TTAN — ServiceTitan, Inc.

Summary of ServiceTitan's Q4 2026 Earnings Call

1. Key Financial Results and Metrics

• Total Revenue: $254 million, up 21% year-over-year.
• Subscription Revenue: $192 million, a 23% increase year-over-year.
• Usage Revenue: $53 million, growing 22% year-over-year.
• Gross Transaction Volume (GTV): $19.8 billion, 16% year-over-year growth.
• Gross Margins: Platform gross margin at 80%, total gross margin at 73.8%.
• Operating Income: $27.1 million, with an operating margin of 10.7%.
• Free Cash Flow: $35 million for Q4, up from $11 million in the prior year; FY '26 free cash flow totaled $85 million, up from $15 million.
• Customer Metrics: Net dollar retention over 110%, gross dollar retention over 95%, with approximately 10,800 active customers, a 14% increase year-over-year.

2. Strategic Updates and Business Highlights

• Celebrated the 1-year anniversary of the IPO and surpassed a $1 billion annualized revenue run rate.
• Launched the Agentic Operating System, with the initial deployment called Max, which integrates AI capabilities to automate workflows.
• Early adopters of Max reported significant improvements, including a 50% increase in average ticket size and a jump in EBITDA margins from 18% to 30%.
• Continued growth in existing AI-native products and promising early results from Virtual Agents.
• Focus on expanding capabilities in commercial and roofing sectors, with positive feedback on new CRM offerings.

3. Forward Guidance and Outlook

• Q1 FY '27 Revenue Guidance: Expected between $255 million and $257 million.
• Full FY '27 Revenue Guidance: Anticipated between $1.11 billion and $1.12 billion.
• Expected to maintain a 25% incremental operating margin framework for FY '27, with a focus on investing in AI and internal tooling.
• Plans to double the capacity of Max in Q1 FY '27 and expand its adoption throughout the year.

4. Bad News, Challenges, or Points of Concern

• GTV growth was impacted by one fewer business day in Q4 and adverse weather conditions, which affected technician availability.
• Incremental margins of 36% in FY '26 exceeded expectations, but future margins may be constrained by increased investments in R&D and AI.
• Potential customer hesitation to adopt Pro products due to anticipation of Max availability, which could temporarily impact sales.

5. Notable Q&A Insights

• Weather Impact: The warm Q4 weather and an ice storm affected technician availability, influencing GTV performance.
• Sales Capacity: There is a concern about whether the current sales capacity is sufficient to meet demand, especially with the anticipated growth from Max.
• Customer Adoption: While many customers are eager to adopt AI and Max, there remains a spectrum of readiness among customers, with some in a "wait and see" mode.
• Competitive Landscape: No immediate competitive pressures noted from new AI-native startups, but the company is vigilant about maintaining its market position.
• Virtual Agents: This new offering is designed to handle inbound calls, which can significantly enhance customer revenue opportunities, although it is still in early stages.

Overall, ServiceTitan reported strong financial results and strategic advancements, particularly with the launch of Max, while also addressing potential challenges related to customer adoption and market conditions.