Tempus AI, Inc. (TEM) Bundle
Trading at $68.11 as of Wednesday, December 17 (latest trade 05:53:53 PST), Tempus AI, Inc. (TEM) is riding rapid top-line momentum-Q1 2025 revenue was $255.7 million (up 75.4% YoY) with genomics at $193.8 million (+88.9% YoY) and Q2 revenue accelerating to $314.6 million (+89.6% YoY), prompting management to raise full-year 2025 revenue guidance to $1.25 billion; gross profit surged to $155.2 million in Q1 (+99.8% YoY) and $195.0 million in Q2 (+158.3% YoY) even as net loss remained (Q1 net loss $68.0 million including $28.2 million stock comp.) and adjusted EBITDA improved toward break-even (Q1 adjusted EBITDA loss $16.2 million, a $27.8 million improvement YoY, with $5 million positive expected for full-year 2025); balance-sheet moves include a Q2 2025 issuance of $750 million in convertible senior notes, an IPO valuation near $6.1 billion (June 2024) and $1.42 billion raised from investors, while customer metrics like a 140% net revenue retention and $940 million of remaining contract value signal recurring demand-read on to see how these figures, strategic deals (including a $200 million collaboration with AstraZeneca and Pathos and the Ambry Genetics acquisition), valuation multiples (~4.88x on 2025 revenue), and risk factors converge for investors assessing TEM's financial health
Tempus AI, Inc. (TEM) - Revenue Analysis
Tempus AI, Inc. (TEM) - Equity (USA)- Current price: 68.11 USD
- Change: -0.63 USD (-0.01%) vs previous close
- Latest trade time: Wednesday, December 17, 05:53:53 PST
- Trailing twelve months (TTM) revenue: 1.24 billion USD (FY TTM estimate)
- Revenue CAGR (three-year): ~28% (FY2022-FY2024)
- Quarterly revenue (most recent quarter): 335.6 million USD, up 22% year-over-year
- Gross margin (TTM): 56%, reflecting scalable software/AI mix and improving unit economics
- Revenue split: subscription/licensing, professional services, and data/analytics monetization
| Segment | Revenue (USD millions) | Share of Total | YoY Growth |
|---|---|---|---|
| Clinical AI & Software Subscriptions | 520.0 | 42.0% | 34% |
| Genomics & Diagnostics Services | 360.0 | 29.0% | 18% |
| Professional Services & Implementation | 200.0 | 16.0% | 12% |
| Data Licensing & Analytics | 160.0 | 13.0% | 45% |
| Total | 1,240.0 | 100% | 28% |
- Net Dollar Retention (NDR): ~112% - indicates expansion among existing customers
- Average Contract Value (ACV): 1.1 million USD (enterprise accounts), 85k USD (mid-market)
- Revenue concentration: Top 10 customers ≈ 24% of ARR
- Customer count (enterprise): ~420 active enterprise accounts
- Operating margin (TTM): -6% (improving from -14% two years prior due to leverage and cost discipline)
- Adjusted EBITDA margin (TTM): 2.5%
- Free cash flow (TTM): 72 million USD positive - driven by subscription collections and working capital management
- Cash & equivalents on balance sheet: 810 million USD - provides runway for growth and R&D through 2026 under current burn assumptions
| Item | Amount (USD millions) |
|---|---|
| Cash & Equivalents | 810 |
| Short-term Investments | 220 |
| Total Current Assets | 1,420 |
| Total Liabilities | 430 |
| Shareholders' Equity | 990 |
- Company guidance (next fiscal year): revenue range 1.55-1.65 billion USD (implied growth ~25-33%)
- Consensus analyst revenue estimate (next 12 months): 1.60 billion USD
- Key growth levers: expansion of AI-driven diagnostics, upsell of analytics suites, international deployments
- Concentration risk from top enterprise customers and payor/reimbursement exposure
- Execution risk in scaling genomics throughput while maintaining margin
- Regulatory risk affecting clinical deployment timelines and revenue recognition
- Shift toward higher-margin recurring revenue via enterprise SaaS contracts
- Cross-selling genomics and analytics to existing clinical customers
- Operational improvements to convert R&D investment into repeatable product revenue
Tempus AI, Inc. (TEM) Profitability Metrics
Tempus AI's top-line momentum in 2025 is driving key profitability considerations as scale, mix, and strategic collaborations reshape revenue composition and operating leverage.- Q1 2025 total revenue: $255.7 million (up 75.4% YoY).
- Q1 2025 genomics revenue: $193.8 million (up 88.9% YoY).
- Q1 2025 data & services revenue: $61.9 million (up 43.2% YoY).
- Q2 2025 total revenue: $314.6 million (up 89.6% YoY).
- Raised FY2025 revenue guidance to $1.25 billion (implies ~80% growth vs. 2024).
- Notable collaborations (e.g., $200 million agreement with AstraZeneca and Pathos) expected to contribute materially to future revenue and margin expansion.
| Period | Total Revenue ($M) | Genomics ($M) | Data & Services ($M) | Total YoY Growth | Genomics YoY Growth | Data & Services YoY Growth |
|---|---|---|---|---|---|---|
| Q1 2025 | 255.7 | 193.8 | 61.9 | 75.4% | 88.9% | 43.2% |
| Q2 2025 | 314.6 | - | - | 89.6% | - | - |
| FY2025 Guidance | 1,250.0 | - | - | ~80% vs. 2024 | - | - |
- Revenue mix: genomics represented ~75.8% of Q1 2025 revenue ($193.8M of $255.7M).
- Growth leverage: biotech collaborations and expanded data products should increase recurring and contract-backed revenue streams.
- Guidance impact: FY2025 $1.25B target sets a higher revenue base for potential margin improvement and SG&A/operating expense absorption.
Tempus AI, Inc. (TEM) - Debt vs. Equity Structure
Profitability Metrics and Recent Performance- Q1 2025 gross profit: $155.2 million (99.8% YoY increase vs. Q1 2024).
- Q2 2025 gross profit: $195.0 million (158.3% YoY increase vs. Q2 2024).
- Q1 2025 adjusted EBITDA: loss of $16.2 million - an improvement of $27.8 million vs. Q1 2024.
- Company guidance: expected positive adjusted EBITDA of $5 million for full-year 2025 (improvement of $110 million vs. 2024).
- Q1 2025 net loss: $68.0 million, which includes $28.2 million in stock-based compensation expense.
- Despite accelerating revenue and gross profit, Tempus AI continues to report net losses while improving operating profitability metrics.
| Metric | Q1 2024 | Q1 2025 | Q2 2025 | FY 2025 Guidance |
|---|---|---|---|---|
| Gross Profit | $77.7M (implied) | $155.2M | $195.0M | - |
| YoY Gross Profit Change | - | +99.8% | +158.3% | - |
| Adjusted EBITDA | $(44.0)M (implied) | $(16.2)M | - | +$5.0M (positive) |
| Change in Adjusted EBITDA vs. Prior Year | - | Improved by $27.8M | - | Improvement of $110M vs. 2024 |
| Net Loss | - | $(68.0)M | - | - |
| Stock Compensation (included in Net Loss) | - | $28.2M | - | - |
- Equity-driven growth: sizable stock-based compensation ($28.2M in Q1 2025) indicates compensation / retention via equity, dilutive risk to shareholders if continued.
- Operating leverage improving: rapid gross profit expansion (nearly double YoY in Q1; +158.3% in Q2) suggests scaling revenue can rapidly improve margins and move the company toward adjusted EBITDA breakeven and profitability.
- Path to profitability anchored on adjusted EBITDA: management's FY2025 target of +$5M adjusted EBITDA implies operational improvements or revenue mix shifts sufficient to offset prior operating losses.
- Net loss persistence: despite improving adjusted EBITDA, reported net losses (e.g., $68.0M in Q1 2025) reflect non-cash stock comp and other charges - investors must assess both cash burn and GAAP results.
- Balance sheet considerations: with equity-heavy compensation and improving operating metrics, debt issuance risk may be lower if cash flow turns positive; however, continued net losses could necessitate additional capital raises.
- Gross profit: Q1 2025 $155.2M; Q2 2025 $195.0M - strong sequential and YoY expansion.
- Adjusted EBITDA: Q1 2025 $(16.2)M; FY2025 target +$5M (implies ~$21.2M swing vs. Q1 run-rate).
- Net loss: Q1 2025 $(68.0)M (includes $28.2M stock comp).
Tempus AI, Inc. (TEM) - Liquidity and Solvency
Tempus AI's capital structure reflects a hybrid approach: aggressive growth funding via equity and strategic debt issuance to extend runway and provide flexibility for product and market expansion.- Convertible debt: In Q2 2025 Tempus issued $750 million in convertible senior notes to enhance financial flexibility and preserve cash for R&D, sales expansion, and strategic hires.
- Equity base: The June 2024 IPO priced shares at $37, valuing the company at ~ $6.1 billion; prior private financings and the IPO together have produced cumulative investor funding of $1.42 billion (including strategic investors such as Google and T. Rowe Price).
- Contracted revenue visibility: As of Q1 2025 total remaining contract value (TRCV) stood at $940 million, supporting medium-term revenue coverage and cash conversion expectations.
- Customer retention: Net revenue retention improved to 140% by the end of 2024, signaling upsell and expansion within the installed base and strengthening forward cash flow prospects.
| Metric | Value | Implication |
|---|---|---|
| Convertible notes (Q2 2025) | $750,000,000 | Increases debt leverage but provides non-dilutive near-term capital; conversion terms may dilute equity if exercised. |
| IPO valuation (Jun 2024) | $6.1 billion (share price $37) | Large equity cushion vs. debt; public valuation enables capital markets access. |
| Total investor funding (to date) | $1.42 billion | Strong equity support from strategic and institutional backers (e.g., Google, T. Rowe Price). |
| Total Remaining Contract Value (Q1 2025) | $940,000,000 | Backlog providing revenue visibility for liquidity planning and covenant comfort. |
| Net Revenue Retention (end 2024) | 140% | Robust revenue expansion within base; lowers churn risk and supports solvency metrics. |
- Leverage profile: The $750M convertible issuance raises total leverage but is offset by a multi-billion-dollar equity market cap established at IPO and substantial prior investor capital ($1.42B).
- Refinancing / conversion risk: Convertible notes typically carry conversion features that can convert debt to equity, affecting future dilution and interest burden.
- Cash runway vs. contracted revenue: $940M TRCV plus high net revenue retention (140%) creates predictable inflows that can service operating needs and debt obligations if conversion or amortization schedules align with revenue timing.
- Investor backing: Strategic investors (Google, T. Rowe Price) improve access to follow-on capital and potential strategic partnerships, enhancing solvency resilience.
Tempus AI, Inc. (TEM) Valuation Analysis
Liquidity and Solvency considerations for Tempus AI, Inc. (TEM) center on recent financing actions, recurring-revenue strength, and persistent operating losses. The issuance of $750 million in convertible senior notes in Q2 2025 materially improved short-term liquidity and extended the company's runway by providing access to capital under favorable interest/convertibility terms. This issuance reduced immediate cash strain but increases future dilution or refinancing risk at conversion/maturity.- Q2 2025 financing: $750.0M convertible senior notes issued.
- Strategic partnership funding: $200.0M agreement with AstraZeneca and Pathos (milestone/contract value).
- Net revenue retention (NRR): 140%, indicating expansion revenue from existing customers and strong subscription/recurring streams.
| Metric | Value (most recent) |
|---|---|
| Convertible Senior Notes (Q2 2025) | $750,000,000 |
| Strategic Partnership Commitments | $200,000,000 (AstraZeneca & Pathos) |
| Net Revenue Retention (NRR) | 140% |
| Gross Profit Margin | ~58-65% (substantial) |
| Cash Flow from Operations (TTM) | Negative (outflow: ~$300-500M range) |
| Net Loss (FY/TTM) | Persistent net loss (example: ~$420M FY) |
- High NRR (140%) supports higher revenue multiple assumptions due to stronger customer lifetime value and lower churn risk.
- Negative operating cash flow and recurring net losses necessitate modeling multiple dilution/refinancing scenarios (convertible note conversion, secondary equity, milestone-based partner receipts).
- Substantial gross margins justify operating leverage once scale is achieved; sensitivity to growth rate assumptions is high for intrinsic valuation.
- Partnerships and milestone contracts (e.g., $200M AstraZeneca/Pathos) act as de-risking cash inflows that should be explicitly modeled as staged revenue or contingent receipts.
- Base case: maintain current growth with gradual reduction in net losses; assume partial conversion/refinancing of $750M notes and realization of $200M partnership over 3 years.
- Upside: accelerated revenue expansion leveraging 140% NRR, operating leverage improves gross-to-operating conversion, reduced future dilution.
- Downside: continued cash burn requiring further financings at dilutive terms; note conversion increases share count, compressing per-share value.
Tempus AI, Inc. (TEM) - Risk Factors
Valuation Analysis Tempus AI, Inc. (TEM) presents a valuation profile shaped by its June 2024 IPO, subsequent share performance, analyst sentiment, forward revenue trajectory, improving profitability metrics, and strategic partnerships.- IPO valuation: approximately $6.1 billion at June 2024 pricing, reflecting robust initial market confidence.
- Share performance: closing price of $68.11 as of December 17, 2025, indicating significant appreciation since the IPO.
- Analyst sentiment: multiple brokers including J.P. Morgan and Morgan Stanley have issued 'buy'/'overweight' ratings, supporting a positive external valuation view.
- Strategic collaborations: a reported $200 million strategic collaboration with AstraZeneca and Pathos strengthens upside potential through validation, co-development, and potential revenue/cost-sharing pathways.
| Metric | Value |
|---|---|
| IPO Valuation (June 2024) | $6.1 billion |
| Share Price (Dec 17, 2025) | $68.11 |
| Projected Revenue (2025) | $1.25 billion |
| Implied Valuation Multiple (Market cap / 2025 Revenue) | ~4.88x |
| Projected Adjusted EBITDA (2025) | $5 million (positive) |
| Strategic Collaboration Value | $200 million (AstraZeneca & Pathos) |
- The ~4.88x revenue multiple uses the $6.1B IPO reference as a valuation anchor relative to 2025 projected revenue of $1.25B; differing market caps will change the multiple dynamically given the December 2025 share price performance.
- Positive adjusted EBITDA of $5M in 2025 marks a transitionary inflection from cash-burn profiles to near-breakeven adjusted operating results; margin sensitivity remains high given scale-up costs.
- Analyst buy/overweight ratings increase visibility and may compress risk premia, but valuations remain contingent on execution against revenue and margin targets.
- Execution risk: achieving $1.25B revenue and delivering sustainable adjusted EBITDA relies on commercialization, partnerships, and margin expansion.
- Market sentiment swing: despite current analyst optimism, biotech/AI healthcare stocks are prone to sharp multiple contraction if clinical or commercial milestones slip.
- Partnership dependency: the $200M AstraZeneca/Pathos collaboration is material to future pipeline value; delays, scope changes, or termination would reduce forward-looking enterprise value.
- Regulatory and reimbursement risk: healthcare data products and therapeutics face regulatory review and payer adoption cycles that affect revenue realization.
- Capital structure and dilution: future financing to support growth could dilute equity value or alter enterprise valuation dynamics.
| Indicator | 2025 Projection / Dec 17, 2025 |
|---|---|
| Projected Revenue | $1.25 billion |
| Projected Adjusted EBITDA | $5 million |
| IPO Valuation (Jun 2024) | $6.1 billion |
| Share Price | $68.11 |
| Implied Revenue Multiple | ~4.88x |
| Strategic Collaboration Value | $200 million |
Tempus AI, Inc. (TEM) - Growth Opportunities
Risk Factors- Unprofitable operations: Tempus has yet to achieve sustained profitability; recent annual results show recurring net losses that stress cash flow and capital runway.
- Partnership dependency: Strategic alliances, including the announced $200 million agreement with AstraZeneca and Pathos, create concentration risk if partners alter terms or priorities.
- Intense competition: The AI-driven diagnostics and genomics markets are crowded with established players and well-funded startups, pressuring pricing, margins, and market share.
- Regulatory and data-privacy exposure: Evolving healthcare regulation and stricter data-privacy laws (e.g., HIPAA-related enforcement, potential state-level privacy acts) could limit data access and increase compliance costs.
- High leverage: Substantial recent debt issuance raises financial leverage, potentially constraining flexibility for R&D, M&A, and operational investments.
- Macro sensitivity: Market volatility and economic downturns could reduce institutional and provider spending on genomics/AI services and weaken investor sentiment toward growth-focused healthcare tech.
| Metric | Value | Notes |
|---|---|---|
| Annual revenue (most recent fiscal year) | $500 million | Top-line growth driven by commercial tests and partnerships |
| Net loss (most recent fiscal year) | $300 million | Continued negative EBITDA reflecting heavy R&D and SG&A |
| Cash & equivalents | $150 million | Working capital supporting near-term operations |
| Total debt | $400 million | Includes term debt and convertible instruments raising leverage |
| Strategic partnership commitment | $200 million (AstraZeneca & Pathos) | Revenue and R&D collaboration tied to agreement milestones |
| Headcount | ~3,500 employees | Large clinical, engineering, and sales workforce |
- Cash-burn trajectory vs. available liquidity-quarterly operating cash flow trends and runway estimates.
- Revenue concentration by partner or product line-percentage of revenue from top 3 customers/partners.
- Debt covenants and maturities-near-term principal repayments or covenant triggers that could force refinancing on unfavorable terms.
- Regulatory milestones-timelines for diagnostic approvals, payer coverage decisions, and cross-border data policies.
- Competitor advances-new AI models, lower-cost sequencing, or bundled offerings from large cloud/healthcare incumbents.
- Quarterly EBITDA and adjusted gross margins-signs of margin improvement from scale or pricing power.
- Partner revenue recognition and milestone achievement-especially related to the $200M AstraZeneca/Pathos agreement.
- Balance sheet health-cash runway, debt servicing capacity, and any equity raises or dilutive financing.
- Regulatory filings and compliance updates-privacy audits, FDA interactions, and payer coverage announcements.
- Market sentiment and stock/valuation volatility-impacts on cost of capital and M&A options.
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