghai are not as strong as Shenzhen and the impact on the transaction volume and the price will be relatively marked. This is your first question. Regarding some competition, yes, we do notice some peers that So normally, we don't comment on other peers' performance directly, but the two things are very certain. The first, Baker's The second, Baker is very confident and is very happy to see new industry entrants to step into this area and allowing us to further enhance our capability to be the leader of the industrial Internet and think deeply about our strategy that is how to take care of our clients and how platform competition among investors among developers. The developers may be hesitant to use somebody's one developer their broadcast channel due to the competition or much vary about the customer long term, which relates cooperation mechanism is unlikely. Baikou will host a different value proposition against to set targets or make a promise on the future valuation as the beginning of the entrepreneurship. Because this strategy has never been changed and as I just reiterate again, our strategy is to take care of customer and have a service provider to take care of customers. So from the financial number and this performance perspective, no impact to Baekho. If we look at the GTV, our take away and contribution margin past 3 years. The GTV will increase from RMB280,000,000,000 to RMB747,000,000,000 and last year we further increased RMB1. And the take rate for the new home sales, we have a modest increase. So our take rate increased from 2 6.6 to 2.71 and last year increased to 2.74. And this contribution margin for the new home continues to improve and improved from 3,000,000,000 to RMB4.9 billion and the last year is RMB8.2 billion. And the DSO, we also our profitability doubled year over year, but our DSO is improved. In 2018, 117 days and 2019, 96 Last year, we have slightly increased 103 days. This is a combined impact in how of 2019. If you now look at the Q3 Q4 number, we are reduced to 87 basis, but there is no sign in impact. So last question regarding our This strategy for the new business, I would like to invite our CEO, Danny, to give the answer. This is Danny. Let me address your question terms of the emerging services development. So the next month, we will enter the 3 years of anniversary for the Vapors as well as the Lianjia's almost like 20 years of anniversary. So in the Last 20 years, we actually accumulated a lot of experience, especially during our procedures to restructuring of the housing industries. So we're really focused on how we can build up the overall standard to the industry. While we get the take from the past 20 year's experience is we need to doing the business horizontally firstly, right. So then after that when we get to know the know how of the industry, we can start to doing the platform business vertically. So that's also what we get to take. And we noticed for a lot of different kind of the business such as housing transaction, All the decoration as well as the furnitures, each of them has a significant peak of the potential market size. So we'll continue We're looking for the opportunities in the industrial Internet going forward. When we look has a potential sectors to develop. We always look at the following of the characteristics. Firstly, the industry should be very big enough. The secondly is we also look at how we can copycat and iterate of our capabilities from the past years of the operational experience. And firstly and thirdly, we also look at the potential opportunities within that tracks. So from that perspective, I can give you two examples going forward in terms of our continued development. So first is about the declaration business And secondly, it's about the financial business. For the declaration business, we will in the year of 2021, as I described in our in the prepared remarks, So we'll continue to focus on the Beijing market. We will focus on to build up the SOP for this industry and build up the SaaS system as well as continue iterate of the systems So we will focus on the workers' management as well as the overall industry chain management in order to further build up our capability within of the declaration business in Beijing. In terms of financial business, for this year, we'll continue to improve our capability to promote the online process. We were trying to build up a system for the financial advisers to ensure the working procedures can be complete online. And meanwhile, In terms of the customer side, we're also trying to promote the products such as the Safeguard and Xingbo products for the home sellers for home sellers' mortgage reduction needs. So the in order to connect the buyers mortgage with the sellers together to further improve the user appearance. So in the future, as I mentioned, so looking into 2021, we'll continue to explore the good practice as well as other explorations within of the financial services. Thank you. And your next question comes from the line of Binbin Ding from JPMorgan. Binbin, your line is now open. So my question is about the pricing strategy. You noticed that recently, Baker has gradually raised the secondary home transaction commission rate to 3 So I was wondering, number 1 is, in how many cities have they started to adopt the 3% commission rate? And second is, In each city, how do we differentiate the pricing of our in house Lianjia stores versus third party connected stores? The third one is, are we going to further expand the 3% pricing to more cities in China? And how should we look at the secondary home commission take rate in the rest of the year? And a related question is, do we have any plans to increase the commission rate in new home transactions in the near future? Thank you very much. Okay. Thank you. Cixita, let me address your question. So for our commission rate for the Disney Home, actually, we want to clarify the level of commission rate actually reflects the service quality and the transaction efficiency. The market of existing home sales is the market with the full competition and the balanced supply and demand market. Rising commission without being justified by service quality or transaction efficiency is just like water without source and In other words, it's not sustainable. So with the neutral market view, our platform will actively explore bilateral commission model to balance the financial burden between buyers and sellers, while striving to improve our service quality, commitment coverage and ability to identify the customers with strong purchase power in order to support the local brand to improve their operating power. So the basis The basic infrastructure of Beike is community center store network. So to balance our Business home and the new home sales are very crucial and we encourage our agents to take part in the community service and the low competitor and self competitor and the build up long term commitments and the professional dignity to continuously improve self-service quality efficiency and offers most of guarantees. So if you look at our take rate for our leasing home sales, In past 3 years, so there's still more than an increase for our proprietary brand of Lianjia in past 3 years, the commission rate from and the last year is 2.4. And for our franchise brand of video yield, the commission rate up and down in a very mid range. So it's varied from it's changed from 2 0.15% and 1.99% and last year is 2.00%. And for our connected branded in bakery platform for 2 78 brands. So we can average the take rate that have a modest increase from 1 point to 1.92 and the last year 2.07%. So inclusion, So for our existing home commission rate, we expect a steady growth in both Zian Jia, Biyu and our connected stores. The existing home sales commission rate are more commitment covered and the quality service improved and this will benefit from our platform. And the first new home commission rate, Actually, for new home sales market is also a 2B market, in which we play an important and equal goal with developers. This is a perfect market and the high commission rate reflects our high efficiency, fast cash election as well as high level of the customer recognition. So in the long run, for the new home commission rate, In order to maintain a mutual and beneficial and sustainable relationship with the royalty developer, we expect commission rate to remain stable and at around 2.77%. Thank you. Thank you very much. Thank you so much. And your next question comes from the line of Stephen Chai from Morgan Stanley. Stephen, your line is now open. Thank you, management for taking my question. My question is related to the sales efficiency improvement for the connected stores. You previously mentioned that on a cohort basis, the third party stores improved GTV per store by 100% and 26% in their 1st and the second year respectively on platform. So just wondering if there is any difference for the stores that join later in second half of twenty nineteen or first half of twenty twenty in terms of the sales improvement trend that you have observed so far? Thanks. Okay. Thank you. Actually, we We would like to see in 2020, we connect more than 47,000 stores and the 493,000 agents and our TV year over year, as I mentioned just now, increased 64.5%. Among these incremental facts, we always emphasize the importance Our operating system, namely the ACN, the agent coverage network to promote healthy platform developments and prevent the competition through the ecosystem governance. So in 2020, reaching big surprise for more than 81.5% listing actually come from third party stores and more than 75% is across store transaction and more than 36% is cross collaboration. So as a consequence of this, so if you look at our number, the store efficiency, namely the IMU GTV per store in 2020. This is the total number. The big picture for our product brand of Lin Jia year over year increased 21.2 percent and for our franchise brand of Douyu year year, they increased 18.7%. For our connected brand in baker platform, year over year efficiency increased by 17 point percent. This is a big picture. If you look at the cohort base, the efficiency year over year increase is over 26%. Thank you. Thank you. It's very clear. Thank you And your next question comes from the line of Jim Lam from UBS. Jim, your line is now open. So there are 2 questions for me. Number 1 is about what do we see in terms of the GDP trend for the primary and also secondary transaction? And also, do we have the guidance for 2021 GTV? And my second question is regarding the margins. We see that during the 4th quarter, adjusted net margin is about 8.8%. And which city has the highest adjusted net margin? And what is the level of that margin? Thank you, John. This is Xiaoping. Let me address your question. So we see steady growth, especially for the existing home sales sector. This will be reflected in our business outlook for the Q1. As I mentioned just now, we expect revenue for the 4th Number for the Q1 because Q1 is still in progress. So regarding the second question, we see this margin is So let me clarify. Internally, we do not measure our financial performance by cities. We are just as a consolidation of the big entities. So And also we just can comment and say internally we have a management, this is a managerial management, it's like the store As I just talked with last analyst, we measure the store efficiency by different city, different brand. So this is our internal environment so far. So we can see the Shanghai It's very good because where we have our business, we stepped into Shanghai for 3 years and we continue to recruit new graduates from the college. And also in Shanghai, Our local management teams issued so many service guarantee and so many discount for the Tianjia agent. So Overall, the client satisfaction has improved and the API has continuously improved. So the efficiency of store as a consequence continues to improve as well. Thank you. Okay. Thank you. Thank you. Thank you so much. And our last question comes from the line of Thomas Chong from Jefferies. Thomas, your line is now open. Thanks management for taking my questions and congratulations for a strong set of results. My question is more about the long term outlook. Can management talk about how we should think about the long term trends in terms of the GCV and profitability? Are we getting a bit even more optimistic about the outlook in the next few years? And on the other hand, Can you comment about any technological upgrade that we should be aware with regards to our backend ecosystem? Thank you. Thank you for the questions. This is Xu Tao. Let me address your first question. Regarding our long term GTV revenue and profitability projection. Actually, last year, when we prepared the IPO, we have this IPO model and the releases to the market. So we still keep our IPO model as that changed. So in that model in 2024, we see the GTV will be CNY7.6 trillion, net revenue will be over CNY161 1,000,000,000 and net profit will be adjusted net profit will be RMB18 1,000,000,000. So, so far, we will not change this projection because we need to balance our investment in future and also our profitability and the management of Beike, we have a strong confidence to beat and raise on this. So regarding your second question, I will invite our CEO to give some further explanation. This is Danny. Let me address your second question. So since we actually have been accumulated huge amounts of data in our operational history. So in terms of the AI evolution this year, we'll continue using the technology as well as AI capability to continue to iterate our products and to further help the agents to get better services as well as serve better to our customers. So we're using a lot of different types of the tools, as I mentioned before, such as Continue to optimize as well as improve their efficiency as well as productivity. So in the following in the previous experience. In terms of the industrial Internet, we truly believe the engineers' capability Definitely can help of the service as well as the service providers within the industry can bring better. Definitely in the future, we will combine the 2 part of the culture and the capability together to continue to improve the efficiency and for the Yixin network. Thank you. Thank you. Thank you so much. And due to the time limits, I will now turn the call over to your speaker host today, Mr. Matthew Zhao, for closing remarks. Yes. Thank you, operator. Thank you once again for joining us today. If you have further questions, please feel free to contact Beike's Investor Relations teams through the contact information provided on our website. This concludes today's call, and we look forward to speaking with you again next quarter. Thank you and goodbye. And that does conclude our conference for today. Thank you for participating. You may all now disconnect.