ServiceTitan’s IPO sets the stage for future tech IPOs.
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In the weeks since ServiceTitan filed to go public in November, CEO Ara Mahdessian has had to maintain his mouth shut as speculation about his company’s ulterior motives for taking the plunge ran rampant. 2024 was a slumber 12 months for technology IPOs, and plenty of corporations were content to take a seat on the sidelines and wait for higher market conditions for his or her Wall Street debuts. Business software company ServiceTitan made an exception only since it needed to, industry insiders said – citing a provision in an earlier private financing that meant investors would get more shares if the corporate waited longer.
Due to a “quiet period,” ServiceTitan was unable to reply. But as his company opened trading on Thursday and closed 42% above an already-beating list price of $71, valuing the corporate at $8.9 billion at the tip of the day, CEO Ara Mahdessian scoffed about the concept he went public with another person.
“We do not make such an important decision based on financing conditions,” he said Forbes in a call from Nasdaq’s Midtown Bell Ringing site. “You can see for yourself the strength of the company and the favorable conditions on the market.”
The IPO on Thursday was an extended time coming. The company was founded in Glendale, California, in 2012 by Mahdessian and President Vahe Kuzoyan, two Armenian immigrants. The company’s original focus was to focus on home repair professionals, corresponding to local plumbers or air con technicians. ServiceTitan provides you with software tools to show you how to maintain your small business, including services for shipping and routing, parts procurement, marketing and automatic financial reporting. “We serve this all-important industry that is not getting its fair share of the general zeitgeist,” Kuzoyan said Forbes.
ServiceTitan, which got here in at number 6 Forbes’ 2024 Cloud 100 list of the world’s top private corporations saw a decline in business throughout the pandemic as people were confined to their homes and suddenly needed more maintenance and repairs. The upward trend led to a $500 million Series F round in 2021 at a valuation of $8.3 billion. Before going public, the corporate had raised a complete of $1.4 billion from investors including Iconiq Growth, Bessemer Venture Partners, TPG and Index.
ServiceTitan was hit with conditions surrounding its IPO during its Series H round in 2022 that included: Conditions for an IPO “Ratchet” – Essentially giving ServiceTitan a deadline of May 2024 to go public, otherwise risking undesirable dilution of its shares. The longer the corporate waited to go public – and the lower the worth of its IPO stock fell in comparison with the Series H price of $84.57 – the more shares went to Series H investors reasonably than existing shareholders, it says in a press release evaluation from Meritech Capital. But by the tip of IPO day, all the pieces was clear: The company’s recent market cap of $8.9 billion easily surpassed its last private valuation of $8.3 billion. With this jump, Mahdessian’s net value grew to about $700 million, while Kuzoyan’s increased to about $775 million.
ServiceTitan’s annual revenue was $685 million in fiscal 2024, with a net lack of $183 million, in line with the corporate’s S-1 filing. However, year-over-year revenue rose 24% after the quarter resulted in July. ServiceTitan just isn’t profitable, but its customers are very loyal. The company has achieved gross retention of greater than 95% during the last 10 quarters, meaning that almost all of its customers have remained loyal to it for the long run.
ServiceTitan’s public debut is a boon for a technology IPO market that has been on the rise since 2021 saw a wave of corporations including investment app Robinhood, dating app Bumble and education app Duolingo the stock market was relatively slow. This 12 months has been slow as compared, with a couple of notable exceptions: Reddit, which went public in March at a valuation of $6.5 billion, and cybersecurity company Rubrik, which went public in April at a valuation of $5.6 billion -Dollar went on the stock exchange.
There are hopes that the market will proceed to get well next 12 months as more IPOs line up, including Cerebras, a next-generation chip maker that has reportedly postponed its IPO attributable to U.S. regulators’ concerns about foreign investment. Others that could be eyeing a public market debut next 12 months include data storage company Databricks, ticket sales company Stubhub and buy now, pay later company Klarna.
ServiceTitan leaders are excited to be a catalyst. “It’s hard to speak for someone else,” Kuzoyan said. “But the water feels great.”
