Teladoc (NYSE:TDOC) Misses Q4 Sales Targets, Stock Drops 13.2%
Digital medical services platform Teladoc Health (NYSE:TDOC) fell short of analysts' expectations in Q4 FY2023, with revenue up 3.6% year on year to $660.5 million. Next quarter's revenue guidance of $637.5 million also underwhelmed, coming in 5.3% below analysts' estimates. It made a GAAP loss of $0.17 per share, improving from its loss of $15.59 per share in the same quarter last year.
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Teladoc (TDOC) Q4 FY2023 Highlights:
Revenue: $660.5 million vs analyst estimates of $671.1 million (1.6% miss)
EPS: -$0.17 vs analyst estimates of -$0.24 (30.4% beat)
Revenue Guidance for Q1 2024 is $637.5 million at the midpoint, below analyst estimates of $672.9 million (adjusted EBITDA guidance missed for the period)
Management's revenue guidance for the upcoming financial year 2024 is $2.69 billion at the midpoint, missing analyst estimates by 3.1% and implying 3.2% growth (vs 8.3% in FY2023) (adjusted EBITDA guidance ahead of expectations for the period)
Free Cash Flow of $93.58 million, similar to the previous quarter
Gross Margin (GAAP): 70.7%, in line with the same quarter last year
US Integrated Care Members: 89.6 million, up 6.3 million year on year
Market Capitalization: $3.48 billion
"With approximately 90 million members and thousands of clients around the world, Teladoc Health continues to be the leader in whole person virtual care," said Jason Gorevic, CEO of Teladoc Health.
Founded to help people in rural areas get online medical consultations, Teladoc Health (NYSE:TDOC) is a telemedicine platform that facilitates remote doctor’s visits.
Online Marketplace
Marketplaces have existed for centuries. Where once it was a main street in a small town or a mall in the suburbs, sellers benefitted from proximity to one another because they could draw customers by offering convenience and selection. Today, a myriad of online marketplaces fulfill that same role, aggregating large customer bases, which attracts commission-paying sellers, generating flywheel scale effects that feed back into further customer acquisition.
Sales Growth
Teladoc's revenue growth over the last three years has been impressive, averaging 41% annually. This quarter, Teladoc reported rather lacklustre 3.6% year-on-year revenue growth, missing analysts' expectations.
Guidance for the next quarter indicates Teladoc is expecting revenue to grow 1.3% year on year to $637.5 million, slowing down from the 11.3% year-on-year increase it recorded in the same quarter last year. For the upcoming financial year, management expects revenue to reach $2.69 billion at the midpoint, representing 3.2% growth compared to the 8.3% increase in FY2023.
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Usage Growth
As an online marketplace, Teladoc generates revenue growth by increasing both the number of users on its platform and the average order size in dollars.
Over the last two years, Teladoc's users, a key performance metric for the company, grew 7.9% annually to 89.6 million. This is decent growth for a consumer internet company.
In Q4, Teladoc added 6.3 million users, translating into 7.6% year-on-year growth.
Revenue Per User
Average revenue per user (ARPU) is a critical metric to track for consumer internet businesses like Teladoc because it measures how much the company earns in transaction fees from each user. Furthermore, ARPU gives us unique insights as it's a function of a user's average order size and Teladoc's take rate, or "cut", on each order.
Teladoc's ARPU growth has been decent over the last two years, averaging 5.2%. The company's ability to increase prices while growing its users demonstrates the value of its platform. This quarter, ARPU declined 3.7% year on year to $7.37 per user.
Key Takeaways from Teladoc's Q4 Results
We struggled to find many strong positives in these results. Its full-year revenue guidance missed analysts' expectations and its revenue guidance for next quarter missed Wall Street's estimates. Adjusted EBITDA guidance for the next quarter was also below expectations. Overall, the results could have been better. The company is down 13.2% on the results and currently trades at $17.8 per share.
Teladoc may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
