Tempus AI: The Data Engine Takes Over as Diagnostics Matures
Revenue up 36% as Insights accelerates with massive pharma deals, lifting guidance and EBITDA outlook.
TEM · Earnings Call · 2026-05-05
Diagnostics Remain Strong, But Data Steals the Show
Tempus AI’s Q1 2026 results defy the narrative of a maturing diagnostics market. Revenue hit $348.1M, up 36% YoY, with diagnostics growing 35% thanks to a 28% jump in oncology unit volumes. tumor-informed and liquid biopsy products are leading the charge, while MRD volume grew 500% off a small base. However, management is not scaling MRD aggressively yet, candidly noting, “If we were to 10x our MRD volume tomorrow, our cash burn would go up a lot.” Instead, the real firepower is coming from data and applications, which grew 40.5% to $87M, with the Insights business up over 44%. Lefkofsky celebrated this: “Our data applications business did extraordinarily well, $87 million of revenue representing 40.5% year-over-year growth” — Eric Lefkofsky, Chief Executive Officer · 2026-05-05. This marks the third consecutive quarter of bookings above $100M, and total contract value is rising.The Data and AI Pivot
The quarter’s biggest story is the accelerating shift toward data and AI as the core growth engine. Tempus signed a major strategic collaboration with Merck and expanded its relationship with Gilead, joining a roster that already includes AstraZeneca, GSK, and BMS. “Merck was a very large strategic data and modeling collaboration. We have very large collaborations with people like AstraZeneca and GSK and BMS.” — Eric Lefkofsky, Chief Executive Officer · 2026-05-05 This is not just about licensing data; pharma customers are increasingly building models on Tempus’s platform. The company now has over 500 petabytes of data and is moving beyond oncology into areas like neurology, with a multimillion-dollar Alzheimer’s disease modeling project underway. monitoring is becoming a repeatable, durable revenue stream. As Lefkofsky explained, “The vast majority of our data licensing today is oncology and almost entirely comes from our therapy selection business” — Eric Lefkofsky, Chief Executive Officer · 2026-05-05, but the future lies in diversifying across disease areas. Data licensing remains the foundation, but modeling services are becoming a high-value add-on. This data pivot is a continuation of a theme from prior quarters. At the last call, Lefkofsky emphasized the scale of the data asset: “We have over 450 petabytes of connected multimodal data” — Eric Lefkofsky, Chief Executive Officer · 2026-02-24 and, critically, “We have 126% net revenue retention,” indicating clients are spending more year after year. The current quarter’s deals underscore that this is not just a one-off.Guidance and Path to EBITDA
Management raised full-year revenue guidance to $1.59–$1.60 billion and reiterated adjusted EBITDA of ~$65 million. This is a substantial jump from prior years, as the company moves closer to profitability. CFO James Rogers highlighted the unprecedented visibility: “We have never been at this point in the year with this level of visibility into the overall number.” The revenue trajectory is steep—revenue has grown from roughly $148M in Q1 2023 to $348M now, a 135% increase in three years. Revenue growth of 36% year-over-year is driven by both diagnostics and the high-margin data business. Despite still-negative operating income, the trend is improving: operating losses narrowed from -$69M in Q1 2025 to -$85M in Q1 2026, but on a much higher revenue base, and management expects significant operating leverage in the back half. The stock market has taken notice—shares are up 69% in the last 90 days, outpacing the broader market. This enthusiasm is justified if management can execute on the data roadmap, but questions remain about the durability of large pharma contracts and the pace of MRD reimbursement.Risks and Watch Items
Hereditary testing is expected to slow, as it is lapping strong growth, but management sees a return to mid-teens in H2. MRD reimbursement is still pending, and the company is deliberately constraining volumes to protect cash flow. The reliance on a few large data clients is a concentration risk, though the growing diversity of deals (Merck, Gilead) mitigates this. As Lefkofsky put it,All in all, Tempus AI is executing a strategic transition from a diagnostics lab to a data and AI powerhouse, and the market is starting to recognize it.To me, one of the most amazing parts is to get to these very large levels where people are signing $100+ million agreements with you to license your de-identified data over multiple years.