Date: 2026-04-01 Quarter: Q4_FY25 (Dec-2025) + FY2025 Full Year Earnings released: 2026-02-24 | Preliminary: 2026-01-11 Market cap: ~$9.8B | P/S TTM: 7.7x | P/S NTM (FY26 $1.59B guide): ~6.2x Atlas baseline: Read and incorporated. I agree with Atlas on organic growth concern and commercial org dysfunction. I diverge on valuation framing — I place more weight on the NRR decline and the EBITDA guidance miss.
First Bear analysis of TEM — no prior established. Using the preliminary Q4 data (Jan 11) plus Atlas's Q3 review as my baseline expectations.
| Metric | Prior Belief (from prelim + Q3 guidance) | Actual (Full Q4 Release) | Verdict |
|---|---|---|---|
| Q4 Revenue | ~$367M per prelim | $367.2M | CONFIRMED |
| Q4 Organic growth | ~30% per JPM | 33.5% ex-Ambry | BEAT — stronger than expected |
| D&S revenue | ~$100M per prelim | $100.4M (+25.1% YoY) | CONFIRMED — record quarter |
| Q4 Adj EBITDA | ~$20M per Q3 guidance | $12.9M | MISSED by 35% |
| FY25 Adj EBITDA | "Slightly positive" per Q3 | -$7.4M | MISSED own guidance |
| Q4 Gross Margin | ~63% (continuation) | 64.7% (implied from $237.7M GP) | BEAT — best ever |
| NRR | ~130%+ (holding) | 126% (down from 140%) | MISSED — 14pp decline |
| TCV | ~$1B (growing) | >$1.1B (up from $940M) | BEAT — 17%+ growth |
| FY26 Guide | ~$1.59B / $65M EBITDA per SA | 1.59B/ 65M EBITDA | CONFIRMED |
| Oncology volume | Continued acceleration | +29% (up from 27%) | BEAT |
| Hereditary volume | Continued acceleration | +23% (down from 37%) | MISSED — sharp deceleration |
Delta Assessment:
| Quarter | Jun-23 | Sep-23 | Dec-23 | Mar-24 | Jun-24 | Sep-24 | Dec-24 | Mar-25 | Jun-25 | Sep-25 | Dec-25 |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue ($M) | 132.4 | 136.1 | 147.7 | 145.8 | 166.0 | 180.9 | 200.7 | 255.7 | 314.6 | 334.2 | 367.2 |
| YoY % | — | — | — | — | +25.4% | +32.9% | +35.9% | +75.4% | +89.6% | +84.7% | +83.0% |
| QoQ % | — | +2.8% | +8.5% | -1.3% | +13.9% | +9.0% | +10.9% | +27.4% | +23.0% | +6.2% | +9.9% |
| GM GAAP % | — | — | — | 53.3% | 45.5% | 58.5% | 60.8% | 60.7% | 62.0% | 62.8% | 64.7% |
| EBITDA ($M) | -37.0 | -36.2 | -35.1 | -43.9 | -31.2 | -21.8 | -7.8 | -16.2 | -5.6 | +1.5 | +12.9 |
| EBITDA Margin | -27.9% | -26.6% | -23.8% | -30.1% | -18.8% | -12.1% | -3.9% | -6.3% | -1.8% | +0.4% | +3.5% |
| Op Margin GAAP | -34.1% | -32.9% | — | -36.5% | -321%† | -29.6% | -25.3% | -26.9% | -19.6% | -18.2% | -16.7% |
| Net Loss ($M) | -55.8 | -53.4 | -50.5 | -64.7 | -552† | -75.8 | -13.0 | -68.0 | -42.8 | -80.0 | -54.2 |
| SBC ($M) | — | — | — | 0.0 | 488† | 21.0 | 32.4 | 23.0 | 22.4 | 34.0 | 45.3 |
†IPO-quarter one-time effects.
FY25 Full Year: Revenue $1,271.7M (+83.4%). Diagnostics $955.4M (+111.5%). D&A $316.4M (+30.9%). GP 797.9M(+109.47.4M (vs -104.7MPY).NetLoss−245.0M. Cash $759.7M.
| Segment | Q4_FY24 | Q1_FY25 | Q2_FY25 | Q3_FY25 | Q4_FY25 | QoQ Q4 | YoY Q4 |
|---|---|---|---|---|---|---|---|
| Genomics (total) | $120.4M | $193.8M | $241.8M | $252.9M | $266.9M | +5.5% | +121.6% |
| — Hereditary | — | $63.5M | $97.3M | $102.6M | ~$110M* | +7.2% | — |
| — Oncology | — | $119.0M | $133.2M | $139.5M | ~$148M* | +6.1% | — |
| Data & Applications | $80.2M | $61.9M | $72.8M | $81.3M | $100.4M | +23.5% | +25.1% |
| Total | $200.7M | $255.7M | $314.6M | $334.2M | $367.2M | +9.9% | +83.0% |
*Oncology/Hereditary split within Q4 Diagnostics not separately confirmed; estimated from diagnostics total and prior trends.
D&S inflection is real. $100.4M is a genuine step-up from the $61-81M range that persisted through Q1-Q3 FY25. Insights (data licensing) at +69.5% YoY is the strongest sub-segment growth rate in the data history. This partially addresses the concern that the "AI premium" business wasn't growing. But one quarter doesn't make a trend. I need Q1 FY26 to confirm.
Diagnostics is steady but Ambry is fading. Hereditary volume growth decelerated from 37% → 23% in one quarter. The post-acquisition channel integration boost is wearing off. Oncology at +29% is the more durable signal — fourth consecutive quarter of acceleration.
| Signal | Direction | Detail |
|---|---|---|
| Oncology volume | Bullish | 20% → 26% → 27% → 29% — four consecutive quarters of acceleration |
| Hereditary volume | Bearish | 23% → 32% → 37% → 23% — sharp reversal after 3Q of acceleration |
| Insights revenue | Bullish | +37.6% (Q3) → +69.5% (Q4) — clear acceleration |
| MRD tests | Bullish (early) | ~4,700 in Q4, +56% QoQ — new product gaining traction |
| D&S sequential growth | Bullish | +23.5% QoQ — first meaningful sequential acceleration |
| NRR | Bearish | 140% (Q4 FY24) → 126% (Q4 FY25) — 14pp annual decline |
| TCV | Bullish | 940M → >1.1B — 17%+ growth in total contract value |
| EBITDA trajectory | Bullish | -43.9M(Q1FY24) → +12.9M (Q4 FY25) — clear inflection |
| SBC trend | Bearish | $23.0M → $22.4M → $34.0M → $45.3M — steep ramp in H2 FY25 |
| GP margin | Bullish | 53.3% → 60.7% → 62.0% → 62.8% → 64.7% — steady expansion |
Net assessment: The volume-to-revenue leading indicators are mixed (oncology bullish, hereditary bearish). The data licensing business is showing the acceleration the thesis requires. NRR decline is the most concerning data point — it means existing customer expansion is slowing, which undermines the moat thesis. The EBITDA trajectory is clearly bullish but the miss of own guidance creates a trust deficit.
| Commitment | Made In | Result | Verdict |
|---|---|---|---|
| FY25 revenue ~$1.24B | Q4 FY24 | $1.27B | BEAT — delivered well above initial guide |
| FY25 guide raised to $1.265B | Q3 FY25 | $1.27B | BEAT — delivered above final guide |
| Q4 EBITDA ~$20M | Q3 FY25 | $12.9M | MISSED — by 35% |
| FY25 EBITDA "slightly positive" | Q3 FY25 | -$7.4M | MISSED — full year still negative |
| "Both businesses accelerating" | Q4 prelim | Oncology ✓, Hereditary ✗, D&S ✓ | MIXED — hereditary decelerated |
In my framework, missing your own guidance is a serious concern. "Companies should never do this." The revenue execution has been excellent — four consecutive raises and beats. But the profitability guidance was the first time management set a specific EBITDA target, and they missed it. The Paige acquisition (~$5M/Q losses) accounts for part of the EBITDA shortfall but management set the $20M Q4 target after announcing Paige. They knew about the drag and still guided too high.
Let me be clear: this isn't a thesis-breaking miss. The trajectory from -104.7MFY24EBITDAto−7.4M FY25 EBITDA is dramatic improvement. But the credibility of the $65M FY26 EBITDA guide is now lower than it would be had they hit their FY25 target.
Atlas flagged D&S stagnation and stale NRR data. Now we have updated numbers and the picture is worse than expected.
Why this matters: The data moat thesis — that Tempus's 38M+ de-identified records create a durable competitive advantage — depends on customers finding the data increasingly valuable over time. Declining NRR suggests the opposite: either the data is not delivering incremental value, or competition is providing alternatives, or procurement budgets are tightening across pharma.
I could be wrong. NRR methodology may have changed (Ambry customer base diluting the metric), or large multi-year contracts may create natural NRR cyclicality. But management needs to address this on the Q1 FY26 call. If NRR drops below 120%, the data licensing business becomes a linear grower, not a compounder.
| Metric | Value | Assessment |
|---|---|---|
| Market cap | ~$9.8B | — |
| TTM Revenue (FY25) | $1.27B | — |
| NTM Revenue (FY26 guide) | $1.59B | — |
| P/S TTM | 7.7x | — |
| P/S NTM | 6.2x | — |
| EV (mkt cap + ~$490M net debt) | ~$10.3B | — |
| EV/NTM Revenue | ~6.5x | Rich for 25% grower |
| EV/NTM EBITDA ($65M) | ~158x | Not meaningful — still early |
| Revenue-PEG (growth/P/S) | 25% / 6.2x = 4.0x | Superficially attractive |
My take on valuation. The revenue-PEG heuristic says 25% growth at 6.2x P/S is reasonable — growth exceeds the multiple by 4x. But this metric is misleading for TEM because:
Is $3.5-4.4B in optionality reasonable? Maybe. But the AI narrative hasn't earned it in revenue yet — AI application revenue was only $12.4M in FY24, and Loop platform (drug discovery) has zero disclosed revenue. I don't invest based on hope.
The market cap question. Is this really a $9.8B company? Revenue run rate is $1.5B, but the company lost $245M in FY25 and has $490M in net debt. Companies at this scale with negative FCF and 25% growth typically trade at 3-5x NTM revenue in normalized markets. TEM's 6.5x EV/NTM is paying for a future that hasn't materialized.
Atlas's scuttlebutt findings remain relevant and I agree with the key points:
Thesis Status: Forming — Watchlist
TEM is a genuinely differentiated company with a real data moat in precision oncology. The Q4 results had bright spots — D&S reaching 100M, Insightsacceleratingto + 69.5105M to -$7M in one year is impressive.
But the numbers don't fully match the theory yet. The two most important data points from Q4 were both negative: (1) management missed their own EBITDA guidance — first time setting a profitability target and they didn't hit it, and (2) NRR declined 14 percentage points from 140% to 126%, which undermines the data licensing quality narrative. Hereditary volume deceleration from 37% to 23% shows the Ambry boost is fading. SBC is ramping. FCF is deeply negative. And at $9.8B market cap for a company earning negative EBITDA on $1.27B revenue, the stock is priced for a future that requires multiple things to go right simultaneously.
I don't have enough conviction to build a position at these levels. The FY26 organic growth comps (starting Q1) and the next NRR reading will be definitive. If organic growth sustains 25%+, D&S continues its acceleration, and NRR stabilizes, this becomes interesting at a lower multiple. If organic growth decelerates below 25% or NRR drops below 120%, the thesis breaks before it forms.
Action: Watchlist — no position. Revisit after Q1 FY26 earnings.
I could be wrong. The data moat may be more defensible than NRR suggests, and the AI revenue inflection may come faster than I expect. But the numbers have to match the theory, and right now they're getting there but aren't there yet.
Bear