Tempus AI (TEM) Q2 Revenue Surges 90%

Key Points

• Revenue (GAAP) surged 89.6% year over year in Q2 2025, reaching $314.6 million and exceeding analyst estimates.

• Non-GAAP EPS loss narrowed to ($0.22) in Q2 2025, beating expectations and reflecting significant operating leverage.

• Full-year 2025 revenue guidance was raised to $1.26 billion, with positive adjusted EBITDA (non-GAAP) now projected.

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Tempus AI (NASDAQ:TEM), a technology company that applies artificial intelligence to precision diagnostics and healthcare data, reported its Q2 2025 earnings on August 8, 2025. The period was marked by rapid growth and strong performance across its genomics and data services businesses. Revenue (GAAP) climbed to $314.6 million, surpassing the analyst consensus of $297.8 million. The non-GAAP loss per share narrowed to ($0.22), better than the expected ($0.23). Management lifted its full-year 2025 revenue forecast to $1.26 billion and now expects adjusted EBITDA profitability for fiscal 2025. The quarter reflected accelerating commercial momentum, significant margin expansion, and ongoing progress leveraging AI and data partnerships.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Business Overview and Recent Focus

Tempus AI seeks to transform healthcare by using artificial intelligence for precision diagnostics. Its core business spans genomics testing -- including oncology and hereditary diagnostics -- and data services that leverage a vast clinical-molecular database. The company’s offerings help clinicians make more informed treatment decisions by integrating laboratory data with clinical histories and other medical information.

Recently, Tempus AI has prioritized scaling its platform and deepening integrations with healthcare institutions. Strategic collaborations, especially with large pharmaceutical companies, have been central to driving growth and product development. The company’s ability to harness AI for intelligent diagnostics and to scale its proprietary data sets underpins its long-term competitive positioning. Key success factors include expanding its genomics testing volume, offering differentiated AI-driven products, and executing multi-year partnership deals that generate recurring revenue.

Quarterly Highlights and Key Developments

The quarter saw a pronounced surge in both genomics and data services revenue. Genomics, which covers specialized diagnostic tests for cancer and inherited conditions, reached $241.8 million in GAAP revenue, a jump of 115.3% compared to Q2 2024. Oncology testing, a product line that analyzes patient tumor genetics for therapy selection, delivered $133.2 million in sales on unit growth near 26%, reflecting a re-acceleration from the previous quarter. Hereditary testing, performed through the company’s Ambry Genetics acquisition, contributed $97.3 million and grew units by about 32% over a pro forma prior-year comparison.

Tempus AI delivered more than 212,000 next-generation sequencing (NGS) tests, up 30% from the year-ago quarter, indicating strong clinical demand. Data and services revenue, which encompasses products like Insights (data licensing for pharma partners), reached $72.8 million -- up 35.7% (GAAP). Insights alone increased 40.7% year-over-year. The company cited continued multi-year contract wins as a foundation, including a $200 million, three-year agreement with AstraZeneca and Pathos to build a large AI model for oncology. The forward contract value for data services (Total Remaining Contract Value) exceeded $1 billion as of April 30, 2025.

The company reported gross profit (GAAP) of $195.0 million, with gross margins (GAAP) climbing to 62.0% from 45.5% in Q2 2024. Genomics gross margin (non-GAAP) increased from 49.4% in Q2 2024 to 59.4%. Data and services gross margin (GAAP) also edged up. Operating expenses declined as a percent of revenue, delivering much narrower operating losses and driving adjusted EBITDA closer to breakeven. The reported net loss decreased significantly from the prior year.

From a product standpoint, several AI-enabled diagnostics advanced. Tempus Next is a clinical decision support tool that uses AI to help guide therapy for breast cancer, now rolled out to broader oncology segments. Tempus One, an AI clinical assistant, integrated into leading electronic health records to enhance workflow. The company also launched Tempus xM, a liquid biopsy test designed to monitor minimal residual disease and assess treatment response in advanced cancer. These initiatives were supported by a database now comprising over 40 million patient records, more than 350 petabytes of clinical and molecular data, and over 4,500 healthcare system integrations as of Q2 2025 -- providing a historical and artificial intelligence advantage in future product launches.

Financial strength was boosted just after Q2 2025 by a $750 million convertible notes offering, replacing more expensive debt and increasing flexibility for future investments in AI compute resources and new diagnostics. Cash and securities stood at $293.0 million at quarter-end. No dividend was declared; TEM does not currently pay a dividend.

The company reported ongoing progress toward securing regulatory reimbursement for new diagnostic assays, which could support further revenue growth if approvals come through.

Outlook and What to Watch Next

Management raised its full-year 2025 outlook, increasing revenue guidance to $1.26 billion and adjusted EBITDA guidance to $5 million. It now expects revenue of $1.26 billion for full year 2025, up from $1.25 billion previously, and adjusted EBITDA profitability of $5 million, an improvement of $110 million over fiscal 2024. This marks a milestone, as achieving profitability on an adjusted EBITDA basis in full year 2025 was a stated goal for the company’s first decade.

Investors should watch for continued volume growth in genomics testing, further progress on AI product launches, expansion of large-scale data partnerships, and success in securing regulatory reimbursement for newer assays such as liquid biopsy. The company indicated ongoing investments in its database, clinical integration capacity, and AI foundation model development as priorities. While the period demonstrated strong operational execution, ongoing integration of new business units, management of large contract risk, and further improvement in margin profile remain points of focus for upcoming quarters. No additional formal quantitative guidance was offered beyond the updated full-year targets. TEM does not currently pay a dividend.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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