ServiceTitan (TTAN) Q3 2025: Pro Product Revenue Up 26% as AI-Led Automation Gains Traction
ServiceTitan’s third quarter marked a pivotal acceleration in AI-driven automation and pro product adoption, with commercial and private equity channels fueling durable growth. Platform gross margin expansion and record free cash flow underscore operational leverage, while early MAX program pilots and ecosystem partnerships set the stage for broader automation scale. Management’s guidance points to continued compounding, but the pace of AI rollout and commercial market standardization remain key watchpoints into 2026.
Summary
- AI-Led Workflow Automation: Early MAX program pilots and agentic workflows deepen platform stickiness and customer ROI.
- Commercial and PE Channels Accelerate: Enterprise wins and private equity-backed customers drive outperformance and higher pro product attach.
- Margin Expansion and Cash Flow Inflection: Record free cash flow and rising platform margins highlight operational leverage as growth compounds.
Performance Analysis
ServiceTitan delivered robust top-line growth in Q3, as total revenue increased 25% year-over-year to $249.2 million, with subscription revenue up 26% and usage revenue up 24%. The company’s platform revenue—subscription plus usage—grew in line with the overall business, while gross transaction volume (GTV), a core usage metric representing the dollar value of jobs processed on the platform, reached $21.7 billion, up 22% year-over-year. Commercial customers led GTV growth, while residential segments, especially HVAC and break-fix trades, remained stable despite broader OEM headwinds.
Platform gross margin expanded 310 basis points to 80.2%, and total gross margin improved 390 basis points to 74.3%, driven by operational efficiency and expense reallocations. Operating income rose to $21.5 million with an 8.6% operating margin, a 780 basis point improvement over the prior year. Free cash flow hit a record $38 million for the quarter, up sharply from $11 million a year ago. Notably, professional services revenue remained a small contributor at $9.6 million. Net dollar retention held above 110%, reflecting strong cross-sell and customer expansion, especially in pro products and fintech adoption.
- Commercial Outperformance: Commercial GTV and usage outpaced residential, supported by new CRM and construction management launches.
- Fintech Utilization: Higher adoption of integrated payments and financing solutions boosted usage revenue and take rate.
- Pro Product Attach: Pro products, including MarketingPro and newly launched FieldPro, remain the largest subscription growth driver, with AI features seeing heightened demand.
Despite seasonality and a slightly compressed Q4 guidance due to one fewer business day, ServiceTitan’s diversified customer base and resilient end markets insulated results from broader macro volatility.
Executive Commentary
"Our growth formula today remains the same as ever. We deliver real ROI to our customers, helping them reach even greater financial outcomes, and this allows them to grow their businesses, which drives more technicians and GTV on our platform and leads to higher subscription and usage revenue for us. As they realize the value of our software, they buy more pro products, which further drives our growth. This growth formula is now compounded by our opportunity to democratize AI for the trades."
Ara Modessian, Co-founder & Chief Executive Officer
"Q3 gross transaction volume, or GTV, was $21.7 billion, representing 22% year-over-year growth. Our customers are performing well, again, demonstrating the durability and diversity of the markets we serve, coupled with the ROI that ServiceTitan delivers. Our GTV continues to be distributed across a diverse set of trades and end markets."
Dave Sherry, Chief Financial Officer
Strategic Positioning
1. AI-Driven Platform Evolution
ServiceTitan’s MAX program, piloted with 50 customers and a deep backlog, signals a strategic shift toward end-to-end workflow automation using proprietary agentic AI. The platform’s Atlas agentic command center leverages large language models to automate complex tasks across sales, dispatch, and back office, aiming to maximize contractor revenue and profit rather than optimizing for narrow metrics like booking rates. Management emphasized that customers seek a unified automation platform, not fragmented point solutions, giving ServiceTitan a product and distribution advantage rooted in its proprietary data set and system-of-action status.
2. Commercial and Private Equity Expansion
Commercial market penetration accelerated, with the launch of commercial CRM and construction management features completing the end-to-end offering for subcontractors. The company’s focus on empowering commercial contractors to drive revenue, optimize cash flow, and increase productivity is bearing fruit, as evidenced by wins like James River Air Conditioning and Master Roofing. Private equity-backed customers continue to grow 500 basis points faster than non-sponsored peers, adopting more pro products and driving higher platform utilization.
3. Ecosystem Leverage and Vertical Integration
ServiceTitan’s ecosystem strategy is unlocking multiplier effects through partnerships with manufacturers, distributors, and third-party vendors. The integration with Verisk for insurance claims in roofing expands the platform’s reach into insurance-based workflows and sets the stage for future expansion into adjacent trades like water damage restoration. The company’s vertical focus, particularly in roofing and commercial, enables deeper integration and higher switching costs for customers.
4. Pro Product Innovation and Attach
Pro products are both deepening customer engagement and driving incremental revenue, with MarketingPro and FieldPro leading adoption. AI-driven virtual agents and automation features are in high demand, with customers aggressively seeking solutions that enhance efficiency and revenue generation. The MAX program is expected to further evolve pricing and packaging, with current pilots focused on ensuring customer success before broader rollout.
5. Operational Discipline and Margin Expansion
Operational leverage is increasingly evident, as margin expansion outpaces revenue growth due to prudent hiring, expense reallocation, and disciplined R&D investment. Management reiterated a commitment to 25% incremental margins and a 24-month payback framework, with the expectation of less upside next year as hiring normalizes. Free cash flow now converges closely with operating income, reflecting improved cash discipline.
Key Considerations
This quarter’s results reflect ServiceTitan’s successful execution on its dual mandate of growth and margin expansion, with AI-led automation and commercial penetration as key levers. The durability of the business model is underpinned by a diverse, essential-services customer base and high net dollar retention. Investors should weigh the following:
- AI Rollout Pace: The MAX program’s deliberate, customer-first pilot approach may delay broad monetization, but early results are promising for long-term stickiness and differentiation.
- Commercial Market Standardization: Full realization of commercial opportunity depends on continued product enhancement and reputational gains, with at least another year needed to achieve market standard status.
- Private Equity Channel Sustainability: Private equity-backed customers are driving outsized growth, but ongoing consolidation and integration dynamics warrant monitoring for channel saturation risk.
- Fintech and Pro Product Attach: Higher fintech utilization and pro product attach rates are expanding take rates, but market standardization in new trades and geographies remains a headwind to earn rate in the near term.
- Seasonality and Day Count Impact: Q4 guidance reflects a one-day headwind, with normalization expected in Q1 FY27; weather and trade mix could further influence seasonality as diversification continues.
Risks
ServiceTitan’s near-term risks include the measured pace of AI program scaling, potential delays in commercial market standardization, and competitive threats from horizontal SaaS and point solution providers. Margin expansion may moderate as hiring accelerates. Macro factors such as consumer health, trade-specific seasonality, and consolidation trends in private equity channels could introduce volatility, though management’s prudent guidance and diversified customer base mitigate some of these exposures.
Forward Outlook
For Q4, ServiceTitan guided to:
- Total revenue of $244 to $246 million
- Operating income of $16 to $17 million
For full-year 2026, management raised guidance:
- Total revenue of $951 to $953 million
- Operating income of $83 to $84 million
Management noted several drivers for the outlook:
- Q4 faces a one-day headwind, compressing GTV and usage growth by approximately 150 basis points
- Q1 FY27 will benefit from one additional business day, normalizing growth rates
- Continued focus on AI, commercial expansion, and operational discipline to sustain durable growth and margin improvement
Takeaways
ServiceTitan’s Q3 results reinforce its position as the operating system for the trades, with AI-led automation, commercial market penetration, and ecosystem leverage driving durable growth and margin expansion. Investors should monitor the pace of MAX program scaling, commercial market standardization, and evolving channel dynamics for future upside and risk.
- AI and Pro Product Adoption: Early traction in agentic automation and pro products is deepening platform engagement and expanding revenue per customer, but broad rollout will require continued execution.
- Commercial and PE Tailwinds: Enterprise and private equity channels are accelerating growth, with commercial now a key vector; product and reputational gains will be critical for market standardization.
- Margin and Cash Flow Leverage: Operational discipline is translating into record free cash flow and margin expansion, though hiring normalization could temper incremental margin upside next year.
Conclusion
ServiceTitan’s Q3 execution underscores its compounding growth engine and the strategic inflection in AI-led automation. With commercial and pro product momentum, the company is well positioned to scale its platform across the trades, but investors should watch for execution on MAX program rollout and commercial market standardization as key determinants of future upside.
Industry Read-Through
ServiceTitan’s performance highlights the accelerating adoption of vertical SaaS in essential services, with AI-driven automation and workflow integration emerging as decisive competitive advantages. The company’s success with private equity-backed consolidators and commercial contractors signals a broader industry shift toward unified, data-rich platforms over fragmented point solutions. For peers in construction tech, field service management, and fintech-enabled SaaS, ServiceTitan’s ecosystem partnerships and proprietary data leverage offer a roadmap for durable growth and margin expansion. The deliberate, customer-first approach to AI rollout suggests that industry winners will be those who balance innovation with operational discipline and deep vertical integration.