Why Rally Software Shares Rallied

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Rally Software rallied today by as much as 20% after the company announced fiscal first quarter results.

So what: Revenue in the quarter hit a record $16 million, which was higher than the $14.8 million consensus estimate. That translated into an adjusted net loss of $0.86 per share, well ahead of the $1.06 per share in red ink that investors were expecting. This is Rally's first earnings release as a public company, and investors are impressed.

Now what: Outlook was also strong, with second quarter revenue expected in the range of $17.25 million to $17.75 million. Full-year revenue should be $71 million to $73 million, which should translate into an adjusted net loss of $1.01 to $1.04 per share. Needham expressed confidence in the company, reiterating its buy rating while increasing its price target to $25. The analyst cited strong net additions and new enterprise wins.

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The article Why Rally Software Shares Rallied originally appeared on Fool.com.

Fool contributor Evan Niu, CFA, has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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