What's going on with ServiceTitan's IPO, earnings updates, and stock market stupidity
Plus: A weird coup
Welcome to Cautious Optimism, a newsletter on tech, business, and power.
📈 Trending Up: Crypto transactions at Stripe … Amazon flooding the AI zone … nuclear power … JOLTS … Yurts …
Happy Spotify Wrapped day to all who celebrate
📉 Trending Down: Anti-encryption agitation … ADP payrolls … Sora’s hype … online sales? … the value of the South Korean Won … South Korean stocks …
The ServiceTitan IPO mess
My effervescent joy at ServiceTitan filing to go public is fizzing down faster than a mispoured pint. When ripping through the ServiceTitan filing, I failed to notice — and this is on me — that the company was listing due to terms set during its last private funding round. Here’s how Meritech described it:
In the November 2022 Series H, the company accepted a compounding IPO ratchet structure [putting] ServiceTitan on the clock to go public ASAP to minimize dilution impact should they trade below the hurdle price, which our valuation analysis indicates they might.
The details are terrifying. Meritech’s analysis indicates that ServiceTitan would need to go public at around $90 per share today to prevent fresh dilution. The company is targeting a $52 to $57 per-share price range in its IPO.
And ServiceTitan intends to use a huge chunk of its IPO proceeds to rebuy outstanding non-convertible preferred stock, which will prevent it from paying dividend thereof, but will still delete a good portion of its IPO raise:
We intend to use approximately $310.6 million of the net proceeds from this offering to redeem all outstanding shares of our non-convertible preferred stock, at a redemption price per share equal to $1,000 plus all accrued but unpaid dividends on each such share, with the remaining net proceeds to be used for general corporate purposes, including working capital, operating expenses and capital expenditures.
Oof. The question before is how many other unicorns had to purchase capital in blood and stock instead of mere equity in the last few years. The price that ServiceTitan had to pay for cash in terms of structure is brutal. I’m still unspooling the details, but it seems that ServiceTitan is going public because the longer it waited, the more its later private-market backers would feast at its expense.
I guess that’s one way to get unicorns to list.
Earnings Updates!
As promised:
Box: Box beat expectations in the quarter, including revenue of $276 Million (+5%), with RPOs worth $1.3 Billion (+13%). Box remains GAAP profitable, and rather profitable in non-GAAP terms. The company is solid today, apart from needing another 5-10% growth to get its full mojo back. In its release, Box stressed its product momentum in the AI realm, which could help it find said missing revenue expansion.
Box stock is off about 2% this morning
PureStorage: Purstorage beat revenue expectations ($815 million) with $831 million worth of Q3 top line, and also came in with more per-share profit than the street expected. However, the real news was that the company “signed a design win with a top 4 hyperscaler in the last few weeks,” according to its CEO Charlie Giancarlo during its earnings call. Recall that PureStorage is a wager on flash storage for enterprise data. The hyperscaler nod means that PureStorage could be on track to deliver “large full production deployments on the order of double digit exabytes expected in calendar 2026.” Nice.
PureStorage stock is up around 23% this morning
Salesforce: How does $9.44 billion worth of revenue instead of an expected $9.34 billion sound to you? Good? Investors got to digest that revenue beat with a small EPS miss ($2.41 versus $2.44 expected), but Salesforce also raised the “low end of its revenue guidance,” pushing its midpoint forecast for its fiscal 2025 “ahead of analysts’ expectations.” The stock market liked the report.
Even more, perhaps, investors liked this riff from Benioff during his earnings call:
[W]ith Salesforce Agentforce, we're not just imagining this future, we're already delivering it. And you still know that in the last week of the quarter, Agentforce went into production. We delivered 200 deals and our pipeline is incredible for future transactions. We can talk about that with you on the call, but we've never seen anything like it. We don't know how to characterize it. This is really a moment where productivity is no longer tied to workforce growth, but through this intelligent technology that can be scaled without limits.
Okta: Revenue of $665 million (+14%), RPOs up 19% to $3.659 billion, a thin GAAP operating loss of $16 million, and adjusted operating profit of $138 million is a tasty mix overall. Critically, the numbers were also ahead of street expectations. The good news for Okta is that its massive cybersecurity failure in quarters past is not proving lethal for its businesss.
Okta is up 13% in pre-market trading
Couchbase: With $51.6 million worth of top line in the third quarter (+13%), Couchbase is on the smaller side of public tech companies. And it’s still eating cash to operate, so it’s a different beast than some of the other companies we’ve looked at this morning.
But there’s good news to chew on as well, with the company’s Capella ‘Database-as-a-Service’ offering “now represent[ing] 15.1% of [its] ARR and one third of [its] customer base.”
What a weird coup?
Yesterday while prepping for the podcast I noticed a spare tweet stating that South Korean President Yoon had declared martial law. It was the start of what turned into a nearly farcical coup attempt that failed as quickly as it kicked off.
After bruising budget fights with the South Korean legislative arm of government, Yoon decided that enough was enough, and that it was the smart thing to do to try and take over the country at the point of a gun. It was not, as it turned out.
It turns out that you can vote down martial law in South Korea. The country’s military tried to keep lawmakers out, but they managed to vote 190-0 to zero-out Yoon’s putsch. Including every present member of Yoon’s own party. Ouch.
Not that I am in favor of violent coups — I am not — but what was he thinking? Yoon kinda went hard at trying to steal the country from itself, and then backed off when, what, he realized that the nation would not rise up in support of a return to autocracy? In terms of political miscalculations, that’s a doozy.
What a fucking loser. Good on South Korea for telling Yoon to get bent.
Towards a Christian Internet?
The latest dumb thing on the stock market is news that incoming President Trump’s son Donald Trump Jr. has joined the board of PublicSquare. The company says that he was an investor in the company before it went public. Fair enough.
PublicSquare is an ecommerce and payments play with a few house brands that, in its own words, values “life, family, and liberty.” Its got some corporate values up on its site to virtue-signal to people who like to buy their camo hats in bulk. The company also recently shook up its operations, stating that it intends to focus on “Fintech and Business-to-Business (“B2B”) going forward.”
Before Don Jr. signed up to help lead it, PublicSquare was worth around $2 per share. Today, it’s worth $7.63 per share, though in pre-market trading the company is set to shed 32% of its value. Why? Immediately after introducing its new board members, the company announced a share sale.
Smart of PublicSquare to have that ready from the get go. As the company is selling stock in that direct offering at $4.63 per share, it’s not a shock that the company’s floating share price is coming down.
Meanwhile, PublicSquare turned in $6.5 million worth of Q3 2024 revenue (+222%), and is very proud that it has built a payments stack. Precisely why it will be competitive against Stripe and other well-known digital payments companies with armies of the world’s best engineers is unclear to me. But if you wanted to guess what the Trump family will be doing for the next four years, I believe the answer is whatever secures a marginal bag.
More tomorrow. Here’s hoping that my sinuses stop trying to kill me. — Alex