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Tempus AI delivered a robust Q1 2026, with revenue of $348.1 million, up 36% year-over-year. The Diagnostics segment remains the primary revenue driver at $261.1 million, while the Insights data business showed accelerated growth of 40.5%, reaching $87 million. Major strategic wins with Merck and Gilead highlighted the quarter, reinforcing Tempus's position as a leader in healthcare AI and data modeling. Management raised full-year revenue guidance to $1.59–$1.60 billion and projects $65 million in adjusted EBITDA. Key operational highlights include a 40% algorithm attach rate in oncology and a deliberate, metered expansion of the MRD business to optimize unit economics ahead of broader reimbursement. Despite a seasonal dip in operational cash flow, the company maintains a strong liquidity position and expects significant improvement in the second quarter. Regulatory progress continues with pending FDA submissions for the XF and XT assays. CEO Eric Lefkofsky emphasized that the company’s scale—boasting over 500 petabytes of data—and its diversified revenue streams across diagnostics and data applications provide a durable foundation for sustained 25% annual growth over the next three years, even as some segments like hereditary testing face temporary year-over-year comparison headwinds.

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Tempus AI: Founder-Led Circular Revenue and The Perpetual Dilution Machine

Full Earnings Call Transcript — Q1 • 2026-05-05

Operator: Ladies and gentlemen, thank you for standing by. At this time, I would like to welcome everyone to the Tempus AI, Inc. First Quarter 2026 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone. I will now turn the conference over to Elizabeth Krutoholow. You may begin.
Elizabeth Krutoholow: Thank you. Good afternoon, and welcome to Tempus AI, Inc.'s First Quarter 2026 Conference Call. This afternoon, Tempus AI, Inc. released results for the quarter ended 03/31/2026. The press release and overview of the quarter and our latest presentation are available on our IR website. Joining me today from Tempus AI, Inc. are Eric Lefkofsky, founder and CEO, and James Rogers, CFO. Before we begin, I would like to remind you that during this call, management may make forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially. For a discussion of these risks, please refer to our 10-K and other filings with the SEC. During the call, we will discuss non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles. Definitions of these non-GAAP financial measures, along with reconciliations to the most directly comparable GAAP financial measures, are included in our earnings release, which is available on our IR page. I would now like to turn the call over to Eric Lefkofsky.
Eric Lefkofsky: Thank you, and welcome, everybody. We had a great quarter. Revenue was $348.1 million, up a little over 36% year-over-year. Our diagnostic revenue was $261.1 million, representing almost 35% growth, driven by particular strength in our oncology business, which had unit growth of about 28%. It was strong across the board with our solid tumor and liquid biopsies performing well, and our MRD volume performing even better. Hereditary slowed down a bit, which was to be expected given that we are lapping some extreme growth rates from a year ago. We expect that business to return to mid-teens in the second half of the year. Our data applications business did extraordinarily well, $87 million of revenue representing 40.5% year-over-year growth with particular strength in our data licensing and modeling business, Insights, which grew over 44%. This is our third straight quarter of bookings north of $100+ million with TCV rising and visibility in the best place it has been for our data and apps business in quite some time. So all in, the business is doing extremely well. Our main businesses are performing at or above plan. We are on track for a great year and, as a result, increased our guidance to now a range of $1.59 billion to $1.60 billion for the year, with adjusted EBITDA of about $65 million. With that, happy to take questions.
Operator: As a reminder, to ask a question, please press star then one. If you would like to withdraw your question, press one again. We do request for today’s session that you please limit yourself to one question only. We will now open the call for questions. Your first question comes from the line of Kallum Titchmarsh with Morgan Stanley. Your line is open.
Kallum Titchmarsh: Great. Thanks for the question, guys. Eric Lefkofsky, I wanted to start with Insights just given some of the recent updates. Can you maybe just talk about how discussions with pharma customers have been trending so far this year, particularly as interest in AI appears to be evolving? And I am curious where de-identified data is sitting in the hierarchy of needs. And investors are obviously cognizant of contract closing and renewal dates for your large agreement, so really looking for your latest thoughts on longevity and extension potential here. Thank you.
Eric Lefkofsky: Yes. I would say that all of our core big data relationships are very strong. We have a long history of renewing these agreements at or above where they historically stood. We feel great about that trend continuing. And I think, equally important, if not more important, is that we are now adding some really big new names to that prestigious group. This quarter alone, we added Merck, who signed a very large strategic collaboration with us. We expanded our relationship with Gilead. We are in late stages on others. So we just have a really strong and robust pipeline. And as I called out in the letter, I do not think anyone thought our data and modeling business would get to this scale, would be growing this quickly at this scale, or would be this durable. 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. It would be impressive to do that with one pharma, even more impressive with two, but we now have almost half a dozen folks at that level where people are signing these very large strategic agreements, with more coming. I would suspect over time that becomes the vast majority of all big biotech and big pharma. We are seeing this migration where people are not just licensing our data; more and more they are actually building models with us, whether those are foundation models as in the case with AstraZeneca, or they are building smaller models leveraging our data. We have a very large database now in excess of 500 petabytes of data. It is all connected to this analytics and model-building platform that is now connected to not just CPUs, but GPUs. People are increasingly building proprietary models to get smarter about their own internal R&D programs, and that trend seems to be up and to the right.
Operator: Your next question comes from the line of Ryan Michael MacDonald with Needham. Your line is open.
Analyst: Hey, thanks for taking the question. This is Matt Shea on for Ryan. Eric Lefkofsky, maybe just jumping off on that last point, is there anything in terms of either the recent Gilead or Merck deal that you would call out in terms of size or scope that is maybe different from some of your other strategic collaborations, or just anything notable to call out with those two wins in particular? And then, James Rogers, as we layer the Merck and Gilead wins on top of the $350 million of TCV that was earmarked for revenue in 2026, how much visibility and confidence do you have in hitting the implied $410 million of data revenue guidance? And what are the potential levers for upside there?
Eric Lefkofsky: Yes, I can start. Merck was a very large strategic data and modeling collaboration. We have very large collaborations with people like AstraZeneca and GSK and BMS. It is another very large collaboration of that magnitude. It is unique in that there are only so many of these that we have, but it is, as I mentioned a minute ago, far more than others. It is nice to see people getting to that size and scale where they are really leaning in at a strategic level with dedicated teams and lots of data and broad access and AI model building and all the great stuff that you want to see for a long-term, sticky relationship. Gilead is a bit different. It is quite large—smaller than Merck—but quite large. What is cool is it represents a very significant step up from their historic levels. We are monitoring two things: we want to get to a point where we have $100+ million agreements with as many big pharmas and big biotechs as we can, but we also want to see the growth of these accounts. We typically do not get to that strategic level upfront; it takes time. We tend to start with one project, maybe in one subtype, then a few subtypes and a few different projects. Eventually people realize they can use our data to be far more intelligent in terms of which compounds they actually want to interrogate, how they design phase one and phase two trials for the greatest likelihood of success, how they ultimately enroll patients and make sure their product is fit for commercial viability. They are using our data across that entire spectrum, and it takes time to get people comfortable. It is nice to see someone like Gilead stepping up in such a big way from their historic levels.
James Rogers: And then in terms of the visibility, obviously we mentioned at the year-end call that we had about $350 million of TCV that was related to 2026. That gave us a tremendous amount of visibility into the guide. On top of that, we had visibility into a very strong pipeline, and Merck and Gilead are part of that pipeline that closed in the first quarter. That increases the level of visibility, and the pipeline remains strong as well, as Eric Lefkofsky noted. So the Insights business is really performing incredibly well at this stage. We have never been at this point in the year with this level of visibility into the overall number, and it is exciting for 2026, but also for 2027 and beyond. As Eric Lefkofsky noted, our TCV actually increased in the first quarter, which is incredibly impressive considering you are delivering $80+ million of revenue and still growing that backlog that will contribute to revenue for the balance of the year and over the next several years to come.
Operator: Your next question comes from the line of Subhalaxmi T. Nambi with Guggenheim. Your line is open.
Subhalaxmi T. Nambi: Hey, guys. Thank you for taking my question. One for James Rogers: Are there any updates on your XF FDA submission? I know it was reiterated that it was submitted, but any realistic timeline for an ADLT pricing update on this test? And then second, could you break down for us what percentage of your data licensing comes primarily from oncology and what has come from other areas like rare disease or cardiovascular? Longer term, where do you see that mix shaping out?
James Rogers: Yes, thanks, Subhalaxmi T. Nambi. I will start with the FDA submissions and then Eric Lefkofsky can take the question on the data breakdown. I would say no update on the XF submission that was made earlier this year; we are awaiting feedback there. As we previously noted, we do not expect that to have any impact on pricing or ASPs in 2026. The other thing that we called out in our letter relates to an amendment that we are making to our XT FDA-approved assay, or the submissions we made—an amendment that will cover tumor-only, so cases where we do not get a normal sample. That will allow us to accelerate the migration over to the ADLT version of the assay. We are expecting a decision there imminently. Those are the updates from an FDA standpoint. Eric Lefkofsky?
Eric Lefkofsky: Yes. In addition to driving ASP higher on the diagnostic side, on the data side the vast majority of our data licensing today is oncology and almost entirely comes from our therapy selection business. We basically built a de-identified data business off the combination of matched clinical-molecular data, predominantly from therapy selection—our liquid biopsy test or solid tumor profiling test. That database, which sits at over 500 petabytes, drives the vast majority of our data business. It has been nice to watch some recent wins in neurology. In particular, we were just engaged to begin building a multimodal model on Alzheimer’s disease. That was a multimillion-dollar project that we are in the middle of right now and will finish up in the middle of this year. So we do have people starting to tap the database in other areas, but for us that represents really significant long-term growth drivers. We can see the data and modeling business in the U.S. getting to multi-billions of dollars. As we get into other disease areas, there is all kinds of opportunity there just in the U.S. alone, let alone international. So lots of leg room.
Subhalaxmi T. Nambi: Thank you, both.
Operator: Next question comes from the line of Daniel Gregory Brennan with TD Cowen. Your line is open.
Daniel Gregory Brennan: Great. Thank you. Maybe just one on cash flow in the quarter. How do we think about cash flow from operations—it was down about $70 million, plus or minus? I think you guys said free cash kind of approximated EBITDA, which was, I think, a $3 million loss. How do we think about the progression of free cash as we go through the year? And then maybe just one unrelated. You have XT FDA approved; you are going to seek to get XT, XR FDA approved. Does that change at all the ability to bill both separately to your local MAC if, for whatever reason, jurisdiction changes and you have both of those FDA approved? How do we think about the durability of that going forward? Thank you.
James Rogers: I will take the first one, and then Eric Lefkofsky can take the second one. In terms of free cash flow, it was a little bit elevated in Q1, which is pretty typical for us over the last couple of years. A few things going on: timing of payables plus bonuses get paid out in Q1. As we noted in the letter, we would anticipate a significant improvement in Q2 driven by, one, normalization of those payables, and, two, a number of our large Insights contracts that had prepayments or revenue that was burning down flip over to quarterly payments. We would anticipate significant improvements in the second quarter and then, from there, continued improvement as adjusted EBITDA improves. With that, I will turn it to Eric Lefkofsky for the second.
Eric Lefkofsky: We are in a good spot given that we are expecting to generate about $65 million of positive EBITDA, with every quarter significantly improving performance. We are now, I do not even know, five, six, seven, eight quarters in a row of every quarter improving EBITDA pretty dramatically on a year-over-year basis. We feel great about our cash position. We do not need more cash. We do not need to do anything. So for us at this point, the quarterly fluctuations of cash flow are not that critical. We are going to generate cash. We are going to be EBITDA positive. We do not need alternative financings in terms of funding the business. We are in a pretty good spot. As it relates to XT, XR, and XF, I would suspect that over time all of our main assays are FDA approved. We have one approved today, we are expanding, as James Rogers mentioned, in solid tumor profiling. We have another that is in front of the FDA now in liquid biopsy. We will take our ADLT as well. I do not think these things will impact how the tests are ultimately ordered or billed. They are ordered and billed on an individual basis, and based on medical necessity. When they are ordered and billed, they get paid for how they get paid for. We do believe that ASPs are likely to rise over the coming years by virtue of the fact that our current ASP sits at around $17.40—somewhere in that range, $17.20. We would suspect there is about $500 worth of incremental ASP lift over the next year or two as we get all these things FDA approved. From everything we can see, nothing about the current trend is anything but significantly positive.
Operator: Next question comes from the line of Bradley Bowers with Mizuho. Your line is open.
Bradley Bowers: Great. Thanks for the question. I just want to get to oncology genomics trends. We see more news headlines from competitors on companion diagnostics status wins. What is the impact to Tempus AI, Inc. as therapy selection gets more widely, formally included into labels as companions to pharmaceuticals? Maybe just an update on what inning of adoption we are in on therapy selection and whether there is still a rising tide for all companies, or do you need some more formal partnerships to keep driving that 20% volume growth on that business? Appreciate it.
Eric Lefkofsky: Yes. We have seen no impact. CDXs have been part of selection for years. There are many of them. They have had no impact on physician ordering in the U.S., by virtue of both how drugs are paid for in the U.S. and how diagnostic tests are ordered. In other markets where you cannot get the drug without that particular companion being ordered, it may have an impact. But in the U.S., we do not have a system set up that way. In fact, the migration has been the other way, where people have been looking to move away from companions as a precursor to ordering. I would suspect that whether we win more CDXs or not, regardless of who wins CDXs, it will not have any impact on the amalgamation of companies that represent the vast majority of external sequencing. I would suspect we will all be just fine. The differential in growth rates—the fact that we are growing faster than others or most others in therapy selection—is predominantly related to the technology platform we built, which is comprehensive and allows physicians to do their job well. We see no sign of that slowing down, and I think CDXs will not have an impact. In terms of where we are, it still feels to us like we are maybe early to the middle of the game in terms of therapy selection. There has been some research published recently that shows a significant volume of physicians still are not ordering comprehensive genomic profiling when treating cancer patients. There are lots of patients historically that have not been profiled. I would suspect there is pretty decent unit volume growth for the industry over the next three to five years. I think we will grow faster because of all the advantages we have built into our platform, but it does feel like it is a healthy space in terms of solid tumor profiling, liquid biopsy, and then even healthier on the MRD side given that it is still fairly new.
Operator: Next question comes from the line of Analyst with Canaccord Genuity. Your line is open.
Analyst: Thanks for the questions. Can you talk about how important Rare is going to be to the hereditary testing business getting back to the mid-teens? And then on that note, can you elaborate on the growth profile of XG that grew 50% year-over-year in Q1, I think? Thanks.
Eric Lefkofsky: Yes. The XG assay for us—the percentages are meaningful, but it is small. Our MRD assay grew 500%. It was only 6.5 thousand tests. It is awesome, but percentages can be a bit misleading. The vast majority of our HCT volume is obviously on the Ambry side, given the amount of volume they do in hereditary. Because the units are so high, nothing Rare can do will move the unit volume metric. It moves the revenue metric because you get reimbursed significantly more per test, but it is hard to move the units. The fact that we expect to get back to mid-teens is a function of the business historically being a mid-teens grower. It is lapping periods of much higher growth last year, when that assay was growing at ~40%. It is a bit lumpy. Their growth has been lumpy, and when you are lapping periods of lumpy growth, it is still lumpy. I suspect as we get into the back half of the year, the growth rates will return to mid-teens. I think Rare will also do well. We had a slower start to the first half of this year. As GeneDx called out, they migrated a bunch of volume to whole genome, which has some ASP impact for them. We were a bit later to get that product in market. For us, it has been more of a volume issue; we have not been selling a bunch of tests. As our product enters market, we expect some volumes to pick up. Even at ~$3 thousand ASP, it is still going to be ASP accretive to us. I would say the back half of the year looks much better for our hereditary business as we are lapping slower periods of growth last year and as Rare starts to really take hold. I would bet that by the end of the year, that business is feeling pretty good.
Operator: Next question comes from the line of Mark Schappel with Loop Capital Markets. Your line is open.
Mark Schappel: Hi. Thank you for taking my question. Eric Lefkofsky, it was highlighted in the prepared remarks that you have roughly a 40% attach rate for your algos on your solid tumor assays in oncology. Could you break down a little bit further which products are driving the higher attach rates there, and what gives you confidence in expanding that within the next 12 months or so?
Eric Lefkofsky: Yes. We have a variety of algorithms that we have built over the years. Some of them—for example, our homologous recombination deficiency algorithm; our tumor origin algorithm, where in about 5% of cancer patients we do not know the site of primary diagnosis—off our transcriptomic assay, or RNA assay, we can actually predict that with super high fidelity. We have an immune profile score that basically refines what is typically a litmus test like tumor mutational burden. If you were TMB high, you would get a checkpoint inhibitor; if you were not, you would not. That test is not perfect, and our immune profile score refines that test. It turns out that there is a significant population of people that would actually do well on immunotherapy that do not get it, and likewise a population that looks like they would respond to immunotherapy that does not. So we can predict that. As these algorithms get more pervasively ordered, they are another tool in the overall bag of technology-enabled assets that physicians increasingly rely on. They can do all kinds of things that they cannot do with others. We called this out years ago. We said we would experience significant growth rates over time. A couple years ago people said they did not see it, but now it is in the rearview mirror. As we called out, technology was going to drive a bunch of ordering behavior. We have demonstrated that. Physicians are overworked, they are seeing a ton of patients, they do not have time in the day to do their job, and those companies that can help them make decisions, analyze real-time data, get to the right answer, and so on—they are going to flock to that platform, no different than you and I flock to Amazon. If it is convenient and easy and I get everything I need, that is going to drive my behavior. We do not see that trend slowing down. One of the reasons that we entered the MRD space and the hereditary space is we believe that will hold true across all major assays in oncology—from “Is my patient at risk?” to “How should I treat them when they get disease?” to “How do I monitor them post-treatment?” We want to be comprehensive, embedded within the workflow, and help physicians make real-time, data-driven decisions, all of which is driving higher growth.
Operator: Next question comes from the line of Casey Woodring with JPMorgan. Your line is open.
Casey Woodring: Great. Thank you for taking my questions. Maybe a related one to Daniel Gregory Brennan’s earlier question, but you are guiding to adjusted EBITDA to hit $65 million this year. This quarter, it was negative $3 million. Maybe walk us through how you see EBITDA progressing over the course of the year and the cadence of gross margins and operating expenses? And then secondly, on MRD, I would be curious to hear your latest thoughts on when you really expect that to start ramping up in terms of volumes. Thank you.
James Rogers: I will start on the adjusted EBITDA and then Eric Lefkofsky can take the MRD question. Similar to last year, phasing will be growing throughout the year. We had about $13+ million of improvement year-over-year in Q1, and we would expect similar trends in Q2. The back half of the year is a bigger period for data, which leads to expanded margins, and more of that drops down to the bottom line. As we highlighted at the beginning of the year, we are fortunate that we are generating a lot of gross profit dollars that allow us to make many of the investments that generate long-term growth, but we want to continue to show improvement in operating leverage, and we feel like we are set up to do that.
Eric Lefkofsky: In terms of MRD, the growth is really, really robust. As we called out, we are generating these kinds of results with a very small sales force dedicated to MRD. We have not unleashed this to our entire sales machine, which is hundreds of people. In part it is because the unit economics, until reimbursement is better, are challenging, and roughly 97% of our tests are tumor-informed. Personalis is really carrying the burden of that reimbursement. They have a few indications approved. They are in the midst of getting many more. As they get a more rounded reimbursement package that looks and smells and feels a bit closer to an LDT market leader, the unit economics will improve. If we were to 10x our MRD volume tomorrow, our cash burn would go up a lot. So we have to meter it, which we are doing in close coordination with them. As reimbursement improves over time, you will see us roll that out more aggressively. You can do the math—if we really put a bunch of wood behind this, we would be a very, very formidable MRD player in the United States.
Operator: Next question comes from the line of Daniel Anthony Arias with Stifel. Your line is open.
Daniel Anthony Arias: Hi, guys. Thanks for the questions. Eric Lefkofsky or James Rogers, I am looking at your slide deck, and you have one that talks about expecting 25% top-line growth over the next three years. You also have a slide that talks about ASPs potentially being 30% higher. I know it is illustrative, and I think the point is to emphasize the EBITDA trend. What is either an underlying volume trend or just a revenue trend that takes into account these ASP items that we should think about? Is that 25% that you are talking about inclusive of some ASP increase?
Eric Lefkofsky: Yes. We always have puts and takes. One of the things that is great about our business—and for those that have been tracking us for three or four years—is that now our guidance is around $1.6 billion, and three or four years ago we were doing $300–$400 million. We were quite small. We have had significant growth that we have been able to manage. For a long time, we have called out our guidance—now we have a small range; historically, just a number. The reason we can be relatively precise is we have a highly durable business with lots of levers we can control. Some go our way, some do not. We have never had a quarter where everything goes our way. Something always does not go our way. The good news is, in the aggregate, more things are up and to the right than are not. That is the benefit of having a diversified business with lots of different growth engines and growth levers. We felt comfortable enough to say we expect 25% growth not just in one year, but over three years. At our scale, that is not a small number. I have not done the math, but $1.6 billion goes to something like $2.0 billion, $2.5 billion, and $3.0 billion. There will be ASP lift. There will be unit and volume lift. Some things will go our way; some will not. There will be trends, weather, this and that. In the aggregate, we have built a business that is durable across a comprehensive portfolio in diagnostics that touches lots of different areas—from hereditary to therapy selection to MRD; other disease areas like rare—and a very robust data and applications business. We feel pretty good that we can sustain good growth.
James Rogers: The only thing I would add, Daniel Anthony Arias, is there is nothing implied by those slides from a volume perspective, given the upside we do have in reimbursement. Obviously, the increases in reimbursement are difficult to pinpoint exactly when they will occur, and our volume trends continue to be very strong. There is nothing contradictory implied by those two statements in the deck.
Operator: There are no further questions at this time. I will now turn the call back over to Elizabeth Krutoholow for closing remarks.
Elizabeth Krutoholow: Thank you all for joining us today. We look forward to speaking with you again in a few weeks at our Investor Day. Have a great day.
Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining, and you may now disconnect.