Tempus AI, Inc.

After the speaker's remarks, there will be a question and answer session. If you would like to ask a question, please press star followed by the number one on your telephone keypad. To withdraw your question, press star one again. I'll now turn the conference over to Liz Crutaholo. Please go ahead.

Thank you, Brianna. Good afternoon and welcome to Tempest's third quarter 2024 conference call. This afternoon, Tempest released results for the quarter ending September 30, 2024. Joining me today from Tempest are Eric Laskowski, founder and CEO of Tempest, and Jim Rogers, CFO. Before we begin, I would like to remind you that during this call, management may make forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially. For discussion of these risks, please visit our 10Q for the quarter, ended September 30, 2024, filed on November 4th, 2024, as well as any future reports that we file with the SEC. During the call, we will discuss non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles. Definitions of these non-GAAP financial measures, along with reconciliations, the most directly comparable GAAP financial measures are included in our third quarter earnings release, which has been furnished to the SEC and is available on our website at investors.temphis.com. I would now like to turn the call over to Eric.

Hi, all. Just before we start the Q&A session, I thought I would just briefly run through some of the highlights for the quarter. Q3 was a solid quarter for Tempest. We delivered a revenue growth of 33%, hitting $180.9 million. We had genomics unit growth that accelerated from last quarter to 23.9%, which was meaningful acceleration in terms of unit growth. The overall business was about 20% growth based upon some ASP drops from last year, but we were excited to see the unit growth pick up. Our data and services revenue accelerated to 64.4% year-over-year growth, notably led by our insights or data licensing business, which came in at 86.6%, which was a meaningful acceleration from last quarter. We also delivered adjusted EBITDA of negative 21.8 million, which was a 14.4 million year-over-year improvement and also a significant improvement quarter-over-quarter. So we're well on track improving our EBITDA quarter-over-quarters. We marched toward cash flow and adjusted EBITDA breakeven. On top of that, the big news, obviously, for the quarters, we announced the acquisition or that we have signed an agreement to acquire Ambry Genetics. who's a leader in hereditary screening and whose business we've come to know well over the past few years. They're actually our largest reference lab for the hereditary screening we do. And we spend significant time with the team and understanding the business and are just super excited to have them join our world. The business is synergistic across all of our products, from sequencing to, we've over time, our data business and our AI applications business. They also... accelerate our path to cash flow and adjusted EBITDA break even, given that the business today is growing at more than 25%, which is meaningful growth, but even more fantastic is that they generate significant EBITDA. So they've achieved one of the rare things in our space where you actually have a genomics business that has significant growth and a proprietary business model, but is also making money. And we're excited that the combination of the Two of us on an annualized basis will also be now adjusted EBITDA and cash flow positive. We're paying $600 million for the business, $375 million in cash and $225 million in equity, $125 million, which will vest at closing, which should occur in early Q1, and the other $100 million, which is locked up for a year. And in terms of the multiples we're paying, it's about 1.9 times current revenue and roughly 15 times EBITDA. So we feel like we are buying the business at an attractive price and we're able to finance the business largely with additional debt from ARIES. And so the transaction is not materially dilutive at all to our equity. So overall, fantastic quarter. And on that note, we're happy to take any questions folks have.