Investing analyses

# TEM — Q3 FY25 Earnings Review (Atlas)

> 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.**

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## Verdict

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 (+84.7% YoY) and preliminary Q4 of ~$367M (+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.**

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## Qualification Gate

| 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.

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## Six-Factor Score

| Factor | Rating | Detail |
|--------|--------|--------|
| Growth | Strong | +84.7% 

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# TEM — Q4 FY25 Earnings Review (WSM)

> Date: 2026-04-01
> Quarter: Q4_FY25 (Dec-2025) — Full results reported 2026-02-24
> Market cap: ~$8.0B | Price: ~$45 | EV/NTM Rev: ~5.3x
> **First WSM analysis of TEM. No prior position. No prior writings.**

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## Verdict

**Not investable at current levels.** TEM's data moat is real and the EBITDA inflection is genuinely impressive — but the 83% headline growth is an acquisition mirage, organic growth is ~30-33%, NRR just dropped from 140% to 126%, the CEO has sold $90M+ while buying zero, and 23% of the sales force hits quota. The AI premium in "Tempus AI" is a valuation narrative ahead of financial reality: AI application revenue was ~$12M in FY24 against $1.3B total. Strip the Ambry veneer and you have a 25% guided grower at 5.3x EV/NTM Revenue with negative FCF, a CEO with Groupon baggage, and a broken go-to-market. Pass.

**Action:** Watchlist. Not buying. Would reconsider at <4x EV/NTM Rev (~$33/share) or if organic growth accelerates to 35%+ post-Ambry anniversary.

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## The Numbers

### Revenue Grid — QoQ Depth (Quarters Down, Years Across)

This is the grid that matters. Compare Q4 FY25 to the same quarter in prior years:

| Quarter | FY23 ($m) | FY23 QoQ | FY24 ($m) | FY24 QoQ | FY25 ($m) | FY25 QoQ |
|---------|-----------|----------|-----------|----------|-----------|----------|
| Q1 (Mar) | — | — | $145.8 | -1.3% | $255.7 | **+27.4%** |
| Q2 (Jun) | $132.4 | — | $166.0 | +13.9% | $314.6 | **+23.0%** |
| Q3 (Sep) | $136.1 | +2.8% | $180.9 | +9.0% | $334.2 | +6.2% |
| Q4 (Dec) | $147.7 | +8.5% | $200.7 | +10.9% | $367.2 | +9.9% |

**Reading this grid:**
- Q1-Q2 FY25 QoQ massive uplift = Ambry consolidation (closed Feb 3, 2025). Not organic.
- **Q3 FY25 QoQ +6.2% vs Q3 FY24 +9.0%** → QoQ deceleration even with Ambry in the base. Concerning.
- **Q4 FY25 QoQ +9.9% vs Q4 FY24 +10.9%** → Roughly in line. Acceptable on a base that's 83% larger.
- Incremental revenue Q4: $33.0M vs $19.8M prior year → absolute adds 

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# TEM — Q4 FY25 Earnings Review (Bear)

> 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.

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## Prior Beliefs / Updated Beliefs

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:**
- **Two material negatives**: (1) FY25 EBITDA missed management's own "slightly positive" target, and (2) NRR declined 14pp from 140% to 126%. These are not catastrophic but they undermine credibility and data licensing quality respectively.
- **Two positive sur

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# TEM — Q4 FY25 Earnings Review (Saul)

> Date: 2026-04-06
> Quarter: Q4 FY25 (Dec 2025)
> Earnings Date: 2026-02-24
> Brief: briefs/TEM_earnings-review_2026-02-23/

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## Verdict: Mixed Positive — Impressive Revenue Machine, But I Can't Own This

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.

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## The Numbers

| 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 (+83.4% YoY; ~30-33% organic ex-Ambry). Adj EBITDA: -$7.4M.

**FY26 Guidance:** ~$1.59B revenue (~25% growth), ~$65M Adj EBITDA.

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## What Stood Out

### The Good — And These Are Real Positives

**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% 

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