Q4 2023 KE Holdings Inc Earnings Call
Hello, Ladies and gentlemen, thank you for standing by for K E Holdings Inc's fourth.
Fourth quarter and fiscal year 'twenty twenty-three earnings conference call.
Please note that todays call, including the management's prepared remarks and question and answer session will all be in English simultaneous interpretation in Chinese is available on a separate line for the duration of the call.
To access the colon Chinese you will need to dial in to the Chinese language one.
At this time, all participants are in listen only mode.
Today's conference call is being recorded I would now like to turn the call over to your host MS. Fittingly IR director of the company. Please go ahead sitting.
Thank you operator, good evening and good morning, everyone. Welcome to <unk> Holdings, Inc. What they cause fourth quarter and fiscal year 2023 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 that says okay.
Com on today's call we have Mr. Stanley poll, our co founder Chairman and Chief Executive Officer.
It's just how she our executive director and Chief Financial Officer, Mr. Polin will provide an overview of our strategies and business development and Mr. Hu will provide additional details on the company's financial results before we continue I refer you to our safe Harbor statements in our earnings press release, which apply.
Through these call as we will make forward looking statements. Please also note that they cause earnings press release and this conference call include discussions I'm not used to GAAP financial information as well as unaudited non-GAAP financial measures.
Refer to the company's press release, which contains a reconciliation of the I'm not non-GAAP measures to comparable GAAP measures lastly, unless otherwise stated all figures mentioned during this conference call are in RMB, but today's call management will use English as main language.
Please note that the Chinese translation is for convenience purposes, only in the case of any discrepancy managements statements in their original language will prevail with that I will now turn the call over to our chairman and CEO. Mr. Stanley Poll. Please go ahead Stephanie.
Thank you <unk>.
Hello, everyone. Thank you for joining Baker's fourth quarter and fiscal year 'twenty to history.
Conference call.
So it was our first full year will be cool.
In terms of our business, but more importantly.
Our organization is good which bolstered our teams deeper sense of purpose and he is buyer Greg.
Jason you us to move forward and embraced more possibilities.
Over the past two years, we have made a series of price adjustments.
Strategy and business operations face changers, we are gearing up for crossing the Max mountain to capitalize on the promising residential market with a technology Cleveland well installed essential services painful for better living.
These efforts have created more for our future.
Skill wise Ah one body business.
Potentially out on the market.
Our new initiatives take you off.
What profitability when bought a business have reached historical highs in Europe.
The twos Havent seen significant improvement in core cities.
We have achieved back soon.
Five cities in terms of integrated wouldn't body, two based business model with Starwood called consolidation and end to end optimization.
More importantly, all of them.
Asian game Unity and cohesion.
The Senate just two developments in 'twenty to 'twenty three guided by the one body issue win strategy has laid a solid foundation for our company.
Well take a shared understanding within the hour.
All of our organization.
We have more certainty over the past I had.
Dave's affirmative.
Now, let's take a more detailed look at our performance in 2023.
Overall, we achieved strong results in a turbulent market.
Full year 'twenty bittersweet, we recorded a G T V O M Street poll, so you'd point to whirlpool.
I'll I'll pass them up 20% year over year. He television all the existing home transactions grew by 29% year over year, which notable market penetration improvements in most of the cost of these full.
Full year, CTV or new home transaction goes up 7% year over year significantly outperforming the market as compared with a year over year decline almost 6% in China total new home to television according to the M D.
And a decline of 18% E. G T V O see rfps public hundred developers.
As for our new initiatives pro forma sales.
Sales.
Home renovation and 40 systems.
Over 93% year over year.
A number where you only to mentor our peak rental services the past 200, who can solve it all.
Our full year total revenue increased by two eight.
8% year over year to RMB 77, 8 billion.
Second the highest level on record.
Which was more than 20% attrition attributable to our new initiatives.
Regarding operation a breakthrough efficiency, we have been reducing costs and enhancing efficiency, while controlling risks over the past two years you see the cost a lot of I'll simply the sciences internally.
These efforts paid off in 2023.
Evidenced by the record high profitability, we said across our existing and our new home transaction.
As well as for the group as a whole.
We have also seen great improvement in our earnings quality and operational cash flow.
Two months in 'twenty, two or three have given us.
Great It sounds T marches.
And the Bose bolstered our confidence.
Yes, we maintain our solid strides.
<unk> body business in 2023, with some who are two axes to garage gurus in the second half.
By the end of 'twenty two 'twenty three transform served a total of 43000.
And the 890 stores, which of 42002 with stores up towards a 12%.
Year over year, the novel agents connected to all of our pencil was close to 400, and then 28 solve it in a number of our agents.
Bye.
15% year over year to 397 solve it also service providers on our platform achieved some substantively improvements in efficiency and income as well as a 44% of first dog Romney increase towards the end just doors.
P J.
Okay.
And three 1% increase falcon that as stores on a year over year baskets move.
Moving to our new initiatives into hubs all humans you scale this year there.
We have progressed, we affirm that we are headed in the right direction.
We also get a clear picture of where we fall short.
And about the potential for incremental senators.
Although home renovation on the flotation citizens and Sheila Grant at Baxter in the 'twenty to 'twenty three.
On the numbers when it matters most is that we get a much deeper industry understanding and knowledge base.
First with your lab developed a deep understanding of customer mindsets their happiness pinpoints.
And in frustration deeply motivated us to iterate our business models in line with the customer studies.
Industry, Saudi is emphasize the good century installation process with logic similar to assembly a computer.
Understanding our customers allows us to take it used to is from whom you are from a human pathetic.
Having our business logic, and then restructuring this restructuring process is based on real customer needs.
Thereby creating competitive barriers and has decreased.
We also understand that.
Our home to life.
Sales model comedy used that's the early development stage of little Green can see industries is not.
This Panama.
Leans on deepening our roots.
<unk> willing long term customer trust customer recognition and word of mouth doctors can be can we increase the transaction frequency and the density now turning to old peak rental services and.
It's actually a gradually throughout 2023, new problems began to your marriage at a faster pace, requiring higher business activity and accelerated a muddle installation.
We're successful on both fronts.
Oh, well kill free rental model recorded over 200000 manager units up from 70000.
In 2022, and our centralized long term apartment rental services as a manager.
10000 units on the Endo tiny tiny street.
From fiery was founded in 2022.
Or are you evaluating meetings rental orders.
Our platform every year from conventionally lower value added has ground to a brokerage services to higher value added long term rental property management services.
The call behind Us.
First of all understanding into the additive value, which are home owners and the tenants' needs and our ability to serve second our ability to control risks.
This requires high operation.
Sequencing in 'twenty to 'twenty, three we upgraded the rental products to enhance the value proposition to homeowners and experiencing with concur and we redefine the rows are our key service providers all of these efforts.
That creates.
Our sustainable business models in Sweden merch.
Only by advancing our understanding of the fundamental between dry drive industry progress for 2024, our goal is to achieve Bruce with stability focus on quality and efficiency and a megadeal editions on long term on long terrorism.
Tell me the strike.
Striking imbalance between business growth the risk control is a fundamental challenge for every organization.
Yeah, I'll I'll put our approach we need to respect the law of the market in the same way farmers honor. The law of natural we also must pretax I was fittings.
From storms to assure a fruitful habits over the past three years, we focused on mitigating risk and reducing uncertainties and needs to know turbulence. This has significantly improved our safety margins and deepened our roots in the industry on top of that or.
For developments that will come from innovation as we face a different environment now.
With new tenders, we need to find new solutions. The first changes like you're shifting a.
Our priorities for a wind body. This is still in the agency income will win the most important centers no efficiency I think the builders have become more important.
No.
<unk> seen resource allocation mechanics.
We've seen a large pool of talent with Afirma, our <unk> compatible and adventures in the past.
He ever going forward. This advantage is scale may not be the key to help us meet our customer demand.
<unk> benefits and ease stay at Hooters.
Agents mature their needs are also change from how you come to work life balance.
As we navigate these tenders, we have already seen our frontline teams pickings Dave's a hat, let me share a few examples our platform is showcased many distinguished home broke acreage brands lots of French has been like full song that was kind of their store counts for them.
So when some of these five years does your strategy focus on differentiated urban coverage and in depth. It's proration you lose your market.
However, U S fast from store location selection and development planning to internal communication and team building.
Those are skillfully design top down approach. We are also honored to academies are bumped to the French fries and like.
You'll see in the top.
Yeah real estate.
FIFO gross things John Baker.
2019.
Defining the market trend near gross strategy emphasize on collaborate and historical nurse and the agents with the quality of service, there's any risk of illnesses.
It's actually the especially those haven't.
Oh, rather hard times by efficiently leveraging our resources. They are actually I went to your service model innovations, let's start with the first transaction under our you'll see in my model had been customers locking new homes before older homes were sold.
On the store phones, we place a strong emphasize on a large store strategy.
Which demand excellent leadership and management skills for almost all operators taking hours in chop wrench ores.
Being lunch how teach you done some of them are your Shanghai. As example, the store managers had a clearer parent plans for staffing and operate no gracious, making each core business line merge by the agent pump in the corresponding fifties. Please sure lumpiness in it.
During key services stage, such as face to face consult consult relations with homeowners. The manager also helps the team to calculate awareness I would give.
If you're voting in home owners niece, and developing a methodology with it to further strengthening the leadership SKU almost all operators managing large doors Grainger has launched the store leadership development program.
D. P. This year the three year program I'm to re shop store managers leadership model through operating planning quality assurance efficiency improvement tenant goes T magazine and so long.
I'm sitting up a comprehensive certification system linked to Korea developments, where incentives and C. O D. P M to Nick to neutral, what's the tayo managers for the industry.
The ancient sorry, our dedicated agents have been instrumental in introducing numerous innovation initiatives.
So it's quality and efficiency, we always saying closing a transaction thing is just the beginning of my service case. This is not just a slogan or agent from Shanghai, Xinjiang Cool Paley set a good example, she deliver.
Special photo album for homeowners upon property hangover.
The album documented details of the apartment during these ideals housing maintenance children have you.
Cholmski et cetera or.
Hey, good memory of their path to home is the buyer pay this idea we have introduced a painting Auburn companywide danja honoring the Hanover, Oh home with these creatures memories.
This example of a gleam proration of new paths for quality and efficiency.
Gross with dipping a marketing process going forward.
Pennsylvania, and the widespread adoption of 10 knowledge, maybe the key as such in 'twenty 'twenty four we need to open our minds the understanding of the relationship with <unk>.
And tech knowledge embrace in the great centers, New media is another powerful falls, we want to better your pool and leverage finally business model innovation is another possible solution offers.
Offers and events are west I'll be with central services model for better living within its core initiatives such as membership system and a snapshot stars. These mechanisms, we will foster deeper senators under the wide bodies to win strategy.
Energizing obesity.
Oh.
Politically.
Beijing is our mother ship I understand at the top of skill in many ways. We believe it's it's both it's both the best innovation grown and we plan to conduct more efficiency.
And the modeling improvement fails there.
For our emerging business our main focus in 'twenty 'twenty four is oncology.
Well home renovation, when they're finishing a funny, finishing the new the next step is to continually enhance our understanding of customer needs you see a wall deepen our capability to get the equality protest process innovation technology, and our supply chain management, thereby countervailing customer trust and the drug.
Future business groups.
Well they could rental services, there's a huge American men up rationally, we always use 10, British Saudi the foundation and now on their store net our next day strategy is clear we enhanced the efficiency through managing individual service capabilities. There is various improve.
<unk> occupied occupancy rates and their profitability and evaluate are elevating service quality by various dedicated rows. What's more important for this business is to explore innovation model that a balanced risk and return better.
We can replicate them look to long term growth.
Prospects, while safeguarding our bottom line in Turbo 10 knowledge, we have the strong strongest data assets and the richest offline scenarios in the leaving the industry due to digitalization and technology holds the greatest potential to solve that.
Long term efficiency issues for antigens in 'twenty 'twenty, four will be enforced and events that digital utilization across all business areas and the industry conduct more in-depth proration and are proud of this around technology driven initiatives.
Regarding quality.
Is it says the upper limits of how much we can be motivated by our customers and it represents our business well too long in 'twenty to 'twenty four we are doubling down on quality exploring ways, where you have an ability to improve quality and to create value through product services.
Operations.
Commitments for example, we are innovating supervisory systems, and then put that to the low barrier beta customers on the whole platform.
Making sure we are always open to hearing from our customers this quality centric products and our capabilities represent the real value to our customers and the business also normally long tourism.
Capabilities less deposit customer feedback to continually motivated us while we're training our customers do you think it's factoring into our driving force to improve any wall. Our organization, that's a real power of them focusing on quantity.
Lastly, we never stopped in Q4, if we Christiana in 20 years behind and looked out with today.
What strategies might not work anymore.
What's new is really opening up a mine to reflect in the draft is called long term issues is a major task for us in 2024, where we are on solid ground with ample opportunities to make a mark to market in a bus to essential center.
My team maturity.
<unk> foam is true battles.
[laughter] fault together moving forward, we will continue to focus on the CS and hence encourage you supporting their learning from each other.
If going together by lending strengths to win another.
We are increasing assembly.
Wisdom boutique.
'twenty 'twenty four is that about a welcoming new possibilities uninsured injures each weren't guiding us towards more promising opportunities and happiness Cross NASA month.
Next I would like to turn the call over to our CFO. She totally with you on our fourth quarter and the fiscal year 'twenty 'twenty suite financials. Thank you.
Central study intended to history, the Chinese growth Monkey deepened, it's a transformation.
The words are concentrated release of pent up a few months before moving to a gradual normalization Nico yes attrition to rebound followed in the second half of two to three.
Goodbye.
Interesting on your home market that shows that people are shaking for homeless.
With later are being affected by the risks associated with a really sticky microstat I believe.
Mickey D type of supply.
And you can continue to repeat user pilot Nicky Moms income trust, both geography, and the G T V.
Transaction increased significantly year over year.
Showing homebuyers precedence for that to date billable home.
This is the basketball trend, that's trying not to Joe's monkey approaches mature.
Was this a virginian to dealt with no purpose.
Taking a comfortable leaving environment brings.
Bringing us closer towards our vision of junk, leaving.
This is an evolving environment our performance in 'twenty can easily demonstrated remarkable resilience.
Lead by our goal of achieving high quality coals.
A series of measures to reduce costs and enhance efficiency and mitigate the risks I Bronco a significant operating leverage.
Although we were revenue reached RMB 77 8 billion.
Eight two percentage points year over year.
Revenues from existing and new home construction services grew by 15, 9% under 6% percent year over year, respectively.
Oh hometown assessment services.
And then kind of steady growth with a solid foundation.
Revenue from other home renovation and 42 months out of all of the services.
On the new engine goes contribute to eight 4% of total seem to a little history.
The increase of 11 seven percentage points from Tinder to the truth.
Typically revenue from a homerun resolution and a bunch of business was RMB 10 9 billion.
I think by some default suite in the same year over year on pro forma basis.
Oh 50 also encourage substantially each will get to the suite.
Contribution margin go by seven 3% to 47, 2%, whether its new home construction services under two nine percentage points to 26.6%, whereas the new home construction services.
Most striking new Yorkers Tokyo hubs.
Our operating expense ratio dropped by two one percentage points year over year.
Adjusted operating margin of 11, 2% for the year.
All of a tough market.
Pushed by seven nine percentage points to reach 12, 6%.
Bringing our full year adjusted 19 call to RMB nine 8 billion.
Learnings clock you pulled the meaningful it is.
Well we are.
Operating cash inflow.
11 punch of <unk> utility to the street.
114 times, well above net income for the year.
Yeah. So bill by 50 days year over year to 55 days literally we have delivered commendable results utility industry.
Turning to our performance in Q4 of top out in Boston each grew by double digits all year over year basis.
Just one game.
Total courses increased by 26% year over year to RMB, two 2 billion.
Speaking to talk with you about guidance.
They are cute or choose a better than expected performance for the new home construction services Homerun Alicia.
Merchant services.
Gross margin reached 25, 5% up one percentage points year over year.
Oh got 19 Com rose by a T plus 2% year over year to RMB 607 Committee and all of our non-GAAP net income increased by 10, 8% year over year to reach RMB 171 billion.
For home consumption and services.
For the fourth quarter, which means they'll put lungs.
So fourth quarter looking at the Oh.
The cone cost performance between new and existing home market the national White.
So you're sitting home monkey I, just see that year on year increase driven by the low base effect caused by your opportunity there to spend I mean.
Chris Hickey E home Monkey in second under such a city.
Sequentially.
So you can home market has been vascular stable since October.
But if he can pharmaceutical policies under increasing lucky maturity.
Revenue from New home construction reached RMB, six 814, plus 6% with D. T D, reaching RMB 406 8.1 bidding.
So to your 0.1% both.
On a year on year basis.
Northland GTA V. So by Blackstone shows even more robust growth at 41, 1% year over year.
All of a strategic functions to more collected stool on the pulse of performance from the second tier cities and the below EBIT.
Market fueled by the inquiries the propulsion of G. T V. So about the connect to stores.
Meanwhile, just structural change.
But to a lower cost and revenue synergies equal home transition services to.
The contribution margin.
Home transaction services reached 44, 5% totaling five seven full percentage points year over year.
She beauty poach was a low base you just didnt kill rate of stringent really true where operations were nearly impossible because it doesn't meet.
The contribution margin fueled by a full point, but put some pinch points cultural culture.
I really do choose the actual bonus issue being truthful.
In terms of new home construction services as I mentioned, the national New home market remains sluggish.
So our seed shows the cells from the top hundred give up her declined by 62% truthful yeah over here.
<unk> by 12% causal quota.
The industry is still undergoing a process of just surprise construction and the risks being cleared.
Well, maintaining our lead source code.
We proactively and strategically he spun our channels in Q4.
Our new home CTV reach RMB 280.
Oh by 19, 7% year over year on nickel to listen to replay 9% sequentially.
Equally outperformance monkeys.
Revenue from the new home construction was RMB seven 6 billion.
On April 5% year over year.
Eight plus super such a crucial at all.
It's going to be close.
This is a reflection of all the study my competition capability.
Duncan.
The contribution margin for new home construction services slightly increasing year over year, maintaining a high level of 26, 4%.
Our ability to grow contributes monkey. Despite the decline you could run your it's either testament to all the operational resilience.
In Q4, the percentage of commission income from MISO would give us goes from $46 eight you'll see 253% youthful.
Protest with commissioning the bus model also remained at the high level accounting for 53% of total Commission revenue.
Would you like to emphasize that we.
We have never and will never compromise on risk control to outperform to monkeys.
Revenue from the home renovation for the Chief merchant services go 500.
Six 6% year over year in Q4.
Accounting for an increased portion of our total.
Revenue I said 32, 6%.
Significantly increased by 13 five percentage points from the same period opportunity there too.
Our home renovation a bunch of business continue to grow at a fast pace.
I suppose the flip sues you both SKU on efficiency.
In Q4, I'm trying itself reached RMB three point might be.
1990, 7%, you'll be in the 19% lifecycle don't culture.
Revenue reached a new high of RMB, three 6 billion.
73, 9% year over year.
The percentage of contract yourselves contribute by our home consultant services continue to increase to about 47% of total just being truthful.
What they're demonstrating the synergy between all of the house.
Transaction and other residential services.
Moreover.
Although home renovation the furniture business has it grown moles that works well.
With furniture on the home front T cells to reach RMB, one 1 billion.
In Q4 accounted for around 29% of total contract yourself, making.
Speaking of three full percentage E coolant pumps, it's impurity opportunity to retool.
In Q4 on that revenue from other services increased by 100, 693%.
E L D under 21, 2% Cordova culture to RMB, two play might be for Mike.
The pilots by the Russian dysfunction of a rental company imagine the services.
Oh, so cost well RMB 727 million remaining almost stable in Q4 comparable it just didnt kill it hopes to get really cheap.
Lots of cost goes up subsequently to RMB 548, maybe year over year.
The increase of the human resources related cost mountain is causal sequential parking management services under the share based compensation expenses.
As a result of increased operating leverage of course puppies go by 25, 7% year over year.
Reaching RMB five 1 billion.
I'll go Smarten up one percentage points year over year to 25, 5%.
While falling by one nine percentage points quarter over quarter due to a lower contribution margin of these new home construction and a smaller proportion of when prompted.
Yes.
In terms of expenses.
Operating expenses for Q4 totaled RMB five 3 billion.
43.5.
5% year over year.
Typically G&A expenses rose by seven 7% year over year to RMB, two 6 billion mainly.
Mainly due to an increase in provision for bad debt from one single day buttress for new home construction services.
The increase in personnel costs.
With regards to the new home receivable provisions, we have to adopt a more cautious assessment.
Like fishing Baidu also single collectible assays.
By sooner Verde sports unpaid amount you'll be cool.
Is that something that you expect it to be impaired by over 50%.
He was the first culture, we made additional provision for bad debt a monkey true around the arm before he couldn't make it which represents over 50% provision on such a receivable on the other correspondents, which is collect twice that.
As a result, our platform as Sundar potion of secured receivables.
So every provision ratio for bad debt related to receivables from the city state hybrid give amperes are plentiful.
City, 95%.
Dolphin, a lucky expenses grow by 56, 1% year over year to be true point about that is the.
The rapid development of our foodservice and wishes Betsy's natural thought Paolo increase you know all the cells monkey spaces.
The increase was a result of the rights of Lucky Associates and all the Hudson consistent service business.
R&D expenses go by a full 0.9% year over year to RMB 534 million.
Mainly due to the salary increase of the R&D plus now.
Our support functions.
Income from operations amounted to a loss of 173, maybe in Q4.
Kentucky was RMB 387 meeting bumped the same kirill between the two the truth.
Got accretion margin, but not considered by 9% compared with two super stuff on coupons to get to the truth.
I'm talking call far more pushes was RMB 856 million.
Power was RMB, one 3 billion from the same period 22 nutrients noncash.
non-GAAP operating margin was four 2% compared with 8% from Q4 to get you the truth.
The year over year reduction in operating market, what's the many due to a higher operating expenses ratio.
In Q4, that's not income was RMB 600, something maybe up 82% year over year.
Net income was RMB, one point someone bidding but year over year increase of 10, 8%.
Moving to cash flow on the balance sheet metrics, but we're doing lots of nice operating cash inflow of RMB one points on some bidding truthful.
Yeah. So for Q4 was only 43 days dropping below 50 days for the first time. This is a testament to all types of risk controls.
On top of the approximate to the U S. Dollar $173 million were spent on the share repurchase it's culture.
Total crusher Gretzky rich at school customers as opposed to the people still amongst the two RMB $79 1 billion remaining at a high level.
Well it extends itself into 'twenty two suites.
We also placed a great emphasis on shareholder returns.
We spend approximately just over 787 million.
You know a strong buyback program on the canceled <unk> purchase shares.
The total number ultimately purchase share accounting for around the three 7% of the Companys total shelf before the start of our buyback program.
We also initiated our first special cash keeps them off the wrong, just under 200 million units a year.
That's the basis of a soft pocket shuffled the returns.
Two of them are supposed to final crush deepened in class, which has to be approved by the board.
The U S. Dollar general pointed one seven per ordinary share or U S. Dollar 0.3 find one played yes for.
The holders of ordinary shares on the holders or P. S O. The quality that's all IP.
So we'll fix it tricky to default respectively Joe.
Amongst paid for the final dividend will be approximately U S dollar 400 minutes.
Richard will be stunted by all of our surplus cash on the balance sheet.
As of yet.
Total shareholder return for Twilio to history.
Equally you see D O necking call.
Accounting for 100 gig, 9% well above 19 come for the year.
In addition, what you're backing Langton.
Black tea stable total shareholder return plan.
Aiming to share the value, we create with all of our long term shareholders.
In doing so we aim to pull out over shareholder which is southern killed returns you know certain external environment.
Lucky Constance Ikea to recovering to digitally fall despite markdown facilities.
Okay.
Well continue to strive for excellence.
That's all in one bucket she was supposed to stay about at a fast pace.
Gradually forming a puppet cycle with scale efficiency and quality.
Blogging crowds with strengthening our initial put them.
In cold resources allocation and agree final appreciates.
In terms of the financial strategy, we will continue to enhance our financial structure.
On a per watt comprehensive support.
And that's what expertise.
Really now moving in efforts to prevent the risks and establish regulations.
Well, the new home construction services.
What about proactively control risks.
Strictly followed up a run team in concert with simple measurement.
Regarding to our new emphasis including home renovation and function.
The rental property management.
We seek to lucky's function.
The old replicate all of a soda he's great business and the financial system.
Mike I'm, just kind of pellets from primary.
So it's a new business.
This will improve the initial posted on commission rates on the post data analysis.
Especially the ability for those business lines.
In addition to actively rewarding shall hold you will consistently for all kinds of safety of our reforms being crushed measurement.
Nike closely Sheila on the life science on it.
Satish create investment strategy and at the risk of preference country. Some are currently all of our cash investments.
It basically put us.
Liberty.
Actually the financial mentioned just to kind of a pilot well survives the ship got plus a housekeeper also organization.
To navigate this through cyclical fluctuations on the overcome tenders.
It's probably more of a gun and efficient the persistency vitamins. Furthermore.
Our proactive shareholder returns well, a longtime investor who have a company on its journey back to share the fruits of the companies' calls thank you.
Yeah.
Yeah.
Thank you.
If you wish to ask a question via the Syn fuel needs press. The stocky followed by the number one on your telephone keypad.
As a reminder, we only accept questions on the English language line.
For the benefit of all participants on today's call. Please limit yourself to one question and if you have additional questions you can re enter the queue.
If you're going to ask a question in Chinese please follow it with an English translation.
Your first question comes from Timothy Zhao with Goldman Sachs. Please go ahead.
Although physical and human.
Would acquaint or whatever that you took longer to goods that go on here with US now we at all cause like I don't know what about Shanghai Sanya, if you're trying to.
Now I'll call it you're right. It's on Kashi go pay a whole treehouse children's Sushil Sharma your combo chip.
To begin with as we've seen that.
You can call yourself, a little bit harder.
Oh there you go up if you don't do not the our senior women attorneys.
Sure.
I think Oh. Thank you for taking my question. My question was regarding the home renovation and finishing badness I noticed a all time high of three you had a very strong growth year and just finished nine commitment elaborated.
Elaborate what is the driver behind and what are the key operating metrics that you got focusing on and into 24, what is your key for cats and dogs in the operation of the Spanish Thank you.
Oh, Oh, Oh, it's all Oh, well, but I'm going to answer a question.
Yeah, we we got to be profitable in our home renovation in our finishing business even 20th century.
Well scale, all coincide yourselves reached RMB 30 points, where you're building up 19, 3% year over year, among our pro forma assets with it.
The reality of a growing by 74% to reach RMB 10 point I believe.
Profitability, we have 11 cities, you're probably operating profits in 'twenty three.
Both cities achieving operation.
Perfect.
On the $10 million.
The upgrade priced insight around 43% of the total contract sales.
Actually Pete.
Executable customer Ralph Rose from real estate agents in 'twenty than history.
Capital increase of 949 percentage points from 'twenty to 'twenty two.
Product portfolio also a more diverse.
Contracts yourselves on foreign insurance and home furnishing, reaching about RMB three points 60 bidding in 20th industry accounting for 27% on a total contract sales.
Five eight percentage points increase from 22 on a pro forma basis as humans, what our results the only improvements across our business operations.
Oh, well, I guess pension or mining driving driven by pension cost cities in Beijing, and Hangzhou contracted sales that you see on the two billing and somehow you're stating the RMB 1 billion. There were also six cities that have had control yourself over RMB 500 emitting.
Oh breakthrough in scales fall down home renovation, when our finishing business where money I think it's due to a three I read is the first high efficiency high efficient vintages.
Recall and emerging business.
The second thing is more diversified product portfolio now and.
<unk> hired do you ever kind of ability capabilities.
Yeah. So.
Our business outlook for 'twenty 'twenty, four we ought to break through with the ease of scaling and putting some new sweet spot for our business to be successful and then recognized by customers and the more important things I guess.
And finally and a key to this quantity. So you can turn it on you for running ensuring steady scaling attention. We have chosen quantity at keywords high quality delivery is a companion device in the home or in a ratio of industry. So now we can provide the customer guarantee.
When facing problems going forward, we plan to attack the.
Preventive measures to reduce problem of frequency finally, offering customer a tree.
Free the areas and are creating a positive cycle quantity right now the main problem regarding the innovation, including construction delays on the response slowness and so long we will take a series of measures to address pinpoints in 'twenty 'twenty four.
The first is southern construction timeline.
All stamps so new simultaneously. The second is we will establish roles in charging of the quantity control. These online on a Wednesday of associates to identify and resolve problems out there already as possible.
Well, you're enhancing quality, we aim to achieve towards the breakthroughs in the skill and the operation model in terms of any fall.
They're replicating our motto in most cities going forward Yeah. That's my quick answer to your question. Thank you.
Thank you. Your next question comes from Harry Chen with Citi. Please go ahead.
Yes.
Okay.
Yes.
I think there maybe a disconnection.
Raleigh Harry.
The next question.
Your next question comes from Jon <unk> with UBS.
Please go ahead.
Uh huh.
Jon: So you're going to challenge you guys have on your end that that awesome. Thank you.
So it's all in South Austin Affinion Awesome awesome.
TPN downtown Central.
Awesome.
The only once a month, you'll also find me a little off alcohol. Some tells me he's not going to assemble a handoff from Yale each car T or towards the end of that you want Oh I'm sorry, yeah.
So they don't get some hike am Bianca.
Yeah.
Not well find out what they want cheap and so what was the change from 18 to existing home market for 'twenty to 'twenty three.
And also what's the Oh for focus for it to come from your existing home business for attention for this year.
That's the company plans to expand its store network.
Can you share more color on this.
Jon: Management also share some insight on this.
Yeah.
Okay. Thank you.
So I think of your job intended history wake it quite well.
Homelessness.
Speaker Change: But she wants to give any permanent in scale efficiency and the profitability.
The effects of the state market adjustments, we managed to reach and causing service providers just to be a big reason why we could jump on when's, the monkey and refunded to us at the beginning of last year.
On top of that we actually.
Actually connect with some old coffee brands.
An agent in the second half of last year.
Well the funding overall purchase strategy and our infrastructure for better efficiency.
And to the industry or you can call them could you beat was up 29% year over year on the revenue was up.
Speaker Change: Super since I'm in kidney space.
Also significantly increase our market penetration in most cities, including.
Speaker Change: Beijing, Shanghai, Nanjing, coffee, Hangzhou, Jinan, Changsha, and Qingdao sounds simple.
Specifically with a focus on a few key areas to boost our existing home business into new tier three Oh wait.
Loans are restored and our agent network.
Angela for 22, new three the total number of stope.
Speaker Change: All in all were plentiful reached over 42 soldiers.
So an increase of 12% year over year.
The number of active agents, one pick a platform with over 397.
Speaker Change: An increase of 14% year over year.
And it will also enhance our operational efficiency. So it's a floating defense strategies like first in the face of lots of new on the provisioning I keep listings, where you buy the team's ability to identify the puppies.
And to create a virtuous cycle, all the securing high cultural issues.
They stop eating fish into mentioned truths under cooperation between the buyers and the southern agent ensure so quickly yourselves on the Chileans are high customer satisfaction, leading earth to secure most high coffee these things under bush of efficiency.
And second we adopt diverse online choose to optimize efficiency.
For example, we introduced AI assistant to help agents you pros that are responsive to the clubs and it's our ability to accurately you come up with at least.
Speaker Change: As a result to start an eight mm cubic feet on a bigger platform improved their subsidy.
Speaker Change: Oh.
We're well into the industry average TV per store increased by 29% and the.
The T V or agent was off by a 25% so heavily income per connect stall it increased by 7% year over year.
In fact, our top tier grounded in Georgia, and Virginia Shanghai.
Just stoked haulage decreased by 64% under the age of tongue rate decreased by two 1%.
Uh huh.
Our focus in 'twenty 'twenty four is on chromosome ecosystem.
Even in this ongoing all of sudden days since the market this year well see.
Probing a persistent cough initially.
Barry.
<unk>.
Speaker Change: Oh, well close what do you see big opportunities Chewy Spongebob network in many cities.
In the year of between two to three well pads that you connect over five so it's been used off and you see it.
You don't feel cities, where we have the longer appreciate it history like Beachy Hello.
Attracted the most customers and inquiries all the monkey.
Speaker Change: <unk> penetration since you're talking on commission, whose last year.
Speaker Change: Year when it was spun out of a coverage for the first time homebuyers in the city.
And those those feelings of most of the starting point of the churn of the whole month Grace.
In addition, we will also continue to grow sort of refund operations.
We're well transforming all ages from just making cells to become experts who truly understood what the customer needs.
We are looking to increase our presence on the customer sides by exploring different channels to bring more online traffic.
Speaker Change: For service providers, while working hard to create a moat.
He's ecosystem well.
Moving from a strong focus on profitability to providing both talking to support.
It's changed image of half of that efficient to stores to start making views and ensure higher put that keeps me start with the battery chain.
There are a host of collaboration and to share measurement, where just the owners.
You're proving to operational environment for stores and also increasing tariff infection, which is our platform.
And also for our self funded business.
Yeah in terms of disposal strategy, where he works with the largest DAU model well.
Well also opened some small stores you don't see others to increase off of service coverage.
Sure the penetration you've just hosts boats.
So makena stay for already a job he just strategy.
That alone old soldier plan to bring back to formal agents and the opening up to the cooking for the experienced agent from the industry to strengthen already Jackie.
Intrinsic to neutral we will focus on improving agent expertise, so that cleaning and talent nurturing building.
Speaker Change: The talent pool for one button through one specific strategy.
Thank you. Your next question comes from Griffin Chen with Citi. Please go ahead.
And so by doing something.
You've got to win it.
Griffin Chen: How shall I say I'm going to buy into a sound answer that somebody else would that cause you to eat them dogs, she doesn't worry about them, but now.
Well always have some claims have been signs that sarnia found each other chicken pizza sheets instead got finished them.
Griffin Chen: Beyond that point should send yamauchi, San you said, you'll use them I'll start by answering on what they hold the Yang you should see yeah, I've seen yeah, Michel who'd you should kind of keep alcohol thoughts you talked that.
You got those shifts you spoke out machine shop. It sounds like you said some pharma malcontent now thanks.
Speaker Change: Thanks management for the opportunity congratulations first on the Saudi doesn't didn't used to eat out and improving shareholder return. So my question is that how do you view the overall real estate market eat underneath wheat, how did the market performed recently, but the notable outperformance of the existing housing market compared to the new home market how does the managed.
And then a thing called the under 90 with it and how is that trend expected for the new and existing housing market.
Therefore, we are they continuing to differentiate.
Speaker Change: Our central Broking.
Speaker Change: Regarding to market situation in 'twenty to industry.
Several of the Lotto the turbulence in the monkeys and the overall SKU he's a middle of the deep adjustment.
We also.
Speaker Change: The monkey is shifting towards new homes at a fast pace.
We are seeing home GTA V national wide goes by or want to change it would still take the same year over year.
Oh official data showed the two homes accounted for nearly 40% of the full year growth to be a transition both of them.
There's a historical high.
Speaker Change: The new home market recovery flu shots.
The cultural fit with other.
National New home himself declined by 6% year over year.
Speaker Change: For the new home sell stuff to talk hundreds of millions of developers dropped by 18% year over year.
New himself so some amount of recoveries in the first culture with last year, but then it dropped again on Husky Halloween there I feel very low library.
Everything.
Hudson price continuing to adopt fourth tier city home prices, so a faster decline in fourth quarter last year, but overall, what you're thinking with the home prices while still paragon.
2019.
Home prices are stable on coal.
Speaker Change: The Lucky supplier demand continued to you both.
Leading to what we also saw polarization of the monkeys.
False demand side.
Roger keeps changing.
Demand for the home upgrades.
Dominate making up 50% total hockey moms with first time home buying demand I, just said in the Sun and the investment the mountain narrowing to around 10%.
Consumers are more inclined to purchase new homes.
All of a survey shows customer preference for its new home purchase go from 23% in June to get to neutral to a 35% in December to get to this week.
While interest in new homes dropped from 61% to 18% over the same time period.
Basically that's in home are meeting the wretched fun home buying demand and the people who want to upgrade their homes by setting one property shebang or other also untrue wholesale entering into that you're seeing home market first.
When you start to make hope demand due to the location and the predictability issue. That's abroad. So the model on the Port Arthur Chen with dozens of language carton consumers' needs.
Nonetheless buyers are still interested in the puppies location scare us address Oh, it's cookie songs.
Mountain for large size under hard price, the new home almost stable.
Overall, it's a mountain the resilience, but they just didn't translate into the transaction.
So still a wait and see momentum a mouthful buyers.
In 'twenty to necessary, so total number of clients viewings of properties.
Speaker Change: Cds total number of newly listed properties bigger plentiful, indicating sorry, the number of people looking to buy homes.
Speaker Change: You said it was a solid foundation such as the Shenzhen Hangzhou way opposite situation whatever was the Saudi the home purchase demand of consumers I hesitate to throw anything into the market.
Speaker Change: It's a market with our bones into home listings, all Dongfeng pluses, it's always new.
Inc, fourth of restoring confidence among homebuyers.
Speaker Change: Overall impulse culture home prices were lowered well people are still willing to make a transaction.
Again, the resilience of the few months.
Speaker Change: Regarding the supply side.
We're not histidine busters are paying attention to the number of homeless. These.
Concerned about the high inventory.
So number obviously homebuilding did reach an all time high in 2023.
It is natural result of the goals of the whole market. It also reflects the accelerated release home upgrades demand on the policy encouragement.
Speaker Change: The first tier cities more than 70% of seller will also the buyer.
Increase homeless thing just typically don't worry.
Some of the growth in demand.
Speaker Change: In addition, not all from lifting other real supply some.
Some home owners make their homes, just keep it twice and Moreover.
Speaker Change: Moreover, a portion of the older housing stock remains at these theaters, so a year with a very low liquidity leading to a continued increase in the total voting obviously popular cities.
When your homes served skew a mismatch between the supply and demand.
New home prices lowered since the neighboring eating homes.
Whole idea of the top cities, you'll feel birds and contributes to more protein of yourselves.
But for new home supply is key I read an immediate just surprised small concentrated you know probably suburbs working boundaries a week or.
So in hydro cities multi mountain multiple fueled by its new home supply.
So all like off the demand for new homes also calls a prolonged inventory clear and kill it on the supply side.
Well recently Murphy updates.
The policies continue to support the Murphys every location.
Articles cities of continue to optimize our policies in terms of our purpose restriction loosening like today's news both a homebuilder.
And the more financial support to supply side pumping conditions could improve.
Mortgage rates lowered its don.
So it's the efforts of the policy, both sometimes a marginal useful too.
So not to builds off of the easing policy since the twins into neutral shoot Boston.
Relative stability of today is the home market.
Placing home monkeys or T V OCC at home.
It's been very stable since October 22 industry.
During the Chinese new year, I was better transaction volume, obviously home our platform builds over by 70% year over year.
For example off the Spring Festival.
First tier cities, especially the syndrome, so second tier cities like a tonne due to machine coffee coffee under 19. So every existing homes house two weeks right after Harvey.
So which I reach from December to January.
Speaker Change: This aligns with if its all trends, indicating that's eating homies operating rates are very stable.
All of these things are leading indicators.
Speaker Change: The daily average of home showing under transaction volume.
Speaker Change: You did call out the change during the transferring weird.
Speaker Change: Rich I really ratio after showing change transaction performed better than the same period last year.
The paper for you guys.
Speaker Change: That's on the listing under priced stuff and the behavior of homeowners are praful.
Speaker Change: That's been bought them out at the beginning of the year with fluctuations.
Speaker Change: The phone for them Beaucage managers conference you guys had to do.
Speaker Change: Steady recovery since February.
In terms of the housing properties.
Also amongst the claims eating home price you guys towards a key 50 cities from January to February 22, four continue to narrow in two.
Speaker Change: Two reaching 1% in February.
Speaker Change: The number of cities experiencing a decline in home prices also reduced.
Speaker Change: So the reason the home.
Speaker Change: Recently, the new home market, according to see or see the cells of the top hundred developers declined 14 not year over year.
Through February.
Speaker Change: The 6% drop we felt for a long.
So continuing to weak demand for new homes has led to a low he says zoltan among developers to promote.
Yes.
Looking ahead into 2000 and grateful.
So really the marketing your second and third tier cities accelerates each transaction to be selling homes.
Hum professional ballroom, well kept the momentum the structural environment.
We believe these new home GTP will remain relatively stable.
That's the new home demand remains the key.
He will continue to fluctuate just a bolton songs.
Speaker Change: The supply side.
Such an environment.
They didn't get offers well take proactive measures to adapt and are focusing on enhancing production strategy and just sell through.
Thank you. Your next question comes from Thomas Chong with Jefferies. Please go ahead.
But somehow I need from you guys.
I don't want you in numerous times and inclusive culture.
Hi, My name is Peggy.
Yeah, well, it's all that much at all.
I wouldn't want to miss out on the condensate.
Well anyhow.
Yeah.
And the part that quite a while.
That's not new.
Claims management Baltic and my question. My question is about Hum Hudson Bancorp, Ethernet, which have experienced rapid growth in trying to trying to sweep could management.
A lot more color on what we have accomplished.
During the year last year and how it would be managing the risks it's about expanding our scale. I believe you said you met them and plan for the year trying to kind of cool. Thank you.
Yeah.
Thomas let.
Let me first summarize fiscal year 2023.
Our goal is to provide homeowners with a carefully eventual services and a reliable proxy mentioned services also provided.
Pendants, which are a safer and more reliable living experience.
And it's a twinjets industry was nokia or issues or fundamental capabilities.
Prudently spunky all we're all pushing scale with all of our decentralized they've gone to a measurement services.
Carefree ranch.
Growing from 70, southern unions banjo, two new junior truth to over 200 total units and.
In joke Attunity history.
We also intend to stop assets, all pushing efficiency on the rental service coffees.
Banjo opportunity to the street so okay.
OCA pitching right.
Tariff free rent increased by six percentage points compared to the year opportunity to Youtube, reaching 95 point bump.
The increase from the last time rental property management of accretion place the annuity Mount Oliver or tweaking.
Speaker Change: In terms of history, when we made the following.
Each region number one we made a significant upgrade to our company run model, which greatly reduces the seasonal fluctuations.
The risks associated with the affiliate or to release it also better but at this stage. The race will continue the monkey Duncan on dental practice.
I'm not sure we implemented refund operation.
Hi, Ricky funding coal rolls, along as a full cycle of parental measurement you sure prefer Duffy to some new songs all the operation process.
Speaker Change: Sorry.
We comprehensively enhance the service called it wrong to seven major pinpoint opted to attendance.
Improving our Thunder is the service capabilities.
You can't starve our service teams to response time on that.
Koji pre emptive problem solving.
So in 'twenty three.
Sure.
Yeah did you introduce history, our apartment business also spunky in scoop and efficiency.
The most intense Hilton housing units on the upper management.
Fortunately to date for first.
We have ambitious goals for the skill we manage.
Our focus will be primarily it's a whole series.
Beijing, Shanghai, Chengdu will be to keep hockey, but the mutual goals.
Second we aim to robustly establish on the 15th at all levels, including achieving operational breakeven into its core cities.
Continuously improving overall operational efficiency and quality.
Across beauty and the strengthening of a range of capabilities.
Improving efficiency, we are aiming for operational breakeven is a leading cities. Although we also target to increase the productivity.
The intelligent suite, so I read the proxy sends off but I keep T for manager has it reached 100 units.
Speaker Change: This year, we aim to reduce the cause of Penske batteries and to have a more rental property managers, but chipset level.
In addition, we'll also solidified quality first brushy causes ultra long.
Speaker Change: Defining the potential risks you know with the bumps.
Stop issue from a kind of 400 and process second we work on making our service both stabilized on a cost per months.
Speaker Change: We do this by clearly defining the distinct Jos.
Speaker Change: In our own ability to keep all the rental service available and finalized.
Speaker Change: We also pay attention to the community demand and customer needs based on their demographics.
Demographics, so we can overachieve right food services.
And we've also built the technology and the service capability around the five key strategies.
They are the only shops.
You need Oh, Capetian rental management operations and reputation.
Speaker Change: To make sure our business kind of achieved sustained growth is a long term. Thank you.
Thank you. Your next question comes from Eddy Wang with Morgan Stanley. Please go ahead.
Uh huh.
Oh God. Thank gotcha, just all let's see what our choice claims you're seeing Pharmfilm and where do you see a kind of all senior and junior indebtedness and fund up Alex Yeah.
Hi, specious higher Hawkins or shall we just got just sort of a woman. She saw its just some oh gosh outweigh Beach town don't take like a hawk and thought that whole Amir Khan Dalton.
Oh, gosh, almost even Frank's household and I'm glad that Panther.
In short I'm glad she doesn't totally quibble quasi junior high yield you send the conduit.
The whole Oh, Hi, Susana change I always try to show them, then that union, especially following Youll find me and Jay.
Well what.
What did you find yourself. Thank you management for taking my question.
My question just regarding the new home business. So are we we have seen that Oh Wow, new home business had been significantly outperformed the industry performance. So what's the reason behind and a.
Speaker Change: Considering that the ourselves off the new home has been more difficult going forward, we expect that the penetration rate of the brokerage channel to keep going up and what's our strategy and the outlook for that in your home fitness in this year. Thank you.
Alrighty Central both Hudson.
As you said to China.
New home Mucky to face up to tend to see in the Europe Attunity history.
He's such a tough market.
Well it shaped up around 7% gross and four year old New home P. T V.
Speaker Change: [noise] decently outperforming the industry.
Speaker Change: Our operating metrics also reached historical highs.
So also a year, where a deep into our insides interest in your home business, that's a monkey votes.
I figured.
He's all accretion that business management also paid off.
Operationally the industry is still a strong move shifting to a buyers market.
Consumers are no need the more professional services fees.
He's a path.
Speaker Change: The home pricing was always going up agents to get used to just focusing on this team I've been fun astute buyers since the poetry is not effective anymore, because it's always the lake.
Speaker Change: Spending on the insight into their customer needs.
To bolster sales conversion.
The key for agent to single from the virus that identify who used to buy into new homes under what's that often.
Meanwhile, answer give us a sense with a weak demand traditional promotional massive sunshine Prescott and not working anymore.
Speaker Change: Developers have a stronger need for the brokerage services.
Speaker Change: So to date key cities of ammonia to.
The propulsion of the project does get buffers choose to cooperate with brokerage sells train them reached 82% at the second half of two new junior suites.
It's an increase of 11 percentage points compared to the first half of last year.
Speaker Change: During such contacts on the England with all of our group strategy adjustment.
Speaker Change: If you have a ship or a new home strategy from a defensive sure proactive manner with a focus on growth and its quality.
We're a different job online consumer coverage on the east side.
And they established a bunch of owner preference with initiatives like the live streaming for quite homes.
Based on all the consumer new sites accumulated the use of data and a close connection with its new home customers.
Second half of 'twenty two street, we're starting to build new pebbles partnership with developers.
We introduced new video services.
Speaker Change: And yourself.
Speaker Change: This helped boost our coverage well, it's a high quality new home purchases.
Turning to the street.
New home, Paul pushing project coverage ratio improved significantly to 51% in Q4.
Off by 10 percentage points from Q1, you can see them here.
We remain committed to strengthening our ecosystem to get violent.
Speaker Change: 22, New Street.
<unk> 6500, new projects have been covered by the commitments, we're supposed to Viper sensor platform to transparent accretion.
Over 3500 College cooperation your whole protest them.
However, he embraced the private phone number protection services.
<unk>.
Oh financial management in the first half of the finishing of the street.
Our focus on risk control under the pump and it's a possibility that's called keep your eyes strictly manager receivable collection under the initial safety.
In the second half opportunity to industry, while maintaining a streak. This baseline with specifically I emphasize the commission amongst model on the collection Benjamin for the hybrid.
Yes.
That's to assist us with all the new homes, yeah. So shorten the true only for the Swedish and truthful.
The vast mobile accounted for 53% for total in your home brand new equal coupon as you.
As a percentage of the commission income from I saw we came out of us reached out to 43% level.
New home Commission rate use a bull's culture also increased modestly.
They saw where although regarding two new whole monkey until you get to neutral.
We will change the photo steps to improve operations number one on supply side.
The fourth of promotes new stretchy collaborations with high quality developers to see true higher quality, new home supply for all the Chinese services.
Unfurl suicides, we aim to empower all the service providers on the boost productivity and as Joseph under Jumpsuits function.
Speaker Change: What about appropriately risked the commissions to be right down the street brokers will also enhance our accretion from external you hometowns triangle and optimized our protocol for brokers and number three will also strengthen our infrastructure.
Our new home halting dictionaries ecosystems on the online new home content development.
Giving our richer on the higher quality new home listings.
Keep a customer on spending on our stronger sales through capabilities liberally.
New home business, while consistently outperform the market. Thank you.
We are now approaching the end of the conference call I will now turn the call over to your speaker host today, Ms sitting Lee for closing remarks.
Thank you operator, and thank you once again for joining US today. If you have any further questions. Please feel free to contact us investor relations team through the contact center.
Provided on our website. This concludes today's call and we look forward to speaking with you next quarter again, Thank you and goodbye.
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