Notes from the Rally Software S-1 IPO Filing

Rally Software Development Corp., makers of tools to help software engineers be more productive (agile software development lifecycle tools to be exact), just filed their S-1 to go public. S-1 IPO filings are a great way to really dig into a company and read about all the nitty gritty stuff that isn’t usually covered in such detail. Rally is interesting on a number of levels: it’s based on Boulder, CO which has a good tech startup brand but few public software companies, it’s been around for over 10 years (that’s how long overnight successes take), and it’s riding the trend in software development going from a waterfall to agile methodology.

Here are notes from the Rally Software S-1 IPO filing:

  • 154,982 paid users and more than 1,000 customers, including 36 of the Fortune 100 companies (pg. 1)
  • Customer renewal rate of 129%, taking into account paid seat nonrenewals, upgrades, and downgrades (pg. 1)
  • Agile, as a software development methodology, was introduced in 2001 (pg. 2)
  • 13% of revenue derived from international customers (pg. 4)
  • Growth strategy (pg. 4)
    Increase sales to existing customers
    Acquire new customers
    Continue to innovate
    Expand international presence
    Increase market awareness and drive adoption of Agile
    Strategic acquisitions
  • Incorporated in Delaware in July 2001 under the name F4 Technologies, Inc. (pg. 5)
  • Revenues (pg. 8):
    2010 – $18.4M
    2011 – $29.7M
    2012 – $41.3M
  • Losses (pg. 8):
    2010 – $9.7M
    2011 – $9.9M
    2012 – $11.6M
  • Accumulated deficit of $71.5M (pg. 11)
  • Primary competitors are Atlassian, CollabNet, and VersionOne (pg. 13)
  • 343 employees (pg. 15)
  • $12M line of credit with Square 1 Bank (pg. 54)
  • Venture capitalists own 76.5% (pg. 106)

Rally has all the makings of a successful IPO with strong recurring revenue and a high growth rate.    Losses are high but growth rate is more important at this stage of their lifecycle.

What else? What are your thoughts on the Rally Software S-1 IPO filing?

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