Rally Software reports 24%
gain for 2014 first quarter

BOULDER – In its first year since going public, Boulder-based Rally Software has reported a 24 percent increase in revenue for the first quarter of its 2014 fiscal year over the same period last year. The company, which offers cloud-based solutions for managing Agile software development, reported total revenues of $16 million for the quarter ending April 30.

Subscription and support revenue increased 40% over the same period a year ago to $13.4 million. Gross margin for the quarter was 78% as compared to 79% from the same period a year ago. The company sold more than 15,000 seats in the quarter, bringing total paid seat count to more than 184,000. The first quarter results were reported June 6.

“We are delighted to report record results for our first quarter as a public company,” said Tim Miller, Chairman and CEO of Rally. “As our financials demonstrate, we experienced good momentum across the business and had notable new customer wins in many key industries and geographies.”

New customers include a major healthcare provider in the U.S., banks in North America and Europe, and a large retailer in the UK and Europe. Miller also said the company expanded engagements with existing customers, including a major Internet search provider that increased its seat count by 200% in the quarter.

“The number of new companies developing their businesses based on Agile and Rally from inception is not only driving our revenue in the near term, but makes us highly optimistic about our continued success well into the future,” Miller said.

Despite the revenue gains, the company experienced a net loss of $5.8 million for the first quarter, or $0.98 per basic and diluted share, based on 5.9 million weighted average shares of common stock outstanding. The company said the net loss was primarily related to the company's continued investment for future growth of the business. For the same period last year, Rally reported a net loss of $1.7 million, or $0.86 per basic and diluted share, based on 2.0 million weighted average shares of common stock outstanding.

The company is expecting continued growth in the second quarter, predicting total revenue in the range of $17.25 to $17.75 million, or 27% to 30% growth over last year’s second quarter. Net loss per basic and diluted share is expected to be approximately $0.24 to $0.22, based on 24.0 million weighted average shares of common stock outstanding. For the full 2014 fiscal year, the company is expecting total revenue in the range of $71.0 to $73.0 million, or 25% to 29% growth over the prior year, and a net loss per basic and diluted share of approximately $1.24 to $1.21, based on 19.6 million weighted average shares of common stock outstanding.

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