Q4 2025 ServiceTitan Inc Earnings Call
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Speaker Change: Thank you for standing by and welcome to ServiceTitans, 4th quarter and full fiscal year 2025 earnings conference call. At this time, all participants are in a listen only mode.
Speaker Change: After the speaker presentation, there will be a question and answer session.
Speaker Change: To ask a question during the session, you will need to press star 1-1 on your telephone. To remove yourself from the queue, you may press star 1-1 again. I would now like to hand the call over to Jason Rechel, Vice President and Vesta Relations. Please, go ahead.
Jason Rechel: Thank you, operator. Welcome everyone to ServiceTitan's fiscal fourth quarter and full fiscal year 2025 earnings conference call. With me are ServiceTitan's co-founder and CEO , Ara Mahdessian, co-founder and president, Vahe Kuzoyan, and CFO Dave Sherry.
Jason Rechel: During today's call, we will review our fourth quarter in fiscal year 2025 results. We will also discuss our guidance for the first fiscal quarter in full fiscal year 2026.
Jason Rechel: Before we get started, we want to draw your attention to the Safe Harbor Statement, included in today's press release and emphasize that information discussed on its call, including our guidance, is based on information as of today and contains forward looking statements that involve risks, uncertainties, and assumptions.
Jason Rechel: Off-statement's other than statements of historical fact could be deemed to be forward-looking.
Jason Rechel: Forward-looking statements reflect our views as of today only, and except as required by law, we undertake no obligation to update or revise these forward-looking statements.
Jason Rechel: Please take a look at our filings with the SEC for discussion of the factors that could cause our results to differ.
Jason Rechel: We also want to point out that we present non-GAAP measures in addition to and not as a substitute for financial measures prepared in accordance with generally accepted accounting principles.
Jason Rechel: A much otherwise stated, all references on this call to platform gross margin, gross margin, operating income, operating margin, free cash flow, and related growth rates are on a non-get basis.
Ara Mahdessian: Finally, we've posted an updated investor presentation that can be found on the investor relations website at investors.servicetitan.com along with a replay of this call. And with that, let me turn the call over to Ara.
Ara Mahdessian: Thank you, Jason, and thank you for joining us today as we update you on our progress and plans for the new fiscal year.
Our Mission and Growth Formula are simple.
Ara Mahdessian: We deliver enormous ROI to our customers, helping them further their success and reach even higher financial outcomes. And this allows them to grow their businesses which drives more technicians and GTV onto our platform and leads to higher subscription and usage revenue for us.
Ara Mahdessian: As they realize the ROI of our software, they buy more pro products which continues to drive our growth and ultimately allows us to reinvest in even more high ROI solutions.
Ara Mahdessian: Fundamentally, we've seen time and again that creating value for our customers is the right thing for our customers and for the financial success of our own business.
Ara Mahdessian: It is because of this durable growth formula that the new public market era for the trades, for our customers, and for ServiceTitan is off to a good start. I am humbled by the way that our team in partnership with our customers, tapped off a transformative year.
Ara Mahdessian: During fiscal year 2025, we delivered 772 million in total revenue, growing 26% year-over-year, led by 28% year-over-year subscription revenue growth.
Ara Mahdessian: We achieved this while delivering 27% incremental operating margins greater than 600 basis points of operating margin improvement and we were free casual positives for the first time.
Ara Mahdessian: Our goal is to be synonymous with the trade by addressing a large and durable market.
Ara Mahdessian: and customers in North America spend roughly one and a half trillion dollars annually on services in the trade.
Ara Mahdessian: There are six million people employed by the trades in the U.S. alone, and the jobs these men and women complete every day are primarily immediate, preventative, or nondiscretionary in nature.
Ara Mahdessian: People don't go without air conditioning or heat. They need functional plumbing even in the worst of times. And so the trades keeps our society running.
Ara Mahdessian: We didn't always address the scope of the opportunity that we served today.
Ara Mahdessian: In fact, when we first built ServiceTitan to solve the problems our dad faced and to deliver exceptional ROI to our early customers we started by addressing only the residential service plumbing market and more specifically only small residential service plumbing businesses.
Over time, we deepen our plumbing capabilities for larger businesses.
Ara Mahdessian: We were pulled into new trades in partnership with our customers. We expanded to serving commercial contractors. We matured our product portfolio and we emerged as the market standard in many of the trades that we serve today.
Ara Mahdessian: We now address more than 10 trades, both in the residential and commercial markets. We have a portfolio of pro-infintech products and we've earned the right to support the largest and most sophisticated customers in the trades.
Ara Mahdessian: The deep enterprise-grade features we built, tailored specifically for the trade, has empowered the largest businesses to grow with us.
Ara Mahdessian: By partnering deeply with these customers, we have become the market standard in these trades and earn the right to increase pro-product attach rates while also acquiring new customers.
Ara Mahdessian: The most successful contractors have then pulled us into new trades which is the core of our new markets expansion.
Ara Mahdessian: This solid business foundation grounded in unique customer ROI is why I am proud of our Q4 performance.
Ara Mahdessian: Our Accord Trades performed well with a healthy combination of growth from both new and existing customers.
Ara Mahdessian: Our customers are leveraging AI and automation across many key workflows.
Ara Mahdessian: and our investments in commercial and roofing continue to deliver strong results.
Ara Mahdessian: setting the stage for this cycle to compound into the future all while we deliver high incremental margins and free cash flow, resulting from focused execution.
Ara Mahdessian: Looking into fiscal 2026, our goal is to build on the foundation. To execute against this goal, we have four primary areas of focus.
to further expand our enterprise capabilities.
Ara Mahdessian: to further expand pro-product adoption, to go deeper in commercial, and to continue to grow in roofing.
Ara Mahdessian: Thank you to our customers and our team for an amazing close to this transformative year for ServiceTitan and for the trades.
Ara Mahdessian: We are on a mission to help every contractor further their success with ServiceTitan while building a generational business that becomes the operating system for the trades.
Jason Rechel: I'll now pass it to my co-founder, our president, and my better half to work, who will provide you with more clarity on how we intend to execute on each of our four priorities this year.
Vahe.
Vahe Kuzoyan: Thanks Ara. I'm also deeply grateful for the way Titans showed up for our customers this year, and I'm excited to create even more customer value throughout fiscal 2026.
Vahe Kuzoyan: Let's expand on each of those four key priorities, which we think positions the business to compound growth.
Vahe Kuzoyan: Beginning with Enterprise, the professionalization of our industry remains a powerful long term trend as large customers in the trade to can larger, more sophisticated and continue to outgrow the industry. These customers have also begun to consolidate their entire tax tax on ServiceTitan.
Vahe Kuzoyan: Our standard operating guidelines, benchmarking, automation capabilities, roll-up reporting, and other enterprise features have been purpose-built for the unique workflows of large
Vahe Kuzoyan: Feedback for many consolidators last month, their annual private equity symposium suggests a consolidation and professionalization of the trade remains early. We plan to continue to build and improve our products to create value for the trade and meet the emerging demands of our largest customers.
Vahe Kuzoyan: Proproducts Strength was notable as sitting the year. Sales-pronged contacts in a program were only launched at Pantheon and have already proven additives to our portfolio. Looking forward, we aim for Proproducts to have appeal across our entire customer base.
Vahe Kuzoyan: which is why we're investing more this year to accelerate moral penetration.
Vahe Kuzoyan: Art Pro capabilities are the foundation for ROI that can only be delivered because of native integrations into the work already being done in core service time.
Vahe Kuzoyan: Our pro-products are at the center of increasing the powerful business outcomes for customers.
Vahe Kuzoyan: which is amplified by AI. We continue to see steady adoption of pro-products as central to our overall expansion story and path towards 2% effective burn rate.
Vahe Kuzoyan: In commercial, we spent the past 12 months accelerating product development in our customer service portal, service agreement functionality, equipment experiences, and our new field mobile app among other advancements.
These capabilities collectively contribute to healthy execution and progress.
Vahe Kuzoyan: Looking forward, we're focused on enabling our commercial customers to also run their construction projects on ServiceTitan.
Vahe Kuzoyan: We don't target general contractors. Instead, we focus on ensuring that specialty traits subcontractors can run all their work on our platform, commercial maintenance, on demand service, replacement, and winning and managing both small and large construction projects.
Vahe Kuzoyan: We're building end-to-end project management workflows and a dedicated commercial CRM that we believe will empower specialty trades subcontractors to win.
Vahe Kuzoyan: We only recently entered the roofing space, and we exceeded our early ambitions during F-25. We delivered steady progress on our product roadmap as we work to mature over time from new player into market leader.
Vahe Kuzoyan: Our recently announced partnership with North America's largest roofing manufacturer, GAS, was the first time Dave endorsed a course offer platform and his further validation of just how far we have come in a short time.
Vahe Kuzoyan: We're executing our proven playbook for success in new trades and we expect that building on our technology investments this year in insurance reimbursement, workflow automation and key integrations with measurements providers and distributors will be key to our growth.
Vahe Kuzoyan: Wrapping up, our priority remains to create value for customers that we are uniquely positioned to create. Because of our end-to-end platform and large existing footprint, we are uniquely positioned to help customers turn insights into action and deliver growth and efficiency.
Vahe Kuzoyan: I'm excited to see how much more successful our customers can become this year, and to help them take full advantage of the service that is sweet as the operating system for the trades. And with that, I'll turn it over to Dave to run through our financials. Dave?
Dave Sherry: Thanks, Vahe. I'm proud of our execution exiting the year. Today I'm planning to run through Q4 financial results in detail and provide guidance for Q1 and the full fiscal year of 2026. For details in the full fiscal year, 2025 financial results.
Please refer to our press release issue earlier today. Thank you very much.
Dave Sherry: Q4, Gross Transaction Volume, or GTV, was $17 billion, of 26% year-rear. As a reminder, GTV is impacted by many external variables, such as macro conditions and weather patterns, the latter of which we believe contributed roughly 150 basis points to year-rear growth in the
Dave Sherry: Even accounting for the weather impact, our GTD expanded faster than we've seen over the prior several quarters.
This was particularly true and residential among our existing customers.
Q4 Total Revenue was 209.3 million dollars, of 29% every year.
Dave Sherry: This higher growth rate was driven by GTB's impact on usage revenue, which was $43.4 million up 26% year-rear, as well as subscription revenue, which was $156.7 million, up 31% year-rear.
Dave Sherry: Subscription revenue grew 4 points faster than the past few quarters due to stronger than expected new bookings and elevated customer expansion.
Dave Sherry: Total Platform Revenue, the sum of subscription and usage revenue grew 30% year-to-year. Q4 Professional Services Revenue was $9.2 million.
Dave Sherry: Ed Dollar Attention was greater than 110% for the quarter. Gross Dollar Attention was greater than 95% for fiscal year 2025, and we exited fiscal year with approximately 9,500 total active customers of 18% year-to-year.
Dave Sherry: Q4 platform gross margin was 76.7% and improvement of 30 basis points year-to-year and total gross margin was 70.2% of 80 basis points year-to-year.
Dave Sherry: Q4 operating income was $6.9 million, leading to an operating margin of 3.3%.
Dave Sherry: and Improvement of 200-base points year-to-year. We're pleased to have delivered 27% increment of margins for fiscal year 2025, even as we began to absorb public company costs through the end of the year. Q4-free cashflow was $10.8 million, up from negative $2.2 million for the prior year of fourth quarter.
Dave Sherry: In mid-January, we paid down the $70 million balance that had previously been drawn against our Ebola and credit facility. We in the Q4 with $442 million in cash and cash criminals compared with $105 million
Dave Sherry: Before shifting to formal guidance, I'd like to provide a few modeling considerations for
Dave Sherry: First, I'd like to highlight that Q1 of FY26 will have one fewer business day as compared to Q1 of FY25, which we estimate will be a 150 basis points headwind to report your over your GTP and use a drab new growth.
Dave Sherry: Second, as you think about the year, I reminder the operational and seasonal fluctuations in our business.
Dave Sherry: We pair annual cash bonuses in Q1. We typically see seasonal sequential growth in Q2, driven by seasonally higher GTV, and we host our annual user conference during Q3, which we expect will weigh on expenses in pre-cash load during the period.
Dave Sherry: Finally, I'd like to highlight that customer success had previously been measured primarily on customer NPS and retention, but starting in FY26, expansion will be added as a core KPI. As a result, a portion of our customer success head count costs will shift from cost to revenue to sales and marketing.
Dave Sherry: Beginning Q1, Plotman Gross Marges will see a one-time ship hire by roughly 200 basis points with a commensurate ship hire and sales and marketing expense. There will be no impact on total operating income. Shifting the guidance.
Dave Sherry: For the first quarter, we expect total revenue in the range of $207 million to $209 million.
Dave Sherry: We expect to generate operating income in the range of 12 million to $13 million.
Dave Sherry: For the full year fiscal 2026, we expect total revenue in the range of $8.95 million to $905 million. We expect to generate upper income in the range of $48.95 million to $53 million.
We're running this business for a marathon, not a sprint.
Dave Sherry: Our goal of subderbly compound growth over many years and expand margins at the same time, growing earnings faster than revenue. Our long-term, non-GAAP operating margin target is 25%, and our path to that target will be driven by our continued focus on incremental operating margins.
Dave Sherry: Business performed well against these goals as we enter into fiscal year. We see healthy performance as evidence of strategy to become the operating system for the trades is working. With that, I'll turn the call back to the operator for Q&A. Operator?
Speaker Change: As a reminder, to ask a question, you will need to press star 1-1 on your telephone. To remove yourself from the queue, you may press star 1-1 again. You will be limited to one question and one follow up to allow everyone the opportunity to participate.
Please stand by while we compile the Q&A roster.
Speaker Change: Our first question comes from Kasth Rangan of Goldman Sachs. Please go ahead and
Tash Rankin: Hello, thank you very much, and congratulations on ending the year so beautifully with your IPO whatnot.
Tash Rankin: I had a question for you maybe on the linearity of new business. What do you think might have contributed to better linearity of new business that got booked in your queue for results?
Tash Rankin: And also on a go-forward basis, you announced it pantheon, a lot of new products and contacts Interpro, salespro, got my attention.
and I think on the commercial side ServiceTitan CRM. David Hynes, David Hynes, David Hynes,
Speaker Change: because you look ahead what are the new opportunities that are available to the company that you could not pursue and the granted to these products take a little bit time to mature and get customer adoption. What is the early read and conviction on these new products and how much opportunity they could unlock for?
Tash Rankin: The Company in the Year's Day. Thank you so much and congrats.
Tash Rankin: Thanks, Kasthuri. I'll take the first part on linearity. As you noted, it was in a usual linearity quarter, we start off the quarter of straw that we typically do, I think.
Tash Rankin: It probably had to do with the momentum coming out of Pantheon, which was then followed up by the IPO, the S1 Flip public in November , and then we had a bunch of excitement in December , so I think we saw more deal close based on employee and customer excitement earlier in the quarter than we normally do. I would not extrapolate this as the new norm going forward. [inaudible]
Tash Rankin: and on PRO products, we continue to innovate on A, making it easier than ever for customers to see the values and B, improving the functionality of each existing PRO products to appeal to a broader portion of our customer base.
and C, Investing in New Product. [inaudible]
Tash Rankin: Some of these factors may contribute to our growth this year, while new products introduced during the year will more likely to be growth drivers in fiscal year 27 and beyond. As a reminder, we have roughly a quarter of our GTV that has adopted four or more pro and Fintech products. This number is up from only five percent three years ago.
Tash Rankin: So he's seen strong success here, and that success is primarily reflected in a steady contribution to our overall expansion revenue. But we continue to be quite early overall and see headroom to both increase the attach rate of each individual product and also increase multi-product penetration.
[inaudible]
Thank you. Our next question.
Speaker Change: Come from Josh Baer, a Morgan Stanley . Your question, please Josh.
Josh Baer: Yes, thank you, congrats on a strong quarter. Terrific acceleration and growth across the board I think.
Josh Baer: The Roots Really Coming From GTV Growth Acceleration, I Know You Called Out What?
Speaker Change: your customer base mix getting larger versus your customer is growing organically and any comments on like private equity roll up.
Speaker Change: Great, thanks, Josh. I think as you did know, there's about 150 bass points from weather, but it's still an acceleration and an outperformance versus prior quarters.
Speaker Change: Are existing residential customers who grew faster than we've seen in prior periods that was mostly to do.
Speaker Change: with a broad-based performance. I don't think there's anything that's specific there. We don't know if it's macro or something, it's really because it trades. We're not yet ready to call this a trend. I think some of them will watch for a couple of course before we see that going forward. We would not expect this level about performance on GKV again, but we'll watch it closely.
Camille Tim, a couple comments, Scott.
Speaker Change: You asked about enterprise, your private equity, so we had our key symposium recently.
Speaker Change: We brought a bunch of these great sponsors together as well as operators.
and they all talk about problems that's practices.
and how ServiceTitan could better support them.
Going forward.
Speaker Change: because our job ultimately is to help and make more money. And I think the highlights were that
Speaker Change: The largest businesses in the trades, they want to standardize their tech stock on ServiceTitan, and so they're asking us to automate as much of their business as possible, and in many cases through AI.
Speaker Change: and also these businesses increasingly recognize that higher Titan scores and Titan score being the measure of what percentage of our capabilities they actually use, higher Titan scores coerling directly with faster revenue growth.
and so high level of interest in standardizing.
Speaker Change: on our pro-products today and very much interested in our tech roadmap for things like data and I moving forward.
Speaker Change: and the residential consolidation has been underway for quite some time and there continues to be opportunity.
to create great outcomes for customers like each moving forward.
Speaker Change: Commercial is earlier in its consolidation journey for a variety of reasons.
Speaker Change: Slightly different business model where you have more bespoke operational playbooks, and it's often for them a harder M&A strategy to both diligence and then integrate, but continues big opportunity on the enterprise and project we found. [inaudible]
Very helpful. Thank you.
Speaker Change: Thank you. Our next question comes from David Hynes of Canacord Genuity. The question please David.
David Hines: Hey, good evening, guys. Congrats, nice quarter. So, Ara, Ara, Vahe, I've gotten a few questions about where you're headed in heavy construction. You know, look, I realize it's a long-term driver of the story, but it was mentioned again during prepared remarks.
David Hines: I think when public investors hear that they think ProCore or Autodesk, so I'm curious where you see ServiceTitan fitting into that ecosystem, whether this is coexistence or competition with those firms, maybe just help us kind of flesh out the strategy there.
Yep, absolutely.
David Hines: We respect the business pro-chorus build. At the end of the day, we focus on totally different markets and if anything, there's probably an opportunity for us to partner in the future.
David Hines: We serve different customers and to your opportunity very differently. When we talk about commercial construction
David Hines: is important to remember that we don't target general contractors. Instead we focus on ensuring that specialty trade subcontractors want all of their work on our platform.
David Hines: Commercial Maintenance, on-demand service and replacement, and winning and managing both small and large construction projects.
Speaker Change: Yeah, got it. Okay. And then Dave, a follow-up for you. So look, I know you guys are only reporting net revenue retention on a threshold basis. In this case, you said it's better than 110%. That said, giving you acceleration we've seen in growth, the momentum with pro-products, is it right to think that NRR has been trending higher?
I think so.
Speaker Change: When we, and as we talked about, met our attention, having some trends of normalization of the priority in quarters and stabilizing over the last year or so. I think it's very soon that stabilization trend continued.
Speaker Change: In this period, of course, as I mentioned, repaired marks, our customers expanded faster and they had in previous periods, I think it's fair to include in that what you will, but I wouldn't say, I don't think we're going to talk about specific numbers around the R, but it didn't see the stabilization trends that we've seen in the prior period.
Speaker Change: Thank you. Our next question comes from Scott Berg of Needham and Company. Please go ahead, Scott.
Thank you.
Scott Berg: Hi everyone, really nice quarter here. I guess I have two questions. I wanted to start on the change in priorities for your CSMs and how many of them drive more expansion cross sell opportunity with your customer. What's the benefit are you expecting to directly gain for that? Obviously it's going to be positive and positive things about, you know, what that we don't do right that opportunity that we'll find.
Speaker Change: You broke up in there, Scott, could you say the last brother question again?
Thank you for having me.
I'm sorry, what was that?
Speaker Change: You broke up there at the end of the question. That's why I'm saying this is the last part of it again.
Speaker Change: You know, what type of impact are you looking to drive for them? Obviously, they should drive more expansion activity, but it is the opportunity to drive, I don't know, 25-50% more opportunity to maybe help us understand how much further they can drive more adaption of the platforms.
Thank you.
Speaker Change: I probably won't comment on numbers, but I'll comment on maybe the philosophy. Of course, our CSNs are responsible for helping our customers better utilize.
Speaker Change: Our products, including our core product, and we believe that better utilization results in revenue growth.
as well as margin improvement for our customers.
Speaker Change: I think what this is mostly focused on is the fact that...
That Natural Segway...
into a conversation about a pro-product.
Speaker Change: in a conversation between a CSM and one of our customers. So for example, when a CSM is reviewing business performance with that customer to help identify ways.
Speaker Change: where ServiceTitan can help them even across just the core product, where we do not benefit from increased spend from them.
Speaker Change: When we see, for example, a contractor's cost per lead is too high.
Speaker Change: or their conversion rate on phone calls to book deployments is too low or for example we see grave variance. Thank you.
in Average Tickets between their best technicians.
Speaker Change: and their worst performing technicians. Naturally, the customer is very interested in understanding how they can improve these metrics.
Speaker Change: and as a very natural opportunity for us to then talk about if your cost per lead is so high something like ads optimizer or marketing pro can help you lower this and generate even more leads for the same marketing budget or for example if they see such variance. Thank you very much.
Speaker Change: Again, performance across technicians. It is very natural to talk about.
Speaker Change: One of the big problems is you have no visibility into what happens in the field.
Thuring the Technician Sales Profit. [inaudible]
Speaker Change: Would you like disability if they say yes? That's when we bring up self-scrow and how it helps record the conversation and...
Speaker Change: You know, use the AI to suggest improvements and of course the management can also review those recordings as well. So that is the fundamental premise behind this approach is just much more natural for the CSM to directly talk to the contract about these opportunities. [inaudible]
God, it's very helpful. And then from a follow-up perspective.
Speaker Change: I believe I already talked about growth and roughing as one of your four priorities this year, as you've done more in that trade.
Speaker Change: Have you found that the existing ServiceTitan Playbook, you know, can be replicated exactly as is, or do you have to tweak that Playbook a little bit for that trade because there are some new on differences in Roughing vs. A, Pony HVite, etc.
Replicated for different trades in the markets.
Speaker Change: Yes, specifically Ruffing, since that's one of the sports data priorities for the year.
That's absolutely. So there is a lot of overlap.
Between Playbos [inaudible]
Speaker Change: in different end markets. However, there are also unique differences. So, for example, in some of them, let's say HVAC, the playbook very much centers on the residential side on optimizing the sales and marketing fund.
Speaker Change: How do you market to generate more phone calls? How do you make sure all the phone calls are booked into an appointment? Make sure none of those appointments get canceled. Make sure the technicians have high close rates in the field with high average figures.
Speaker Change: Nearly all of that applies as it is in roofing and that's frankly the reason why.
Power, Largest Consolidators in Plenty Geeshwet College School.
Speaker Change: wanted to partner with us and us to partner with them to build support for roofing and enter the roofing industry. And that same playbook applies. However, within roofing, certain workflows are immediately different.
How measurements are taken about the home and the roof?
Speaker Change: How that turns into an estimate, and then once the job is sold, how that translates into procurement for all the materials is meaningfully different than other industries.
Speaker Change: And so, that part of the playbook, we had to both work on from a product perspective as well as of course from a services perspective and how we can enable our customers.
Speaker Change: There are equal differences in most commercial trades because the sale of the marketing playbook is pretty different. Instead of marketing to a mass audience, it's more business development.
Speaker Change: It's a different proposal process but the actual execution of the job and procurement and things like that are actually far more similar to our existing markets. So the difference is on sales and marketing follow-up.
Speaker Change: Thank you. Our next question comes from Jason Celino of Keybank Capital Markets. Please go ahead, Jason.
Hey, thanks for taking my questions. Good afternoon.
Jason Salino: So, maybe this is for R and Vahe, I understand that 75% of the work your customers do is repair and maintain and non-discretionary.
Speaker Change: But, you know, no industry is recession proof. So, you know, I know there's a lot of unease at the moment with tariffs and SMB, but what areas of your business could be, you know, affected by macro?
Speaker Change: Yeah, great question. So as you alluded to, no businesses reception proved. Now in our case, historically what we have seen is that the growth in jobs performed.
Hasn't been meaningfully impacted by David Hynes.
Speaker Change: through different macro cycles where we see variance between macro cycles is in something like the average ticket.
Speaker Change: on those jobs that are performed. And then on the macro side.
Speaker Change: Of course, we're monitoring things closely. It's hard for us to predict net net what will happen.
Speaker Change: But 95% of our revenue is in the U.S.
Our Customers contracts are-
Speaker Change: Price in U.S.D., you mentioned the point about 75% being immediate or preventative or nondiscretionary and at the end they were ultimately aware of all these shifts in government policy and the uncertainty in the macro right now.
Speaker Change: So we're monitoring things closely but we have not yet observed an impact on either just performed or average ticket.
Speaker Change: Okay, excellent, that's helpful. And maybe that's a good segue for Dave.
You know, I, you know, really nice, you know, 29% growth exiting Q4.
Speaker Change: Q1s, decelerating in the guide. The rest of the years can continue deceleration. So I guess helped me understand from like what is built into the framework for this year from like a degradation standpoint. You know, thank you.
Jason: Thanks Jason. The business is performing well with healthy trends across retention and expansion.
and your bookings.
Q4 was sort of the stars fully aligned.
Jason: and in sales with tailwinds from the weather, the industry generally, your product launch
Jason: I think we're thrilled with the progress we've made. At the same time, I don't expect all these tailwinds to continue forever. We also recognize that we're early in the journey of being a public company, and as such, we want to be prudent in our guys with you to conference where it hit the numbers we say. And until...
Jason: The one thing is, let's say, the success we saw in Chief Horn of Deals.
Jason: We do expect to lead a strength and in subscriber evidence you won.
and it always were most conservative in the model.
Jason: Is there on GTV? As a variant, there's out to ever control. Some quarters that's going to be to our benefit like we saw in Q4 and some quarters is not.
Jason: We want to make sure that our cost rupture is aligned so we can deliver.
Jason: The funeral martyrs that we talked about without having to grow like an accordion growing and cutting costs. We want to make sure that our costressors align to deliver our funeral martyr targets with even if GTB comes in lower than we'd like. So that's the short answer for you.
Speaker Change: Thank you. Our next question comes from Terry Tillman of Truest Securities. Your line is open to Terry.
Terry Tillman: Yeah, thanks, and congratulations for me as well in the quarter. First question, and then I had to follow up. First, I want to start with a commercial CRM. Just anything more you can share in terms of is it a first or second half launch? And the last part of this first question is
Speaker Change: Is this potentially unlocked faster commercial or are there some customers are in markets and commercial that hey the commercial CREM needs to be the tip of the spear before you can really get going and then I had to follow up.
Speaker Change: Sir, commercial is a big part of our strategy and we've seen good progress over the past couple of years having roughly doubled the commercial GTV on our platform through the middle of last year. We first began serving commercial in 2021 with functionality specific to this segment and we've made a large investment specifically in commercial landscaping.
Speaker Change: As we continue to build functionality that is specific to the needs of commercial customers, we've steadily evolved into a leader in this space.
Speaker Change: We're not satisfied with being veer because as we've shared our goal is to be market standard in all of the trades in which we compete and commercial represents 360 billion of addressable GTV in which we aim to become the market standard over time.
Speaker Change: Our progress continued during Q4. We have success in signing new customers as well as getting customers live. The results of the quarter continue to validate our commercial strategy, both a product perspective and from a go-to-market perspective.
Speaker Change: Commercial CRM is progressing well and is an exciting part of our roadmap this year. Our team is excited about how this made further differentiated in the commercial space and will have more concrete updates to share on our progress as the year unfolds.
Speaker Change: Is there any kind of the relationship we should think about for free cash flow in FY26, maybe in comparison to non-GAAP operating income, or just anything you can share about the things we should consider that could help or impact free cash flow in FY26. Thanks.
Speaker Change: No, man, if you nail the sugenality, of course, remember Q1, we pay our annual bonus, so there's a seasonal pre-castle alpha of that quarter, but over the year, you should expect pre-castle and outright come to be pre-castle, not got popping turquoise.
Speaker Change: Thank you. Our next question comes from Parker Lane of Stiefel. Please go ahead, Parker.
Thank you. Bye.
Speaker Change: And he's done so programmably a growth engine for us. It's the fastest growing portion of the business. With that said, its contribution to expansion in the quarter was relatively consistent with prior periods, slightly up with the new process was launched, but relatively consistent with what we've seen in the prior periods.
Speaker Change: What actually drove the out performance versus prior quarters was principally core. In that arm mentioned his prepared marks was split pretty evenly between new customers on the platform and existing customers expanding faster.
Speaker Change: Got it. In Quick Fall Up, any reason to believe that the PE consolidation trend would change from what you've seen in historical periods that the macro gets notably worse.
Speaker Change: We expect the trend to continue as is and we don't anticipate any sort of downward trend due to macro conditions changing.
Thank you. Our next question.
comes from Joe Brunk, a Baird.
You're a question, please, Joe.
David Hynes, David Hynes, David Hynes,
Speaker Change: Great. Thanks for taking my questions. I want to go back to Jason's question on the macro, but take it more from a cost or prepare angle, understand the volume is pretty steady, but just if we do get a return in inflation, how do you customers manage through that environment again and then when it comes to ServiceTitan's own performance?
Speaker Change: How did the inflation show up in your financials? I would imagine we end up seeing higher GTV on the platform, but is there anything else to take into consideration?
Yeah, good. Great question.
Speaker Change: First, I guess that so far we have not seen any effects on either jobs performed or the average tickets. It's hard to predict what will happen just because there are so many different factors and what will be in the outcome. I can say the last time we experienced a rise in input costs.
Speaker Change: inflation on implicuff was during COVID when there were supply shortages and just general inflation on the market and what we saw there was our customer's ability to pass on the increased costs.
Speaker Change: Yeah, whether the storm. So they also continue to improve how they run their businesses. So there are other drivers that they have to compensate for it.
but at the end, Dave.
Speaker Change: We're not the communists that are legal to predict the mere effect of all reasons.
Okay, I'm in charge of horrible things.
Thank you.
Ara Mahdessian: I was going to say, in terms of how close to the business, David, to Ara's point of generance, more GTV, of course, the closer and more usage revenue, the potential and more technicians which are proud of the subscription revenue.
Speaker Change: Our costs are mostly labor costs because it's pretty easy to forecast that. We don't have a lot of material in the costs that are in labor, so there's nothing around the 17th after us.
Yes, yes, I understand.
Speaker Change: Do that act as a leading indication? Sometimes we are companies say active usage typically spikes right before you're able to capitalize on a lot more new business opportunity.
Speaker Change: I'm wondering if you're seeing kind of any positive indications right now and that's helping inform the stronger outlook at the start of the year.
Speaker Change: I think Tyler's course is free-headly correlated with customers' growth, but there are so many other variables that drive GTB, and it's hard to say it's a very accurate leading indicator. Of course, as you saw in this period, whether it was a big driver, the macro variables that are talked about a big variable, so I'm not sure I would call that a reliable leading indicator that's driving our forecast this year.
Speaker Change: Thank you. Our next question comes from Yun Kim of Luke Capital. Your question please, Yun.
Yun Kim: All right, great. Thank you. Congrats on a solid quarter, solid finish to the year. So with an increasing mix of commercial and your business and the ramp that you're expecting and roofing to share, do you expect the seasonality and take rate, take rate trend of GTV to be somewhat different than previous years?
Yun Kim: I think it's a great question. It depends on the acceleration there on how fast they were to accelerate up as part of our business. I think we're not forecasting a big variance, of course it's commercial or losing a room much faster, that may impact our overall earn rate, but I don't think it's currently a driver we're expecting to change the overall history that much. Seasonality, we don't expect to be very different than what we've seen in prior years.
Vahe Kuzoyan: Great. And then Vahe, if you can give us update on the mobile apps which I believe you launched last year at Pantheon, how's the adoption going? What is the more of a near-term target strategy there in terms of the overall mobile apps? Thanks.
David Hynes, David Hynes, David Hynes, David Hynes,
Vahe Kuzoyan: So, we've seen a 30 increase, a meaningful increase in the utilization of the new mobile platform. It continues to be rolled out.
Vahe Kuzoyan: on schedule. We haven't finalized when the full transition will be from our previous mobile app to our current one, but the results that we're seeing from the customers that are utilizing it are very strong, and we're excited about the final transition onto the new platform.
Speaker Change: Thank you. Our next question comes from Dylan Becker of William Blair. Please go ahead Dylan.
Speaker Change: Hey guys, Steve Ratt here, and apologies for the background noise. Maybe first for Ara or Vahe. You pulled out a partnership with the leading materials provider in grouping. We've talked about it in the past as well as some of the
Speaker Change: Residential and commercial segments, so I wonder how you think about kind of leaning into and leveraging some of those partnerships and those relationships to help kind of push forward faster with...
Speaker Change: with some of these initiatives, some of the opportunity with the customers they have today versus kind of your penetration within those but how you can think about leading in with that partnering.
Speaker Change: Yeah, great question. I would say our growth in nearly every trade has certainly been fueled by partnerships with the key players in that industry and roofing appears to be no difference. We're very excited about this new relationship with G.A.F. Of course, we're very grateful for their partnerships. They're ultimately North America's largest roofing manufacturer. They have a massive footprint. And, you know, we're very thankful that this is the first time today. Thank you very much. Thank you very much.
Officially endorsed, course offer of vendor and we see that as-
Saladation of how far we've come in roofing [inaudible]
Speaker Change: and of course this relationship that's structured as a win-win win for them for us and for our mutual customers.
Speaker Change: Similarly, we announced the partnership with SRS Distribution last fall.
shortly after Home Depot closed its acquisition of SRS.
Speaker Change: But the broader goal in roofing is that we want to have full coverage across all the major partners and distributors and measurement providers.
Speaker Change: and demos is towards our goal of being market standard, so we ultimately want to be the central highlight of this trade ecosystem, and there's huge opportunities to create value for mutual customers, so.
And that typically helps us get through.
Peter Vahe Kuzoyan School Chief
Speaker Change: Sure, perfect. Maybe switching over to Dave, kind of on the guidance frame, we talked about kind of seasonality throughout the business.
Speaker Change: Strong periods in kind of summer and winter months, so I should we think about a year-of-year viewpoint on how the progression of the level of conservatism trends throughout the balance of the year as you can layer in visibility to some of those GCB dynamics.
David Hynes, David Kuzoyan, David Kuzoyan, David Kuzoyan, David Kuzoyan
Speaker Change: And it's an interesting question. I think we tend to be pretty prudent throughout the year. I think, of course, there's more concern with the backup or the total year. One more visibility into the next quarter in terms of subscription revenue. GTV, because these external variables will probably be prudent throughout the year, relatively evenly. And so I wouldn't assume there is more prudent in one quarter than other. The subscription is obviously more visible now than just the backup here.
Michael Turin: Thank you. Our next question comes from Michael Turrin of Wells Fargo Securities. Please go ahead, Michael.
Michael Turin: Okay, great. Thanks very much. Appreciate you taking the questions.
Michael Turin: I'll ask you, but all upfront, I guess you've hit on this a little bit, Dave, but just given your newer to the public market, maybe just frame overall factors to consider with the profile of fiscal 26, how you incorporate things like weather patterns or new products.
Michael Turin: into your forecast, given there's clearly a lot of focus and enthusiasm on some of the newer product efforts there, and then...
Michael Turin: All think through where the more direct impacts there could come from based on some of the customer conversations you may be having. Thank you.
Sure, I'll start with the first one, Gaggen, any...
Michael Turin: In terms of weather, we don't have a specific view of weather, we just kind of assume the seasonal trends are consistent in terms of the macro environment that Ara talked about.
Michael Turin: We're assuming a rough and comparable what we saw in a full year of FY25, we haven't extrapolated Q4's over performance into the year, of course, again.
Michael Turin: Repeat myself as the prudence we'll have in the forecast is Jenler on GDV.
Vahe Kuzoyan: In terms of new products, I think that we're excited about the early traction of those new products. They're still not hugely material in our total revenue. They're not going to be very vulnerable. And the results we're excited about what they are and what they can be sort of stacking as hers, but they're not a huge driver. And the guys were getting them all at by talk about the questions. Thank you.
Vahe Kuzoyan: Yeah, in terms of the short-term, let's say, impacts of AI, we currently have three pro products that are effectively pure-play AI products that customers and love and pay for, in Dispatch Pro, ads optimizer and sales Pro. But this is just the beginning as customers continue to have a deep appetite for us to automate their businesses.
Thank you.
Vahe Kuzoyan: Introducing Agents into this equation, or Agents Kaya is just the next evolution that we think will power a next set of products.
But as we think about, from a monetization lens,
Vahe Kuzoyan: Our current structure of having a core product as well as attached product and our ability to infuse AI, particularly into the pro-products layer, is where we expect the monetization to occur. And, in terms of new retirement packs, it will be primarily from these three products, and as Dave noted.
Vahe Kuzoyan: the role they play in terms of our growth formula. That's where the near-term AI impacts will be coming from.
David Hynes, David Hynes, David Hynes,
Speaker Change: Thank you. Our next question comes from Brent Braseland, a Piper Sandler. Your question please, Brent.
Speaker Change: Good afternoon, Dave, we'll start with you here, the external environment.
Speaker Change: certainly is not getting better, but you did just report platform revenue acceleration
Speaker Change: I think 30% platform growth is the highest you've seen in over a year.
Speaker Change: Could you just go back and maybe parse out how much of this acceleration was seasonality versus maybe share game momentum or increasing R3 because of these pro add-ons? Just a little more color on what closed that acceleration, thanks.
Speaker Change: For sure, we're really proud of the core we just had, and then the start of our life as a public company.
Speaker Change: As for the outperformance of the quarter, Alpha stars essentially to live line, in the quarter, to drive the disabsure of news to off first.
Speaker Change: As I mentioned, our customers themselves are out-of-formed, which led to a factor growth in core, the
Speaker Change: Second, as I mentioned, my prepare marks, a new dual inarity.
Speaker Change: They're from our norm, and the one-time catch-ups together drove about $9.5 in the quarter. Third, we had a bunch of momentum coming out of a very strong pan-gun with the dune or pro-products that you talked about, which that momentum continued through the IPO, which had a lot of sudden, from both customers and employees.
Speaker Change: and I think these factors true of really strong sales performance and that strong sales performance combined by customers are performing.
Speaker Change: It is what drove the subscription revenue you saw. And as much as I'd like to have an IPO every quarter, I don't want you to expect this type of performance to continue. We obviously will work to ask you to make that happen, but I don't want it.
Speaker Change: for everyone to extrapolate this, given the way of the tillings that we had in the corner.
Speaker Change: We got it, make sense. And then, alright, I know you've talked a little bit about the business.
Speaker Change: around macro concerns. And that's certainly something we're getting questions from investors.
Speaker Change: My question for you is you do have a pretty resilient business here, 75% non-discretionary. That's much better than most of the software companies we look at. We're on the NFI side.
Speaker Change: I'm curious to get your thoughts on commercial. As we think about the opportunity there, is there potential this year based on your customer conversations to maybe accelerate share gains on the commercial side?
Speaker Change: New land opportunities that could maybe offset some of these macros any color you could provide around where we're at with commercial the opportunity there in the in the next you know six and I must be super helpful thanks.
Speaker Change: Great question. As you can imagine, Vahe and I spend a lot of time talking to customers, particularly our largest ones, literally every day. David, today we have not heard anything.
Speaker Change: that is a concern about their continued growth in commercial. We've talked to them about tariffs and they reiterated, you know, what I just shared with you.
So...
We continue to expect commercial to do well and...
That's what we've shared previously, you know, the...
Speaker Change: We got started in commercial, you know, very recently and others have been in this market for years before us and we're very happy with the traction that we've seen that today, you know, we are as far as we know number one by every observable metric that we have already.
So, continued excitement for commercial and also residential.
Speaker Change: Thank you. I would now like to turn the conference back to Ara Mahdessian for closing remarks, sir.
Speaker Change: Thank you. I just want to thank everyone for joining us today.
We understand and really appreciate that you have.
Speaker Change: The opportunity to spend time with incredible businesses, and so we're very grateful that you've taken time to better understand ServiceTitan. We know the opportunity, Kasthuri Rangan is very high. And of course, we aspire to be great stewards of your capital and to build a generational company in the process. And we very much look forward to...
Singy Som, and thank you.
Speaker Change: This concludes today's conference call. Thank you for participating. You may now disconnect.
For more information visit www.fema.gov
Thank you for watching!
David Hynes, David Kuzoyan,
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