ServiceTitan's Q3 2026: Contradictions Emerge on MAX Program, Residential HVAC GTV, AI Strategy, Tariff Impact, and Growth Strategy

Date of Call: December 4, 2025

Financials Results

• Revenue: $249.2M, up 25% YOY
• Gross Margin: Total gross margin 74.3%, up 390 bps YOY (platform gross margin 80.2%, up 310 bps YOY)
• Operating Margin: 8.6% operating margin, operating income $21.5M, improvement of 780 bps YOY

Guidance:

• Q4 FY'26: Total revenue $244M–$246M; operating income $16M–$17M.
• Full FY'26: Total revenue $951M–$953M; operating income $83M–$84M.
• Note: Q4 FY'26 has one fewer business day vs. prior year, expected to compress GTV/usage growth by ~150 bps.

Business Commentary:

• Revenue Growth and AI Integration:
• ServiceTitan, Inc. reported revenue of $249.2 million for Q3, with 25% year-over-year growth.

• The growth was driven by strong demand for AI integrations and new products, such as Field Pro and virtual agents.

• Subscription and Usage Revenue Growth:

• Subscription revenue increased by 26% year-over-year to $182.8 million, while usage revenue grew 24% to $56.8 million.
• Growth in subscription revenue was driven by strong adoption of Pro products, while higher-than-expected fintech utilization contributed to usage revenue growth.

• Strong Financial Performance:
• Platform gross margin improved by 310 basis points year-over-year to 80.2%, and operating income improved by 780 basis points to 8.6%, resulting in a net income of $21.5 million.

• Steady execution, higher-than-expected usage revenue, and cost management contributed to the strong financial performance.

• Expansion into New Trades and Markets:

• The company is expanding into new trades, including roofing and water damage restoration, driven by partnerships like those with Verisk and Timeproof.
• This expansion is aimed at further diversifying revenue streams and enhancing ServiceTitan's market position across various trades.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted 25% total revenue growth, 26% subscription growth, record free cash flow of $38M (Q3) and repeatedly emphasized AI/MAX momentum and enterprise customer wins (Wrench Group, Galaxy, James River) and confidence that execution + AI will drive long-term opportunity.

Q&A:

• Question from Kasthuri Rangan (Goldman Sachs Group, Inc.): What will you do differently to scale to a multibillion-dollar revenue company and observations going into calendar '26 on GTM?
  Response: MAX/AI is the top strategic priority: deliver integrated agentic workflows to optimize revenue/profit for customers; leverage proprietary data, distribution and execution intensity to scale.

• Question from Josh Baer (Morgan Stanley): How is the MAX pilot progressing, current time to deploy, and when will it open to the broader backlog?
  Response: Early but promising; intentionally slow-rolled to ensure success for initial cohort—progress strong and plan to open more broadly soon.

• Question from Josh Baer (Morgan Stanley): What is private equity's contribution to new customer wins and growth: is that changing?
  Response: Private-equity-backed customers are top utilizers, adopt Pro more and grow ~500 bps faster than non-sponsored customers; PE remains an important, ongoing growth vector.

• Question from David Hynes (Canaccord Genuity Corp.): What is the average technician-to-back-office ratio and potential efficiency upside?
  Response: Varies by trade/size (ranges ~1:1 to >2:1); automation/AI can both improve profitability and increase revenue via higher close rates, ticket sizes and lead generation.

• Question from David Hynes (Canaccord Genuity Corp.): Why guide Q4 slightly down sequentially versus last year—are you being more cautious?
  Response: No unusual caution—Q4 seasonally moderates from Q3; guidance reflects prudent GTV assumptions and the one fewer business day impact.

• Question from Dylan Becker (William Blair & Company L.L.C.): How does the Verisk partnership and ecosystem broaden roofing/insurance workflows and applicability to other trades?
  Response: Verisk integration addresses insurance-based roofing workflows; traction is strong and such insurance integrations could extend to trades like water-damage restoration over time.

• Question from Dylan Becker (William Blair & Company L.L.C.): On consumer health and GTV mix (break/fix vs replace), any signs of weakening?
  Response: Internal indicators—job growth and average ticket—remain consistent, suggesting consumer demand is stable and underpins the guidance.

• Question from Scott Berg (Needham & Company, LLC): How will you invest in commercial next year; any change to approach?
  Response: Continue to focus on nailing construction and CRM capabilities; shift R&D toward AI-driven value (CRM/automation) while leveraging holistic service+construction positioning.

• Question from Tyler Radke (Citigroup Inc.): In construction, where is the low-hanging fruit and are new customers replacing third-party solutions or greenfield?
  Response: Mostly replacement: most prospects come from existing systems; early wins where contractors expand service-to-construction; product maturity will enable handling larger project sizes and drive value creation.

• Question from Jason Celino (KeyBanc Capital Markets Inc.): What is driving the usage acceleration—can you explain the fintech contribution?
  Response: Rising adoption of integrated fintech (financing/payment) and converting non-integrated customers to the integrated solution has increased usage take rate and monetization.

• Question from Hannah Rudoff (Piper Sandler & Co.): Is pricing/packaging of Pro products optimized or is there room to change?
  Response: Pricing not fully optimized yet; MAX pilot will inform packaging/pricing as they ensure participants' success before evolving commercial model.

• Question from Michael Turrin (Wells Fargo Securities, LLC): What signals should investors watch going forward?
  Response: Monitor GTV expansion across trades (notably commercial) and the platform earn rate (subscription + usage, driven by Pro products) as the best indicators of durable performance.

Contradiction Point 1

MAX Program Deployment and Customer Success

It directly impacts the company's strategic initiative and customer success, which are critical for future growth and investor expectations.

How is the MAX program progressing? What is the deployment timeline and how can it be accelerated? When will the MAX program be available to a broader customer base? - Josh Baer(Morgan Stanley, Research Division)

2026Q3: The MAX program is still in early days, focusing on ensuring initial participants' success. Deployment is slow to get it right. We'll open it up soon. - Vahe Kuzoyan(CFO)

What is the current average ratio of technicians to back-office staff, and will it change over time? - David Hynes(Canaccord Genuity Corp., Research Division)

2026Q2: Our primary focus is on execution and making sure that we have initial participants that are successful. - Vahe Kuzoyan(CEO)

Contradiction Point 2

Residential HVAC GTV Insulation from OEM Volume Declines

It involves differing statements about the insulation of ServiceTitan's GTV in residential HVAC from OEM volume declines, which is crucial for understanding the stability of their revenue streams.

Why is ServiceTitan's residential HVAC GTV resilient to OEM volume declines? - Andrew Sherman(TD Cowen, Research Division)

2026Q3: Our GTV is driven by break-fix in existing homes, not new home construction cycles. We see stability due to diverse customer bases and operational efficiency. - Dave Sherry(CFO)

Did high interest rates or refrigerant changes impact HVAC results? - Andrew Sherman(TD Cowen, Research Division)

2026Q2: Our GTV is driven by break-fix in existing homes, not new home construction cycles. We see stability due to diverse customer bases and operational efficiency. - Dave Sherry(CFO)

Contradiction Point 3

Focus on AI and Trades

It highlights a shift in the company's focus from enterprise consolidation to AI and automation, which could impact growth strategies and product development priorities.

As you prepare for future scale, what are your plans for 2026 to adjust your go-to-market strategy to meet ambitious goals? - Kasthuri Rangan(Goldman Sachs Group, Inc., Research Division)

2026Q3: AI in the trades is a critical opportunity. Customers want one platform to automate key workflows, optimize revenue, and profit. The MAX program aims for this, focusing on executing effectively to guarantee customer and business success for ServiceTitan. - Ara Mahdessian(CEO)

What drove the GTV growth acceleration, and were there specific comments on private equity rollout? - Josh Baer(Morgan Stanley, Research Division)

2025Q4: Largest businesses want to standardize tech stacks on ServiceTitan. There's high interest in Pro products, and continued opportunities exist in enterprise consolidation, especially in commercial, which is early in its consolidation journey. - Ara Mahdessian(CEO)

Contradiction Point 4

Impact of Tariffs on Business Stability

It highlights differing opinions on the resilience of the company's customers and the potential effects of tariffs on their operations.

Why is Q4 guidance down sequentially but up modestly year-over-year? - David Hynes(Canaccord Genuity)

2026Q3: Our customers have historically been resilient and capable of passing through rising costs. - Ara Mahdessian(CEO)

What impact will tariffs have on the business? What impact will extended equipment lifetimes from tariffs have on servicing opportunities and transaction volumes? - Kasthuri Gopalan Rangan(Goldman Sachs)

2026Q1: Tariffs could have compound effects, possibly causing supply chain inflation. - Ara Mahdessian(CEO)

Contradiction Point 5

Growth Strategy and S-Curves

It involves a shift in the company's approach to growth strategy, specifically regarding their focus on stacking S-curves for durable growth.

How is the MAX program progressing? What is the deployment timeline and how can it be accelerated? When will it expand to a broader customer base? - Josh Baer(Morgan Stanley)

2026Q3: We prioritize focus and are targeting specific areas like enterprise, commercial, Pro products, and roofing. - Vahe Kuzoyan(CFO)

What is the strategy for stacking S-curves to drive durable growth? Should we expect new trades, new market segments, or new Pro products on a consistent basis? - Joshua Phillip Baer(Morgan Stanley)

2026Q1: We're very early in commercial penetration and continue to invest heavily. - Vahe Kuzoyan(CFO)