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TrueCar Inc (TRUE -3.00%)
Q2Â 2019 Earnings Call
Aug 8, 2019, 4:30 p.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Greetings and welcome to the TrueCar Second Quarter 2019 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded.
I will now turn the conference over to your host, Alison Sternberg, VP of Investor Relations. Please proceed.
Alison Sternberg -- Senior Vice President, Investor Relations and Communications
Thank you, operator. Hello, and welcome to TrueCar's second quarter 2019 earnings conference call. Joining me today are Mike Darrow, interim President and Chief Executive Officer, and Noel Watson, Chief Financial Officer.
As a reminder, we will be making forward-looking statements on this call, in addition to our guidance for the third quarter and full year of 2019, these forward-looking statements can be identified by the use of words such as believe, expect, anticipate, will, intend, confident and similar expressions.
These forward-looking statements are not and should not be relied upon as guarantee of future performance or results. Actual results could differ materially from those contemplated by our forward-looking statements. We caution you to review the Risk Factors section of our Annual Report on Form 10-K, our quarterly reports on Form 10-Q and other reports and filings with the Securities and Exchange Commission, for a discussion of the factors that could cause our results to differ materially.
The forward-looking statements on this call are based on information available to us as of today's date, and we disclaim any obligation to update any forward-looking statements, except as required by law.
In addition, we will also discuss GAAP and certain non-GAAP financial measures. Reconciliations of all non-GAAP measures to the most directly comparable GAAP measures are set forth in the Investor Relations section of our website at true.com. The non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP.
Now I'll turn the call over to Mike.
Mike Darrow -- Interim President and Chief Executive Officer
Thank you, Alison, and good afternoon, everyone. I'm excited to be here for my first earnings call. I want to thank Chip for his leadership over the past four years. During his time, we rebuilt our dealer network and completed our technology replatforming effort, which we believe will allow us to innovate and achieve our vision to build the best-in-class online automotive marketplace.
As it's evident on this call, we have a new management team, we have made a number of changes at the senior level to best position the Company to capture the opportunities in front of us. We are confident that this was the right move for the Company at this time. As you know, I am currently acting as the interim President and CEO, while a committee of our Board of Directors is evaluating a strong pipeline of candidates, which includes myself. We don't have a specific timeline for concluding the search, but are focusing on identifying the right CEO for TrueCar.
Let me start with some themes that are likely top of mind for you. First, we continue to innovate on the consumer experience. Last year's technology rebuild is enabling multiple AV tests of our users experience on the site now. We have run 65 tests year-to-date, including 94 unique test variants. Second, we are marching toward an anticipated early 2020 launch of our new consumer experience across truecar.com that will be supported by an all new brand and TV campaign.
Third, we have made great progress toward laying the foundation of future organic traffic growth. Examples include make/model pages that went live across 100% of our traffic addressing one of the largest segments of organic search demand in the industry. A new home page personalization module and thousands of permutations of new search result page. And fourth, USAA negotiations continue and we are pleased with our progress.
Let me now summarize our key financial metrics for the quarter. Revenue came in at $88.1 million for the quarter, roughly flat year-over-year and slightly below the low end of our guidance range. Our core auto buying program performed in line with expectations. However, new business revenue within our OEM segment fell short of expectations. Adjusted EBITDA came in at $3.7 million, or approximately 4% of revenue, also just below the low end of the guidance range. Noel will cover the financial performance of the quarter in more detail, as well as the expectations for the remainder of the year later in this call.
We have confidence in our strategic direction. The Board and the Executive Team have taken the time to examine the market and our competitive position. And as a result, reconfirmed and rededicated ourselves to TrueCar's mission. We exist to be the most transparent brand in automotive to serve as a catalyst that dramatically improves the way people discover, buy and sell cars.
We will continued to leverage our core strengths, which include upfront pricing and price transparency, our accountable, closed-loop sales matching, unrivaled scale and reach of our affinity partners, our strong dealer network, targeted OEM incentives and ALG's industry thought leadership, brand and relationships.
We continue to believe that we can leverage these key strengths to deliver the industry's leading digital end-to-end marketplace experience in automotive. So, how are we doing against this goal? We have reassessed our progress against our goal and see enormous opportunity to better leverage our strengths and to do this more quickly with our new technology platform.
Let's start with our used car marketplace, which transitioned to Capsela six months earlier than our new car experience. It is a great example of our post Capsela velocity and progress. During 2019, we released more than 150 features to our used car platform and our increased product velocity has helped us achieve significant improvements in MPS and consumer engagement, and as a result, our used car units grew double digits year-over-year.
As a company, we are working on for key initiatives, all of which are designed to substantially improve our customer experience. As described on previous calls, these are; one, our consumer controlled engagement model; two, pricing; three, used car marketplace; and four, trade. Most important of the four is our consumer controlled engagement model.
Let me now provide an update on how our testing is proceeding. As a general reminder, the goal of the consumer controlled engagement model is to provide consumers with a greater level of control, as they navigate our experience. Since the beginning of the year, our technology replatforming has enabled us to run parallel AB test nationally across a portion of our audience.
We've made a lot of progress to date and we feel confident that by early 2020, our new consumer controlled engagement model will be alive across our truecar.com audience with the objectives of one: a higher net promoter score for our consumers; two, higher consumer engagement metrics including time on site and return visitation; and three, setting us up for improved financial performance in 2020.
As a result of what we've learned from testing and our confidence in being able to positively improve these metrics, our approach on the consumer controlled engagement model has evolved away from conducting isolated geographic tests. Instead, we are now iterating simultaneous AB tests nationally on a small percentage of our traffic and will not have to test in isolated geographic markets. We believe this change in approach allows us to move more quickly with the least amount of disruption to our business.
So, what's our plan to get back to revenue growth? Let me outline this for you now. First, let's start with our core auto buying program. At a fundamental level, the financial performance of our core auto buying program is rooted in our ability to drive value to the dealers on our platform. Adding new dealers onto the platform is a tactic to grow revenue, but that alone does not create long-term sustainable growth. Long term sustainable growth in our core auto buying program comes through driving more attributable sales to our dealer customers. Since our IPO five years ago, TrueCar has nearly doubled the number of dealers on the platform and the number of units, but the value we've driven to our dealer customers at the individual level has not changed.
Now let's not forget why that has been the case. For one, our legacy technology stack did not allow for the kind of rapid innovation characteristic of a disruptive digital marketplace. As a result, our consumer experience remains static, as the world around us moved forward. Second, given our static consumer experience, we made the decision to invest in our growing dealer sales and service team in lieu of our brand. This investment powered the growth of our dealer network and consequently revenues, but it did not deliver a higher value to our existing customers.
Sitting here now more than halfway through 2019, I firmly believe we are better positioned than ever to drive sustainable value to our dealer customers, as we innovate toward a consumer experience that drives higher levels of onsite engagement and return visitation and supplement these efforts with a refreshed brand campaign, we believe more prospective car buyers will visit truecar.com.
As the traffic to our branded channel grows in parallel to the efficiency of our product experience, we are confident we will then begin to deliver significantly increased value to our dealer customers in the form of additional attributable sales and increased brand exposure. And ultimately, we will leverage our best-in-class dealer sales and service team to monetize this value and drive business results.
Second, let me highlight our OEM business. With a softening SAAR and a pullback in OEM incentive spend, we recognize our legacy go-to-market approach needs revision. The OEM business will continue to be unpredictable, but our relationships continue to deepen and grow, as we look for solutions to current market challenges. Going forward, we tend to more aggressively leverage ALG to position this project -- this product in the minds of the OEMs, as a strategy for planning and not exclusively a tactic to react to a singular market issue.
What this means is? First, being proactive versus reactive as part of the OEMs marketing strategy. And second, looking to get more embedded in the OEMs annual planning process. In addition, we are actively managing our pipeline and working to expand existing relationships. Ultimately, as a result of our planning discussions with OEMs, we will evolve our product set in a way that we believe addresses their needs and drives adoption.
Now, let me discuss our trade business. As we mentioned on our last call, we modified our go-to-market approach with a freemium model that we call vehicle of Interest or VOI and continue to add dealers at a healthy pace.
As a reminder, VOI helps consumers, who start down our trade path by connecting them with a nearby dealer, who stocks a vehicle that matches what they intend to buy. These leads converted a high rate, creating a true win-win for both consumers and dealers. In addition, trade remains a vital component of our end-to-end consumer strategy, enabling all users to configure their personalized car deal online, including calculating the equity they have in their current vehicle. We continue expect to have trade fully integrated in our auto buying program experience by the end of the year.
Finally, let me highlight our new dealer advertising products. In Q2, we successfully piloted two new dealer advertising products to complement our core offerings and allow dealers to pay for exposure into our expanded audience. These products include sponsored listings, which you can see live on the site at the top of the used search results page in which enable a dealer to get incremental exposure of their inventory to consumers.
We have also piloted what we refer to as TrueCar Reach. This retargeting product enables dealers, enables local dealers to nurture car shoppers of the same brand to ultimately buy from them. Both products allow us to present our dealer partners in differentiated ways to our consumers, while operating within the goals and principles of our consumer control engagement model.
Before I wrap up, let me provide a quick update on USAA. We know the USAA contract is top of mind for all of you, and it's clearly top of mind for us. USAA is a long-standing valued partner and a relationship, as a strong as it's ever been highlighted by very healthy growth in total USAA units year-over-year. We are pleased with our progress on our renewal discussions with USAA. As a reminder, we can't publicly comment on the status of ongoing negotiations, so we will not have further comment on these discussions until a definitive contract is signed.
I'm now very excited to introduce you to Noel Watson, who recently joined us from TripAdvisor. After working with him for the past two months, I can tell you he's going to be a steady hand, he is going to help guide the Company through our next chapter.
And with that, I'll now turn the call over to Noel, our Chief Financial Officer.
Noel Watson -- Chief Financial Officer
Thank you Mike. And good afternoon everyone. First, I'd like to start by saying how excited I am to be joining TrueCar at such a pivotal point in its history. I believe TrueCar is a differentiated value proposition for both consumers and dealers as well as its diverse set of partnerships and new technology platform create a unique market opportunity, and I look forward to helping the company realize its potential. As I settle into my second month here, I am encouraged by the depth of talent, level of commitment and collaboration that I see within this organization.
Now I'd like to walk you through our financial results for the quarter and our outlook for Q3 and the remainder of the year. During the second quarter, total revenue of $88.1 million was roughly flat to Q2 of 2018, and slightly below the low-end of our guidance. Franchise dealer revenue was also flat year-over-year with franchise dealer count up 3% to 12,681 dealers. Monthly revenue per franchised dealer decreased by 3% during the quarter.
Independent dealer revenue was up 12% compared to the prior year, and independent dealer count increased 27% to 4,014 dealers. With monthly revenue per independent dealer decreasing 12%, as we continued to add smaller dealerships. New dealer product revenue, including revenue from trade and dealer signed was approximately $2.8 million during the quarter.
OEM revenue of $4.1 million was down 48% from Q2 of '18. As mentioned on our prior calls, this decrease was primarily driven by the lack of recurring revenue from one of our larger OEM clients. Forecast, consulting and other revenue was $5 million this quarter, up 7% year-over-year.
Turning to units. Our total units were 249,856 roughly flat year-over-year and in line with our forecast. Units in the TrueCar branded channel were down 10% year-over-year. The pressure on our truecar.com channel was driven by traffic weakness, with monthly unique visitors also down 10% in the quarter. Our traffic decline is primarily the result of a significant loss of organic traffic beginning in late September of last year.
Despite the recent headwinds, we are confident that the net effect for consumer experience improvements, combined with a simultaneous launch of our national branding campaign will position us for future growth in this channel. In our extended partner channel units were up 4% year-over-year. This growth reflects strong performance in our membership and finance categories and an increase in used car unit. USAA channel units were up 8% from last year. We continue to see positive momentum in this channel fueled by strong used car performance following the cut over from Capsela.
Total new units were down 7% year-over-year, while used units were up 14%. As I just mentioned, weakness in the branded channel is driving the decline in new and total new car units. Product innovation in the used car channel has enabled us to consistently grow consumer engagement and thus units. Monetization in Q2 of '19 was $333 per unit, roughly flat to last year, with an increase in revenue from new dealer products for which no incremental ABP units are recognized and an increasing mix of used car units being offset by the decline in OEM revenue.
Now turning to expenses and margins, where all of the following metrics are on a non-GAAP basis, unless otherwise stated. Gross profit was flat from Q2 of '18 and gross margin was 91.2% in Q2 of '19 versus 91.7% in Q2 of last year. Technology and product expenses totaled $11.7 million or 13.3% of revenue in Q2 of '19, as compared to $13 million, or 14.8% of revenue in Q2 of last year.
Sales and marketing expenses were $55.1 million or 62.5% of revenue in Q2 of '19, as compared to $48.5 million, or 55.2% of revenue in Q2 of last year. Our blended cost per sale in Q2 increased from $124 per unit last year to $139 per unit, largely driven by both the decrease in organic traffic and a higher level of spend for marketing of our new trade product.
Our sales, headcount and other costs were $20.3 million in Q2 of '19, up 14% from $17.8 million this time last year. This increase in cost reflects the expansion of our dealer sales and service teams to support our larger dealer network and our new product offerings.
Moving to D&A. Q2 2019 expenses totaled $9.9 million, or 11.2% of revenue, as compared to $10.3 million, or 11.8% of revenue in Q2 of '18. Adjusted EBITDA was $3.7 million or 4.1% of revenue in Q2 of '19, as compared to $8.7 million, or 9.9% of revenue in Q2 of '18. The items excluded from adjusted EBITDA for Q2 of '19 primarily include depreciation and amortization of $6.8 million, stock-based compensation of $15.6 million, of which $7.2 million was associated with termination benefits related to the departures of certain executives, including our former CEO and $4.7 million in severance costs related to these same departures.
GAAP net loss for the period was $24.1 million, or $0.23 per share, as compared to a loss of $6.6 million, or $0.07 a share in the prior year. Non-GAAP net loss was $2.2 million, or a loss of $0.02 per share compared to non-GAAP net income of $3.2 million, or $0.03 per share this time last year. Our balance sheet remains healthy with approximately $177 million in cash and no outstanding debt.
Now, turning to guidance. We are guiding the Q3 revenue at $87 million to $89 million, or negative 7% to negative 5% growth year-over-year. For the full year, we're guiding to a revised range of $345 million to $350 million, or negative 2% to negative 1% of revenue growth. Our updated revenue guidance reflects the following. Removal of unsigned OEM business, tempered expectations around the adoption of our new dealer product, continued weakness in truecar.com traffic, consistent with recent performance, and additional flexibility to test traffic against our consumer controlled engagement model at greater levels than what we've been testing so far this year.
Turning now to adjusted EBITDA. We are guiding to Q3 adjusted EBITDA of $1 million to $3 million, or 1% to 3% adjusted EBITDA margin. For the full year, we are guiding to a revised range of $10 million to $14 million, or 3% to 4% adjusted EBITDA margin. This revision to adjusted EBITDA is primarily the result of the lowered revenue guidance, particularly in our high margin OEM revenue.
I will now turn it back over to Mike for final comments.
Mike Darrow -- Interim President and Chief Executive Officer
Thanks, Noel. In conclusion, I feel very strongly that we've made the necessary changes to stabilize the business and set us up for growth in the future. We are reenergized as an organization and remain excited by the opportunities in front of us.
And with that, let's go to questions.
Questions and Answers:
Operator
Thank you. At this time, we will conduct a question-and-answer session. [Operator Instructions] Our first question comes from Ron Josey with GMP Securities. Please proceed with your question.
Ronald Josey -- GMP Securities -- Analyst
Great. Thanks for taking the question. If I could two please. Mike, in your prepared remarks, you talked about the investment in the dealer network over the past several years came at the expense of the brand. And as you prepared to relaunch the brand as well as a website in the first half or early 2020, could you just talk about how you balance dealers and consumers like the value between the two/ I think that's a really important sort of understanding in terms of how you move forward?
And then when you talked about adding advertising the sites sponsored listings and retargeting, just I'd love to understand a little bit more around the decision that there I believe we haven't really seen any advertising on TrueCar before. So, it's a little bit of a change in approach. Thank you very much.
Mike Darrow -- Interim President and Chief Executive Officer
Yeah. Thank you, Ron. We are certainly very focused right now on fixing the consumer experience. We understand that's a priority for us. The consumer engagement model that we're working on has been in development now for a period of time, and we know we've got to make some strides in that.
We're focused very heavily on doing that, eliminating some of the problems we've had with consumers coming through the funnel too quickly. We're excited about some of the testing we've seen. We're seeing positive results that are going to have a positive impact on both our NPS scores and our engagement source scores from consumers. So, we're laser-focused as a number one priority on fixing the consumer experience.
In regards to our investment in the dealer network, we see that a lot of value in our dealer network. They do a great job of calling on our dealers and providing value to our dealer network during a time period, where we had very little innovation and product innovation. So, we will work exclusively now focused on coming up with the right consumer product and we feel confident that we've got the dealer network in place to help us monetize that once, we're ready to launch.
Did you have another second question, Ron?
Ronald Josey -- GMP Securities -- Analyst
Yeah. Thanks, Mike. Just I was asking about the advertising response, your listings in retargeting. I've just never heard you all actually have advertising on the site. It seems like a change in tack. I want to understand that a little bit more. Thank you.
Mike Darrow -- Interim President and Chief Executive Officer
Yeah. We launched a sponsored listing product, which is pretty traditional in the industry. It's not really an ad unit, not a traditional IAB type ad unit. It's more of a marketing slot for our dealers to move themselves up in the listing process. You can see that on our used car pages now. And it's an opportunity for dealers to spend additional dollars on marketing certain products, not really a traditional ad type product. So, that in the TrueCar Reach program is an opportunity that we've built for these registered users, who are pre prospect and have not been handed off to a dealer for our dealers to connect with them and engage in. And it's the beginning tests on some of our additional monetization efforts we see around the consumers coming through our site.
Ronald Josey -- GMP Securities -- Analyst
Got it. Thank you.
Operator
Our next question comes from Kyle Evans with Stephens. Please proceed with the question.
Kyle Evans -- Stephens Inc. -- Analyst
Hi, thanks. I guess I know I've beaten this horse to death, but I guess I'm just curious. Are you determined to give the consumer if, when and how controls on dealership access? And in one step further than that, would you be willing to give them just VIN level access to dealers?
Mike Darrow -- Interim President and Chief Executive Officer
Yeah. Kyle, thanks for the question. We're exploring all those opportunities in the testing we're doing right now. You heard some of the numbers for the different iterations of tests we've been able to run. We run these tests with goals in mind and then we iterate and get a chance to adjust off of that. But we are committed to giving the consumers more control of the engagement process. There's a million new cars delivered every month through our -- through franchise dealers to consumers. And we feel we can be the solution to that.
So, we are working toward the ultimate consumer product, giving them the right amount of control to engage with our dealers and push them through our core program. There isn't other products that we're looking at, the Reach product is an example of that, where we're going to work with consumers preprospect, who aren't ready to be connected with a dealer, to continue to engage them, bring them back to the site, allow our dealers to send their marketing messages, but not to be deep in the prospect process. So, we're looking at all those things. We're seeing good things coming out of the testing. We're learning a lot and we're iterating quickly.
Kyle Evans -- Stephens Inc. -- Analyst
Okay. What can we expect to see on the site in terms of changes and testing between now and in the launch of the new consumer user interface? And you said early 2020, can you be -- can you commit to first quarter, can you give us something a little firmer than early?
Mike Darrow -- Interim President and Chief Executive Officer
Yes. So, you won't see a lot of the things we're doing on the site because we're taking about 5% of the traffic nationally and doing our testing across that sliver. It gives us enough volume to get the type of data we need to understand the test. But it's not disruptive to our core business or our dealers, as we do that. So, you won't see a lot of the things. One of the recent things we've done that, I can use as an example is, when we came out of Capsela, we eliminated the configurator process to our prospect chain. We've now put configurator back in the process, so you can see that on the site. We asked the consumers a few very simple questions, so that when we land them on a vehicle, we make sure it's a vehicle that they're interested in.
So, you'll begin to see some of things show up on the site. But most of the testing we're being -- that's being done, is done in a way, where you won't notice it, until we've stitched it all together, and are ready to move to the new process. As far as, when we are definitely pushing for Q1. We would like to be out in the marketplace with this new product at that period of time.
Kyle Evans -- Stephens Inc. -- Analyst
Last one, you had a big jump in sales and marketing, how much of that was trade?
Noel B.Watson -- Chief Financial Officer
Hi, Kyle, this is Noel. Thanks for the question. So, we are breaking out our marketing at that level, but we will say trade was a significant portion of the uptick in marketing spend in the quarter year-over-year. We also had some increase in our TCDC channel as well as in our partner marketing on a higher unit in that channel.
Mike Darrow -- Interim President and Chief Executive Officer
And Kyle, as you know, trade is a new product for us. We're excited about it and we will continue to do some market -- make some marketing investments in that product as we continue to get traction with our dealer network.
Kyle Evans -- Stephens Inc. -- Analyst
Okay, thank you.
Operator
Our next question comes from Naved Khan with SunTrust. Please proceed with your question.
Naved Khan -- SunTrust Robinson Humphrey, Inc. -- Analyst
Yeah. Thanks a lot. Few questions. Maybe just on the updated guidance, I think, Noel, you -- the EBITDA outlook is mentioned, how OEM is kind of big part of the takedown in the EBITDA outlook.
Maybe you help us kind of think about it, or maybe put a final point on it. How should we be thinking about the OEM revenues in the back half of the year? And then I got a couple of product-related questions.
Noel Watson -- Chief Financial Officer
All right, thanks for the question, Naved. So, I think we tried to break down for you a little bit in my earlier remarks, but just let me think about how we formulated the guidance for the full year. Our OEM revenue stream has been very unpredictable and very challenging for us to forecast, given the relative size of the opportunities and the binary nature of the outcomes. We decided to take a very conservative approach here and essentially we've removed any of the pipeline for OEM from our current forecast.
What that does is that means that our OEM business for the back half of the year is essentially relatively flat from, where we are in Q2. The other thing that we did in the forecast is related to our new dealer products. Those are early stage, it have been well received in the market thus far. We still expect strong growth here in the back half of the year, but we are temporarying the ramp that we had expectations with regards to those products.
The one other piece in our current guidance to call out is, we've extrapolated the recent performance that we've seen in our truecar.com channel with regards to traffic. We haven't incorporated any significant list from product enhancements as the old benefits or our marketing efficiency gains. And have incorporated some flexibility around the testing that we're doing to give ourselves some room to be more aggressive, and if we can find avenues to accelerate our progress against our enhanced consumer experience.
So, in terms of the full year guidance, that's how we came to the revenue composition. I think it's a very measured and balanced approach for the year. The OEM revenue is a very high margin business for us. And so you do see a lot of that flow down through EBITDA and it creates some margin compression on the business. Obviously, once we're able to regrow that revenue stream, we'll start to see some leverage against the operating expenses.
Naved Khan -- SunTrust Robinson Humphrey, Inc. -- Analyst
Thanks. That's helpful. And just maybe on the product side. I think previously you guys have spoken about how you can with Capsela lower the -- in terms of just how you are thinking about the consumer experiences. Lowering the hurdle for consumer registration and how not necessarily exposing the consumer to a dealer until they were ready to -- closer to the car buying process. So, how much of that is happening? Are you still thinking along those lines? Or, has that evolved since then?
And then on the conversion side, I guess, you taking a test and learn approach with AB testing, but the 5% of traffic you're experimenting with, how -- do you think that's going to be the sandbox you're going to be experimenting with through year-end? Or, you can actually grow that based on what you're seeing?
Mike Darrow -- Interim President and Chief Executive Officer
Yes, Naved. That the consumer testing we're doing does involve expanded registration. We are looking to have consumers register during the process and then we're running different scenarios as to how we have them through the funnel down to a dealer or when we keep them in a nurturing state, where we provide them more information, help them deal with the shopping process, before we send them through the funnel. So, we are looking to grow registration, and then be smart and give consumers control of how they end up passing and connecting with a dealer.
Regarding the 5% testing of traffic, it appears to be sufficient now to give us the type of information we need. But as Noel mentioned, we have given ourselves some room in the back half to raise that rate if it will help us accelerate to a conclusion. So, 5% seems to be working at the time. We're happy with that. We're getting the type of data we need. We're able to run through tests fairly quickly. And, we'll probably stick with that until we find a need to accelerate it. But right now, 5% sufficient.
Naved Khan -- SunTrust Robinson Humphrey, Inc. -- Analyst
Okay. That's helpful. And last question, if I may. I guess, on the partner side, it seems like those volumes are holding up. How -- with the SEO sort of hit, can you just remind us about how the SEO traffic has evolved? So, I remember, there was a Google Gotham change back in March? Was that positive or a negative change?
And then on the -- in terms of things that you can do to kind of help the SEO traffic, I think you mentioned about sort of vehicle listing pages and how that can help. How long does that effort take? And where are you in that process, as we think between now and year-end?
Noel Watson -- Chief Financial Officer
Hi, Naved, this is Noel. As far as SEO in terms of the March algorithm change, we did see a benefit on our used car channel during that time. We're still lapping headwinds from the September algorithm change that impacted our new car channel and we'll obviously look to lap that at the tail end of this quarter.
Mike Darrow -- Interim President and Chief Executive Officer
Right. And Naved, we look at as SEO as just a part of our broader organic traffic strategy. We know we have to grow our organic traffic. That starts with delivering a better product to consumers in the marketplace. It will be energized by our new brand campaign and all of the things we have in place there.
So, we are addressing all the SEO things we can do. I mentioned the number of those we created landing pages. We've got a home page carousel that we've introduced for returning traffic. And we're doing the fundamental things to help our SEO business. But we know that's all correlated to delivering a better product to the marketplace and getting back out in front of consumers in and telling them the story of our brand and the value we bring. So, what we're going to be aggressive in that area and stay very focused on it.
Naved Khan -- SunTrust Robinson Humphrey, Inc. -- Analyst
Thank you.
Operator
Our next question comes from Doug Anmuth with JPMorgan. Please proceed with your question.
Dylan Haber -- JPMorgan Chase -- Analyst
Hey guys. This is Dylan Haber, on for Doug. Can you provide some more color on units and how you expect unit growth to trend over the next two quarters? Are there any competitive headwinds at play here? Or, are you really just waiting for the launch of the new consumer model to serve as a catalyst?
And then following the recent management changes, Mike, how do you think about TrueCar's relationship with the dealer industry? And just in terms of your franchise dealer growth, what are you seeing there?Thanks.
Mike Darrow -- Interim President and Chief Executive Officer
Thanks for the question, Dylan. Let me let me address the second one first. I think we're in a good position with the dealer industry, much of my background and history was on the OEM side, calling on dealers. And in my previous third-party space experience, I directly managed the dealer network. So, I understand the importance. I've been out to see many of our key big dealer groups and they're very happy with where we are. They want to see some more growth just like we do. But they describe us as their primary new car partner and we want to hold that position and grow it.
And at the end of the day, we all bring value to the relationship with our personal brands, but they do business with TrueCar because we provide value. And we provide a good value on the used car side. But we got to grow that on the new car side.
Noel Watson -- Chief Financial Officer
And Dylan as regard to your question regarding unit growth in the back half. We don't actually forecast or guide to unit growth, I should say. Obviously, unit growth was flat year-over-year in Q2. We saw a different trend between new and used. You would expect that trend to continue in the back half of the year. I will say our deal from a dealer count standpoint, we're expecting dealer count to stay relatively flat from here through the end of the year and we haven't seen any significant uptick in churn related to our dealer -- our dealer network.
Dylan Haber -- JPMorgan Chase -- Analyst
Great. Thank you.
Operator
Our next question comes from Lee Krowl with B. Riley. Please proceed with your question.
Lee Krowl -- B. Riley FBR, Inc. -- Analyst
Great. Thanks for taking my questions. Just a quick clarification on the OEM incentive business. You guys have obviously kind of derisked the pipeline, but I just kind of wanted to double check on, obviously you're taking a more conservative approach. But just maybe talk about the opportunity set within OEM incentive and whether in fact that's also deteriorated, or if it's more that from a modelling perspective, you're taking a conservative approach. But the opportunity still exists with the dealer groups -- the OEMs you are still targeting?
Mike Darrow -- Interim President and Chief Executive Officer
Thank you, Lee for the question. We're still very bullish on our OEM business. We've been out, as quite a few folks have talked about this week in our industry. There is a slight softening of the SAAR. And OEMs are pulling back a bit on their OEM spending. And what that's caused us to do is change our approach with some of the OEM opportunities we have. We've been out spending a lot of time with our OEM partners, as they transition through this phase of the industry.
I'm still very, very bullish on that business. We have a large active pipeline, but it's unsigned contracts at this point. And we've come to the conclusion that until those contracts are signed, we're not going to put him into the guidance. So, we're still excited about the business. Our relationships with OEMs are probably stronger and deeper than they've ever been. And we've just risk that business until we have fully, formally signed.
Lee Krowl -- B. Riley FBR, Inc. -- Analyst
Got it. And then probably getting a little bit ahead of the initiative. But maybe just talk about, you guys have done some branding campaigns in the past and invested pretty significantly in marketing. So, I guess, you know, as we go into this next round of branding strategy around the newer products. Maybe talk about what you guys are potentially doing differently? Maybe the shift from branding to performance marketing like we've seen with some of your peers. I guess maybe just talk about some of the changes in strategy versus prior marketing initiative.
Mike Darrow -- Interim President and Chief Executive Officer
Yeah. We're very excited. I'm very excited about some of the early branding, rebranding that we're about to do. We are convinced, you need a balanced marketing program that has both branding elements and direct targeted SEM type activities, as well as a solid foundation and SEO. So, we are working hard to get all of those things in place. We will -- we're excited about, where the new brand campaign will take us.
Probably premature for me to talk specifically about any of that. But, you know, we're excited about it and it will be a part of our media mix come the first of the year. We'll stay aggressive in the SEM space and continue to compete there and hope to build both of those building on top of a stronger organic flow to our traffic.
Lee Krowl -- B. Riley FBR, Inc. -- Analyst
Got it. Thank you for taking my question, guys.
Mike Darrow -- Interim President and Chief Executive Officer
Yeah.
Operator
Our next question comes from Nick Jones with Citi. Please proceed with your question.
Jack Dave -- Citigroup, Inc. -- Analyst
Hi, this is Jack for Nick. Most of my questions have been asked. Since I have one on the sponsored listing product, what does the attach rate you look for that -- look like that?
Mike Darrow -- Interim President and Chief Executive Officer
I'm sorry, Nick or Jack, could you repeat the question?
Jack Dave -- Citigroup, Inc. -- Analyst
On the new sponsored listing product, what does the attach rate look like for that?
Mike Darrow -- Interim President and Chief Executive Officer
Yeah, it's probably early to come up with those exact numbers. We really are just coming out of the pilot phase of that. It is a -- it's been understood product in the marketplace. Many of our competitors offer something very similar. So, we expect fairly quick ramp, but it literally just got out into the marketplace and probably too early to calculate a real tight attach rate.
Jack Dave -- Citigroup, Inc. -- Analyst
Understood. Thank you.
Operator
[Operator Instructions] Our next question comes from Marvin Fong with BPIG. Please proceed with your question.
Marvin Fong
Thanks and good evening. Thanks for taking my question. Just the one on -- just to drill down. I apologize if you described this before I jumped on a little late. But just on turning trade into a freemium model, could you just elaborate on why you decided to do that? What were you seeing with the original subscription model that you decided that you wanted to change?
And just the second part of that question. So, I think you talked about sort of still expecting some new products that contribute to the revenue growth. So, should I take that to mean that trade will be less, but like the target -- the retargeting and some of the new products that going to pick up the flack? Is that part of your guidance? Thanks.
Mike Darrow -- Interim President and Chief Executive Officer
Thank you, Marvin. Let me take your first question. First, as far as our evolution to a freemium mode, what we've realized in the early phase of that product, it's very important for the consumer to have a network in order to deliver that trade experience into and the speed at which you build that network allows us to accelerate the benefit that we provide to the consumers using that product.
So, it's been delivering very high-quality leads, when we can attach the new product that the consumer wants to buy with a dealer, who sells that product in the marketplace. So, we felt accelerating this product -- to some extent our current AVP core program is a freemium product. In that, we put it in there and then we work with the dealer on the performance. And that's kind of what we adopted with trade. We want our core dealers representing the trade product, so that we have a solid network in order to deliver consumers, who use that product into.
As far as our new product revenue projections and those sort of things, we're bundling all of that stuff together. At this point it seems to make sense for us to do that rather than putting them all out there as individual products. They're all very, very early in the launch stage, both of the new marketing products and the trade product, which we launched. And we'll have much more data on that as we progressed. We're excited about all of them, our dealers are receiving them well and we expect good results as we go forward.
Marvin Fong -- BTIG, LLC. -- Analyst
Great. And a follow, if I may, just, I think you talked about that you finally have the new make/model pages up and running. I know it's probably very early in the process and the benefits in terms of algorithmic search will come later. But are you seeing any actual changes in how consumers are shopping on the site? Are they -- is the engagement stronger? Are they visiting more, more pages, anything like that? Thanks.
Mike Darrow -- Interim President and Chief Executive Officer
Yeah. Those pages, Marvin, are so new. We haven't directly integrated them into the site flow yet. So, we're excited about the SEO lift they'll provide for us. Like you said, it takes quite a while for the algorithmic searches to get out there and crawl those pages. But, we're in the SEO game for the long haul. We know you have to make those type of investments. You have to stay committed to it. And, we're committed to do that.
Marvin Fong
Great, thanks. Thanks a lot, Mike.
Operator
Thank you. There are no further questions in queue at this time. I would like to turn the call back to management for closing comments.
Mike Darrow -- Interim President and Chief Executive Officer
Okay. Thank you. Thanks for making the time for our Q2 earnings call. I just want to take a moment to thank our employees for their continued hard work and dedication. And thank you for your time and questions today. I look forward to speaking with all of you over the coming weeks.
Operator
[Operator Closing Remarks]
Duration: 49 minutes
Call participants:
Alison Sternberg -- Senior Vice President, Investor Relations and Communications
Mike Darrow -- Interim President and Chief Executive Officer
Noel Watson -- Chief Financial Officer
Noel B.Watson -- Chief Financial Officer
Marvin Fong
Ronald Josey -- GMP Securities -- Analyst
Kyle Evans -- Stephens Inc. -- Analyst
Naved Khan -- SunTrust Robinson Humphrey, Inc. -- Analyst
Dylan Haber -- JPMorgan Chase -- Analyst
Lee Krowl -- B. Riley FBR, Inc. -- Analyst
Jack Dave -- Citigroup, Inc. -- Analyst
Marvin Fong -- BTIG, LLC. -- Analyst
