Tempus AI Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
May 6, 2025
Skip to Participants
Operator

Good day, everyone, and thank you for standing by. My name is Argy, and I will be your conference operator today. At this time, I would like to welcome everyone to the First Quarter twenty twenty five Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.

Operator

Thank you. I would now like to turn the call over to Liz Crutuhalo, VP for Investor Relations. Please go ahead.

Elizabeth Krutoholow
Elizabeth Krutoholow
VP - IR and Competitive Intelligence at Tempus AI

Thank you. Good afternoon, and welcome to Tempest's first quarter twenty twenty five conference call. This afternoon, Tempest released results for the quarter ended 03/31/2025. The press release, an overview of the quarter, and our latest presentation are available on our IR website. Joining me today from Tempest are Eric Lefkoski, Founder and CEO of Tempest and Jim Rogers, CFO.

Elizabeth Krutoholow
Elizabeth Krutoholow
VP - IR and Competitive Intelligence at Tempus AI

Before we begin, I would like to remind you that during this call management may make forward looking statements that are subject to risks and uncertainties that could cause actual results to differ materially. For a discussion of these risks, please refer to our 10 ks and other filings with the SEC. During the call, we will discuss non GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles. Definitions of these non GAAP financial measures, along with reconciliations to the most directly comparable GAAP financial measures, are included in our first quarter earnings release, which has been furnished to the SEC and is available on our website at investors.tempest.com. I would now like to turn the call over to Eric.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

Thank you, and thanks for joining us today. Q1 was a record quarter for Tempest and we're off to a great start. I'll provide just a super quick overview and then we can take questions. Quarterly revenue increased 75.4% year over year to $255,700,000 Genomics revenue was $193,800,000 which is about 89% year over year growth. Oncology testing, which is how we're going to refer to our legacy Tempest clinical testing, grew 31% year over year with approximately 20% volume growth.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

Hereditary testing, which is how we're going to refer to the legacy Ambregenetics business, contributed $63,500,000 in revenue and grew its units by 23%. Revenue from data and services totaled $61,900,000 which was about 43% year over year growth, led by our insights or data licensing business, which grew 58 year over year. We generated $155,200,000 in quarterly gross profit, which was 99.8% growth year over year. Adjusted EBITDA was negative $16,200,000 in the first quarter of twenty twenty five compared to negative $43,900,000 in the first quarter of twenty twenty four, which was an improvement of $27,800,000 year over year. As a result, we're increasing our full year 2025 revenue guidance to 1,250,000,000.00 representing about 80 year over year growth.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

So I would say all in the company is performing super well, which was in my quote. Revenues are up, gross profit is up, both are growing nicely. We're managing our costs, which is producing nice year over year operating leverage. In addition, I'll highlight just one other big piece of news, which we put out about a week ago, which is we announced a three year two hundred million dollars data and modeling license agreement with AstraZeneca and Pathos in April to build the world's largest foundation model in oncology. And this is big for a few reasons.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

One is it brings our total remaining contract value to greater than 1,000,000,000 as of April 30. It also allows us to take over 300 petabytes of data, which includes this really rich multimodal data set connected to outcomes and use that to build a foundation model, which is in addition to the data licensing, which is quite positive for us also, the cost of compute is not small and AZ and Pathos are covering a significant portion of that. When the model is complete, we expect the first version of the model will be complete in about nine to twelve months, each party will get a copy, AZ and Pathos to advance their drug discovery efforts and Tempus to advance its diagnostic and data products. Given that AstraZeneca is our longest standing client, actually was our first strategic collaboration, we couldn't be more excited to be expanding our relationship in such a significant manner. I think of further validating the value we're providing to lots of biopharma clients.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

It's also worth noting this is a non exclusive agreement. We can essentially license data and build models with others and we hope to do so in the future. And as such, this represents an entirely new category for us. It's also important in that it's a giant step in making precision medicine a reality. We're closer than ever to understanding at a molecular level why patients do and don't respond to cancer treatments.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

And we believe models like this will bring all kinds of insights into clear focus and we can see a day when our diagnostics are so smart that they're actually playing a critical role in ensuring every patient's on the optimal therapeutic path and that drug companies are far more efficient, ideally in a perfect world, having clinical trials that fail far less often. On that note, we are happy to take questions.

Operator

Thank you. At this time, I would like to remind everyone in order to ask a question, star then the number one on your telephone keypad. And to ensure we get to as many participants as possible, Your first question comes from the line of Tejas Sabant from Morgan Stanley. Please go ahead.

Tejas Savant
Tejas Savant
Executive Director & Senior Healthcare Equity Analyst at Morgan Stanley

Hey guys, good evening and appreciate the time here. Eric, congrats on a clean start to the year. I want to ask a two parter on the easy pathos deal that you just highlighted as well. So first off, can you just share some color on follow-up conversations with other pharma companies about the possibility of similar deals for foundational model development in oncology? And what is it about the pathos approach that really is the hook here for drug developers?

Tejas Savant
Tejas Savant
Executive Director & Senior Healthcare Equity Analyst at Morgan Stanley

And on the deal again, one for Jim. I want to dig a little bit into the deal structure here. It's a little bit sort of complicated. So, as we think about the rev rec on this $200,000,000 amount, you know, there's that $50,000,000 upfront fee from Tapos to you guys, but then you guys are also paying them, I think, 35,000,000. And then in terms of up front, you also get an AZ, I think, $35,000,000 So just pass that out for us in terms of how you expect it to play out on the P and L.

Tejas Savant
Tejas Savant
Executive Director & Senior Healthcare Equity Analyst at Morgan Stanley

And then the $150,000,000 residual from Pathos, I think there's a stock component in it as well. So just unpack that a little bit in terms of the next three years and how it flows through the P and L. Thank you.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

Yes, so I can start and then Jim can jump in. So after we announced the steel, obviously there was quite a bit of excitement among other companies. We work with I think 19 of the 20 largest pharmaceutical companies in oncology and have good relationships with a bunch. So people were quite interested. AstraZeneca is one of the leaders in oncology and has had a really strong track record over the past four or five years.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

And so I think people were particularly focused on what was this gonna mean for them going forward and how should they try to bring it into their own practice. Some of those conversations have already kicked off. I would say the excitement has been greater than I thought it was gonna be. And I had pretty lofty expectations, so that's awesome. But these big deals, as Jim will cover in a second.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

This is $200,000,000 of data licensing and real data revenue, and so somebody's got to be willing to sign up for something that significant. And it's expensive, and so even though there's a ton of excitement, we have to turn that into tangible agreements and tangible projects and kick those off. In the case of AZ and Pathos, AstraZeneca was a client of ours. They also had spent some time with Pathos and got to know that team. I think there was independent of the Tempest relationship, they were exploring some different ideas together.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

And so I think when we began discussing this idea of building a foundation model, it made sense for them to want to have this be a three way agreement whereby they could make a sizable investment and commit some of the attributes they have, but they also could leverage a bunch of work that Pathos had done, and then obviously leverage our data and the work we had done. And so it came together as a three way partnership, but just as easily could have come together as a two way partnership between us and the pharmaceutical company and not involve pathos. And I'll let Jim cover the rev rec.

Jim Rogers
Jim Rogers
CFO at Tempus AI

Yeah, in terms of the revenue recognition, I think the easiest way to think about it is we have a $200,000,000 kind of data license to pathos that is specifically related to building the foundational models. The data can only be used for that purpose as AD, Pathos, and Tempest work together to build that foundational model. There are some cash flows between AD, the Tempest over to Pathos, but there's no revenue recognition impact of that. And so the $200,000,000 will be recognized. It ramps a little bit over the three year period, but roughly ratably over the three year term during which the model will be built.

Jim Rogers
Jim Rogers
CFO at Tempus AI

So this license is no different than the other large subscriptions that we have. The upfront payment from Pathos to Tempest doesn't trigger any revenue recognition upon that payment. It's a three year subscription similar to the other large multi year deals that we currently have.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

Yes. And one last piece, the first payment was made in cash. We at this point, even though Pathos could make some payments in the future in part cash, part stock, we have every reason to think they'll make it in cash. And so it's very possible that we just collect cash the entire time.

Operator

Your next question comes from the line of Ryan MacDonald of Needham and Company. Please go ahead.

Ryan Macdonald
Managing Director, Senior Equity Research Analyst at Needham & Company

Hi, thanks for taking my questions. Congrats on a great quarter. Maybe you could talk about the Hereditary business. I think the original expectation as that was integrated as Ambri was integrated with sort of a maybe a mid to high teens growth rate for this year, but obviously kicking off the year at much faster rate in around 23%. Can you just maybe talk about what surprised you to the upside in terms of the performance of that business and maybe how durable sort of mid-20s growth rate was? Thank you.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

Yes. I mean, so obviously, it's early, we don't there's no point getting too ahead of our skis. But we talked about this, I think when we announced the Ambri acquisition, which was there was this kind of narrative that hereditary screening was either kind of in the twilight or sunset of horizon or it became commoditized. And we just obviously couldn't feel more strongly that that's not accurate. I mean, I could foresee a day when tens of millions of people get this kind of sequencing on a regular basis, not just to understand their inherited cancer risk, but their inherited cardio risk, their inherited Alzheimer's risk, their inherited risk of developing immunological disorder later in life.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

So the target audience of people that might be at risk of disease is obviously much greater than the audience of people that have disease, generally speaking. So I think long term we suspect Ambri will grow at high rates. In the near term, we told people we thought the growth rate would be mid to high teens. In large part, they experienced a lot of rapid growth previously, so you're lapping that period. So yes, the business is performing really strong.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

That may continue, but we're not here to kind of highlight that for folks. We're watching it month to month, but so far they're firing on all cylinders and we see no sign of that slowing down.

Operator

Question comes from the line of Mark Schappel of Loop Capital. Please go ahead.

Mark Schappel
Managing Director at Loop Capital Markets LLC

Good evening. Thank you for taking my question and nice job on the quarter. Eric, I have a question around the Deep six acquisition that was made during the quarter. Was wondering if you could just provide some additional details around what capabilities Deep six brings that you already did not have.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

Yes. So we also talked about this, I think, last quarter, which is that we felt like we had a really comprehensive molecular offering that with the acquisition of Ambri, we felt really good that between our MRD offerings and our therapy selection offerings and now our hereditary offerings, we felt really good. And that if we were to make any acquisitions, they would likely be smaller and likely be on the data and services side. And so that, by the way, is exactly what Deep six is. Core to our business model is obviously combining large amounts of clinical and molecular data.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

And being able to build these really rich data sets where you can understand at a molecular level what's happening to a patient and then connect all those rich molecular insights to outcome and response data over time. And say like, okay, if this is the molecular composition of this patient, this is the DNA profile, the RNA profile, the germline profile, the methylomic profile. This is the molecular profile of the patient. What drugs do they take? How do they respond?

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

What adverse events do they have? How long were they on that drug? What was their progression free survival? What was their overall survival? All that clinical data.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

And so you have to have rich connections to pull that clinical data. We also mentioned this quarter, we're now over 4,000 connections, is up significantly from the past, and Deep six is a part of adding more connectivity, especially to some really high quality institutions. They built a product that allows providers to interrogate their data sets to advance analytics, to get people on their own studies and clinical trials. And that product has good product market fit, people like it. And it allows us to kind of have another connection point to providers, another reason for them to share their data with us, another reason to be on our platform.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

And that bidirectional feed of data. People sending us their clinical data, we're generating some molecular insight, we're putting the insight back into the hands of providers. That is at the core of how we build these very large data sets, which are now in totality like 40,000,000 patients or something. It's become a huge data set.

Operator

Your next question comes from the line of Subbu Nambi of Guggenheim. Please go ahead.

Subbu Nambi
Managing Director at Guggenheim Securities

Hey, guys. Thank you for taking my question. I had one model related question and one long term. For the model related, could you remind us the assumption baked in on gross margin and ASP improvement if you do receive MolDXXM reimbursement before the end of the year? And if it's not baked in, could you quantify the upside?

Subbu Nambi
Managing Director at Guggenheim Securities

And the long term question was, when you do flip EBITDA positive, you said you are looking to invest back into the business. Curious what are you looking at right now with the most ROI in 2025 and if that wish list changes at all as a result of flipping to profitability? Thank you.

Jim Rogers
Jim Rogers
CFO at Tempus AI

Yes. So I'll take the first question and then Eric take the second one. In terms of the ASP progression, obviously, saw about a $60 increase in our oncology ASPs in Q1, largely the results of us migrating our XT volume over the ADLT version or the FDA approved version of that assay, which has a higher ASP with Medicare. There was also a small impact from some ASP improvements for our liquid biopsy code as well. In terms of the progression over the balance of the year, we said that by the end of Q1, about 20% of our XT volume would be migrated to the FDA perversion.

Jim Rogers
Jim Rogers
CFO at Tempus AI

That's where the number kind of came in at. We will continue to migrate more over the balance of the year, targeting about 40% by the end of the year. And so the ASP improvements for the balance of the year largely come from just migrating XT volume from the LDC to the FDA approved version. We haven't baked in any XM reimbursement. We submitted our first CRC XM to Moldex in January.

Jim Rogers
Jim Rogers
CFO at Tempus AI

That process is playing out and we wouldn't anticipate anything until later on in the year. And so we haven't baked any of that into the ASCs.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

And in terms of kind of how we think about EBITDA and investments and ROI, it was very important to us, as we have said historically that we are EBITDA positive by the time we turn 10, which is this year. We'll turn 10 this year and so I think we're on track as we've provided in our guidance to be adjusted EBITDA positive this year, which is a big milestone for us, especially given that there's other companies that are older than us, similarly situated that are still losing $100,000,000 a year, dollars 200,000,000 a year. So we feel really good that we have these rapid growth rates, often best in class growth and the business producing lots of gross profit and lots of leverage. And so we're able to run it in an EBITDA positive manner, adjusted EBITDA positive manner. The issue for us I think is when you look at the opportunity set to bring AI to healthcare at scale, it's not small.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

So don't want to under invest and just try to maximize every dollar of profit at the expense of long term sustained growth and then miss out on what could be one of the biggest technology opportunities of all time. And so we're mindful of that. And in particular, there's lots of places to invest in both of our main businesses. For example, in genomics, the MRD space is super exciting. We've got a tumor naive platform that we believe in.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

We're running all kinds of studies in different disease areas and we continue to make those. We're making those investments now. We made them last year. We'll make more in the future And we feel good about those investments, but it's certainly an area to put money to. And then the other is in terms of building out our core AI applications and products that including the foundation model that power a lot of this.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

You're constantly investing in data and compute, and those are not inexpensive. We make lots of investments. Again, we made them last year, we make them this year, we make them next year, make lots of investments in data and compute to be able to bring AI to diagnostics at scale. And so we're fortunate that the landscape in front of us is open. Have lots of things we would love to invest in.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

We're also disciplined in that we're not going to try to get ahead of our skis and make sure that we're investing appropriately. And I think lucky that these things are all coming together in a really nice way where the growth is producing lots of additional dollars that we can invest to drive future growth.

Operator

Your next question comes from the line of Daniel Brennan of TD Cowen. Please go ahead.

Dan Brennan
Dan Brennan
Analyst at Cowen

Great. I was hoping maybe you could just speak to the first question would just be on the genomic volumes. Just give us a sense on some competitive talk about some weather induced issues in the first quarter, '20 percent was kind of towards the lower end of the range. So just wondering kind of how the quarter played out versus expectations? How you think volumes will kind of play out the rest of throughout the rest of the year?

Dan Brennan
Dan Brennan
Analyst at Cowen

And then B, just on the Insights business, super helpful upfront with the Astra deal, but there was some warning. What else could you say just in terms of how that business is going? What the funnel looks like? Any qualitative color you can provide about the demand trends on your Insights business?

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

Yes, I'll take the first. I don't know about weather. I mean, weather could have played some impacts. We certainly had many days when FedEx was delayed or parts of the country were shut We spend a ton of time focused on that because we don't think of ourselves as just a lab, that's not like our only business where we're kind of micro fixated on it. We consider 20% growth given our scale, given our volume, given the volume of tests that we're running to be pretty extraordinary.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

When you look at the unit growth of Tempus in the aggregate, I think we delivered something like 158,000 tests this quarter. So anytime you've got something delivering 158,000 billable orders that is growing units, not only double digits, but in the 20 plus percent range, it's pretty good. So we're way more focused on long term sustained growth than we are on short term growth. And if we ever have a choice to grow at 20% for six or eight quarters or ten quarters versus 22% or 23% for one quarter, we'll always choose the former.

Jim Rogers
Jim Rogers
CFO at Tempus AI

Yes. Then on your second question, Dan, regarding the Insights business and the Data and Services business, it's also off to a good start. As we mentioned, the whole data and services business growing more than 40%, the insights business growing 58%. So we were very fortunate coming into the year, we had $940,000,000 of real contract value that was yet to be delivered. And so delivering on those subscriptions and then adding additional deals in Q1.

Jim Rogers
Jim Rogers
CFO at Tempus AI

Obviously, the highlight coming in April with the AZ, which pushes the total remaining contract value over $1,000,000,000 for the first time ever. And so that forward looking visibility that those contracts provide allow us to feel really confident about data number for the balance of the year and into the next several years.

Operator

Your next question comes from the line of Mark Massaro of BTIG. Please go ahead.

Mark Massaro
Managing Director - Senior Equity Research Analyst at BTIG

Hey, guys. Thank you for taking the questions. The first one is for you, Eric. I was just curious if you could speak to how you think you can leverage your advantage with data and collaborations with pharma to some of your early traction in the MRD space. So if you could speak to how you see the tumor naive opportunity, but also how you see the tumor informed opportunity coming together with your partner?

Mark Massaro
Managing Director - Senior Equity Research Analyst at BTIG

And then I'll ask the second question, which is, can you speak to any puts and takes on any tests in your broader portfolio that might be picking up share in the marketplace? Thank you.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

Yeah, so let's start with the first. So I think, look, long term, we have said this for years. We believe that AI and technology are the primary differentiator of diagnostics, which is kind of complicated because we spend so much time on the diagnostic side talking about like sensitivity and specificity and limited detection and this study and that test and this 500 genes and 1,000 genes, we fundamentally believe that is not the differentiator. We're in a migration that we've been in for some long period of time where sequencing is getting less expensive. And I suspect over time, we're all doing whole genome, whole transcriptome and the like quite regularly and that's the bioinformatics landscape of the future.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

So what differentiates these tests is what insights can you derive for a clinician or a patient off of this massive amount of data? And that is where I think Tempus is so differentiated and yet we kind of don't spend a lot of time ever talking about it, is fine because you wanna see what it shows up. But if you look at the foundation model we're building, what it's essentially doing is pouring in an enormous amount of data, right? Like hundreds of petabytes of data, looking for associations between vast amounts of molecular data that we have been unable to ever interrogate, connected to vast amounts of outcomes. And likely what should show up is all kinds of associations that none of us ever knew existed.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

So for example, if I'm a non small cell lung cancer patient, one of the first things the NCC guideline would tell me is I should be profiled to see if I'm EGFR positive. If I'm EGFR mutated, I should get an EGFR inhibitor. The challenge is about half the patients that get that drug respond, the other half don't. And even the half that do respond have different variations of response. Some might be on that drug for a year, some might be on that drug for a decade.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

We have no way of stratifying those patients. And in cancer, name of the game is to generate more insights earlier in the process. And I suspect AI and technology will produce that. I hope it's Tempus, but some company like Tempus will one day understand whether or not a patient's going to respond to an EGFR inhibitor before they ever go on the drug. And once you have that kind of information, you can design truly intelligent, personalized diagnostics.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

That's going to hold true for therapy selection. That's going to hold true for hereditary, and that's going to hold true for MRD. We are going to know with far greater granularity, not just whether or not a patient is likely to recur, which these tests are amazing in their ability to see recurrence long before a scan, but also how to intervene. What it means when we see these signatures, whether they're methylomic signatures or whether they're just fragments of mutations in the blood, what does it mean? How do we analyze them?

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

Is this patient likely going to have a very bad recurrence? Is it gonna be mild? Do we have a short amount of time, long amount of time? How aggressive should we be? All these insights will be data driven, I think.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

And so I would suspect that for both our tumor naive and tumor informed products, we enhance them and eventually, I think, make them totally differentiated from anything else out there by virtue of our investments in AI technology and the data that we've been able to amass, which others just don't have.

Jim Rogers
Jim Rogers
CFO at Tempus AI

Then in terms of the performance of the different assays that we have in market today, I think we saw growth across the entire portfolio. Obviously, with MRD, we're still kind of metering the volume given the lack of reimbursement. And so we wouldn't anticipate volumes growing tremendously there only because since we don't have reimbursement, we're bearing the cost of running those tests. But the core assay is kind of all performing well in the quarter.

Operator

And your next question comes from the line of Michael Ryskin of Bank of America. Please go ahead.

Michael Ryskin
Michael Ryskin
Managing Director at Bank of America Merrill Lynch

Great. Thanks for taking the question guys. I'll ask one. Maybe it has multiple parts, but I promise it's only one question. I just want to make sure sort of tying your earlier comments on Pathos on sort of how Ambri performed in the quarter.

Michael Ryskin
Michael Ryskin
Managing Director at Bank of America Merrill Lynch

Just sort of what's included in the or what are your assumptions that add up to the new revenue guide for the year, the 1.25? I mean, you're raising it by $10,000,000 versus prior. Does that include PATHO's contribution? It sounds like it does. But if you just take that $200,000,000 and prorate it over 12 quarters, just sort of how much of that is in there?

Michael Ryskin
Michael Ryskin
Managing Director at Bank of America Merrill Lynch

And then previously you talked about Ambri high teens growth, the legacy Tempest business around 30%. Is that still unchanged? I just want parse out the moving pieces of guide change. Thanks.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

Yeah, mean, Jim and I can both answer. So certainly in the guide, there is some amount of the new pathos AZ revenue. We start every year, we have a very high degree of visibility to our revenue, especially our data revenues, but not 100% visibility. So we always expect to sign a certain amount of revenue that we both sign and deliver in the year. And that's been the case for some period of time.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

So we're fortunate that here we are, it's whatever, May, and we're so far ahead, which is awesome. But this thing's gonna ramp over time. Don't have, obviously we only have a partial year anyway. Some, we always had planned to go get some additional revenue. So we feel like this is appropriate.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

We also are being, I think appropriately conservative in terms of Ambri and its growth rates and how they perform the balance of the year. Could there be some upside there? Sure. But at this point, our job is to basically kind of say, hey, this feels like an appropriate place to be. We're glad that we raised by the way, we raised guidance last quarter by $10,000,000 just raise it again by $10,000,000 So we're kind of $20,000,000 above where we were, I don't know, ninety days ago.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

So we feel like we're in the right place, but we don't want get out of our skis.

Operator

Question comes from the line of Rachel Van Stahl of JPMorgan. Please go ahead.

Rachel Vatnsdal
Rachel Vatnsdal
Analyst at JPMorgan Chase

Hey, good afternoon. Thanks you guys for taking the questions. So I wanted to dig into the data side of the portfolio and specifically what you're seeing on the TCV. So just given what we've seen from a macro sense, there's a lot of noise out there in regard to biotech funding, but also pharma, these potential tariffs and everything as well. So can you talk about the risks that you see given this choppier macro environment that you could see some of the TCV either canceled or pulled out of that backlog?

Rachel Vatnsdal
Rachel Vatnsdal
Analyst at JPMorgan Chase

We've also heard some of the CROs kind of talk about these elevated cancellations in both preclinical and clinical studies. So curious, how are you assessing that risk? Have you seen any impact so far?

Jim Rogers
Jim Rogers
CFO at Tempus AI

Yes. So just a reminder on the data business, we kind of have two customer groups. We work with 19 of the top 20 large pharma companies and then a couple of hundred biotechs. Obviously, the majority of the TCV and the revenue comes from the large pharma companies that have larger R and D budgets, but we do work with a number of biotechs. Certainly, on the biotech side, there has been some impact over the last, call it, twenty four months of the lack of funding and kind of that coming through.

Jim Rogers
Jim Rogers
CFO at Tempus AI

But again, that represents a smaller percentage of our overall business. The relationships with big pharma tend to be multiyear subscriptions that are committed. And so we're delivering the data that they have agreed to license over these terms. And so we haven't seen a significant impact on the large pharma side. I'd also add that when budgets tend to be flat or cut, we actually see a little bit of a benefit to the data business because leveraging the types of data that we license folks allows them to more effectively design their trials or identify targets in a more effective way.

Jim Rogers
Jim Rogers
CFO at Tempus AI

And so we actually see a little bit of a benefit of our business on the data side when it comes to budgeting being budgets being shrunk, because they can leverage our data, be more efficient and kind of stretch those dollars. That's what we've seen in the market.

Operator

Your next question comes from the line of Dan Arias of Stifel. Please go ahead.

Dan Arias
Dan Arias
Managing Director at Stifel Financial Corp

Yes. Hi, guys. Thanks for the questions. Eric, on MRD, obviously, lot going on in that space. You guys are coming up on one full year, I believe, of commercial availability for the XM assay.

Dan Arias
Dan Arias
Managing Director at Stifel Financial Corp

What's gone the way that you expected within your program? What's been a bit of a surprise? And then what would you say are the key things over the course of the next year in order to feel like you're on track and successful?

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

Yes. So I mean, our portfolio, just to remind people, includes our tumor naive assay in colorectal cancer, and it includes a personalysis tumor informed assay in non small cell lung breast and IO response. So we kind of run the market in four areas, four very big areas. We are managing volumes and metering volumes because none of these assays are currently reimbursed by MolDX. So not our assay, not their assay.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

And so we run these tests, but we don't get paid. So we're metering volume otherwise you could burn a lot of money. I would say that the demand has been quite strong. We've been pleasantly surprised that there's a ton of interest in both products. I think there's a space for naive and a space for informed.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

Informed is clearly winning the day today because it has improved sensitivity and specificity. It's got lower limits of detection. Natara has done a great job seeding the market. So informed is kind of the more conventional way people think about MRD today. We're fortunate that Personalis' platform is really best in class in terms of a bunch of those metrics, because it's whole genome based instead of whole exome based.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

So I think people want it and I would suspect the volumes will be really strong once we ungate it. In terms of tumor naive, we're all doing a bunch of work, us and other people that have those products, to keep improving those assays, make sure that they perform well. I think they perform quite well today. Certainly does, performs quite well, especially in those instances where you don't have extra tissue, where you can't rerun a whole genome tumor informed assay because you just literally don't have the tissue. In certain areas like non small cell lung cancer where you have scant tissue to begin with, I think those products will perform really well.

Eric Lefkofsky
Eric Lefkofsky
Founder & CEO at Tempus AI

So I would say it's early days, but everything is moving along quite nicely and I have not been negatively surprised in any big way. It's always kind of when you start a new product, you learn all kinds of stuff. So far I think we feel really good about our long term positioning in MRD.

Operator

That ends our Q and A session, and we appreciate your participation. I will now turn the call back over to Liz Crotoholo, VP for Investor Relations. Please go ahead.

Elizabeth Krutoholow
Elizabeth Krutoholow
VP - IR and Competitive Intelligence at Tempus AI

Thank you all for joining us today. As always, we're available for any follow-up questions. We look forward to updating you again next quarter.

Operator

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Executives
    • Elizabeth Krutoholow
      Elizabeth Krutoholow
      VP - IR and Competitive Intelligence
    • Eric Lefkofsky
      Eric Lefkofsky
      Founder & CEO
    • Jim Rogers
      Jim Rogers
      CFO
Analysts
Powered by Quartr

Key Takeaways

  • Q1 record revenue: Tempus delivered $255.7 M in revenue, up 75.4% YoY, led by genomics (+89%), oncology testing (+31% on 20% volume growth), hereditary testing (23% unit growth) and data services (+43%, Insights +58%).
  • Gross profit nearly doubled to $155.2 M (+99.8% YoY) and adjusted EBITDA loss narrowed to $16.2 M (from $43.9 M), reflecting improved operating leverage.
  • Raised full-year 2025 revenue guidance to $1.25 B (~80% YoY growth), driven by strong subscription visibility and a growing contract backlog.
  • Announced a three-year, $200 M non-exclusive data and modeling license with AstraZeneca and Pathos to build a foundation oncology AI model—pushing total remaining contract value over $1 B and targeting a first version in 9–12 months.
  • Hereditary testing (legacy Ambry) outperformed initial forecasts with 23% unit growth in Q1 versus a mid-to-high-teens expectation, highlighting sustained demand in inherited disease screening.
AI Generated. May Contain Errors.
Earnings Conference Call
Tempus AI Q1 2025
00:00 / 00:00

Transcript Sections