ServiceTitan Q1 FY2027 Earnings Call - Max Adoption Accelerates as Revenue and Margins Beat

Andrew Sherman, Analyst, TD Cowen4: Thank you for standing by, and welcome to ServiceTitan’s fiscal first quarter 2027 earnings conference call. Currently, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. To remove yourself from the queue, please press star one one again. I would now like to hand the call over to Jason Rechel. Please go ahead.

Andrew Sherman, Analyst, TD Cowen0: Thank you, operator. Welcome everyone to ServiceTitan’s fiscal first 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 first quarter 2027 results. We will also discuss our guidance for the second 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 and contains forward-looking statements that involve risks, uncertainties, and assumptions. 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’ve 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. 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.

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

Ara Mahdessian, Co-founder and CEO, ServiceTitan: Thank you, Jason, and thank you for joining us. Our customers are off to a strong start in fiscal year 2027. We continue to execute on our core multi-year growth vectors. We’re delivering the agentic operating system to the trades, and we’re improving our organizational velocity. During Q1, our focus on delivering customer ROI resulted in 25% year-over-year revenue growth, healthy efficiency, and record operating margins. As I spoke about last quarter, 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, owners focused on business outcomes, and ServiceTitan increasingly handled the operational complexity in between. I outlined the evolution of our platform and opportunity to build Max and the agentic operating system for the trades.

Today, I’d like to share the story of E·D·S Air Conditioning & Plumbing, one of South Florida’s premier HVAC and plumbing contractors, serving the residential and commercial, service and construction markets for decades. They were among the first to adopt Max, and E·D·S’s business performance speaks for itself across virtually every aspect of the funnel. While the first quarter has previously been a slower quarter for E·D·S, they delivered striking improvements during Q1 2026 compared with Q1 2025. Year-over-year, call booking rates increased roughly 16 points, close rate in the field increased more than nine points, average ticket size increased more than 30%, and as a compounding result of these improvements, average revenue per technician increased more than 50%. These significant revenue outcomes with minimal incremental overhead are powered by agentic workflows across the platform that complement the work that is required to be touched by humans.

ServiceTitan’s agents are generating leads, booking them into appointments, and helping technicians convert them into revenue at higher average tickets. Of all E·D·S jobs during Q1 of this year, nearly half were touched by the optimization engine. E·D·S founder Ed Sasso shared with me, "We can now manage our jobs, our accounting, and our overall costs without adding layers of people. Our tradesmen and women are put in the best position to perform their best work every day without worrying about unnecessary clerical work. This improves job performance, job satisfaction, and career development in a way we never thought possible. They have automated workflows that can create dramatic efficiency improvements, and we’re now able to significantly scale our business without adding additional overhead." All told, both productivity improved and technician count grew.

E·D·S is using ServiceTitan Max to accelerate the capabilities of their best people and create even greater future growth opportunities with enhanced efficiencies across the business. Proof that Max doesn’t just allow for improved operations, it compounds them. "The best part," Ed Sasso told me, "is that the technology gets better every single day." The power of Max is amplified beyond merely a collection of underlying Pro Products because there are 25 agentic capabilities Optimizing the platform to generate more leads and a higher conversion rate at higher average tickets, all while orchestrating the back office. During Q1, we introduced speed to lead, inbound call booking automation, auto inventory replenishment, and invoice detection, among others, that compound capabilities across the Manjam, the back office, and the field.

The power that is unlocked with this platform means that what used to require a group of people manually coordinating an operation is now being orchestrated by the system itself, with humans and AI agents working together seamlessly, where each player does what they do best. This end-to-end orchestration gets work done in the trades faster, more reliably, and more efficiently. We’re leveraging this end-to-end platform and massive proprietary data set alongside our 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 for operators. Our internal leverage of AI tooling is allowing us to accelerate development velocity to create more value for customers faster than ever. We are well on our way to delivering the agentic operating system to the trades. I continue to be inspired watching Titans execute for our customers every day.

Now let’s hear more about our execution from my co-founder, Vahe.

Andrew Sherman, Analyst, TD Cowen8: Thanks, Ara. I’m excited about our progress so far this year as we build the agentic operating system for the trades. Last quarter, we talked about our three major priorities this year. One, to execute against our multi-year growth vectors in enterprise, commercial, and roofing. Two, to build out Max and the agentic operating system on top of which it sits. Three, to accelerate our organizational velocity. I’d like to highlight important progress that we made during Q1. I’ll begin with a brief update of our primary existing growth vectors. Within commercial, we made significant product enhancements this quarter with the launch of our invoicing agents, equipment systems, and enhanced CRM capabilities. In roofing, we continue working to harden roofing-specific and insurance workflows to unlock the next leg of our growth in this trade. Finally, in enterprise, during Q1, we surpassed 2,000 total customers with annualized billings greater than $100,000.

Customers in this greater than 100K cohort now represent greater than 60% of our annualized billings and remain our fastest-growing segment. The health of this enterprise ecosystem was made clear during our annual private equity symposium. We brought together dozens of the largest operators in the trades and leading sponsors representing more than 3 trillion in AUM to speak about our collective vision for the future evolution of our industry. Shifting to Max and the agentic operating system for the trades, which we continue to intentionally roll out across our customer base to lead this industry evolution. Last quarter, we talked about doubling our Max capacity. During Q1, we more than doubled the number of locations on Max. Behind ongoing strong demand for Max, we’re optimizing our internal processes, accelerating our capabilities, automating customer onboarding, and expect to again double the number of locations on Max during Q2.

Most importantly, every fully ramped Max customer is running at least one fully automated job where the only human intervention is the technician in the field. Across fully ramped Max customers, on average, more than 10% of jobs are now fully automated. As a result of this end-to-end orchestration, Max customers are over-performing their peers across relevant funnel metrics. An additional pillar of our AI monetization strategy, our Virtual Agents, are experiencing strong early customer adoption to clear customer ROI and the advantages of a singularly integrated platform. We recently introduced outbound calling and receptionist capabilities, which we believe will further expand the addressable opportunity for Virtual Agents while making it even easier for customers to fully automate a greater proportion of jobs. Closing with our organizational velocity.

Our goal at ServiceTitan is to build a software factory where AI agents play a central role in all code development to accelerate velocity. Over the past quarter, I worked closely with our new CTPO to hire an industry-leading R&D leadership team that we expect will raise the industry standard of innovation and efficiency. One example of software factory in action, we are using AI through the full life cycle of product development, from collecting user feedback across forums, to design ideation, to code creation, and bug detection and prevention across both sandbox environment and live in production. We are accelerating our pace of product development. Stepping back, the continued success that we are seeing on our primary growth vectors, the clear opportunity to deliver the agentic operating system for the trades, and the notable improvements I have already seen in our internal velocity are each clear signals.

It is inspiring to see our vision come to life, and I want to thank Titans everywhere for delivering value to our customers every day, and our customers for your partnership and trust. With that, I’ll turn it over to Dave to run through the financials. Dave?

Dave Sherry, Chief Financial Officer, ServiceTitan: Thanks, Vahe. Our start to the year underscores the durability of our opportunity. Today, I’ll run you through Q1 financial results and provide an update to our guidance for fiscal year 2027. For more detailed financial results, please refer to our press release issued earlier today. Q1 gross transaction volume or GTV was $21.7 billion, representing 23% year-over-year growth. Q1 benefited from one additional business day as compared to the year ago period, resulting in a roughly 150 basis points tailwind to GTV.

Weather contributed roughly another 150 basis points tailwind due to both January ice storms pushing GTV into our fiscal Q1 and an unusually early start to the cooling season. Underlying growth across residential and commercial trades remains healthy. Q1 total revenue of $268.8 million grew 25% year over year. Subscription revenue of $202 million grew 24% year over year, led by strong growth in Pro, commercial, and initial upside for Max. Usage revenue grew 29% year over year to $58.5 million. Fintech revenue was driven by a combination of higher on-platform monetization and strength in commercial GTV, which, as a reminder, has lower monetization given the mix of payment volume. Beyond Fintech, both ecosystem and virtual agent revenue are growing well, and we continue to believe that growth from these factors will likely lead usage revenue to grow more quickly than GTV in FY 2027.

Total platform revenue for Q1, the sum of subscription and usage revenue, grew 25% year-over-year to $260.6 million. Q1 professional services revenue was $8.3 million. Net dollar retention was greater than 110% for the quarter. Q1 platform gross margin was 81.3%, an improvement of 160 basis points year-over-year. Total gross margin for Q1 was 75.3%, up 170 basis points year-over-year. Q1 operating income of $40.8 million resulted in operating margin of 15.2%, an improvement of 770 basis points year-over-year. We overperformed our expectations during the quarter, primarily due to stronger than expected GTV combined with lower costs, which was partially driven by the timing of certain expenses. As always, we’re managing against a full-year incremental margin plan by reinvesting behind strength we saw in the quarter.

Looking ahead, we expect the timing of expense growth to normalize as well as incremental investments in Max and Inference. We expect investments in these areas to precede the benefits and reduce our future hiring needs over time. In total, we now expect our incremental operating margins for the full fiscal year 2027 to be higher than our initial target of 25%. Q1 free cash flow was negative $9.6 million, an improvement compared to negative $22.3 million for the prior year first quarter. We pay our annual cash bonuses during Q1 and continue to expect the annual free cash flow will roughly approximate annual non-GAAP operating income over the course of the full fiscal year. Two quick model notes before shifting to formal guidance. First, we’ve conducted an analysis of our appropriate non-GAAP tax rate moving forward.

Beginning this fiscal year, we will adopt a long-term non-GAAP tax rate of 18% to be applied for fiscal 2027 through fiscal 2030. Second, I’d like to remind you of business day seasonality this year. Compared to the prior year, GTV and usage revenue will benefit from one additional business day in Q2. Q3 will have one fewer business day, and Q4 will have a comparable number of business days. Now, shifting to formal guidance. For the second quarter, we expect total revenue in the range of $284 million-$286 million. We expect to generate operating income in the range of $38 million-$39 million. For the full fiscal 2027, we expect total revenue in the range of $1.13 billion-$1.14 billion, and we expect to generate operating income in the range of $142 million-$147 million.

Underpinning our outlook is a sustainably high ROI that we deliver our customers who operate in the resilient trades that keep our economy running. We’re excited by the progress we’re seeing as we build the agentic operating system for the trades with greater operational velocity than ever before. With that, I’ll turn the call back to the operator for Q&A. Operator?

Andrew Sherman, Analyst, TD Cowen4: Thank you. As a reminder, to ask a question, you will need to press star one one on your telephone. To remove yourself from the queue, you may press star one one 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. Our first question comes from the line of Josh Baer of Morgan Stanley. Your line is open, Josh.

Andrew Sherman, Analyst, TD Cowen2: Excellent. Congrats on a great quarter. I was hoping that you could provide some insights and key takeaways from your private equity symposium to start.

Dave Sherry, Chief Financial Officer, ServiceTitan: Great question. As you know, our job as the operating system for the trades is to help our operators thrive and, of course, to help sponsors earn even higher returns. That is our mandate, and our mandate is to deliver AI for the trades, particularly for the largest operators. Those operators and sponsors are standardizing their operations on ServiceTitan. We believe the reason for this is where the vast majority of the work happens in the trades, and it’s done by technicians and others that are already working inside ServiceTitan across all the end-to-end workflows, and that is where we get to leverage data and ecosystem advantages. I think in particular, being the end-to-end platform makes us the natural destination for the execution layer, the orchestration layer, and the interaction layer. Ultimately, ServiceTitan is not some small piece of our customers’ tech stack. It’s the primary platform.

Ara Mahdessian, Co-founder and CEO, ServiceTitan: It’s where the work has been done historically for a decade, it’s natural for us to automate this work now as the execution layer. It’s where all the workflows have been coordinated for a decade, it’s natural for us to coordinate now as the orchestration layer. Of course, for the parts that continue to be manual, it’s very natural for us to remain as the interaction layer.

Andrew Sherman, Analyst, TD Cowen8: PE companies continue to do well. They continue to be very fast-growing part of our business. The PE symposium just reiterated the excitement for how far we’ve all come together, but more importantly, how much further we have yet to go with AI on the frontier.

Andrew Sherman, Analyst, TD Cowen2: That’s great. Just to follow up on that point, is there any way to provide context for the contribution to growth from private equity? How to think about the durability of that tailwind and this great trend for you? Thank you.

Andrew Sherman, Analyst, TD Cowen8: Hey, Josh, I’ll take this one. I think in the quarter we announced a big milestone of crossing 2,000 customers north of $100,000 of ARR each. I think that you can assume is pretty heavily concentrated with private equity partners, and that represents north of 60% of our ARR today, and it’s probably the fastest-growing component of the business.

Andrew Sherman, Analyst, TD Cowen4: Thank you. Our next question comes from the line of DJ Hynes of Canaccord. Please go ahead, DJ.

DJ Hynes, Analyst, Canaccord: Hey, thank you, guys. I’ll echo Josh’s congrats. Great quarter. Ara, for customers that have moved to Max, what kind of usage are you seeing of Pro Products that they didn’t previously have access to? I guess I’m curious how much of that is natural experimentation versus led by a ServiceTitan customer success team. I’m sort of getting at scalability of the rollout and utilization as a leading indicator of retention.

Ara Mahdessian, Co-founder and CEO, ServiceTitan: Great. Maybe I’ll provide some context while I can comment on the scalability pieces. We have customers that started from different places, some with little to no Pro products, others with more meaningful access to Pro products before switching to Max. I want to remind ourselves that Max is far more than simply the aggregation of Pro products. Max represents 25 different agentic capabilities. Of those 25, before Max, about seven of them were available in the form of Pro products. The rest have been net new since Max, and they span the, call it, the three most important areas of our customers’ businesses that are correlated to revenue. These are the direct drivers of revenue, how they generate demand or leads, how they convert that demand into booked appointments, and then ultimately, what is the close rate and average ticket on those booked appointments.

For example, on the demand side, whether it’s optimizing ads on Google and Meta, it’s email marketing to the customer base, it’s things like speed to lead. On the conversion to booked appointments, it’s the voice agents that field voice calls, it’s the SMS agents that field text messages and automatically book them. It’s for the calls that are handled by CSRs, it’s the AI that scores how well they perform and coaches them to improve performance. Then, of course, on the average ticket side, things like assigning the right technician to the right job to maximize close rates and average tickets or follow up on unsold estimates.

For folks who’ve spent time building agents in real life, like production businesses, there’s a lot of work that’s necessary to be done to truly automate everything and drive the types of results that we’re seeing with Max. It’s been incredibly exciting to see the outcomes. I shared E.D.S.’s in the prepared remarks, to see the level of performance from the Max customers makes us very excited for the future.

Andrew Sherman, Analyst, TD Cowen8: I’ll just add on, in terms of the scalability portion of that answer. For us, the focus has been maniacally emphasizing the ROI that our customers get, and we’re doing that primarily through making sure that we’ve got all hands on deck, and to the extent that we’ve got an executive sponsor, including myself and Ara, on every single Max customer right now. This first cohort, we’re not focusing on the automation and the scalability of the setup. Secondly, we started with a lot of customers that had some of the Pro Products already, there was less setup to do than a greenfield customer. All that being said, the focus right now is exactly on the scalability aspect and being able to deliver the type of ROI we’re seeing, but without having to have all the various manual work that’s involved today.

As we think about how we scale Max, the ability to automatically get everything dialed in without needing work either from the customer or from us, or I should say minimize that work as much as possible, is where the focus is now. We expect to see the benefits of that scalability to show up throughout the rest of the year.

DJ Hynes, Analyst, Canaccord: Okay. Very helpful. Dave, maybe a follow-up for you on a separate topic. Q1 GTV as a % of the full year. Would you expect that ratio to be similar to what we’ve seen over the past couple of years? Or could Q1 skew a little heavier given some of the dynamics you talked about, demand pushout from Q4, the extra day? How should we think about that as we set our models?

Andrew Sherman, Analyst, TD Cowen8: Thanks for getting me involved, DJ. I’ll say it’s going to really depend on what happens during the peak season this summer. If the summer is hot, I’d expect it to be sort of a normal pattern. If the summer’s more mild, then I’d expect it to be maybe a little bit higher in Q1. It’s hard for us to know to develop a real conviction around what it’s going to be because it’s impacted by factors outside of our control, principally weather. I don’t think we see very much that’s driving an unusual trend in terms of seasonality this year.

Andrew Sherman, Analyst, TD Cowen4: Thank you. Our next question comes from the line of Scott Berg of Needham & Company. Please go ahead, Scott.

Andrew Sherman, Analyst, TD Cowen6: Hi, everyone. Really nice quarter here. I guess I’ve two questions. Let’s start off with on the Max deployments that you’ve done so far. I guess, have most of the deployments gone pretty much as expected and very consistently? Are you seeing any sort of variations from deployment to deployment that would be maybe interesting to call out?

Andrew Sherman, Analyst, TD Cowen8: Overall, we’re incredibly proud of the results that we’ve been able to drive for customers, and I would say are generally on the optimistic end of the spectrum. We are, of course, learning some of the subtleties around how previous configurations affect future configurations, how the different products work together, and generally the ability of customers to change and go through that process, which is exactly what this first cohort was intended to produce. That being said, we are focusing on those customers that have the best fit for Max today. As we start to scale it out across our entire customer base, I’m sure there’s a lot more learnings to be had. To go to your question, we’ve been very happy with the ability for our customers to both use Max and get the value out of it.

Ara Mahdessian, Co-founder and CEO, ServiceTitan: I think the seven needs are largely homogenous. At the same time, building agents for production use cases, there are a lot of such use cases to manage. I think, for example, thinking about something like voice agent might seem as simple as handling the call and booking the appointment. There are dozens of additional related use cases you need to handle from things like prioritizing capacity for high-value jobs or having receptionist capabilities to connect the caller to, for example, billing if it’s a billing question, to being able to support rescheduling appointments to, I don’t know, notifying on-call texts when calls are booked after hours. There are these dozens of additional use cases that you must support in order to turn it into a real production-grade system that a customer running mission-critical operations can rely on for effectively 100% of their calls.

Those needs are homogenous across our customer base.

Andrew Sherman, Analyst, TD Cowen6: Understood. Thank you. Then from a follow-up perspective, Dave, there’s a lot of concern around some of the initial AI usage amongst the application software vendors and how it has a chance maybe in the early stages to compress gross margins as customers maybe use more functionality that has token use than maybe what some of us are expected or what vendors are expected. As these customers have ramped their usage of tokens, et cetera, has it been within your realm of expectation? Has it been maybe more or less? Should we expect any real impact to gross margins as we think about more and more customers ramping over the next year?

Dave Sherry, Chief Financial Officer, ServiceTitan: I think a couple things to say. First, our usage of AI for the customer end is not code creation, video creation, it’s not as token intensive. With regards to the margins from Max, I think both Max and virtual agents are additive to gross profit dollars. While this may change over time, so far, what we’ve seen is a combination of the two to be roughly consistent with our total gross margins at scale.

Andrew Sherman, Analyst, TD Cowen4: Thank you. Our next question comes from the line of Jason Celino of KeyBanc Capital Markets. Please go ahead, Jason.

Jason Celino, Analyst, KeyBanc Capital Markets: Hey, great. Thanks for taking my question. Just a couple for Dave. The incremental margin improvement was very good in Q1. I heard you on the incremental margins for the full year upticking to 29%, and I understand the timing differences, but where do you think you’re getting more efficiency? The alternative would be to be reinvesting that back. Help me kind of understand where you saw some upside and kind of your process there.

Dave Sherry, Chief Financial Officer, ServiceTitan: Absolutely. With regards to incrementals this year, three key things. First and foremost, as I mentioned on the script, the prepared remarks, it’s important to remember we manage the biz on a full year basis, not quarterly, and I encourage investors to not look at incremental margins on any given quarter. Second, in Q1, we saw strong performance that was driven both by the outperformance from high GTV, which drove usage revenue, which is high margin and lower expenses. Part of that was regards to timing. Looking forward, I expect that timing to normalize. Third, behind the strength of Q1, we are increasing our investments in both Max and AI inference inside the business. This will roll out throughout the year. With that said, despite these increased investments, factoring both the Q1 strength and those investments, we do expect to overperform our full year incremental targets this year.

Jason Celino, Analyst, KeyBanc Capital Markets: Okay. Wonderful. If we look at the usage take rates, they improved quite a bit on a year-over-year basis for Q1. I think in the past you’ve talked about driving better payments utilization. Was that the same driver here or was there something more at play?

Dave Sherry, Chief Financial Officer, ServiceTitan: Yeah, absolutely, Jason. Usage take rate performed really well this quarter. We were able to maintain our take rate relative to Q4 even with the GTV overperformance. A couple of things. First, as I mentioned in my prepared remarks, Fintech is driven by two really opposing forces. The first is on-platform payment monetization. It inched up this quarter. On the other hand is a mix shift towards commercial, which has lower monetization due to different mix of pay methods. That’s the first thing. The second, beyond Fintech, our AI monetization, both ecosystem and virtual agents are growing quite well. Ecosystem is larger. VA is growing faster. As I look forward, I’d expect usage take rates to remain roughly at these levels. We don’t foresee further improvements in the on-platform monetization, and we do expect GTV mix to continue to shift towards commercial.

I’d expect this shift to commercial to be offset by the growth in our AI usage products from an earn rate perspective. Given the way that usage earn rate has ramped over the last year, this means that we expect usage revenue to continue to outpace GTV throughout the balance of the year.

Andrew Sherman, Analyst, TD Cowen4: Thank you. Our next question comes from the line of William Blair. Please go ahead.

Jackson Beaulieu, Analyst, William Blair: Hey, guys. This is Jackson Beaulieu on for Dylan Becker. Vahe, you noted that you guys more than doubled Max locations in the first quarter, and you expect to double them again in the second quarter. I’m just curious to get your thoughts on how sustainable that doubling cadence is beyond the first half. Maybe, is that a function of being capacity constrained by demand or by onboarding throughput? Just curious to get your thoughts on that cadence going forward.

Dave Sherry, Chief Financial Officer, ServiceTitan: Hey, Jack, this is Dave. Before Vahe jumps in, I just wanted to send a big congratulations to Dylan and the Becker family for the addition to their family. With that, V, go ahead and why don’t you answer Jackson’s question?

Andrew Sherman, Analyst, TD Cowen8: Ultimately, what we really care about is having every customer on Max. The sustainability of the growth rate is really around the fastest path towards that full coverage. As we think about how we maintain that growth as much as possible, one of the other exciting things that we’ve started this quarter is being able to get brand new customers directly onto Max versus just going after the existing customer base. We’re seeing some promising early signals there. In terms of how long we could keep the doubling over quarter, as you mentioned, that’s a pretty aggressive growth rate.

That’s what we’re trying to orient, is ultimately we want to be intentional about what expectations we’re setting, how we’re laying the foundations for a durable growth story, and ultimately optimizing for getting all of ServiceTitan onto Max, not necessarily any particular growth rate in the journey.

Jackson Beaulieu, Analyst, William Blair: Got it. That’s super helpful. Maybe, Ara, we’re talking about the agentic operating system for the trades, and you guys have been improving organizational velocity as well. I know we’ve talked about what agentic capabilities are live and resonating most with customers today. Really, I’m curious how you’re thinking about the improved internal velocity translating into the faster product delivery and ROI and how this just reinforces your core multi-year growth vectors. Thanks.

Andrew Sherman, Analyst, TD Cowen8: Ultimately, we are a tech company, our business is predicated on delivering solutions for our customers. There is no greater driver of that, both in terms of value to customers and revenue to us, than the quality of the product and the velocity with which it progresses. Any time we get even a little bit of an acceleration on the R&D side, there are massive long-term consequences here.

What we’re seeing now with the more and more effective utilization of AI is that the signals across the board, whether it’s the overarching amount of code and the quality with which it’s produced or the entire life cycle of understanding what to build, how to build it, and so on, what we’re trying to focus on most is making sure that we’re holding a high quality bar as we see this acceleration materialize, and that we’re able to do it in a way that allows sustainable velocity improvements over time. If we’re able to maintain this pace, I think our ability to deliver outcomes for our existing markets becomes accelerated, our ability to grow into adjacent markets will become accelerated, and ultimately the value we drive and the revenue we generate is going to be accelerated.

As far as I’m concerned, there is nothing more important than the long-term success of our company than our ability to get the benefits of AI, particularly within our R&D org.

Ara Mahdessian, Co-founder and CEO, ServiceTitan: We are excited about what the software factory will do for our future, from scouring all the tens of thousands of live conversations we have with customers to the support tickets to the underlying product utilization data to help figure out and prioritize what to build. Then, of course, for agentic coding to build what we need to build, test it, deploy it, monitor it in production, and self-evolve over time. This is the frontier that we are very excited about and what it’ll mean for our future.

Andrew Sherman, Analyst, TD Cowen4: Thank you. Our next question comes from the line of Billy Fitzsimmons of Piper Sandler. Your line is open, Billy.

Billy Fitzsimmons, Analyst, Piper Sandler: Great. Thanks for taking the question. Vahe, you touched on this in your prepared remarks, but it’s been a couple of months now since you’ve had your new Chief Technology and Product Officer. He has a track record at some of the largest software companies. Anything you can provide on either how we should think about some of the processes and procedures he has brought or is able to bring to the engineering organization? Maybe more broadly, you touched on the use of AI tools internally and went through some of the use cases, and I got to imagine it’s evolving day to day, but to kind of double-click on that, are there any additional anecdotes you can talk about that kind of help us think through things you could not do, or can now do faster than you could previously with some of these tools?

Andrew Sherman, Analyst, TD Cowen8: Yeah, absolutely. I would say, by far, the most important aspect of being able to do what we’re talking about is to build a strong team. There will be no bigger driver of any of those things, and this is the first area that Abhi has been focusing on in terms of increasing the talent density within the team and making sure that we’ve got the right leaders in the right seats in order to take us to where we need to go. Secondly, in order to get the benefits of AI, particularly around the acceleration, what you need is a foundation that allows you to have resiliency and quality as you gain those benefits.

His experience at companies at scale that have proven to scale their R&D org and be able to grow their footprint, in terms of the products they create, the value that they deliver, is what is allowing us to see the benefits in terms of having those foundational quality harnesses, processes, and ultimately the teams that are building the foundations on top of which what the software factory is ultimately going to be able to do. All that being said, we are early days and so we are very excited to see these early signals start to accelerate ultimately the velocity and quality with which we can serve our customers.

Billy Fitzsimmons, Analyst, Piper Sandler: Awesome. If I could sneak in a second one for Dave. When we think about the revenue upside in 1Q and the increase for the year, there’s a few different growth drivers here. Max is ramping, voice agents, Roofing and Commercial are all ramping, and more broadly, it seems like end customer demand is strong. The GTV line accelerated. Can you just help us rank order or think through the different drivers is driving the upside for kind of initial expectations?

Dave Sherry, Chief Financial Officer, ServiceTitan: I think a couple of things here. First, Max and VA are both really exciting for us long term. Although our expectations are higher today as compared to 90 days ago, these deals generally have meaningful ramps built in to enable customers to align their usage with their bill. Though the contribution is higher today in Max than it was a quarter ago, it does remain small. With regards to GTV, our approach, as always, is to not roll forward GTV over performance into future periods. Despite the strength in Q1, we’re expecting a normal summer consistent with the last few years. The raise for the rest of the year is simply just execution of the business, and it’s these factors that’s the foundation for the improved FY27 outlook.

I think we’re fortunate to be able today to raise our total guidance by $20 million.

Andrew Sherman, Analyst, TD Cowen4: Thank you. Our next question comes from the line of Nick Altmann of BTIG. Please go ahead, Nick.

Andrew Sherman, Analyst, TD Cowen3: Awesome. Thank you. I wanted to circle back on a prior comment around how some of the net new customers are actually starting on Max, and can you just expand on that a bit? It’s kind of interesting in the sense of whether Max is actually acting as sort of a front door to ServiceTitan or whether you’re seeing more net new logo opportunities because of Max. Just any additional color on that comment would be interesting. Thank you.

Andrew Sherman, Analyst, TD Cowen8: Great question. First and foremost, this is very new and very small. The thesis is when switching software is a moment of great change management, it may make sense that this be the time to switch software and deploy agents at the same time. The other part of the thesis is that in the traditional world where you had software that you manually use, it required a lot of training and coaching and monitoring in order to get utilization. Whereas in the agentic world, when you deploy agents upfront, you naturally get effectively 100% utilization with much less effort on training, monitoring, support, and coaching. We’re excited to do this on a small scale and see the results for these contractors that adopt Max from the beginning, depending on the results that we see, determine how to scale moving forward.

Andrew Sherman, Analyst, TD Cowen3: Great. Thank you.

Andrew Sherman, Analyst, TD Cowen4: Thank you. Our next question comes from the line of Parker Lane of Stifel. Please go ahead, Parker.

Andrew Sherman, Analyst, TD Cowen1: Yeah. Hi, this is Jack McShane on for Parker. Thanks for taking my questions today. I’d be curious, with customers in the Max Program seeing such strong productivity gains, you mentioned.

EDS, I believe it was 50% average revenue per technician improvement. Are you seeing customers in the Max Program start to talk about making plans of hiring more? Do you think that this can be a growth driver towards the back half of the year and into fiscal year 2028?

Andrew Sherman, Analyst, TD Cowen8: In E·D·S’ case, they not only saw an increase in revenue per technician, but they also added technicians. Generally, when customers increase the number of leads that they generate or their booking rates increase or both, they end up with more appointments that they need to run. One way of meeting the increased demand for appointments is greater technician efficiency that allows an individual tech to get to more appointments, although there’s a pretty strict limit on how much efficiency you can gain there. Therefore, in almost every case, it ends up in the hiring of additional techs.

Andrew Sherman, Analyst, TD Cowen1: Yeah, it’s great to hear. Second question, obviously, headless is a focal point with investors in the space now. I’d be curious to just get your guys’ thoughts on its applications to ServiceTitan. Are you seeing technicians on-site, or maybe it’s back office employees using general purpose models outside of the ServiceTitan platform? Is there an opportunity to build out headless functionalities so you start to capture some of that usage? Thank you.

Andrew Sherman, Analyst, TD Cowen8: What we’re seeing is a pretty broad, let’s say, desire to start using all the AI tools available on the market and especially with our larger customers, huge amounts of experimentation, whether it’s ClockShark or tools like that that are similar. What we’re noticing is that part of the main challenge they experience is in order to do anything useful, they ultimately need to be able to access data in order to get information. Once something useful is discovered through an insight, they need to take some sort of action into the real world. This is the role that we think that we can play, and this is why it’s so important to become that orchestration layer, that end-to-end intelligence, both in terms of reads and writes.

We’re still early on in thinking about how we plug into the broader ecosystem of AI tools. Right now, there’s so much low-hanging fruit in terms of delivering direct functionality to our customers that that’s what’s taking up the majority of our time. I can very easily see a future where both individually and as businesses, there’s all sorts of AI tooling, and we want to be able to provide a platform through which customers can get the most out of AI. Ideally, it’s through solutions that we offer directly, but we also want to become a platform and an orchestration layer that can be leveraged through external tools as well. This is why we think the ecosystem and having a strong and thriving ecosystem is such a strategic area for us to invest in.

Andrew Sherman, Analyst, TD Cowen4: Thank you. Our next question comes from the line of Andrew Sherman of TD Cowen. Please go ahead, Andrew.

Andrew Sherman, Analyst, TD Cowen: Oh, great. Thanks, guys. Ara, on VA, I wanted to drill in a little bit more on what you’re seeing from early customers and trials. What percentage of your customer base has reached out and expressed a lot of interest? What’s the sales motion to target these, and how quickly are the rollouts going wall to wall or kind of slower and then ramping? In the competitive landscape, any differentiating factors you want to call out?

Andrew Sherman, Analyst, TD Cowen8: Very good question. We gave select customers access to the early version of our voice agents in Q4. As I described earlier for one of the questions, we then built out support for dozens of additional of these real-life production use cases through Q1. We began more expanded go-to-market late Q1. Of course, given the recency of the more expanded go-to-market, you can imagine the penetration is naturally low today, but ramping quite well. To the latter half of your question, I think nearly all of our customers face situations where there’s a sudden surge of calls and that surge overwhelms their staff, or calls come in after hours and somebody needs to pick those up.

Especially when each one of these calls might represent thousands of dollars of revenue, our thesis is that a lot of customers will move in this direction over time. Naturally, some will start with overflow and after hours, others may choose to let voice agents handle incremental volume as they see CSR attrition in their business, especially because CSR attrition tends to be fairly high in contracting businesses. We see this as a very meaningful opportunity for growth.

Andrew Sherman, Analyst, TD Cowen: Great. That’s it for me. Congrats. Thanks, guys.

Andrew Sherman, Analyst, TD Cowen8: Thank you so much.

Andrew Sherman, Analyst, TD Cowen4: Thank you. Our next question comes from the line of Richard Poland of Wells Fargo. Please go ahead, Richard.

Andrew Sherman, Analyst, TD Cowen5: Hey, thanks, guys. On for Michael Turrin here. I guess when we just think about the broader, let’s call it Pro Products suite, how is adoption going there? I know a lot of the focus right now is on Max, and it sounds like that’s kind of ramping nicely. But just in this interim period, while that’s not fully available to everyone else, how do we think about just kind of where you’re seeing strength in certain Pro Products and how that’s kind of developed over the last 90 days?

Dave Sherry, Chief Financial Officer, ServiceTitan: What I’ll say here is Pro continues to sell well. We’ve not seen a headwind from Pro adoption while we’re selling Max. I think that over time, our packaging will encourage customers to adopt Max more. Remember, it’s really, really important that everyone understands that Max is more than just a collection of Pro products. It’s not just a bundle. It’s incremental capabilities. While Pro continues to sell, we think customers are going to increasingly have interest in Max or versions of Max.

Andrew Sherman, Analyst, TD Cowen5: Great. I guess, Dave, just on GTV, when we think about just kind of average ticket size and any differences in just number of jobs in the quarter, some of the core on GTV, any color there?

Dave Sherry, Chief Financial Officer, ServiceTitan: I think nothing really stood out this quarter. We see pretty balanced growth from average ticket and number of jobs. The bigger variance, obviously, the big driver was weather and of course, business days in the period.

Andrew Sherman, Analyst, TD Cowen5: Awesome. Great quarter, guys.

Dave Sherry, Chief Financial Officer, ServiceTitan: Thank you.

Andrew Sherman, Analyst, TD Cowen4: Thank you. Our next question comes from the line of Brian Peterson of Raymond James. Please go ahead, Brian.

Brian Peterson, Analyst, Raymond James: Hey, guys. Thanks for taking the question. Sorry for the background noise. Just on Max, obviously doubling this quarter and expecting to double, or more than doubling when they expected to double that quarter. I’m actually just curious, what is the gating factor on growth at this point? Is there anything that customers are pushing back on? Why should we not see that adoption accelerate from where you’re seeing so far? Thanks, Dave.

Andrew Sherman, Analyst, TD Cowen8: The primary gating factor is us wanting to go through a very intentional sequential process of first and foremost nailing the ROI story. We feel very confident that we’ve done this already. That has been the first constraint. Now we’re in the phase of making sure that we can continue to deliver those same types of results, but with a more scalable and efficient implementation effectively. That’s where the focus is right now, and that’s the gating factor. The last phase is really making sure that Max is a fantastic fit across all of our customers, not just the ones that are best fit today. Going back to your question, it’s really around optimizing for the long-term durable success of Max versus selling the most we possibly can today.

We have way more demand than what we’ve been onboarding, we expect to continue to be in that same state. We want to be very, very intentional with the success that we deliver, the brand and reputation of Max, and the durability of the customers on the program.

Andrew Sherman, Analyst, TD Cowen4: Thank you. Our next question comes from the line of Tyler Radke of Citi. Please go ahead, Tyler.

Andrew Sherman, Analyst, TD Cowen7: Yeah, thank you. Ara and Vahe, there’s been a lot of headlines out in terms of the big data center build-out projects of shortage of workers, electricians, plumbers, HVAC, et cetera. How are you thinking about the medium and long-term impact to ServiceTitan? Obviously these are workers that are critical to the platform today.

Andrew Sherman, Analyst, TD Cowen8: Yeah. This is where we see mostly affecting the commercial part of our business. As you’d imagine, the residential businesses are not really involved on the data center build-outs. On the commercial side, we are certainly hearing and seeing from our customers the huge kind of tidal wave of work coming in from data centers. I think it’s really hard to predict exactly what the impact is going to be, because as you know, these data centers are built typically way off-site. What I’m hearing from our customers is it’s not so straightforward to get, first of all, just the number of plumbers and electricians needed, much less to get them to move to those areas for the construction period and so on.

For the foreseeable future, we’re not anticipating any meaningful impact to our business or to our customers’ businesses in terms of the labor disruptions from the build-out. It’s a fast-moving situation, and we continue to monitor it closely.

Andrew Sherman, Analyst, TD Cowen7: Thank you. Just a quick follow-up on the weather dynamics that you called out. Given what sounded like kind of a benefit both from the early start to the cooling season, is there any sort of timing issues we should be aware of in terms of that follow-on impact in Q2? Any pull forward from that should take kind of some momentum out of Q2? Or would you not associate that directly with Q2?

Dave Sherry, Chief Financial Officer, ServiceTitan: Great question, Tyler. The warmer spring means our customers’ busy season started earlier. How the peak performs will really be driven by the peak summer months. If it’s a hot summer, I could see GTV being higher. If it’s a milder summer, it’s possible that it will appear to be a pull forward from Q2 to Q1. It’s hard to know until we really see the quarter evolve. As always, we’re not taking a differentiated view on the weather and just, as I said before, assuming a consistent summer with the prior years.

Andrew Sherman, Analyst, TD Cowen4: Thank you. Our next question comes from the line of Adam Hotchkiss of Goldman Sachs. Please go ahead, Adam.

Adam Hotchkiss, Analyst, Goldman Sachs: Great. Thanks for taking the questions. Dave, I know historically you’ve talked a little bit about this dynamic of repair versus replace impacting ticket sizes for your customers. Would just be curious what you’re observing on that front and what it tells you about consumers in the space. Thanks so much.

Dave Sherry, Chief Financial Officer, ServiceTitan: Thanks for the question, Adam. I don’t think we saw anything stand out in the quarter. Ticket sizes were up a little bit, but there was no fundamental shift from repair to replace.

Adam Hotchkiss, Analyst, Goldman Sachs: Okay, super clear. On the competitive environment, appreciate the commentary around the architectural vision when it comes to third-party AI tools. Any changes you’re seeing more broadly given what AI is doing to product development velocity in the broader competitive environment in your space?

Andrew Sherman, Analyst, TD Cowen8: Not necessarily in our space. I think, as just a technologist, it’s a crazy time to be in the game. We’re just seeing incredible things being possible, both internally as well as what other companies are doing. There’s nothing particularly special in our corner of the universe. We’re kind of seeing the magic of AI continue to play out, and we continue to be super excited about what it means for us.

Andrew Sherman, Analyst, TD Cowen4: Thank you. Our next question comes from the line of Daniel Jester of BMO Capital Markets. Your question, please, Daniel.

Andrew Sherman, Analyst, TD Cowen9: Great. Thanks for sneaking me in here. This is Will Hancock on for Dan Jester. Appreciate you taking our question, and congrats on the quarter. You’re putting a lot of resources into expanding the Max Program. Can you talk about how you weigh that opportunity versus investing in entering and scaling new trades? Has that prioritization shifted given the success that you’ve seen so far in Max?

Andrew Sherman, Analyst, TD Cowen8: I would say there’s definitely been an increase in the weight in terms of Max and what resources we’ve been putting into it over the last few quarters. The early signals have been promising enough for us to be increasing that level of investment. We’re trying very hard not to have a huge pullback in other areas, and so we’re being thoughtful about how we’re shifting resources in that direction. Generally speaking, I would describe it as increased priority and importance for Max, and then we’re trying to be balanced in terms of where we take those resources from in order to increase that investment.

Ara Mahdessian, Co-founder and CEO, ServiceTitan: Fundamentally, we’re running the business like a marathon, not a sprint. We do continually believe that we will be the operating system for all the trades. Right now, there is a near-term, very exciting opportunity around building out and delivering Max. Over the long term, we continually believe we’ll extend beyond the trades. I think today the focus has, as you said, shifted more towards Max.

Andrew Sherman, Analyst, TD Cowen4: Thank you. Our next question comes from the line of Terry Tillman of Truist Securities. Please go ahead, Terry.

Connor Passarella, Analyst, Truist Securities: Terry, good evening, team. This is Connor Passarella on for Terry. Appreciate you taking the questions. I’ll stick to one. Just first on the broader landscape, on the broader AI adoption, how does the level of customer interest and urgency around AI digital transformation in commercial compare to residential today? Maybe what’s driving that difference as well. Thank you.

Andrew Sherman, Analyst, TD Cowen8: I would say that there’s a general similar level of excitement, and I would say both for us and the market in general, there is more maturity on the residential side. I think a lot of it comes from the fact that residential transactions tend to be simpler. If you have even a booking situation, the systems involved and the dynamics involved are generally less complex to deal with than in a commercial use case. As we think about the longer arc, we see a very similar opportunity in both, but we anticipate that both the market in general and our level of product maturity for residential to lead commercial.

Andrew Sherman, Analyst, TD Cowen4: Thank you. Our next question comes from the line of Yun Kim of Loop Capital Markets. Your line is open, Yun.

Ara Mahdessian, Co-founder and CEO, ServiceTitan0: Okay, great. Thank you. Great quarter. Following up on a couple of questions on competitive landscape and also the last question, if you can give us just an update on the overall competitive landscape, especially at the low end of the market. Picking up a lot more players in that end of the market. Maybe they’re using vibe coding and such, I don’t know. Given that you are seeing faster growth from the enterprise, the larger end of the market, is the higher end of the market more of your go-to-market focus?

Ara Mahdessian, Co-founder and CEO, ServiceTitan: Great question. We don’t really sell to the lower end of the market, so we haven’t seen any dynamics that necessarily materialize in the way that you’re describing.

Andrew Sherman, Analyst, TD Cowen4: Thank you. I would now like to turn the conference back to Ara Mahdessian for closing remarks. Sir.

Ara Mahdessian, Co-founder and CEO, ServiceTitan: I just want to thank everyone for the call today. In particular, a special thank you to our customers who work tirelessly to serve their communities, particularly with the upcoming busy season coming up. A special thank you to our Titans all around the world who work tirelessly for our customers, and especially to our investors who support our mission. We hope to be good stewards of your capital and aspire to build a generational company. Thank you all, and look forward to seeing you all soon.

Andrew Sherman, Analyst, TD Cowen4: This concludes today’s conference call. Thank you for participating. You may now disconnect.