Shares of ServiceTitan Inc. jumped 42% in their trading debut today after the company raised about $625 million through its initial public offering.

The listing marks the first major tech IPO since Rubrik Inc. floated on the NYSE in April. 

ServiceTitan, which makes software for trade businesses, sold 8.8 million shares for $71 apiece. That’s well above the company’s target range of $65 to $67 per share, which was itself an increase over the up to $57 it had originally sought. The IPO valued ServiceTitan at $6.3 billion.

Glendale, California-based ServiceTitan provides a platform that helps trade businesses manage their day-to-day operations. The software is used in more than half a dozen markets including the roofing, landscaping and water treatment segments. 

Trade businesses often rely on firms called lead providers to find prospective customers. Using ServiceTitan, a trade business’ employees can automatically copy lead data into internal sales software without the manual work usually involved in the process. The platform also provides features for managing related tasks such as creating quotes and signing contracts.

When a new order arrives, companies can use a dispatching tool built into ServiceTitan to determine which technician should take on the project. The feature highlights the technician best-equipped to carry out the task. It also displays other information, such as the tools that employees should take with them to a customer site. 

Technicians, in turn, have access to a mobile app that provides information about the property in need of repairs. There’s an interface section for sharing sign-off forms with customers. Another section of the app shows information about whether the customer has bought other services in the past, which makes it easier to identify upselling opportunities. 

ServiceTitan provides its namesake platform alongside more than a half dozen other applications sold under the Pro brand. One product, Pricebook Pro, displays the average prices charged by competing trade businesses in the same area. Another application helps companies manage marketing campaigns.

Over the past few years, ServiceTitan has acquired several rivals that developed business management software for specific trades. Among those deals was the company’s 2022 purchase of FieldRoutes, a provider of software for pest control businesses. ServiceTitan disclosed in its IPO filing that it spent about $577 million on the transaction. 

The company financed the deal partly by selling non-convertible preferred stock. According to TechCrunch, the buyers of the shares were granted a term sheet with a so-called compounding IPO ratchet structure. The agreement specified that the investors would receive additional shares unless ServiceTitan’s IPO meets certain price targets.

It’s believed the company had to achieve a share price of at least $90 to avoid activating the ratchet structure clause. ServiceTitan opened above $100 in its trading debut this morning. In the filing for tis IPO, the company disclosed that it will use some of the proceeds to buy back the non-convertible preferred stock.

ServiceTitan generated $363.3 million in revenue during the six months ended July 31, 24% more than a year earlier. The company’s loss from operations narrowed from $98.6 million to $86 million in the same time. On an adjusted basis, it generated positive income from operations of $16.8 million in the first six months of the year. 

“The IPO reflects the size and opportunity of the industry, which is vast and still ripe for innovation,” said Gary Specter, the Chief Executive Officer of Simpro Group Pty Ltd., an Australian company that provides software for trade businesses.

ServiceTitan is listed on the Nasdaq under the ticker symbol “TTAN”. 

Photo: ServiceTitan