Tempus AI, Inc. Q4 FY2024 earnings call

• Q4 was a fantastic quarter with revenue and gross profit growth accelerating. - Ended the year with $940 million in total remaining contract value and 140% net revenue retention. - Closed the acquisition of Ambry Genetics on February 3, with two months of Ambry's results included in current quarter. - Extended the Google agreement for another five years. - Increased 2025 revenue guidance to $1.24 billion and expect adjusted EBITDA positive with about $5 million of adjusted EBITDA.

In the fourth quarter, Tempus saw revenue growth accelerate to 35.8% year-over-year, with gross profit growth at 49.7%. The Data and Services business had a strong quarter. Total remaining contract value ended the year at $940 million, and net revenue retention was 140%. The Data and Services business contributed significantly to the strong gross profit growth.

• 2025 revenue guidance raised to $1.24 billion. - Expect adjusted EBITDA to be positive with approximately $5 million of adjusted EBITDA. - Core Tempus is expected to grow around 30%, while Ambry is projected to grow in the high teens. - Q1 is expected to have 20% of the revenues, and it's anticipated that about 20% of the xT volume will move to the ADLT version by quarter end.

• Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ. - Timing of data deliveries can slip, impacting revenue. - Seasonality in the business, such as slower periods around holidays. - Potential slowdowns in FDA staffing due to layoffs, which could affect decision-making or trial approvals. - The lumpy nature of total remaining contract value.

Q: Tejas Savant asks about the time frame to bring somatic workflows to Ambry's West Coast lab and seasonality of Ambry's business.

A: Eric states that over the next 1-2 years, they will look to start moving some somatic workflows to Ambry's West Coast lab. Jim mentions that Ambry has similar seasonality to Tempus, with typically slower periods around the holidays.

Q: Tejas Savant asks about a data delivery project slipping and data contribution in the 2025 guide.

A: Eric says a large data delivery over $10 million slipped to the early part of 2025, and Jim notes that total remaining contract value provides visibility into 2025 data contribution.

Q: Unidentified Analyst asks about Ambry's contribution model in 2025.

A: Eric says Ambry's growth rate in 2025 is expected to be in the high teens, lapping accelerants from 2024.

Q: Unidentified Analyst asks about quarterly phasing of the guide and ADLT exit rate.

A: Jim says Q1 is typically the lowest in terms of revenue percentage of the year, and they expect about 20% of xT volume to move to the ADLT version by quarter end.

Q: Mike Ryskin asks about the long-term model for Ambry and Data's total contract value.

A: Eric says long-term Ambry's growth rate may align with Tempus, and Jim mentions that total remaining contract value is healthy but lumpy.

Q: Unidentified Analyst asks about going in-network with Blue Cross Blue Shield and the regulatory environment.

A: Jim says going in-network with commercial payers is an uplift to reimbursements, and Eric states that regulatory changes are tailwinds for AI companies.

Q: Dan Brennan asks about core Tempus and Data growth rates and EBITDA margin.

A: Jim says genomics revenue outpaces volume growth, and Eric mentions being focused on growth with no significant synergies in 2025 for Ambry.

Q: Subbu Nambi asks about payer coverage improvement from the Ambry acquisition and a commercial agreement with ArteraAI.

A: Jim says there is minimal overlap in payer coverage improvement, and Eric states that they connect third-party algorithms via their connectivity.

Q: Doug Schenkel asks about MRD data readouts and capital deployment.

A: Eric says MRD assays are in market with ongoing studies, and mentions appetite for M&A depends on balance sheet.

Q: Andrew Brackmann asks about reimbursement for AI diagnostics and commercial deployment post-Ambry.

A: Jim says the ECG algo shows payer willingness, and there are no significant changes in rep deployment.

Q: Mark Schappel asks about the Olivia AI app and investment priorities.

A: Eric says Olivia AI is monetized via subscription, and priorities include genomics, Data, and applications.

Q: Dan Arias asks about AstraZeneca and GSK renewals and Ambry's ASP.

A: Jim says renewals are years away, and there are no significant ASP changes for Ambry.

Q: David Westenberg asks about seasonality and contract revenue correlation.

A: Jim says seasonality varies by product line, and Eric states that total remaining contract value provides multiple years' visibility