Teladoc (NYSE: TDOC) is blaming its disappointing financial results, in part, on BetterHelp’s advertising cost associated with customer acquisition.

Despite the advertising woes, the company reported that its digital mental health subsidiary BetterHelp’s revenue grew by 40% year over year during 2022’s second quarter. That performance came in at the low end of Teladoc’s expectations.

Jason Gorevic, CEO of Teladoc, said during a Wednesday earnings call that this could be an indication that consumers are tightening their belts.

“With inflation on the rise, consumer confidence has now dropped to multi-decade lows,” Gorevic said.

Teladoc’s Q2 revenues were $592.38 million, a 17.7% year-over-year increase. While Teladoc beat its Q2 earnings per share projections by $0.15 and its revenue by $5.12 million, Gorevic noted that “it’s more likely that our overall financial performance will be towards the lower-end of our consolidated revenue and adjusted EBITDA guidance ranges in [2022’s] second half.”

A second factor playing into Teladoc’s year-end earnings projections is its chronic care business’ slower-than-expected dealmaking pace.

For the second earnings call in a row, Teladoc blamed smaller digital health startups for the lackluster advertising yield rate.

“We still see smaller private competitors pursuing what we believe are low or no-return customer acquisition strategies to establish market share,” Gorevic said. “Although we do not see this as sustainable, it’s difficult to predict how long this dynamic may continue.”

Gorevic stressed that Teladoc’s leadership position in the D2C market and its scale advantage will lead the company to outperform the industry while driving strong financial performance in a bear market.

As a result of the lower-than-expected marketing yield rate, the company is pulling back on advertising spend.

“You’ll see we’re not going to go to zero on the advertising spend in the fourth quarter, but it is a significant reduction because of the greater expense per advertising impression,” Gorevic said.

Teladoc is still banking on BetterHelp to drive a larger percentage of its growth.

“Management acknowledged that lower yield on marketing spend in BetterHelp – a majority of the mental health business which generates roughly one-third of the revenues – was a key driver of the reduced guidance, but still guided this business to grow 35-40% in F22,” states an analyst note from investment bank and financial services company Jefferies.

Despite the competition in the digital behavioral health space, the Jefferies note highlighted a promising movement in the market in BetterHelp’s favor.

“Our analysis of website traffic indicates that BetterHelp is regaining share in recent months as Cerebral website traffic declines, albeit with overall [behavioral health] traffic still down, following scrutiny around Cerebral’s prescribing practices,” the note reads. “This is encouraging as it should provide a near term lift for TDOC as it recovers share – however we would caution that total website traffic across the largest players in virtual behavioral health (including BetterHelp) has remained relatively flat over the past year.”