Tempus AI Q3 2026 Earnings: Revenue Rises 23% as Adjusted EBITDA Expands

Tempus AI (NASDAQ: TEM) reported Q3 2026 revenue of $411.5 million, up 23% from $334.2 million a year earlier, while GAAP diluted loss per share narrowed to $0.08 from $0.46. Data and Applications led the growth, and adjusted EBITDA increased to $25.6 million, though the company remained loss-making on a GAAP operating basis.

Core Financial Results

Revenue growth translated into a 27% increase in gross profit, faster than the top-line gain. Adjusted operating measures turned positive or improved substantially, while the GAAP operating loss narrowed more modestly.

Business and Segment Performance

Both reported segments grew, but Data and Applications expanded faster than Diagnostics. Within Diagnostics, oncology volume was the principal driver, while Hereditary revenue increased at a much slower rate.

Minimal Residual Disease volume reached approximately 12,000 tests, an increase of 300%. This added another high-growth diagnostic indicator alongside the broader oncology volume increase.

Tempus also reported more than $550 million of year-to-date data licensing bookings after announcing an October collaboration with Bristol Myers Squibb. The BMS arrangements include up to $137.5 million over five years for oncology data and models and a separate $55 million, five-year data license involving BMS and Pathos for patients with Alzheimer’s disease or dementia. These amounts represent multi-year contractual bookings rather than Q3 revenue.

The company also announced a multi-year collaboration with Merck and Moderna related to the potential commercialization of individualized neoantigen therapy intismeran autogene. No financial contribution from that collaboration was quantified in the release.

Gross Margin Gains Were Largely Absorbed by Higher Operating Expenses

Gross margin expanded to about 64.8% from 62.8%, reflecting gross profit growth that exceeded revenue growth. However, operating expenses excluding cost of revenue rose to approximately $323.6 million from $270.9 million. Selling, general and administrative expense accounted for most of that increase, rising to $231.9 million from $187.9 million.

As a result, the approximately $56.8 million increase in gross profit produced only about a $4.1 million reduction in the GAAP operating loss. The improvement was more visible on an adjusted basis, with non-GAAP operating income reaching $14.4 million and adjusted EBITDA rising to $25.6 million.

The GAAP net loss narrowed by about $65.1 million, substantially more than the operating-loss improvement. The quarter included $42.8 million of unrealized gains on marketable securities, while interest expense declined to $6.7 million from $15.4 million and the prior-year period included a $12.0 million debt-extinguishment loss. These items show that a meaningful portion of the bottom-line improvement occurred below the operating line. The quarter also included $50.8 million of stock-based compensation and related employer payroll taxes.

Cash Flow and Balance Sheet

Tempus used $71.6 million of operating cash during the first nine months of 2026, compared with $181.3 million in the corresponding 2025 period. That represents an improvement of about $109.7 million, but operating cash flow remained negative despite positive Q3 adjusted EBITDA.

The company ended September with $854.4 million of cash and marketable securities. Accounts receivable increased to $380.7 million from $311.2 million at the end of 2025 and consumed $71.8 million of cash during the first nine months.

The capital structure also changed. Net convertible senior notes increased to $1.175 billion from $728.1 million at year-end 2025, while the convertible promissory note declined to $176.0 million from $208.7 million. The revolving credit facility and separately reported long-term debt both fell to zero from $100.0 million and $202.8 million, respectively.

Guidance

Tempus raised its full-year revenue range while maintaining its adjusted EBITDA target. The unchanged profit outlook means the higher revenue guidance was not accompanied by an increase in the adjusted EBITDA target.

Risks Investors Need to Watch

• GAAP profitability remains unestablished: Tempus still recorded a $56.9 million operating loss. The differences among GAAP net loss, non-GAAP income, and adjusted EBITDA remain material because of stock-based compensation, acquisition-related adjustments, and securities valuation changes.
• Cash conversion remains negative: Nine-month operating cash use improved substantially but was still $71.6 million. Rising accounts receivable also absorbed cash during the period.
• Bookings will be recognized over time: The more than $550 million of year-to-date data licensing bookings includes multi-year arrangements and should not be treated as near-term revenue.
• Growth remains uneven within Diagnostics: Oncology volume rose 32%, while Hereditary revenue grew only 3%. Future segment performance will depend partly on whether oncology volume growth continues and the slower business improves.
• Acquisition execution is still pending: Regulatory review of the Personalis acquisition was cleared, but shareholder approval remained outstanding as of the earnings release, with a meeting planned for November 30, 2026.

Summary

Tempus AI’s Q3 2026 results combined 23% revenue growth with faster expansion in Data and Applications, higher oncology test volumes, and a substantial improvement in adjusted profitability. Gross margin expanded, but higher operating expenses limited the reduction in the GAAP operating loss, while unrealized investment gains contributed materially to the narrower net loss. The next areas to monitor are cash conversion, the timing of revenue from multi-year data bookings, execution of the Personalis transaction, and whether stronger revenue can translate into sustained GAAP operating improvement.