ServiceTitan, Inc. Class A Common Stock 2027 Q2 Earnings Call

Please go ahead. Thank you, operator, and welcome everyone to ServiceTitan's fiscal second quarter 2027 earnings conference call.

With me are ServiceTitan's Co-founder and CEO, Ara Mahdessian, Co-founder and President, Vahe Kuzoyan, and CFO, Dave Sherry. During today's call, we will review our fiscal second quarter 2027 results. We will also discuss our guidance for the third fiscal quarter and full fiscal year 2027. 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 this call, including our guidance, is based on information as of today only, and it contains forward-looking statements that involve risks, uncertainties, and assumptions. All statements other than statements of historical fact could be deemed to be forward-looking. 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.

Please take a look at our filings with the SEC for a discussion of the factors that could cause our results to differ. 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. Definitions of these non-GAAP financial measures, along with reconciliations to our GAAP financial measures, are included in our earnings release, which we have furnished with the SEC and is available on our website at investors.servicetitan.com. Unless otherwise stated, all references on this call to platform gross margin, total gross margin, operating income, operating margin, free cash flow, and related growth rates are on a non-GAAP basis. Finally, we have 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.

With that, let me turn the call over to Ara.

Ara? Thank you, Jason, and thank you for joining us.

I am excited to share that our strong momentum delivering the Agentic Operating System for the trades resulted in 21% year-over-year revenue growth and record free cash flow this quarter. Over the course of a year, it has become increasingly obvious that delivering this Agentic Operating System to our customers and leveraging AI to further enhance our own organizational velocity are once-in-a-lifetime opportunities to execute against. As a result, we have broadened the scope of our investments in both Max and the Software Factory in absolute dollars, and also relative to our expectations at the beginning of the year. We now believe that focusing on our existing trades and accelerating our shift towards Max will allow us to unlock the full potential of our business in the years ahead. Vahe will share more about our Max execution.

Dave will discuss the financial implications of this mix shift, and I am excited to lead with the outcomes that our customers are realizing with Max today. Our vision since founding ServiceTitan has been to transform the lives of hardworking contractors by helping them grow revenue and increase margins. From day one, we imagined a world where technicians focused on serving customers in the field, leaders focused on business outcomes, and ServiceTitan increasingly handled the operational complexity in between. The outcomes our customers are now seeing with Max and our organizational readiness to lean into this success gives me even more clarity into our forward trajectory. As many of you know, we introduced Max as a pilot program at Pantheon last September, where Stacey Anipol was sitting in the audience. Stacey, the co-owner and president of Delponte Plumbing & Heating, saw immediate potential in Max.

She saw an operating system with a singular company brain connected to every piece of context in her business and armed with the ability to take action on key workflows in her operation. One that could automate and optimize how her business generated demand, booked appointments, sold work, managed payroll and inventory, and more, allowing her team to handle far more volume with the same headcount. Delponte has been in business for nearly 50 years and first implemented ServiceTitan in 2023, when Stacey took over as president. Her initial goal was straightforward, to build a better company for their customers, their employees, and the future of the business. I am glad to share that Delponte's results have been extraordinary so far. Stacey's revenue grew more than 35% year-over-year during Q1 2026 and more than 45% year-over-year in the second quarter of 2026, accelerating as the quarter went on.

With Max, Delponte generated more calls, booked more appointments, and closed more sales with higher average tickets. But what impressed me most was not the revenue growth. It was what the operating model allowed them to do next. Delponte launched a new vertical entirely around recurring service. In just 3 months, they have already served 400 customers, all without adding a single back office employee. Delponte's technician to admin ratio improved from 2 to 1 in 2025 to 3 to 1 in 2026, materially improving profitability. Whereas technicians often work long hours during peak season to serve every customer and the office is typically overextended, technicians averaged only 45 hours per week, and office morale has never been stronger.

As I said last quarter, the power that Max unlocks means work that used to require a group of people manually coordinating an operation is now orchestrated by the system itself, with humans and AI agents working together, each doing what they do best. Delponte is proving something we believed from the beginning. When routine coordination is handled automatically, leaders spend less time coordinating work and more time coaching people, serving customers, and growing the business. We see this as just the beginning and are excited to announce the next big wave of innovation at Pantheon in October. We are focused on leveraging the Max platform and our massive proprietary data set, expanding ecosystem, brand leadership, and distribution across more than 10,000 high-performing contractors to bring the magic of end-to-end automation to life.

Before I conclude, I want to take a moment to thank Ross Biestman for building ServiceTitan into the business we are today. We announced earlier that after leading us from less than $30 million in ARR to over $1 billion of annual analyzed run rate revenue, Ross has decided to step away from an operating role, but not before closing through Pantheon in Q3 as our CRO and then serving as an advisor through the end of the fiscal year to ensure a smooth transition. Ross, I am grateful for your leadership and your friendship over the past nine years. Being the leader that you are, you've also built a bench of exceptional leaders and a world-class go-to-market machine. Rikus Pretorius has served as our SVP of worldwide sales and Ross's right hand for over seven years.

We have great confidence that we have the right sales leadership team to lead us forward as Rikus steps into the CRO role beginning in Q4. Now, let's hear more from my co-founder, Vahe.

Thanks, Ara. Max has become the foundation for our future, and while I don't want to steal too much of our thunder from Pantheon next month, I'd like to dive right into the progress we made during the second quarter. Our North Star has always been to deliver transformational customer outcomes. Max customers continue to overperform their peers across key funnel metrics and are creating tangible business value. Max customers are generating more leads, converting those leads at a higher booking rate, and completing work at a higher average ticket. They are doing this with improved operational ratios, like what you heard from Delponte, to deliver a faster and more efficient rate of growth relative to peers. We now have over 30 agentic capabilities native within Max to power enhanced automation, including Q2 introductions like Demand Orchestration, advanced session SMS recovery, AI coaching, and scorecards and live escalations.