TEM — Tempus AI, Inc.

Summary of Tempus AI, Inc. Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Revenue: $348.1 million, up 36% year-over-year.
• Diagnostic Revenue: $261.1 million, a 35% increase, driven by strong oncology performance (28% unit growth).
• Data Applications Revenue: $87 million, representing 40.5% growth, particularly strong in data licensing and modeling (Insights).
• Total Contract Value (TCV): Bookings exceeded $100 million for the third consecutive quarter, with TCV rising.
• Adjusted EBITDA Guidance: Increased to approximately $65 million for the year.

2. Strategic Updates and Business Highlights

• Oncology Business: Continued strength with solid tumor and liquid biopsies performing well; MRD volume showed significant growth.
• Data Licensing: Strong relationships with major pharmaceutical companies, including new collaborations with Merck and expanded partnerships with Gilead.
• Data and Applications Business: Robust pipeline with high visibility into future revenue; expected to contribute significantly to growth.
• FDA Submissions: Ongoing updates on FDA submissions for various assays, with no expected impact on pricing for 2026.

3. Forward Guidance and Outlook

• Revenue Guidance: Increased to a range of $1.59 billion to $1.60 billion for the year.
• Long-term Growth: Management expects 25% top-line growth over the next three years, with potential ASP increases of 30%.
• Improvement in Cash Flow: Anticipated significant improvement in Q2 driven by normalization of payables and large contract transitions to quarterly payments.

4. Bad News, Challenges, or Points of Concern

• Cash Flow: Operational cash flow decreased by approximately $70 million; free cash flow approximated an EBITDA loss of $3 million in Q1.
• Hereditary Testing Growth: Slower growth expected in hereditary testing due to lapping previous high growth rates; anticipated return to mid-teens growth in the second half of the year.
• MRD Volume Economics: Current unit economics for MRD tests are challenging, and growth is being carefully managed in coordination with reimbursement developments.

5. Notable Q&A Insights

• Data Licensing Trends: Strong demand from pharma for de-identified data, with a growing number of large agreements expected to drive future revenue.
• Companion Diagnostics (CDX): Management noted no significant impact from CDX trends on their business, asserting that the U.S. market dynamics allow for continued growth in therapy selection without reliance on CDX.
• MRD Growth Strategy: Management is cautious about ramping up MRD volumes until reimbursement improves, indicating a strategic approach to scaling this segment.
• Oncology Algorithms: High attach rates for algorithms in solid tumor assays are driving physician adoption, with confidence in expanding these offerings further.

Overall, Tempus AI, Inc. reported strong financial performance in Q1 2026, with positive growth trends in key business areas, although challenges in cash flow and certain segments remain. The company is optimistic about future growth driven by strategic partnerships and a robust pipeline.