ServiceTitan Made Waves in Its IPO, But Is the Stock a Buy?

DevSecOps Concept - Integration of Security Testing Throughout the Development and Operations IT Lifecycle - Tools to Release Resilient Software Faster and More Efficiently on the Digital Cloud - 3D Illustration

One of the hottest stocks to have its initial public offering (IPO) recently is tech company ServiceTitan (NASDAQ: TTAN). The software company made headlines after its valuation jumped over 42% on its first trading day. However, since its one-day change on Dec. 10, the share price has stagnated, down 1%. On average, Wall Street analysts are still bullish on the name. So, what exactly does ServiceTitan do, and what is the reason for such excitement around the company? I’ll answer those questions and provide my thoughts on the company going forward.

ServiceTitan: Bringing Technology to the Trades

ServiceTitan finds itself in an interesting space. It looks to integrate sophisticated software into industries that have gone years without it. ServiceTitan and many others refer to these industries as “the trades." It includes people who work in plumbing, roofing, landscaping, carpentry, and similar jobs. ServiceTitan’s founders were the sons of trades business owners. They noticed that low-value, repetitive tasks were wasting their parents' time. It hurt their ability to grow the business. They developed ServiceTitan software to meet the needs of tradespeople. It helps them scale and run their businesses more efficiently.

The cloud-based software provides a variety of functions. It includes sales, marketing, and customer service. It also extends to scheduling and assigning jobs, tracking inventory, HR management, and payment processing. Overall, it appears to be a one-stop shop where tradespeople manage their business. The software uses AI to automate processes within these functional areas and lead its customers to the best business opportunities.

Customers clearly like the product once they use it. The company has retained 95% of its customers over each of the last 10 quarters. Those customers are also spending more. The company’s net retention rate is over 110% for the past 10 quarters. This means that, on average, the spending from existing customers has increased by 10% each quarter.

Revenue Streams, Addressable Market, and Growth Strategy

The company generates revenue primarily through software subscriptions and usage-based revenue from payment processing. Subscription revenue was $138 million in Q2 2024, while payment revenue was $47 million. They contributed 71% and 25% to total revenue; professional services revenue made up the rest. Payment volume adds an important driver of revenue growth. As ServiceTitan helps its customers expand their revenues, the amount of payment processing going through the software also increases. This creates a feedback loop and directly aligns ServiceTitan’s interests with those of its customers.

Over the 12 months ending July 31, 2024, ServiceTitan generated $685 million, with revenue growing 24% in the most recent quarter. Overall, ServiceTitan is targeting a total addressable market of $13 billion. The company has been improving its margins substantially but still has a long way to go on a non-adjusted basis. For the six months ending July 31, its operating margin was -24%, but the adjusted margin reached 5%.

The company is looking to expand into its large addressable market by increasing the gross transaction volume (GTV) that goes through its platform and selling add-on products over time. It aims to expand GTV by serving larger customers and expanding its client base into different types of trades.

ServiceTitan: Strong Long-Term Bull Case With Short-Term Risk

Overall, ServiceTitan has a very strong business. The clear customer satisfaction shows that companies are getting significant value from it. The large total addressable market is a huge opportunity. The strong feedback loop between customer success and ServiceTitan's success is also a sticking point.

Growing the business by targeting larger customers would make a huge difference if successful, but it could be challenging. Larger players likely already have significant efficiency built in that smaller players don’t. The company notes the rise of private equity firms in this industry. Boosting efficiency is their calling card. Whether they will look to drive efficiency themselves or contract it out to ServiceTitan is the question.

ServiceTitan is also still significantly unprofitable on a non-adjusted basis. The company is notably trading at elevated valuations versus similar software companies. Still, the long-term case for this stock is strong, although, in my opinion, waiting for a better entry price could make sense. This is especially true given the first-year struggles many newly public stocks often face. The average of 12 price targets released since the IPO implies an upside in the shares of 16% versus the Dec. 9 closing price.

Learn more about TTAN

Newest Stories

POZNAN, POL - JAN 19, 2023: Laptop computer displaying logos of Microsoft 365, a product family of productivity software, collaboration and cloud-based services owned by Microsoft
Microsoft 365 Premium Marks the Next Phase of AI Monetization

Microsoft Corporation (NASDAQ: MSFT) recently launched Microsoft 365 Premium across its productivity suite. The updated package adds the company’s artificial intelligence-powered assistant, Copilot, to its subscription bundle that includes Word, Excel, PowerPoint, Teams and Outlook. The pa...

Chris Markoch | Oct 12, 2025

he target corporation logo is displayed on a smartphone screen
Could Target’s Week of Discounts Come Full Circle for Investors?

A 40% discount across most in-store products doesn’t normally scream “bullish,” especially in the retail sector. But for Target Corp. (NYSE: TGT), October will be a defining month for the stock, giving markets a real sense of whether it can reclaim higher prices before th...

Gabriel Osorio-Mazilli | Oct 12, 2025

Sprouts Farmers Market sign on the retail grocery store location - San Jose California, USA - 2021 — Stock Editorial Photography
3 Reasons to Buy Sprouts Farmers Market Ahead of Earnings

Having hit record highs at the start of the summer, Sprouts Farmers Market Inc (NASDAQ: SFM) has spent much of the past few months sliding lower. It’s a tough pill for investors who believed the good times would last forever, but for those of us on the sidelines, there are actually some...

Sam Quirke | Oct 12, 2025

Orlando, FL USA- March 6, 2021 : A couch , chair and tables display at a West Elm Midcentury Modern furniture store in Orlando, Florida.
Bassett Furniture: Buy Now, Sit Back, and Collect Dividends

Basset Furniture Industries' (NASDAQ: BSET) Q3 results affirm its strong position in an industry poised for a rebound. The furniture industry has struggled for years as high interest rates clamped down on housing activity, but the screws are loosening. The FOMC cut rates once already in 2025 and...

Thomas Hughes | Oct 11, 2025

TickerTalk Unveils Real-Time Financial Insights and Breaking News!