Before investing in any stock, investors always perform a deep analysis about that particular stock. They always prefer stocks with great potential and positive future growth. But, while performing these analyses they sometimes overlook certain stocks that may fetch a pocketful of return in future. Rally Software Development Corp. (RALY, Financial) is that kind of a stock with great potential.
About the Great Player
Founded in 2001, with a market cap of $269.22 million, Rally Software provides cloud based solutions for managing Agile software development activities worldwide. The Rally Agile application lifecycle management (ALM) platform transforms the way organizations manage the software development lifecycle by closely aligning software development and strategic business objectives, facilitating collaboration, increasing transparency and automating manual processes. Rally Software's solutions are used by the companies to accelerate the pace of innovation, improve productivity, and more effectively adapt to rapidly changing customer needs and competitive dynamics.
Tracking the Performance
On June 5, 2014, this Boulder, Colorado- based company reported its first quarter of fiscal year 2015 ended April 30, 2014. Its revenues were of $19.4 million, an increase of 21% compared to the first quarter in the same period one year ago. Rally’s GAAP net loss were of $ (8.5) million, as compared to a GAAP net loss of $ (5.8) million in the same period one year ago. Non-GAAP net loss were of $ (6.8) million, as compared to a non-GAAP net loss of $ (5.1) million in the same period one year ago. The company’s total paid seats increased to 225,963, a 23% increase over the total paid seats one year ago and a 6% increase over total paid in seats at the end of the prior quarter. Cash flow used in operations in the first quarter was $2.8 million. Cash and cash equivalents at April 30, 2014, excluding restricted cash, were $85.7 million. Further, a chart has been provided below to show Rally’s quarterly revenue.
Positive Outlook
For the second quarter of fiscal year 2015, Rally expects its total revenue in the range of $20.2 to $20.8 million, or 2% to 5% growth over the same period one year ago, and for fiscal year 2015 expected total revenue is in the range of $87.0 to $90.0 million, or 17% to 21% growth over the prior fiscal year.
Growth
Technology is changing its color day by day, and companies are moving towards the cloud computing as it reduces the hardware costs, and time by not having backups of their own data. Rally is the market leader in agile development software, and has an impressive customer list, with more than 1/3 of Fortune 100 companies as clients according to their S-1 filing. On June 10, 2014, this leading global provider of enterprise-class software has announced three new solutions to support customers in their journey toward business agility. Further, on June 9, 2014, Rally announced that it is extending its Agile ALM platform to include foundational capabilities that support business agility across the enterprise. To extend its wings deeper in the industries like airports and aviation, healthcare and life sciences, financial services, telecommunications and utilities, Rally has partnered with NCS (a leading info communications technology (ICT) service provider in Singapore).
To End
This thirteen year old company has 14% revenues and 40% users internationally. Rally has started 29% new projects worldwide. It also has expert training and consulting services. The cloud computing sector is fast growing and Rally is in this sector. Further, Rally has a very strong balance sheet with plenty of cash and no debt. A chart has been provided below to show Rally’s long term operating model.
Charts from company website
The company also announced that it will continue to make acquisitions along the way as it grows the business. I am therefore pretty bullish that Rally will impress its customers as well as valued investors in the long run.
