Rally Announces Fourth Quarter and Fiscal Year 2015 Financial Results
BOULDER, Colo., March 19, 2015 /PRNewswire/ -- Rally (NYSE: RALY), a leading global provider of software and services to drive agility, today announced financial results for its fourth quarter and fiscal year 2015 ended January 31, 2015.
Fourth quarter fiscal year 2015 results:
- Revenues of $24.6 million, an increase of 25% compared to the same period one year ago.
- GAAP net loss of $(9.0) million, or a loss of $(0.35) per basic and diluted share based on 25.3 million weighted average shares of common stock outstanding, as compared to a GAAP net loss of $(6.3) million, or a loss of $(0.26) per basic and diluted share based on 24.6 million weighted average shares of common stock outstanding in the same period one year ago.
- Non-GAAP net loss of $(7.0) million, or $(0.28) per basic and diluted share, as compared to a non-GAAP net loss of $(4.7) million, or $(0.19) per basic and diluted share in the same period one year ago (see the table titled "Reconciliation of GAAP to non-GAAP Financial Measures").
- Total paid seats increased to just under 262,000, a 22% increase over the total paid seats in the same period one year ago.
Cash flow used in operations in the fourth quarter was $5.0 million. Cash and cash equivalents and short-term investments at January 31, 2015, excluding restricted cash, were $66.6 million.
Fiscal year 2015 results:
- Revenues of $87.5 million, an increase of 18% compared to prior year.
- GAAP net loss of $(33.8) million, or a loss of $(1.35) per basic and diluted share based on 25.1 million weighted average shares of common stock outstanding, as compared to a GAAP net loss of $(20.1) million, or a loss of $(1.01) per basic and diluted share based on 19.8 million weighted average shares of common stock outstanding in the prior year.
- Non-GAAP net loss of $(26.9) million, or $(1.07) per basic and diluted share, as compared to a non-GAAP net loss of $(15.1) million, or $(0.76) per basic and diluted share in the prior year (see the table titled "Reconciliation of GAAP to non-GAAP Financial Measures").
Cash flow used in operations in the fiscal year was $23.0 million.
"Our record fourth quarter results highlight our continued momentum and the strong appetite from customers to bring agility across the enterprise. Early in the quarter we closed on two large competitive deals with customers focusing on large scale enterprise transformations -- these wins set the tone for the quarter. In addition, we saw record performance from our services organization, robust growth from existing customers -- including a 10,000 seat upgrade from a large American multinational conglomerate -- and a continued focus on further improving our performance across the business," said Tim Miller, Rally's Chairman and CEO.
New customers welcomed by Rally during the fourth quarter include: Aviva, Berkadia, Digital Air Strike, Dodge Data & Analytics, Equinix, G6 Hospitality, GN Netcom, ITT Educational Services, Jack Henry, JetPay Payroll, Marathon Data Systems, MicroStrategy, Modularis, Packlink, Preludesys, PROS Holdings, Inc., PwC Sweden IT, Qvidian, Sabre, ServiceMesh, Solutran, Symitar, Tatts, Texas Municipal League Intergovernmental Risk Pool, Vasona Networks, and Welltok.
Business Outlook
As of March 19, 2015, management is providing its financial outlook as follows:
First Quarter of Fiscal 2016
- Total revenue in the range of $24.3 to $24.6 million, or 25% to 27% growth over the prior year's first quarter.
- GAAP net loss per basic and diluted share of approximately $(0.31) to $(0.28), based on 25.5 million weighted average shares of common stock outstanding.
- Non-GAAP net loss per basic and diluted share of approximately $(0.24) to $(0.21), based on 25.5 million weighted average shares of common stock outstanding, which excludes $1.8 million in stock-based compensation and amortization of acquired intangible assets.
Fiscal Year 2016
- Total revenue in the range of $103.5 to $105.5 million, or 18% to 21% growth over the prior year.
- GAAP net loss per basic and diluted share of approximately $(1.14) to $(1.10), based on 25.9 million weighted average shares of common stock outstanding.
- Non-GAAP net loss per basic and diluted share of approximately $(0.85) to $(0.81), based on 25.9 million weighted average shares of common stock outstanding, which excludes $7.3 million in stock-based compensation and amortization of acquired intangible assets.
CFO Commentary
Commentary on the quarter by Jim Lejeal, Rally Chief Financial Officer, is available at investors.rallydev.com.
Conference Call Today, March 19, 2015
Rally will host a conference call and live webcast to discuss the financial results at 3:00 p.m. Mountain Time, 5:00 p.m. Eastern Time, on Thursday, March 19th, 2015. The conference call can be accessed by dialing 1-888-346-9287, or 1-412-902-4274 (outside the U.S. and Canada). A live webcast will be available on the Investor Relations page of the Rally corporate website at www.rallydev.com and via replay beginning approximately one hour after the completion of the call for 30 days. An audio replay of the call will also be available to all interested parties beginning at approximately 4:00 p.m. Mountain Time, 6:00 p.m. Eastern Time, on Thursday, March 19th, 2015 until 7:00 a.m. Mountain Time, 9:00 a.m. Eastern Time, on Friday, March 27th, 2015, by dialing 1-877-344-7529 or 1-412-317-0088 (outside the U.S. and Canada) and entering pass code 10061707.
About Rally
Rally delivers software and services that drive agility. Organizations worldwide use Rally's solutions to navigate evolving market demands, improve performance, and accelerate the pace of innovation to deliver value faster. Rally's enterprise-class cloud-based platform transforms the way organizations manage the software development lifecycle by aligning software development with strategic business objectives, facilitating collaboration, and increasing transparency. By applying Agile and Lean approaches, Rally's consulting and training services help companies innovate, lead, adapt, and deliver.
© 2015 Rally Software Development Corp. All rights reserved. Rally, Rally Software, and the Rally logo are trademarks or registered trademarks of Rally Software Development Corp. in the United States and other countries. All other trademarks are properties of their respective owners.
Non-GAAP Financial Measures
To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with Generally Accepted Accounting Principles (GAAP), we have provided certain measures that have not been prepared in accordance with GAAP. These non-GAAP financial measures include non-GAAP results for calculated billings, subscription and support billings, cost of revenue, gross profit, gross margin, operating expenses, net loss and basic and diluted net loss per share, which are in addition to, and, not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
Our non-GAAP financial measures exclude stock-based compensation expense and amortization of acquired intangible assets. We believe the presentation of operating results excluding stock-based compensation expense and the amortization of acquired intangible assets provides useful supplemental information to investors and facilitates the analysis of our core operating results and comparison of operating results across reporting periods and is therefore useful to investors in analyzing and assessing our past and future operating performance.
Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures. A reconciliation of the non-GAAP financial measures to such GAAP measures can be found in the accompanying financial statements included with this press release.
Forward-looking Statements
This press release contains forward-looking statements, including statements regarding our future financial performance, market growth, the demand for our solutions, and general business conditions. Any forward-looking statements contained in this press release are based upon our historical performance and current plans, estimates and expectations and are not a representation that such plans, estimates, or expectations will be achieved. These forward-looking statements represent our expectations as of the date of this press release. Subsequent events may cause these expectations to change, and we disclaim any obligation to update the forward-looking statements in the future. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from our current expectations. Important factors that could cause actual results to differ materially from those anticipated in such forward-looking statements include, but are not limited to, the growth of demand for Agile software development, our ability to expand relationships with existing customers, our ability to attract and retain customers, the mix of perpetual license and subscription revenue, competitive factors, including but not limited to pricing pressures, industry consolidation, and entry of new competitors and new products, our ability to manage growth effectively, the ability of sales personnel to become fully productive quickly and efficiently, our ability to maintain, protect and enhance our brand and intellectual property, general economic and financial conditions, and other risks and uncertainties. Further information on risk factors that could cause actual results to differ materially from forecasted results is included in our reports filed with the SEC, including our Quarterly Report on Form 10-Q for the quarter ended October 31, 2014 filed on December 9, 2014 and our Annual Report on Form 10-K that will be filed for the fiscal year ended January 31, 2015.
Rally Software Development Corp. |
|||
Condensed Consolidated Balance Sheets |
|||
(Unaudited, in thousands) |
|||
January 31, |
January 31, |
||
2015 |
2014 |
||
ASSETS |
|||
Current assets: |
|||
Cash and cash equivalents |
$ 15,175 |
$ 88,891 |
|
Short-term investments |
51,410 |
- |
|
Restricted cash |
15 |
16 |
|
Accounts receivable, net |
25,986 |
21,771 |
|
Other receivables |
117 |
78 |
|
Prepaid expenses and other current assets |
3,393 |
3,310 |
|
Total current assets |
96,096 |
114,066 |
|
Property and equipment, net |
5,419 |
5,569 |
|
Goodwill |
2,104 |
2,529 |
|
Intangible assets, net |
1,382 |
1,909 |
|
Restricted cash |
4,200 |
4,200 |
|
Other assets |
671 |
810 |
|
Total assets |
$ 109,872 |
$ 129,083 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||
Current liabilities: |
|||
Accounts payable |
$ 3,230 |
$ 2,170 |
|
Accrued liabilities |
5,511 |
4,812 |
|
Deferred revenue |
43,978 |
38,352 |
|
Other current liabilities |
1,909 |
2,054 |
|
Total current liabilities |
54,628 |
47,388 |
|
Deferred revenue, net of current portion |
697 |
2,433 |
|
Other long-term liabilities |
876 |
888 |
|
Total liabilities |
56,201 |
50,709 |
|
Stockholders' equity: |
|||
Common stock |
3 |
3 |
|
Additional paid-in capital |
183,532 |
174,027 |
|
Accumulated deficit |
(129,424) |
(95,660) |
|
Accumulated other comprehensive income (loss) |
(440) |
4 |
|
Total stockholders' equity |
53,671 |
78,374 |
|
Total liabilities and stockholders' equity |
$ 109,872 |
$ 129,083 |
Rally Software Development Corp. |
|||||||
Condensed Consolidated Statements of Operations |
|||||||
(unaudited, in thousands, except per share amounts) |
|||||||
Three Months Ended |
Twelve Months Ended |
||||||
January 31, |
January 31, |
||||||
2015 |
2014 |
2015 |
2014 |
||||
Revenue: |
|||||||
Subscription and support |
$ 18,226 |
$ 15,371 |
$ 69,424 |
$ 57,852 |
|||
Perpetual license |
2,364 |
1,495 |
5,404 |
5,914 |
|||
Total product revenue |
20,590 |
16,866 |
74,828 |
63,766 |
|||
Professional services |
3,961 |
2,739 |
12,675 |
10,563 |
|||
Total revenue |
24,551 |
19,605 |
87,503 |
74,329 |
|||
Cost of revenue (1) (2): |
|||||||
Product |
3,194 |
2,085 |
11,455 |
7,567 |
|||
Professional services |
3,428 |
2,319 |
12,108 |
9,105 |
|||
Total cost of revenue |
6,622 |
4,404 |
23,563 |
16,672 |
|||
Gross profit |
17,929 |
15,201 |
63,940 |
57,657 |
|||
Operating expenses (1): |
|||||||
Sales and marketing |
15,197 |
10,876 |
51,440 |
39,628 |
|||
Research and development |
6,478 |
5,515 |
25,797 |
20,812 |
|||
General and administrative |
5,186 |
5,064 |
19,737 |
16,708 |
|||
Total operating expenses |
26,861 |
21,455 |
96,974 |
77,148 |
|||
Loss from operations |
(8,932) |
(6,254) |
(33,034) |
(19,491) |
|||
Other income (expense): |
|||||||
Interest and other income |
46 |
37 |
162 |
128 |
|||
Interest expense |
- |
- |
- |
(464) |
|||
Loss on foreign currency transactions and other gain (loss) |
63 |
(20) |
(200) |
(131) |
|||
Loss before provision for income taxes |
(8,823) |
(6,237) |
(33,072) |
(19,958) |
|||
Provision for income taxes |
162 |
40 |
692 |
173 |
|||
Net loss |
$ (8,985) |
$ (6,277) |
$ (33,764) |
$ (20,131) |
|||
Net loss per share attributable to common stockholders, basic and diluted |
$ (0.35) |
$ (0.26) |
$ (1.35) |
$ (1.01) |
|||
Weighted average common shares outstanding, basic and diluted |
25,315 |
24,592 |
25,093 |
19,841 |
|||
(1) Includes stock-based compensation expense as follows: |
|||||||
Three Months Ended |
Twelve Months Ended |
||||||
January 31, |
January 31, |
||||||
2015 |
2014 |
2015 |
2014 |
||||
Cost of product revenue |
$ 108 |
$ 76 |
$ 379 |
$ 250 |
|||
Cost of professional services revenue |
167 |
60 |
490 |
181 |
|||
Sales and marketing |
521 |
413 |
1,834 |
1,316 |
|||
Research and development |
439 |
251 |
1,397 |
1,239 |
|||
General and administrative |
596 |
601 |
2,273 |
1,465 |
|||
$ 1,831 |
$ 1,401 |
$ 6,373 |
$ 4,451 |
||||
(2) Includes amortization expense of acquired intangible assets as follows: |
|||||||
Cost of product revenue |
$ 132 |
$ 132 |
$ 527 |
$ 542 |
Rally Software Development Corp. |
||||||||
Condensed Consolidated Statements of Cash Flows |
||||||||
(Unaudited, in thousands) |
||||||||
Three Months Ended |
Twelve Months Ended |
|||||||
January 31, |
January 31, |
|||||||
2015 |
2014 |
2015 |
2014 |
|||||
Cash flow from operating activities: |
||||||||
Net loss |
$ (8,985) |
$ (6,277) |
$ (33,764) |
$ (20,131) |
||||
Adjustments to reconcile net loss to net cash (used) in operating activities: |
||||||||
Depreciation and amortization |
759 |
699 |
3,039 |
2,686 |
||||
Noncash stock-based compensation expense |
1,831 |
1,401 |
6,373 |
4,451 |
||||
Noncash interest expense |
- |
- |
- |
462 |
||||
Other |
(9) |
2 |
163 |
3 |
||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
(12,418) |
(10,051) |
(4,214) |
(5,454) |
||||
Other receivables |
138 |
92 |
(39) |
213 |
||||
Prepaid and other current assets |
616 |
(624) |
(83) |
(1,374) |
||||
Other assets |
113 |
(154) |
73 |
(427) |
||||
Accounts payable and accrued expenses |
3,400 |
828 |
1,727 |
1,958 |
||||
Deferred revenue |
9,950 |
7,098 |
3,889 |
2,595 |
||||
Other current liabilities |
(379) |
(882) |
(145) |
806 |
||||
Other long-term liabilities |
(23) |
(15) |
(11) |
(50) |
||||
Restricted cash |
- |
(16) |
- |
(4,216) |
||||
Net cash (used) in operating activities |
(5,007) |
(7,899) |
(22,992) |
(18,478) |
||||
Cash flow from investing activities: |
||||||||
Purchase of property and equipment |
(226) |
(698) |
(2,494) |
(3,963) |
||||
Purchase of investments |
(14,193) |
- |
(55,610) |
- |
- |
|||
Proceeds from maturities of investments |
4,233 |
4,233 |
||||||
Proceeds from sale of property and equipment |
- |
- |
15 |
- |
||||
Purchase of Flowdock Oy, net of cash received |
- |
- |
- |
(2,857) |
||||
Net cash (used) in investing activities |
(10,186) |
(698) |
(53,856) |
(6,820) |
||||
Cash flow from financing activities: |
||||||||
Proceeds from exercise of common stock options |
129 |
769 |
613 |
1,233 |
||||
Proceeds from issuance of common stock under the employee stock purchase plan |
1,252 |
1,884 |
2,715 |
1,884 |
||||
Proceeds from initial public offering, net of underwriting discounts and commissions |
- |
- |
- |
89,838 |
||||
Proceeds from follow-on public offering, net of underwriting discounts and commissions |
- |
- |
- |
5,884 |
||||
Payment of payroll taxes related to stock-based compensation plan |
(87) |
- |
(196) |
- |
||||
Payments of offering costs |
- |
- |
- |
(2,259) |
||||
Net cash provided by financing activities |
1,294 |
2,653 |
3,132 |
96,580 |
||||
Net increase (decrease) in cash and cash equivalents during period |
(13,899) |
(5,944) |
(73,716) |
71,282 |
||||
Cash and cash equivalents at beginning of period |
29,074 |
94,835 |
88,891 |
17,609 |
||||
Cash and cash equivalents at end of period |
$ 15,175 |
$ 88,891 |
$ 15,175 |
$ 88,891 |
Rally Software Development Corp. |
|||||||
Reconciliation of GAAP to Non-GAAP Financial Measures |
|||||||
(unaudited, in thousands, except per share amounts) |
|||||||
Three Months Ended |
Twelve Months Ended |
||||||
January 31, |
January 31, |
||||||
2015 |
2014 |
2015 |
2014 |
||||
GAAP product cost of revenue |
$ 3,194 |
$ 2,085 |
$ 11,455 |
$ 7,567 |
|||
Amortization expense of acquired intangible assets |
(132) |
(132) |
(527) |
(542) |
|||
Stock-based compensation expense |
(108) |
(76) |
(379) |
(250) |
|||
Non-GAAP product cost of revenue |
$ 2,954 |
$ 1,877 |
$ 10,549 |
$ 6,775 |
|||
GAAP professional services cost of revenue |
$ 3,428 |
$ 2,319 |
$ 12,108 |
$ 9,105 |
|||
Stock-based compensation expense |
(167) |
(60) |
(490) |
(181) |
|||
Non-GAAP professional services cost of revenue |
$ 3,261 |
$ 2,259 |
$ 11,618 |
$ 8,924 |
|||
GAAP gross profit |
$ 17,929 |
$ 15,201 |
$ 63,940 |
$ 57,657 |
|||
Amortization expense of acquired intangible assets |
132 |
132 |
527 |
542 |
|||
Stock-based compensation expense |
275 |
136 |
869 |
431 |
|||
Non-GAAP gross profit |
$ 18,336 |
$ 15,469 |
$ 65,336 |
$ 58,630 |
|||
Gross margin: |
|||||||
GAAP |
73% |
78% |
73% |
78% |
|||
Non-GAAP |
75% |
79% |
75% |
79% |
|||
Product gross margin: |
|||||||
GAAP |
84% |
88% |
85% |
88% |
|||
Non-GAAP |
86% |
89% |
86% |
89% |
|||
Professional services gross margin: |
|||||||
GAAP |
13% |
15% |
4% |
14% |
|||
Non-GAAP |
18% |
18% |
8% |
16% |
|||
GAAP sales and marketing expense |
$ 15,197 |
$ 10,876 |
$ 51,440 |
$ 39,628 |
|||
Stock-based compensation expense |
(521) |
(413) |
(1,834) |
(1,316) |
|||
Non-GAAP sales and marketing expense |
$ 14,676 |
$ 10,463 |
$ 49,606 |
$ 38,312 |
|||
GAAP research and development expense |
$ 6,478 |
$ 5,515 |
$ 25,797 |
$ 20,812 |
|||
Stock-based compensation expense |
(439) |
(251) |
(1,397) |
(1,239) |
|||
Non-GAAP research and development expense |
$ 6,039 |
$ 5,264 |
$ 24,400 |
$ 19,573 |
|||
GAAP general and administrative expense |
$ 5,186 |
$ 5,064 |
$ 19,737 |
$ 16,708 |
|||
Stock-based compensation expense |
(596) |
(601) |
(2,273) |
(1,465) |
|||
Non-GAAP general and administrative expense |
$ 4,590 |
$ 4,463 |
$ 17,464 |
$ 15,243 |
|||
GAAP net loss |
$ (8,985) |
$ (6,277) |
$ (33,764) |
$ (20,131) |
|||
Amortization expense of acquired intangible assets |
132 |
132 |
527 |
542 |
|||
Stock-based compensation expense |
1,831 |
1,401 |
6,373 |
4,451 |
|||
Non-GAAP net loss |
$ (7,022) |
$ (4,744) |
$ (26,864) |
$ (15,138) |
|||
Basic and diluted net loss per share: |
|||||||
GAAP basic and diluted net loss per share |
$ (0.35) |
$ (0.26) |
$ (1.35) |
$ (1.01) |
|||
Amortization expense of acquired intangible assets |
0.01 |
0.01 |
0.02 |
0.03 |
|||
Stock-based compensation expense |
0.06 |
0.06 |
0.26 |
0.22 |
|||
Non-GAAP basic and diluted net loss per share |
$ (0.28) |
$ (0.19) |
$ (1.07) |
$ (0.76) |
|||
Shares used to calculate basic and diluted net loss per share |
25,315 |
24,592 |
25,093 |
19,841 |
Rally Software Development Corp. |
|||||||
Reconciliation of Total Revenue to Calculated Billings, Subscription and Support |
|||||||
Revenue to Subscription and Support Billings and Days Sales Outstanding |
|||||||
(unaudited, in thousands except days sales outstanding) |
|||||||
Three Months Ended |
Twelve Months Ended |
||||||
January 31, |
January 31, |
||||||
2015 |
2014 |
2015 |
2014 |
||||
Total revenue |
$ 24,551 |
$ 19,605 |
$ 87,503 |
$ 74,329 |
|||
Deferred revenue- |
|||||||
End of period |
44,675 |
40,785 |
44,675 |
40,785 |
|||
Beginning of period |
(34,725) |
(33,688) |
(40,785) |
(38,190) |
|||
Net change |
9,950 |
7,097 |
3,890 |
2,595 |
|||
Calculated billings |
$ 34,501 |
$ 26,702 |
$ 91,393 |
$ 76,924 |
|||
Total subscription and support revenue |
$ 18,226 |
$ 15,371 |
$ 69,424 |
$ 57,852 |
|||
Deferred revenue- |
|||||||
End of period |
44,675 |
40,785 |
44,675 |
40,785 |
|||
Beginning of period |
(34,725) |
(33,688) |
(40,785) |
(38,190) |
|||
Net change |
9,950 |
7,097 |
3,890 |
2,595 |
|||
Subscription and support billings |
$ 28,176 |
$ 22,468 |
$ 73,314 |
$ 60,447 |
|||
Accounts receivable |
$ 25,986 |
$ 21,771 |
|||||
Days Sales Outstanding (1) |
69 |
75 |
(1) - Days Sales Outstanding is computed by dividing accounts receivable by calculated billings times the number of days in the quarter. |
Rally Software Development Corp. |
|||
Reconciliation of Non-GAAP Financial Guidance |
|||
The financial guidance provided below is an estimate based on information available as of March 19, 2015. The company's future performance and financial results are subject to risks and uncertainties, and actual results could differ materially from the guidance set forth below. Some of the factors that could affect the company's financial results are stated above in this press release. More information on potential factors that could affect the company's financial results is included in the company's public reports filed with the SEC, including the company's Annual Report on Form 10-K for the fiscal year ended January 31, 2014 filed on April 11, 2014, the company's Quarterly Report on Form 10-Q for the quarter ended October 31, 2014 filed on December 9, 2014 and the company's Annual Report on Form 10-K for the fiscal year ended January 31, 2015 to be filed with the SEC. The company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates. |
|||
Three Months Ended |
Fiscal Year Ended |
||
Non-GAAP basic and diluted net loss per share |
$(0.21) - $(0.24) |
$(0.81) - $(0.85) |
|
Stock-based compensation expense |
(0.06) |
(0.27) |
|
Amortization of acquired intangible assets |
(0.01) |
(0.02) |
|
GAAP basic and diluted net loss per share |
$(0.28) - $(0.31) |
$(1.10) - $(1.14) |
SOURCE Rally
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