ServiceTitan filed to go public yesterday. Finally, an exciting IPO for those who follow vertical SaaS and B2B software!

ServiceTitan Background

You likely know ServiceTitan, so I will briefly describe it. It’s one of those canonical vertical SaaS companies, along with Mindbody, Shopify, Toast, Procore, Veeva, and Clio, to name a few. ServiceTitan is an operating system for the trades—contractors in HVAC, plumbing, landscaping, pest control, electrical, and garage door repair. It serves both residential and commercial contractors.

The ServiceTitan solution covers much of a contracting business’s front-office, mid-office, and back-office tasks. Here’s how the company describes its platform:

ServiceTitan Metrics

Here are some of the top-level metrics ServiceTitan provides in its S-1:

If you are a SaaS metrics geek, I recommend you check out Jamin Ball’s excellent post, which puts ServiceTitan’s metrics in the context of other public SaaS companies. The bottom line is that ServiceTitan compares favorably on growth, less so on profitability. The company is very respectable in terms of gross and net revenue retention. It stands out for its low CAC payback period.

Fun Facts Derived from the S-1

I love learning about the microeconomics of these businesses from the statistics buried in the S-1.

Take Rate

The first fun fact is ServiceTitan’s “take rate.” As you can see from the above chart, the company earns $685 million in revenue on gross transaction volume (GTV) of its customers of $62 billion, which is about a 1% take rate. The company believes that through upselling and cross-selling (and presumably price increases), it can achieve a 2% take rate.

For perspective, this 1% take rate is roughly what Toast nets from its restaurant customers in the form of subscription ARR and payments gross margin. Toast achieves this primarily by offering payments and a slice (pun intended) of subscription revenue. ServiceTitan does the opposite.

Contractor Fun Facts

The company’s customer statistics provide other fun facts about contractors:

• As of January 2024, ServiceTitan had 8,000 active customers, accounting for most of its billings and (presumably) GTV. The average customer, therefore, has $7 million in billings. Half of all revenue comes from clients with $10 million or more in revenue. These are small businesses (by most SBA definitions) but not small contractors.
• ServiceTitan’s customers performed 109 million jobs to generate $55.7 billion in revenue on the platform. This works out to an average job size of $511, which fits my experience in facilities maintenance.
• Lest you think these small businesses and jobs don’t amount to much, ServiceTitan reminds you that the $1.5 trillion spent on trade services for homes and businesses in the US and Canada compares favorably with:
  • the $1.1 Trillion spent on retail e-commerce (take that, Shopify),
  • $1 trillion spent on transportation and warehousing, and
  • $1 trillion spent on restaurants (take that, Toast).

These market sizes are consistent with my work with the folks at Tidemark on which verticals are well-suited for SaaS companies to target.

Two More Fun Facts

1. ServiceTitan reports an average sales cycle of less than 60 days. I’m not sure I’ve ever seen sales cycle length reported in an S-1.
2. ServiceTitan identifies the following competitors: Salesforce, SAP, FieldEdge, Workwave, ServiceTrade, AccuLynx, BuildOps, HouseCall Pro, JobNimbus, and Jobber.

If this IPO goes well, we might see one of these companies follow!