A：The key financial takeaways include total revenue returning to growth despite a modest year-over-year decline, profits increasing significantly, and a material outperformance of both GTV and revenue. Gross margin grew 6.7 percentage points year over year to 28.6%, while GAAP operating expenses fell 14.1% year over year.

A：Existing home transaction services experienced a return to growth with a significant improvement in profitability. GTV reached 629.89 billion, up 8% year over year and 17.9% quarter over quarter. Revenue was 7.02 billion, up 4.5% year over year and 14.5% quarter over quarter. The contribution margin reached 46.1%, up 6.1 percentage points year over year, driven by a lower fixed labor and a structural shift toward higher margin platform service revenue.

A：Contribution margins across all core business lines improved year over year and quarter over quarter. The second-largest contribution margin came from the new home business, which remained stable year over year while profitability continued to improve with contribution margin rates at 28.8%, up 4.4 percentage points year over year.

A：The home renovation and furnishings business saw a decrease in revenue of 30.1% year over year and an exit from cities with a weak economic environment in the new home market. The Q2 contribution margin was 39.6%, up 7.5 percentage points year over year and 3.4 percentage points quarter over quarter, driven by lower material costs, centralized procurement, and refined cost management.

A：Home rental services had a decrease in revenue of 14.8% year over year and 3.6% quarter over quarter. This was due to transitioning to a lighter product model utilizing net basis revenue recognition. Managed rental units continued to grow, with a revenue increase of 6.9 percentage points year over year, reflecting an operational improvement and a physical shift towards a more profitable product mix.

A：Store-related costs were 550 million RMB, down 25.9% year over year, and operating expenses fell 14.1% year over year. Operating expenses rose 21.3% quarter over quarter due to higher selling expenses. GAAP net income was 2.624 billion RMB, up 185.6% year over year, and non-GAAP operating profit was 3.592 billion RMB, up 123.6% year over year. GAAP operating profit reached 3.026 billion RMB, up 185.6% year over year, with a 12.3% margin, up 8.3 percentage points year over year.

A：Net income was 3.185 billion RMB, up 74.5% year over year, and the net cash balance was around 67.3 billion RMB. This ample liquidity and strong risk resilience supported business development and shareholder returns.

A：The purpose of the company's share repurchase program is to enhance shareholder returns and create long-term value by balancing business development with shareholder returns.

A：The new operational strategies have led to a shift from tracking citywide metrics to analyzing specific districts or projects, resulting in tailored solutions. This has improved agent efficiency and income, enhanced profitability, and maintained stable service quality.

A：The company has regrouped operational units based on actual client needs and expertise, resulting in project experts for professional presentations and client experts addressing specific family needs, thus making agents into project and client experts rather than transaction-focused.

A：After the new operational strategies were implemented, the FS 700 agents increased their average transaction efficiency from 2 to 5.6 transactions per agent, and the zero-transaction ratio dropped from nearly 25% to under 10%.

A：For the company, consumer-centricity means that as the platform moves closer to the consumer, it does not diminish the role of agents but rather leverages them. The company recognizes the value of having agents who can provide continuity of service, gain client trust, and make informed decisions, as well as compensate them based on skills independently verified and compensated.

A：With the help of AI, the company is transforming single agents into groups of independently valuable specialized roles, allowing for more dynamic and specialized service provider ecosystems.

A：The impact of AI on traditional real estate transactions could lead to a reduction in the use of static information easily accessible by AI, and thus may affect traditional real estate agents' roles, as decision-making might increasingly rely on more complex and specialized inputs.

A：The company is preparing for the changing landscape by reducing reliance on easily accessible information and instead focusing on local market assessments from seasoned managers and capturing specialized insights from AI. The company aims to mitigate uncertainty in the industry and value judgment and accountability over static information.

A：AI is transforming business functions primarily by serving as an efficiency tool or a direct variable, requiring unitization; it is also changing management through the use of quantifiable data, altering labor distribution by breaking down task segmentation, and reshaping organizations to be more dynamic and efficient.

A：AI is improving consumer experiences by solving their problems and is transforming management by moving towards a focus on individual properties and clients, utilizing unstructured data and AI-generated insights to manage more personalized aspects of business operations.

A：AI is changing the distribution of labor by breaking down traditional segmentation of tasks within companies, including in finance, human resources, products, technology, and various operational stages, allowing for a reallocation of labor between humans and AI.

A：AI is enabling agencies to compare proposals using a dynamic knowledge base, allowing agents to better understand clients, which in turn leads to improved deal closure and the development of reusable organizational capabilities. This reshapes the organization to be more efficient and adaptable.

A：AI reduces fixed costs and increases variable costs, which allows for rapid iteration and innovation. It lowers the barriers to experimentation and enables high-frequency, low-cost gains, facilitating a shift from heavy, slow investments to quicker, more frequent tests and trials.

A：AI shifts the focus of managers from merely presenting numbers to creating real business value. This encourages managers to stop being passive and to actively engage in creating value from the front line, changing the balance between human intervention and AI automation.

A：AI is perfecting workflows, making human intervention in certain tasks unnecessary, and enabling human interaction with AI systems to work efficiently. This creates a transition towards a model where human roles are supplemented and supported by AI technology.

A：The key considerations for implementing AI in organizations include determining whether AI is a direct variable that necessitates a regrowth of the company with AI, placing heavy bets on deep service, deep data, and a platform ecosystem, and separating areas that require deep expertise from those that require more investment in rapid testing.

A：Before fully implementing AI, organizations must validate four key aspects: professional use cases, the ability to return to the front line and produce high-quality adjustments, the process and judgment capability to earn trust and recognition, and the ability to turn a single success into a replicable capability.

A：In Q2, the overall property market showed a diverging trend in volume and price with fluctuations in momentum in Q3. Specifically, existing home market transactions displayed a structural recovery with prices bottoming out in Q2, while registered existing home transactions grew faster in tier 1 cities which also showed greater sequential price resilience. National prices remained broadly stable year over year. In the first half, tier 1 cities' existing home prices rose by 3.6% quarter over quarter, whereas lower price homes outperformed mid to high-priced homes. However, the transaction mix across unit funds remained stable, indicating housing demand didn't broadly downgrade to smaller homes.

A：The company is focusing on capturing structural market opportunities to strengthen revenue by allocating resources based on market performance across cities, customer groups, and property types. They are reinforcing coverage and enhancing content, precision, matching, and professional execution to help customers make better decisions and convert genuine demand into transactions. The company is also continuing to reinforce financial discipline and resource allocation, with a linear cluster structure that improves their ability to counteract or fend off marketing volatility. They prioritize their core professional service network over short-term profits, avoiding extensive expansion and ensuring that investments align with ROI and service validation before scaling. This approach is designed to efficiently convert transactions into profit and cash flow.

A：Profit improvements in Q2 were primarily driven by higher contribution margins across the core business and lower operating expenses for the core business. This resulted in a year-over-year and quarter-over-quarter increase in the group's gross margin to 28.6%. The profit growth can be attributed to lower cost expense management, enhanced productivity, and reduced fixed labor costs. The break-even point was also impacted, alongside a persistent baseline, interest in operating efficiency, improved housing transaction coverage, and enhanced customer conversion for both new homes and existing homes. This translated into better monetization and channel efficiency, which drove profit growth.

A：The company's strategy to optimize resources and operations involves several steps. Initially, they are focusing on achieving value for revenue and profit growth without simply extrapolating past results. If the market improves, they aim to release stronger operating leverage and generate greater profits. Their current structure is designed to increase upside potential and downside protection. The company's strategic transformation includes optimizing resource allocation for the current market and directing limited resources towards initiatives that create customer funding rather than just cutting costs. They plan to use workflows, incentive evaluations, and platform tools to impact efficient allocation into their organizational capacity to support sustainable growth.

A：The existing home business performance in Q2 was attributed to a structural recovery in transactions rather than extensive network expansion or pricing. Higher unit productivity within the company's sample network and a better conversion of platform service value into revenue drove the performance. Specifically, the increase in existing home GDP grew by 8% year on year, with a significant 20% transaction volume growth. Unit productivity in the network saw a year-over-year increase of nearly 40%. Active stores and agents remained broadly stable, but there was a 26% rise in the average transaction price per active connected store, indicating a shift towards high-quality operations. The company's efforts in connected store performance and the conversion of platform service value into revenue were key factors contributing to the improved profitability.

A：The Q2 income growth was mainly driven by the independent recovery of high-quality projects and higher conversion efficiency. The company collaborated with high-quality projects and refined their project identification process, effectively allocating resources to high-potential projects to boost conversion rates. For the second half of the year, it is assumed that markets will remain in adjustment, with conscious customers focusing on optimizing project mix and improving controllable operating efficiency.

A：In the long run, the new home business aims to address customer housing decisions rather than just extending the service chain. Consumers in a buyers' market face complex choices and require more than access to projects; they need an understanding of project scalability, product value, and trade-offs regarding price, layout, amenities, and whether their needs can be met. The company is evolving from an intersection channel to a customer-centric model, providing full cycle services and integrating consumer impact into project research, positioning, sales, and decision-making to support their consumers.

A：The three strategies for converting consumer insights into value are: 1) Early consumer insights and matching, using data from existing functions like end views to understand demand and aid project positioning and marketing, reducing mismatches between developer products and actual demand; 2) Translating product value into comparable decision metrics, turning complex factors like location, layout, and natural light into intuitive content and providing explanation and other services to assist decision-making; 3) End-to-end project operating capacity based on customer feedback, linking customer analysis content and channel sales for projects, and making timely adjustments and resource allocations for improved efficiency.

A：The company is managing risks by focusing on sustainable valuation, better replication as it expands, and deepening its service scope. It is being prudent with payment terms and developing credit risk management. In the long term, sustainable growth will rely on a deep understanding of consumers and their needs, translating into high-quality revenue, new healthy profitability, and strong cash collection.

A：The year-over-year revenue decline in the home renovation business is attributed to the exit from inefficient city stores and acquisition checks over the past year, along with overall demand pressure due to fewer new home deliveries and competitors using high channel incentives to retain existing homeowners. The decline is considered largely complete, and the company expects no further broad-based impact this year. The revenue contraction is being addressed by provider productivity improvements, store cost optimizations, and contract value growth as a leading indicator. Revenue recovery is anticipated from positive internal cooperation incidents, and long-term growth will rely on maintaining high delivery quality via frequent renovations and enhanced user experiences.

A：The key strategies for the home renovation business to improve efficiency and profitability include stabilizing the units under management portfolio to reduce rental channel costs and boost the tenant renewal rate, improving efficiency to lower per unit delivery costs, and enhancing incremental scale quality by tailoring products to withstand rental fluctuations. The company plans to pilot separate transaction tasks to boost specialization and personnel efficiency, optimize service areas, and match task scheduling. Additionally, it will focus on improving service quality to ensure sustainability and to translate scale growth into profit growth.