ServiceTitan, Inc.(TTAN) - 2026 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Q1 gross transaction volume (GTV) was $17.7 billion, up 22$215.7 million, up 27% year over year, driven by subscription revenue of $162.7 million, which grew 29$16.2 million, leading to a record operating margin of 7.5%, an improvement of 560 basis points year over year [25] - Q1 free cash flow was negative $22.3 million, an improvement from negative$24.6 million in the prior year [26] Business Line Data and Key Metrics Changes - Subscription revenue growth was 29% year over year, while usage revenue grew 22% year over year [24] - Professional service revenue for Q1 was $7.7 million [24] - Net dollar retention was greater than 110% for the quarter [24] Market Data and Key Metrics Changes - The company reported healthy growth from both residential and commercial customers [23] - The focus on enterprise customers is increasingly driving growth, with significant interest in standardizing operations around AI and automation [16][17] Company Strategy and Development Direction - The company aims to deliver real ROI to customers, which drives subscription and usage revenue growth [6] - Four primary areas of focus for FY 2026 include expanding enterprise capabilities, pro product adoption, deeper engagement in commercial, and growth in roofing [15] - The company is leveraging partnerships and technology to enhance its offerings, particularly in the commercial and roofing sectors [21][66] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate economic uncertainty and highlighted the resilience of customers [32] - The company is managing for long-term growth and margin expansion, with a target of achieving a 25% non-GAAP operating margin [27] - Management is cautious about external factors such as tariffs and their potential impact on customer growth and supply chain inflation [32] Other Important Information - The company is focused on delivering transformative customer outcomes and building trade-specific workflows [11][14] - The introduction of new AI-native products is expected to enhance operational efficiency for customers [18] Q&A Session Summary Question: Impact of tariffs on the business - Management acknowledged potential positive and negative impacts of tariffs, emphasizing customer resilience and the ability to pass through rising costs [32] Question: Stacking S curve strategy for growth - The company is focused on enterprise, commercial, pro, and roofing as primary areas of attention for growth [35] Question: Seasonal perspective on GTV and pro product attach - GTV is expected to be stronger in Q2 due to seasonal factors, with pro products being a significant growth driver [40][43] Question: Update on commercial bookings and product capabilities - Commercial bookings and go-lives are performing well, with ongoing development of a dedicated commercial CRM and project management capabilities [46][48] Question: Opportunities in new trades - The company is open to exploring new trades but focuses primarily on established priorities to ensure resource allocation [52] Question: Average ticket sizes and macro impacts - Average ticket sizes remained stable, with Q2 guidance factoring in weather variability and macroeconomic conditions [56] Question: Visibility from customer go-lives - Customer go-lives provide high visibility into subscription revenue, with a focus on delivering ROI to encourage upselling of pro products [76][78]