Morgan Stanley has increased its price target for ServiceTitan (TTAN, Financial) from $107 to $109. This decision comes in response to the company's impressive first-quarter results and its fiscal year 2026 guidance, which surpassed all expectations. The company maintains an Equal Weight rating on TTAN shares.
The analyst suggests that any potential dip in shares may be attributed to heightened expectations or trading dynamics related to an impending lock-up expiration. Despite this, there appears to be minimal concern regarding the first-quarter performance. The analyst also indicates that ServiceTitan’s forward outlook seems conservative, and the company is enjoying sustained momentum.
TTAN Key Business Developments
Release Date: June 05, 2025
- Gross Transaction Volume (GTV): $17.7 billion, up 22% year over year.
- Total Revenue: $215.7 million, up 27% year over year.
- Subscription Revenue: $162.7 million, up 29% year over year.
- Usage Revenue: $45.3 million, up 22% year over year.
- Platform Revenue: $208 million, up 27% year over year.
- Professional Service Revenue: $7.7 million.
- Net Dollar Retention: Greater than 110% for the quarter.
- Platform Gross Margin: 79.7%, an improvement of over 300 basis points year over year.
- Total Gross Margin: 73.6%, up 390 basis points year over year.
- Operating Income: $16.2 million, with a record operating margin of 7.5%, an improvement of 560 basis points year over year.
- Free Cash Flow: Negative $22.3 million, better than negative $24.6 million for the prior-year first quarter.
- Q2 Revenue Guidance: $228 million to $230 million.
- Q2 Operating Income Guidance: $17 million to $18 million.
- Full Year 2026 Revenue Guidance: $910 million to $920 million.
- Full Year 2026 Operating Income Guidance: $54 million to $59 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ServiceTitan Inc (TTAN, Financial) reported a 29% year-over-year growth in subscription revenue and a 27% increase in total revenue.
- The company achieved record operating margins, improving by 560 basis points year-over-year.
- ServiceTitan Inc (TTAN) successfully launched several large strategic accounts, both residential and commercial, during the quarter.
- The company is seeing strong adoption of its Pro products, which are contributing significantly to subscription revenue growth.
- ServiceTitan Inc (TTAN) is making significant progress in expanding its enterprise capabilities and entering new markets, such as commercial and roofing.
Negative Points
- ServiceTitan Inc (TTAN) reported a negative free cash flow of $22.3 million for the quarter.
- The company faces potential risks from economic uncertainties, including tariffs and supply chain inflation, which could impact customer growth.
- There is a dependency on weather patterns for Q2 performance, which introduces variability in revenue outcomes.
- ServiceTitan Inc (TTAN) is still in the early stages of penetrating the commercial market, indicating a long path to full market capture.
- The company has to manage the timing of expenses carefully, as Q1 expenses were more favorable than in prior years, which may not be sustainable.
