ServiceTitan saw a strong 42% increase in its stock price during its Nasdaq debut on Thursday, after raising around $625 million in its initial public offering (IPO). The cloud software provider for contractors sold shares at $71 each, above the expected range, and closed the day at $101 per share, giving the company a market capitalization of approximately $8.9 billion.
The IPO marks a significant event in the tech sector as it is one of the first notable venture-backed companies to go public since 2021, when rising interest rates and inflation made the market less attractive for riskier assets. ServiceTitan’s success is seen as a positive sign for future tech IPOs, with many other companies, including chipmaker Cerebras and online lender Klarna, considering public offerings.
Despite recording a net loss of $47 million on $198.5 million in revenue for the latest quarter, ServiceTitan has seen strong year-over-year revenue growth of about 24%. The company’s software helps businesses in industries like plumbing, electrical, and landscaping manage sales leads, schedules, and quotes. With around 8,000 customers, ServiceTitan’s strong revenue and growth prospects were key factors in the positive reception of its IPO.
At the closing price, ServiceTitan’s valuation stood at 12 times its trailing 12-month revenue, which is significantly higher than the current multiple of 6.4 times revenue for the WisdomTree Cloud Computing Fund, a basket of cloud stocks. The successful debut highlights the growing investor appetite for tech companies and marks a positive milestone for the broader IPO market.
