1) TL;DR
ServiceTitan reports Q3 FY26 results after the close on December 4, with the Street looking for roughly $238–239M in revenue and a small non-GAAP profit against ongoing GAAP losses. The December monthly options are implying about a ±12% move into the post-earnings expiry, with at-the-money premiums richly priced versus recent realized volatility.
Given the combination of 25%+ year-over-year top-line growth, a pattern of beating expectations, and management’s already-raised full-year revenue outlook, the setup leans modestly bullish. The call here is for an upside earnings gap on the order of 8–10% from the ~93 handle, with directional odds in the low 60s that the gap skews higher rather than lower, assuming guidance is at least reaffirmed near the current range.
Guidance is expected to be broadly consistent with the last update: high-teens to low-20s revenue growth and continued margin progress. A fresh raise would likely be treated as a positive surprise; anything that walks numbers back could flip the reaction sharply negative given how much premium is embedded in the front-month options.
2) Street setup
Consensus heading into the print is clustered around:
- Q3 FY26 revenue: about $238.5M, slightly down sequentially from Q2 but right in line with management’s previously issued range in the high-230s.
- EPS:
- Non-GAAP: the sell side is looking for a positive, low-teens cent print, down from last quarter’s $0.33 as the company laps a seasonally strong period and leans back into growth investments.
- GAAP: the market still expects a loss in the mid-$0.40s per share, reflecting stock-based comp and other non-cash items.
On the top line, a print in the upper half of the revenue range with 20–25% year-over-year growth would be treated as “in-line good.” A number that pushes meaningfully above $240M would qualify as a genuine surprise and almost certainly fuel the bull case that the raised full-year guidance was still conservative.
On the profitability side, the bar is lower: management has already demonstrated operating leverage, so the Street mainly wants to see that margin expansion was not a one-off from Q2. A repeat of double-digit non-GAAP operating margins would be enough to keep the “path to profitability” narrative intact.
The risk is that after a strong Q2, expectations and analyst targets have crept higher even as the stock has pulled back, creating a “must-deliver” quarter: a merely in-line print with cautious commentary could easily turn into a downside gap given how much event premium is sitting in the front-month chain.
3) Fundamentals & filings
ServiceTitan is still in classic high-growth SaaS mode:
- Growth vs. profitability
- Revenue has been growing in the mid-20s percent range year-over-year.
- Gross margins are robust in the high-60s to low-70s, but the company remains GAAP unprofitable with negative net margins in the mid-20s.
- Balance sheet & leverage
- Leverage looks reasonable for a young SaaS name: debt-to-equity is modest, and liquidity ratios are strong, with both current and quick ratios comfortably above 4x.
- Quality of growth
- Previous quarters showed 25%+ revenue growth, driven by a mix of subscription and usage-based revenue, with subscription still the anchor and usage (payments and financing) amplifying growth.
- Management leaned into AI-enabled features and automation (via the “Titan Intelligence” platform) to drive higher customer productivity and stickiness.
Recent filings and commentary have stressed a shift up-market toward larger enterprise customers (including partnerships with major brands in fleet and home services), which generally bring bigger contract sizes and better long-term unit economics but can make quarter-to-quarter bookings lumpier.
Overall, the fundamental story still screens as:
- Pros: durable growth in an under-penetrated vertical, improving margins, strong gross margin profile, and a differentiated platform in a niche that’s harder for hyperscalers to commoditize.
- Cons: persistent GAAP losses, a rich revenue multiple even after the pullback, and sensitivity to macro-driven spending freezes in construction, housing, and small-business capex.
From a directional standpoint, the combo of strong growth, improving operating leverage, and still-elevated analyst price targets argues that if execution is solid, the market has room to reward the stock. The main fundamental bear case hinges on a sharp slowdown in growth or a walk-back of full-year guidance, neither of which appears base case heading into this print.
4) Options & tape
The uploaded chain snapshot shows:
- Underlying around 93.31 into the event.
- Front-event expiry is effectively the December 19 monthly, sitting roughly two weeks after the report and serving as the de facto earnings contract.
- For that expiry:
- The 95 strike is the practical at-the-money.
- The 95 straddle (call + put) is pricing around 11.4 points, implying roughly a ±12% move by December 19 from the current spot.
- Implied volatility at-the-money is around 73%, more than 2x the recent 30-day realized volatility and materially above the 90-day realized number, indicating a substantial event premium.
- Skew and wings
- Downside puts around 70–80 and upside calls out at 110–120 both carry elevated implied volatilities versus the at-the-money line, with deep wings especially rich.
- That combination points to traders paying up for crash protection and moon-shot upside, rather than a one-sided skew.
- Flow and positioning
- Total options volume is modest but skewed heavily toward calls, with call volume roughly 7x puts.
- Open interest is also call-heavy, with call open interest about 5–6x put open interest across the chain.
- Most of the near-term volume is concentrated in the December 19 expiry, while open interest is more heavily built in January and April, reflecting both event-trading and longer-dated directional structures.
- Gamma profile
- In the December expiry, the largest gamma concentrations sit above spot, clustered around the 100–105 strikes, creating a potential overhead “gamma wall.”
- If the stock gaps up into that region, dealers may need to buy into strength to stay hedged, which can fuel an overshoot; conversely, a gap that stalls below 100 could see that wall act as a short-term cap.
Taken together, the options picture says:
- The market is paying rich premiums for a large move.
- Flow is call-tilted, and overhead gamma is concentrated slightly above current levels.
- Near-term realized volatility has been much lower than what the straddle is implying.
The directional takeaway: the tape is not screaming “one-sided downside hedge.” Instead, it looks like a mix of growth bulls and event traders willing to pay for upside while hedging tails. With implieds already so elevated, a merely “good” print could actually hurt long premium traders even if the stock moves, but from a price-direction standpoint, the positioning leans slighly in favor of an upside surprise.
5) Sentiment & news
Recent news and sentiment around ServiceTitan can be summarized as:
- Execution track record
- The last reported quarter featured mid-20s revenue growth, non-GAAP EPS well ahead of expectations, and meaningful margin improvement, helped by operating leverage and disciplined spending.
- Management raised full-year revenue guidance into the mid-$900M range, signalling confidence in the pipeline and demand environment.
- Strategic partnerships and product narrative
- Multiple partnerships with large brands in fleet management and services, as well as ecosystem deals around payments and financing, underscore the long-term strategic story.
- The company is leaning heavily into AI-driven automation across scheduling, dispatch, and marketing workflows. Recent commentary highlighted early customer wins and tangible uplift in close rates and revenue from these AI features.
- Analyst coverage
- The sell-side remains broadly bullish, with a Buy / Strong Buy rating skew and average 12-month price targets in the low-130s, implying 40–50% upside from current levels.
- Recent target hikes after the last print emphasize confidence in the business model and a belief that the current multiple is justified given growth and margin trajectory.
- Retail and social chatter
- Online discussion has been active but not euphoric: TTAN shows up in growth and IPO-focused communities, with bulls pointing to AI exposure and a long runway in the trades vertical.
- There is some grumbling about insider selling and the drawdown from the post-IPO highs, but the overall tone leans constructive, especially among investors who view the stock as an “AI-adjacent” SaaS compounder that’s now trading below peak valuation.
Net-net, sentiment is positive but not frothy. That backdrop, combined with a stock sitting nearly 30% off its 52-week high, is supportive of an upside reaction if the company delivers another clean quarter with steady guidance.
6) Guidance scenarios
Given existing commentary and the current setup, a few key scenarios stand out:
Base case: Solid quarter, guidance reaffirmed (most likely)
- Revenue lands near the top half of the guided $237–239M range, with year-over-year growth still in the mid-20s.
- Non-GAAP operating margins hold in the low-double-digits, showing that Q2 leverage wasn’t a fluke.
- Full-year revenue guidance is reiterated in the mid-$900M range, and management emphasizes durable demand in core verticals plus traction in larger enterprise and fintech-adjacent products.
Market reaction: With the stock below its highs and sentiment already constructive, this base case likely supports an upside gap – perhaps high single digits – but the rich IV may keep a lid on follow-through once the initial pop is digested.
Bull case: Beat and raise
- Revenue comes in meaningfully ahead of the ~$238M consensus, perhaps in the low-$240M range.
- Non-GAAP EPS comfortably beats, and management nudges full-year revenue guidance above the current range or guides Q4 meaningfully above Street.
- Commentary on AI-driven upsell, payments penetration, and enterprise wins remains very strong, with healthy expansion metrics.
Market reaction: This is the setup for a double-digit upside gap, potentially challenging the 100–105 gamma wall in the near term. In that scenario, dealer hedging could amplify a squeeze, especially if short interest has built up into the print.
Bear case: Top-line disappointment or guidance wobble
- Revenue lands at the low end of range or slightly below consensus, and management frames it as macro or seasonal, but without a clear path to re-accelerate.
- Non-GAAP margin expansion stalls, or commentary hints at heavier investment that pushes out the profitability timeline.
- Full-year guidance is trimmed or reframed in a way that suggests a weaker second half than previously assumed.
Market reaction: Given the elevated premiums and call-heavy positioning, this would likely result in a sharp downside gap, easily in the low double digits, with both long premium and late longs taking pain.
The call here is that the base case is most likely, with a non-trivial chance of a mild beat-and-raise. That supports a modestly bullish directional bias, but not a high-conviction, all-in stance.
7) Trade framework
This is not investment advice, but here is how some traders might think about structuring risk around this setup, given the rich implied move and modestly bullish skew.
a) Short-dated call spread (directional upside, defined risk)
- Structure: Buy a December 19 call slightly out-of-the-money (for example, around 100) and sell a further-out strike (for example, 110) in the same expiry.
- Thesis:
- Leverages the view that an upside gap into or through the 100 region is more likely than a crash lower.
- Caps upside in exchange for a lower premium outlay and reduced vega exposure versus outright calls.
- Main risks:
- A flat or down move will likely result in a full loss of premium.
- A massive upside squeeze beyond the top strike leaves profit capped; long stock or wider spreads would participate more, but also cost more.
b) Put spread as a hedge for holders (downside protection)
- Structure: For existing longs, buy a December or January put near current spot (for example, 90–95 region) and sell a lower-strike put (for example, mid-70s or low-80s).
- Thesis:
- Locks in a floor against a “bad quarter” scenario without paying for the full cost of a naked put in a high-IV environment.
- The lower strike sold helps offset some of the rich downside skew.
- Main risks:
- If the stock trades sideways or higher, the premium spent may decay quickly after the event.
- A severe downside overshoot beyond the lower strike leaves residual tail risk.
c) Post-earnings premium fade (for volatility traders)
- Structure: For traders focused on implied volatility rather than direction, consider short-vol structures after the announcement if the move is smaller than the ~12% currently priced in and IV collapses.
- Examples include short strangles or iron condors in the December or January expiries, centered around the new post-earnings spot.
- Thesis:
- The current straddle price bakes in a large move; a smaller-than-expected reaction could leave a lot of extrinsic value to decay.
- Main risks:
- Short-vol trades carry large tail risk if the stock trends aggressively after earnings or if new information triggers a second-leg move.
Traders with a strong upside bias but respect for the rich IV might favor call spreads or call diagonals (long nearer-dated call, short longer-dated call) to express the view while mitigating vega and theta exposure.
8) Risks / what flips the view
Key risks to the bullish tilt include:
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Macro or end-market slowdown
- A more pronounced slowdown in residential HVAC and related trades than management has previously let on could pressure growth and bookings, particularly if enterprise wins don’t scale quickly enough to offset softness.
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Guidance disappointment
- Any sign that the previously raised full-year revenue outlook is too aggressive – whether via a cut or cautious language – would undercut the “beat and raise” narrative that has been supporting analyst targets.
-
Margin backsliding
- If operating margin expansion stalls or reverses, investors may question whether the path to sustainable profitability is as clear as bulls assume, especially in a higher-rate world where unprofitable growth is discounted more harshly.
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Valuation and IPO overhang
- Despite the recent pullback, ServiceTitan is still valued as a premium growth asset. Insider selling, lock-up expirations, or lingering IPO overhang can amplify volatility around events.
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Positioning and options risk
- With IV elevated and a call-heavy chain, any disappointment can see a rapid reset lower as both longs and event-premium buyers head for the exits.
- Conversely, a strong beat that fails to clear the already-high expectations could still lead to a “pop and fade” pattern if traders use the strength to take profits.
A clear miss on revenue or a meaningful walk-back of guidance would flip this framework from modestly bullish to defensively bearish, making downside structures or outright hedges more appropriate. Absent that, the balance of factors – fundamentals, sentiment, and the options tape – supports a slight edge toward an upside earnings gap, even if the main trade opportunity may lie in how quickly post-event volatility normalizes.