One of the hottest stocks to recently have an initial public offering (IPO) is technology company ServiceTitan (NASDAQ: TTAN). The software company made headlines after its valuation jumped more than 42% on its first day of trading. However, since its one-day change on December 10, the stock price has stagnated, down 1%. On average, Wall Street analysts remain bullish on the name. So, what exactly does ServiceTitan do and what is the reason for such excitement around the company? I will answer these questions and give my opinion on the future of the company.
ServiceTitan: bringing technology to the professions
ServiceTitan finds itself in an interesting space. It seeks to bring sophisticated software into industries that have gone years without it. ServiceTitan and many others call these industries “the professions.” This 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 activities were wasting their parents’ time, which was hurting their ability to grow their business. They developed ServiceTitan software to meet the needs of tradesmen. It helps them scale and manage their business more efficiently.
The cloud-based software offers a variety of functions. This includes sales, marketing and customer service. This also extends to scheduling and assigning tasks, tracking inventory, managing human resources, and processing payments. Overall, it is a one-stop-shop where artisans run their businesses. The software uses AI to automate processes in these functional areas and guide its clients to the best business opportunities.
Customers clearly love the product once they use it. The company has retained 95% of its customers in each of the last 10 quarters. These customers also spend more. The company’s net retention rate is over 110% over the last 10 quarters. This means that on average, existing customer spending increased by 10% each quarter.
Revenue Stream, Addressable Market and Growth Strategy
The company…
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