ServiceTitan IPO Guide Part II: What to Expect During the IPO

Welcome back to Part II of our ServiceTitan IPO Guide! In Part I, we talked about why it’s crucial to plan early for the rumored IPO, especially for potential tax savings. Now, let’s walk through the IPO process itself so you know what to expect—from the S-1 filing to the lock-up period and beyond.

How Companies Go Public

While there are a few ways companies can list publicly—like a direct listing or merging with a SPAC—ServiceTitan is expected to use a traditional Initial Public Offering (IPO), the most common route. Here’s how it works:

S-1 Filing

ServiceTitan will file an S-1 registration with the SEC, detailing its financials, business model, and more. Many companies file a “confidential” S-1 initially to test investor interest without publicly disclosing sensitive information. Once the S-1 is made public, it’s a big milestone that signals the IPO is progressing. The S-1 filing often raises the company’s 409A valuation, which can impact your tax bill if you wait to exercise options.

Investor Roadshow

After the S-1 goes public, ServiceTitan executives and underwriters will conduct a roadshow to pitch the company to large investors. Investor demand can further increase the 409A value, potentially driving up the cost to exercise your options. Some companies also enforce a blackout period during this time, which may restrict option exercises.

Setting the Price

Underwriters will set the IPO price based on investor demand gathered during the roadshow. This price-setting typically happens the night before trading begins.

IPO Day: First-Day Trading Volatility

On IPO day, ServiceTitan’s shares will begin trading on the open market. While some IPOs see a “pop” in stock price due to initial demand, others experience drops, as we saw with companies like Facebook. First-day price movements can be volatile, so it’s essential to prepare for both possibilities and avoid making impulsive decisions based on early trading.

The Lock-Up Period

After the IPO, most employees won’t be able to sell shares immediately due to a lock-up period, usually lasting around 3-6 months. This period helps stabilize the stock price by preventing a large volume of shares from being sold at once. Some companies offer limited liquidity options, such as allowing partial sales if certain conditions are met (e.g., stock price or earnings performance), so keep an eye on any details specific to ServiceTitan.

Post-IPO: What to Expect

Stock performance after the IPO can be unpredictable. Some stocks rise steadily, while others experience volatility. Research shows that while many IPO stocks initially perform well, they can face a bumpier ride over the long term. A strong financial and tax plan can help you navigate this period with confidence.

While it’s difficult to predict a specific IPO price for ServiceTitan, one can look to comparable public companies to estimate an expected range. For example, a basket of comparable vertical SaaS companies such as Procore Technologies, Veeva Systems, and Toast on the public market currently trade at median next twelve months revenue ~6.5x - 8.5x. While this does not tell the full story, it may give an indication of how the public market may view ServiceTitan, and how they might price share value.

For Illustrative Purposes only The closest comparative companies are based on section scale and business model. Vertical SaaS companies are selected based on comparable companies with $500m+ in revenue as of 2024. The enterprise value of the companies is based on Factset. All forward revenue is based on the Factset broker estimates and may be subject to change. The average pre 2020 is simple average of all comparable companies median ev/forward revenue projections prior to 2020 based on information obtained from FactSet.

Preparing for Your Next Steps

In Part III, we’ll dive into planning your post-IPO strategy, including when to sell, how to handle taxes, and ways to manage your newfound equity wealth. Stay tuned!