Building trades like roofing, renovations, and fire safety offer ServiceTitan Inc. a huge chance to grow, and Wall Street seems to like the company’s IPO. ServiceTitan Inc. makes software for bills, dispatch, and payments.
When ServiceTitan (TTAN +41.87%) went public, the price of each share rose more than 40% above its offering price of $71 a share. It had been selling at $101 a share on Thursday afternoon. Recently, a share of the stock was being bought and sold for $102.50.
The IPO was priced at $71 a share, which was higher than the expected range of $65 to $67 a share for its first day of trading on Thursday. This was a sign of a good start. ServiceTitan raised about $625 million in its initial public offering (IPO). It sold 8.8 million shares.
Wall Street investors like companies that can grow, and ServiceTitan has a lot of room to do that.
In the 12 months ending July 31, the company made 24% more money, or $685 million.
But ServiceTitan thinks there is a lot more room for growth in a business that technology hasn’t really helped in the past.
When it first started, the business mainly did plumbing, electrical work, heating and air conditioning, garage doors, pest control, and gardening. But now it sees more potential as a back-office service provider for other industries.
In its IPO prospectus, the company said, “We believe the addressable market for technology for the trades is large and significantly underpenetrated.” “We are ready to win in this great market opportunity thanks to our deep domain expertise and the depth and breadth of our platform.”
People in the US and Canada spend a total of $1.5 trillion a year on trade services.
ServiceTitan thinks it is currently working with about $650 billion of that total market. This includes both building new homes and buildings and fixing up houses and businesses that are already there.
If the company gets about 2% of the gross transaction value of its customers on average, it thinks its market chance is about $13 billion.
“We think this opportunity will continue to grow as we continue to expand our platform to reach trade spend that we don’t fully service right now,” the company said.
It wants to grow its business in low-end trades with five or fewer workers, as well as in heavy commercial and construction work and various trade verticals.
There is competition in the market for ServiceTitan, but the field is pretty big.
Jobber CEO Sam Pillar said, “ServiceTitan’s public debut is a big deal for the company, but what’s more important is what it says about the long-underappreciated home-services category and the sheer size of the opportunity.” Jobber is a competitor of ServiceTitan.
ServiceTitan’s sales have grown quickly, but it hasn’t made a profit yet. However, its net losses are going down.
ServiceTitan had a net loss of $91.7 million in the six months ending July 31. This is less than the $104 million it lost during the same time last year.
Its income went up from $276.1 million to $348.2 million during the same time period.
The big banks that worked on ServiceTitan’s IPO were Goldman Sachs, Morgan Stanley, Wells Fargo Securities, and Citigroup.
