ServiceTitan, a software startup, is planning to go public in the United States. The company aims for a valuation of up to $5.2 billion in its initial public offering (IPO). ServiceTitan plans to start its IPO in December and expects to raise as much as $502 million.
The company, valued at $7.6 billion in 2022 according to PitchBook data, is looking to tap into public markets amid fluctuating market conditions. Market analysts believe this listing could be crucial for ServiceTitan as it seeks to expand its market share in a competitive industry. The funds raised from the IPO will be used to enhance its product offerings and expand its business operations.
ServiceTitan plans to market 8.8 million shares for $52 to $57 each, according to its filing with the US Securities and Exchange Commission. At the top of that range, the company would have a market value of $5.16 billion based on the outstanding shares listed in its filing. The co-founders, chief executive officer Ara Mahdessian and president Vahe Kuzoyan, will together control the majority of the voting power after the offering through their Class B shares.
Affiliates of ICONIQ Growth are expected to have a 20.1% stake after the offering, affiliates of Bessemer Venture Partners will have an 11.7% stake, TPG entities are set to have 8.4%, and Battery Ventures affiliates will have 6.2%. ServiceTitan posted a net loss of $195 million on revenue of $614 million in its fiscal 2024 year. The IPO is being led by Goldman Sachs Group Inc., Morgan Stanley, Wells Fargo & Co.
and Citigroup Inc.
Servicetitan’s December IPO aspirations
with 10 other banks working on the deal.
The company plans for its shares to trade on the Nasdaq Global Select Market under the symbol TTAN. In a surprising move, ServiceTitan disclosed that it plans to allocate a significant portion of the proceeds, about $311 million, to repurchase all the shares of its nonconvertible preferred stock at $1,000 per share, the original purchase price. Additionally, these stockholders will receive any unpaid dividends per share.
The investors benefiting from this buyback include Saturn FD Holdings, LP, and Coatue Tactical Solutions PS. ServiceTitan had committed to paying annual dividends of 10% for five years and 15% for the sixth year on these shares. Alex Clayton, a general partner at late-stage firm Meritech Capital, described ServiceTitan’s strategy as sensible.
“They clearly want to have a cleaner cap table, so they are using the proceeds to buy these back. They could buy this back anytime and now have the cash to do so,” Clayton said. ServiceTitan also clarified its direct share program, setting aside 5% of its shares for purchase by friends and family of the founders and certain C-suite decision-makers of its customers.
While this approach might present some conflict-of-interest concerns, it isn’t unprecedented. ServiceTitan’s IPO has become a subject of significant attention and speculation. Regardless of the outcome, it won’t necessarily signal the broader tech IPO market’s resurgence.
ServiceTitan did not immediately respond to a request for comment.
