Digital medical services platform Teladoc Health (NYSE:TDOC) announced better-than-expected results in Q1 CY2024, with revenue up 2.7% year on year to $646.1 million. On the other hand, next quarter's revenue guidance of $647.5 million was less impressive, coming in 2.3% below analysts' estimates. It made a GAAP loss of $0.49 per share, down from its loss of $0.42 per share in the same quarter last year.

Is now the time to buy Teladoc? Find out by accessing our full research report, it's free.

“We are pleased to report a solid start to the year, with strength in both revenue and adjusted EBITDA in the first quarter,” said Mala Murthy, acting Chief Executive Officer and chief financial officer 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 strong, averaging 28.7% annually. This quarter, Teladoc beat analysts' estimates but reported lacklustre 2.7% year-on-year revenue growth.

Teladoc is expecting next quarter's revenue to decline 0.8% year on year to $647.5 million, a reversal from the 10.1% year-on-year increase it recorded in the comparable quarter last year. Ahead of the earnings results, analysts were projecting sales to grow 3% over the next 12 months.

Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) semiconductor stock benefitting from the rise of AI. Click here to access our free report on our favorite semiconductor growth story.

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 7.8% annually to 91.8 million. This is decent growth for a consumer internet company.

In Q1, Teladoc added 6.9 million users, translating into 8.1% 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 mediocre over the last two years, averaging 2.7%. However, the company's ability to continue increasing prices while growing its users shows they still find value in its platform. This quarter, ARPU declined 5% year on year to $7.04 per user.

Key Takeaways from Teladoc's Q1 Results

It was good to see Teladoc narrowly top analysts' revenue and EBITDA expectations this quarter. Although next quarter's revenue guidance was softer than expected, its full-year sales outlook was in line. Furthermore, its full-year free cash flow and U.S. Integrated Care Member estimates beat Wall Street's estimates. Overall, this was a decent quarter for Teladoc. The stock is up 4.2% after reporting and currently trades at $13.89 per share.

So should you invest in Teladoc 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.