ServiceTitan, Inc. (TTAN) stock intrinsic value fair value estimate & owner earnings analysis

ServiceTitan sells cloud software to plumbing, HVAC, electrical and other trades contractors, covering scheduling, dispatch, invoicing, pricing, marketing, payments and consumer financing. Fiscal 2026 (year ended January 31, 2026) revenue was $961.0 million, up 24%. Subscription revenue grew 26% and usage-based revenue (tied to customer transaction volume and payments) grew 23%. Gross margin rose from 65% to 70%, and cash from operations was $110.1 million. The company holds $428.8 million of cash and an undrawn $250 million credit line. Sales are almost entirely to trades businesses in the United States and Canada. Why the shares are worth little on our method: we treat stock compensation as a real cost, because it is paid with newly issued shares that dilute owners. Stock compensation was $197.1 million in fiscal 2026 (20.5% of revenue, versus 21.2% the year before). After stock compensation, removing working-capital swings ($20.5 million cash outflow in fiscal 2026) and deducting maintenance capital spending of $16.7 million (total capex of $24.6 million includes capitalized software, less an estimated $7.9 million of growth spending), owner earnings were negative $83.2 million, or about negative $0.90 per share. The trend is improving: about negative $149 million in fiscal 2024 and negative $137 million in fiscal 2025. Per-share figures for earlier years are not comparable because the share count roughly tripled around the December 2024 IPO. Two of the three years reflect IPO-year distortions, so we anchor on fiscal 2026, the first full year as a public company. The first half of fiscal 2027 shows revenue up 22.7% to $561.6 million and operating cash flow of $56.4 million against $25.8 million a year earlier, but stock compensation also rose to $115.1 million from $93.1 million, so we did not raise the level on those results. Stock compensation is not about to shrink. The filing shows $415.9 million of unrecognized expense on restricted stock units to be recognized over more than two years, plus $195.0 million tied to awards that vest at stock-price hurdles. Owner earnings and revenue trend for the last year: owner earnings improved by about $54 million, but they are still negative. Because the base case's first year starts no higher than that trend, and no year-one profit is evidenced, we do not assume a turn to profit. Bear case ($0 per share): revenue growth slows and stock compensation stays near 20% of revenue, so owner earnings stay negative. The company has no meaningful debt-like obligations that would push value below zero; the losses are paid in shares, not cash, so the case is valued at zero rather than below. Base case ($0 per share): revenue keeps growing, and contracted revenue supports it: $492.4 million of remaining contracted obligations, about 48% of which is recognized in fiscal 2027 and nearly all the rest by January 2029. But margin improvement, share gains and new products are not yet secured, so we do not credit them. On demonstrated costs (gross margin 70%, stock compensation about 20% of revenue) the business remains below break-even after stock compensation, so nothing is added to value. Bull case ($3.27 per share): revenue grows 18% a year for five years, below the 24% to 26% achieved in the last two years, with cash earnings before stock compensation held at the fiscal 2026 margin of about 12% of revenue and stock compensation held near $200 million a year. Owner earnings turn positive in year four and reach about $64 million in year five. We then hold that level for ten more years, since subscription contracts and the customer base are the only persistent feature we can point to, and fade to zero after that. Discounted at 6%, this is worth about $313 million, or $3.27 on about 95.9 million shares. The growth rate and flat stock compensation are the levers that must work for this to happen; neither is yet a proven multi-year record. What we could not reconcile: the company filed an amendment to its annual report on September 8, 2026, which we could not review. Our fiscal 2026 figures come from the original annual report filed March 25, 2026. If a restatement is involved, these figures could change. Cash flow reconciles to the cash flow statement within about 1.2%. What would prove this wrong: if stock compensation fell in absolute dollars while revenue kept growing at 20% or more, owner earnings would turn positive far sooner than the bull case assumes. The margin-of-safety price of $1.20 applies only if the business has produced positive owner earnings for a full year, and reflects a large margin of safety for a young public company with no track record through a downturn.