ServiceTitan made a blockbuster debut on the Nasdaq Stock Exchange on Thursday.
Shares opened more than 40% up compared to their initial public offering (IPO) price of $71 and stuck a market cap of $6.3 billion on the cloud-based software company.
ServiceTitan currently has more than 8,000 customers with over $10,000 in annualised billings.
ServiceTitan stock debut matters a lot
ServiceTitan is a significant debut since not a lot of tech companies opted to go public in recent years as inflation and higher interest rates deterred appetite for riskier assets.
But the cloud company that now trades on Nasdaq as “STTN” raised about $625 million via an initial public offering and rallied more than 40% this morning to suggest investors are now ready to park their capital gain in tech.
In fact, continued push to the upside in the likes of Alphabet, Amazon, Tesla, Apple, and Meta Platforms pushed the Nasdaq Composite Index to an all-time high of over 20,000 this week.
Other than founders Ara Mahdessian and Vahe Kuzoyan – names like Iconiq Growth, Bessemer Venture Partners, and TPG are some of the top shareholders of ServiceTitan at writing.
IPO market could pick up in 2025
ServiceTitan says its revenue increased by 24% on a year-over-year basis to $198.5 million in its October quarter. Still, it lost $47 million in the three months from about $40 million a year ago.
The warm welcome of STTN on the Nasdaq signals “a window is opening” in the IPO market, according to Greg Martin – the head of Rainmaker Securities.
Investors also expect pro-business policies under the Trump administration to help revive the long-dormant tech IPO market.
Just this morning, President-elect reiterated their commitment to cutting corporate taxes and accelerating the approval process for investments worth over $1.00 billion as he rung the bell at the New York Stock Exchange.
Both of his remarks can be interpreted as fairly positive for future initial public offerings.
ServiceTitan is not a cheap stock
ServiceTitan stock is rallying on market debut also because its leveraging AI via its Titan Intelligence platform. The offering provides actionable insights to plumbers, landscapers, roofers, and others in the trades industry.
Titan Intelligence also automates repetitive tasks, predicts outcomes, and improves customer and employee experiences.
Investors are cheering STTN as they see it as another play on the AI market that Statista forecasts will grow at a compound annualised rate of more than 28% through the end of 2029.
Nonetheless, some caution is warranted as ServiceTitan shares are not particularly inexpensive.
At $101, ServiceTitan stock is currently going for close to 13 times its trailing 12-month revenue.
In comparison, that multiple for the software industry at large typically sits between 6 times and 9 times.
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