Date: 2026-04-06 Quarter: Q4 FY25 (Dec 2025) Earnings Date: 2026-02-24 Brief: briefs/TEM_earnings-review_2026-02-23/
Let me be straightforward: Tempus put up some genuinely impressive numbers this quarter. $367 million in revenue, 83% year-over-year growth, a record $100 million quarter for Data & Applications, and Insights data licensing growing almost 70%. Those are real numbers.
But — and this is a big but — there are things here that make me very uncomfortable, and I've learned over decades that when something makes you uncomfortable, you should pay attention to that feeling.
| Quarter | Revenue | YoY | QoQ | GM% (GAAP) | Adj EBITDA | EBITDA% | D&A Rev |
|---|---|---|---|---|---|---|---|
| Q1_FY24 | $145.8M | — | -1.3% | 53.3% | -$43.9M | -30.1% | — |
| Q2_FY24 | $166.0M | +25.4% | +13.9% | 45.5% | -$31.2M | -18.8% | — |
| Q3_FY24 | $180.9M | +32.9% | +9.0% | 58.5% | -$21.8M | -12.1% | $64.5M |
| Q4_FY24 | $200.7M | +35.9% | +10.9% | 60.8% | -$7.8M | -3.9% | $80.2M |
| Q1_FY25 | $255.7M | +75.4% | +27.4% | 60.7% | -$16.2M | -6.3% | $61.9M |
| Q2_FY25 | $314.6M | +89.6% | +23.0% | 62.0% | -$5.6M | -1.8% | $72.8M |
| Q3_FY25 | $334.2M | +84.7% | +6.2% | 62.8% | +$1.5M | +0.4% | $81.3M |
| Q4_FY25 | $367.2M | +83.0% | +9.9% | ~64.7% | +$12.9M | +3.5% | $100.4M |
FY25 Full Year: 1, 271.7M(+83.47.4M.
FY26 Guidance: ~1.59Brevenue( 2565M Adj EBITDA.
1. Data & Applications Hit $100 Million. This is the number that matters most for the long-term thesis. D&A revenue hit a record $100.4M in Q4, up 25% YoY, and Insights (data licensing) grew 69.5%. That's not a typo — 69.5%! For a data licensing business, that kind of acceleration is genuinely exciting. It suggests pharma companies are actually BUYING the data, not just kicking tires. TCV grew to over $1.1 billion from $940 million. That's real money.
2. Gross Margins Keep Expanding. GAAP gross margin hit approximately 64.7% in Q4, up from 60.8% a year ago and 62.8% in Q3. That's operating leverage showing up where you want to see it — at the gross margin line. For a company with a significant diagnostics/genomics business, that's a very respectable margin.
3. Oncology Volume Acceleration. Oncology volume growth hit 29% in Q4 — the third consecutive quarter of acceleration (20% to 26% to 27% to 29%). When a testing volume metric accelerates three quarters in a row, it tells you something about market adoption. That's a real demand signal.
4. EBITDA Inflected. Q3 was the first-ever positive EBITDA quarter (+$1.5M) and Q4 accelerated to 12.9M.Thetrajectoryisclear : −43.9M to -31.2Mto−21.8M to -7.8Mto−16.2M to -5.6Mto+1.5M to +$12.9M. That's what operating leverage looks like.
5. MRD Is A New Growth Vector. ~4,700 MRD tests in Q4, up 56% quarter-over-quarter. Minimal residual disease testing is a massive TAM — if this scales, it's a meaningful new revenue stream.
1. Organic Growth Is Only ~30-33%. This is the elephant in the room. The 83% headline looks spectacular, but strip out the Ambry acquisition (closed Feb 3, 2025) and organic growth is roughly 30-33%. That's fine — it's solid growth — but it's not 83%. And the FY26 guide of ~25% tells you where we're headed when Ambry anniversaries in Q1 FY26. A company growing 25% with no profits and a $9.8 billion market cap? That's a 7.7x P/S multiple on TTM revenue. Tell me why I should pay that???
2. NRR Dropped From 140% to 126%. God, this is important! Net revenue retention on the data licensing business fell 14 percentage points in one year. 140% to 126%. In my SaaS era, a 14-point NRR decline would have been an immediate red flag, possibly a sell signal. Now, TEM isn't SaaS — NRR here measures Insights (data licensing) customer cohort expansion — but the principle is the same. When your existing customers are spending less incrementally, something is wrong. Are pharma budgets pulling back? Are contracts being renegotiated down? Is the initial land bigger, leaving less room to expand? I don't know, and management hasn't adequately explained it.
3. They Missed Their First Profitability Target. Q3 guidance called for Q4 EBITDA of ~$20M and FY25 "slightly positive." What did they deliver? Q4 EBITDA of 12.9M(357.4M. That's not slightly positive. That's slightly NEGATIVE. The first time a company sets a profitability target and misses it, you have to pay attention. It tells you either they don't know their own cost structure, or they're overpromising. Neither is good.
4. CEO Selling Is Relentless. Eric Lefkofsky has made 227 insider sales and ZERO purchases since IPO. Over $90 million in 2025 alone. Yes, they're under 10b5-1 plans. Yes, founders need liquidity. But 227 sales and zero purchases? I want to see management that is aligned with shareholders, and this pattern makes me deeply uncomfortable. Spruce Point's short report (May 2025) called him a "cash out king" — and while short seller reports are always biased, the selling pattern is factual and undeniable.
5. SBC Is Accelerating Badly. $23M to $34M to $45.3M over Q1-Q3-Q4 FY25. That's almost a doubling in three quarters. $45.3M in Q4 alone is 12.3% of revenue. For a company just barely reaching EBITDA breakeven, the real-cash dilution from SBC is eating into whatever operating leverage the business generates.
6. Hereditary Decelerated. Hereditary volume growth went from 37% in Q3 to 23% in Q4. That's a significant step-down. Oncology accelerated, which is great, but Hereditary is the Ambry business — the acquisition they just made — and it's already decelerating one quarter after peak?
I won't rehash the entire short report, but the key allegations are serious enough to mention: potential round-tripping of capital through the SoftBank joint venture, $300M in non-binding opt-ins within TCV, related-party revenue from Pathos AI. Tempus has pushed back on these but hasn't specifically rebutted each claim point by point. This isn't the kind of governance transparency I look for.
Market cap: $9.8B. TTM Revenue: $1.27B. P/S: 7.7x.
On FY26 guidance of 1.59B : forwardP/Sof 6.2x.Foracompanyguidingto257.4M FY25 EBITDA (and guiding $65M for FY26), that's... not cheap. Compare this to what I could own instead: companies growing 30-40%+ with proven profitability and clean governance.
At 25% guided growth, I'd want to see P/S closer to 4-5x, or I'd want to see 35%+ growth to justify 7-8x. Neither is the case right now.
Prior Beliefs: First time covering TEM in depth. The Rolling file and Bear/WSM analyses established a baseline of "impressive revenue machine with governance and profitability concerns."
Updated Beliefs: The Q4 results confirm the revenue story is real — the D&A acceleration to $100M and Insights +69.5% is genuinely impressive. But the NRR decline from 140% to 126% is a material negative that contradicts the data licensing quality thesis. The EBITDA miss on the first profitability target damages management credibility. And the CEO selling pattern, combined with the Spruce Point allegations, creates a governance overhang I'm not willing to own through.
Status: Not Investable (Watchlist)
The revenue growth is impressive but inflated by acquisition. Organic growth of ~30-33% declining to guided 25% is solid but not exceptional. The NRR decline, EBITDA miss, CEO selling, and governance concerns disqualify this from my portfolio. If NRR stabilizes or reaccelerates, and CEO selling moderates, I'd reconsider. But right now? I follow the money, the results — and the results say this company has a credibility problem alongside genuine revenue strength.
What Would Change My Mind:
| Metric | FY26 Guide | What It Implies |
|---|---|---|
| Revenue | ~$1.59B | ~25% growth — significant deceleration from 83% |
| Adj EBITDA | ~$65M | ~4.1% margin — real but modest |
| Insights growth | ~40% (CEO commentary) | Decelerating from 69.5% Q4 — watch closely |
No position. Watchlist. This is not a company I can own given the governance concerns, NRR deterioration, and valuation. The D&A story is compelling, and if the data licensing business proves durable with stabilizing NRR, this could become interesting at lower multiples or higher organic growth rates.
Best, Saul