UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 19, 2015
Rally Software Development Corp.
(Exact name of registrant as specified in its charter)
|
Delaware |
|
001-35868 |
|
84-1597294 |
|
(State or other jurisdiction of incorporation) |
|
(Commission File Number) |
|
(IRS Employer Identification No.) |
|
3333 Walnut Street Boulder, Colorado |
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80301 |
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(Address of principal executive offices) |
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(Zip Code) |
Registrant’s telephone number, including area code: (303) 565-2800
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition.
On March 19, 2015, Rally Software Development Corp., a Delaware corporation (“Rally”), issued a press release announcing its financial results for the fiscal fourth quarter and year ended January 31, 2015. The press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Attached hereto as Exhibit 99.2 and incorporated by reference herein is financial information and commentary by James M. Lejeal, Chief Financial Officer and Treasurer of Rally, regarding results of the quarter ended January 31, 2015 (the “CFO Commentary”). The CFO Commentary will be posted to http://investors.rallydev.com immediately after the issuance of the press release.
The press release and CFO Commentary are furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended. The information in this Current Report shall not be incorporated by reference in any filing with the U.S. Securities and Exchange Commission made by Rally, whether made before or after the date hereof, regardless of any general incorporation language in such filing, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
|
Exhibit No. |
|
Description |
|
99.1 |
|
Press Release titled “Rally Announces Fourth Quarter and Fiscal Year 2015 Financial Results,” dated March 19, 2015. |
|
99.2 |
|
CFO Commentary on Fourth Quarter Fiscal Year 2015 Results. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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|
Rally Software Development Corp. | |
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| |
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Dated: March 19, 2015 |
| |
|
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By: |
/s/ James M. Lejeal |
|
|
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James M. Lejeal |
|
|
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Chief Financial Officer and Treasurer |
Exhibit 99.1
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.
Investor Relations contact:
Rally Software Development Corp.
ir@rallydev.com
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 |
|
|
|
|
| ||
|
|
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|
|
|
| ||
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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) - $(1.14) |
|
Exhibit 99.2
CFO Commentary on Fourth Quarter Fiscal Year 2015 Results
March 19, 2015
GAAP Quarterly Revenue Comparison
|
($ in millions) |
|
Q4 FY15 |
|
Q3 FY15 |
|
Q4 FY14 |
|
Q/Q |
|
Y/Y |
| |||
|
Subscription and Support |
|
$ |
18.2 |
|
$ |
17.7 |
|
$ |
15.4 |
|
up 3% |
|
up 19% |
|
|
Perpetual License |
|
2.4 |
|
1.0 |
|
1.5 |
|
up 127% |
|
up 58% |
| |||
|
Total Product Revenue |
|
20.6 |
|
18.7 |
|
16.9 |
|
up 10% |
|
up 22% |
| |||
|
Professional Services |
|
4.0 |
|
3.3 |
|
2.7 |
|
up 19% |
|
up 45% |
| |||
|
Total Revenue |
|
$ |
24.6 |
|
$ |
22.0 |
|
$ |
19.6 |
|
up 12% |
|
up 25% |
|
GAAP Quarterly Financial Comparison
|
($ in millions, except per share |
|
Q4 FY15 |
|
Q3 FY15 |
|
Q4 FY14 |
|
Q/Q |
|
Y/Y |
| |||
|
Gross Margin |
|
73 |
% |
73 |
% |
78 |
% |
0% pts |
|
down 5% pts |
| |||
|
Operating Expenses |
|
$ |
26.9 |
|
$ |
23.2 |
|
$ |
21.5 |
|
up 16% |
|
up 25% |
|
|
Earnings Per Share |
|
$ |
(0.35 |
) |
$ |
(0.29 |
) |
$ |
(0.26 |
) |
nm^ |
|
nm |
|
Non-GAAP* Quarterly Financial Comparison
|
($ in millions, except per share |
|
Q4 FY15 |
|
Q3 FY15 |
|
Q4 FY14 |
|
Q/Q |
|
Y/Y |
| |||
|
Gross Margin |
|
75 |
% |
75 |
% |
79 |
% |
0% pts |
|
down 4% pts |
| |||
|
Operating Expenses |
|
$ |
25.3 |
|
$ |
21.8 |
|
$ |
20.2 |
|
up 16% |
|
up 25% |
|
|
Earnings Per Share |
|
$ |
(0.28 |
) |
$ |
(0.22 |
) |
$ |
(0.19 |
) |
nm |
|
nm |
|
Key Metrics Quarterly Comparison
|
|
|
Q4 FY15 |
|
Q3 FY15 |
|
Q4 FY14 |
|
Q/Q |
|
Y/Y |
|
|
Total Paid Seats |
|
261,982 |
|
240,032 |
|
214,047 |
|
up 9% |
|
up 22% |
|
|
Renewal Rate |
|
113 |
% |
116 |
% |
116 |
% |
down 3% pts |
|
down 3% pts |
|
*Non-GAAP financials exclude stock-based compensation expense and amortization of acquired intangible assets.
^ Not meaningful.
Reconciliations between our GAAP and non-GAAP results are set forth in the tables following the narrative. 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.
Key Metrics Discussion
We believe total paid seats is a key indicator of our market penetration, growth and future revenue. We define a paid seat as a seat with a subscription or support contract as of the measurement date.
We ended the quarter with a total paid seat count of 261,982 seats. This seat count represents a 22% year over year increase when compared to 214,047 seats under contract at the close of Q4 of last year. The 21,950 seats added in the quarter represent an increase of 9% over the seats under contract at the end of last quarter.
We offer our renewal rate on a quarterly basis to provide insight into our ability to meaningfully grow our existing customer base. We calculate our renewal rate by comparing the number of paid seats of all of our existing customers at the beginning of a twelve-month period to the number of paid seats for those same customers at the end of such period, taking into account non-renewals, upgrades and downgrades.
As of January 31, 2015, our renewal rate calculated against this customer cohort was 113%.
The table below highlights our top 15 customers by total paid seats and the year-over-year seat growth.
Top 15 Customers
|
|
|
First Order Date |
|
First Order Seats |
|
Seats as of Q4 |
|
Y/Y Seat Growth |
|
|
Customer 1 |
|
September 2008 |
|
10 |
|
17,000 |
|
141 |
% |
|
Customer 2 |
|
March 2008 |
|
110 |
|
12,600 |
|
0 |
% |
|
Customer 3 |
|
June 2008 |
|
25 |
|
12,000 |
|
0 |
% |
|
Customer 4 |
|
May 2009 |
|
25 |
|
12,000 |
|
140 |
% |
|
Customer 5 |
|
September 2013 |
|
1,500 |
|
7,500 |
|
275 |
% |
|
Customer 6 |
|
June 2008 |
|
100 |
|
6,500 |
|
0 |
% |
|
Customer 7 |
|
January 2008 |
|
70 |
|
6,248 |
|
20 |
% |
|
Customer 8 |
|
March 2013 |
|
350 |
|
6,000 |
|
216 |
% |
|
Customer 9 |
|
October 2009 |
|
350 |
|
5,949 |
|
37 |
% |
|
Customer 10 |
|
April 2012 |
|
600 |
|
5,600 |
|
56 |
% |
|
Customer 11 |
|
September 2005 |
|
10 |
|
4,607 |
|
22 |
% |
|
Customer 12 |
|
November 2014 |
|
4,500 |
|
4,500 |
|
New |
|
|
Customer 13 |
|
December 2010 |
|
25 |
|
3,003 |
|
-2 |
% |
|
Customer 14 |
|
November 2014 |
|
3,000 |
|
3,000 |
|
New |
|
|
Customer 15 |
|
September 2010 |
|
30 |
|
2,986 |
|
45 |
% |
|
TOTAL |
|
|
|
10,705 |
|
109,493 |
|
58 |
% |
Revenue and Calculated Billings Discussion
Total revenue for the quarter was $24.6 million, which represents a 25% year-over-year increase over the same period last year.
International (i.e., non-US) revenue accounted for 13% of revenue in the quarter. However, since many of our domestic customers have international users, approximately 36% of the users that access our multi-tenant platform are from locations outside the US.
Subscription and support revenue for the quarter was $18.2 million, which represents a year-over-year increase of 19%.
Perpetual revenue for the quarter was $2.4 million, which represents a year-over-year increase of 58%. The majority of our product revenue comes from annual subscriptions contracts and, therefore, shows as subscription and support revenue. However, we do expect some customers to buy perpetual licenses. The revenue associated with this licensing model can be hard to predict. Large deals can significantly impact this revenue line given the revenue recognition pattern of this license option.
Services revenue for the quarter was $4.0 million, which represents a 45% year-over-year increase.
Calculated billings, a non-GAAP measure which can be derived from our financial statements by taking revenue plus the change in deferred revenue, closed the quarter at $34.5 million, representing a year-over-year increase of 29% as compared to the fourth quarter of last year. Our subscription and support billings, which can be derived from our financial statements by taking subscription and support revenue plus the change in deferred revenue, closed the quarter at $28.2 million, representing a year-over-year increase of 25%.
GAAP and Non-GAAP Gross Profit and Margin Discussion
GAAP gross profit for the quarter was $17.9 million, as compared to $15.2 million in Q4 of fiscal year 2014, reflecting an increase of $2.7 million or 18%. Total GAAP gross margin for the quarter was 73%. Our GAAP product gross margin was 84% and our GAAP professional services margin was 13%.
Non-GAAP gross profit for the quarter was $18.3 million, as compared to $15.5 million in Q4 of fiscal year 2014, reflecting an increase of $2.9 million or 19%. Total non-GAAP gross margin for the quarter was 75%. Our non-GAAP product gross margin was 86% and our non-GAAP professional services margin was 18%.
GAAP and Non-GAAP Operating Expenses and Net Loss Discussion
GAAP sales and marketing expense was $15.2 million, representing a year-over-year increase of $4.3 million or 40%. This increase was driven mainly by increased headcount across our sales and marketing organizations. In addition, in FY15, we moved our sales compensation plan to an annual plan as opposed to a quarterly plan. As a result, our commission expense is now more back-end weighted and this had a significant impact on Q4 sales and marketing spend. This was compounded by strong product and services bookings which led to higher than expected sales commissions’ expense. In general, we were delighted with our bookings performance in Q4, but that strong performance had a meaningful impact on sales and marketing spend. As a percentage of revenue, GAAP sales and marketing expense was 62% for the quarter, as compared to 55% for the same period in fiscal year 2014.
Non-GAAP sales and marketing expense was $14.7 million, representing a year-over-year increase of $4.2 million or 40%. As a percentage of revenue, non-GAAP sales and marketing expense was 60% for the quarter, as compared to 53% for the same period in fiscal year 2014.
GAAP research and development expense was $6.5 million, representing a year-over-year increase of $1.0 million or 17%. This increase was driven mainly by increased headcount as we continue to invest in product development. As a percentage of revenue, GAAP research and development expense was 26% for the quarter, as compared to 28% for the same period in fiscal year 2014.
Non-GAAP research and development expense was $6.0 million, representing a year-over-year increase of $800 thousand or 15%. As a percentage of revenue, non-GAAP research and development expense was 25% for the quarter, as compared to 27% for the same period in fiscal year 2014.
GAAP general and administrative was $5.2 million, representing a year-over-year increase of $100 thousand or 2%. As a percentage of revenue, GAAP general and administrative expense was 21% for the quarter, as compared to 26% for the same period in fiscal year 2014.
Non-GAAP general and administrative was $4.6 million, representing a year-over-year increase of $100 thousand or 3%. As a percentage of revenue, non-GAAP general and administrative expense was 19% for the quarter, as compared to 23% for the same period in fiscal year 2014.
GAAP net loss for the fourth quarter was $9.0 million or a net loss per share of $0.35 per basic and diluted share.
Non-GAAP net loss for the fourth quarter was $7.0 million or a net loss per share of $0.28 per basic and diluted share.
We are currently generating a net loss and as such, our basic weighted average shares outstanding for the fourth quarter was approximately 25.3 million. If we were profitable today, our fully diluted share count would have been approximately 25.8 million shares when applying the treasury stock method to vested in-the-money stock options and warrants.
Cash Flow and Balance Sheet Discussion
Cash flow from operating activities was negative $5.0 million for the quarter, as compared to cash flow from operating activities in Q4 last fiscal year of negative $7.9 million.
As of January 31, 2015, our total cash, cash equivalents, short-term investments and accounts receivable balance, which excludes restricted cash, was approximately $92.6 million, as compared to $110.7 million as of January 31, 2014, and $84.1 million as of October 31, 2014. We currently carry no bank debt.
We ended the quarter with an accounts receivable balance of $26.0 million.
Total deferred revenue and short term deferred revenue closed the quarter at $44.7 million and $44.0 million, respectively.
Our days sales outstanding were 69 days at January 31, 2015.
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 CFO Commentary.
Forward-looking Statements
This CFO Commentary 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 CFO Commentary 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 CFO Commentary. 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, |
|
October 31, |
|
January 31, |
| |||
|
|
|
2015 |
|
2014 |
|
2014 |
| |||
|
ASSETS |
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
| |||
|
Current assets: |
|
|
|
|
|
|
| |||
|
Cash and cash equivalents |
|
$ |
15,175 |
|
$ |
29,074 |
|
$ |
88,891 |
|
|
Short-term investments |
|
51,410 |
|
41,427 |
|
— |
| |||
|
Restricted cash |
|
15 |
|
15 |
|
16 |
| |||
|
Accounts receivable, net |
|
25,986 |
|
13,567 |
|
21,771 |
| |||
|
Other receivables |
|
117 |
|
255 |
|
78 |
| |||
|
Prepaid expenses and other current assets |
|
3,393 |
|
4,009 |
|
3,310 |
| |||
|
Total current assets |
|
96,096 |
|
88,347 |
|
114,066 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Property and equipment, net |
|
5,419 |
|
5,827 |
|
5,569 |
| |||
|
Goodwill |
|
2,104 |
|
2,343 |
|
2,529 |
| |||
|
Intangible assets, net |
|
1,382 |
|
1,514 |
|
1,909 |
| |||
|
Restricted cash |
|
4,200 |
|
4,200 |
|
4,200 |
| |||
|
Other assets |
|
671 |
|
799 |
|
810 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Total assets |
|
$ |
109,872 |
|
$ |
103,030 |
|
$ |
129,083 |
|
|
|
|
|
|
|
|
|
| |||
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
|
| |||
|
Current liabilities: |
|
|
|
|
|
|
| |||
|
Accounts payable |
|
$ |
3,230 |
|
$ |
2,195 |
|
$ |
2,170 |
|
|
Accrued liabilities |
|
5,511 |
|
3,112 |
|
4,812 |
| |||
|
Deferred revenue |
|
43,978 |
|
33,599 |
|
38,352 |
| |||
|
Other current liabilities |
|
1,909 |
|
2,288 |
|
2,054 |
| |||
|
Total current liabilities |
|
54,628 |
|
41,194 |
|
47,388 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Deferred revenue, net of current portion |
|
697 |
|
1,126 |
|
2,433 |
| |||
|
Other long-term liabilities |
|
876 |
|
901 |
|
888 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Total liabilities |
|
56,201 |
|
43,221 |
|
50,709 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Stockholders’ equity: |
|
|
|
|
|
|
| |||
|
Common stock |
|
3 |
|
3 |
|
3 |
| |||
|
Additional paid-in capital |
|
183,532 |
|
180,407 |
|
174,027 |
| |||
|
Accumulated deficit |
|
(129,424 |
) |
(120,439 |
) |
(95,660 |
) | |||
|
Accumulated other comprehensive income (loss) |
|
(440 |
) |
(162 |
) |
4 |
| |||
|
Total stockholders’ equity |
|
53,671 |
|
59,809 |
|
78,374 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Total liabilities and stockholders’ equity |
|
$ |
109,872 |
|
$ |
103,030 |
|
$ |
129,083 |
|
Rally Software Development Corp.
Condensed Consolidated Statements of Operations
(unaudited, in thousands, except per share amounts)
|
|
|
Three Months Ended |
| |||||||
|
|
|
January 31, |
|
October 31, |
|
January 31, |
| |||
|
|
|
2015 |
|
2014 |
|
2014 |
| |||
|
Revenue: |
|
|
|
|
|
|
| |||
|
Subscription and support |
|
$ |
18,226 |
|
$ |
17,653 |
|
$ |
15,371 |
|
|
Perpetual license |
|
2,364 |
|
1,040 |
|
1,495 |
| |||
|
Total product revenue |
|
20,590 |
|
18,693 |
|
16,866 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Professional services |
|
3,961 |
|
3,316 |
|
2,739 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Total revenue |
|
24,551 |
|
22,009 |
|
19,605 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Cost of revenue (1) (2): |
|
|
|
|
|
|
| |||
|
Product |
|
3,194 |
|
3,025 |
|
2,085 |
| |||
|
Professional services |
|
3,428 |
|
2,956 |
|
2,319 |
| |||
|
Total cost of revenue |
|
6,622 |
|
5,981 |
|
4,404 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Gross profit |
|
17,929 |
|
16,028 |
|
15,201 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Operating expenses (1): |
|
|
|
|
|
|
| |||
|
Sales and marketing |
|
15,197 |
|
11,992 |
|
10,876 |
| |||
|
Research and development |
|
6,478 |
|
6,838 |
|
5,515 |
| |||
|
General and administrative |
|
5,186 |
|
4,389 |
|
5,064 |
| |||
|
Total operating expenses |
|
26,861 |
|
23,219 |
|
21,455 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Loss from operations |
|
(8,932 |
) |
(7,191 |
) |
(6,254 |
) | |||
|
|
|
|
|
|
|
|
| |||
|
Other income (expense): |
|
|
|
|
|
|
| |||
|
Interest and other income |
|
46 |
|
37 |
|
37 |
| |||
|
Loss on foreign currency transactions and other gain (loss) |
|
63 |
|
(111 |
) |
(20 |
) | |||
|
|
|
|
|
|
|
|
| |||
|
Loss before provision for income taxes |
|
(8,823 |
) |
(7,265 |
) |
(6,237 |
) | |||
|
Provision for income taxes |
|
162 |
|
126 |
|
40 |
| |||
|
Net loss |
|
$ |
(8,985 |
) |
$ |
(7,391 |
) |
$ |
(6,277 |
) |
|
|
|
|
|
|
|
|
| |||
|
Net loss per share attributable to common stockholders, basic and diluted |
|
$ |
(0.35 |
) |
$ |
(0.29 |
) |
$ |
(0.26 |
) |
|
|
|
|
|
|
|
|
| |||
|
Weighted average common shares outstanding, basic and diluted |
|
25,315 |
|
25,207 |
|
24,592 |
| |||
(1) Includes stock-based compensation expense as follows:
|
|
|
Three Months Ended |
| |||||||
|
|
|
January 31, |
|
October 31, |
|
January 31, |
| |||
|
|
|
2015 |
|
2014 |
|
2014 |
| |||
|
Cost of product revenue |
|
$ |
108 |
|
$ |
102 |
|
$ |
76 |
|
|
Cost of professional services revenue |
|
167 |
|
136 |
|
60 |
| |||
|
Sales and marketing |
|
521 |
|
508 |
|
413 |
| |||
|
Research and development |
|
439 |
|
309 |
|
251 |
| |||
|
General and administrative |
|
596 |
|
588 |
|
601 |
| |||
|
|
|
|
|
|
|
|
| |||
|
|
|
$ |
1,831 |
|
$ |
1,643 |
|
$ |
1,401 |
|
(2) Includes amortization expense of acquired intangible assets as follows:
|
Cost of product revenue |
|
$ |
132 |
|
$ |
132 |
|
$ |
132 |
|
Rally Software Development Corp.
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
|
|
|
Three Months Ended |
| |||||||
|
|
|
January 31, |
|
October 31, |
|
January 31, |
| |||
|
|
|
2015 |
|
2014 |
|
2014 |
| |||
|
Cash flow from operating activities: |
|
|
|
|
|
|
| |||
|
Net loss |
|
$ |
(8,985 |
) |
$ |
(7,391 |
) |
$ |
(6,277 |
) |
|
|
|
|
|
|
|
|
| |||
|
Adjustments to reconcile net loss to cash (used) in operating activities: |
|
|
|
|
|
|
| |||
|
Depreciation and amortization |
|
759 |
|
777 |
|
699 |
| |||
|
Noncash stock-based compensation expense |
|
1,831 |
|
1,644 |
|
1,401 |
| |||
|
Other |
|
(9 |
) |
94 |
|
2 |
| |||
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
| |||
|
Accounts receivable |
|
(12,418 |
) |
194 |
|
(10,051 |
) | |||
|
Other receivables |
|
138 |
|
(76 |
) |
92 |
| |||
|
Prepaid and other current assets |
|
616 |
|
192 |
|
(624 |
) | |||
|
Other assets |
|
113 |
|
72 |
|
(154 |
) | |||
|
Accounts payable and accrued expenses |
|
3,400 |
|
(716 |
) |
828 |
| |||
|
Deferred revenue |
|
9,950 |
|
(1,581 |
) |
7,098 |
| |||
|
Other current liabilities |
|
(379 |
) |
478 |
|
(882 |
) | |||
|
Other long-term liabilities |
|
(23 |
) |
12 |
|
(15 |
) | |||
|
Restricted cash |
|
— |
|
— |
|
(16 |
) | |||
|
|
|
|
|
|
|
|
| |||
|
Net cash (used) in operating activities |
|
(5,007 |
) |
(6,301 |
) |
(7,899 |
) | |||
|
|
|
|
|
|
|
|
| |||
|
Cash flow from investing activities: |
|
|
|
|
|
|
| |||
|
Purchase of property and equipment |
|
(226 |
) |
(289 |
) |
(698 |
) | |||
|
Purchase of investments |
|
(14,193 |
) |
(41,417 |
) |
— |
| |||
|
Proceeds from maturities of investments |
|
4,233 |
|
— |
|
— |
| |||
|
Proceeds from sale of property and equipment |
|
— |
|
1 |
|
— |
| |||
|
|
|
|
|
|
|
|
| |||
|
Net cash (used) in investing activities |
|
(10,186 |
) |
(41,705 |
) |
(698 |
) | |||
|
|
|
|
|
|
|
|
| |||
|
Cash flow from financing activities: |
|
|
|
|
|
|
| |||
|
Proceeds from exercise of common stock options |
|
129 |
|
76 |
|
769 |
| |||
|
Proceeds from issuance of common stock under employee stock purchase plan |
|
1,252 |
|
— |
|
1,884 |
| |||
|
Payment of payroll taxes related to stock-based compensation plan |
|
(87 |
) |
(1 |
) |
— |
| |||
|
|
|
|
|
|
|
|
| |||
|
Net cash provided by financing activities |
|
1,294 |
|
75 |
|
2,653 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Net (decrease) in cash and cash equivalents during period |
|
(13,899 |
) |
(47,931 |
) |
(5,944 |
) | |||
|
|
|
|
|
|
|
|
| |||
|
Cash and cash equivalents at beginning of period |
|
29,074 |
|
77,005 |
|
94,835 |
| |||
|
Cash and cash equivalents at end of period |
|
$ |
15,175 |
|
$ |
29,074 |
|
$ |
88,891 |
|
Rally Software Development Corp.
Reconciliation of GAAP to Non-GAAP Financial Measures
(unaudited, in thousands, except per share amounts)
|
|
|
Three Months Ended |
| |||||||
|
|
|
January 31, |
|
October 31, |
|
January 31, |
| |||
|
|
|
2015 |
|
2014 |
|
2014 |
| |||
|
|
|
|
|
|
|
|
| |||
|
GAAP product cost of revenue |
|
$ |
3,194 |
|
$ |
3,025 |
|
$ |
2,085 |
|
|
Amortization expense of acquired intangible assets |
|
(132 |
) |
(132 |
) |
(132 |
) | |||
|
Stock-based compensation expense |
|
(108 |
) |
(102 |
) |
(76 |
) | |||
|
Non-GAAP product cost of revenue |
|
$ |
2,954 |
|
$ |
2,791 |
|
$ |
1,877 |
|
|
|
|
|
|
|
|
|
| |||
|
GAAP professional services cost of revenue |
|
$ |
3,428 |
|
$ |
2,956 |
|
$ |
2,319 |
|
|
Stock-based compensation expense |
|
(167 |
) |
(136 |
) |
(60 |
) | |||
|
Non-GAAP professional services cost of revenue |
|
$ |
3,261 |
|
$ |
2,820 |
|
$ |
2,259 |
|
|
|
|
|
|
|
|
|
| |||
|
GAAP gross profit |
|
$ |
17,929 |
|
$ |
16,028 |
|
$ |
15,201 |
|
|
Amortization expense of acquired intangible assets |
|
132 |
|
132 |
|
132 |
| |||
|
Stock-based compensation expense |
|
275 |
|
238 |
|
136 |
| |||
|
Non-GAAP gross profit |
|
$ |
18,336 |
|
$ |
16,398 |
|
$ |
15,469 |
|
|
|
|
|
|
|
|
|
| |||
|
Gross margin: |
|
|
|
|
|
|
| |||
|
GAAP |
|
73 |
% |
73 |
% |
78 |
% | |||
|
Non-GAAP |
|
75 |
% |
75 |
% |
79 |
% | |||
|
|
|
|
|
|
|
|
| |||
|
Product gross margin: |
|
|
|
|
|
|
| |||
|
GAAP |
|
84 |
% |
84 |
% |
88 |
% | |||
|
Non-GAAP |
|
86 |
% |
85 |
% |
89 |
% | |||
|
|
|
|
|
|
|
|
| |||
|
Professional services gross margin: |
|
|
|
|
|
|
| |||
|
GAAP |
|
13 |
% |
11 |
% |
15 |
% | |||
|
Non-GAAP |
|
18 |
% |
15 |
% |
18 |
% | |||
|
|
|
|
|
|
|
|
| |||
|
GAAP sales and marketing expense |
|
$ |
15,197 |
|
$ |
11,992 |
|
$ |
10,876 |
|
|
Stock-based compensation expense |
|
(521 |
) |
(508 |
) |
(413 |
) | |||
|
Non-GAAP sales and marketing expense |
|
$ |
14,676 |
|
$ |
11,484 |
|
$ |
10,463 |
|
|
|
|
|
|
|
|
|
| |||
|
GAAP research and development expense |
|
$ |
6,478 |
|
$ |
6,838 |
|
$ |
5,515 |
|
|
Stock-based compensation expense |
|
(439 |
) |
(309 |
) |
(251 |
) | |||
|
Non-GAAP research and development expense |
|
$ |
6,039 |
|
$ |
6,529 |
|
$ |
5,264 |
|
|
|
|
|
|
|
|
|
| |||
|
GAAP general and administrative expense |
|
$ |
5,186 |
|
$ |
4,389 |
|
$ |
5,064 |
|
|
Stock-based compensation expense |
|
(596 |
) |
(588 |
) |
(601 |
) | |||
|
Non-GAAP general and administrative expense |
|
$ |
4,590 |
|
$ |
3,801 |
|
$ |
4,463 |
|
|
|
|
|
|
|
|
|
| |||
|
GAAP net loss |
|
$ |
(8,985 |
) |
$ |
(7,391 |
) |
$ |
(6,277 |
) |
|
Amortization expense of acquired intangible assets |
|
132 |
|
132 |
|
132 |
| |||
|
Stock-based compensation expense |
|
1,831 |
|
1,643 |
|
1,401 |
| |||
|
Non-GAAP net loss |
|
$ |
(7,022 |
) |
$ |
(5,616 |
) |
$ |
(4,744 |
) |
|
|
|
|
|
|
|
|
| |||
|
Basic and diluted net loss per share: |
|
|
|
|
|
|
| |||
|
GAAP basic and diluted net loss per share |
|
$ |
(0.35 |
) |
$ |
(0.29 |
) |
$ |
(0.26 |
) |
|
Amortization expense of acquired intangible assets |
|
0.01 |
|
0.01 |
|
0.01 |
| |||
|
Stock-based compensation expense |
|
0.06 |
|
0.06 |
|
0.06 |
| |||
|
Non-GAAP basic and diluted net loss per share |
|
$ |
(0.28 |
) |
$ |
(0.22 |
) |
$ |
(0.19 |
) |
|
|
|
|
|
|
|
|
| |||
|
Shares used to calculate basic and diluted net loss per share |
|
25,315 |
|
25,207 |
|
24,592 |
| |||
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 |
| |||||||
|
|
|
January 31, |
|
October 31, |
|
January 31, |
| |||
|
|
|
2015 |
|
2014 |
|
2014 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Total revenue |
|
$ |
24,551 |
|
$ |
22,009 |
|
$ |
19,605 |
|
|
|
|
|
|
|
|
|
| |||
|
Deferred revenue- |
|
|
|
|
|
|
| |||
|
End of period |
|
44,675 |
|
34,725 |
|
40,785 |
| |||
|
Beginning of period |
|
(34,725 |
) |
(36,306 |
) |
(33,688 |
) | |||
|
|
|
|
|
|
|
|
| |||
|
Net change |
|
9,950 |
|
(1,581 |
) |
7,097 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Calculated billings |
|
$ |
34,501 |
|
$ |
20,428 |
|
$ |
26,702 |
|
|
|
|
|
|
|
|
|
| |||
|
Total subscription and support revenue |
|
$ |
18,226 |
|
$ |
17,653 |
|
$ |
15,371 |
|
|
|
|
|
|
|
|
|
| |||
|
Deferred revenue- |
|
|
|
|
|
|
| |||
|
End of period |
|
44,675 |
|
34,725 |
|
40,785 |
| |||
|
Beginning of period |
|
(34,725 |
) |
(36,306 |
) |
(33,688 |
) | |||
|
|
|
|
|
|
|
|
| |||
|
Net change |
|
9,950 |
|
(1,581 |
) |
7,097 |
| |||
|
|
|
|
|
|
|
|
| |||
|
Subscription and support billings |
|
$ |
28,176 |
|
$ |
16,072 |
|
$ |
22,468 |
|
|
|
|
|
|
|
|
|
| |||
|
Accounts receivable |
|
$ |
25,986 |
|
$ |
13,567 |
|
$ |
21,771 |
|
|
|
|
|
|
|
|
|
| |||
|
Days Sales Outstanding (1) |
|
69 |
|
61 |
|
75 |
| |||
(1) - Days sales outstanding is computed by dividing accounts receivable by calculated billings times the number of days in the quarter.