TEM

Q4 2025

Date: 2026-02-24Rank: #60Forward Promise: very_bullish

Tempus AI reported exceptional FY 2025 results, with core revenue growing over 33% year-over-year, significantly exceeding expectations. The Diagnostics business saw accelerating unit growth of 29% in Oncology, driven by a 56% quarter-over-quarter surge in MRD tests, while the Data and Services business grew 69% in Q4 (including one-time items) with a net revenue retention of 126%. Management guided for 2026 revenue of $1.59 billion (approx. 25% growth) and positive adjusted EBITDA of $65 million, highlighting strong visibility with $350 million of TCV already committed for the year.

Bullishness Score

88.06

μ Mean

93.19

σ Uncertainty

1.71

Forward Promise

8.5

Management Tone

Management exuded high confidence and enthusiasm throughout the call, frequently using superlatives like 'exceptional,' 'extraordinary,' and 'phenomenal' to describe performance and outlook. Eric Lefkofsky was particularly assertive regarding the company's competitive moat, dismissing concerns about new AI entrants by emphasizing the difficulty of replicating Tempus's proprietary data and distribution network. The tone remained consistent from prepared remarks into the Q&A, where they eagerly detailed growth drivers and technological advancements.

Confidence: HIGH

Strategic Signals

Management emphasized the 'platform advantage' driven by the integration of clinical and molecular data, which they believe is the primary driver of their accelerating market share gains. This strategy focuses on making diagnostics 'smarter' by layering AI insights, such as Paige Predict and Immune Profile Score, onto standard tests to increase physician utility and stickiness.

The Data and Services segment is highlighted as a major growth engine, with management noting that Total Contract Value (TCV) is rising faster than revenue and currently stands above $1.1 billion. The strategic focus here is on leveraging proprietary data to train large language models (LLMs) for Pharma partners, creating a high-barrier-to-entry moat that competitors cannot easily replicate.

Significant capital and operational resources are being directed toward AI infrastructure, specifically the procurement of H200 and GB200 GPU clusters to train foundation models. Management signaled that these models will be 'catalytic' to both the Diagnostics business (by improving test accuracy) and the Data business (by providing deeper insights to clients).

On the product roadmap, the company is prioritizing the migration of its xT CDx test from an LDT to an FDA-approved version, which is expected to drive ASP expansion of over $500 per test in the coming years. Additionally, the submission of the xF liquid biopsy to the FDA marks a key step toward long-term portfolio expansion and revenue diversification.

Management is strategically 'ungating' its Minimal Residual Disease (MRD) product, currently constrained to a small fraction of the sales force. They indicated that full rollout could increase volume by up to 20x, suggesting a deliberate strategy to scale the product only as reimbursement and operational maturity allow to maximize long-term profitability.

Key Metrics

Core Revenue Growth>33%YoY

Oncology Unit Growth29%Q4 YoY

MRD Growth56%QoQ

Data & Services Growth69%Q4 YoY (incl. warrant)

Net Revenue Retention126%N/A

Total Contract Value (TCV)$1.1B+Rising faster than revenue

2026 Revenue Guidance$1.59B~25% YoY

2026 Adj. EBITDA Guidance$65MPositive

Q4 ASP$1,640+$40 QoQ

Guidance

2026 Revenue: $1.59 billion (approx. 25% growth)

2026 Adjusted EBITDA: Approximately $65 million positive

Q1 Data & Services Growth: Approx. 40%

Long-term Core Growth: 25%

Hereditary Growth 2026: High-teens (with lumpiness)

ASP Upside: Greater than $500 over coming years

Bottom Line

Price Target: N/A

Tempus AI is executing at a high level, leveraging its unique data advantage to drive accelerating growth in both Diagnostics and Data Services. The 33% core revenue growth and 126% net revenue retention demonstrate strong product-market fit and competitive moat durability. The 2026 guidance of $1.59B appears conservative given the record backlog and 'crazy' demand levels described by management. Key catalysts include the full rollout of the MRD product (currently constrained), the migration to FDA-approved xT CDx driving ASP expansion, and the deployment of new foundation models which should further widen the competitive gap. Risks are largely contained to execution on reimbursement and product pivots, which management has shown a willingness to navigate intelligently.

Forward Promise

Overall: 8.5 · very_bullish

Exceptional visibility and accelerating growth driven by an unassailable data moat.

Management exuded high confidence, backed by record bookings and accelerating demand, signaling that the current growth trajectory is sustainable and likely conservative.

Red Flags

While the MRD growth numbers are explosive (56% QoQ), the business remains heavily constrained by management choice, and the path to full reimbursement remains uncertain. Eric Lefkofsky noted that MolDx coverage for the first-gen CRC assay is unpredictable ('it's possible that we have reimbursement in a month, and it's possible that it takes longer'), creating a potential overhang on the timing of this growth vector.

The Hereditary business, while still growing at 23% in Q4, is expected to decelerate to 'high-teens' growth rates in 2026 as the company laps prior share gains. Management admitted to potential 'lumpiness' in this segment, indicating that the easy growth from this vertical may be moderating.

Management provided a somewhat vague response regarding the specific revenue contribution of the new foundation model with AstraZeneca and Pathos in 2026. While they confirmed hitting Q1 benchmarks, they deflected on quantifying the financial impact, suggesting it is currently immaterial or difficult to forecast precisely.

There is an execution risk associated with the rapid pivot in the tumor-naive MRD strategy. Management admitted they 'pivoted' to a second-generation assay because the first version did not meet performance standards, effectively burning time and requiring new studies, which could delay market entry in competitive segments like lung cancer.

Macro Insights

Healthcare AI Adoption: Management indicated a strong trend where providers and institutions are increasingly willing to share de-identified data to accelerate drug discovery, suggesting a favorable macro environment for data-centric AI platforms.

Diagnostic Reimbursement: The uncertainty surrounding MolDx coverage for the MRD assay highlights the persistent friction and unpredictability in the diagnostic reimbursement landscape, which can delay product launches.

Sequencing Market Growth: Management noted that the broader market for sequencing is growing healthily, with 'everyone experiencing kind of healthy growth rates,' indicating a rising tide lifting all boats in the genomics space.