ServiceTitan, Inc.(TTAN) - 2026 Q2 - Quarterly Results

Company Overview and Executive Summary Introduction and Management Commentary ServiceTitan announced its fiscal second quarter 2026 financial results, with management highlighting strong performance in the seasonally strongest quarter for the trades and progress in the large enterprise Commercial market due to multi-year investments - CEO Ara Mahdessian expressed gratitude for the team's empowerment of customers and emphasized the opportunity to transform the lives of contractors[2] - President Vahe Kuzoyan noted progress on company goals, particularly a positive change in the large enterprise Commercial market where multi-year investments are yielding results[2] About ServiceTitan ServiceTitan is a software platform providing cloud-based, end-to-end solutions for trades businesses, enabling contractors to manage and grow their operations, handle back-office functions, and enhance customer experience - ServiceTitan offers a cloud-based, end-to-end SaaS platform that powers trades businesses[8] - The platform provides contractors with tools to run and grow their business, manage back-office, and deliver a stellar customer experience[8] - The company aims to equip tradespeople with technology in an industry historically underserved by technology[8] Financial Performance and Outlook Fiscal Second Quarter 2026 Financial and Operational Highlights ServiceTitan reported strong fiscal Q2 2026 results, with significant year-over-year growth in Gross Transaction Volume (GTV), total revenue, and platform revenue. Non-GAAP income from operations and operating margin also saw substantial improvements Fiscal Second Quarter 2026 Financial and Operational Highlights | Metric | FY26 Q2 (Millions) | FY25 Q2 (Millions) | YOY GTV Growth (FY26 Q2) | YOY GTV Growth (FY25 Q2) | | :-------------------------------- | :----------------- | :----------------- | :----------------------- | :----------------------- | | Gross Transaction Volume ("GTV") (in billions) | $22.9 | $19.2 | 19% | 23% | | Total revenue | $242.1 | $193.0 | 25% | 24% | | Platform revenue | $232.7 | $185.0 | 26% | 25% | | GAAP loss from operations | $(34.8) | $(32.6) | - | - | | Non-GAAP income from operations | $29.2 | $13.5 | - | - | | Non-GAAP operating margin | 12.1% | 7.0% | - | - | | GAAP net cash provided by operating activities | $40.3 | $25.3 | - | - | | Non-GAAP free cash flow | $34.3 | $18.7 | - | - | | Net dollar retention | > 110% | > 110% | - | - | Fiscal Third Quarter and Fiscal Year 2026 Financial Outlook ServiceTitan provided financial guidance for fiscal Q3 2026 and the full fiscal year 2026, projecting continued revenue growth and non-GAAP income from operations Fiscal Third Quarter and Fiscal Year 2026 Financial Outlook | Metric | Fiscal Third Quarter 2026 (Millions) | Full Fiscal Year 2026 (Millions) | | :-------------------------------- | :--------------------------------- | :------------------------------- | | Total revenue | $237 - $239 | $935 - $940 | | Non-GAAP income from operations | $14 - $15 | $74 - $76 | - The company is unable to provide a GAAP loss from operations outlook or reconciliation due to the difficulty of estimating certain excluded items like stock-based compensation expense[4] Condensed Consolidated Financial Statements (GAAP) Condensed Consolidated Statements of Operations For the three months ended July 31, 2025, ServiceTitan reported a total revenue of $242.1 million, an increase from $193.0 million in the prior year, but still incurred a net loss of $32.2 million Condensed Consolidated Statements of Operations (Three Months Ended July 31) | Metric | 2025 (Thousands) | 2024 (Thousands) | | :-------------------------------- | :--------------- | :--------------- | | Total revenue | $242,123 | $192,994 | | Gross profit | $171,349 | $126,826 | | Loss from operations | $(34,772) | $(32,610) | | Net loss | $(32,225) | $(35,652) | | Net loss per share, basic and diluted | $(0.35) | $(1.43) | - For the six months ended July 31, 2025, total revenue was $457.8 million, with a net loss of $78.6 million[14] Disaggregated Revenue Platform revenue, comprising subscription and usage fees, continues to be the primary revenue driver, showing strong growth for both the three and six months ended July 31, 2025 Disaggregated Revenue (Three Months Ended July 31) | Revenue Type | 2025 (Thousands) | 2024 (Thousands) | | :-------------------------- | :--------------- | :--------------- | | Subscription | $174,753 | $137,697 | | Usage | $57,973 | $47,300 | | Platform revenue | $232,726 | $184,997 | | Professional services and other | $9,397 | $7,997 | | Total revenue | $242,123 | $192,994 | - For the six months ended July 31, 2025, subscription revenue was $337.5 million and usage revenue was $103.2 million[15] Condensed Consolidated Balance Sheets As of July 31, 2025, ServiceTitan maintained a strong financial position with total assets of $1.78 billion, a slight increase from January 31, 2025, and a decrease in total liabilities Condensed Consolidated Balance Sheets (As of) | Metric | July 31, 2025 (Thousands) | January 31, 2025 (Thousands) | | :-------------------------------- | :------------------------ | :------------------------- | | Total assets | $1,783,881 | $1,768,648 | | Total liabilities | $294,467 | $314,064 | | Total stockholders' equity | $1,489,414 | $1,454,584 | | Cash and cash equivalents | $471,485 | $441,802 | - Current assets increased to $622.9 million from $572.8 million, primarily driven by an increase in cash and cash equivalents and accounts receivable[17] - Total liabilities decreased by approximately $19.6 million, mainly due to a reduction in accrued personnel related expenses[17] Condensed Consolidated Statements of Cash Flows ServiceTitan generated significant cash from operating activities in fiscal Q2 2026, with net cash provided by operating activities increasing to $40.3 million from $25.3 million in the prior year quarter Condensed Consolidated Statements of Cash Flows (Three Months Ended July 31) | Metric | 2025 (Thousands) | 2024 (Thousands) | | :-------------------------------- | :--------------- | :--------------- | | Net cash provided by operating activities | $40,340 | $25,316 | | Net cash used in investing activities | $(6,040) | $(6,588) | | Net cash provided by (used in) financing activities | $16,920 | $(7,286) | | Net change in cash, cash equivalents, and restricted cash | $51,220 | $11,442 | - For the six months ended July 31, 2025, net cash provided by operating activities was $25.8 million, a substantial increase from $6.1 million in the prior year period[19] - Proceeds from the exercise of stock options significantly contributed to financing activities in 2025[19] Non-GAAP Financial Measures and Reconciliations Statement Regarding Use of Non-GAAP Financial Measures ServiceTitan uses non-GAAP financial measures to provide additional insights into its operating performance, believing these measures are useful for evaluating results, future prospects, and comparisons, despite their inherent limitations - Non-GAAP measures are used to adjust GAAP financial measures for the impact of various items, offering a supplementary view of operating performance[20] - Management acknowledges that non-GAAP measures have limitations and should not be considered substitutes for GAAP results, as they involve judgment and may not be comparable across companies[21] - The company excludes items like stock-based compensation, amortization of acquired intangibles, restructuring charges, loss on operating lease assets, and acquisition-related items to facilitate meaningful comparisons and internal performance assessment[22][23] Non-GAAP Definitions This section defines the methodologies for calculating Non-GAAP EPS and Free Cash Flow, emphasizing their purpose in providing a clearer view of the company's core operational and liquidity performance Non-GAAP EPS Definition Non-GAAP EPS is calculated by dividing non-GAAP net income by weighted-average shares outstanding, with diluted EPS accounting for potentially dilutive common stock equivalents using the treasury method - Non-GAAP basic EPS is non-GAAP net income divided by basic weighted-average shares outstanding[24] - Non-GAAP diluted EPS includes the dilutive effect of stock options, restricted stock units, and acquisition indemnity shares withheld using the treasury method[24] Free Cash Flow Definition Free cash flow is defined as GAAP net cash provided by (used in) operating activities, adjusted for cash used in investing activities related to capitalized internal-use software and property/equipment purchases, serving as an indicator of liquidity - Free cash flow is calculated as GAAP net cash from operating activities minus capitalized internal-use software and purchases of property and equipment[25] - It is considered a meaningful indicator of liquidity and capital requirements, useful for evaluating cash flow trends and investment in future growth[25] - Limitations include not reflecting mandatory debt service and potential incomparability with other companies' similarly titled measures[25] GAAP to Non-GAAP Reconciliations This section provides detailed reconciliations from GAAP to non-GAAP financial measures for various income statement line items, illustrating the impact of adjustments such as stock-based compensation, amortization of acquired intangibles, and other non-recurring charges Non-GAAP Gross Profit and Gross Margin Non-GAAP gross profit and gross margin show improvements over GAAP figures, primarily by excluding stock-based compensation, amortization of acquired intangibles, and loss on operating lease assets Non-GAAP Gross Profit and Gross Margin (Three Months Ended July 31) | Metric | 2025 (Thousands) | 2024 (Thousands) | | :-------------------------- | :--------------- | :--------------- | | GAAP gross profit | $171,349 | $126,826 | | Non-GAAP gross profit | $180,064 | $137,263 | | GAAP gross margin | 70.8% | 65.7% | | Non-GAAP gross margin | 74.4% | 71.1% | - Adjustments for Q2 2025 included $2.8 million for stock-based compensation and $5.9 million for amortization of acquired intangibles[27] - For the six months ended July 31, 2025, Non-GAAP gross profit was $338.8 million (GAAP: $319.7 million) and Non-GAAP gross margin was 74.0% (GAAP: 69.8%)[28][29] Non-GAAP Sales and Marketing Expense Non-GAAP sales and marketing expense is significantly lower than GAAP, reflecting the exclusion of non-cash and non-recurring items like stock-based compensation and amortization of acquired intangibles Non-GAAP Sales and Marketing Expense (Three Months Ended July 31) | Metric | 2025 (Thousands) | 2024 (Thousands) | | :-------------------------------- | :--------------- | :--------------- | | GAAP sales and marketing expense | $69,544 | $58,218 | | Non-GAAP sales and marketing expense | $56,335 | $46,759 | - Adjustments for Q2 2025 included $(7.7) million for stock-based compensation and $(5.5) million for amortization of acquired intangibles[30] Non-GAAP Research and Development Expense Non-GAAP research and development expense is presented after excluding stock-based compensation, acquisition-related items, restructuring charges, and loss on operating lease assets, providing a clearer view of core R&D investment Non-GAAP Research and Development Expense (Three Months Ended July 31) | Metric | 2025 (Thousands) | 2024 (Thousands) | | :-------------------------------- | :--------------- | :--------------- | | GAAP research and development expense | $73,065 | $62,449 | | Non-GAAP research and development expense | $60,362 | $50,583 | - Adjustments for Q2 2025 primarily included $(12.7) million for stock-based compensation[31] Non-GAAP General and Administrative Expense Non-GAAP general and administrative expense significantly reduces the GAAP figure by excluding stock-based compensation (including Co-Founders' performance-based RSUs), acquisition-related items, restructuring charges, and loss on operating lease assets Non-GAAP General and Administrative Expense (Three Months Ended July 31) | Metric | 2025 (Thousands) | 2024 (Thousands) | | :-------------------------------- | :--------------- | :--------------- | | GAAP general and administrative expense | $63,512 | $38,769 | | Non-GAAP general and administrative expense | $34,164 | $26,442 | - Adjustments for Q2 2025 included $(15.8) million for stock-based compensation and $(13.5) million for Co-Founders performance-based RSUs[32] Non-GAAP Income from Operations and Operating Margin ServiceTitan achieved positive non-GAAP income from operations and a significantly improved non-GAAP operating margin in fiscal Q2 2026, contrasting with GAAP operating losses, due to the exclusion of various non-cash and non-recurring expenses Non-GAAP Income from Operations and Operating Margin (Three Months Ended July 31) | Metric | 2025 (Thousands) | 2024 (Thousands) | | :-------------------------------- | :--------------- | :--------------- | | GAAP loss from operations | $(34,772) | $(32,610) | | Non-GAAP income from operations | $29,203 | $13,479 | | GAAP operating margin | (14.4)% | (16.9)% | | Non-GAAP operating margin | 12.1% | 7.0% | - Key adjustments for Q2 2025 included $39.1 million for stock-based compensation and related payroll taxes, and $13.5 million for Co-Founders performance-based RSUs[33] - For the six months ended July 31, 2025, Non-GAAP income from operations was $45.4 million (GAAP loss: $84.3 million) and Non-GAAP operating margin was 9.9% (GAAP: (18.4)%)[33] Non-GAAP Net Income ServiceTitan reported positive non-GAAP net income for fiscal Q2 2026, a significant improvement from the GAAP net loss, after adjusting for non-cash and non-recurring items and their tax effects Non-GAAP Net Income (Three Months Ended July 31) | Metric | 2025 (Thousands) | 2024 (Thousands) | | :-------------------------------- | :--------------- | :--------------- | | GAAP net loss | $(32,225) | $(35,652) | | Non-GAAP net income | $32,845 | $10,017 | - Adjustments for Q2 2025 included $39.1 million for stock-based compensation, $13.5 million for Co-Founders performance-based RSUs, and $11.4 million for amortization of acquired intangibles[34] - For the six months ended July 31, 2025, Non-GAAP net income was $50.7 million (GAAP net loss: $78.6 million)[34] Non-GAAP EPS ServiceTitan achieved positive non-GAAP diluted EPS of $0.33 in fiscal Q2 2026, reflecting the positive non-GAAP net income and the impact of dilutive securities Non-GAAP EPS (Three Months Ended July 31, 2025) | Metric | 2025 (Thousands, except per share) | | :-------------------------------- | :-------------------------------- | | Non-GAAP net income | $32,845 | | Weighted-average shares (basic) | 91,687,907 | | Weighted-average shares (diluted) | 99,387,647 | | GAAP net loss per share, basic and diluted | $(0.35) | | Non-GAAP net income per share, basic | $0.36 | | Non-GAAP net income per share, diluted | $0.33 | - For the six months ended July 31, 2025, Non-GAAP diluted EPS was $0.51[35] - Prior year non-GAAP EPS is not provided due to the redeemable convertible preferred stock outstanding before the IPO, which would not offer meaningful trend information[35] Free Cash Flow ServiceTitan generated strong non-GAAP free cash flow of $34.3 million in fiscal Q2 2026, a significant increase from the prior year, indicating robust liquidity Free Cash Flow (Three Months Ended July 31) | Metric | 2025 (Thousands) | 2024 (Thousands) | | :-------------------------------- | :--------------- | :--------------- | | GAAP net cash provided by operating activities | $40,340 | $25,316 | | Non-GAAP free cash flow | $34,300 | $18,728 | - For the six months ended July 31, 2025, Non-GAAP free cash flow was $12.0 million, a substantial improvement from a negative free cash flow of $(5.9) million in the prior year period[36] Additional Information Conference Call Information ServiceTitan scheduled a conference call and webcast for September 4, 2025, to discuss the financial results and business highlights, with replay available online - A conference call and webcast were scheduled for September 4, 2025, at 2:00 p.m. Pacific Time[6] - The live webcast and replay are accessible via ServiceTitan's investor relations website[6][7] Forward Looking Statements This section contains standard forward-looking statements regarding ServiceTitan's financial outlook, cautioning that actual results may differ materially due to various risks and uncertainties detailed in SEC filings - The press release includes forward-looking statements concerning financial outlook for fiscal Q3 2026 and full fiscal year 2026[9] - Actual results may differ materially from projections due to risks and uncertainties, as described in the company's Form 10-Q filings[9] - ServiceTitan undertakes no obligation to update forward-looking statements, except as required by law[9] Press and Investor Contacts Contact information for ServiceTitan's press and investor relations teams is provided for inquiries - Press inquiries can be directed to Max Wertheimer at press@servicetitan.com[11] - Investor inquiries can be directed to Jason Rechel at investors@servicetitan.com[11]