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ServiceTitan projects $935M–$940M full-year revenue as automation and enterprise partnerships accelerate growth
Sep. 04, 2025 7:02 PM ET
AI-Generated Earnings Calls Insights
Earnings Call Insights: ServiceTitan (TTAN) Q2 2026
Management View- CEO Ara Mahdessian highlighted record operating margins and strong revenue growth, stating, "Year-over-year, we delivered 27% subscription revenue growth, 25% total revenue growth and record operating margins, which improved 510 basis points." Mahdessian underscored the role of automation and AI: "This quarter, ServiceTitan's AI, Titan Intelligence, enabled the customer to organically book, schedule, dispatch and perform the first fully automated job in our history."
- Mahdessian shared a customer case where Gulfshore Air Conditioning and Heating saw a "22%" increase in close rate and a "$150" higher average ticket after adopting ServiceTitan’s AI-driven Pro products, and achieved a "$370,000 increase in revenue just by running automated marketing campaigns with Marketing Pro."
- President Vahe Kuzoyan announced a new partnership with Roto-Rooter, calling it "an iconic enterprise brand that is synonymous with the trades" and stating, "We'll work hard together on implementation and expect to go live in early calendar year 2026."
- Kuzoyan emphasized rapid growth in Pro products and commercial verticals, stating, "Our pro story has become the tangible AI story for customers, and I'm excited to share more innovations at Pantheon this month."
- CFO Dave Sherry stated, "Q2 gross transaction volume, or GTV, was $22.9 billion, representing 19% year-over-year growth...Q2 total revenue of $242.1 million grew 25% year-over-year. Subscription revenue of $174.8 million grew 27% year-over-year, led by faster-than-expected growth from new customers and healthy expansion trends."
Outlook- Sherry provided third quarter guidance: "For the third quarter, we expect total revenue in the range of $237 million to $239 million. We expect to generate operating income in the range of $14 million to $15 million."
- For the full fiscal year 2026, Sherry said, "We expect total revenue in the range of $935 million to $940 million. We expect to generate operating income in the range of $74 million to $76 million."
- Management stated, "Given our overperformance year-to-date, we expect to overachieve our incremental margin targets in the fiscal year."
Financial Results- Gross transaction volume (GTV) for Q2 reached "$22.9 billion," with "19% year-over-year growth." Total revenue was "$242.1 million" with "25% year-over-year growth." Subscription revenue was "$174.8 million", up "27% year-over-year." Usage revenue was "$58 million," up "23% year-over-year." Total platform revenue reached "$232.7 million." Professional services revenue was "$9.4 million."
- Platform gross margin was "80.7%, an improvement of 280 basis points year-over-year." Total gross margin was "74.4%, up 330 basis points year-over-year."
- Operating income stood at "$29.2 million," yielding a record operating margin of "12.1%, an improvement of 510 basis points year-over-year."
- Free cash flow was "$34.3 million, up from $18.7 million from the prior year second quarter."
Q&A- Kasthuri Rangan, Goldman Sachs: Asked about the Roto-Rooter partnership and drivers for the deal. Mahdessian responded, "ServiceTitan continues to be the platform of choice for the largest trade businesses because we uniquely have both the trade-specific workflows that they need as well as the enterprise capabilities that the largest customers need."
- Josh Baer, Morgan Stanley: Questioned focus on hybrid residential/commercial customers. Kuzoyan noted, "We almost always land with both sides of the house...because there's such a common instance of the business needing to have both sides, our ability to be excellent in both residential and commercial, we see as an enduring competitive advantage."
- Michael Turrin, Wells Fargo: Asked about commercial expansion. Kuzoyan said, "It's been about three years that we've been investing on the commercial side...the fundamental driver of what we're seeing in terms of traction on the commercial side is the gaps that we're filling on construction."
- Faith Brunner, William Blair: Probed product innovation in construction. Kuzoyan detailed ongoing work on "crews, daily logs, RFIs, submittals, change orders, financials, document management and a better mobile experience."
- Jason Celino, KeyBanc: Asked about sales cycle and AI search impact. Kuzoyan stated, "We do utilize organic search, which is performing well...but it's a small portion of our total demand gen. We think a balanced go-to-market machine helps us execute consistently through time."
- Brent Bracelin, Piper Sandler: Queried sustainability of platform gross margins. Sherry replied, "There is a seasonal peak in Q2 given usage is high incremental margins. We do see overall trend towards higher platform gross margin."
Sentiment Analysis- Analysts’ tone was positive, with several congratulating management on strong results and partnerships. Questions focused on sustainability of growth drivers, product expansion, and clarity on commercial traction.
- Management maintained a confident and upbeat tone during prepared remarks, highlighting execution, customer success, and new partnerships. During Q&A, responses remained constructive, with occasional acknowledgment of ongoing work or areas for improvement.
- Compared to the previous quarter, the tone remained consistently optimistic, but Q2 featured more focus on the impact of automation and enterprise deals.
Quarter-over-Quarter Comparison- Guidance for full-year revenue was raised from a prior range of "$910 million to $920 million" to "$935 million to $940 million." Operating income guidance increased to a range of "$74 million to $76 million" from "$54 million to $59 million."
- The company highlighted a major new enterprise partnership (Roto-Rooter) and delivered the first fully automated job, while Q1 centered on expanding into new trades and scaling Pro product adoption.
- Gross transaction volume and revenue growth rates remained strong, with margin expansion accelerating further in Q2.
- Analysts’ focus shifted more toward enterprise wins, automation, and the sustainability of growth drivers, compared to Q1’s broader questions on market expansion and product roadmap.
Risks and Concerns- Management cited "a challenging comparable period from last year" for residential HVAC, noting weather and comp-driven headwinds.
- Sherry indicated current growth was "particularly driven by high-margin usage revenue overperformance and slower-than-budgeted pace of hiring," noting hiring could pick up later in the year.
- Management acknowledged the need to optimize product packaging for Pro products, with Sherry stating, "We're probably not the most optimized in terms of packaging here...we've not yet nailed exactly that will look."
- Analysts probed the durability of gross margin expansion and the mix impact of Pro product adoption.
Final Takeaway
ServiceTitan’s Q2 2026 call emphasized accelerating momentum in automation, AI-driven product adoption, and enterprise partnerships—most notably the signing of Roto-Rooter. Management reported robust revenue and margin expansion, raised full-year guidance, and highlighted customer success stories that underscore the platform’s return on investment. The company remains confident in its strategy to compound growth while scaling innovation across commercial and enterprise segments.
Read the full Earnings Call Transcript |
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