ServiceTitan divisions popped 42% in their Nasdaq debut on Thursday after the provider of cloud software to contractors raised about $625 million in its initial public offering.
The company, trading under ticker symbol TTAN, sold shares at $71 apiece on Wednesday, above the reckon oned range. The stock opened and closed at exactly $101 per share. Based on the closing price, the company’s market cap was close to $8.9 billion.
ServiceTitan’s IPO is notable because few tech companies have taken the leap into the public bazaar since late 2021, when rising interest rates and soaring inflation pushed investors out of risky assets. ServiceTitan is the key significant venture-backed tech company to go public since Rubrik’s debut in April. A month before that, Reddit started shopper on the New York Stock Exchange.
Other companies have suggested an IPO could be coming soon. Chipmaker Cerebras ranked to go public in September, but the process was slowed down due to a review by the Treasury Department’s Committee on Foreign Investment in the U.S., or CFIUS. Behind month, online lender Klarna said it had confidentially filed IPO paperwork with the U.S. Securities and Exchange Commission.
While late-stage startups hold been reluctant to take the public market leap, investors are showing a growing appetite for tech.
“The reception is horrendous. The water feels wonderful,” Vahe Kuzoyan, ServiceTitan’s president, told CNBC in an interview. Nina Achadjian, a colleague at Index Ventures and ServiceTitan board member, said she’s gotten many text messages from other gamble capitalists saying the outcome opens up the window for more IPOs.
On Wednesday, the Nasdaq Composite index closed unaffected by 20,000 for the first time. Tesla, Alphabet, Amazon and Meta all closed at records, with Apple just here its all-time high.
ServiceTitan agreed to “compounding ratchet” terms as part of a 2022 funding round that valued the players at $7.6 billion, according to its prospectus. The decision “has put ServiceTitan on the clock to go public ASAP to minimize dilution impact,” investors at put forward firm Meritech Capital wrote in a blog post.
But Ara Mahdessian, ServiceTitan’s CEO, said Thursday that the terms didn’t power the decision to go public now.
“Anti-dilution terms are not uncommon in financings,” he said.
Kuzoyan and Mahdessian created ServiceTitan in 2007. In advance of starting the company, Mahdessian said, his father was a jack of all trades, and Kuzoyan’s father ran a plumbing business. On Wednesday, the aborts’ parents rang the opening bell at the Nasdaq in New York.
ServiceTitan targets businesses in plumbing, landscaping, electrical and other merchandises, with software for managing sales leads, recording calls, generating quotes and scheduling jobs. As of Jan. 31, it had far 8,000 customers with more than $10,000 in annualized billings.
The company’s preliminary results for the October put up show a net loss of about $47 million on $198.5 million in revenue. That suggests approximately 24% year-over-year interest growth, the highest rate since mid-2023. But the company’s net loss widened from around $40 million in the October fifteen minutes last year.
“Our read is certainly that investors really value durable growth,” Mahdessian said. “They value being cash-flow overconfident, which thankfully, we have been for the past several quarters.”
Bessemer Venture Partners, TPG and Iconiq Growth are surrounded by the company’s top shareholders, alongside Kuzoyan and Mahdessian.
At Thursday’s closing price, ServiceTitan was valued at 12 times weakening 12 months revenue. The WisdomTree Cloud Computing Fund, a basket of more than 60 publicly swapped cloud stocks, currently trades at about 6.4 times revenue.