What lessons can be drawn from TEM's 2024 EPS performance?

Tempus AI's (TEM) 2024 EPS performance reveals several key takeaways:

1. Improvement in Profitability: The company's adjusted EPS loss narrowed from 20 cents to 18 cents per share, indicating a significant improvement in profitability. This suggests that Tempus AI is effectively managing its costs and operational efficiencies are improving.
2. Revenue Growth Outpaces Expenses: The 35.8% year-over-year revenue increase in Q4 2024, reaching $200.68 million, surpasses the growth rate of expenses, which is a positive signal for the company's financial health. This indicates that Tempus AI's revenue growth is sustainable and could lead to improved financial performance in the future.
3. Strong Segmental Performance: The Data and Services segment saw a 44.6% year-over-year growth, while Genomics grew by 30.6%. This demonstrates the effectiveness of Tempus AI's strategic focus on its core competencies, which are driving significant revenue growth and contributing to the company's overall success.
4. Contract Value and Retention: The company ended the quarter with $940 million in total remaining contract value and a net revenue retention rate of 140%. This indicates strong customer loyalty and the ability to maintain and grow its customer base, which is crucial for long-term sustainability and competitiveness in the industry.
5. Growth Prospects: Tempus AI expects full-year 2025 revenue of approximately $1.24 billion, which represents approximately 79% annual growth. This optimistic outlook is supported by the company's strong segmental performance and strategic acquisitions, such as the acquisition of Ambry Genetics.

In conclusion, Tempus AI's 2024 EPS performance highlights the company's improving profitability, effective revenue growth management, and strong segmental performance. These factors, combined with the company's robust contract value and growth prospects, provide a positive outlook for Tempus AI's future financial performance.