Tempus AI Q1 Earnings Call Highlights

Key Points

• Strong quarter and raised guidance: Tempus reported Q1 revenue of $348.1 million (up ~36% YoY) and raised full‑year 2026 revenue guidance to $1.59–$1.60 billion with adjusted EBITDA of about $65 million, citing a >$13 million YoY adjusted EBITDA improvement in Q1 and expecting margin gains through the year.
• Data segment momentum and large pharma deals: Data & applications revenue grew 40.5% to $87 million with a third straight quarter of bookings above $100 million, and management closed a "very large" strategic collaboration with Merck while expanding work with Gilead, boosting TCV and visibility into future revenue.
• MRD and regulatory dynamics: MRD volumes are “really robust” but commercial rollout is being metered due to evolving reimbursement (about 97% tumor‑informed), while management expects roughly $500 of incremental ASP lift over 1–2 years as additional assays win FDA approvals and an xT amendment decision is “imminent.”

Tempus AI NASDAQ: TEM reported first-quarter 2026 revenue of $348.1 million, up a little over 36% year over year, as the company posted growth across both its diagnostics and data and applications segments and raised its full-year outlook.

Founder and CEO Eric Lefkofsky said diagnostics revenue came in at $261.1 million, representing nearly 35% growth. He attributed the performance to strength in oncology, where unit growth was about 28%. Lefkofsky said results were “strong across the board” in oncology, with solid tumor and liquid biopsy tests performing well and minimal residual disease (MRD) volumes “performing even better.”

Segment results and growth drivers

On the diagnostics side, Lefkofsky said hereditary testing “slowed down a bit,” which he said was expected as the company laps “some extreme growth rates from a year ago.” He added that Tempus expects hereditary growth to return to the mid-teens in the second half of the year.

Tempus’ data and applications business generated $87 million in revenue, up 40.5% year over year. Lefkofsky pointed to “particular strength” in data licensing and modeling business insights, which he said grew more than 44%. He also noted the company’s third straight quarter with bookings above $100 million, with total contract value (TCV) rising and visibility improving for the data and applications segment.

“All in the business is doing extremely well,” Lefkofsky said, adding that Tempus’ main businesses are performing “at or above plan.”

Guidance raised; adjusted EBITDA outlook reiterated

Based on the quarter’s performance, Lefkofsky said the company increased full-year 2026 guidance to a range of $1.59 billion to $1.6 billion in revenue, with adjusted EBITDA of about $65 million.

CFO Jim Rogers addressed questions about the cadence of profitability, noting that, similar to last year, adjusted EBITDA is expected to improve as the year progresses. Rogers said Tempus delivered more than $13 million of year-over-year adjusted EBITDA improvement in the first quarter and expects similar trends in the second quarter. He added that the back half of the year is typically “a bigger period for data,” which can expand margins and increase bottom-line contribution.

Pharma demand, contract visibility, and recent collaborations

In response to questions about demand from large pharmaceutical customers and the durability of de-identified data licensing, Lefkofsky said Tempus’ “core big data relationships are very strong” and that the company has a history of renewing agreements “at or above” prior levels. He also emphasized new customer additions and expansions.

Lefkofsky said that during the quarter Tempus added Merck through what he described as “a very large strategic collaboration,” and expanded its relationship with Gilead. He characterized the Merck agreement as a “very large strategic data and modeling collaboration,” comparable in magnitude to Tempus’ collaborations with AstraZeneca, GSK, and BMS. He said the Gilead expansion was smaller than Merck but still “quite large” and represented “a very significant step up” from Gilead’s historic levels with Tempus.

Rogers discussed the company’s visibility into its data and applications guidance, noting that management previously referenced about $350 million of TCV related to 2026, which he said provided “a tremendous amount of visibility” into the outlook. He said Merck and Gilead were part of a strong pipeline that closed in the first quarter and that Tempus’ pipeline remains robust. Rogers added that TCV increased in the first quarter despite delivering “$80 plus million” of revenue, which he said indicated backlog growth that should contribute to revenue over the remainder of 2026 and “over the next several years to come.”

Lefkofsky also described a shift in how pharma customers are engaging with Tempus, saying companies are increasingly building models with Tempus rather than only licensing data. He cited examples ranging from foundation models to smaller proprietary models built using Tempus data, and said Tempus’ database now exceeds 500 petabytes, connected to an analytics and model-building platform that includes GPU infrastructure.

Regulatory updates, reimbursement, and assay strategy

Rogers said there was “no update” on the xF FDA submission made earlier in the year and that Tempus is awaiting feedback. He reiterated that the company does not expect the xF submission to affect pricing or average selling prices (ASPs) in 2026.

Rogers also said Tempus submitted an amendment to its xT FDA-approved assay submission to cover “tumor only” cases where a normal sample is not obtained. He said the company expects a decision “imminently” and that the amendment would help accelerate migration to an ADLT version of the assay.

Lefkofsky said he expects that “over time, all of our main assays are FDA-approved,” referencing xT as already approved and noting that liquid biopsy is currently before the FDA, with RNA intended to follow. He said he does not believe FDA approvals will change how tests are ordered or billed, describing ordering and billing as being done on an individual basis “based on medical necessity.”

On ASPs, Lefkofsky said Tempus’ current ASP is around $1,720 to $1,740 and that the company believes there may be roughly $500 of incremental ASP lift over the next year or two as additional assays receive FDA approval.

Cash flow seasonality and MRD commercialization approach

Rogers said free cash flow was “a little bit elevated in Q1,” which he called typical for Tempus, citing the timing of payables and bonus payments. He said the company anticipates “a significant improvement in Q2,” driven by normalization of payables and a shift in certain large insights contracts from prepayments or deferred revenue burn-down to quarterly payments. He also said the company expects continued improvement as adjusted EBITDA improves.

Lefkofsky said Tempus feels strong about its cash position and does not need additional funding, adding that the company expects to be EBITDA positive and that quarterly cash flow fluctuations are “not that critical” at this stage.

On MRD, Lefkofsky said growth has been “really robust,” but noted that Tempus has not deployed its full commercial organization behind MRD. He said the company is “metering” growth in close coordination with Personalis, describing reimbursement dynamics as a key constraint because “roughly 97%” of Tempus’ MRD tests are tumor-informed and reimbursement coverage is still evolving. As reimbursement improves, Lefkofsky said Tempus expects to roll out MRD more aggressively and argued that broader commercial deployment would make the company a “very, very formidable MRD player in the United States.”

Tempus said it plans to provide additional updates at an upcoming Investor Day, according to VP of Investor Relations Liz Krutoholow.

About Tempus AI NASDAQ: TEM

Tempus is a technology-driven healthcare company that applies artificial intelligence and machine learning to clinical and molecular data in order to advance precision medicine. Its primary focus lies in oncology, where the company offers comprehensive genomic profiling, digital pathology services and data-driven insights to inform personalized cancer care. By integrating DNA and RNA sequencing with structured clinical information, Tempus enables clinicians and researchers to identify targeted treatment options for patients based on the genetic characteristics of their tumors.

The company's core offering centers on a scalable, cloud-based analytics platform that aggregates vast amounts of molecular and clinical data.

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