ServiceTitan (NASDAQ:TTAN) reported fiscal second-quarter 2027 revenue growth of 21% and record free cash flow, while outlining a broader investment push behind its AI-driven Max platform and internal “Software Factory” initiatives.
Total revenue for the quarter was $292.8 million, up 21% year over year. Subscription revenue rose 22% to $212.4 million, while usage revenue increased 24% to $72.1 million. The company said total platform revenue, which combines subscription and usage revenue, grew 22% to $284.5 million.
Max adoption exceeds internal expectations
President Vahe Kuzoyan said ServiceTitan more than doubled its number of Max locations during the fiscal second quarter, surpassing its prior target. The company had slightly more than 100 enrolled locations after fiscal first-quarter growth and now expects to finish fiscal 2027 with more than 700 Max locations.
ServiceTitan has begun selling Max to select new customers in addition to existing customers. Kuzoyan said early signals suggest some prospective customers are willing to adopt Max at the start of their relationship with ServiceTitan rather than first implementing the company’s traditional core platform.
Management also plans to introduce smaller Max packages for customers that are not ready for a full business transformation. Mahdessian said those offerings could allow customers to adopt AI capabilities focused on demand generation or field operations before expanding their use of the broader platform.
The company cited Delponte Plumbing & Heating as an example of Max adoption. According to Mahdessian, Delponte’s revenue rose more than 35% year over year in the first quarter of 2026 and more than 45% in the second quarter of 2026. The contractor also launched a recurring-service business that served 400 customers in three months without adding back-office staff, ServiceTitan said.
ServiceTitan expects Max implementations to become more efficient over time. Kuzoyan said the company is not planning meaningful staffing increases for implementation teams, instead expecting AI and process improvements to reduce the time and effort required to onboard customers while maintaining implementation quality.
Investment focus shifts from new trades
To support increased spending on Max and the Software Factory, ServiceTitan is narrowing its near-term expansion plans. The company will focus on its existing commercial trades, including mechanical, electrical, plumbing and landscaping, as well as residential roofing, rather than pursuing planned expansion into new commercial trades or broader residential exterior categories.
Management said the shift does not reduce investment in commercial, construction or roofing operations already underway. Kuzoyan said construction remains integral to ServiceTitan’s commercial strategy, while the change applies to incremental investments that otherwise would have targeted new trades.
Mahdessian described the Software Factory as an effort to use AI to speed product development and improve how ServiceTitan builds, sells and markets software. He said some large features previously estimated to require quarters of development are now being delivered in months, with fewer escaped defects and more automated identification and resolution of bugs.
Virtual Agents, another component of the company’s AI monetization strategy, also showed growth during the quarter. Revenue and call volume for Virtual Agents each more than doubled sequentially, according to Kuzoyan. The offering includes voice and SMS capabilities for functions such as after-hours calls, overflow calls, lead response and customer messaging. CFO Dave Sherry said Virtual Agent adoption was balanced between customers using the product for the first time and customers replacing existing solutions.
GTV growth moderates, but margins expand
Gross transaction volume was $26.8 billion, an increase of 17% from a year earlier. Sherry said growth was about 200 basis points below recent quarters after adjusting for business days and weather, primarily because existing customers experienced lower job growth.
Lead volume growth was more moderate than seasonal patterns during May and June before stabilizing in July, the company said. The trend was broad-based across trades and markets, though it was particularly notable among HVAC-focused customers. ServiceTitan said it does not have clarity on the causes of the lead-volume trend and has incorporated the more moderate second-quarter GTV growth into its outlook for the remainder of the fiscal year.
- Platform gross margin was 81.1%, up 40 basis points year over year.
- Total gross margin was 74.6%, up 20 basis points.
- Operating income was $44.4 million, producing a 15.2% operating margin, up 310 basis points.
- Free cash flow was $50.5 million, up 47% year over year.
- Net dollar retention exceeded 110%.
Sherry said the company now views 25% incremental margins as a floor rather than a target and expects fiscal 2027 incremental margins of 33%.
Guidance reflects Max revenue timing and GTV outlook
For the fiscal third quarter, ServiceTitan forecast revenue of $285 million to $287 million and operating income of $29 million to $30 million. For fiscal 2027, it projected revenue of $1.139 billion to $1.144 billion and operating income of $152 million to $154 million.
The company said its growing mix of Max sales will create a near-term revenue-recognition effect. Core subscription revenue is recognized ratably over contract terms, while upsell products such as Max are recognized as billed. Because Max customers typically receive an initial period without billing and ramp over the first year, ServiceTitan expects a $2 million to $3 million subscription-revenue headwind over the rest of fiscal 2027.
ServiceTitan also expects approximately $2 million less professional-services revenue during the remainder of the year because it is not charging existing customers onboarding fees to transition to Max. Sherry said the combined near-term impact from Max mix shift across subscription and professional services is approximately $4 million to $5 million.
Separately, the company announced that Chief Revenue Officer Ross Biestman will leave his operating role after the company’s Pantheon event in the fiscal third quarter and serve as an adviser through the end of the fiscal year. Rikus Pretorius, currently senior vice president of worldwide sales, will become CRO in the fourth quarter.
About ServiceTitan (NASDAQ:TTAN)
ServiceTitan, Inc (NASDAQ: TTAN) is a cloud-based software provider specializing in end-to-end business management solutions for residential and commercial trade contractors. The company’s platform integrates customer relationship management, scheduling and dispatch, mobile workforce management, invoicing, payments and reporting tools into a single suite. By automating key back-office processes, ServiceTitan helps field service businesses improve operational efficiency, enhance customer experience and drive revenue growth.
At the core of ServiceTitan’s offering is a mobile application that allows technicians to access job details, update work orders, capture signatures and process payments from the field.
