Glendale’s blue collar software firm ServiceTitan was set to debut on the Nasdaq on Thursday.
The provider of business management software for plumbers and other contractors priced its initial public offering of 8.8 million shares at $71, raising gross proceeds of $625 million. It has the potential to raise more capital if underwriters exercise a 30-day option to sell an additional 1.32 million shares.
The shares, which trade under the ticker TTAN, were initially priced between $52 to $57 before being upped earlier this week to a range of $65 to $67, indicating demand had picked up for the offering. At its $71 debut price, the company had a market value of $6.42 billion, lower than the $7.6 billion valuation it had after a November 2022 funding round.
“Today is obviously a very special day for ServiceTitan, but more importantly it’s an incredible milestone for this very special industry,” said co-founder and President Vahe Kuzoyan, whose parents rang the Nasdaq opening bell, along with the parents of co-founder Ara Mahdessian.
There have been only a handful of software IPOs this year, with ServiceTitan the largest since data management company Rubrik went public in April. However, there are signs the market is recovering after being battered by inflation and the Federal Reserve’s interest rate hikes.
“Total proceeds for 2024 have already surpassed 2016 and are on track to be just shy of 2017,” said Riley Mullin, an analyst with Renaissance Capital. “The convergence of a new political administration, technological tailwinds like AI, and a whole swath of companies that have been waiting to go public since the IPO window closed in late 2021, could make for a strong 2025.”
ServiceTitan counts about 8,000 contracting firms as customers, providing a soup-to-nuts software package that can manage booking appointments, generating estimates and processing invoices as well as payroll and dispatching workers. Clients range in size from family-owned contractors to large national franchises totaling more than 100,000 technicians. The firms pay a subscription fee for its services.
More than $300 million of the IPO’s proceeds will go to retiring all of ServiceTitan’s non-convertible preferred stock, a type of stock that typically pays holders a consistent dividend but cannot be converted into common stock. The company, which wants to expand the number of trades and markets it serves, will use the remainder for general corporate purposes and possible acquisitions.
ServiceTitan was founded in 2007 by Mahdessian, 39, and Kuzoyan, 41, two friends from Glendale whose fathers worked as contractors. The company previously raised about $1.4 billion from venture firms, including Iconiq Growth, Bessemer Venture Partners and Battery Ventures.
It employed 2,870 workers as of July 31 at its Glendale headquarters and offices elsewhere in the U.S. and internationally. Competitors include BuildOps, Housecall Pro, Jobber and other companies that charge subscriptions for their web-based business management software.
ServiceTitan had filed confidential paperwork for an $18-billion IPO in 2022, according to Business Insider, but didn’t proceed when the market froze up.
The company reported revenue of $614 million in the fiscal year that ended Jan. 31, up nearly a third from a year earlier, and an operating loss of $195 million, 28% less than in fiscal 2023. It had about $147 million in cash and equivalents on hand as of Jan. 31 and was carrying $175 million in long-term net debt.
The company’s share structure will ensure that control remains with Mahdessian, who is chief executive, and Kuzoyan, who is president. They are retaining all of ServiceTitan’s Class B shares, which are entitled to 10 votes each when shareholders make decisions about the company’s leadership.
Lead underwriters on the IPO are Goldman Sachs Group, Morgan Stanley, Wells Fargo and Citigroup.