MW ServiceTitan IPO's growth story wins over Wall Street with huge market opportunity to help tradespeople

By Steve Gelsi

Company sees $1.5 trillion in trade spending as a market opportunity

Service trades from roofing to renovations and fire safety present a massive opportunity for ServiceTitan's growth as the initial public offering from the provider of billing, dispatch and payment software has apparently won over Wall Street with its growth prospects.

ServiceTitan (TTAN) priced its IPO at $71 a share, above its estimated range of $65 to $67 a share for its first day of trading on Thursday. With 8.8 million shares in the deal, ServiceTitan raised about $625 million in its IPO.

Also read: ServiceTitan raises IPO price on deal demand and appetite for new issuers

Wall Street investors love growth and ServiceTitan offers plenty.

The company's revenue in the 12 months ending July 31 rose 24% to $685 million.

But ServiceTitan sees room for much more expansion in a business that' been historically underserved by technology.

It started out with a focus on plumbing, electrical, heating and air conditioning, garage door, pest control, and landscaping, but it sees more opportunity as a back office service provider for other sectors.

"We believe the addressable market for technology for the trades is large and significantly underpenetrated," the company said in its IPO prospectus. "Our deep domain expertise, as well as the depth and breadth of our platform, position us to win in this attractive market opportunity."

All told, customers in the U.S. and Canada spend about $1.5 trillion a year on trade services.

ServiceTitan estimates it's currently addressing about $650 billion of that total market that includes construction of homes and buildings as well as servicing existing residences and commercial buildings.

If the company captures and average of 2% of gross transaction value of its customer base, ServiceTitan estimated its serviceable market opportunity is about $13 billion.

"We believe that this opportunity will continue to grow as we continue to expand our platform to reach trade spend we currently do not fully service," the company said.

It's looking to boost its presence in trade verticals and businesses focused on heavy commercial and construction work, as well as down-market trades businesses with five or less employees.

To be sure, ServiceTitan faces competition in the marketplace.

It also has yet to turn a profit, but its net losses are coming down.

For the six months ended July 31, ServiceTitan's net loss was $91.7 million, down from about $104 million in the year-ago period.

During the same time period, its revenue rose to $348.2 million from $276.1 million.

-Steve Gelsi

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December 12, 2024 08:49 ET (13:49 GMT)

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