ServiceTitan Q1 2026 Earnings Report

ServiceTitan EPS Results

• Actual EPS: $0.18
• Consensus EPS: $0.12
• Beat/Miss: Beat by +$0.06
• One Year Ago EPS: N/A

ServiceTitan Revenue Results

• Actual Revenue: $215.69 million
• Expected Revenue: $208.61 million
• Beat/Miss: Beat by +$7.08 million
• YoY Revenue Growth: +26.60%

ServiceTitan Announcement Details

• Quarter: Q1 2026
• Date: 6/5/2025
• Time: After Market Closes
• Conference Call Date: Thursday, June 5, 2025
• Conference Call Time: 5:00PM ET

ServiceTitan (NASDAQ:TTAN), Inc. engages in the collection of field service activities required to install, maintain, and service the infrastructure and systems of residences and commercial buildings. The company was founded by Ara Mahdessian and Vahe Kuzoyan on June 8, 2008 and is headquartered in Glendale, CA.

ServiceTitan Q1 2026 Earnings Call Transcript

Key Takeaways

• Q1 Financial Performance: ServiceTitan reported 27% year-over-year total revenue growth to $215.7 million, driven by 29% subscription growth and record non-GAAP operating margin of 7.5%.
• Margin Expansion: Platform gross margin improved by over 300 bps to 79.7%, while total gross margin rose to 73.6%, reflecting scale efficiencies and cost reallocation.
• Raised Guidance: Management expects Q2 revenue of $228–230 million and full-year FY26 revenue of $910–920 million with operating income of $54–59 million.
• Key Customer Go-Lives: Several of ServiceTitan’s largest residential accounts and four strategic commercial customers—including a top-five mechanical firm—went live in Q1, underscoring strong execution.
• AI-Powered Pro Products: The company launched AI-native solutions like Field Assist and Contact Center Pro to accelerate automation and enhance pro product adoption.

Presentation

[Operator]

Thank you for standing by and welcome to ServiceTitan's First Quarter Fiscal Year twenty twenty six Earnings Conference Call. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer session. To remove yourself from the queue, you may press 11 again. I would now like to hand the call over to Jason Reckle, VP of Investor Relations. Please go ahead.

[Jason Rechel, VP - Investor Relations at ServiceTitan]

Thank you, operator, and welcome everyone to ServiceTitan's fiscal first quarter twenty twenty six earnings conference call. With me are ServiceTitan's Co Founder and CEO, Ara Madhessian Co Founder and President, Bahe Kazzolian and CFO, Dave Sherry. During today's call, we will review our fiscal first quarter twenty twenty six results. We will also discuss our guidance for fiscal quarter and full fiscal year 2026. Before we get started, we want to draw your attention to the Safe Harbor statement included in today's press release and emphasize that information discussed on this call, including our guidance, is based on information as of today and contains forward looking statements that involve risks, uncertainties and assumptions.

[Jason Rechel, VP - Investor Relations at ServiceTitan]

All statements other than statements of historical fact could be deemed to be forward looking. Forward looking statements reflect our views as of today only, and except as required by law, we undertake no obligation to update or revise these forward looking statements. Please take a look at our filings with the SEC for a discussion of the factors that could cause our actual results to differ. We also want to point out that we present non GAAP measures in addition to and not as a substitute for financial measures prepared in accordance with generally accepted accounting principles. Definitions of these non GAAP financial measures, along with reconciliations to our GAAP financial measures are included in our earnings release, which we have furnished with the SEC and is available on our website at investors.servicetitan.com.

[Jason Rechel, VP - Investor Relations at ServiceTitan]

Unless otherwise stated, all references on this call to platform gross margin, total gross margin, operating income, operating margin, free cash flow and related growth rates are on a non GAAP basis. Finally, we've posted an updated investor presentation that can be found on our Investor Relations website at investors.servicetitan.com along with a replay of this call. And with that, let me turn the call over to Ara. Ara?

[Ara Mahdessian, Co-founder, Chairperson & CEO at ServiceTitan]

Thank you, Jason, and thank you for joining us as we update you on our progress against our mission. Our growth formula is simple. We deliver real ROI to our customers, helping them further their success and reach even greater financial outcomes. And this allows them to grow their businesses, which drives more technicians and GTD on our platform and leads to higher subscription and usage revenue for us. As they realize the value of our software, they buy more pro products, which continues to drive our growth and allows us to reinvest in more high ROI solutions.

[Ara Mahdessian, Co-founder, Chairperson & CEO at ServiceTitan]

I am humbled by the way that our team in partnership with our customers performed this quarter to get us off to a good start in FY 2026. Year over year, we delivered 29% subscription revenue growth, 27% total revenue growth and record operating margins, which improved five sixty basis points. Our sales team delivered consistent performance. Our product and engineering teams are executing well on our roadmap and I am pleased that several of the largest and most strategic accounts, both residential and commercial went live this quarter. Against the backdrop of economic uncertainty, this quality and breadth of execution underscores our opportunity to transform the lives of every hardworking contractor in the trades.

[Ara Mahdessian, Co-founder, Chairperson & CEO at ServiceTitan]

Our focus on delivering ROI and obsession with the financial outcomes of our customers extends from the sales process to implementation and go live and to ongoing customer success. Our customers are our most important partners, and I'd like to today share two customer stories to demonstrate how our customer success translates into our own success. In 2016, our software had not yet been built for the garage door industry. And then I received the call from Tommy Mello, who is ready to take a one garage door to the next level. We work together to augment service titan for the needs of garage door customers, optimizing workflows that are unique to the trade.

[Ara Mahdessian, Co-founder, Chairperson & CEO at ServiceTitan]

Tommy took an early risk on ServiceTitan, but the bet paid off. A1 doubled revenue to almost 20,000,000 in its first year on the platform and hasn't looked back. With the full capabilities of the service titan, A1 Garage has expanded into 22 states with hundreds of technicians and nine digit revenues. After recently deploying Dispatch Pro to simplify and automate dispatching, A1 took its most recent step forward in efficiency. And with Dispatch Pro, A1 told us they added another 150 technicians to the platform without adding a single additional dispatcher.

[Ara Mahdessian, Co-founder, Chairperson & CEO at ServiceTitan]

This allowed A1 to nearly double its tech to dispatcher ratio from around 10 to one to 20 to one, while also improving lead conversion at the same time. As a result of this most recent success, A1 shared with us in February that they had just surpassed 21,000,000 in monthly revenue for the first time. Quote, ServiceTitan has been a game changing partner in our success, Tommy shared. This is our model as we expand into new trades. We're pulled by customers.

[Ara Mahdessian, Co-founder, Chairperson & CEO at ServiceTitan]

We create outsized value as we build trade specific workflows on our platform, and that attracts a new industry onto service titan. The current breakout success of Guild Garage demonstrates this maturity. Guild Garage is a national residential garage door services platform founded in 2024 by three young entrepreneurs who saw an opportunity to consolidate what they perceived to be a large, fragmented and recession resilient market. The team shared the quote, the decision to use ServiceTitan products across the entire platform was a no brainer. ServiceTitan has been our secret weapon since day one, end quote, to inflict faster growth with higher margins.

[Ara Mahdessian, Co-founder, Chairperson & CEO at ServiceTitan]

Guild shared that in 2024 alone, the team completed 14 acquisitions and has since grown to over 20 operating companies, 700 employees, 400 managed technicians, and is on track to surpass 250,000,000 of revenue in 2025. ServiceTitan enables Guild to not only fully integrate the partner companies in less than sixty days, but also continue to achieve high teens organic growth as the platform has scaled. The team shared that they standardized all operations and all workflows on ServiceTitan across all portfolio companies, which allows them to streamline operations to drive growth, improve decision making, strengthen the technician experience, and enhance the customer experience. Guild has deployed both products wall to wall. Capabilities like Ads Optimizer deliver ROI that dynamically optimizes marketing spend across multiple campaigns for all portfolio companies.

[Ara Mahdessian, Co-founder, Chairperson & CEO at ServiceTitan]

With a centralized marketing platform and a model that combines the benefits of local economy with centralized leadership, it's no surprise that Guild is one of our fastest growing customers. From zero to 200,000,000 in less than eighteen months is truly inspirational. But we know that the team is only just warming up, and we can't wait to watch what they'll do next. These types of business transformations are all that we care about.

[Ara Mahdessian, Co-founder, Chairperson & CEO at ServiceTitan]

I receive texts and calls daily from our customers with similar stories. To build on the foundation of the success, we're building a series of stacking S curves that will put us in a position to continue to deliver transformative customer outcomes. Last quarter, we outlined our four primary areas of focus for this fiscal year, to further expand our enterprise capabilities, to further expand pro product adoption, to go deeper in commercial and to grow in roofing. We are executing well against each priority, which has established a strong foundation for service tightening to begin FY '26. I'll now pass it to Vahya, who will share more details on our progress.

[Vahe Kuzoyan, Co-Founder and President at ServiceTitan]

Thanks, Ara. Very proud of the way Titans are helping our customers navigate these unpredictable economic times. The ROI we deliver to our customers continues to be our greatest advantage and the foundation for why each of our four primary areas of focus are off to a strong start this year. Let's dig into how we are progressing against these goals. Beginning with enterprise, which is increasingly the tip of the spear for our growth.

[Vahe Kuzoyan, Co-Founder and President at ServiceTitan]

As the industry consolidates and further professionalizes, our largest customers continue to be our fastest growing cohort, as well as leading the way in our top down strategy for entering into new markets. They also have a huge appetite for standardizing their businesses around the AI and automation we enable. For all these reasons and more, our enterprise customers attract a major portion of our focus from a product roadmap perspective. This quarter, one of the largest and most well respected residential windows and doors players selected ServiceTitan as the best platform to power their future growth. The customer's private equity sponsor pulled them onto ServiceTitan after realizing the demonstrable value with ServiceTitan across multiple residential home services portfolio companies.

[Vahe Kuzoyan, Co-Founder and President at ServiceTitan]

Shifting to pro products, which continue to perform well. Our largest customers continue to ask Mianara how to fully automate their operations to both drive faster revenue growth and greater efficiency. Marketing, Dispatch, Fleet and Schedule Pro are each notable examples. Our newest AI native products are ramping well and round out our ability to automate our customers' processes. Beyond this passively processing recordings, we have successfully deployed conversational agents that interact with technicians and customers and office staff with strong early signals in terms of validating a broader thesis around the readiness of the core technology.

[Vahe Kuzoyan, Co-Founder and President at ServiceTitan]

Our new field assist technology empowering technicians to ask Titan intelligence questions from the field went live during Q1. And in April, we launched our new Contact Center Pro virtual agents native to our platform, unlocking opportunities to automate our customers CS operations. We were excited to see the first jobs booked on our platform using exclusively agents and our broader AI opportunities increasingly palpable. In commercial, our focus and roadmap investments are paying off. We today leverage the breadth of our enterprise capabilities and success getting customers live on ServiceTitan.

[Vahe Kuzoyan, Co-Founder and President at ServiceTitan]

Our progress building the key project management capabilities required to unlock construction use cases, we believe will position us to unlock a new set of commercial customers. During Q1, we delivered enhancements to invoicing and dispatch crew scheduling. As we work towards the larger unlocking construction workflow, our commercial new deals and customer go lives are trending in the right direction. We successfully took four major strategic commercial accounts live, including a top five mechanical firm. We remain focused on ensuring that specialty trades subcontractors can run all of their work platform, from local maintenance, on demand service, replacements, and winning and managing construction projects.

[Vahe Kuzoyan, Co-Founder and President at ServiceTitan]

Our product capabilities are moving quickly and we expect to have more updates for you as FY '26 unfolds. In roofing, a combination of our brand leadership and partnership with the largest enterprise players have increasingly made us the first call for customers as roofing undergoes a wave of professionalization. We delivered on our key technology roadmap items during Q1, most notably enhanced estimating functionality and we were selected by one of the nation's largest residential roofing and exteriors businesses to run their more than 80 locations on service side. Looking ahead, we're focused on delivering distributor integrations and adding support for insurance that will allow our customers to automate workflow, manage claims, collaborate with insurance providers and get paid. We are pleased with the early leads from our GAF partnership and we are excited to announce the availability of our new partnership with EagleView that will deliver faster, more accurate measurements and streamline bid workflow to contractors.

[Vahe Kuzoyan, Co-Founder and President at ServiceTitan]

Because of our end to end platform and large existing footprint, we are able to help customers turn insights into action to deliver growth and efficiency. Our success this quarter in winning new customers, getting the most strategic accounts in our industry live on ServiceTitan and innovating at an accelerating pace helps position us well for the future. And with that, I'll turn it over to Dave to run through the financials. Dave?

[Dave Sherry, CFO at ServiceTitan]

Thanks, Fahey. I'm proud of the way our customers and business are performing to begin FY 2026. Today, I'll run you through Q1 financial results in detail and provide guidance for Q2 and update our full fiscal year 2026 guidance. For more detailed financial results, please refer to our press release issued earlier today. Q1 gross transaction volume or GTV was $17,700,000,000 up 22% year over year with healthy growth from both residential and commercial customers.

[Dave Sherry, CFO at ServiceTitan]

Q1 total revenue was $215,700,000 up 27% year over year. This healthy growth to begin the year was led by subscription revenue, which was $162,700,000 up 29% year over year, as well as consistent usage revenue, which was $45,300,000 up 22% year over year. When normalizing for the $1,500,000 in one time subscription items, which positively impacted Q4 FY twenty twenty five results, our subscription revenue growth and net new subscription dollars added during Q1 each continue to perform well on a year over year basis. Total platform revenue for Q1, the sum of subscription and usage revenue grew 27% year over year to $2.00 $8,000,000 Q1 professional service revenue was $7,700,000 Net dollar retention was greater than 110% for the quarter. Q1 platform gross margin was 79.7%, an improvement of over 300 basis points year over year, of which approximately 200 basis points was due to the allocation of certain customer success expenses to sales and marketing, which we mentioned last quarter.

[Dave Sherry, CFO at ServiceTitan]

Total gross margin for Q1 was 73.6%, up three ninety basis points year over year. Q1 operating income was $16,200,000 leading to record operating margin of 7.5%, an improvement of five sixty basis points year over year. We're pleased with how we are pacing against our incremental margin goals, especially as we layer in the expected headwind of public company costs. However, we measure incrementals on a full year basis, and we encourage you not to look at each quarter as the timing of spend may vary from year to year. In fact, the timing of expenses in Q1 this year was more favorable than in prior years.

[Dave Sherry, CFO at ServiceTitan]

Q1 free cash flow was negative $22,300,000 better than negative $24,600,000 for the prior year first quarter in spite of greater cash bonus attainment this year compared to the prior year. As mentioned previously, our annual bonuses are paid in Q1 of each fiscal year. Shifting to guidance. For the second quarter, we expect total revenue in the range of $228,000,000 to $230,000,000 We expect to generate operating income in the range of $17,000,000 to $18,000,000 For the full year fiscal twenty twenty six, we expect total revenue in the range of $910,000,000 to $920,000,000 We expect to generate operating income in the range of 54,000,000 to $59,000,000 As we highlighted to many of you in the past, our business is not a cyclical business, but it is a seasonal business. This has historically been most positively pronounced during Q2 due to weather driven seasonality in many trades.

[Dave Sherry, CFO at ServiceTitan]

This leads to typically stronger usage revenue mix in Q2, which carries more variability than subscription. We are cognizant that weather patterns vary from year to year and the fact that last year was quite hot. We have prudently incorporated each of these factors into our Q2 revenue and margin guidance. We're managing the business for a marathon, not a sprint. Our goal remains to durably compound growth over many years and expand margins at the same time.

[Dave Sherry, CFO at ServiceTitan]

Our continued focus on incremental operating margins is the path to delivering on our long term non GAAP operating margin target of 25%. We see healthy performance this quarter as evidence that our strategy to become the operating system for the trades is working. With that, I'll turn the call back to the operator for Q and A. Operator?

[Operator]

Thank 11 on your telephone. To remove yourself from the queue, you may press 11 again. You will be limited to one question to allow everyone the opportunity to participate. Please stand by while we compile the Q and A roster. Our first question comes from the line of Kash Rangan of Goldman Sachs. Please go ahead, Kash.

[Kash Rangan, Managing Director at Goldman Sachs]

Hi. Thank you very much. Congratulations on a fantastic start to the fiscal year. One more of a longer term, maybe in the the context of tariffs, whatnot. If the tariffs do go through, curious to see how that would perhaps positively and also negatively affect the business.

[Kash Rangan, Managing Director at Goldman Sachs]

I wonder if you could make a case for extended lifetimes of the equipment that that we've all installed that cannot be procured and replaced as cheaply if tariffs do go into effect. That means the the servicing opportunity for this equipment and therefore the option of a service titan could be a more long longer durable path and also at the same time, the transaction volumes also maybe I'm over analyzing the cycle of tariffs if they do go into effect, but strategically, since you guys have built a business from ground zero, how do you think about this potential structure change as a positive or not so positive? Thank you so much.

[Ara Mahdessian, Co-founder, Chairperson & CEO at ServiceTitan]

Kash, it's always a pleasure to hear from you. And thank you all for all your continued coverage and support. I think most importantly, our customers have proven the ability to execute through various business environments. And this resilience is further enabled by service titan. There are compound factors from tariffs, which could affect our customers growth.

[Ara Mahdessian, Co-founder, Chairperson & CEO at ServiceTitan]

It's possible that we see a return of supply chain inflation. Although I would say in the past, our customers have proven their ability to pass through rising costs. But I think because the macro is outside of our control, we elect to forecast pretty prudently, especially on GTV.

[Operator]

Thank you. Our next question comes from the line of Josh Baer of Morgan Stanley. Please go ahead, Josh.

[Joshua Baer, Executive Director - Software Equity Research Analyst at Morgan Stanley]

Great. Congrats on a strong quarter. Thanks for the question. I was hoping you could shed some light on the stacking S curve strategy. Should we be thinking about entering new trades, new market segments, rolling out new pro products, like on a planned or consistent basis to drive durable growth?

[Joshua Baer, Executive Director - Software Equity Research Analyst at Morgan Stanley]

What would you change from that line of thinking? Anything else that you'd add there?

[Vahe Kuzoyan, Co-Founder and President at ServiceTitan]

Yeah, for us, we're big proponents of focus. And we live in a very target rich environment. So we try our best to stay on the ball on what the priorities are. And so today, we're focused on enterprise, commercial, pro, and roofing. And those are the S curves that are attracting the primary source of attention for us.

[Vahe Kuzoyan, Co-Founder and President at ServiceTitan]

As we mature in these focus areas, there's a pretty long tail of S curves that are beyond that. But right now, we should be focused on those priorities.

[Operator]

Thank you. Our next question comes from the line of Michael Turrin of Wells Fargo Securities. Your question please, Michael.

[Michael Turrin, Managing Director, Software Equity Research Analyst at Wells Fargo]

Hey, great. Thanks so much. Appreciate you taking the question. Dave, you touched on it a bit, but maybe just remind us in more detail what you typically see from a seasonal perspective in the first half and the visibility you have into various scenarios that could play out. And maybe as a second part, just touch on from the broader team what you're seeing in terms of pro product attach.

[Michael Turrin, Managing Director, Software Equity Research Analyst at Wells Fargo]

If there are certain product areas you'd point us towards and how we should think about the contribution from those products over time. Thank you.

[Dave Sherry, CFO at ServiceTitan]

Yes, I'll hit the first one pretty quickly here. GTV is a bigger factor in Q2 than any other quarter of the year. It's a seasonally strong period for our customers, especially in trades like landscape, pest, HVAC, and others. This makes Q2 particularly sensitive to weather, both in terms of absolute temperature, but also the degree of temperature change. Because usage is a larger portion of our mix in Q2, there's a slightly wider range of possible outcomes.

[Dave Sherry, CFO at ServiceTitan]

This year ago period I talked about in the prepared remarks was pretty hot, and consistent with our approach to be prudent forecasting GTB internally, this is already captured in the guidance. And so I think that's the answer on on GDV and the seasonality. The only other part I'd say in the first half is bonuses are paid in Q1. And so as you saw in the free cash flow change in Q1, that's mostly driven by bonus payment. Michael, could you repeat the pro product part of the question?

[Operator]

Actually, Michael is no longer in queue.

[Dave Sherry, CFO at ServiceTitan]

Okay. I think your the the core question was on how pro products are are driving the growth. The pro products are the fastest growing portion of our business, which is what you're seeing in the subscription growth performance versus prior year. I think what we talked about is some new pro products at Pantheon that did have some They're continuing to be strong performers for us in new sales, but they're still not huge drivers to revenue. But I think that the pro product contribution continues to be a significant part of our subscription revenue.

[Operator]

Thank you. Our next question comes from the line of David Hymes of Canaccord Genuity. Please go ahead, David.

[David Hynes Jr., Managing Director, Software Lead Analyst at Canaccord Genuity - Global Capital Markets]

Hey, thank you guys. Ara, I'd love to get an update on commercial from you. Just what you talked about for go lives in the quarter. That's great to see. I'm curious what you're seeing from a bookings perspective with pure commercial customers, the pipeline that front?

[David Hynes Jr., Managing Director, Software Lead Analyst at Canaccord Genuity - Global Capital Markets]

And then maybe you could talk a little bit about where you think you are from a product perspective as you look to build out a full complementing capabilities for those buyers.

[Ara Mahdessian, Co-founder, Chairperson & CEO at ServiceTitan]

Great question. Commercial bookings and customer go lives are performing well, even as you mentioned about product roadmap, while we continue to build out that dedicated commercial CRM, as well as the key project management capabilities we've discussed before that are required to fully unlock construction use cases that our customers have. Those four major commercial go lives in April was a very important moment for us. We activated more ARR in twenty eight hours than our enterprise commercial team typically does in a month.

[Ara Mahdessian, Co-founder, Chairperson & CEO at ServiceTitan]

So successfully standing up all those highly strategic accounts is really a testament to how far we've come on commercial. And we remain very much focused on ensuring that the specialty trade subcontractors can run all of their work on our platform. And that includes commercial maintenance, includes on demand service, it includes replacements, and it also includes winning and managing construction projects.

[Vahe Kuzoyan, Co-Founder and President at ServiceTitan]

Yeah, and while we're continuing to evolve the full footprint of our commercial offering, the thrust of development right now is focused on construction, specifically around crews, daily logs, RFIs, submittals, change orders, financials, document management, and a better mobile experience. We're pacing well and expect big advancements later this year. Upleveling commercial service with enhanced service agreements, equipment pull through agreements, mobile app improvements, and a new customer portal. We need to be in every deal and we need to nail every customer implementation and onboarding. We're making great progress here.

[Vahe Kuzoyan, Co-Founder and President at ServiceTitan]

And finally, we need to fully evolve our brand from residential to commercial as the operating system penetrates.

[Operator]

Thank you. Our next question comes from the line of Scott Berg of Needham and Company. Your question please, Scott.

[Scott Berg, Senior Analyst at Needham & Company]

Hi, everyone. Thanks for taking my questions and nice quarter here. I guess my question sort involves moving into into new trades. We hosted a customer call with someone from the glass industry, which is not a stated trade that you all are in, but this customer is gonna roll your platform out to, I believe, 800 different locations over a period of time, which is kind of fascinating because it's not a stated trade that you're in, but they're able to leverage the platform as is. But how do you think about other opportunities or other trades that you don't have this stated kind of target set of use cases for?

[Scott Berg, Senior Analyst at Needham & Company]

Are there more that you can move into there or apply to maybe that you are today? Or just trying to understand if there's more opportunities like that. Thank you.

[Vahe Kuzoyan, Co-Founder and President at ServiceTitan]

Sure, absolutely. My assumption is that there's a broader set of verticals that could be using service titan than there is today. The challenge is because of the end to end scope. It's not always obvious who's going to be a fantastic fit and who's going to find certain gaps in their workflow where it's a problem. So our current approach is to spend most of our energy proactively on areas that we're focusing on along the lines that I mentioned earlier.

[Vahe Kuzoyan, Co-Founder and President at ServiceTitan]

And so that's where most of our energy goes into. Now, when we have an existing relationship, and there's a new trade, or there's something that comes up that's opportunistic, and we have a high degree of conviction that we can make those successful, then we may take those on. But generally, we try to stay kind of focused on where we're prioritizing debt resources on, and making a concentrated effort versus chasing opportunistic deals in areas that may not be in the focus area.

[Operator]

Thank you. Our next question comes from the line of Tyler Radke of Citi. Please go ahead, Tyler.

[Tyler Radke, Director / Senior Equity Research Analyst - Software at Citigroup]

Yes. Hi. Thanks for taking the question. Can you talk a little bit more I know you're getting a lot of questions on the macro, but I believe in the past you've just talked about average ticket sizes being impacted by macro cycles. So did you see any impact on average ticket sizes across your trades?

[Tyler Radke, Director / Senior Equity Research Analyst - Software at Citigroup]

And then just to clarify on Q2 guidance, I know there's a lot of seasonal impacts in there, know, be it weather and, you know, a lot of sensitivity to GTV. Did you include a wider range because of macro or weather factors than you normally would? Just a quick clarification on those two would be helpful. Thanks so much.

[Dave Sherry, CFO at ServiceTitan]

Hey, Tyler. I'll I'll take this one. You nailed it. The two largest inputs of GTV are the number of jobs that are completed in the average ticket per job. Both these factors were pretty stable in terms of their growth rates through q one.

[Dave Sherry, CFO at ServiceTitan]

And and though some of the the large OEMs have talked about price increases, we're not embedding any change or acceleration average ticket at this point. Q two is dependent on on macro that you talked about, guess, bit, but it's heavily dependent on the weather. And as there are a bunch of very hot days last year, that's factored into the guide. I think that there is a bit more variance in the guide, excuse me, in Q2, which we have factored prudently in our GDP forecast. So, yes.

[Operator]

Thank you. Our next question comes from the line of Brent Bracelin of Piper Sandler. Please go ahead, Brent.

[Brent Bracelin, Sr. Research Analyst at Piper Sandler Companies]

Good afternoon. Thank you. Great to see another quarter of strong execution here. I wanted to go back to the commercial discussion. It sounds like there's some momentum there.

[Brent Bracelin, Sr. Research Analyst at Piper Sandler Companies]

I think you referenced maybe top five win at a mechanical firm. Can we just step back and maybe frame how much of the commercial markets penetrated today? It sounds like you're investing in the construction part of that market. It sounds like there's some momentum in the mechanical part of it. Walk us through what's your penetration rate today?

[Brent Bracelin, Sr. Research Analyst at Piper Sandler Companies]

And as you make these investments, how much more of that opportunity does it unlock? Thanks.

[Vahe Kuzoyan, Co-Founder and President at ServiceTitan]

Thanks. I'll let Dave speak to any specific figures. But when we go when we take a step back and we look at the overall opportunity, we still believe that we're very early in the commercial story. And so that's what's driving so much investment and focus is because we see that this is a deep well that we're just getting started in. In terms of what we're disclosing, Dave, do you wanna jump in and share on that front? You're on mute. You're still on mute.

[Dave Sherry, CFO at ServiceTitan]

I think you nailed it right. We're still very early days here in terms of our penetration in commercial. We have a lot of success so far, but we're still quite early in the penetration. I think we're making a lot of progress so far.

[Operator]

Thank you. Our next question comes from the line of Dylan Becker of William Blair. Your question, please, Dylan.

[Dylan Becker, Research Analyst at William Blair]

Hey, gentlemen. Maybe Ara or Vahe for you. I wonder if you could kind of dive into a lot of the conversation around the commercial segment, but maybe in particular, the partnership angle and what we've seen kind of come out with Cobalt and others, maybe how you think about the opportunity for the roll up opportunity within the commercial side of the equation, which has been so successful and transformative for you as we think about the residential opportunity?

[Vahe Kuzoyan, Co-Founder and President at ServiceTitan]

Sure. Is a new customer and a very fast growing commercial consolidator that is backed by Alpine. And we have a great relationship with Alpine as a well known thought leader in the commercial space. Cobalt validating our technology and approach in commercial is a key point of validation for us. They will leverage the full power of ServiceTitan, and as a consolidated operating system across 12 brands, we are the software best suited to make them successful over time.

[Vahe Kuzoyan, Co-Founder and President at ServiceTitan]

Our ecosystem playbook in commercial continues to mature. Private equity awareness and validation is growing. And Alpine Cobalt being a great example. And this is where we've seen, as we mentioned before, this customer cohort is the one that's growing the fastest, and is the tip of the spear as we enter basically all new markets. Similar play is happening on the roofing side as well. And so we're fully banking on the consolidation trend continuing, particularly in commercial. And that's why we have both enterprise and commercial as such big focus areas for us from a debt perspective overall.

[Operator]

Thank you. Our next question comes from the line of Jason Celino of KeyBanc Capital Markets. Please go ahead, Jason.

[Jason Celino, Managing Director & Equity Research Analyst at KeyBanc Capital Markets]

Great. Thanks for taking my question. Maybe just one clarification for Dave. I think last quarter you talked about seeing earlier than normal linearity. Just wanted to ask if linearity was more normal this quarter.

[Jason Celino, Managing Director & Equity Research Analyst at KeyBanc Capital Markets]

And then if we think about your subscription sales cycles or pipeline generation, if you've seen any changes to those, either positive or negative? Thank you.

[Dave Sherry, CFO at ServiceTitan]

Hey, Jason. Linearity was much more normal this quarter. I think last quarter was sort of a onetime exception. In terms of pipeline and and new deal volume, it was a strong quarter. Nothing out of the ordinary there to note.

[Operator]

Thank you. Our next question comes from the line of Parker Lane of Stifel. Please go ahead, Parker.

[Parker Lane, Director at Stifel Financial Corp]

Yeah. Hi, guys. Thanks for taking the question. Vahe, when you look at the opportunity to drive efficiencies for your customers through AgenTic AI and digital agents, Is the contact center the primary area that you would see that benefit first? Or do you think there's a broad based appeal across areas like dispatch marketing, etcetera?

[Vahe Kuzoyan, Co-Founder and President at ServiceTitan]

Great question. No, this is actually part of the core aspect of our approach to AI that we think is a durable, sustainable competitive advantage. We have a product that operates our customers businesses end to end, from the clicks on the website all the way to when the cash hits the bank. And everything within that range is within striking distance of creating some either AI or specifically agentic experience that adds value, either by replacing work that's being done by humans today by machines, or by just doing things that aren't even possible. And so specifically within commercial and construction, we believe that there's a lot of work that's being done today in the back office that can be automated and enhanced.

[Vahe Kuzoyan, Co-Founder and President at ServiceTitan]

And so we expect that a big driver of the value that we've been to our customers will be in increasing the productivity in the back office. There's also opportunities in the field as well. And so for us, we look at the entire range that our product touches as being the surface area on which we can innovate from an any specifically AI and agentic AI perspective.

[Operator]

Thank you. Our next question comes from the line of Terry Tillman of Truist. Please go ahead, Terry.

[Terry Tillman, Managing Director at Truist Securities]

Yes. Hey, guys. Congrats on the quarter. Hey, Ara, Bahai, Dave and Jason. A lot of my questions have been answered, but I just wanted to go back to I like hearing about customers going live.

[Terry Tillman, Managing Director at Truist Securities]

I think you all talked about a couple residential key customers or large ones and then four signature commercial customers going live. I'm curious though, what kind of visibility does that create going forward on? When they go live, I'm assuming they're not live across the board in all the businesses. What kind of visibility that creates on your subscription revenue and then usage? And then what's their propensity or how quickly they're they move to pro products? I know there was a lot in there, but just would love to know what that means when they go live and how that affects the model over the next twelve to eighteen months. Thanks.

[Dave Sherry, CFO at ServiceTitan]

Hey, Terry. Thanks for the question. I think on the visibility of subscription revenue, it's it's pretty clear given the the ramp in ASC six zero six nature of the contracts. That's pretty high visibility when a customer goes live. GTV, we have a view of it, but of course it will depend on how we use that, as I said, as locations go live and how much they actually ramp, which directly flows into usage revenue.

[Dave Sherry, CFO at ServiceTitan]

Pro product propensity, we focus principally on delivering the ROI of our core product, and as they start to deliver that ROI, we then go and upsell them the pro products. And so that's generally the model. I think we have a view of when and where we should be pushing for certain pro products, but I would say at initial go live, our core focus on making sure that the customer realizes ROI. That's true for any product. It's when they go live on a new pro product, we're hyper focused on delivering ROI to them.

[Dave Sherry, CFO at ServiceTitan]

By delivering ROI, we earn the right to sell them more products. It's the core of our formula.

[Operator]

Thank you. Our next question comes from the line of Andrew Sherman of TD Cohen. Please go ahead, Andrew.

[Andrew Sherman, Analyst at Cowen]

Oh, great. Thanks.

[Andrew Sherman, Analyst at Cowen]

Maybe one for Ara or Vai. Home equity loan applications, HELOC had a seventeen year high this week. Wondering if you think that can drive bigger projects this year, any sign or indication of value when you talk to customers yet?

[Vahe Kuzoyan, Co-Founder and President at ServiceTitan]

We do hear from customers that turnover in the housing market is a driver of doing work in the home. And so I would anticipate that any meaningful change in that direction is going to be positive. But it's hard to say the magnitude or the severity at this point.

[Andrew Sherman, Analyst at Cowen]

Great. Thank you.

[Operator]

Thank you. Our next question comes from the line of Igor Tomachev of Freedom Broker. Please go ahead, Igor.

[Egor Tolmachev, Senior Equity Analyst - Capital Markets Research at Freedom Broker]

Hi. Thank you for taking my questions. Short question about gross margins. Gross margin performance was quite impressive this quarter even if we take into account the transition of customer success team. But what was really driving this performance?

[Egor Tolmachev, Senior Equity Analyst - Capital Markets Research at Freedom Broker]

Was it, like, just a matter of scale or some efficiencies?

[Dave Sherry, CFO at ServiceTitan]

Hey, Igor. Thanks for the question. As you said, we had a pretty strong gross margin quarter. Total platform gross margins expanded over roughly 300 basis points in the quarter. Of that, about 200 came from the CSM reclassification, and just under 100 basis points came from the organic platform margin expansion.

[Dave Sherry, CFO at ServiceTitan]

That has to do with scale, product selection, we look a lot at the incremental gross margins, and those continue to be strong and similar as what they were last year. From here looking forward, you should probably expect platform gross margin to remain relatively comparable to q one through the balance of of this year.

[Operator]

Thank you. Our next question comes from the line of Yun Kim of Loop Capital. Please go ahead, Yun.

[Yun Kim, Managing Director at Loop Capital Markets LLC]

Alright. Thank you. I have a really a product question, Vahey. AgenTeq AI obviously have has been the buzzword for for a while recently. What's interesting is that that that technology is introducing new products on for the software vendors, but also it gives the software vendors an opportunity to introduce a new type of pricing model, like whether that's usage or consumption based.

[Yun Kim, Managing Director at Loop Capital Markets LLC]

Obviously, you guys have a payment and fintech products, but is there maybe you can give us a quick thought around all these around potentially introducing a new pricing model based on consumption or usage beyond fintech. And when you're thinking about that, if you are, when you're designing a new product, do you have to have a I mean, do you have a particular pricing model in mind? Thanks.

[Vahe Kuzoyan, Co-Founder and President at ServiceTitan]

Yeah. Great question. So if you look at our current suite of pro products, we have some that are by seats in the field, seats in the office, some of them are based on consumption, for example, direct mail. And so we've got a pretty broad range of how we price and package the pro products. And we believe that that mechanism allows us to kind of have a monetization path that is familiar with our customers.

[Vahe Kuzoyan, Co-Founder and President at ServiceTitan]

And that kind of fits into how we do business with them. And that's the structure that we're going to be using to then capture, all the opportunities within the agentic AI space.

[Operator]

Thank you. I would now like to turn the conference back to Ara Modessian for closing remarks. Sir?

[Ara Mahdessian, Co-founder, Chairperson & CEO at ServiceTitan]

Just want to thank everyone for joining us today. Fahad and I are actually signing off from our office in Armenia. We've been spending time with our teams. We're doing great work to transform the lives of our customers. We are inspired by the quality of our collective execution during Q1.

[Ara Mahdessian, Co-founder, Chairperson & CEO at ServiceTitan]

But as always, we know we're just getting started. We hope to see many of you soon, and we just want to thank you for your continued support for our mission and our journey. Thank you.

[Operator]

This concludes today's conference call. Thank you for participating. You may now disconnect.

Participants

Executives

• Jason Rechel, VP - Investor Relations
• Ara Mahdessian, Co-founder, Chairperson & CEO
• Vahe Kuzoyan, Co-Founder and President
• Dave Sherry, CFO

Analysts

• Kash Rangan, Managing Director at Goldman Sachs
• Joshua Baer, Executive Director - Software Equity Research Analyst at Morgan Stanley
• Michael Turrin, Managing Director, Software Equity Research Analyst at Wells Fargo
• David Hynes Jr., Managing Director, Software Lead Analyst at Canaccord Genuity - Global Capital Markets
• Scott Berg, Senior Analyst at Needham & Company
• Tyler Radke, Director / Senior Equity Research Analyst - Software at Citigroup
• Brent Bracelin, Sr. Research Analyst at Piper Sandler Companies
• Dylan Becker, Research Analyst at William Blair
• Jason Celino, Managing Director & Equity Research Analyst at KeyBanc Capital Markets
• Parker Lane, Director at Stifel Financial Corp
• Terry Tillman, Managing Director at Truist Securities
• Andrew Sherman, Analyst at Cowen
• Egor Tolmachev, Senior Equity Analyst - Capital Markets Research at Freedom Broker
• Yun Kim, Managing Director at Loop Capital Markets LLC