EPS of $-1.32 increased by 7.5% from previous year
Gross margin of 65.2%
Net income of -46.46M
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ServiceTitan Inc (TTAN) QQ3 2024 Earnings Analysis — Revenue Growth Amid Margin Pressures and Path to Profitability
Executive Summary
ServiceTitan’s QQ3 2024 results show a still-growing top line but ongoing profitability challenges. Revenue reached $199.28 million, up 23.19% year over year and 9.70% quarter over quarter. Gross profit was $129.95 million, yielding a gross margin of 65.2%. However, operating income remained negative at -$44.05 million and net income was -$46.46 million, with EPS of -$1.74 (diluted -$1.32). EBITDA was -$21.86 million, reflecting continued investment in R&D and go-to-market initiatives. Despite the negative GAAP bottom line, the company generated positive operating cash flow of $15.53 million and free cash flow of $10.57 million, supported by a cash balance of $135.09 million and modest capital expenditure.
Key Performance Indicators
Revenue
199.28M
QoQ: 9.70% | YoY:23.19%
Gross Profit
129.95M
65.21% margin
QoQ: 14.95% | YoY:29.67%
Operating Income
-44.05M
QoQ: -2.39% | YoY:8.41%
Net Income
-46.46M
QoQ: -1.34% | YoY:9.63%
EPS
-1.74
QoQ: -18.37% | YoY:7.45%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $199.28M; YoY +23.19%; QoQ +9.70%
Gross Profit: $129.95M; Gross Margin 65.21%
Operating Income: -$44.05M; OpEx elevated with R&D at $65.94M and SG&A + S&M combined at $97.33M
EBITDA: -$21.86M; EBITDA margin -10.97%
Net Income: -$46.46M; Net margin -23.31%
Financial Highlights
Overview of key metrics and trends:
- Revenue: $199.28M; YoY +23.19%; QoQ +9.70%
- Gross Profit: $129.95M; Gross Margin 65.21%
- Operating Income: -$44.05M; OpEx elevated with R&D at $65.94M and SG&A + S&M combined at $97.33M
- EBITDA: -$21.86M; EBITDA margin -10.97%
- Net Income: -$46.46M; Net margin -23.31%
- EPS: -$1.74; Diluted EPS -$1.32
- Cash Flow: Operating cash flow $15.53M; Free cash flow $10.57M
- Liquidity: Cash $135.09M; Current ratio ~1.80; Cash ratio ~0.96; Debt ratios indicate modest leverage with negative equity dynamics impacting valuation metrics
- Valuation inputs: Price-to-sales ~13.52x; other multiples indicate a high-growth, high-investment profile with profitability lagging peers
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
199.28M
23.19%
9.70%
Gross Profit
129.95M
29.67%
14.95%
Operating Income
-44.05M
8.41%
-2.39%
Net Income
-46.46M
9.63%
-1.34%
EPS
-1.74
7.45%
-18.37%
Key Financial Ratios
currentRatio
1.8
grossProfitMargin
65.2%
operatingProfitMargin
-22.1%
netProfitMargin
-23.3%
returnOnAssets
-3.16%
returnOnEquity
8.06%
debtEquityRatio
-0.41
operatingCashFlowPerShare
$0.58
freeCashFlowPerShare
$0.4
priceToBookRatio
-4.67
priceEarningsRatio
-14.5
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Transcript availability: The provided data set includes an empty earnings transcript (earningsTranscript: []). Consequently, there are no management quotes to excerpt. In the absence of official call excerpts, the analysis relies on reported results and standard management commentary cues typical for a growth SaaS company (investors should source the official call for exact quotes). Anticipated themes in a typical QQ3 call would include: product roadmap progression, monetization strategy, customer growth/retention metrics, guidance on gross margin improvements, and path to profitability through operating leverage. Investors should verify any explicit guidance or commentary from the management team in the SEC filing or the company’s investor relations release.
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Forward Guidance
No explicit forward guidance is provided in the supplied data. Given the results, the business is likely to be evaluated on its ability to improve operating leverage, accelerate ARR growth, and move toward sustainable profitability. Key variables to monitor include: (1) ARR and net revenue retention (NRR) trends, (2) gross margin trajectory and pricing/packs optimization, (3) operating expense discipline (R&D vs. sales/marketing and G&A), (4) cash flow conversion and free cash flow trajectory, and (5) liquidity runway and capital allocation (share repurchases vs. investment). Investors should watch for any updated guidance on target profitability milestones, cycle-time to profitability improvements, and KPIs such as ARR growth rate, logo retention, and cross-sell momentum.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
TTAN Focus
65.21%
-22.10%
8.06%
-14.50%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Baseline view: ServiceTitan is growing revenue and generating cash flow, but remains unprofitable on a GAAP basis. The near-term investment phase appears to be funded by a strong cash position and ongoing R&D/sales investments. For investors, the key to a more constructive outlook is evidence of operating leverage and margin expansion (improvement in gross margin, reduced burn, and positive EBITDA). The stock could re-rate if management demonstrates progress toward sustainable profitability while maintaining healthy ARR growth and customer retention. Key monitoring points include ARR growth trajectory, net revenue retention, gross margin improvement, and the ability to convert high top-line growth into meaningful positive cash flow and earnings. Given the current multiples (price-to-sales ~13.5x) and negative enterprise value implications in the data, a cautious stance is warranted until clearer profitability milestones are achieved.
Key Investment Factors
Growth Potential
Strong revenue growth signals a scalable SaaS model in a large addressable market (field-service software for residential/commercial environments). Potential upside from cross-sell/upsell of modules, international expansion, and pricing optimization to improve gross margins and monetize existing customers.
Profitability Risk
Near-term profitability remains a challenge (negative EBITDA and net income). High stock-based compensation and elevated operating expenses pressure margins. Dependence on continued investment in growth initiatives; any slowdown in new customer adds or longer sales cycles could dampen ARR growth. Valuation may be sensitive to the pace of margin expansion and cash flow improvement.
Financial Position
Solid liquidity with $135.09M cash and ~1.80 current ratio. Modest leverage with debt ratios showing negative equity implications; negative book value metrics. Positive operating cash flow ($15.53M) and free cash flow ($10.57M) indicate cash-generative activity despite GAAP losses. Share repurchases ($5.40M) and minimal debt repayments suggest a soft capital allocation stance while focusing on liquidity.
SWOT Analysis
Strengths
Gross margin of ~65% supports pricing power and service mix.
Positive liquidity with $135.1M cash and manageable leverage.