KE Q3 net revenue 23.1 billion yuan, a year-on-year increase of 2.1%, net profit decreased by 36.1% year-on-year | Financial report insights

On November 10th, KE released its performance announcement for the third quarter of 2025. The report shows that the company's net revenue for Q3 was RMB 23.1 billion, a year-on-year increase of 2.1%; however, net profit fell by 36.1% year-on-year, presenting a situation of "increased revenue without increased profit."

The decline in profitability has already been reflected at the gross profit level. The gross profit for the third quarter was RMB 4.9 billion, a year-on-year decrease of 3.9%; the gross profit margin dropped from 22.7% in the same period last year to 21.4%. The financial report pointed out that this was mainly due to a decrease in net revenue contribution from existing and new housing businesses, which historically contributed higher profit margins compared to the overall gross profit margin. However, part of the decline in gross profit margin was offset by an increase in the contribution profit margin from housing rental services.

The following are key data from the financial report:

Financial Performance:

• Q3 net revenue RMB 23.1 billion, a year-on-year increase of 2.1%
• Net profit RMB 747 million, a significant year-on-year decrease of 36.1%; adjusted net profit RMB 1.286 billion, a year-on-year decrease of 27.8%
• Gross profit margin decreased from 22.7% to 21.4%
• As of the end of Q3, total cash, cash equivalents, and short-term investments amounted to RMB 55.7 billion

Core Business Progress:

• Total transaction volume of existing housing business RMB 505.6 billion, a year-on-year increase of 5.8%, net revenue decreased by 3.6% to RMB 6 billion
• Total transaction volume of new housing business RMB 196.3 billion, a year-on-year increase of 13.7%, net revenue increased by 14.1% to RMB 6.6 billion
• Net revenue from housing rental services RMB 5.7 billion, a year-on-year increase of 45.3%, achieving over RMB 100 million profit for the first time in Q3
• Net revenue from home decoration and furniture RMB 4.3 billion, basically flat compared to the same period last year

Profit Dilemma Behind Revenue Growth

KE's Q3 financial report presents a typical "increased revenue without increased profit" dilemma. Revenue recorded RMB 23.1 billion, achieving a year-on-year growth of 2.1%, while net profit fell by 36.1% year-on-year, and adjusted net profit also declined by 27.8%.

More notably, the gross profit margin narrowed from 22.7% in the same period last year to 21.4%. The existing housing business was the main drag—despite a GTV growth of 5.8%, net revenue actually decreased by 3.6%. Management attributed this to an increased proportion of transactions by BeiLian brokers (which recognize revenue on a net basis) and a deterioration in the absorption rate of fixed labor costs at Lianjia stores. Changes in transaction structure and rigid costs have jointly squeezed profit margins. The weakness in the new housing business is also evident, with both GTV and revenue declining by over 13%.

Rental Business as a Bright Spot

In this financial report, housing rental services became a highlight. Q3 revenue increased by 45.3% to RMB 5.7 billion, contributing over RMB 100 million in profit.

However, it is important to note that the costs of the rental business also rose significantly, increasing from RMB 3.8 billion to RMB 5.2 billion, a growth of 38.8%. This is a typical model of exchanging scale for profit—under the worry-free rental model, the number of rental properties increased, leading to simultaneous expansion of revenue and costs Whether it can continue to be profitable depends on whether the scale effect can cover the rise in marginal costs.

The home decoration and furniture business is relatively stable, with revenue of RMB 4.3 billion, remaining basically flat compared to last year, and profit contribution increased from RMB 1.316 billion to RMB 1.376 billion.

In terms of stock price, as of the time of writing, KE has risen over 3%. Since the beginning of this year, KE's stock price has fallen nearly 10%.