ServiceTitan’s IPO is a big winner that could inspire fintechs


ServiceTitan, which offers financial and customer management software for the trades, went public in a big way on Thursday, much to the delight of retail investors. The stock quickly popped from its opening IPO sales price of $71 million to $105 a share in modest trading volume. It is currently maintaining an above-$100 price.

ServiceTitan’s success does not necessarily portend the reopening of a painfully tight IPO window for tech companies waiting in the wing to go public. That’s because its motive to go public wasn’t strictly market related.

ServiceTitan disclosed that it needed to pay off some of its venture investors pronto after it entered into painful terms with them when it previously raised money. In those previous fund raises, ServiceTitan agreed to pay some investors increasing penalties, in the form of more stock, every quarter it delayed an IPO after May 22, 2024, it said. They paid $84.57 a share, it disclosed, and according analysis by Meritech Capital, ServiceTitan would have to IPO at around $90/share to avoid those penalties. In addition, the company also dedicated about $311 million of the IPO money to buy back all the shares of its nonconvertible preferred stock, at $1,000 a share, the price these investors paid, plus pay them some hefty dividends.

While the $71 million IPO sales price likely wasn’t enough to avoid penalties, it was actually healthy enough to serve much of ServiceTitan’s needs. It allowed the company to raise at about $625 million — and possibly up to $718.5 million if its bankers exercise their full option to buy all the shares allotted to them. After the company pays off its investors, it still has a handsome coffer to use for operations, acquisitions, or other needs. ServiceTitan is still not yet profitable, so it does need the cash.

But retail investors driving up share price on day one is an exciting omen all the same. Some are reacting with excitement that thirst for this stock could portend more IPOs to come soon. Others say it bodes particularly well for any fintech companies who have been waiting in the wings for their chance.

“We expect ServiceTitan’s debut to be an encouraging indicator that could inspire other fintech players in the extensive fintech IPO pipeline to follow suit,” said PitchBook senior emerging technology analyst Rudy Yang.

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