ServiceTitan Inc. (TTAN) Earnings & Analysis

Latest quarter

ServiceTitan reported Q2 FY2027 revenue of $292.8 million, above the $285.1 million consensus and up 20.9% from $242.1 million a year earlier. Adjusted earnings per share were $0.40, compared with the $0.36 consensus. The company reported a diluted loss per share of −$0.26, compared with −$0.35 a year earlier.

In its filing, ServiceTitan said subscription revenue rose by $37.6 million and usage revenue rose by $14.2 million, helped by higher transaction volume and a higher earn rate on that volume. Professional services and other revenue fell by $1.1 million as the company performed fewer billable services.

ServiceTitan reported gross margin of 71.4%, compared with 70.8% a year earlier, and an operating margin of −9.41%, compared with −14.4%. Free cash flow rose to $50.5 million from $34.3 million. The filing said research and development expense increased by $27.6 million, including higher personnel costs and technology spending associated with AI.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

CFO Dave Sherry said gross transaction volume reached $26.8 billion in Q2, up 17% year over year, but growth slowed from recent quarters primarily because existing customers generated fewer jobs. He said customer lead volume grew at a more moderate seasonal pace in May and June before stabilizing in July, with the slowdown particularly evident among heating and air-conditioning customers.

Asked about transaction-volume trends, Sherry said an observed July holiday brought less business-day benefit than expected, while an early start to the cooling season shifted some activity into Q1. He said the effects roughly offset each other. Rather than assume July’s stabilization would continue, he said ServiceTitan carried the aggregate Q2 trend into its forecast for the rest of the year.

CEO Ara Mahdessian said the company had broadened investment in Max and its software factory and would focus on existing trades. Sherry said the decision to defer expansion into additional trades was not permanent. On pricing, he said subscription revenue for a fully ramped Max contract roughly doubles relative to a customer’s prior spending; ServiceTitan also plans packages that could provide an entry point to Max with a smaller subscription uplift.

Sherry said a shift toward Max deals would weigh on near-term revenue because the company typically does not bill for the first quarter of a Max contract and then ramps billing. Existing customers also are not charged an onboarding fee to transition. He put the combined subscription and professional services revenue headwind at approximately $4 to $5 million in the second half.

Asked about the next quarter, Sherry noted one fewer business day than a year earlier. He said the company expected some Max revenue to begin appearing in Q4. Asked about virtual agents, he described progress but did not provide a specific forecast. He also said lower professional services revenue would flow through to that segment’s gross margin.

Guidance

ServiceTitan now expects to end FY2027 with over 700 enrolled Max locations. Sherry said the company now expects incremental margins of 33% for FY2027. He also said ServiceTitan now expects 25% incremental margins to represent an annual floor rather than a target.