$TEM EXECUTIVE CALL SUMMARY: (Tempus AI, Inc., 02/24/26)
Tempus reported Q4 2025 revenue of $367.2M, up 83.0% YoY, with stated organic growth excluding Ambry of 33.5%. Diagnostics revenue was $266.9M (+121.6% YoY) and Data and Applications revenue was $100.4M (+25.1% YoY). Q4 gross profit was $237.7M (+94.7% YoY), implying a consolidated gross margin of 64.7% (vs 60.8% in Q4 2024), driven by a large step-up in Diagnostics gross margin to 61.4% (vs 48.4% in Q4 2024), partially offset by Data and Applications gross margin compression to 73.5% (vs 79.5% in Q4 2024). Q4 adjusted EBITDA was $12.9M (vs -$7.8M in Q4 2024), while GAAP net loss was -$54.2M (vs -$13.0M in Q4 2024) and included $48.7M of stock-based compensation expense and employer payroll taxes. (SEC)
Full-year 2025 revenue was $1.2718B (+83.4% YoY), with Diagnostics at $955.4M (+111.5% YoY) and Data and Applications at $316.4M (+30.9% YoY, with “Insights” growth stated at 38.0% for the year). Full-year adjusted EBITDA was -$7.4M (an improvement of $97.3M vs 2024), while GAAP net loss was -$245.0M and included $136.3M of stock-based compensation expense and employer payroll taxes. Year-end cash and marketable securities were $759.7M, Total Remaining Contract Value was >$1.1B, and Net Revenue Retention was 126%. Management provided full-year 2026 guidance of ~$1.59B of revenue (~25% YoY growth) and ~$65M of adjusted EBITDA. (SEC)
Relative to the prior quarter’s framework, revenue execution modestly exceeded the raised FY2025 revenue guide of $1.265B, but profitability under-delivered against the prior expectation of Q4 adjusted EBITDA of ~$20M and “slightly positive” FY2025 adjusted EBITDA. Actual Q4 adjusted EBITDA was $12.9M and FY2025 adjusted EBITDA was -$7.4M. (SEC)
The call’s central incremental message was strategic rather than purely financial: an explicit attempt to position Tempus as a durable “data + distribution” AI moat in healthcare, backed by (1) scale claims around multimodal proprietary data and clinical workflow integration and (2) an increasingly compute-intensive foundation model strategy (including disclosed GPU clusters), intended to accelerate both Diagnostics differentiation (more algorithmic “insights” embedded into assays) and Data monetization (higher-value licensing and applications). In parallel, MRD was positioned as a gated, reimbursement-constrained but potentially very large upside vector, with unusually strong early growth off a deliberately limited commercial footprint.
BUSINESS MODEL AND STRATEGIC POSITIONING
Tempus’s narrative continued to emphasize a 2-engine model: Diagnostics as the data-generation flywheel and distribution channel, and Data and Applications as the monetization layer that converts proprietary multimodal data into pharma, biopharma, and provider value. On the call, the moat argument was framed in classic AI-economic terms: proprietary training data plus proprietary distribution. Management asserted “over 450 petabytes of connected multimodal data” and claimed embedded distribution via “more than 5,500 hospitals” and “more than 8,500 regularly ordering oncologists,” with longitudinal outcome linkage highlighted as differentiating. The key competitive claim was that replication would require rebuilding provider contracting, data plumbing, and harmonization at scale, described as “an enormous lift” spanning “10 years.” These statements matter primarily as a durability claim for Data and Applications growth and pricing power, and secondarily as a justification for significant compute and R&D intensity.
The practical economic implication of this model is that Diagnostics may be managed less as a standalone margin-maximizing business and more as a strategic asset that expands data density, quality, and longitudinal coverage. This was reinforced when gross margin progression was discussed: the CFO explicitly indicated that ASP increases tend to expand margin, but the company periodically “reassess[es]” expanding panel sizes as sequencing costs fall, implying an intentional reinvestment loop where some pricing upside is translated into richer assays and greater downstream data value rather than purely flowing through to near-term Diagnostics gross profit.
Q4 2025 PERFORMANCE AND WHAT IT SIGNALS
Revenue composition and growth quality
Q4 2025 revenue of $367.2M (+83.0% YoY) reflected a mix of organic growth and acquisition contribution, with the company explicitly citing 33.5% organic growth excluding Ambry. Diagnostics revenue of $266.9M (+121.6% YoY) was the primary growth driver and likely reflects both strong underlying oncology volumes and the Ambry contribution within hereditary testing. Data and Applications revenue of $100.4M (+25.1% YoY) showed materially lower reported growth than Diagnostics, but the call and the earnings materials emphasized that reported growth comparisons were affected by the prior-year AstraZeneca warrant impact; “Insights” growth was stated as 69.5% excluding that impact for Q4. (SEC)
From a growth-quality lens, the key signal was that core organic growth remained in the low-to-mid 30% range despite scale, consistent with management’s “core business” growth characterization on the call, while the reported consolidated growth rate remained elevated due to acquisition comp effects. This sets up an important 2026 dynamic: the guided 25% consolidated growth is a step down from 2025’s reported 83% growth, but the relevant debate is whether underlying organic growth decelerates toward the 20s or can be sustained closer to the 30s, with Data and MRD acting as potential offsets.
Margin trajectory and underlying economics
Q4 consolidated gross margin was 64.7%, up 390 bps YoY, driven by a 1-year expansion in Diagnostics gross margin to 61.4% (up 1,300 bps YoY). Data and Applications gross margin declined to 73.5% (down 600 bps YoY), which may indicate either mix shift toward lower-margin application/service components, incremental costs associated with scaling delivery, or investment in productization. Full-year consolidated gross margin expanded to 62.7% (vs 55.0% in 2024), with Diagnostics gross margin rising to 59.6% (vs 46.1% in 2024) and Data and Applications gross margin modestly higher at 72.3% (vs 71.5% in 2024). (SEC)
Q4 adjusted EBITDA of $12.9M (3.5% margin) represented a major step toward the longer-term profitability narrative, but GAAP losses remained substantial, with GAAP net loss of -$54.2M in Q4 and -$245.0M for 2025. The reported stock-based compensation and payroll taxes burden remained heavy ($48.7M in Q4; $136.3M in 2025), which is economically dilutive even if excluded from adjusted EBITDA. (SEC)
A technically important nuance is that the gross margin inflection is being driven primarily by Diagnostics margin expansion rather than Data margin. That reduces the risk that the high-margin Data business is masking weak Diagnostics unit economics. However, it also raises a sustainability question: how much of the Diagnostics margin expansion is structural (scale, automation, mix) versus transitory (pricing, reimbursement mix, near-term panel configuration), especially given the stated willingness to reinvest ASP upside into larger panels.
Operational performance drivers emphasized on the call
Oncology volumes: Management stated 29% oncology unit growth in Q4, described as accelerating through the year. Liquid biopsy (XF) was characterized as growing “a little faster than solid,” with mix expected to remain broadly stable. This suggests that Q4 momentum was broad-based rather than driven by a single protocol or testing cadence. The durability question is whether oncology volume growth can remain high-20s/low-30s as the base scales, especially with competitive intensity across CGP and liquid biopsy.
Hereditary volumes: Q4 hereditary unit growth was stated at 23%, and management explicitly guided to moderation and lumpiness in 2026, with “high teens” framed as the longer-term growth rate for hereditary. This is consistent with the pattern of deceleration versus Q3, where hereditary volume growth was 37% and hereditary testing revenue (Ambry genetics) was $102.6M, up 32.8% on a pro forma basis. (Tempus)
MRD: MRD was positioned as both a near-term operational highlight and a major embedded option. The letter referenced on the call (not provided in the transcript text) was described as stating MRD volume of ~4,700 tests in Q4, with 56% growth quarter-over-quarter. The most consequential commercial insight was that MRD was being deliberately constrained: management described having “a very small percentage” of the salesforce selling MRD and stated that if fully unblocked, volume “could be 20x higher,” while emphasizing gating tied to reimbursement timing to avoid “financial havoc.” This framing implies that near-term MRD contribution to the 2026 guide may be conservative, with MRD treated as upside optionality rather than a required driver.
Data business: The call repeatedly emphasized demand strength and renewal dynamics. “Net revenue retention was 126%” was cited as evidence of expansion within existing customers. Total Remaining Contract Value was described as >$1.1B and rising faster than revenue. Management claimed unusually high “visibility” into the 2026 revenue build due to bookings already in place, and stated that “the vast majority” of Data and Applications is data licensing, with trial matching (TIME) and care gap products (Next) characterized as smaller components. (SEC)
GUIDANCE AND OUTLOOK ANALYSIS
FY2026 guidance level and implied operating model
FY2026 guidance of ~$1.59B revenue implies ~25% YoY growth off the $1.2718B 2025 base. Adjusted EBITDA guidance of ~$65M implies a roughly 4.1% adjusted EBITDA margin, representing a meaningful step-up from -0.6% in 2025 and 3.5% in Q4 2025. (SEC)
The margin ramp implied by the 2026 guide appears to require a combination of (1) continued gross margin expansion and/or mix shift toward higher-margin Data and Applications, and (2) opex leverage, particularly in SG&A, given the company’s existing commercial scale and stated lack of major salesforce reorganization entering 2026. At the same time, the call disclosed substantial compute scaling (dedicated H200 and GB200 clusters) and continued foundation model investment, which likely raises the fixed-cost base and could offset some natural opex leverage. This tension suggests that the 2026 adjusted EBITDA guide embeds both operating discipline and ongoing investment, rather than a pure “harvest” year.
Guidance credibility versus prior guidance behavior
Q3 2025 increased FY2025 revenue guidance to $1.265B; FY2025 revenue finished at $1.2718B, effectively consistent and slightly above. However, the Q3 framework also suggested Q4 adjusted EBITDA of ~$20M and “slightly positive” FY2025 adjusted EBITDA, whereas actual Q4 adjusted EBITDA was $12.9M and FY2025 adjusted EBITDA was -$7.4M. (Tempus)
The inference for 2026 is that revenue guidance has recently shown reasonable calibration, while profitability guidance appears more sensitive to investment timing and cost variability. The disclosed compute expansion, MRD gating strategy, and the stated willingness to reinvest ASP upside into broader panels all increase the range of potential EBITDA outcomes versus a more mature diagnostic company.
Near-term (Q1/Q2) directional indicators disclosed on the call
While explicit quarterly revenue guidance was not stated in the transcript excerpt, management indicated that the Licensing/Insights business is “projecting roughly 40% growth this quarter,” and described Q1 as “off to a good start” for oncology. Hereditary was expected to be “a little bit lower in Q1” and then pick up, with lumpiness across 2026. These statements collectively suggest that Q1 2026 may show continued oncology momentum, with Data growth normalizing toward ~40% in Insights and hereditary becoming a relative drag versus 2025 headline growth.
IMPORTANT CALL QUOTES WITH INVESTMENT RELEVANCE
AI moat and scale:
“access to proprietary data to train models and proprietary distribution”
“over 450 petabytes of connected multimodal data”
“connected to more than 5,500 hospitals”
“more than 8,500 regularly ordering oncologists”
“an enormous lift… over the last 10 years”
Data demand and competitive positioning:
“126% net revenue retention”
“greater than $1.1 billion in the tank”
“crazy amounts of demand”
“pulling further and further away from the competition”
MRD upside with gating:
“MRD… 56% quarter over quarter”
“highly constraining this effort”
“it could be 20x higher”
“a function of reimbursement”
“not… wreak financial havoc”
Compute and foundation models:
“hit all those benchmarks”
“a little over 1,000 H200s”
“more than 500 GB200s”
“running additional models… across all of our data”
ASP expansion and timing:
“ASPs in Q4 were around $1,640”
“up about $40 quarter over quarter”
“about $500… of upside to ASP”
“by the end of 2026… vast majority of volume on… FDA approved version”
“submitted our XF… liquid biopsy to the FDA… unlikely to have much of a ’26 impact”
STRATEGIC AND PRODUCT DEVELOPMENTS WITH QUARTER IMPACT
Paige Predict / digital pathology integration
The earnings materials disclosed the launch of Paige Predict, described as an AI-powered digital pathology suite built to analyze H&E pathology slides and predict 123 biomarkers across 16 cancer types, with emphasis on supporting decision-making when tissue is limited. The call added strategic context: the product was positioned as one example of “stacking” incremental insights onto the diagnostic workflow, including when sequencing is QNS and results cannot be returned. The key economic implication is not near-term revenue contribution (explicitly downplayed by management) but incremental competitive differentiation that could sustain volume growth, reduce redraws/retests, and potentially improve physician preference in competitive CGP and RNA/DNA testing markets. The investment risk is that such algorithmic “stacking” may increase COGS and R&D/compute expense, making near-term profitability more sensitive to scaling efficiency. (SEC)
Foundation model program with AstraZeneca and compute intensity
The call introduced a materially more compute-intensive posture than typical diagnostics peers, with a disclosed dedicated cluster of >1,000 H200 GPUs for an oncology foundation model and a second cluster of >500 GB200 GPUs for broader multimodal model development. The most important implication is that Tempus is attempting to move up the stack from being primarily a data provider to also being a foundation model developer with direct productization into both Diagnostics (test contextualization, new biomarkers, faster turnaround) and Data (richer licensed insights and potentially new application layers). The near-term financial tradeoff is increased capital intensity and fixed costs, potentially limiting near-term EBITDA upside even as revenue grows. The longer-term payoff, if successful, would be deeper defensibility and monetization per patient or per customer, which could justify premium valuation multiples versus standard diagnostics models.
MRD portfolio strategy and reimbursement gating
MRD strategy was explicitly framed as disciplined and staged. The tumor-informed product was described as representing ~95% of current MRD, with the CRC tumor-naive assay reimbursement process characterized as uncertain timing with MolDX and “not… a needle mover.” The investment implication is that MRD is being managed as a controlled optionality lever rather than a near-term growth dependency. Upside exists if reimbursement broadens and the company “ungates” salesforce deployment, leveraging existing distribution into oncology practices. Downside exists if reimbursement remains slow, competitive performance gaps persist in tumor-naive assays, or partner dependency (Personalis) introduces execution constraints.
ASP and FDA strategy as a 2026 margin lever, with reinvestment caveats
Diagnostics ASP was stated at ~$1,640 in Q4, up ~$40 QoQ, with management reiterating a path to >$2,200 over time and >$500 of upside from the current mix. The principal 2026 driver was framed as migration from xT CDx LDT to the FDA-approved version by end of 2026, with XF FDA submission framed as a 2027 driver. On the margin side, management explicitly indicated ASP increases should lift gross profit, but also indicated the company may expand panel size as costs decline and is “less reliant” on maximizing diagnostics gross profit due to the Data business. The investment implication is that ASP uplift should support revenue and margin, but the gross margin pass-through is intentionally not 1:1 and could be partially reinvested into broader panels and data capture.
COMPARISON TO HISTORICAL PERFORMANCE AND PRIOR QUARTER CONTEXT
Operationally, Q4 oncology unit growth of 29% represented continued acceleration versus Q3’s 27% oncology volume growth. Hereditary growth decelerated meaningfully versus Q3’s 37% hereditary volume growth, consistent with management’s commentary that hereditary will moderate as share gains are lapped and growth becomes lumpy. (Tempus)
Financially, Q3 revenue was $334.2M and Q4 revenue was $367.2M, implying sequential growth of ~$33.0M (+9.9%). Q3 gross profit was $209.9M and Q4 gross profit was $237.7M, implying sequential gross profit growth of ~$27.8M (+13.2%) and modest margin expansion. Q3 adjusted EBITDA was $1.5M and Q4 adjusted EBITDA was $12.9M, implying substantial sequential profitability improvement. (Tempus)
INVESTMENT IMPLICATIONS
Core debate: durable compounding versus guided deceleration
The 2026 guide implies a deceleration to ~25% consolidated growth, which is directionally consistent with (1) tougher acquisition comps and (2) deliberate gating of MRD. The key technical question is whether underlying organic growth remains closer to the low 30% level cited for Q4 (excluding Ambry) or trends down toward the mid-20s as the oncology base scales and hereditary moderates. Diagnostics growth durability is supported by continued oncology volume acceleration and a multi-factor differentiation story (contextualization, turnaround, multimodal insights), but the 2026 guide embeds a more moderate consolidated view, which may be interpreted as conservatism or as an early signal of organic normalization.
Quality of Data and Applications as a recurring, high-LTV revenue stream
Data and Applications reported growth (25.1% in Q4) appears modest relative to management’s qualitative claims of acceleration, but “Insights” growth adjusted for the AstraZeneca warrant impact was stated at 69.5% in Q4, and NRR at 126% indicates customer expansion. The >$1.1B Total Remaining Contract Value provides backlog visibility but must be interpreted carefully: the disclosed definition assumes exercise of options and no early termination, which can overstate realizable value under budget pressure scenarios. (SEC)
From an investment standpoint, the Data business remains the most important multiple-support component due to (1) expected higher incremental margins and (2) platform defensibility. However, this also increases exposure to pharma R&D budgets, deal timing lumpiness, and contract scope changes, which could create quarterly volatility even if the multi-year trend remains strong.
MRD as asymmetric optionality with a reimbursement governor
MRD was framed as very high growth (56% QoQ) from a constrained base (~4,700 tests in Q4) with potentially massive scaling if/when fully commercialized. The gating strategy reduces near-term P&L risk but pushes the MRD inflection into a reimbursement-dependent timeline. Upside is meaningful if coverage expands and Tempus successfully leverages its existing oncology distribution; downside risk is primarily timing (delayed reimbursement) and competitive differentiation (tumor-naive performance and market structure differences by cancer type).
Capital intensity and execution risk tied to foundation model ambitions
The disclosed GPU infrastructure (H200 and GB200 clusters) suggests a material step-up in capital intensity and ongoing operating expense (power, networking, depreciation, talent). This approach could be strategically correct if it produces defensible model performance and productized diagnostics enhancements that sustain share gains. However, it raises 3 investment risks that become more relevant as the company targets positive adjusted EBITDA in 2026:
Operating leverage risk: fixed costs rise faster than revenue if model commercialization lags.
Monetization risk: incremental insights improve outcomes and adoption but may not be immediately priced.
Competitive response risk: large AI and healthcare incumbents may accelerate partnerships and acquisitions to close data and distribution gaps.
Profitability pathway: credible directionally, sensitive to investment cadence
The adjusted EBITDA bridge from -$7.4M in 2025 to +$65M in 2026 is directionally supported by (1) a large gross margin step-up already visible in 2025 and (2) the 2025 exit run-rate of positive adjusted EBITDA. The principal sensitivities are (1) compute and R&D ramp, (2) salesforce and SG&A discipline as MRD and new products scale, and (3) Diagnostics gross margin behavior as ASP rises but panel breadth expands. The miss versus the prior quarter’s implied Q4 adjusted EBITDA (~$20M expected versus $12.9M actual) reinforces that profitability is currently the more volatile variable than revenue. (SEC)
Market reaction and consensus context
Public commentary indicated that the 2026 revenue guide of ~$1.59B was slightly above consensus (~$1.581B), but the equity traded lower following the release, consistent with investor expectations for a larger upside versus estimates. (https://t.co/lfvCJxdZ98)
KEY MONITORING ITEMS AND CATALYSTS
Evidence that “Insights” growth normalizes near the indicated ~40% pace in Q1 and that Net Revenue Retention remains >120% as the base scales.
Updates on Total Remaining Contract Value and the conversion rate of bookings to revenue, with focus on contract duration, termination provisions, and option exercise behavior.
MRD reimbursement milestones (including MolDX dynamics) and explicit signals on when broader salesforce deployment will be permitted.
FDA pathway execution: pace of xT CDx migration to the FDA-approved version through 2026 and progress/timing for XF post-submission.
Diagnostics ASP trajectory through 2026 and explicit commentary on how much of ASP upside is reinvested into broader panels versus flowing through to gross margin.
Quantification of compute-related capex/opex and any explicit targets for foundation model productization, including customer-facing deployments and measurable clinical workflow improvements.
COMPANY PARTICIPANTS
Elizabeth Krutoholow, Vice President, Investor Relations and Competitive Intelligence
Eric Lefkofsky, Founder and Chief Executive Officer
Jim Rogers, Chief Financial Officer
RESEARCH ANALYSTS
Andrew Brackmann, William Blair
Bradley Bowers, Mizuho
Casey Woodring, JP Morgan
Dan Brennan, TD Cowen
Kyle Mikson, Canaccord Genuity
Mark Massaro, BTIG
Mark Schappel, Loop Capital
Ryan MacDonald, Needham & Company
Subbu Nambi, Guggenheim Securities
Talon Titchmarsh, Morgan Stanley
Doug Schenkel, Wolfe Research
