Rally Software, the Colorado-based Agile software development management provider (say that five times fast), filed for an initial public offering this week with the U.S. Securities and Exchange Commission.
The price sought? Seventy million dollars.
Agile, of course, is the software development methodology characterized by short, iterative cycles that was introduced in 2001. (It stands in contrast to the more linear "waterfall" method, characterized by longer, less flexible cycles.) The company's platform allows distributed development teams to collaborate, incorporate customer feedback and otherwise give a dose of transparency to projects. In practice, that means a cloud-based place for project planning and scheduling, resource allocation, quality management and reporting on progress and cost.
It's a sizable market. The application lifecycle market -- that includes software configuration management, IT project and portfolio management, and automated software quality -- represented $5.2 billion in 2012, according to IDC figures. More broadly, the software market -- for everything from cloud computing to social networking -- totals more than $372 billion, according to Gartner figures.
Rally certainly has a presence. It calls more than a third of the Fortune 100 companies customers, and has more than 1,000 on the rolls. It's betting that companies will increasingly use Agile techniques as they discover improved time-to-market, fewer development costs and less headache overall.
With an influx of funds, Rally would like to acquire new customers (especially outside the U.S.), sell more services to its existing customer base, further develop its platform and acquire other companies on its way to promoting Agile development.
It's a big bet. Aside from the assumption that the Agile methodology will continue to appeal to those in the business of business technology -- what if something better comes along? -- the company itself has a history of losses, and expects "to incur future losses as we grow our company and may be unable to achieve or sustain profitability." Despite more than $41 million in revenue in 2012, it posted $11 million in losses, which means Rally is banking on continuing its successful streak well beyond the IPO date -- nevermind how stable the overall enterprise IT market may or may not be.
The good news: with all of that revenue, it's doing something right. And with a 129 percent subscription renewal rate, it's not playing for the short term, either. I'm sure its investors -- Meritech, Mohr Davidow, Mobius, Greylock and Boulder Ventures, among others -- aren't either.