ServiceTitan, Inc. Q3 FY2026 earnings call

• Ara Mahdessian noted the one-year anniversary of IPO and Day of the Trades, emphasizing confidence in building the operating system for the trades and the role of AI. Discussed the Wrench Group partnership and their use of ServiceTitan's platform.
• Vahe Kuzoyan highlighted strong enterprise growth, new product launches like FieldPro and virtual agents, commercial investments including new capabilities for commercial CRM and construction management, and partnerships such as with Galaxy Service Partners and James River Air Conditioning.
• Dave Sherry reviewed Q3 financial results and provided guidance for Q4 and full fiscal year 2026.

In the third quarter, total revenue was $249.2 million, growing 25% year over year. Subscription revenue was $182.8 million, up 26% year over year, led by strong growth in pro, commercial, and new trades. Usage revenue reached $56.8 million, up 24% year over year due to higher fintech utilization. Platform gross margin was 80.2%, an improvement of 310 basis points year over year. Total gross margin was 74.3%, up 390 basis points year over year. Operating income was $21.5 million, resulting in an operating margin of 8.6%, an improvement of 780 basis points year over year. Q3 free cash flow was a record $38 million, with year-to-date free cash flow at $50 million.

• For the fourth quarter, total revenue is expected in the range of $244 million to $246 million, and operating income is expected in the range of $16 million to $17 million.
• For the full fiscal year 2026, total revenue is expected in the range of $951 million to $953 million, and operating income is expected in the range of $83 million to $84 million.
• Noted that Q4 FY2026 will have one fewer business day, compressing GTV and usage revenue growth by approximately 150 basis points.

Q: Kash Rangan asked about the go-to-market strategy for scaling to a multibillion-dollar revenue company, A: Ara Mahdessian discussed the MAX program and AI focus as the key to future growth.

Q: Josh Baer inquired about the progress of the MAX program pilot, A: Ara Mahdessian mentioned the slow rollout to ensure success and that it would open up soon.

Q: Josh Baer followed up on private equity contribution to growth, A: Dave Sherry stated private equity customers are strong utilizers and grow faster, with no indication of slowing.

Q: DJ Hynes asked about technician-back office staff ratios and efficiency unlock, A: Ara Mahdessian discussed variation by trade and size, and the alignment of customers with automation for profit and revenue growth.

Q: DJ Hynes questioned Q4 guidance due to one fewer business day, A: Dave Sherry said typical sequential moderation from Q3 to Q4 is expected, with assumptions driven by prudent GTV forecast.

Q: Dylan Becker asked about diversifying the partner ecosystem and roofing insurance partnerships, A: Vahe Kuzoyan talked about roofing insurance focus and potential for other trades in the future.

Q: Scott Berg asked about commercial investment plans for FY2027, A: Ara Mahdessian discussed nailing construction and AI-driven value creation in CRM.

Q: Parker Lane asked about learnings in commercial space and residential customer opportunities, A: Vahe Kuzoyan discussed consolidation trends and the benefit of having both residential and commercial solutions.

Q: Terry Tillman asked about ecosystem multiplier effect, A: Ara Mahdessian mentioned evangelism from customers and partners aiding go-to-market.

Q: Terry Tillman followed up on Q4 free cash flow seasonality, A: Dave Sherry said no unique seasonality for Q4 free cash flow, with full year free cash flow and operating income converging.

Q: Andrew Sherman asked about Resi HVAC GTV insulation from OEM cycles, A: Dave Sherry explained RGTV driven by break-fix in existing homes, insulated from new home construction and supplier cycles.

Q: Andrew Sherman asked about pro product demand ranking, A: Vahe Kuzoyan said AI-focused products have the hottest demand, with MarketingPro being mature.

Q: Joseph Vruwink asked about subscription growth spread and HVAC destocking cycles, A: Dave Sherry discussed platform earn rate drivers and COVID-era average ticket growth.

Q: Daniel asked about being better than horizontal applications and R&D prioritization, A: Vahe Kuzoyan explained Marketing Pro's unique value in lead and CRM management.

Q: Yun Kim asked about AI chatbots impact on product strategy, A: Vahe Kuzoyan said monitoring consumer behavior and capitalizing on emerging opportunities.

Q: Yun Kim followed up on contract length and billing cycle, A: Dave Sherry said billing is generally monthly for all customers.

Q: Tyler Radke asked about construction opportunity low hanging fruit, A: Vahe Kuzoyan discussed focus on service-side contractors and expanding construction module capabilities.

Q: Tyler Radke asked about FY2027 margin expansion, A: Dave Sherry talked about intentional guidance, 25% incremental margins, and hiring impact.

Q: Jason Celino asked about usage acceleration and fintech utilization, A: Dave Sherry explained increasing fintech adoption driving usage taker.

Q: Jason Celino asked about subscription pro product momentum, A: Dave Sherry said strong pro product attach is a growth driver.

Q: Hannah Rudolph asked about pro product pricing and packaging, A: Dave Sherry said focused on customer success in pilot, with evolution to come.

Q: Hannah Rudolph asked about commercial platform timeline to market standard, A: Vahe Kuzoyan said close on product, with work needed on branding and reputation.

Q: Michael Turrin asked about investor signals to watch, A: Dave Sherry said watching GTV and earn rate evolution as key indicators