Date: 2026-02-23 Quarter: Q3_FY25 (Sep-2025) | Preliminary Q4_FY25 also incorporated Market cap: ~$9.8B | EV/TTM Rev: ~8.9x | Revenue growth: +84.7% YoY (Q3); ~30% organic NOTE: Full Q4_FY25 results due 2026-02-24 after market close. This analysis covers Q3_FY25 with preliminary Q4 context.
Tempus is a genuinely differentiated healthcare data company wrapped in an AI narrative that is running ahead of demonstrated AI economics. Reported Q3 revenue of 334.2M(+84.7367M (+83%) are eye-catching, but ~80% of the headline growth is Ambry Genetics acquisition-driven — organic growth is ~30%. EBITDA turned positive for the first time (+$1.5M in Q3) and the margin trajectory is the clearest bright spot. Against this: commercial/sales org dysfunction (23% quota attainment), CEO selling $90M+ in 2025, Spruce Point TCV credibility questions, and 6.2x forward revenue for a ~25-30% organic grower. Not a buy at current levels. Conviction: 2/5.
| Criterion | Threshold | Actual | Pass/Fail |
|---|---|---|---|
| Revenue YoY growth | >30% (>40% preferred) | +84.7% reported; ~30% organic | PASS (reported) / BORDERLINE (organic) |
| Gross margin | >60% (>70% preferred) | 62.8% GAAP; 63.6% Non-GAAP | PASS (not at preferred threshold) |
| Revenue per quarter | >$50M | $334.2M | PASS |
| Data availability | 4+ quarters | 10 quarters (completeness flag: <12) | MARGINAL PASS |
| Share dilution | <10% annual | +5.6% YoY (165.6M → 174.9M) | PASS |
| GAAP profitability trajectory | Improving | EBITDA +$1.5M (first positive) | PASS |
Company qualifies for analysis. Key caveat: all growth KPIs are Ambry-inflated. Organic Tempus-only growth ~30% YoY per CEO's JP Morgan commentary, which barely clears the minimum threshold.
| Factor | Rating | Detail |
|---|---|---|
| Growth | Strong | +84.7% YoY reported. ~30% organic. Headline is acquisition-inflated; strip Ambry and this is a $30-range grower |
| Trajectory | Decelerating (but inflected) | Total: Q1 +75.4% → Q2 +89.6% → Q3 +84.7%. QoQ: Q1 +27.4% → Q2 +23.0% → Q3 +6.2% — sharp QoQ deceleration. Volume metrics still accelerating (hereditary 23%→32%→37%, oncology 20%→26%→27%), which is a positive leading signal |
| Margins | Mid / Rapidly Expanding | GM 62.8% GAAP. EBITDA turned positive (+$1.5M) for first time. Non-GAAP op margin -2.6% (from -17.3% a year ago). Direction strongly bullish; level not yet impressive |
| Dominance | Strong | Tempus+Caris ≈ 60–65% of US solid tumor NGS volume. 50%+ of US oncologists connected to Tempus. 95% of top-20 pharma use Tempus data. Real data moat that takes a decade to replicate. But commercial execution is broken |
| Valuation | Rich | TTM: ~8.9x. NTM (FY26 $1.59B guide): ~6.2x. For 25% forward growth with negative FCF, this is expensive |
| Special | Mixed | Full Q4 results due tonight (Feb 24) — binary catalyst. 2026 EBITDA guidance ($65M) is the first year with meaningful profitability milestones. Spruce Point short report overhang |
10 quarters available. Chronological order. Q4_FY25 preliminary only.
| Quarter | Jun-23 | Sep-23 | Dec-23 | Mar-24 | Jun-24 | Sep-24 | Dec-24 | Mar-25 | Jun-25 | Sep-25 | Dec-25* |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue ($M) | 132.4 | 136.1 | 147.7 | 145.8 | 166.0 | 180.9 | 200.7 | 255.7 | 314.6 | 334.2 | ~367 |
| YoY % | — | — | — | — | +25.4% | +32.9% | +35.9% | +75.4% | +89.6% | +84.7% | ~+83% |
| QoQ % | — | +2.8% | +8.5% | -1.3% | +13.9% | +9.0% | +10.9% | +27.4% | +23.0% | +6.2% | ~+9.8% |
| Gross Margin GAAP | — | — | — | 53.3% | 45.5% | 58.5% | 60.8% | 60.7% | 62.0% | 62.8% | — |
| Op Margin GAAP | -34.1% | -32.9% | — | -36.5% | -321.4%† | -29.6% | -25.3% | -26.9% | -19.6% | -18.2% | — |
| Op Margin Non-GAAP | — | — | — | — | — | -17.3% | — | -10.1% | — | -2.6% | — |
| EBITDA Margin (Adj) | -27.9% | -26.6% | -23.8% | -30.1% | -18.8% | -12.1% | -3.9% | -6.3% | -1.8% | +0.4% | — |
| Net Margin GAAP | -42.1% | -39.2% | -34.2% | -44.4% | -3.3%‡ | -41.9% | -6.5%§ | -26.6% | -13.6% | -23.9% | — |
| Adj EBITDA ($M) | -37.0 | -36.2 | -35.1 | -43.9 | -31.2 | -21.8 | -7.8 | -16.2 | -5.6 | +1.5 | — |
| FCF ($M) | — | — | — | -107.5 | — | — | — | -107.7 | +36.6 | -126.5 | — |
| SBC ($M) | — | — | — | 0.0 | 488.3† | 21.0 | 32.4 | 23.0 | 22.4 | 34.0 | — |
| Shares (M, diluted) | 0.1 | 0.1 | — | 44.0 | 82.3 | 165.6 | 162.7 | 170.1 | 173.4 | 174.9 | — |
| EPS GAAP | -1.07 | -1.03 | — | -1.47 | -6.86 | -0.46 | -0.08 | -0.40 | -0.25 | -0.46 | — |
Q4_FY25 preliminary (Jan 11, 2026 8-K). Full results due 2026-02-24 after market close. †IPO-quarter one-time SBC vesting; op margin not meaningful. ‡/§ Low net loss margin in Jun-24 and Dec-24 reflects non-operating gains, not operational improvement.
First Atlas analysis of TEM — no prior established. Using market expectation framework.
| Metric | Expected (consensus / guidance trajectory) | Actual | Verdict |
|---|---|---|---|
| Q3 Revenue | ~$320-330M (FY guide $1.265B; Q2 was $314.6M) | $334.2M | BEAT ~$4-14M |
| YoY growth rate | ~80% (Ambry inflated) | +84.7% | IN LINE / SLIGHT BEAT |
| EBITDA | Still negative (improving) | +$1.5M — first positive | BEAT (positive earlier than expected) |
| Gross margin | 61-62% (continuing expansion) | 62.8% GAAP | IN LINE / SLIGHT BEAT |
| FCF | Improving from -$107M in Q1 | -126.5M(reversalfromQ2′s+36.6M) | MISS — Q2 positive FCF was anomalous |
| FY25 guidance | Maintain ~$1.265B | Raised to 1.265B; Q4prelimimplies 1.27B | BEAT — raised 4x during year |
| Volume growth | Modest acceleration | Hereditary +37%, Oncology +27% YoY | BEAT — consistent acceleration |
Delta assessment:
Bullish divergence signals:
Bearish divergence signals:
Assessment: Volume-to-genomics leading indicators are bullish. D&S/AI revenue is stagnating despite strong bookings signals — either there's a booking-to-revenue conversion lag (positive, recoverable) or pipeline quality is lower than reported (negative). Cannot resolve without more quarters of data.
(Source: stages/scuttlebutt/TEM/2026-02-23.md — first scuttlebutt run)
Data moat is genuine but AI premium is not yet earned. 38M+ de-identified records, 1M+ cancer patients with molecular profiling, 7M+ pathology slides. Decade-long collection effort. AI application revenue: only $12.4M in all of FY2024 (~2% of total). The "AI" label in "Tempus AI" is a valuation narrative ahead of financial reality. (mlq.ai deep dive, Spruce Point report)
Commercial org is structurally broken. RepVue score 68.96, only 23% of sales reps meet annual quota (#6,159 out of 6,245 companies on culture/leadership). Glassdoor: 2.9/5 overall, 40% would recommend. Pattern: "great product, broken go-to-market." This is a durable risk — if competitors close the data gap while Tempus churns field reps, the moat erodes faster than the financials suggest. (RepVue, Glassdoor)
Spruce Point short thesis deserves scrutiny. May 2025 strong sell report: (1) $300M of 1.1BTCVisnon − bindingopt − ins; (2)PathosAIdeal(200M of TCV) is a related-party transaction — Pathos founded by Tempus leadership and Board-connected funds; (3) After 10 years, no profit or positive net cash flow. Tempus disputed but didn't fully rebut point-by-point. Full Q4 earnings call tonight will be the first opportunity to probe these live. (BusinessWire)
CEO insider selling is a material yellow flag. 227 insider sales, 0 purchases since IPO. Lefkofsky sold $90M+ in 2025 under a 10b5-1 plan adopted March 2025. Including $35M (June), $25.4M (September), $12.6M (November), $10.5M (December), additional sales. The 10b5-1 plan provides legal cover but is not insulating — the volume is incongruent with "we're at the beginning of a massive opportunity" messaging. Lefkofsky's Groupon track record (extracted $300M+ pre-IPO before that company's public market implosion) adds pattern risk. (MarketBeat)
Competitive position: dominant in NGS, contested everywhere else. Tempus+Caris ≈ 60–65% US solid tumor NGS volume — a real duopoly. Post-Ambry, now competing in hereditary (vs. Myriad, Invitae, GeneDx) where dynamics are less favorable. Foundation Medicine (Roche-backed) is the main oncology CGP threat; lacks Tempus's AI data layer but has better pharmaceutical partnerships. (CanvasBusinessModel.com)
Ambry integration tracking. Closed Feb 3, 2025 ($600M consideration, including $300M Ares debt). Hereditary revenue Q1→Q3 FY25: $63.5M → $97.3M → $102.6M — sequential growth slowing post-initial consolidation. Integration running as standalone subsidiary. Complexity risk is real. (Tempus IR)
Hiring: engineering-skewed, commercial unstable. Active roles in TypeScript/Node, Edge Data Platform, product management, medical science liaisons. No confirmed layoffs. Commercial instability via attrition rather than structured RIF. Consistent with the "build the platform, can't retain the sellers" pattern.
| Metric | Current | NTM (FY26 guide) | Assessment |
|---|---|---|---|
| Market cap | ~$9.8B | — | — |
| TTM Revenue | ~$1.1B | — | — |
| EV/TTM Revenue | ~8.9x | — | Rich for 30% organic grower |
| EV/NTM Revenue (FY26 $1.59B) | ~6.2x | 6.2x | Rich |
| EV/NTM EBITDA (FY26 $65M guide) | ~151x | — | Extremely rich |
| P/FCF | Negative / not meaningful | — | Not applicable |
| EPS GAAP Q3 | -$0.46 | — | Still deeply negative |
| EPS Non-GAAP Q3 | -$0.11 | Approaching zero | Directionally positive |
Organic vs. reported growth matters enormously for multiple justification. The 80%+ reported YoY growth would justify 8-10x EV/Revenue for a true high-growth compounder. But organic growth of ~30%, decelerating as Ambry anniversaries out (Q1_FY26 will be the first clean organic-only comparison), puts TEM in the 4-5x EV/Revenue range vs. comparables.
Peer context: Guardant Health (GHDX) trades at ~6x forward revenue with comparable growth. Foundation Medicine is private (Roche). GeneDx (WGS) trades at lower multiples with lower growth. Myriad (MYGN) at ~2x reflecting mature hereditary market. TEM's premium over diagnostics peers is justified only if the data/AI platform monetization accelerates — which has not yet happened in the numbers.
| Segment | Q4_FY24 | Q1_FY25 | Q2_FY25 | Q3_FY25 | QoQ Q3 | YoY Q3 |
|---|---|---|---|---|---|---|
| Genomics (total) | $120.4M | $193.8M | $241.8M | $252.9M | +4.6% | (Ambry-inflated) |
| — Hereditary | — | $63.5M | $97.3M | $102.6M | +5.4% | — |
| — Oncology | — | $119.0M | $133.2M | $139.5M | +4.7% | — |
| Data & Services | $80.2M | $61.9M | $72.8M | $81.3M | +11.7% | +1.4%* |
| Total | $200.7M | $255.7M | $314.6M | $334.2M | +6.2% | +84.7% |
*D&S YoY: Q3_FY24 D&S not available; Q4_FY24 was $80.2M — barely any growth in 3 quarters.
The structurally concerning number is Data & Services. It's the higher-margin, AI-premium business ($80.2M in Q4_FY24 → $81.3M in Q3_FY25 — essentially flat over 9 months). The business that justifies the AI multiple is not growing. Insights bookings of 150Mand + 37.6100M D&S, +25% YoY, Insights +68%) is the first quarter showing meaningful D&S acceleration. If that holds in the full release tonight, the thesis gets more interesting.
TEM sits at the intersection of three secular tailwinds: (1) precision oncology — NGS becoming standard of care for cancer diagnosis and treatment selection; (2) AI in drug discovery — pharma paying for multimodal patient data to train drug development models; (3) population genomics — hereditary disease screening scaling to the general population.
The platform architecture is genuinely multi-product: genomic sequencing (Oncology + Hereditary) → data licensing (Insights, pharma research partnerships) → AI models (diagnostic algorithms, drug target discovery via Loop platform) → clinical trial matching. The flywheel theory: more sequencing → richer dataset → better models → more physician adoption → more sequencing.
The gap between flywheel theory and revenue reality:
Market opportunity is real. Execution against the AI/data monetization layer has been slow. The diagnostics business is essentially a fee-for-service lab with a data moat story attached. If that story doesn't convert to AI revenue in 2026, the premium compresses.
Organic growth deceleration. As Ambry anniversaries out in Q1_FY26, reported YoY growth will revert toward the ~30% organic baseline — a 50pp headline compression that will shock investors anchored to 80%+ comps. If organic growth is not accelerating toward 35-40%, the multiple contracts sharply.
Commercial org dysfunction. 23% quota attainment on the sales force that sells the high-margin Data Services business means the moat is not being efficiently monetized. Competitor data collection gap narrows every year Tempus fails to convert physician relationships into paid data partnerships.
CEO insider selling and governance questions. 227 sales, 0 purchases since IPO; 90M + in2025.CombinedwithSprucePoint′sPathosrelated − partyallegation(200M TCV from a Lefkofsky-connected entity) and his Groupon track record, this creates a credibility overhang that limits institutional confidence.
TCV quality and revenue recognition credibility. Spruce Point claims $300M of $940M TCV is non-binding opt-ins. If accurate, the deferred revenue pipeline and future revenue guidance are overstated. Tempus has not fully rebutted this. TCV has not been updated since Q4_FY24 (3 quarters stale).
**Ares debt (300M) + negativeFCFinastill − unprofitablecompany. * *Q3FCF : −126.5M. Cash: 764.3M.Atcurrentburn, runwayisadequate( 3years)butAmbryintegrationaddsoperatingcomplexity, andanydeteriorationingenomicsvolumegrowthcouldacceleratecashconsumption.NoclearpathtopositiveFCFin2025; 2026EBITDAguide(65M) still implies FCF negative.
Full Q4_FY25 earnings tonight (Feb 24). The first event where management gives formal FY2026 guidance, addresses Spruce Point allegations in Q&A, and reports D&S segment performance. Consensus expects ~$367M revenue (inline with prelim) and clarity on EBITDA trajectory.
FY2026 guidance shape. SA consensus: $1.59B revenue (+25% YoY), $65M adj EBITDA. If management guides above this or raises the EBITDA floor, the stock re-rates. The EBITDA inflection is more important than the revenue number — first year of meaningful profitability changes the investor base.
D&S and Insights revenue acceleration. Q4 prelim shows Insights +68% YoY (ex-AZ warrant). If the full Q4 D&S segment reaches $100M and sustains 25-30%+ growth in 2026, the data monetization thesis begins to earn its multiple. This is the single most important structural signal.
Ambry anniversary. Q1_FY26 will be the first clean organic-only YoY comparison. If organic oncology+hereditary volume continues accelerating (hereditary at 37%, oncology at 27% in Q3) through the anniversary, the base business is stronger than the acquisition-inflated headline suggests.
Loop platform commercial traction. Launched 2025. Any material deal announcement (pharma partnership, milestone payment) in the drug discovery AI space would validate the AI platform narrative beyond genomics sequencing.
| Metric | FY25 Preliminary | FY24 (derived) | YoY |
|---|---|---|---|
| Total Revenue | ~$1.27B | ~$694M | +83% |
| Diagnostics Revenue | ~$955M | ~$452M | +111% |
| Data & Applications Revenue | ~$316M | ~$242M | +31% |
| Oncology volume growth | ~26% | — | — |
| Hereditary volume growth | ~29% | — | — |
| Insights growth (Data Licensing) | ~38% | — | — |
| Organic growth (ex-Ambry) | ~30% | — | — |
FY24 diagnostics derived as $200.7M (Q4) − $80.2M (D&S Q4) + prior 3Q genomics + prior 3Q D&S. Rough estimate only.
First analysis. No prior Atlas position in TEM. No position held.