Tempus AI, Inc. Class A ((TEM)) has held its Q4 earnings call. Read on for the main highlights of the call.
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New trading tool for TEM bullsTempus AI, Inc. used its latest earnings call to underscore a broadly upbeat outlook, highlighting strong multi‑year growth drivers across diagnostics and data. Management acknowledged reimbursement and execution risks, but emphasized robust unit expansion, a surging contract backlog, and clear operating leverage, framing the business as solidly on track toward profitable scale by 2026.
Strong Revenue Trajectory and Profitability Path
Tempus reported core business revenue growth of more than 33% including Ambry, reinforcing investor confidence in the scale of its platform. Executives guided to $1.59 billion in 2026 revenue and roughly $65 million of positive adjusted EBITDA, aligning with a long‑term growth rate around 25%.
Diagnostics: Oncology and Hereditary Volume Expansion
Oncology testing remained the growth engine, with Q4 unit volume up 29% and momentum building through the year. Hereditary testing also posted a solid 23% Q4 increase, and management expects overall core diagnostic volume growth near 30% when excluding slower‑moving businesses.
MRD: Rapid Uptake With Significant Upside
Minimal residual disease, or MRD, continued to scale quickly, with about 4,700 tests run in the quarter and 56% sequential growth. Leadership argued that reimbursement and sales constraints are the main bottlenecks, estimating MRD volumes could be roughly 20 times higher if those hurdles were removed.
Data Business Momentum and Contract Visibility
The Insights data and licensing segment delivered reported revenue growth of 69% in the quarter once a one‑time warrant impact is included. Total contract value now exceeds $1.1 billion, giving the company strong visibility into 2026 with an active in‑year pipeline supporting continued data‑driven expansion.
High Net Revenue Retention Signals Stickiness
Net revenue retention in the data business reached 126%, a level that points to customers not only renewing but expanding their spend. This dynamic is critical for Tempus, as it supports a recurring, high‑margin revenue base that can compound alongside new client wins and product launches.
ASP Gains and Roadmap to Higher Pricing
Average selling price in Q4 climbed to about $1,640, roughly $40 higher than the prior quarter, as the mix gradually improves. Management outlined more than $500 per test of potential ASP upside over time, driven largely by moving volume from lab‑developed xT to the FDA‑approved xT CDx by the end of 2026, plus other payer and product upgrades.
AI and Foundation Model Investments
Tempus highlighted progress on its foundation models, noting that a key deliverable for a major pharma partner met internal benchmarks and moved into external testing. The company has invested heavily in on‑premise compute, with clusters of over 1,000 H200s and more than 500 GB200s, to power AI across radiology, pathology, and other data types.
Product and Platform Innovation
New offerings such as Paige Predict, which uses digitized pathology for predictive insights, and an Immune Profile Score aim to deepen clinical utility. The company also submitted its liquid biopsy xF test to regulators and plans to launch a whole‑genome heme product this year, broadening its multi‑assay, multimodal platform.
Hereditary Testing: Growth Normalization Ahead
While hereditary testing remains an important pillar, management cautioned that growth is likely to moderate from recent levels. They now target high‑teens growth longer term and flagged that near‑term results, including Q1, may be uneven as the business laps earlier share gains and elevated comparison periods.
MRD Reimbursement and Market Constraints
The company stressed that MRD adoption is gated by reimbursement processes and regulatory timing, including an ongoing review for its first‑generation colorectal assay. About 95% of current MRD volume is tumor‑informed, and after first‑generation tumor‑naive performance fell short, Tempus shifted resources toward a second‑generation assay to better address that segment.
One‑Time Effects Clouding Data Growth
Management reminded investors that the reported 69% growth in Insights was boosted by a non‑recurring warrant‑related item tied to a large partner. As a result, they urged caution when extrapolating that figure and suggested focusing on underlying recurring trends and forward growth expectations in the data business.
ASP and Margin Trade‑Offs to Monitor
Although the ASP roadmap suggests more than $500 of upside potential per test, Tempus noted that higher prices will not automatically translate into equivalent gross margin gains. Decisions to expand panel sizes, enhance content, or shift product mix could partially offset margin benefits, making execution and mix management key variables.
Forward‑Looking Guidance and Growth Drivers
Looking ahead, Tempus reaffirmed 2026 revenue guidance of $1.59 billion and about $65 million in adjusted EBITDA, underpinned by a rapidly scaling data business and an accelerating diagnostics franchise. Management expects contract bookings above $1.1 billion, mid‑double‑digit data growth, rising ASPs, and eventual easing of MRD constraints to drive sustained, high‑teens to mid‑20s topline expansion.
Tempus’ earnings call painted a picture of a data‑rich diagnostics platform entering a scale phase, supported by strong oncology volumes, sticky data contracts, and expanding AI capabilities. While reimbursement uncertainties, hereditary normalization, and margin trade‑offs remain key watch points, the overall tone was confident, with management leaning into a multi‑year growth and profitability story that will resonate with long‑term investors.