EPS of $-0.35 increased by 76.2% from previous year
Gross margin of 70.8%
Net income of -32.23M
""We uniquely have both the trade-specific workflows that they need as well as the enterprise capabilities that the largest customers need."" - Ara Mahdessian
- ServiceTitan reported solid QQ2 2026 results with strong top-line momentum and meaningful margin expansion as the company leverages higher-value usage revenue, a robust subscription base, and automation-driven cost efficiencies. Total revenue reached $242.1 million, up 25% year over year (YoY), with subscription revenue up 27% YoY to $174.8 million and usage revenue up 23% YoY to $58.0 million. GTV was $22.9 billion, representing 19% YoY growth, underscoring durable activity across commercial and non-HVAC residential trades. Net dollar retention exceeded 110%, highlighting robust expansion within the installed base. Platform gross margin registered 80.7%, up 280 bps YoY (driven in part by reclassification of some customer success costs to sales/marketing, about 200 bps), and total gross margin rose 330 bps to 74.4%. Operating income was $29.2 million, delivering a record operating margin of 12.1% (an improvement of 510 bps YoY). Free cash flow was $34.3 million in QQ2, with year-to-date free cash flow turning positive versus the prior year. Management reaffirmed a disciplined outlook and highlighted strong year-to-date overperformance.
Key Performance Indicators
Revenue
242.12M
QoQ: 12.25% | YoY:33.28%
Gross Profit
171.35M
70.77% margin
QoQ: 15.47% | YoY:51.57%
Operating Income
-34.77M
QoQ: -170.20% | YoY:19.17%
Net Income
-32.23M
QoQ: 30.50% | YoY:29.71%
EPS
-0.35
QoQ: 31.37% | YoY:76.19%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $242.1 million in QQ2 2026, +25% YoY; Subscription revenue: $174.8 million, +27% YoY; Usage revenue: $58.0 million, +23% YoY; Total platform revenue: $232.7 million, +26% YoY; Q2 gross profit: $171.3 million, gross margin 74.4%; Platform gross margin: 80.7% (+280 bps YoY, ~200 bps from reallocation of customer success costs to S&M); Q2 operating income: $29.2 million, operating margin 12.1% (+510 bps YoY); Net dollar retention: >110%; Q2 free cash flow: $34.3 million; Year-to-date FCF: $12 million (FY ’26 YTD reference); Guidance: Q3 revenue $237–$239 million, Q3 operating income $14–$15 million; FY2026 revenue guidance $935–$940 million, FY2026 operating income guidance $74–$76 million; RTX: management targets 25% long-term incremental margins; Pantheon/Ignite events expected to bolster demand and product adoption.
Financial Highlights
- Revenue: $242.1 million in QQ2 2026, +25% YoY; Subscription revenue: $174.8 million, +27% YoY; Usage revenue: $58.0 million, +23% YoY; Total platform revenue: $232.7 million, +26% YoY; Q2 gross profit: $171.3 million, gross margin 74.4%; Platform gross margin: 80.7% (+280 bps YoY, ~200 bps from reallocation of customer success costs to S&M); Q2 operating income: $29.2 million, operating margin 12.1% (+510 bps YoY); Net dollar retention: >110%; Q2 free cash flow: $34.3 million; Year-to-date FCF: $12 million (FY ’26 YTD reference); Guidance: Q3 revenue $237–$239 million, Q3 operating income $14–$15 million; FY2026 revenue guidance $935–$940 million, FY2026 operating income guidance $74–$76 million; RTX: management targets 25% long-term incremental margins; Pantheon/Ignite events expected to bolster demand and product adoption.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
242.12M
33.28%
12.25%
Gross Profit
171.35M
51.57%
15.47%
Operating Income
-34.77M
19.17%
-170.20%
Net Income
-32.23M
29.71%
30.50%
EPS
-0.35
76.19%
31.37%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
- AI and automation as a core growth engine: Titan Intelligence enabled the first fully automated job (Gulfshore case) and is central to expanding beyond core technician workflows into end-to-end automation across marketing, scheduling, dispatch, and payments. Management stressed that automation is the path to higher ROIs for customers and stronger attach of Pro products. Ara emphasized the company’s “four main priorities” and the tangible ROI realized by customers using AI-enabled workflows. Vahe highlighted enterprise expansion, pro-product flywheel, and the construction-focused product enhancements unlocking new commercial opportunities. - Roto-Rooter partnership marks a strategic enterprise milestone: A large, iconic plumbing brand will go live with a wall-to-wall implementation expected in early 2026, validating ServiceTitan’s ability to scale to large, multi-division customers with integrated AI and workflow capabilities. - Commercial construction as a growth inflection: The management team signaled that the construction-related capabilities (project management, RFIs, submittals, change orders, and financials) are critical to winning large commercial contracts and expanding addressable market. - Mixed product mix and monetization evolution: Management acknowledged that Pro products drive higher margins and that the company is still refining pricing/packaging to optimize attach rates and margin mix, with a keen focus on delivering ROI rather than simply selling more modules. - HVAC and market dynamics: While HVAC remained a growth area, it faced tougher comps and weather-related headwinds in QQ2, which the team attributed to prior-year heat events and regional differences; the broader trades market remained resilient.
"We uniquely have both the trade-specific workflows that they need as well as the enterprise capabilities that the largest customers need."
— Ara Mahdessian
"It's been about three years that we've been investing on the commercial side. And what's happening now is basically what we said was going to happen when we laid out what we're going to focus on for the rest of the year... the market's reaction to the beginning of us delivering on that construction vision."
— Vahe Kuzoyan
Forward Guidance
- Near-term: Q3 revenue guidance of $237–$239 million and operating income guidance of $14–$15 million imply continued growth momentum and improving utilization of high-margin usage revenue. - Full-year: Revenue guidance of $935–$940 million and operating income of $74–$76 million reflect ongoing margin expansion and disciplined expense management, with the company reaffirming a long-term target of 25% incremental margins. - Strategic catalysts: Pantheon conference, enhancements in construction-focused modules (crews, daily logs, RFIs, submittals, change orders, mobile), and the Roto-Rooter go-live slated for early 2026 are key near-term catalysts. - Risks and monitoring: Execution risk in large enterprise deployments, integration challenges across the expanding Pro product suite, potential competition in the growing field-service automation space, and macro conditions affecting spend by trade businesses. Key factors investors should monitor include: cadence of wall-to-wall enterprise implementations (including Roto-Rooter), progress of Construction-related product features, Pro product attach rates, CAC payback evolution, and the pace of AI-enabled adoption by customers.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
TTAN Focus
70.77%
N/A
N/A
N/A
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
ServiceTitan is positioning itself as the operating system for the trades, with AI-enabled automation and a multi-product Pro strategy that aligns with customers’ ROI-centric buying. The QQ2 2026 results demonstrate healthy top-line growth, expanding margins, and meaningful cash flow generation, underscored by durable customer retention and an increasing contribution from high-margin usage and Pro-product attachments. The Roto-Rooter partnership and Gulfshore customer story illustrate the potential to convert enterprise-scale opportunities into meaningful revenue and margin lift as the company executes on its construction-focused product roadmap. Near-term catalysts include Pantheon/Ignite-driven demand, additional go-lives of enterprise customers, and continued AI-enabled workflow expansion. The long-term investment thesis remains constructive, with a large TAM in the trades and a scalable platform that can monetize through a mix of subscription, usage, and Pro-product attach. Risks to monitor include execution risk in large deployments, evolving pricing dynamics, and macro conditions affecting capex in the trades. Given the strength of YoY growth metrics, margin trajectory, and the strategic importance of AI-enabled automation, the stock appears to offer compelling upside conditional on continued execution, customer expansion, and monetization of Pro products.
Key Investment Factors
Growth Potential
- Large TAM in enterprise trades; ongoing expansion into commercial construction with AI-enabled workflow automation; recruitment of major enterprise customers (e.g., Roto-Rooter) and ecosystem expansion (ABC Supply) support multi-year growth; Pro products as a scalable growth engine with higher margins.
Profitability Risk
- Execution risk in large, complex deployments; dependence on a few marquee customers for growth; pricing and packaging optimization remains ongoing; potential competitive substitutions from point solutions; macro softness in certain trades impacting spend on software and automation.
Financial Position
- Solid liquidity with positive free cash flow in QQ2 and robust cash generation; high platform gross margins (~80.7%) and improving overall gross margins; ongoing investment in R&D and AI capabilities; dataset shows some data inconsistencies in cash/debt figures that warrant cross-check with SEC filings for precise balance-sheet health.
SWOT Analysis
Strengths
Strong YoY growth in subscription revenue (27%), total revenue (25%), and GTV (19% YoY) indicating durable demand across the platform.
>110% net dollar retention signals high value realization and wallet share expansion within existing customers.
Record operating margin (12.1%) with a 510 bps YoY improvement, supported by higher-margin usage revenue.
High platform gross margin (80.7%), aided by efficiency gains and selective cost allocations to sales/marketing.
AI leadership via Titan Intelligence enabling automated workflows across booking, scheduling, dispatch, and payments; prominent customer success stories (Gulfshore) illustrate ROI.
Large addressable market in commercial construction and roofing, supported by a structured product roadmap and go-to-market execution.
Weaknesses
HVAC saw a softer quarter on a difficult YoY comp, indicating exposure to seasonality and weather-driven demand.
Reliance on large enterprise deals introduces execution risk and potential customer concentration concerns.
Pricing and packaging of Pro and related modules still evolving, with potential impact on attach rates and gross margins until monetization is optimized.
Opportunities
Roto-Rooter deployment validates scale to large enterprise multi-division customers and can unlock broader market access.
Construction-focused features (RFIs, submittals, change orders, document management) to accelerate enterprise win-rate and product-market fit in commercial roofing and general contracting.
Expansion of Pro-product ecosystem and AI-driven automation to improve sales efficiency, ticket size, and close rates (e.g., Gulfshore outcomes).
Pantheon/Ignite events to accelerate customer education and demand generation for advanced AI-enabled workflows.
Threats
Industry competition from other field-service software platforms and bespoke ERP solutions.
Macroeconomic headwinds could affect discretionary software spend in trades.
Execution risk in scaling high-ROI automation across diverse trades and geographies, including integration with insurance workflows and distributors.