What's Fueling Tempus AI's Q2 Net Loss Improvement Momentum?

Tempus AI TEM reported an improvement in net loss of $42.8 million in the second quarter of 2025 compared with the year-ago quarter’s net loss of $552.2 million. The company highlighted several operational and financial improvements that collectively drove this huge narrowing of net loss.

Total revenues surged 89.6% year over year to $314.6 million, supported by exceptional performance across its business segments. Genomics revenues soared 115% to $241.8 million, while Data and Services revenues increased 35.7% year over year to $73 million.

Additionally, second-quarter gross profit rose sharply to $195 million, approximately a 160% year-over-year increase, reflecting improved cost management and a shift toward higher-margin products. Operational efficiency also improved significantly, with adjusted EBITDA narrowing from a negative $16 million in first-quarter 2025 to a negative $5.6 million in second-quarter 2025, demonstrating stronger cost discipline and operational leverage as the company scaled.

Just after quarter end, Tempus AI completed an upsized offering of $750 million 0.75% convertible senior notes, enhancing its balance sheet and allowing it to replace a portion of the existing term loan with a significantly lower interest debt instrument. Although this refinancing occurred post-quarter, it highlights the company’s commitment to lowering non-operational costs and enhancing financial stability. Meanwhile, TEM ended the quarter with $293.0 million in cash and marketable securities, an improvement of approximately $70 million over last quarter.

Peer Updates

Guardant Health GH reported a net loss of $99.9 million for the second quarter of 2025, an improvement of $2.7 million from the year-ago period. This improvement was driven by strong top-line growth of 31% year over year. Guardant Health also saw significant gross margin expansion, fueled by higher oncology average selling prices. In line with this, Guardant360 Tissue’s average selling price increased to approximately $2,000, achieving the 2028 target three years ahead of schedule. Another key factor was the turnaround in Shield and Reveal, both of which moved from negative gross margins in second-quarter 2024 to positive in second-quarter 2025.

Exact Sciences EXAS reported a net loss of $1.19 million, an improvement of $14.6 million from the year-ago period. This performance was driven by strong total revenue growth of 16% on a reported and core revenue basis. Exact Sciences’ quarterly gross profit rose 15.2% year over year to $562.5 million. Adjusted EBITDA hit a record $138 million. The company’s strong solvency position also contributed to the net loss improvement. In line with this, Exact Sciences exited the second quarter of 2025 with cash, cash equivalents, and marketable securities of $858 million and zero current debt.

TEM Stock Outperforms Industry & Benchmark

In the past year, Tempus AI shares have rallied 41.3%, outperforming the industry’s 17% growth and the S&P 500 composite’s 17.4% improvement.

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Expensive Valuation

TEM currently trades at a forward 12-month Price-to-Sales (P/S) of 9.28X compared with the industry average of 5.83X.

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TEM Stock Estimate Trend

In the past 30 days, Tempus AI's loss per share estimate for 2025 has moved south by 3%.

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TEM stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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