Core Insights - ServiceTitan (TTAN) shares increased by 13% following the release of Q3 fiscal 2026 results, which showed earnings of 24 cents per share, exceeding the Zacks Consensus Estimate by 60% and reversing a loss of 45 cents from the previous year [1][8] Financial Performance - Revenues for the quarter reached $249.2 million, marking a 25% year-over-year increase and surpassing the consensus estimate by 4.5%. This growth was driven by strong execution with both new and existing customers, alongside a 22% rise in gross transaction volume to $21.7 billion. Net dollar retention exceeded 110% [2][8] - Adjusted gross profit was reported at 74.3%, an expansion of 390 basis points year-over-year, while platform gross margin increased by 310 basis points to 80.2% [3] - Total operating expenses amounted to $163.6 million, reflecting a 17.9% year-over-year increase due to higher research and development (up 17.8%), sales and marketing (up 16.6%), and general and administrative expenses (up 20.5%). Non-GAAP operating income rose to $21.5 million from $1.6 million in the prior year [4][8] Balance Sheet Strength - As of October 31, 2025, ServiceTitan held cash, cash equivalents, and restricted cash totaling $493.2 million. Free cash flow for the quarter was $37.7 million, compared to $10.6 million in the same quarter last year [5] Future Guidance - For Q4 fiscal 2026, ServiceTitan anticipates total revenues between $244 million and $246 million, with expected operating income in the range of $16 million to $17 million. For the full fiscal 2026, revenues are projected to be between $951 million and $953 million, with operating income expected to be between $83 million and $84 million [6]

Core Viewpoint - The company Service Titan is highlighted as a promising investment opportunity due to its growth potential in the vertical software market, particularly for trades like roofing and landscaping, despite not yet being profitable [1][4][12]. Company Overview - Service Titan is a relatively new company that has not been trading for a full year and is currently in a growth phase, focusing on building its customer base among small to mid-sized businesses in various trades [1][4][5]. - The company reported a revenue growth of 25% in its last earnings report, with expectations to maintain a 20% growth rate moving forward [6][12]. Financial Performance - Subscription revenue reached $182.8 million, reflecting a year-over-year increase of 26% [6]. - Gross margins improved to 80.2%, up 310 basis points year-over-year, indicating strong operational efficiency [7]. Market Position and Strategy - Service Titan is positioned as a "category killer" in its niche, aiming to integrate AI into workflows for trades, which enhances customer stickiness and operational efficiency [3][9]. - The company is targeting partnerships with various trades to expand its software usage, which is expected to drive further growth [7][9]. Competitive Landscape - The company is currently valued at about 10 times forward sales, which is considered high compared to other software companies, but it is growing faster than many established players [11]. - There is skepticism in the market regarding the company's lack of profitability and potential competition, but the focus remains on market share acquisition rather than immediate profitability [10][12].

Market Overview - The CNN Money Fear and Greed index showed a slight increase in overall fear, remaining in the "Fear" zone with a reading of 40.4, down from 40.6 [7] - U.S. stocks closed higher, with the Dow Jones gaining over 100 points, supported by economic data that bolstered expectations for a Federal Reserve interest rate cut [1] Economic Indicators - The core Personal Consumption Expenditures price index decreased from 2.9% to 2.8% year over year in September, slightly below expectations [2] - The CME FedWatch tool indicates an 87% probability of a 25-basis-point interest rate cut next week [2] - The University of Michigan's preliminary December consumer survey showed an improvement in overall sentiment, rising from 51 to 53.3, with further softening of inflation expectations [2] Company News - Netflix Inc. experienced a 2.9% drop after announcing a definitive agreement to acquire Warner Bros. Discovery Inc. for $27.75 per share, valuing the company at approximately $72 billion [3] - Ulta Beauty Inc. shares surged 12.7% after exceeding analysts' estimates and raising its outlook [4] - ServiceTitan Inc. shares rose 10.5% following better-than-expected third-quarter financial results [4] Sector Performance - Most sectors on the S&P 500 closed negatively, with utilities, health care, and energy stocks experiencing the largest losses [5] - Communication services and information technology stocks closed higher during the session [5] - The Dow Jones closed at 47,954.99, up around 104 points, while the S&P 500 gained 0.19% to 6,870.40, and the Nasdaq Composite climbed 0.31% to 23,578.13 [5] Upcoming Earnings - Investors are anticipating earnings results from Toll Brothers Inc., Phreesia Inc., and Compass Minerals International, Inc. [6]

Group 1 - The individual investor focuses on undercovered companies, particularly in technology, software, electronics, and energy transition sectors [1] - The investor has over 7 years of personal capital investment experience across a broad range of global companies [1] - The investor holds a Master's degree in Electrical Engineering and works as an automotive battery R&D engineer in Sweden [1] Group 2 - The investor maintains a watchlist of up to 100 companies, aiming to identify asymmetric investment opportunities for market-beating returns [1] - The write-ups on Seeking Alpha serve as a platform for laying out investment theses and receiving community feedback [1]

Financial Performance - ServiceTitan Inc reported quarterly earnings of 24 cents per share, exceeding the analyst consensus estimate of 15 cents per share [1] - The company reported quarterly sales of $249.200 million, surpassing the analyst consensus estimate of $238.535 million [1] - ServiceTitan raised its FY2026 sales guidance from $935 million-$940 million to $951 million-$953 million [1] Market Reaction - Following the earnings announcement, ServiceTitan shares rose by 15.8% to trade at $110.66 [2] Analyst Ratings and Price Targets - Piper Sandler analyst maintained an Overweight rating but lowered the price target from $155 to $140 [4] - BMO Capital analyst maintained an Outperform rating and raised the price target from $115 to $125 [4] - Morgan Stanley analyst maintained an Equal-Weight rating and raised the price target from $118 to $125 [4] - TD Cowen analyst maintained a Buy rating and raised the price target from $150 to $160 [4]

Core Insights - ServiceTitan Inc. reported a revenue of $249.16 million for the quarter ended October 2025, marking a year-over-year increase of 25% and exceeding the Zacks Consensus Estimate by 4.5% [1] - The company achieved an EPS of $0.24, a significant improvement from -$0.45 a year ago, resulting in a surprise of 60% over the consensus EPS estimate of $0.15 [1] Financial Performance Metrics - Gross Transaction Volume reached $21.70 billion, surpassing the three-analyst average estimate of $20.48 billion [4] - Revenue from the Platform segment was $239.58 million, exceeding the average estimate of $229.79 million from five analysts [4] - Revenue from Professional Services and Other was $9.58 million, compared to the average estimate of $8.55 million [4] - Subscription revenue from the Platform was $182.78 million, above the average estimate of $178.06 million [4] - Usage revenue from the Platform was $56.8 million, exceeding the four-analyst average estimate of $51.56 million [4] - Non-GAAP gross profit for Professional Services & Other was -$7.02 million, better than the average estimate of -$8.08 million [4] - Non-GAAP gross profit for the Platform was $192.12 million, surpassing the average estimate of $182.84 million [4] Stock Performance - Shares of ServiceTitan Inc. have returned +1.7% over the past month, compared to a +0.1% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Core Insights - ServiceTitan Inc. reported quarterly earnings of $0.24 per share, exceeding the Zacks Consensus Estimate of $0.15 per share, and showing a significant improvement from a loss of $0.45 per share a year ago, resulting in an earnings surprise of +60.00% [1] - The company achieved revenues of $249.16 million for the quarter ended October 2025, surpassing the Zacks Consensus Estimate by 4.50% and reflecting a year-over-year increase from $199.27 million [2] - ServiceTitan has consistently outperformed consensus EPS and revenue estimates over the last four quarters [2] Earnings Outlook - The future performance of ServiceTitan's stock will largely depend on management's commentary during the earnings call and the sustainability of the recent earnings surprise [3][4] - The current consensus EPS estimate for the upcoming quarter is $0.16 on revenues of $242.06 million, while the estimate for the current fiscal year is $0.83 on revenues of $938.37 million [7] Industry Context - The Internet - Software industry, to which ServiceTitan belongs, is currently ranked in the top 25% of over 250 Zacks industries, indicating a favorable outlook compared to lower-ranked industries [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Data and Key Metrics Changes - Q3 gross transaction volume (GTV) was $21.7 billion, representing a 22% year-over-year growth [18] - Total revenue for Q3 was $249.2 million, growing 25% year-over-year [19] - Subscription revenue reached $182.8 million, a 26% year-over-year increase [19] - Usage revenue grew 24% year-over-year to $56.8 million, exceeding expectations [19] - Q3 platform gross margin was 80.2%, an improvement of 310 basis points year-over-year [19] - Free cash flow for Q3 was a record $38 million, up from $11 million in the prior year [20] Business Line Data and Key Metrics Changes - Pro products continued to be the largest driver of subscription revenue growth [12] - The introduction of Field Pro and virtual agents across the pro portfolio contributed to growth [13] - The commercial segment saw strong results with the introduction of commercial CRM and construction management capabilities [14] Market Data and Key Metrics Changes - GTV growth was led by the commercial sector, with consistent growth in HVAC and other trades within residential [18] - The customer base is diverse, with GTV insulated from supplier inventory cycles due to its focus on break/fix services [18][71] Company Strategy and Development Direction - The company aims to build the operating system for the trades, focusing on delivering real ROI to customers [5][27] - The MAX program is a key initiative aimed at automating workflows and optimizing revenue for customers [28] - The strategy includes leveraging AI to enhance customer operations and improve profitability [10][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory and the opportunity to democratize AI for the trades [6] - The company is focused on delivering sustainable high ROI to customers in resilient trades [21] - Management noted that the current economic environment remains stable, with job growth and average ticket sizes consistent [50] Other Important Information - The company paid approximately $20 million in cash for the acquisition of Conduit, which is expected to enhance cross-sell opportunities [20] - The company is experiencing strong momentum from private equity customers, who are significant adopters of pro products [36] Q&A Session Summary Question: What are the plans for achieving multi-billion-dollar revenue? - Management emphasized the importance of building the operating system for the trades and leveraging AI as a critical opportunity for growth [27] Question: How is the MAX program progressing? - The MAX program is in early stages, with a focus on ensuring success for initial participants before broader rollout [35] Question: What is the current technician to back office staff ratio? - The ratio varies by trade, with some contractors achieving over two technicians per back office staff [40] Question: Why is GTV in residential HVAC insulated from OEM volume declines? - GTV is driven by break/fix services rather than new home construction, making it less susceptible to OEM cycles [71] Question: What are the learnings from the commercial side? - There is a trend towards consolidation in the commercial space, with a focus on providing capabilities that allow for synergies similar to the residential side [60] Question: How does the company view the impact of AI on product strategy? - The rise of AI presents opportunities for new products and services, with a focus on ensuring the best market solutions for customers [90]

Financial Data and Key Metrics Changes - Q3 total revenue reached $249.2 million, growing 25% year-over-year [17] - Subscription revenue was $182.8 million, reflecting a 26% year-over-year increase [18] - Free cash flow for Q3 was a record $38 million, up from $11 million in the prior year [19] - Q3 platform gross margin improved to 80.2%, an increase of 310 basis points year-over-year [18] - Operating income for Q3 was $21.5 million, resulting in an operating margin of 8.6%, an improvement of 780 basis points year-over-year [18] Business Line Data and Key Metrics Changes - Pro products continued to be the largest driver of subscription revenue growth [12] - The introduction of Field Pro and virtual agents across the pro portfolio indicates a shift towards AI-driven solutions [13] - Professional services revenue for Q3 was $9.6 million, contributing to overall revenue growth [18] Market Data and Key Metrics Changes - Q3 gross transaction volume (GTV) was $21.7 billion, representing a 22% year-over-year growth [17] - GTV growth was primarily driven by commercial sectors, with consistent growth in HVAC and other residential trades [17] - Net dollar retention exceeded 110% for the quarter, indicating strong customer loyalty and expansion [18] Company Strategy and Development Direction - The company aims to build the operating system for the trades, focusing on delivering real ROI to customers [4] - The MAX program is a key initiative aimed at automating workflows and optimizing revenue for contractors [30] - The strategy includes leveraging AI to enhance customer experience and operational efficiency [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory, emphasizing the importance of AI in the trades [27] - The company anticipates continued strong performance in the fourth quarter, despite a one-day reduction in business days compared to the previous year [20] - Management highlighted the resilience of the markets served, particularly in essential services [17] Other Important Information - The company completed the acquisition of Conduit for approximately $20 million, which is expected to enhance cross-sell opportunities [19] - The partnership with Verisk aims to streamline claims management for contractors, particularly in the roofing sector [15] Q&A Session Summary Question: What are the plans for scaling to a multi-billion-dollar revenue company? - Management emphasized the focus on building the operating system for trades and leveraging AI as a critical opportunity for growth [27] Question: How is the MAX program progressing? - The MAX program is in early stages, with a focus on ensuring success for initial participants before broader rollout [36] Question: What is the contribution of private equity customers to growth? - Private equity customers are significant utilizers of the product, growing faster than non-sponsored customers [37] Question: What is the average technician to back office staff ratio? - The ratio varies by trade, with efficient contractors achieving higher ratios, indicating potential for increased automation and profitability [40] Question: What are the dynamics affecting Q4 guidance? - The guidance reflects typical seasonal moderation and prudent GTV forecasts, with no unusual factors impacting expectations [44] Question: How is the roofing initiative progressing? - The roofing sector is seeing strong traction, particularly with insurance-based workflows and partnerships [49] Question: What is the outlook for GTV and consumer health? - Job growth and average ticket sizes remain consistent, indicating a stable economic environment [51] Question: How does the company plan to invest in the commercial opportunity? - The focus will remain on enhancing construction capabilities and AI-driven value creation [55] Question: What are the learnings from the commercial side? - There is a trend towards consolidation, with a desire for more centralized operations among commercial contractors [60] Question: How is fintech utilization impacting usage growth? - Increased adoption of fintech products has driven higher usage rates among customers [105]

Financial Highlights - Q3FY26 total revenue reached $249 million[7] - Q3FY26 saw a YoY revenue growth of 25%[7] - Q3FY26 GTV was $22 billion, representing a YoY growth of 22%[7] - The company achieved a Q3FY26 non-GAAP operating margin of 8.6%[7] - Q3FY26 non-GAAP platform gross margin stood at 80.2%[7] - The net dollar retention rate for Q3FY26 exceeded 110%[7] Market Opportunity - The company addresses approximately $650 billion of the trades industry spend[20] - The total addressable market (TAM) is estimated to be over $1.5 trillion[21] - Potential revenue with full platform deployment is estimated at ~$13 billion[24] Customer Base - The company has approximately 9,500 active customers[41] - Over 1,000 customers generate >$100K in annualized billings, accounting for >50% of total annualized billings[41]