ServiceTitan has somewhat quietly become one of the most important vertical software stories of the past decade. It sells an end-to-end operating system to the trades: HVAC, plumbing, electrical, roofing, garage doors.
And it just crossed a $1B revenue run rate the hard way: by growing 25% at that scale, not by acquiring its way there.
The headline numbers from fiscal Q1 2027:
- $268.8M in quarterly revenue, up 25% YoY (roughly a $1.08B run rate)
- $21.7B in Gross Transaction Volume, up 23% YoY (about $87B annualized flowing through the platform)
- Net dollar retention still above 110%
- Non-GAAP operating margin of 15.2%, more than double the 7.5% a year ago
- FY27 revenue guidance of $1.13B to $1.14B
The revenue muliple? About …6x-7x. At about $78 a share, ServiceTitan carries a market cap near $7.5B. That’s roughly 7.5x trailing revenue and closer to 6.6x forward, with the stock down more than 40% from its 52-week high near $120. For a company growing 25% with margins doubling, that’s a fairly ordinary multiple. Which tells you most of what you need to know about how the market is pricing vertical B2B in 2026.
5 interesting learnings from the latest quarter:
1. 25% growth at a $1B run rate, and it clears Rule of 40
Revenue grew 25% to $268.8M, and it did that on top of a base that already cleared a billion in annualized revenue. Growth slightly decelerated from the 27% it posted a year ago at a much smaller base.
Pair that 25% growth with a 15.2% non-GAAP operating margin and you land at a Rule of 40 score above 40. But the revenue multiple remains strong but not outstanding, at 6x-7x ARR. Growth is impressively consistent, ServiceTitan isn’t slowing down at $1B ARR. But the public markets want accelerators right now.
2. The real engine is fintech, not seats. Usage revenue is growing faster than subscriptions
This is the part people miss about ServiceTitan. It isn’t just a per-seat software company. It processes payments, and it takes a rate on the dollars flowing through the platform. That’s why GTV matters as much as revenue.
GTV hit $21.7B in the quarter, up 23%, which annualizes to roughly $87B running through the system. And the revenue that ties to that volume is growing faster than the software subscriptions:
- Subscription revenue: $202.0M, up 24%
- Usage revenue: $58.5M, up 29%
Usage now represents about 22% of platform revenue and it’s outpacing the core subscription line. This is the vertical software plus fintech playbook that Toast, Shopify, and Bill made famous. Own the system of record, then monetize the money movement on top of it. Once you’re the platform a contractor runs their whole business on, payments attach almost for free, and the take rate scales with your customers’ success instead of just their seat count.
If you’re building vertical software, the question isn’t whether to add payments. It’s how big can payments / merchant services of one form or another get.
3. Margins didn’t just improve. They inflected. And sales & marketing efficiency is why (R&D spend is going up!)
Non-GAAP operating margin went from 7.5% a year ago to 15.2% this quarter. Non-GAAP operating income more than doubled, from $16.2M to $40.8M. That’s not a rounding-error improvement, that’s an inflection.
The driver is the least glamorous line on the P&L: sales and marketing efficiency. Revenue grew 25%, adding $53M. GAAP sales and marketing spend grew just 5.6%, adding under $4M. When your revenue grows five times faster than your sales spend, margins expand almost on their own.
GAAP operating margin improved dramatically too, from -23.0% to -9.6%. The company is closing the gap to real GAAP profitability while still investing heavily, which is the balance every growth-stage board is asking for right now.
4. They’re pouring the margin gains straight back into AI agents, R&D spend up to 33%
ServiceTitan isn’t banking the efficiency gains. It’s reinvesting them into R&D.
R&D spend grew 27% to $88M, which is now about 33% of revenue. Management is explicit about where it’s going: an “Agentic Operating System for the Trades” and a product called Max. And the adoption signal is real. They more than doubled the number of locations on Max in Q1, and guided to doubling again in Q2.
Doubling a product’s footprint two quarters in a row while it’s still early is the kind of curve that turns into a new revenue engine if it holds. For a company that already owns the system of record for tens of thousands of trades businesses, layering AI agents on top of that proprietary operational data is a defensible wedge. Nobody else has the workflow data on how a plumbing business actually runs..
5. NRR held above 110% (although the markets aren’t really rewarding it)
Net dollar retention stayed above 110%, flat versus a year ago. For a vertical player serving small and mid-sized contractors, that’s a strong number. It means existing customers keep spending more, through seat growth, new modules, and payments attach, faster than any churn drags it down.
And yet the stock has been punished. Shares trade well below their post-IPO highs, down roughly 46% over the past year and far off a 52-week high near $131. So what’s the market’s hesitation?
Two things. First, GAAP profitability is still negative. The company posted a $22.8M GAAP net loss even while reporting $36.7M in non-GAAP net income. The wedge between those two numbers is almost entirely stock-based compensation, which ran $54.6M in the quarter, more than 20% of revenue. Second, vertical software multiples have compressed across the board, and the market is making companies prove durable growth quarter after quarter before re-rating them.
You can put up 25% growth, expanding margins, 110%+ retention, and a real AI story, and still watch your multiple sit on the floor. Fundamentals and stock price are running on different clocks right now. For founders, the read-through is simple: control what you can control, keep the growth and efficiency compounding, and let the multiple sort itself out later.
A Few More Worth Noting
- Non-GAAP EPS doubled. Diluted non-GAAP earnings hit $0.37, up from $0.18 a year ago. Profitability per share is compounding faster than revenue.
- The software economics underneath are excellent. Platform gross margin ran 81.3%. Blended non-GAAP gross margin came in at 75.3%, pulled down only by professional services, which is the piece that gets contractors onboarded and stickier.
- The balance sheet can fund the AI bet without dilution. ServiceTitan sits on $421.5M in cash. It can pour 33% of revenue into R&D and still not need to raise, which matters when the stock is depressed.
- The guide signals no deceleration. Q2 is guided to $284M to $286M, roughly 26% growth, a slight tick up rather than the fade the market seems to be pricing in.
- GAAP is closing the gap fast. GAAP operating margin improved more than 13 points in a year, from -23.0% to -9.6%. Real GAAP profitability is now in sight, not a someday story.
How ServiceTitan Stacks Up Against the Other Vertical B2B Leaders
ServiceTitan’s quarter looks even more interesting next to the rest of the public vertical B2B cohort that reported this cycle. Seven companies, seven unrelated verticals, all reporting within a few weeks of each other:
- Veeva (life sciences): $882.9M revenue, up 16%, at roughly 45% non-GAAP operating margins with $7.3B of cash. The category’s profitability benchmark.
- Samsara (connected physical operations): $478.8M revenue, up 31%, ARR just under $2B growing 30%, now GAAP profitable three quarters running.
- Guidewire (P&C insurance): $372.5M revenue, up 27%, migrating legacy carriers to the cloud, ARR up 19% to $1.15B.
- Toast (restaurants): $1.63B revenue, up 22%, $51.3B in payments processed, first quarter above a 20% GAAP operating margin.
- AppFolio (property management): $262M revenue, up 20%, with a 27% non-GAAP operating margin and a payments attach that keeps climbing.
- Procore (construction): $359M revenue, up 16%, a 17% non-GAAP operating margin and free cash flow margins near 19%.
Roughly where the group trades on market cap to trailing revenue:
- Samsara: ~10x revenue (~9x ARR). The fastest grower in the set at 31%, and the market pays for it.
- Guidewire: ~9x revenue (~11x ARR). Mission-critical insurance core systems and a long cloud-migration runway.
- Veeva: ~8x revenue. Only 16% growth, but ~45% operating margins and life-sciences durability hold the premium.
- ServiceTitan: ~7.5x trailing revenue (~6.6x forward). The fintech attach and 25% growth support it; GAAP losses and heavy stock comp cap it.
- AppFolio: ~5x revenue. Small, efficient, growing 20% with a ServiceTitan-style payments attach.
- Procore: ~4.8x revenue. Pure subscription, 95% gross retention, strong free cash flow, but 16% growth holds it down.
- Toast: ~2x revenue, but roughly 6x ARR. The headline multiple looks tiny only because more than 80% of Toast’s revenue is low-margin payment pass-through. On ARR it sits right in the pack.
Three things drive the spread from roughly 2x to 10x. Growth still gets paid: Samsara and Guidewire post the fastest growth and carry the fattest multiples. Durability and margins get paid independently of growth: Veeva grows the same 16% as Procore yet trades at nearly double the multiple, on the back of 45% margins and revenue that never leaves. And business model distorts the denominator: for the payments-heavy names, gross revenue is inflated by pass-through transaction dollars, so ARR or gross profit is the honest number, which is why Toast’s sub-2x revenue multiple is misleading and its ARR multiple tells the real story. ServiceTitan sits in an awkward middle. It grows faster than Veeva and AppFolio, but it trades below Veeva and Guidewire because the market is still docking it for GAAP losses and 20%-of-revenue stock comp. Fast is not enough on its own anymore. The market wants fast plus profitable, or slow plus deeply durable.
The operating themes rhyme across all seven. Growth is durable in the mid-teens to low-30s even past a billion in revenue, which kills the old idea that vertical software caps out early. There are two models in the group: the transaction monetizers (ServiceTitan, Toast, and AppFolio) whose GTV and GPV run into the tens of billions, and the pure-subscription players (Veeva, Guidewire, Samsara, Procore) trading lower revenue per customer for higher gross margins. Nearly every one inflected on profitability this cycle, because the grow-at-all-costs era is over and Rule of 40 is now the price of admission. And all seven are plowing the gains into AI agents built on proprietary vertical data, from ServiceTitan’s Max to Veeva AI to Samsara’s operational agents. The data moat is the wedge, and it is the same wedge everywhere.
The last theme is the loudest. The market is punishing the whole category regardless of execution. ServiceTitan is down roughly 46% over the past year, Guidewire fell 14% on a beat-and-raise, and Veeva has shed about a quarter of its value even while growing 16% at 45% margins. When the best operators in a category all trade down together, the story is not about any single company. It is a multiple reset for vertical B2B as a whole.
What ServiceTitan tells us about vertical software today
Three things stand out from this quarter. Boring verticals scale further than anyone expects when you own the full operating system. Payments and usage-based revenue are the margin story, not an add-on. And even the best-executing vertical players are getting no free pass from the market, so the only move is to keep compounding growth and efficiency at the same time.
ServiceTitan is doing all three. At $1B+ in revenue, growing 25%, with margins doubling and an agent platform doubling its footprint every quarter, it’s making the case that vertical B2B is still one of the best places to build.
