Boulder's Rally Software files for $70M IPO [Daily Camera, Boulder, Colo.]
(Daily Camera (Boulder, CO) Via Acquire Media NewsEdge) March 11--Rally Software's growth story continues.
The Boulder-based Agile software development services provider that has expanded significantly during the past decade -- including outgrowing several headquarters locations within its hometown -- has submitted paperwork for a future $70 million initial public offering, according to registration documents filed Monday with the Securities and Exchange Commission.
The pricing information and the date of the planned offering have not been disclosed.
Rally officials said they plan to use the net proceeds from the offering for working capital, other general corporate purchases, data center infrastructure, sales force expansion and international growth, according to the filing. Rally officials added that a portion of the proceeds could be put toward the acquisition of complementary firms.
The company intends to have its stock listed on the New York Stock Exchange under the symbol RALY.
Lead book-running managers for the offering are Deutsche Bank Securities and Piper Jaffray. Needham & Company, JMP Securities and William Blair are acting as co-managers.
Rally officials were unavailable to comment because of a required quiet period associated with the regulatory process.
Rally Software -- founded in 2001 as F4 Technologies Inc. -- has experienced torrid growth during much of the past decade.
Rally positioned itself as providing on-demand products and services to developers using Agile development, an emerging methodology aimed at emphasizing collaboration, communications and the frequent deployment of software.
As Agile's adoption grew, so did Rally. In mid-2008, right before Rally raised its largest investment to-date of $16 million, the firm was bringing on 25 new hires per quarter and had expectations of triple-digit annual revenue growth.
The company played Goldilocks, hop-scotching to larger quarters in Boulder, leaving a 30,000-square-foot space at 3333 Walnut St. for a 60,000-square-foot building at 4001 Discovery Drive only to return to 3333 Walnut in 2010 -- this time leasing the entire 65,545-square-foot building.
More growth is coming to that 33rd and Walnut Street location.
Last month, city of Boulder planning staff approved an application from MAVDevelopment, the property's owner, to build a 93,000-square-foot addition to the north of the property, said Elaine McLaughlin, a city planner.
The financial gains are continuing as well.
During the fiscal year that ended Jan. 31, 2012, Rally posted a net loss of $11.6 million on revenue of $41.3 million, according to financial statements included in Monday's filing. In the comparable period during 2011, the company's net loss was $10 million and revenue was $29.7 million.
At the end of 2012, Rally had 285 employees worldwide.
Through Oct. 31, 2012, Rally posted a net loss of $6.7 million and revenue of $41.4 million.
The company has $19.6 million in cash and cash equivalents as of Oct. 31, 2012.
Rally has upward of 154,000 paid users, more than 1,000 customers including 36 of the Fortune 100 companies.
Since its inception, Rally has raised about $70 million in venture funding. Investors include Meritech, Greylock Partners, Boulder Ventures, Vista Ventures, Mohr Davidow Ventures and Mobius Venture Capital.
Boulder Ventures, Mobius Technology Ventures and Mohr Davidow Ventures are Rally's largest institutional shareholders with beneficial ownership stakes of 20.3 percent, 20.3 percent and 19.2 percent, respectively.
Despite its growing losses, Rally appears well positioned for a successful IPO, said Francis Gaskins, president and editor of IPODesktop, an IPO research and analysis site.
Working in Rally's favor, Gaskins said, is that the company is in the cloud-based services sector and that 75 percent of its revenue comes from subscriptions and ongoing maintenance.
"The market projections are very good," he said.
The IPO market looks as if it's on pace to continue its strong performance from 2012, Gaskins said, noting that of the 100 companies to go public since January of last year, 85 percent posted gains in their stocks.
"The lake is rising, so to speak," he said.
Rally is classified as an "emerging growth company" as defined by the newly enacted Jumpstart Our Business Startups, or JOBS, Act. The classification could exempt Rally from certain public company reporting requirements such as reduced disclosure of its executive compensation and not having its internal control over financial reporting audited by its independent public accounting firm.
Rally could take advantage of the exemptions for up to five years, or until it no longer is an emerging growth company.
The effects of the JOBS Act also could shorten the time from the initial filing to public trading, Gaskins said, adding he believes Rally could move forward on its IPO in a matter of weeks.
Contact Camera Business Writer Alicia Wallace at 303-473-1332 or firstname.lastname@example.org.
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