ServiceTitan, Inc. Price & Performance (TTAN)

Forward looking statements reflect our views as of today only and except as required by law, we undertake no obligation to update or Forward looking statements. [indiscernible] 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 reconciliation 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, gross margin, operating income, operating margin, free cash flow and related growth rates are on a non GAAP basis. [indiscernible] 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?

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, 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. 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. Fundamentally, we've seen time and again by creating value for our customers is the right thing for our customers and for the financial success of our own business. 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 capped off a transformative year. During fiscal year twenty twenty five, we delivered $772,000,000 in total revenue, growing 26% year over year. Led by 28% year over year subscription revenue growth.

We achieved this while delivering 27% incremental operating margins greater than 600 basis points of operating margin improvement and we were free cash flow positive for the first time. Our goal is to be synonymous with the trades by addressing a large and durable market And customers in North America spend roughly $1,500,000,000,000 annually on ServiceTitan the trades. There are 6,000,000 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 non discretionary in nature. 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. We didn't always address the scope of the opportunity that we serve today. In fact, when we first built ServiceTitan to solve the problems our dads 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 deepened our plumbing capabilities for larger businesses 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.

We now address more than 10 trades both in the residential and commercial markets We have a portfolio of pro and fintech products and we've earned the right to support the largest and most sophisticated customers in the trades. The deep enterprise grade features we built tailored specifically for the trades has empowered the largest businesses to grow with us. By partnering deeply with these customers, we have become the market standard in these trades and earned the right to increase pro product attach rates while also acquiring new customers. The most successful contractors have then pulled us into new trades which is the core of our new markets expansion. This solid business foundation grounded in unique customer ROI is why I am proud of our Q4 performance. Our core trades performed well with a healthy combination of growth from both new and existing customers Our customers are leveraging AI and automation across many key workflows and our investments in commercial and roofing continue to deliver strong results. 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. Looking into fiscal twenty twenty six, our goal is to build on this foundation.

To execute against this goal we have four primary areas of focus. To further expand our enterprise capabilities, to further expand pro product adoption to go deeper in commercial and to continue to grow in roofing. Thank you to our customers and our team for an amazing close to this transformative year for ServiceTitan and for The Trace. We are on a mission to help every contractor further their success ServiceTitan while building a generational business that becomes the operating system. For the trades. I'll now pass it to my Co Founder, our President, and my better half of work, who will provide you with more clarity on how we intend to execute on each of our four priorities this year. [indiscernible] I'm also deeply grateful for the way Titan showed up for our customers this year. And I'm excited to create even more customer value throughout fiscal twenty twenty six.

Let's expand on each of those four key priorities.

Which we think positions the business to compound growth.

Beginning with enterprise, the professionalization of our industry remains a powerful long term trend as large customers in the trade become larger more sophisticated and continue to outgrow the industry, These customers have also begun to consolidate their entire tech stacks on ServiceTitan.

Our standard operating guidelines, benchmarking, automation capabilities, roll up reporting and other enterprise features have been purpose built for the unique workflows of large phrase businesses. Feedback from many consolidators last month at our Annual Private Equity Symposium suggests that the consolidation and professionalization of the trades remains early. We plan to continue to build and improve our products to create value in the trades and meet the emerging demands of our largest customers.

Core product strength was notable exiting the year. Salesforce and Contact Center Pro were only launched at Pantheon and have already proven additive to our portfolio.

Looking forward, we aim for Pro products to have appeal across our entire customer base. Which is why we're investing more this year to accelerate pro penetration. Our pro capabilities are the foundation for ROI that can only be delivered because of native integrations into the work already being done in Coursera's [indiscernible] Our Pro products are at the center of increasingly powerful business outcomes for customers. Which is amplified by AI.

We continue to see steady adoption of our product as central to our overall expansion story and path towards 2% effective earn rate. In commercial, we spent the past twelve 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 contributed to healthy execution and progress. Looking forward, we're focused on enabling our commercial customers to also run their construction We don't target general contractors, Instead, we focus on ensuring that specialty trades subcontractors can run all their work on our platform. Commercial maintenance, on demand service, replacements, and winning and managing both small and large construction projects.

We're building end to end project management workflows and a dedicated commercial CRM that we believe will empower specialty trade subcontractors to win.

We only recently entered the roofing space. And we exceeded our early ambitions during FY 2025. We delivered steady progress on our product roadmap as we work to mature over time from new player into market leader. Our recently announced partnership with North America's largest roofing manufacturer GAS, was the first time Dave endorsed a core software platform and is further validation of just how far we have come in a short time. 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. 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. I'm excited to see how much more successful our customers can become this year. And to help them take full advantage of ServiceTitan suite as the operating system for the trades.

And with that, I'll turn it over to Dave to run through our financials. Dave? Thanks, Vahe. I'm proud of our execution exiting the year. Today, I'm planning to run through Q4 financial results in detail, provide guidance for Q1 the full fiscal year of 2026. For details on the full fiscal year 2025 financial results, please refer to our press release issued earlier today.

Q4 gross transaction volume or GTV was $17,000,000,000 up 26% year over year.

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 over year growth in the quarter. Even accounting for the weather impact, our GTV expanded faster than we've seen over the prior several quarters. This was particularly true in residential among our existing customers. Q4 total revenue was $209,300,000 up 29% year over year. This higher growth rate was driven by GTV's impact on usage revenue which was $43,400,000 up 26% year over year as well as subscription revenue which was $156,700,000 up 31% year over year. Subscription revenue grew four points faster than the past few quarters due to stronger than expected new bookings and elevated customer expansion. We also benefited from new deal linearity as more deals closed earlier in the quarter than anticipated and we saw some onetime catch up items, Together, these amounted to roughly $1,500,000 of incremental revenue in the quarter. Total platform revenue, the sum of subscription and usage revenue, grew 30% year over year Q4 professional services revenue was $9,200,000 Net dollar retention was greater than 110% for the quarter Gross dollar retention was greater than 95% for fiscal year twenty twenty five and we exited fiscal year with approximately 9,500 total active customers.

Up 18% year over year. Q4 platform gross margin was 76.7%, an improvement of 30 basis points year over year and total gross margin was 70.2%, up 80 basis points year over year. Q4 operating income was $6,900,000 leading to an operating margin of 3.3%. An improvement of 200 basis points year over year. We're pleased to have delivered 27% incremental margins for fiscal year twenty twenty five even as we began to absorb public company costs through the end of the year. Q4 free cash flow was $10,800,000 up from negative $2,200,000 for the prior year fourth quarter. In mid January, we paid down the $70,000,000 balance that had previously been drawn against our revolving credit facility. We ended Q4 with $442,000,000 in cash and cash equivalents, compared with $105,000,000 in debt. Before shifting to formal guidance, I'd like to provide a few modeling considerations for the year ahead. First, I'd like to highlight that Q1 of FY twenty twenty six will have one fewer business day as compared to Q1 of FY 'twenty five. Which we estimate will be 150 basis points headwind to reported year over year [indiscernible] and usage revenue growth. Second, you think about the year, a reminder of the operational and seasonal fluctuations in our business.

When we pay our 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 and free cash flow during the period. Finally, I'd like to highlight that customer success had previously been measured primarily on customer NPS [indiscernible] But starting in FY twenty twenty six, expansion will be added as a core KPI. As a result, a portion of our customer success headcount costs will shift from cost of revenue to sales and marketing. Beginning Q1, platform gross margins will see a one time shift higher roughly 200 basis points with a commensurate shift higher in sales and marketing expense. There will be no impact on total operating income. Shifting to guidance. For the first quarter, we expect total revenue in the range of $2.00 $7,000,002.00 $9,000,000 We expect to generate operating income the range of $12,000,000 to $13,000,000 For the full year fiscal twenty twenty six, we expect total revenue in the range $895,000,000 to $9.00 $5,000,000 We expect to generate operating income in the range of $48,000,000 to $53,000,000 We're running this business for a marathon.

Not a sprint. Our goal is to durably 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. The business is performing well against these goals as we enter a new fiscal year We see healthy performance as evidenced in our strategy to become operating system for the trades is working. With that, I'll turn the call back to the operator for Q and A. Operator?

To allow everyone the opportunity to participate. Please standby while we compile the Q and A roster. Our first question comes from Kash Rangan of Goldman Sachs. Please go ahead, Kash.

Hello. Thank you very much and congratulations on ending the year so beautifully with your IPO whatnot. 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 Q4 results? And also on a go forward basis, you announced at Pantheon a lot of new products in Contact Center Pro, Sales Pro got my attention. I think on the commercial side, ServiceTitan CRM. As you look ahead, a lot of the new opportunities that are available to the company that you could not pursue And granted that these products take a little bit time to sure and get customer adoption, what is the early read and conviction on these new products and how much opportunity they could unlock for the company in the year? Thank you so much and congrats. [indiscernible] I'll take the first part on linearity. As you noted, it was an unusual linear quarter. We started off the quarter stronger than we I think 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 closed based on employee and customer excitement earlier in the quarter than we normally do.

I would not extrapolate this as a new norm going forward.

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 and C, investing in new products. 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 'twenty seven 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. So we've 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 multiproduct penetration.

Thank you. Our next question comes from Josh Baer of Morgan Stanley. Your question please, Josh.

Yes. Thank you. Congrats on a strong quarter. Terrific acceleration in growth across the board. I think the roots really coming from GTV growth acceleration. I know you called out some benefit from weather and gave a little context there, but I was hoping you could dig in. I mean, we see the durable customer growth. And so I was hoping you could unpack like the rest of what contributes to GTV. Like how much what can you say about average ticket sizes? What can you say about your customer base mix getting larger versus your customers growing organically? And any comments on private equity roll up?

Great. Thanks, Josh. I think as you did know, it's about 150 basis points from weather, but it's still an acceleration or an outperformance versus prior quarters. I will say that the majority of that outperformance came from our existing residential customers who grew faster than you've seen in prior periods. That was mostly to do [indiscernible] broad based performance. I don't think there's anything that's specific there We don't know if it's macro or something specific to the trades. We're not yet ready to call this a trend. I think some of them will watch for a couple of quarters before we see that going forward. We would not expect this level of outperformance on GTV again, but we'll be watching closely.

And maybe a couple of comments. Go ahead.

You asked about enterprise or private equity. So we had our PE symposium recently We brought a bunch of great sponsors together as well as operators and they all talked about problems, best practices and how ServiceTitan could better support them. Going forward. Because our job ultimately is to help them make more money. And I think the highlights were that the largest businesses in the trades they want to standardize the tech stack on ServiceTitan side. So they're asking us to automate as much of their business as possible.

And in many cases through AI.

And also these businesses increasingly recognize that higher Titan scores [indiscernible] Higher Titan scores correlate directly with faster revenue growth. And so high level of interest in standardizing on our pro products today and very much interested in our tech roadmap for things like data and I moving forward. And the residential consolidation has been underway for quite some time. There continues to be opportunity. To create great outcomes for customers like these moving forward Commercial is earlier in its consolidation journey for a variety of reasons. Slightly different business model where you have more bespoke operational playbooks and it's often for them a harder M and A strategy to both diligence and then integrate But continues big opportunity on the enterprise and private equity front.

Very helpful. Thank you. Thank you. Our next question comes from David Hynes of Canaccord Genuity. Your question please, David.

Hey, good evening guys. Congrats on a nice quarter.

So Ara, Urvaj, I've gotten a few questions about where you're headed in heavy construction. Look, I realize it's it's a long term driver of the story, but it was mentioned again during prepared remarks 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 flush out the strategy there? Yes, absolutely. We respect the business Procore has built. 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.

Serve different customers and see our opportunity very differently. When we talk about commercial construction, is important to remember that we don't target general contractors. Instead, we focus on ensuring that specialty trade subcontractors run all of their work on our platform. Commercial maintenance, on demand service and replacements, and winning and managing both small and large construction projects.

Yes, 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, given the 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 when we and yes, when we talked about net to our attention having some trends of normalization in the prior October and stabilizing over the last year or so. I think it's fair to assume that stabilization trend continued in this period. Of course, as I mentioned in the prepared remarks, customers expanded faster than they have in previous periods. So I think it's fair to conclude from that what you will, but it was I wouldn't say I don't think we're going to talk about specific numbers around NDR, but it did see the stabilization trends that we've seen in prior periods.

Thank you. Our next question comes from Scott Berg of Needham and Company. Please go ahead, Scott.

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 helping them drive more expansion cross sell opportunity with your customer What percentage that are you expecting to directly gain for that? Obviously, going to be positive. And how should we think about what that real direct opportunity looks like?

You broke up Scott, could you say the last question again?

I'm sorry, what was that?

You broke up there at the end of the question. All I'm saying is the last part of it again.

Yes. Just with the change in priorities for the CSM, individuals and trying to drive more cross sell expansion opportunity, what type of impact are you looking to drive for them? Obviously, that could drive more expansion activity. But is the opportunity drive, I don't know, 2550% more opportunity? Just trying to maybe help us understand how much further they can drive more adoption of the platform? I probably won't comment on on numbers, but I'll comment on maybe the philosophy. Of course, our CSNs are responsible for helping our customers better utilize our products including our core product And we believe that better utilization results in revenue growth as well as margin improvement for our customers. I think what this is mostly focused on is the fact that that natural segue into a conversation about a pro product in a conversation between a CSN and one of our customers. So for example, when a CSM is reviewing business performance, with that customer to help identify ways where ServiceTitan can help them even across just the core product where we do not benefit from increased spend from them. When we see, for example, a contractor's cost per lead is too high, or their conversion rates on phone calls to book deployments is too low.

Or for example, we see great variance in average tickets between their best technicians and their worst performing technicians.

Naturally the customer is very interested in understanding how they can improve these metrics. And that is a very natural opportunity for us to then talk about if you're 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 in performance across technicians, it is very natural to talk about one of the big problems is you have no visibility into what happens in the field during the technician sales process. Would you like visibility and if they say yes, that's when we bring up sales growth and how to record the conversation and uses 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. It's just much more natural for the CSM directly talk to the contract about these opportunities. Got it.

Very helpful. And then from a follow-up perspective, I believe, Ira, you talked about growth in roughing as one of your four priorities this year.

As you've done more in that trade, have you found that the existing ServiceTitan playbook can be replicated exactly as is? Or do you have to tweak that playbook a little bit for that trade? Because there are some nuance differences in roughing versus say on the etcetera? [indiscernible] trades and end markets Yes, specifically roofing since that's one of the four stated priorities for the year.

Absolutely. So there is a lot of overlap between Playbooks in different end markets. However, there are also unique differences. So for example, in something like, let's say, HVAC, the playbook very much centers on the residential side. On optimizing the sales and marketing front.

How you market to generate more phone calls, how you make sure all the phone calls are booked into a appointment make sure none of those appointments get canceled, make sure the technicians have high close rates in the field with high average tickets.

Nearly all of that applies as is in roofing and that's frankly the reason why our largest consolidators in plumbing HVAC electrical 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 meaningfully different. How measurements are taken, of the home and the roof 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. And so that part of the playbook had to both work on from a product perspective as well as of course from a services perspective and how we enabled our customers.

There are equal differences in most commercial trades. Because the sales and marketing playbook is pretty different. Right? Instead of marketing to a mass audience, it's more business development, 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.

Thank you. Our next question comes from Jason Celino of KeyBanc Capital Markets. Please go ahead, Jason.

Hey, thanks for taking my questions. Good afternoon. So maybe this is for R and R. I understand that 75% of the work your customers do is repair and maintain and non discretionary.

But no industry is recession proof. So I know there's a lot of unease at the moment with tariffs and SMB, but what areas of your business could be affected by macro?

Yes, great question.

So as you alluded to, no business is reception approved. Now in our case, historically, what we have seen [indiscernible] is that the growth in jobs performed has not been meaningfully impacted through different macro cycles.

Where we see variance typically between macro cycles is in something like the average ticket on those jobs that are performed.

And then on the macro side, of course, we're monitoring things closely. It's hard for us to predict net net what will happen. But 95% of our revenue is in The U. S. Our customers' contracts are priced in USD. You mentioned the point about 75%. Being immediate or preventative. Or non discretionary. And at the end, they were ultimately aware of all these shifts in government policy and the uncertainty in the macro right now. So we're monitoring things closely, but we have not yet observed an impact either jobs performed or average ticket.

Okay. Excellent. That's helpful. And maybe that's a good segue to for Dave. Really nice 29% growth exiting Q4. Q1 is decelerating in the guide. The rest of the year is continued deceleration. So I guess help me understand from like what what is built into the framework for this year from like a degradation standpoint Thank you.

Thanks, Jason. The business is performing well with healthy trends across retention and expansion. And new bookings. Q4 was sort of the stars fully aligned in sales with tailwinds from the weather, the industry generally new product launch and boosted by the IPO?

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 guidance with you. Confidence we're going to hit the numbers we say. And so the one thing I'd say is the success we saw in Q4 new deals we do expect to lead to strength in subscription revenue in Q1. And as always, we're most conservative in the model is around GTV. As the variance there is outside of our control, some quarters that's going to be to our benefit like saw in Q4 and some quarters it's not.

We want to make sure that our cost structure is aligned so that we can deliver the the incremental margins that we talked about without having to grow like an accordion growing and then cutting costs. We want to make sure that our cost structures align to deliver our incremental margin targets with even if GTB comes in lower than we'd like. So that's that's the short answer for Thank you. Our next question comes from Terry Tillman of Truist Securities.

Yes, thanks and congratulations for me as well on the quarter. First question and then I had a follow-up. First, I want to start with the commercial CRM. Just anything more you can share in terms of is it a first or second half launch? And And the last part of this first question is, is this potentially unlocked faster commercial or are there some cost [indiscernible] commercial CRM needs to be the tip of the spear before you can really get going? And then I had a follow-up. Sure.

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. 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. We're not satisfied with being leader because as we've shared, our goal is to be market standard in all of the trades in which we compete. And commercial represents $360,000,000,000 of addressable GTV in which we aim to become the market standard over time. [indiscernible] Our progress continued during Q4 We had success in signing new customers as getting as well as getting customers live.

The results of the quarter continue to validate our commercial strategy both from a product perspective and from a go to market perspective. Commercial CRM is progressing well is an exciting part of our roadmap this year.

Our team is excited about how this may further differentiate us in the commercial space and we'll have more concrete updates to share on our progress as the year unfolds. Great. I appreciate that. This is my second question is maybe Dave on free cash flow. We know the seasonality dynamics I think in 2Q. Is there any kind of the relationship we should think about for free cash flow in FY 2026 maybe in comparison to non GAAP operating income or just anything you can share about things we should consider that could help or impact free cash flow in FY 2026? Thanks.

No, I think you nailed the seasonality portion of it. Remember, Q1, we pay our annual bonus So there's a seasonal regasal outflow that quarter. But over the year, you should expect free cash flow and operating income to be pretty close, non GAAP operating, pretty close.

Thank you. Our next question comes from Parker Lane of Stifel. Please go ahead, Parker.

Hey, guys. Thanks for taking the question and congrats on the quarter. Dave, you talked about expansion picking up a little bit here in the back half of the year. Just wondering how much of that expansion activity was related to the launches of SalesPro and Contact CenterPro versus other solutions that are already available on the platform prior to Pantheon?

How are you doing? So Pro remains 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 products we launched, but relatively consistent with what we've seen in the prior periods.

What actually drove the outperformance versus prior quarters was principally core And that, as Armin mentioned in his prepared remarks, was split pretty evenly between new customers and the platform and existing customers expanding faster.

Got it. And quick follow-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?

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 of Baird. Your question please, Joe.

Great. Thanks for taking my questions.

I wanted to go back to Jason's question on the macro, but take it more from a cost per repair angle, understand the volume is pretty steady, but just if we do get a return in inflation, how do customers manage through that environment again? And then when it comes to ServiceTitan own performance, how does the inflation show up in your financials? I would I would imagine we end up seeing higher GTV on the platform. But is there anything else to take into consideration?

Yes, great question.

First, I guess that so far we have not seen any impact on either jobs performed or the average ticket. It's hard to predict what will happen just because there's so many different factors and what will be given that outcome. I can say the last time we experienced a rise in input costs inflation on input costs, was during COVID when there were supply shortages and just general inflation in the market. And what we saw there was our the increased costs because the elasticity curve in this market and weather 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 of day, we're not the comments to able to predict the net effect of all these things. Okay.

In terms of ARVO, thanks.

Was just saying in terms of how close to the business, if it to our point, it generates more GTV. Of course, it flows through and more usage revenue. And potentially more technicians which are private subscription revenue. Our costs are mostly labor costs. And so pretty easy to forecast that. We don't have a lot of material cost other than labor. So [indiscernible] [indiscernible] I wanted to go back, you mentioned the Titan advisor scoring on the platform I'd just be curious since that measures your customers engagement and utilization pretty closely. Does that act as a leading indication? Sometimes we or companies say active usage typically spikes right before you're able to capitalize on a lot more new business opportunity. I'm wondering if you're seeing kind of any positive indications right now in that's helping inform the stronger outlook at the start of the year?

I think Titan Advisor scores is pretty heavily correlated with customers' growth. There are so many other variables that drive GTV. But it's hard to say it's a very accurate leading indicator. Of course, as you saw in this period, weather was a big driver of the macro variables that Ari talked about are big variables. So I'm not sure I would call that a reliable leading indicator that's driving our forecast this year.

Thank you. Our next question comes from Yun Kim of Loop Capital. Your question please, Young.

All right, great. Thank you. Congrats on a solid quarter, solid finish to the year. So with with an increasing mix of commercial in your business and the ramp that you expecting in roofing, to share you expect the seasonality and take rate trend of GDP GTV to be somewhat different than previous years?

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, if commercial or roofing grew 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 district that much. Seasonality, we don't expect to be very different than we've seen in prior years.

Okay, great. And then Vah, if you can give us update on the mobile apps which I believe you launched last year with Pantheon. How's the adoption going? What is the the more of a near term target strategy there in terms of the overall mobile apps? Thanks.

So we've seen a pretty increased, a meaningful increase in the utilization of the new mobile platform. It continues to be rolled out 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.

Thank you. Our next question comes from Dylan Becker of William Blair. Please go ahead Dylan.

Hey, guys. Congrats here and apologies for the background noise. Maybe first, for Ara or Bache, You called out a partnership with a leading material provider in grouping. We've talked about it in the past as well on some of the residential and commercial segments. I wonder how you think about kind of leaning into and leveraging some of those those partnerships and those relationships to help kind of push forward faster with some of these initiatives kind of the opportunity with the customers they have today versus kind of your penetration within those how are you going to think about leaning in with that partner angle? [indiscernible] 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 different. We're very excited about this new relationship with GAF. Course, we're very grateful for their partnership. They're ultimately North America's largest roofing manufacturer. They have a massive footprint. And we're very thankful that this is the first time they had officially endorsed the core software vendor. And we see that as validation of how far we've come on roofing. And of course, this relationship is structured as a win win win for them for us and for our mutual customers.

Similarly, yes, we announced the partnership with SRS Distribution last fall. Shortly after Home Depot closed its acquisition of SRS. But the broader goal in roofing is that we want to have full coverage across all the major partners and distributors and measurement providers.

And that moves us towards our goal of being market standard So we ultimately want to be the central hub of this trades ecosystem.

And there's huge opportunity to create value for our mutual customers. So and that typically helps us get to [indiscernible] Sure. Perfect. Maybe switching over to Dave kind of on the guidance framework, right, we talked about kind of seasonality throughout the business. Strong periods in kind of some of those summer and winter months. How should we think about kind of your viewpoint on how the progression of the level of conservatism trends throughout the balance of the year you can layer in more visibility to some of those GCP dynamics?

It's an interesting question. I think we tend to pretty prudent throughout the year. I think of course there's mortgage servicing back half or the total year. And 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 that there is more prudence in one quarter than another subscription is obviously more visible now than it is in the back half of the year.

Thank you. Our next question comes from Michael Turrin of Wells Fargo Securities. Please go ahead, Michael.

Hey, great. Thanks very much. Appreciate you taking the questions.

I'll ask two, but all upfront. I guess, you've hit on this a little bit, Dave, but just given you're newer to the public market, maybe just frame overall factors to consider with the profile of fiscal twenty twenty six how you incorporate things like weather patterns or new products into your forecast given there's clearly a lot of focus enthusiasm on some of the newer product efforts there? And then secondarily, just there have been a few comments on AI throughout the call. Probably not as clear for investors here maybe initially on where the more immediate AI related opportunities could manifest. But can you just help us 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 on guidance. I think in terms of weather, we don't have a specific view of weather. We just kind of assume seasonal trends are consistent. In terms of the macro environment that Ari talked about, we're assuming roughly comparable what we saw in full year of FY 2025. We haven't extrapolated Q4's over performance into the year. Of course, again, repeat myself as the prudence we'll have in the forecast is general around GTV. 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 a big variable in the results. We're excited about what they are and what they can be stacking as curves, but they're not a huge driver in the guidance we've given you.

I'll let Avai talk about the AI question.

Yes.

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 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. Introducing agents into this equation or Agentic AI is just the next evolution. That we think will power a next set of products as we think about from a monetization lens, our current structure of having a core product as well as attached products and our ability to infuse AI particularly into the pro products layer is where we expect the monetization to occur. And in terms of near term impact, it will be primarily from these three products. And as Dave noted, the role they play in terms of our growth formula That's where the near term AI impacts will be coming from.

Thank you. Our next question comes from Brent Bracelin of Piper Sandler. Good afternoon.

David, we'll start with you here. The external environment certainly is not getting better, but you did just report platform revenue acceleration for the second straight quarter. I think 30% platform growth is the highest we've seen in over a year. Could you just go back and maybe parse out how much of this acceleration was seasonality versus maybe share gain momentum or increasing ARPU because of these pro add ons? Just a little more color on what drove that acceleration? Thanks.

For sure. We're really proud of the quarter. Just had.

And then the start of our lives at public company.

As the outperformance of the quarter, I'll say the star is essentially flatlined. In the quarter to drive the subscription revenues to up first, As I mentioned, our customers themselves outperforming which led to faster growth in core via add to text and renewals. Second, as I mentioned in my prepared remarks, the new deal linearity to perform our norm the one time catch ups.

Together drove about $1,500,000 in the quarter. Third, we had a bunch of momentum coming out of a very strong Pantheon with the DooNova product that you talked about. Which that momentum continued through the IPO, which had a lot of a sudden from both customers and employees And I think these factors drove really strong sales performance and that strong sales performance combined with our customers are performing is what drove the the subscription revenue you saw 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 execute to make that happen, but I don't want for everyone to extrapolate this. Given the way the tailwinds that we had in the quarter.

Got it. Makes sense. And then, Ar, I know you've talked a little bit about the business around macro concerns and that certainly is something we're getting questions from from investors My question for you is, you do have a pretty resilient business here, 75%, nondiscretionary. That's much better than most of the stuff companies we look at. We're on the enterprise side. 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 [indiscernible] new land opportunities that could maybe offset some of these macros? Any color you can provide around where we're at with commercial and the opportunity there? In the next six to nine months would be super helpful. Thanks.

Great question. As you can imagine, Vadhi and I have spent a lot of time talking to customers particularly our largest ones.

Literally every day.

To date, we have not heard anything that is a concern about their continued growth in commercial We've talked to them about the tariffs and they've reiterated what I just shared with you. So we continue to expect commercial to do well. And as we've shared previously, We got started in commercial 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 and 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.

Thank you. I would now like to turn the conference back to Ara Madesian for closing remarks. Sir?

Thank you. I just want to thank everyone for joining us today. We understand and really appreciate that you have 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 cost of your time is very high. And of course, we aspire to be great stewards of your capital.

And to build a generational company and in the process. And very much look forward to seeing you soon. And thank you.

This concludes today's conference call. You for participating. You may now disconnect. [indiscernible]