Financial Data and Key Metrics Changes - In Q2 FY2026, total revenue reached $242.1 million, reflecting a 25% year-over-year growth [18] - Subscription revenue grew by 27% year-over-year to $174.8 million, driven by faster growth from new customers [19] - Gross transaction volume (GTV) was $22.9 billion, representing a 19% year-over-year increase [18] - Platform gross margin improved to 80.7%, an increase of 280 basis points year-over-year [19] - Operating income was $29.2 million, resulting in a record operating margin of 12.1%, an improvement of 510 basis points year-over-year [20] - Free cash flow for Q2 was $34.3 million, up from $18.7 million in the prior year [20] Business Line Data and Key Metrics Changes - The company reported strong performance across its pro products, which are the fastest-growing area of the business [13] - Professional services revenue for Q2 was $9.4 million, contributing to overall revenue growth [19] - The introduction of AI capabilities has allowed customers to automate workflows, leading to increased efficiency and revenue growth [10][14] Market Data and Key Metrics Changes - Commercial customers and non-HVAC residential trades led the overperformance in GTV growth [18] - Residential HVAC growth was slower compared to previous periods due to challenging year-over-year comparisons [19][75] - The partnership with Roto-Rooter is expected to enhance the company's presence in both residential and commercial markets [12][13] Company Strategy and Development Direction - The company aims to become the operating system for the trades, focusing on delivering automation and AI solutions to enhance customer operations [11][12] - There is a strong emphasis on expanding capabilities in the commercial sector, particularly in construction project management [15][39] - The company is committed to improving product offerings and customer service to maintain competitive advantages [35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver strong ROI to customers, which in turn drives growth [4][5] - The management team highlighted the importance of automation and AI in transforming the trades industry [10][14] - Future growth is expected to be driven by continued investment in R&D and capital deployment towards high ROI opportunities [22][48] Other Important Information - The company has posted an updated investor presentation and earnings release on its website [3] - The management team is focused on executing their strategy with a long-term view of sustainable growth and margin improvement [22] Q&A Session Summary Question: What was the business objective for Roto-Rooter in choosing ServiceTitan? - Management highlighted that Roto-Rooter seeks revenue growth through lead generation, lower customer acquisition costs, and back-office automation [25][26] Question: What percentage of the customer base is hybrid, spanning across residential and commercial? - Management noted that most customers have both residential and commercial operations, which provides a competitive advantage [32][33] Question: Is there anything underperforming that the company is working on? - Management acknowledged the desire for continuous improvement across all areas, including product delivery and service levels [35] Question: How long has the company been investing in the commercial side? - The company has been investing in the commercial side for about three years, focusing on construction capabilities [39] Question: How is the company leveraging AI for efficiency? - Management indicated that AI is being used to improve customer experience and operational efficiency, with ongoing developments in this area [79] Question: What is the expected impact of Pro products on gross margins? - The impact on gross margins will depend on the specific Pro products, with some expected to contribute positively [80]
ServiceTitan, Inc.(TTAN) - 2026 Q2 - Earnings Call Transcript