ServiceTitan – the Operating System that Powers the Trade

ServiceTitan went public last Thursday. The company reported annual revenues of $685M (ltm ended July 31), a 24% yoy growth rate, gross margins of 72%, losses of $183M, and processed $62B in Gross Transaction Volume. Shares jumped 42% in the trading debut and now it is valued at $8.9B, at a price / sales multiple of 12.9x.

The company raised $1.4B from VCs such as Sequoia, Bessemer, Battery and Tiger. The last funding round of Nov 2022 set its valuation at $7.6B valuation (a down-round from $9.5B).

ServiceTitan was founded in 2012 by Ara Mahdessian (CEO) and Vahe Kuzoyan (President). The two met on a college ski trip for Armenian students in 2004 and bonded over their shared experience of being Armenian immigrants to California. Both their fathers were home-service contractors in building and plumbing, and both were having issues with the logistics of running their companies.

The US home services industry employs over 6M people and represents a $700B market. There are ~2.5 million home service companies completing over 500M jobs annually. In 2023, U.S. homeowners spent an average of $13.7K on home services, on average.

ServiceTitan has developed a comprehensive suite of solutions tailored to home services businesses. These products address workflows in four key areas: front office, field operations, client experience, and management insights

In addition, ServiceTitan’s mobile app equips field technicians with all the information they need on the go, including job details, customer history, and route information. They can update job statuses, capture photos, and process payments directly in the field. And the drag-and-drop dispatch board allows dispatchers to efficiently assign jobs based on technician skills, location, and availability, reducing travel time and ensuring timely service.

ServiceTitan has made 9 acquisitions to expand horizontally across trades, from Aspire (landscaping) to FieldRoutes (pest control, a $577M transaction).

Conclusion

Can ServiceTitan sustain its stock price? Regardless, ServiceTitan’s strong IPO is good news for VC, fueling optimism that 2025 could be a great year for our trade.

Note: Not to be confused with the “Brazil Titans 20”, a DJ index comprising the top 20 ADR-listed Brazilian companies, the so-called Titans of the Brazilian economy, such as Itaú, Bradesco, AmBev, Vivo, which is down 64% (in nominal terms) from its 2007 peak, while the DJI is up 3.5x.