Inside ServiceTitan’s pitch to the public

ServiceTitan on Monday filed for an initial public offering, publishing a 300-page document outlining its industry outlook, financial performance, and future plans. Here’s how the company’s pitching the trades — and itself — to the public.

“The trades are massive, durable, and rapidly professionalizing” 

ServiceTitan estimates that home and building owners collectively spend around $1.5 trillion a year on trades services in the U.S. and Canada, outpacing both retail e-commerce ($1.1 trillion) and transportation and warehousing ($1 trillion).  

The company highlights three key factors driving demand for the trades: An aging housing stock, increasing job complexity, and extreme weather events. 

Zoom in: “The U.S. building stock, including homes, businesses, and other properties, are aging, requiring increasing levels of upkeep,” the filing says. Per Angi, the average U.S. home was 47 years old in 2022. 

• “Homeowners and property managers increasingly lack the technical skills, know-how and willingness to perform increasingly complex projects in a ‘DIY’ manner, driving up demand for professional tradespeople,” it adds. 
• Finally, it highlights changing weather patterns, which it notes “can lead to more wear-and-tear on homes and businesses, increasing the frequency of maintenance projects and new installations.”

The company: As of January 31, 2024, ServiceTitan had about 8,000 active customers on its platform, defined by those spending over $10,000 a year.

• Of those 8,000, over 1,000 spend more than $100,000 annually, a number that’s nearly doubled since January 31, 2022. 
• In its fiscal 2024, contractors on its platform completed approximately 109 million total jobs, in zip codes representing over 98 percent of the U.S. population. 

Financials: ServiceTitan raked in $614 million in revenue this fiscal year, up from $179 million in 2021 — a 51 percent annual growth rate. 

• On that $614 million, it reported a net loss of $195 million. 
• From July 2023 to 2024, its customers invoiced a total of $62 billion to end customers, including homeowners and building owners, a 23 percent year-over-year jump.

Of note: ServiceTitan laid out a plethora of business risks, and among them was industry consolidation.

• “New companies that result from such consolidation may decide to develop their own internal solutions… Additionally, these industry participants may also try to use their market power to negotiate price reductions for our subscriptions,” the filing warns.
• “If consolidation of our larger customers occurs, these consolidated companies may represent a larger percentage of business for us and, as a result, we are likely to rely more significantly on revenue from such consolidated companies to continue to achieve growth,” it adds.

What’s next: The company aims to boost revenue by growing its customers’ transaction volume, cross-selling its eight Pro products, and building new products.

• “Our ability to retain and increase the revenue we earn from existing customers is a key driver of our future business performance and depends on our customers… increasing their usage of existing solutions and adopting additional products,” it says. 

Artificial intelligence, mentioned 90 times in the filing, is one of the company’s big bets. ServiceTitan plans to use the “billions of data points” it’s collected over the years to enhance both existing and new products. 

• For instance, Dispatch Pro, its automated routing tool, can already “simulate thousands of possible scenarios to project job value, [and] use logic based on industry best practices to automatically assign the best technician for a specific job.”

Misc: The company is setting aside up to 5 percent of its shares for eligible customers, the founders’ friends and family members, and “certain other persons.”

• Yes, but: “We will invite customers to participate in [a] directed share program on a first-come, first-serve basis, and an invitation to participate… does not guarantee that the participant will receive an allocation of shares,” the filing notes. 

The bottom line: ServiceTitan didn’t disclose how much it intends to raise in the offering, but its success so far highlights the growing importance — and value — of technology in the trades.