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    TTAN
    Earnings call· Jan 2026(Q4 FY26)

    ServiceTitan Q4 FY26 earnings call TTAN

    Mar 12, 2026 Source

    Executive summary

    ServiceTitan Q4 FY26 — AI-Driven Growth and Strong Profitability

    ServiceTitan concluded FY26 with robust financial performance, exceeding $1 billion in annualized revenue run rate and demonstrating strong profitability driven by its AI-powered Agentic Operating System. The Max program shows promising early results, with customers reporting significant improvements in revenue and margins. While facing some GTV headwinds from weather and business days, the company is strategically investing in AI and organizational velocity to accelerate value delivery for its customers.

    Highlights

    5

    • Achieved $961 million in total revenue for FY26, growing 24% year-over-year, with Subscription revenue up 26% YoY.

    • Delivered 36% incremental operating margins for FY26, outperforming the 25% target.

    • Generated $85 million in free cash flow for FY26, a significant increase from $15 million in the prior year.

    • Max program customer experienced a 50% increase in average ticket size and over 50% YoY revenue growth in January.

    • Another Max customer improved EBITDA margins from 18% to 30% while reducing office staff from 7 to 2 for 19 technicians.

    Concerns

    2

    • Q4 GTV growth was impacted by one fewer business day and unusual weather, leading to approximately 300 basis points lower contribution from existing customers.

    • Q4 FY25 Subscription revenue included a ~$1.5 million benefit from atypical linearity and one-time items, making year-over-year comparisons more challenging.

    Guidance & targets

    6
    CategoryTargetConfidence
    Total Revenue
    $255 million to $257 million
    high materiality
    High
    Operating Income
    $27 million to $28 million
    medium materiality
    High
    Total Revenue
    $1.11 billion to $1.12 billion
    high materiality
    High
    Operating Income
    $128 million to $133 million
    high materiality
    High
    Incremental Operating Margin
    25%
    medium materiality
    High
    Usage Revenue Growth vs GTV
    grow more quickly
    low materiality
    Medium

    Operational metrics

    31
    Gross Transaction Volume (GTV)
    $19.8 billion16% year-over-year growth
    Q4 FY26

    GTV contribution from new customers remained consistent, but existing customer contribution was ~300 bps lower due to one fewer business day and unusual weather.

    Total Revenue
    $254 million21% year-over-year growth
    Q4 FY26

    Company-wide total revenue.

    Subscription Revenue
    $192 million23% year-over-year growth
    Q4 FY26

    Led by strong growth in Pro, Commercial, and New Trades. Q4 FY25 Subscription revenue included ~$1.5 million benefit from atypical linearity and one-time items.

    Usage Revenue
    $53 million22% year-over-year growth
    Q4 FY26

    FinTech utilization remained strong, also benefited from partner ecosystem monetization and early growth in Virtual Agents revenue.

    Total Platform Revenue
    $245 million23% year-over-year growth
    Q4 FY26

    Sum of Subscription and Usage revenue.

    Professional Services Revenue
    $8.9 million
    Q4 FY26

    Revenue from professional services.

    Net Dollar Retention
    >110%
    Q4 FY26

    Company-wide net dollar retention.

    Gross Dollar Retention
    >95%
    FY26

    Company-wide gross dollar retention for the full fiscal year.

    Total Active Customers
    10,80014% year-over-year
    End of FY26

    Total number of active customers.

    Platform Gross Margin
    80%330 basis points year-over-year improvement
    Q4 FY26

    Non-GAAP platform gross margin.

    Total Gross Margin
    73.8%360 basis points year-over-year improvement
    Q4 FY26

    Non-GAAP total gross margin.

    Operating Income
    $27.1 million
    Q4 FY26

    Non-GAAP operating income.

    Operating Margin
    10.7%740 basis points year-over-year improvement
    Q4 FY26

    Non-GAAP operating margin.

    Incremental Operating Margins
    36%outperformed target
    FY26

    Non-GAAP incremental operating margins for the full fiscal year.

    Term Loan Paid Down
    $107 million
    Q4 FY26

    Amount of term loan outstanding that was paid down due to strong free cash flow expectations.

    Total Revenue
    $961 million24% year-over-year growth
    FY26

    Company-wide total revenue for the full fiscal year.

    Subscription Revenue Growth
    26%year-over-year growth
    FY26

    Subscription revenue growth for the full fiscal year.

    Transaction Volume
    $80 billion
    past 12 months

    Total transaction volume processed through ServiceTitan's platform.

    Max Customer Average Ticket Size Increase
    50%
    3 months

    Increase experienced by a customer since migrating to Max.

    Max Customer Revenue Growth
    >50%year-over-year
    January

    Revenue growth experienced by a customer since migrating to Max.

    Max Customer EBITDA Margin Improvement
    18% to 30%
    months after going live

    Improvement in EBITDA margins for a residential plumbing customer using Max.

    Max Customer Office Staff Reduction
    7 to 2
    months after going live

    Reduction in office staff for a residential plumbing customer using Max, while increasing technician salaries and reducing end-customer pricing.

    Max Customer Monthly Subscription Revenue
    doubles
    fully ramped

    Average increase in monthly subscription revenue for customers on Max when fully ramped, not factoring in expanded technicians.

    GTV Growth Contribution from Existing Customers
    ~300 bps lowervs prior year
    Q4 FY26

    Impact on GTV growth from existing customers.

    Subscription Revenue Benefit
    ~$1.5 million
    Q4 FY25

    Benefit in the prior year's Q4 subscription revenue, making current year's growth comparison more challenging.

    Business Days Impact on GTV
    one additional business day
    Q1 FY27

    GTV will benefit from one additional business day in Q1.

    Business Days Impact on GTV
    one additional business day
    Q2 FY27

    GTV will benefit from one additional business day in Q2.

    Business Days Impact on GTV
    one fewer business day
    Q3 FY27

    GTV will have one fewer business day in Q3.

    Business Days Impact on GTV
    comparable number of business dayswith prior year
    Q4 FY27

    Q4 will have a comparable number of business days with the prior year.

    CAC Payback
    24-month
    target

    The company's target for customer acquisition cost payback.

    Virtual Agent Job Value
    $500 to $50,000
    per job

    Potential revenue opportunity for each job handled by Virtual Agents.

    Industry KPIs

    8
    MetricValueDetails
    Revenue growth$961 millionUSD
    Arr net new arr$1 billionUSD
    Pricing model mixper technician
    Customer account count10,800customers
    Gross retention renewal rate>95%%
    Operating FCF margin rule of 4010.7%%
    Ai product adoption monetization50% increase%
    Net revenue net dollar retention>110%%

    Product announcements

    3
    ProductTypeDetails
    Max (Agentic Operating System)launch
    Virtual Agentslaunch
    Accounts Payable Automationroadmap

    Risks & headwinds

    5
    GTV growth impact from weather and business daysQ4 FY26

    ~300 bps lower contribution from existing customers in Q4 FY26

    Mitigation: Latent demand from ice storms was met in early February; Q1 and Q2 FY27 will benefit from additional business days.

    Seasonality of free cash flowQ1 (annually)

    Negative free cash flow

    Mitigation: Due to payment of annual cash bonuses in Q1; Q2 is seasonally strongest period for GTV.

    Elevated sales and marketing expensesQ3 (annually)

    Elevated expenses

    Mitigation: Due to hosting annual customer conferences during this period.

    Max program capacity constraintsCurrent

    Demand for Max pilot exceeded supply

    Mitigation: Doubling capacity in Q1; focusing on efficient and scalable onboarding to meet demand while ensuring customer success.

    Potential for customers to delay Pro product purchasesNear-term

    Possible

    Mitigation: Customers might delay buying decisions for Pro products while waiting for Max availability; company prioritizes nailing product-market fit and ROI for Max over short-term sales optimization.

    What to watch in Q1 FY27

    5

    Max program scaling efficiency

    next quarter
    CurrentDoubling capacity in Q1
    TargetSuccessful scalable and automated onboarding for new Max customers

    Why it matters

    Successful scaling of Max is crucial for realizing the full potential of the Agentic Operating System and driving future revenue growth.

    The current phase is around delivering that same set of outcomes with this new batch of customers but doing so, in a much more scalable and automated way in terms of getting them activated on Max.

    Q&A highlights

    8

    How did weather impact Q4 results and Q1 guidance? Also, why won't the 36% incremental margin from FY26 continue, given it's above the 25% target?

    Q4 was warmer overall, but a late-quarter ice storm reduced GTV by ~300 bps, with latent demand met in early February. The 36% incremental margin was due to Usage overperformance and delayed hiring; FY27 will see aggressive R&D investment in AI, making a repeat unlikely.

    “I think the incrementals this year were really driven by, as I said, those two factors, the overperformance in Usage and being behind in hiring.”

    asked by Josh Baer · answered by Ara Mahdessian

    2 min read5 chapters

    Detailed Narrative

    01

    Agentic Operating System and Max Program

    ServiceTitan is transforming the trades with its Agentic Operating System, leveraging over a decade of proprietary data from workflows like marketing ROI, call booking rates, and technician productivity. This system automates tasks previously requiring manual judgment, with AI agents orchestrating demand generation, appointment booking, and quote generation. The Max program, the initial deployment, has shown significant customer outcomes, including a 50% increase in average ticket size and a residential plumbing customer improving EBITDA margins from 18% to 30%.

    02

    FY26 Performance and Strategic Goals

    Fiscal Year 2026 marked ServiceTitan's first full year as a public company, surpassing $1 billion in annualized revenue run rate. The company's core goals for FY27 include continuing multiyear growth factors, bringing the Agentic Operating System vision to life, and making a step-function change in execution velocity. These goals are supported by the benefits of AI, which are accelerating the company's vision faster than anticipated.

    03

    Commercial and Roofing Market Expansion

    ServiceTitan made substantial progress in its Commercial and Roofing growth initiatives in FY26. New Commercial capabilities, including construction and commercial CRM, have been well-received, laying the groundwork for FY27 go-to-market execution. In Roofing, the company's implementation playbook and workflows are maturing, exemplified by partner Vertex's growth to over $600 million in revenue in under three years, positioning ServiceTitan for durable growth in exteriors.

    04

    Organizational Velocity and AI Integration

    The company is accelerating its organizational velocity by integrating AI across all departments and roles to enhance quality, efficiency, and speed. Vahe Kuzoyan is personally driving this initiative, noting the tangible impact of AI. The recent hiring of Abhishek Mathur, former Head of AI Research at Figma, as Chief Technology and Product Officer, is expected to further improve velocity in FY27, leveraging his experience from Meta and Microsoft.

    05

    Seasonality and Business Day Impact

    ServiceTitan's business experiences seasonal patterns, with annual cash bonuses paid in Q1 leading to negative free cash flow, and Q2 typically being the strongest period for GTV. Q3 sees elevated sales and marketing expenses due to annual customer conferences. The number of business days also impacts GTV, with Q1 and Q2 FY27 benefiting from one additional business day each, while Q3 will have one fewer.

    AI-generated summary of the company’s earnings call. Not investment advice.