Shell Fourth Quarter Performance Deteriorates, 1.9 Billion Yuan Executive Compensation Sparks Controversy

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Source: Zi Shi Hui

Real estate transactions and financial services are concerning, and the situation in the fourth quarter is even more severe.

Author | Zi Shi Fen Zi

In the fifth year of deep adjustment in the real estate industry, as a leader in property transactions, Ke Holdings’ annual report data is undoubtedly an important window into market trends.

In 2025, Ke Holdings delivered a complex and delicate report card: total revenue barely maintained positive growth, but profits felt the chill from the deep water zone.

On the surface, the company tried to signal that its scale remains solid through store expansion and increased user activity; but on the other hand, transaction volumes for both existing and new homes declined, directly lowering overall gross profit margins.

Faced with the irreversible downward pressure on property transactions, Ke Holdings had to accelerate seeking growth in “non-property transaction” areas, with housing rental services becoming the brightest growth point, gradually shifting the company’s image from “transaction platform” to “residential service provider.”

However, behind this difficult transformation, risks in financial services within new business segments, marginal changes in receivables, and fluctuations in market confidence make Ke Holdings’ future more uncertain.

01

Net profit sharply down, core business deeply adjusted

Ke Holdings’ pressure is obvious.

In 2025, Ke Holdings achieved total revenue of 94.6 billion yuan, a slight increase of 1.2% from 93.5 billion yuan in 2024, but net profit plummeted from 4.078 billion yuan in 2024 to 2.991 billion yuan, a decrease of 26.65%. Adjusted net profit was 5.017 billion yuan, far below 7.211 billion yuan in 2024.

This “revenue growth but profit decline” performance reflects ongoing pressure on core operations.

Specifically, net income from existing home business was 25 billion yuan, down 11.3% year-over-year; new home business net income was 30.6 billion yuan, down 9.1%. The profit contributions from both declined more sharply, by 19.29% and 8.4%, respectively. As a result, the overall gross margin dropped from 24.6% in 2024 to 21.4%.

Despite increased operational pressure, Ke Holdings did not shrink its store network or user outreach. By the end of 2025, it had 61,139 stores, an 18.5% increase; mobile monthly active users averaged 43.8 million, slightly higher than the previous year.

However, scale expansion did not effectively offset the decline in transaction volume.

In 2025, total platform transaction volume was 3.18 trillion yuan, down 5% year-over-year. Among them, transaction volume for existing homes was 2.15 trillion yuan, down 4.2%; new home transaction volume was 890.9 billion yuan, down 8.2%.

Focusing on the fourth quarter, the situation was even more severe.

In Q4 2025, Ke Holdings’ revenue was 22.19 billion yuan, with net profit only 87.85 million yuan, down 28.71% and 84.95% year-over-year, respectively. The total property transaction volume in this quarter decreased by 36.7%, with transaction volumes for existing and new homes falling 35.3% and 41.7%.

Under performance pressure, Ke Holdings still returned value to shareholders through share buybacks and dividends, spending $921 million on buybacks and planning to pay about $300 million in dividends.

02

19 billion yuan in stock, sky-high salaries spark renewed debate

The financial report shows that in 2025, Ke Holdings paid 1.904 billion yuan in salaries, a decrease from 2.726 billion yuan in 2024, but still a huge expense. This is one of the main reasons for the discrepancy between net profit and adjusted net profit.

In 2023, Ke Holdings paid 2.98 billion yuan in salaries, with Peng Yongdong receiving about 713 million yuan and Dan Yigang about 507 million yuan, totaling 1.22 billion yuan, accounting for 41%. In 2024, their combined pay was 681 million yuan, about 25%, with Peng Yongdong around 401 million yuan and Dan Yigang about 299 million yuan.

Assuming a 40% share, their stock-based compensation in 2025 would total nearly 800 million yuan; at 25%, about 500 million yuan. Full details are still pending in the financial disclosures.

From 2021 to 2024, Peng Yongdong and Dan Yigang’s total compensation exceeded 3 billion yuan, making them record-breaking high earners in Chinese companies.

In response to controversy over executive pay, Ke Holdings explained that most of the compensation for the two founders was granted as restricted stock units during the Hong Kong listing in May 2022, to meet the dual-class share structure requirements. These are accounted for as “equity compensation” via straight-line amortization, not traditional cash salary, and Peng Yongdong had never sold or transferred these stocks, so no actual cash was realized.

However, cold financial data cannot ease the psychological gap among grassroots employees—“executives earn sky-high salaries while frontline workers work hard”—a contradiction that has been amplified, ultimately leading to collective protests by agents and becoming a hot topic online.

To ease the controversy, Peng Yongdong and Dan Yigang donated about 840 million yuan within a year, establishing a special fund to support employee health.

In December 2025, Peng Yongdong sold his 9 million shares of Ke Holdings A-shares, earning about 440 million yuan after tax, all used for charity—50% for housing assistance for recent graduates, and 50% to improve health and medical services for residents and their families.

On February 24, 2026, on the 25th anniversary of Ke Holdings and Lianjia, Peng Yongdong and Dan Yigang again donated 10 million A-shares, worth about 400 million yuan, establishing the “Healthy Home Bao Guardian Fund.”

But large donations did not fully address core doubts: whether wealth distribution in the brokerage industry is fair, and whether executive high salaries are justified by performance and responsibilities.

03

Cut costs and increase revenue, nearly 16,000 layoffs last year

Faced with declining main business, Ke Holdings demonstrated strong execution in cost control and business expansion.

In terms of “cost cutting,” the company reduced management, marketing expenses, and staff numbers to optimize costs.

General and administrative expenses decreased by 9.9% from 9 billion yuan in 2024 to 8.1 billion yuan in 2025, mainly due to lower stock-based compensation and credit loss provisions.

Sales and marketing expenses decreased by 5.8% from 7.8 billion yuan to 7.3 billion yuan, reflecting reductions in labor costs, advertising, and promotion.

The total number of employees at the end of 2025 was 119,200, down from 135,100 at the end of 2024.

In Q4 2025, Ke Holdings also incurred some one-time expenses related to cost optimization measures, indicating organizational adjustments.

On the revenue side, non-property transaction businesses, such as housing rental services, became key to offsetting the main business decline.

Housing rental services saw managed properties exceed 700,000 units, a 62% increase; net income was 21.9 billion yuan, up 52.8%; profit contribution was 1.879 billion yuan, up 162.86%. Ke Holdings has firmly established itself as a “second landlord.” The profit margin for rental services increased by 3.6 percentage points to 8.6%. The “Worry-Free Rent” model, providing rental agency and lease management services, became a key profit driver, allowing owners to retain control and benefits of their properties.

Home furnishing and decoration services also contributed to revenue growth, with net income of 15.4 billion yuan, up 4.4%, and profit of 4.844 billion yuan, up 6.72%.

Additionally, Ke Holdings strengthened receivables management, reducing accounts receivable from 5.5 billion yuan in 2024 to 3.9 billion yuan in 2025.

However, despite diversifying revenue streams and strict cost controls, the decline in existing and new home businesses still impacted the company. As of the end of 2025, cash, cash equivalents, restricted funds, and short-term investments totaled 55.5 billion yuan, down 6.1 billion yuan from the previous year.

04

Financial business compliance risks and transparency issues

In Ke Holdings’ business landscape, fluctuations in emerging and other income segments are noteworthy. This segment’s net income dropped from 2.5 billion yuan in 2024 to 1.6 billion yuan in 2025, a 36% decline.

According to the company, this mainly includes financial services and other newly expanded businesses. Although the company previously stated that financial services were a main driver of growth, the sharp decline in 2025 suggests a deep adjustment.

Ke Holdings has a significant presence in financial services.

To empower its platform’s financial offerings, Ke Holdings developed advanced technology, notably the “LiFangTong” electronic wallet. This wallet can be used within the Ke Holdings ecosystem for high-frequency, high-value currency transactions, essentially a digital transfer, clearing, and settlement system.

Ke Holdings also offers financing guarantee services. The “off-balance sheet arrangements” in its financial report mention that “we provide loan guarantees for some financial partners or individual lenders through subsidiaries. In case of borrower default, we are responsible for compensating the principal and interest, effectively providing credit risk guarantees to lenders.”

In the first half of 2025, “other costs” increased by 27.6% from 900 million yuan in 2024 to 1.1 billion yuan, mainly due to increased risk provisions and funding costs related to financial services.

The online payment platform “LiFangTong,” established in 2014, provides digital payment processing for property transactions. According to its official website, LiFangTong handles payments for deposits, earnest money, down payments, and final payments.

Financial services also pose higher regulatory and control requirements.

Tianyancha shows that LiFangTong has 11 legal cases, and in 2025, there was an administrative penalty for issues including “failure to ensure transaction information is true, complete, and traceable” and “unauthorized transfer of payment accounts to bank accounts with different names.” Such penalties can negatively impact Ke Holdings’ reputation.

Meanwhile, the platform’s use of “undisclosed” funds has been criticized. On the Ke Holdings app, under the “Financial Services” section, there is a feature called “Mortgage Release,” which involves “releasing mortgage” using down payments.

The description states that this service offers two products, one of which uses a down payment to release mortgage, with a fee of 1,000 yuan per transaction for amounts up to 100,000 yuan; for amounts above 100,000 yuan, the fee is the guarantee amount times 1%.

Given the total second-hand home transaction volume of 2.15 trillion yuan annually, such services pose significant risk management challenges. Although the company mentions this in periodic reports, details on fund flows, risk exposure, and risk control measures remain insufficiently transparent.

05

Old shareholders continue to sell and cash out

As industry conditions change, Ke Holdings’ performance pressure has affected shareholder confidence. In recent years, old shareholders have been steadily exiting.

Public information shows that in 2021, strategic investor Sunac China sold off in two large tranches, cashing out over $1 billion, ultimately completely divesting from Ke Holdings. Sunac China’s official explanation was “recover financial investment and support core business development.”

From 2024 to 2025, Vanke also accelerated its divestment, completing full exit by November 2025. Vanke described this as a “leaner and healthier” move.

SoftBank, a financial investor, reduced holdings in 2022, with media dubbing it “Masayoshi Son fleeing Ke Holdings,” and ultimately fully divested. Another financial investor, Hillhouse Capital, also reduced holdings.

Related parties and executives have also been selling.

In June 2023, a trust representing the interests of Ke Holdings founder Zhou Hui’s family announced a reduction of 11.9 million shares, worth about $180 million.

Vice Chairman and Executive Director Xu Wanggong sold shares multiple times through his owned Blossom South Limited in 2023.

Chairman, Executive Director, and CEO Peng Yongdong also sold shares for the first time since the listing in 2025. This sale was not for cashing out but to fulfill a pledge to donate 9 million shares made in April 2025.

Faced with share sales and stock price pressure, Ke Holdings announced buyback and dividend plans, which helped stabilize market expectations and offset some selling pressure. However, with core business still unstable and new business segments needing validation, how to achieve sustainable operational improvement and rebuild long-term trust in the capital market remains a challenge for Ke Holdings.