Tempus AI Delivers Strong Revenue Beat and Narrower Loss, Outlines Profitable Path Forward
TEMPUS AI INC (NASDAQ:TEM), a leader in applying artificial intelligence to precision medicine, reported fourth-quarter and full-year 2025 financial results that surpassed analyst expectations on the top line while demonstrating significant progress toward profitability. The company's performance, characterized by explosive growth in its diagnostics business and a positive turn in a key profitability metric, was met with a modestly negative initial reaction in after-hours trading.
Earnings and Revenue Versus Estimates
For the critical fourth quarter, Tempus posted results that edged out Wall Street's forecasts.
- Revenue: The company reported Q4 revenue of $367.2 million, representing a staggering 83% year-over-year increase. This figure narrowly exceeded the analyst consensus estimate of approximately $365.9 million.
- Earnings Per Share (Non-GAAP): Tempus reported a non-GAAP net loss per share of $(0.04). This result was slightly better than the estimated loss of $(0.0422) anticipated by analysts.
The full-year 2025 picture was even more dramatic, with revenue soaring 83.4% to $1.27 billion. This growth was primarily fueled by the company's Diagnostics segment, which more than doubled year-over-year to $955.4 million in revenue, driven by strong volume growth in both oncology and hereditary testing.
Market Reaction and Profitability Milestone
Despite the revenue beat and a slightly smaller-than-expected loss, TEM shares traded down approximately 4.3% in after-hours activity following the report. This reaction may reflect a "sell the news" dynamic after a period of relative stock strength, or investor focus on the company's continued net losses under standard accounting measures.
However, a deeper look reveals a significant positive development. Tempus reported its first quarter of positive Adjusted EBITDA, a key measure of operational profitability, at $12.9 million for Q4. This marks a substantial improvement from a loss of $(7.8) million in the prior-year period and $1.5 million in Q3 2025. For the full year, Adjusted EBITDA improved by $97.3 million to $(7.4) million, even after absorbing the impacts of recent acquisitions.
Forward Guidance and Analyst Expectations
Management provided clear financial targets for 2026, offering a benchmark against existing analyst models.
- The company issued revenue guidance of approximately $1.59 billion, which implies year-over-year growth of about 25%. This aligns closely with the analyst sales estimate of $1.59 billion for the full year 2026.
- More notably, Tempus projected full-year 2026 Adjusted EBITDA of approximately $65 million. This forward-looking statement signals management's confidence in achieving sustained profitability on an operational basis in the coming year. For the upcoming first quarter of 2026, analysts currently estimate a revenue of $345.8 million and a non-GAAP EPS loss of $(0.15).
Key Takeaways from the Earnings Report
Beyond the headline numbers, the earnings release highlighted several operational strengths:
- Dual-Engine Growth: The Diagnostics business saw oncology test volumes grow 29% and hereditary volumes grow 23% year-over-year in Q4. Concurrently, the Data & Applications segment, which includes high-margin data licensing, grew 25.1%, with the core Insights business up 69.5% excluding one-time items.
- Strong Commercial Momentum: The company ended 2025 with over $1.1 billion in Total Remaining Contract Value and a Net Revenue Retention rate of 126% for its data business, indicating robust customer expansion.
- Solid Financial Position: Tempus strengthened its balance sheet, closing the year with $759.7 million in cash and marketable securities.
- Strategic Advancements: Recent operational highlights include the launch of Paige Predict, an AI-powered digital pathology suite, new clinical study data supporting its AI-driven diagnostic tests, and expanded collaborations with major health systems like NYU Langone Health and Northwestern Medicine.
Conclusion
Tempus AI's fourth-quarter results underscore its ability to capitalize on the integration of AI in healthcare, delivering revenue growth that continues to outpace the market. While the company remains unprofitable on a GAAP basis due to significant investments, the achievement of positive Adjusted EBITDA in Q4 and a clear path to substantial profitability in 2026 are pivotal milestones. The initial negative market reaction appears focused on short-term dynamics, potentially overshadowing the strong fundamental progress and a guidance outlook that meets or exceeds current expectations. The company's growing contracted revenue base and expanding network of healthcare partnerships suggest its growth narrative remains intact.
For a detailed breakdown of future quarterly estimates and historical earnings performance for Tempus AI, you can review the data here.
Disclaimer: This article is for informational purposes only and does not constitute investment advice, financial analysis, or a recommendation to buy or sell any security. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
