Shell in the Cold Winter of Real Estate: Peng Yongdong Delivers an Underestimated Performance Report

How did Peng Yongdong lead Beike to achieve counter-cyclical growth during the industry’s winter?

Produced by | Zhongfang Network

Reviewed by | Li Xiaoyan

As the leader in China’s real estate services industry, Beike has always been a core “thermometer” for observing fluctuations in the domestic real estate cycle. Its hundreds of thousands of agents, nationwide store network, and full-chain businesses in new and second-hand home transactions, home decoration, and leasing precisely mirror the warm and cold changes in the real estate market. Recently, Beike released its financial report for the fourth quarter of 2025 and the entire year, showing that the company’s revenue for the fourth quarter fell to 22.2 billion yuan, a year-on-year decline of 29%, with an adjusted net profit of 517 million yuan, a year-on-year decline of 61.5%. The total revenue for the year was 94.6 billion yuan, a slight increase of 1.2% compared to 2024.

Looking solely at the short-term performance of the fourth quarter, Beike has indeed been impacted by the deep downturn in the real estate industry, with core transaction business growth slowing. However, peeling back the surface of short-term data fluctuations, in the counter-cyclical environment of the industry, the management team led by Peng Yongdong has demonstrated strong strategic determination and operational control, maintaining the basic market share, optimizing the business structure, and solidifying long-term competitiveness. The answers provided after the era of Zuo Hui are far more impressive than they appear.

The industry faces deep declines, yet Beike’s resilience is commendable

The real estate market in 2025 remains in a deep adjustment cycle, with the growth rate of real estate development investment continuing to decline and market trading sentiment low. As the industry leader, Beike naturally cannot detach itself from the overall industry environment. In the fourth quarter, Beike’s existing home business revenue fell by 39% year-on-year, and new home business revenue declined by 44%. The core transaction business has seen a significant drop, which is not due to Beike’s operational mistakes but rather an inevitable result of the overall industry downturn.

It is worth noting that the fourth quarter of 2024 coincided with a concentration of real estate policy releases, resulting in a surge in market sentiment and creating a very high year-on-year base, further amplifying the performance decline in this quarter. Despite this, Beike still achieved a 1.2% slight increase in annual revenue, successfully maintaining the basic revenue scale, which is quite remarkable against the backdrop of industry contraction.

Historically, the existing home business has been Beike’s “ballast.” Although there was a significant decline in this phase, Beike still maintained its user scale and market share, with the fourth quarter’s MAU stabilizing at over 43 million, and the store network further densifying. In an environment where overall industry transaction volume sharply decreased and small to medium players exited the market, Beike’s ability to retain its core user base and leading industry position, while resisting the immense pressure from the industry’s beta decline, has clearly demonstrated its superior risk resistance capability compared to its peers.

Proactive adjustment of the second curve, anchoring long-term healthy development

In response to real estate cycle fluctuations, Beike has long laid out its “one body, three wings” strategy, positioning its home decoration and furnishing business as a second growth curve to hedge against industry risks. In the fourth quarter of 2025, Beike’s home decoration and furnishing business revenue was 5.411 billion yuan, a year-on-year decline of 12%, marking its first single-quarter negative growth. This data may seem below expectations, but in reality, it reflects a rational and proactive strategic choice made by the management team based on the industry environment.

In 2025, the home decoration industry frequently experienced corporate failures, with rampant industry chaos and heightened risks. Blindly pursuing scale growth could easily lead to operational crises. Peng Yongdong’s team decisively chose to slow growth while enhancing quality, optimizing operational costs and profit structures through scaled procurement, human resource structure optimization, and standardized service replication. They sacrificed short-term revenue growth for the long-term healthy development of the business. The management has made it clear that for the next 2-3 years, the home decoration business will abandon aggressive expansion strategies and focus on refined operations. This “retreat to advance” strategy may seem to slow growth, but in fact, it avoids industry risks and lays a solid foundation for the long-term development of the second curve, demonstrating far greater foresight than blind expansion.

At the same time, the rental business has become a highlight in the financial report, with fourth-quarter revenue increasing by 18% year-on-year, making it the only segment among the four major businesses to achieve positive growth. Beike proactively adjusted the accounting treatment for its rental business, changing the revenue recognition from a gross method to a net method. Although this somewhat impacted the reported revenue scale, it significantly increased the business’s profit margin, with a rental business profit margin of 10.4% in the fourth quarter, far exceeding the industry average. This decision to “prioritize profit over revenue” precisely aligns with the capital market’s core demand for corporate profit quality, and it also allows the rental business to complement the property sales business, further enhancing the housing service ecosystem.

Extreme cost control + light asset expansion, efficiency revolution solidifying survival foundations

In a counter-cyclical environment, surviving and thriving hinges on efficiency. Peng Yongdong’s team understands this well, delivering a remarkable “combination punch” in expense control and business model optimization.

In the fourth quarter, affected by the decline in revenue scale, Beike’s expense ratio increased slightly; however, in absolute values, selling, administrative, and R&D expenses decreased by 18%, 24%, and 3% year-on-year, respectively, showing a significant overall reduction in expenses. With the number of active agents remaining stable and the number of active stores continuing to expand, Beike successfully adjusted approximately 1.3 billion yuan in expenses by optimizing internal personnel structure and streamlining operational processes, ultimately achieving a turnaround in adjusted profits, setting an industry benchmark for expense control.

Even more noteworthy is Beike’s accelerated expansion of its light asset franchise model, which has become a key measure for maintaining market share and reducing operational pressure. Franchise brands like Leyuan have expanded to 5,800 stores in less than three years, deeply covering lower-tier markets. Franchise stores not only contribute more revenue than direct-operated stores but also possess advantages of high flexibility and low operational costs, while also connecting to the ACN network to ensure service standards and market coverage. This model has allowed Beike to achieve a dual breakthrough of “expanding store numbers while lightening asset structure,” maintaining market share while alleviating financial reporting pressure, freeing itself from the constraints of heavy asset operations, and gradually transforming into a light asset internet service enterprise.

Additionally, Beike has consistently maintained a gross profit margin above 20%, strictly controlling the turnover days for accounts receivable in new home business. Through stock buybacks and optimizing profit models, it has safeguarded cash flow security, sustaining stable operations at the bottom of a seemingly endless cycle with minimal costs, thus preparing ample energy for industry recovery.

Demonstrating responsibility in a counter-cyclical environment, Peng Yongdong delivers a qualified answer sheet

After the passing of Zuo Hui, Peng Yongdong took over Beike at a time when the real estate industry was entering its most difficult downturn cycle, and there were many doubts about his management capability, with some even questioning his compensation issues. However, in reality, Peng Yongdong’s high compensation stems from equity grants at the time of the company’s listing on the Hong Kong stock exchange, which is a normal amortization under accounting standards, not excessive benefits. Additionally, he has donated approximately 840 million yuan over the past year, showcasing a sense of responsibility and commitment as a corporate leader.

Overall, in the years that Peng Yongdong has led Beike, during the industry’s winter, he has neither been blindly aggressive nor passively retreated, but has instead led Beike to accomplish three key objectives: stabilizing the basic real estate transaction market, safeguarding cash flow security, and maintaining a reasonable expansion pace. The group’s gross profit margin has consistently remained above 20%, and all core operational indicators are within reasonable industry ranges. Against the backdrop of industry contraction, Beike’s market share has continued to rise, further solidifying its position as an industry leader.

The industry downturn presents a reshaping opportunity for leading enterprises. As small and medium players accelerate their exit, resources concentrate towards the top. The user scale, store network, and service capabilities that Beike has accumulated in the counter-cyclical environment will become core competitive advantages after the industry’s stabilization and rebound.

The real estate winter is not yet over, but under Peng Yongdong’s leadership, Beike has already clarified its development path, standing firm in the counter-cyclical environment through optimization of business structure, transformation to a light asset model, and extreme cost control. Short-term performance fluctuations are merely normal manifestations within the industry cycle. In the long run, Peng Yongdong’s strategic decisions and management have allowed Beike to find its direction amid industry changes. In the post-Zuo Hui era, he has indeed performed well, and Beike is poised for the arrival of spring in the industry with a lighter and more efficient stance.