Glendale’s blue-collar tech unicorn ServiceTitan files for IPO

Ara Mahdessian and Vahe Kuzoyan had a simple plan after graduating from college: Write some software that could assist their dads with all the paperwork that comes with being a contractor.

Two decades later, that idea has morphed into a Glendale company called ServiceTitan, which last year served some 8,000 plumbing, HVAC, janitorial and other firms with a soup-to-nuts software suite — and now plans to go public on Nasdaq under the ticker symbol TTAN.

The tech company, which has raised about $1.4 billion in funding since its 2007 founding, did not disclose in the Nov. 18 filing how many shares it plans to sell or how much capital it wants to raise. A spokesperson declined to comment.

The initial public offering of stock marks a significant step for the company, which had filed confidential paperwork for an $18-billion offering in 2022, according to Business Insider, but didn’t move forward after the Federal Reserve sharply raised interest rates to combat inflation, freezing up the IPO market.

ServiceTitan — which makes most of its money charging a subscription for its services — reported revenue of $614 million in the fiscal year that ended Jan. 31, up nearly a third from a year earlier; and a loss of $195 million, 28% less than in fiscal 2023. It had about $147 million in cash and equivalents on hand as of Jan. 31, 2024, and was carrying $175 million in long-term net debt.

The company, which serves contractors nationwide, says it wants to expand the number of trades and markets it serves. It employed 2,870 workers as of July 31 at its Glendale headquarters as well as at offices elsewhere in the U.S. and internationally.

ServiceTitan has developed a web-based software that can manage all aspects of a contractor’s business, including booking appointments, generating estimates, processing invoices as well as payroll and dispatching workers. Clients range in size from family-owned contractors to large national franchises.

It estimates it receives about 1% of what its clients charge their own customers, which totaled $62 billion in the 12 months that ended July 31. Competitors include BuildOps, Housecall Pro, Jobber and other companies that charge subscriptions for their web-based business management software.

The founders immigrated to the United States in the 1980s as children: Mahdessian, 39, from Iran and Kuzoyan, 41, from Armenia. Mahdessian’s father started a contracting business, and Kuzoyan’s, plumbing. Mahdessian went off to Stanford and Kuzoyan got into USC, with the pair meeting at an Armenian students event.

After graduation, they started in 2007 building a simple program to track customer calls and marketing budgets, but their venture soon attracted other contractors. The duo scored a seed round of funding from Mucker Capital in 2014.

ServiceTitan also has gone on to make acquisitions and raise more than $1 billion from Iconiq Growth, Bessemer Venture Partners, Battery Ventures and others. Iconiq is the largest institutional shareholder of ServiceTitan, holding 24% of Class A shares.

The company’s share structure will ensure that control remains with the founders — Mahdessian is chief executive and Kuzoyan president — who will retain all Class B shares, which are entitled to 10 votes each.

Meritech Capital, in an analysis of the offering, said ServiceTitan appears to be eager to go public due to an unusual provision of its $365-million funding round in November 2022 when money was harder to come by. A so-called IPO ratchet protected participants by guaranteeing them more shares should the company’s IPO price decline below its funding-round valuation.

PitchBook valued the company at $7.6 billion at the time, meaning the IPO needs to trade above a “base” of $84.57 per share or ServiceTitan will have to issue more shares, Meritech said. The base per share price also compounds after a certain time, making it more difficult for the IPO price to exceed it.

“ServiceTitan is incentivized to get public ASAP,” Meritech stated in its report.

Lead underwriters on the IPO are Goldman Sachs Group, Morgan Stanley, Wells Fargo and Citigroup. The offering is expected to be watched closely for signs that the IPO market is making a comeback.