Q3 2019 Earnings Call
Greetings and welcome to Truecars third quarter 2000.
19 earnings conference call at this time, all participants are not listen only mode.
A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
As a reminder, this conference call is being recorded.
I'd now like to turn the conference over to your host Noel Watson. Thank you you may begin.
Words, such as believe expect plan anticipate well intentioned competence and similar expressions. These forward looking statements are not and should not be relied upon as a guarantee of future performance or results actual results could differ materially from those contemplated by are forward looking statements.
We caution you to review the risk factor section of our annual report on Form 10-K , our quarterly reports on Form 10-Q , and our other reports and filings with the Securities Exchange Commission for a discussion or the factors that could cause our results to differ material.
The forward looking statements we make 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 certain GAAP and 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 <unk> Dot com.
non-GAAP financial measures are not intended to be considered isolation or as a substitute for results prepared in accordance with gap now I'll turn the call over to Mike.
Thank you do well and good afternoon, everyone I'd like to start by taking a moment to thank our employees for their continued hard work and dedication is truly an honor to work with each of you everyday and I believe the results that were reporting today reflects well on your strong efforts.
Before covering the details of the quarter. Our board of directors is asking me to give you an update on its search for a new CEO .
As you know I'm currently serving as interim CEO motherboard continues the process of evaluating candidates. The board is pleased with the progress that the company has made it under the new leadership team that had put in place after the departure of our former CEO and certain other executives over the last several months the board believes that the reason.
Elsewhere reporting today reflects well on the new leadership team and that the company is getting on the right track to achieving its long term goals.
That said the board believes that the selection of our new CEO is an important decision that must not be rush with the assistance of an outside search from the board continues to evaluate external candidates at the same time that evaluates the company's performance under my leadership.
The board once you didn't know that expects to wrap up this process before the end of the first quarter.
In the meantime, I'm very pleased with our third quarter results highlighted by revenue and adjusted EBITDA performance above the upper end up or guidance ranges, perhaps more importantly, I can sense a change in the momentum here a true core let me touch on just a few of the many exciting achievements in the core.
First.
Innovation continues at a rapid pace as we remain laser focused on improving our customer experience ahead of our new brand campaign planned for early 2020.
Second trocar Dot com traffic is beginning to stabilize as evidenced by flat monthly unique visitors year over year in September .
Third we continue to grab share in the used car market with unit volumes up 20% year over year in the quarter.
Fourth RCD business development pipeline is delivering nicely with several key additions in the past few months and finally, our new dealer advertising products sponsored listings and Truecar reach are being well received by the market more than 500 dealers have adopted one of these products.
And we believe that we're delivering them tremendous value for example dealers who have adopted sponsored listings are on average receiving three times more leads and five times more vehicle detailed page or BDP views for the vehicles in the program.
Despite these exciting achievements, we recognize there's more work to do to return this business to sustainable double digit growth.
No work is more important than our efforts to improve our product, let me provide a bit more detail on our progress first we're giving consumers more control over when and how dealers contact them. During the car buying journey, we've made significant progress against this goal by testing various options for consumers.
To engage and communicate with dealers.
So far we've learned that when you give consumers more control they are more satisfied with their overall experience and convert to a car sale at a much higher rate.
The experience changes we plan to roll out in early 2020 will set the foundation for additional improvements over the course of next year. We believe the impact of these changes will improve customer satisfaction metrics and ensure higher lead quality for our partners.
We are confident that an iterative approach test launch and improve we'll produce the best results were all of our stakeholders.
Second as we continue the severity of approach and move toward an experience that gives consumers a greater level of control. We believe that we have the opportunity to more intelligently guide consumers through their car buying journey.
In Q3, we began testing new machine learning capabilities with the near term goal of improving dealer selection algorithm. How we selected dealers we introduced to consumers after they register on our site.
This is just the first example of many that shows how we intend to leverage machine learning to more intelligently segment, our audience custom tailor, our marketing messages and provide a more valuable and personalized Evan experience for our users.
Third we continue to focus our laying the foundation for future organic traffic growth.
This past quarter, we significantly improved our internal leaking across the site to ensure both users in search engines can more easily navigate the breadth and depth of our inventory into experience. In addition, we're continuing to build more shopping content such as makes a lot more incentive pages and best though vehicle rankings.
Which are alive and the site today.
While these improvements are just the tip of iceberg, we're already seeing the positive effects, including strong double digit organic session growth year over year in the early part of Q4.
And finally, we're making strides in improving consumer reengagement.
Users, who visit our site can now save their favorite vehicles and save their searches register for price drops and new inventory alerts through both E mail and push notifications and receive personalized vehicle recommendations.
As a whole frontal activity on the site continues to grow we're leveraging targeted email campaigns and intelligent retargeting initiatives to reengage. The shoppers. The primary objective. All this activity is to provide consumers with the incremental value to help them find the right car at the right price.
From the right dealer.
As our product can to experience continues to improve.
We're excited by the opportunity to supplement its evolution with an end to end rebrand of Truecars, featuring a new corporate identity web experience brand taxonomy, and omni channel advertising campaign.
The rebrand is designed to broaden the appeal amongst to crucial segments millennials and win.
Research suggests millennials will represent approximately 40% of new car sales in 2020.
It also points to women influencing or purchasing 80% or more of the vehicle sold in North America.
And our focus for testing the new Truecar logo and related brand materials that will roll off early next year outperformed our competition among both male and female consumers across the U.S. and they over index among women specifically.
The entire organization has rallied behind this initiative and are excited by the positive results that we expected to drive next year and into the future.
Next I'd like to provide some high level commentary on our key priorities for 2020.
The items I will highlight our by no means exhaustive, but represent areas that we believe provide the most opportunity in the near term.
First and foremost will continue to build on the progress made this year by optimizing our consumer experience as I mentioned earlier. This will include an iterative approach to providing consumers with a greater level of control over how and when dealers contact them.
We will also maintain our heightened focus on improving vehicle pricing data our core consumer value proposition.
Second we will focus on accelerating the growth of our partner channel.
Our robust network of partners is a clear differentiator in our industry, we've seen an acceleration of our business development activity and we'll continue to invest in this area next year.
Third we remain committed to capturing wallet share in the used car space as Saar levels off and new car margins Titan. We're looking to help our dealers continue to grow their used car business, which is a key profit center for them. We've seen tremendous success in used car throughout 2019.
And are confident in our ability to roll that momentum into next year.
Fourth we made sure we remain committed to re accelerating the growth of our OEM business. We expect this business to remain unpredictable, but our relationships continue to deepen and grow as we look for solutions to current market challenges as I've stated before we will aggressively leverage LG to position.
This product in the mine of the Oems as a strategy for planning and not exclusively a tactic to react to a singular market issue.
Finally, we will accelerate towards our long term vision of becoming the only true end to end shopping to show room experience by introducing what we're calling retail solutions, which is our effort to enable consumers to configure their entire cardio online including calculate.
Inaccurate trading value and monthly payment.
At any point throughout the deal configuration process consumers will be given the direct off ramp into retail locations with introduction smoothly facilitated by troop are.
We have already taken substantial steps towards this vision by launching true portrayed and acquiring dealer science next year, our focus in this space will be twofold first.
First to fully integrate our trade in and poor auto buying experiences to provide our partially robbing consumers with an upfront guaranteed price on their trading as part of their our online car buying journey.
And secondly to leverage dealer science to provide consumers with transparent and accurate monthly payments, helping to drive transaction ready consumers into showrooms.
Accomplishing both of these goals will be a huge step towards seamlessly facilitating digital shopping to show room transition.
Before I wrap up let me provide a quick update on USA to start performance from the USAA channel is strong underscored by 11% year over year unit growth in the third quarter in short we're pleased with the progress of our contract discussions with USAA, we are going to go.
Shading, a new agreement with USAA and are aligned with them on a timeline for completion, which gives us confidence we'll have a new agreement in place in advance of the exploration of our current agreement.
Of course, when we do enter into a new agreement, we will announce development to the marketplace.
In closing I am pleased with the progress made in the third quarter and can feel the momentum in the business shifting we remain laser focused on executing against our near term game plan with the goals of hitting our Q4 financial guidance finalizing the new USA contract in launching phase one of our.
Valving consumer experience in early 2020.
And with that I'll now turn over to know well, our chief financial Officer.
Thank you, Mike and good afternoon, everyone I'd like to start by walking you through our financial results for the quarter and our outlook for the remainder of the year.
Before jumping into details I first wanted to know how excited I am with the progress that team heres, making which is clearly evidenced by our ability to drive results above our expectations for the quarter.
As Mike has mentioned we are improving execution on multiple fronts and are progressing against both near term and longer term initiatives.
Now turning to our detailed financial results.
During the third quarter total revenue of 90.6 million was 1.6 million above the high end of our guidance range and down 3% year over year franchise dealer revenue was down 2% year over year with franchise dealer count up 1% to 12711 deals.
Monthly revenue per franchise dealer decreased by 5% during the quarter.
Independent dealer revenue was up 14% compared to last year and independent dealer count increased 22% to 4242 dealers with monthly revenue per independent dealer decreasing 8% as we continue to add small smaller dealerships.
New dealer product revenue, including revenue from trade dealer science sponsor listings and trocar reach was approximately 3 million during the quarter.
OEM revenue of 4.4 million was down 54% from Q3 of 18. This decrease was primarily driven by the lack of recurring revenue from two of our larger OEM clients. We will begin to lap easier comparison. This revenue line in Q1 2020.
Forecast consulting and other revenue was 4.9 million this quarter were flat year over year.
Turning to units our total units were 267821 or flat year over year units in the Truecar branded channel were down 8% year over year, we continue to feel the impact of organic traffic loss in late 2018 with monthly unique visitors down 6% quarter.
However, as Mike mentioned earlier in the call. We're beginning to see the positive impact of our SCR investments and along with the easier year over year compare we expect traffic to our branded channel to return to growth in Q4.
We're also optimistic about the potential of the new brand campaign, we expect to launch of the first quarter of next year.
And our extended partner channel units were roughly flat year over year. We expect these extended partner channel to return to growth in 2020, as we activate a handful of recently signed partners and identify opportunities to scale, our existing high potential partners.
USAA channels units were up 11% year over year, we continue to see positive momentum in this channel again fueled by strong used car performance.
Total new car units were down 8% year over year, while used car units were up 20%.
Testing with earlier quarters, the weakness in the branded channel is driving the decline in total new car units. Meanwhile, throughout 2019 improvements to our used car product experience have fueled growth across all channels.
Monetization in Q3 of 19 was $320 per unit down $11 per unit from last year, driven by a decline in OEM revenue.
Decline was partially offset by an increase in revenue from new dealer products and an increasing mix of used car units.
Now turning to expenses in margins, where all of the following metrics on a non-GAAP basis, unless otherwise stated.
Gross profit was down 3.6 million from Q3 of 18 in gross margin was 91.3% in Q3 of 19 versus 92.2% in Q3 last year.
Technology and product expenses totaled 11.4 million or 12.6% of revenue in Q3 of 19 compared to 12.5 billion or 13.4% of revenue in Q3 of last year.
Sales and marketing expenses were 55.3 million or 61% of revenue in Q3 of 19 compared to 53.2 million or 56.8% of revenue in Q3 of last year.
Our blended cost per sale in Q3 ticked up slightly from $131 per unit last year to $132 per unit this year.
We're pleased to see this metric normalized on a year over year basis, thanks to improved efficiency from our branded channel media spend.
Our sales head count and other costs were 19.9 million in Q3 of 19 up 5% from 19.0 million. This time last year.
The increase in cost reflects onetime charges associated with the upcoming rebranding campaign announced by Mike earlier.
Moving on to DNA, where Q3 2019 expenses totaled 10.2 million or 11.2% of revenue compared to 10.6 million or 11.3% of revenue in Q3 of 18.
Adjusted EBITDA was 5.9 billion EUR, 6.5% of revenue in Q3 of my team compared to 10 million or 10.7% of revenue in Q3 of 18.
The items excluded from adjusted EBITDA for Q3 of 19, primarily include depreciation and amortization of 6.1 billion and stock based compensation of 7.2 million.
GAAP net loss for the period was 7.7 million or seven cents per share compared to a loss of 6.3 million or six cents per share last year.
non-GAAP net income was point 5 billion representing earnings of less than one cents per share compared to non-GAAP net income of 4.3 million 4.3 million or four cents per share. This time last year.
Our balance sheet continues to remain healthy with approximately 172 million in cash and no outstanding debt.
Now turning to guidance given our financial results in Q3, we are raising our guidance for the full year 2019 revised range of 351 million to 353 million or negative 1% to flat revenue growth year over year. This represents a $4.5 million adjustment upwards from the midpoint of the prior.
Greetings range.
For the full year 2019, adjusted EBITDA, we're also raising our guidance to a revised range that 15 million to $17 million, 45% adjusted EBITDA margin.
It represents a $4 million adjustment upwards from the midpoint of the prior guidance range.
This revision reflects the benefit of stronger top line guide in addition to active expense just.
I will now turn the call back over to Mike for final comments.
Thanks, Noelle, we strongly believe that the delivery of our Q3 performance and the momentum we have going into Q4 will lay the groundwork for us to return to growth in 2020, I look forward to our next call, where we'll be prepared to share more details about the launch of our new consumer experience and our new rebranding campaign.
It's an exciting time here, a true car and I look forward to sharing with all of you the company's continuing progress and with that let's go to questions.
Thank you at this time will be conducting a question answer session. If you'd like to ask a question. Please press star one on your telephone keypad.
Formation tell indicate your line is in the question Q you May press star to like to remove your question from the Q.
Our participants uses speaker equipment and may be necessary to pick up your handset before pressing the star keys, one moment, please while we pull for questions.
Our first question comes from Kyle Evans with Stephens. Please proceed with your question.
Hey, Mike I know you said you were going to share more details around the new consumer launch at the next call but of course, you knew where we're going to ask I Wonder if you could put some day brackets around.
Phase, one and kind of tell us exactly what we should be looking for and were and then I've got some follow up questions as well.
Hey, Cal Thanks for the question, Yes, we have put some day brackets around phase one of our new consumer launch it will be early in Q1.
And it will coincide with our refreshed and all new brand launch that we'll be launching at about the same time. So we're still heavy into testing will be a testing aggressively for probably the next 45 days or so.
We will come up with a final product winner that will be the kind of stitching together an accumulation of all the good testing we've done we'll start ramping up the traffic on that after the first of the year and we're shooting for a launch.
Very early in Q1.
Can you talk a little bit.
What I would say on this is oftentimes when you talk about these type of projects. It's when it's going to be completed and for US. This is really just the beginning this is phase one we're excited about the changes you'll see our early in 2020, but we'll continue to be interesting.
Through a process. We've we've found the comfort level with about 10% of our DCDC traffic that we're able to pull off and aggressively test different.
Things that we'd like to try through the system. So we're going to continue to do that on an ongoing basis and we think it.
Allow us to continually.
All of our product in a positive way.
Believe you referenced conversion improvements.
In your prepared remarks could you talk a little bit about what you're seeing in that 10% testing ground in terms of prospect conversion improvements.
Yes, so that we've seen and the testing we're doing kind of follows the full gamut of the funnel.
We've done some some work around the Configurator that you can actually see on the site.
Right now we believe it's you know these state of the art Configurator out there for consumers. It helps us get the consumer on the right vehicle. We're excited about that part of the testing that's actually been launched and will be a big piece of our of our new new product offering even after we turn to first of the year.
Inversion efforts.
Manny and what we've done is we've tried to look for ways to engage consumers.
In a self directed way.
We've got some different products that we're testing one of them.
And I think this will be the first time, we'll talk about it as a product called lock unlock where we get the consumer more involved in the actual selection of the dealers they want to engage with.
There's a number of things we're working on from our DSE algorithm the kind of sits behind the scenes, but we're beginning to put all the the key attributes of what tends to create a good connection between our dealers and our consumers and we're feeding that into a machine learning database and testing.
Backwards against previous results to find out what really creates the best alignment between our dealer network in consumer. So those are just a few of the things we're working on Theres. Many of them that are in the queue still to be tested, but we're really excited by what we're seeing.
And then lastly sales and marketing is up as a percent of Noel I believe referred to.
Some work that's going on for the rebranding.
Could you help quantify that in the in the current quarter and then help us think about what.
Rebranding looks like from a margin perspective.
And kind of absolute dollar perspective next year. Thank you.
Thanks, Kyle I appreciate the question.
So marketing as a percentage of revenue.
Is down sequentially from Q2, it is up year over year, but we are we're seeing some efficiencies sequentially in our spend we spent time, particularly on the search engine marketing side.
Doing some pick and shovel work around our campaigns doing a better job matching keyword searches to landing pages and keyword searches to the associated copy and so we are seeing some efficiencies there.
Works, but we also are engaged in testing.
We'll be doing throughout Q4, so we've allocated some funds in Q4 for that we'll be testing across Facebook you to connected TV programmatic display and we also have a consulting engagement. We're looking at our overall marketing mix and trying to optimize across all of those channels. All this.
Being done.
As we move into the new year to be able to leverage that work as we launched our new brand and have overall prove deficiency in our marketing.
As far as next year, we're still in the 2020, playing process. So I'm not going to put a finer point on the total absolute spend or percentage of revenue next year, we're still working through that I will say given the fact that we're planning to launch a new brand and in Q1, you can expect from a mix shift staff.
Endpoint, we're going to spend up in support of that in the first half of the year.
But we will will provide some additional context on the full year on our next call.
Great. Thank you.
Our next question comes from Ron Josey with JMP. Please.
Please proceed with your question.
Hi, Thanks for taking my question. This is Andrew Byrne on for Ron.
I think in the prepared remarks, you talked about double digit sessions growth and that compares to I think you highlighted flat kind of GP growth that implies that more people are coming back to the platform can you just talk about kind of repeat visits and Pete visitors and what you guys are doing to try that.
And then secondarily.
Franchise independent revenue per dealer came in a little bit lower than us up can you talk about your process with renewals with dealers right now.
Thank you.
Yes, let me speak first hi, Andrew to the to the Reengagement piece of our business. We've got a team actively focusing on reengagement for our consumers.
We have a light registration process, that's actually pretty prospect before consumers are actually ready to be in connected with the dealer and we're spending time reengaging those folks through emails through targeted campaigns to re targeting on Facebook and other sites. So we are working hard.
To take the people who spend time on our site site shopping, but don't complete the process of prospecting and making sure we get them back to the site when they're when they're ready to move forward.
Hi, This is no while Andrew I'll take the second question.
So on the their revenue per franchise dealer. So right now we're in an environment where unit growth is flattens flat in Q3 was flat in Q2.
And so we've consciously made the decision to prioritize maintaining our current dealer network and coverage.
To fully benefit the new consumer experience in rebrand launch in Q1 and make sure we have a full network.
And the short term that's led to a modest decline in revenue per dealer. We think it represents an opportunity for us once we returned to unit growth will say on the independent side, we do on a break renewal standpoint feel like we have some monetization to grow into there, but we are adding.
Smaller dealers. So when you look at dealers standpoint, as we have smaller deals it's going to put pressure on revenue dealing there.
It is worth noting that our new products such as sponsor listings in reach give us an opportunity to offer more value to our dealer customers.
As a result in an opportunity to capture greater wallet share them as well.
Thank you.
Okay.
Our next question comes from Lee Girl with B. Riley. Please proceed with your question.
Great. Thanks for taking my questions.
It seems like kind of behind the scenes trade in is kind of tracking in line or if not ahead of expectation. So.
And maybe your thoughts on the trade and drivers during the quarter and perhaps as it ties into both new and used.
Yes, we thanks for the question lean we focused recently on on expanding our footprint on Truetrade.
We know it's going to be an important element of our consumer experience as we go forward and we wanted to make sure that we were getting coverage out into the marketplace. We're approaching 2000 dealers on truetrade.
Currently and you will see us begin to integrate the trading product in our core buying program post prospect before the end of the year. So we're excited about that all of our data tells us that.
Consumers about 50% of consumers, who purchase a new vehicle or used vehicle havent trade in.
And with the number of prospects, we have coming through our system. We know that's been a generate a lot of trade in valuations, we think it's going to.
Created good opportunity for our current prospects to get an idea what their trade ins work before they go into the dealerships. So we're excited about that and we think we'll see you know that product begin to grow rapidly as we get an integrated into the core buying product, yes, just to add to that.
The once we have an integrated into our flow the higher lead volume will will create engagement with the dealer and our tool and it provides us with an upsell opportunity to our dealers on the software on the full extent of the software.
So that they can use it for acquisition across all of their chance.
Got it and then just on the OEM and incentive business.
It seems like it's a combo.
You know OEM specific and also just kind of a general trend in lower OEM incentive spending.
Maybe talk on just a little bit on kind of the strategy as you sit today and maybe the potential.
Changes to the pipeline due to get that.
Vertical of business growing again next year.
Yes, we've had.
Two years consecutively to tell to pretty different stories around that piece of the business in in 18.
Bringing on some new partners generated quite a bit of growth in our OEM business in was much of the growth.
That we you know we delivered in 2018.
Two of those partners.
Did not come back to the platform and 19 and that created the dip in revenue. So it's going to be a little choppy, even going forward as we get out there and talk to the Oems. We are in discussions with all of our OEM partners on a regular basis.
We feel good about being a solution to them going forward and we expect the OEM business the turn.
Back to growth.
In 2020, although a lot of that business is still being developed now so the Oems are planning, they're going through their planning cycles for incentives as we speak.
I want to see a big close to Q4. This year and then they will begin working on next year and we're in the middle of those discussions one of the products new products. We are looking at for the future is a better understanding.
Of what they have in their current garage.
Our trading product will help us understand that a bit and as you can imagine the Oems are interested in a prospect to potentially is trading at competitive product and the opportunity to win a conversion and steel someone from another brand. So we think integration of trade into the flow will help us understand that.
We will get even.
I have the opportunity to be even more fine tuned with our OEM partners.
Got it thank you for taking my question.
Our next question comes from Daniel Powell with Goldman Sachs. Please proceed with your question.
Great. Thank you two questions. If I may 1st just wanted to ask around monetization realized the OEM incentives were were softer this quarter, but we kind of back those those figures out on the dealer product revenue side as well.
It looks like monetization was generally a bit softer versus Q2 than it has been historically just curious if there's anything going on there from a price mix perspective that could help us explain that.
Yes, thanks to the question Daniel I think that ties back to our earlier commentary on the revenue per franchise dealer, we're seeing some softer monetization given that we're at flat overall unit volumes and we're constantly doing so in protection of the of the network.
And to put a finer point on that Dan you were excited about our coverage right now in the franchise side of the business. We want to carry this group of dealers with us into Q1.
When we introduce our new product in our new brand campaign and get back to grow so we're being.
Sensitive to that and we want to make sure that we this group sticks with us as we as we turn the corner on 2020.
Understood. Thanks, and then on the the traffic looked like it improved versus Twoq you your units at Truecar and USA, both look like they approved rounded the trends in the second quarter, but it looks like the market share. That's your reporting the declines there accelerated just curious if that's telling us anything about.
Your market exposures or if there's a nuance there though.
Helpful. Appreciate.
Yes, we.
We've seen the upticks in traffic.
We felt good about traffic across all three channels.
In Q3 and Weve.
We've continued to focus on.
Effectively bringing that traffic to the site and and doing the right things to create conversion on that so we havent seen any.
Any significant competitive impact.
Influences on that business, we have seen a shift to use.
Versus our new car percent of units, so that's a bit of the shift but.
I think we're in a good position we feel we're we're in a strong position as the number one new car provider and we're growing on the used car side and I think you'll see those shares numb those share numbers.
Begin to move again once we get into 2020.
Great appreciate it.
Our next question comes from Nick Jones with Citi. Please proceed with your question.
Hi, Thanks for taking the questions I guess first you talked a little bit about what the.
Rebranding of Truecars going to be as you launch a new side and then maybe expand a little bit on.
The focus on millennials in women achieving.
Interesting shift.
Yes.
And Nick the marketing people, we kill me if I gave you too much on this but we've seen.
Preliminary work in and we're excited about it.
It's been a while if you had been following us as a brand since we've done much to refresh our brand.
And even from the product side, we were.
We were built at a time when the impact of millennials and the extreme influence of women on the buying process hadn't come to fruition. So we know we are in a position the need to freshen all of that the new brand is modern it's exciting what you'll see is is very upbeat and I think you'll.
Like it once you see it and were positive.
On on the opportunity to grow into some segments, where maybe we weren't being considered before and certainly the gross segments. So.
More work to be done on that and it's certainly going to be important as to how we tie that into our new product experience. We're feeling good about both of those efforts and no look forward both in those having an impact in the marketing Q1 early Q1 of 2020.
Great. Thank you appreciate the color.
Our next question comes from Marvin Fung with BTI G. Thank please proceed with your question.
Okay. Good evening, thanks for taking my questions most of them and asked already but just.
On the partner channel the deceleration in growth in unit.
Could you just dig a little deeper into.
What the trends dollar that's causing that.
Slowdown and I realize we'll see some growth once you onboard the new new partners, you signed up but.
Just help us on that and then.
Good question, you you've mentioned that we should be an uptick in.
Brian the traffic growth.
In the fourth quarter of curious does that more of a function of that compares or.
One of the SVR improvement you've been doing multiple driving thank you.
Yes. Thank you for the question Marvin and on the partner side, we went through a bit of a period, where we had some limited resources around our BD.
Function that supports the partner group and it had been a period of time before we had brought some new partners on so part of the slowdown in growth that you saw was the fact that we you know we had lost some partners and we had not brought some new partners into the mix until just recently.
We're really excited about the newest set of partners we brought on board.
Motor one.
Kroger the number one grocery retailer in the nation with a very active duty digital audience.
And we also have a deal with credit Karma.
That we've signed and we hope the launch before the end the year. So we're excited about reinvigorating the partner network, you'll see that.
Begin to is to show signs of growth again, when you bring new partners on light that Theres always a phase of optimization and getting to know how the sites work together in that but but we think we've we've brought some real influential kind of partners on motor one has 10 million monthly uniques that visit their site.
So what we're excited about returning that channel back and growth.
As we turn the corner on 2020.
Hi, Marvin this is no I'll take the second question on SCR. So.
A component of the performance is related to lapping compares if you remember last year.
At the end of September there was a grew algorithm change that has significant impact on our SCR traffic. So yet we are lapping that in Q4, but we're also making a lot of progress on our internal SCR efforts, both in creating strong stronger upper funnel content.
10, best lists and things that will keep people coming to the site and engaged in this site for longer periods of time.
And also.
Things like dynamic butters on the sites. So we are we're making good progress with the things that we're working on from a product standpoint, as well as lapping you compares.
Great, Thanks, guys and nice quarter.
Thank you.
We have reached the end of the question and answer session. At this time I'd like to turn the call back to Mike Daryl for closing comments.
Thank you operator, I'd like to close by again thanking all the hard working through CCAR employees, who are making these positive results possible and helping US set the foundation for a really exciting year in 2020. Thank you for your timing questions today, and I look forward to speak with all of you over the coming weeks. Thanks again.
This concludes todays conference you may disconnect your lines at this time and we thank you for your participation.