Rally Software Announces Updated Second Quarter Fiscal 2014 and Full Fiscal Year 2014 Business Outlook

Rally Software RALY, a leading global provider of cloud-based solutions for managing Agile software development, today announced the following update to its business outlook for the second quarter of fiscal 2014, which ends on July 31, 2013, and the full fiscal year 2014, which ends on January 31, 2014. Second Quarter of Fiscal 2014 For the second quarter of fiscal 2014, management expects: Total revenue to be in the range of $18.6 million to $19.1 million, representing 36% to 40% growth over the second quarter of fiscal 2013; Subscription and support revenue to be in the range of $14.0 million to $14.2 million, representing 34% to 36% growth over the second quarter of fiscal 2013; Perpetual license revenue to be in the range of $2.1 million to $2.3 million, representing 49% to 63% growth over the second quarter of fiscal 2013; Professional services revenue to be in the range of $2.5 million to $2.6 million, representing 42% to 47% growth over the second quarter of fiscal 2013; GAAP net loss per basic and diluted share of approximately $(0.19) to $(0.17), based on 24.0 million weighted average shares of common stock outstanding; and Cash flow from operating activities to be negative reflecting continued investment in Rally's business. Fiscal Year 2014 For the full fiscal year 2014, management expects: Total revenue to be in the range of $72.0 to $74.0 million, representing 27% to 30% growth over fiscal year 2013; Subscription and support revenue to be in the range of $58.0 to $58.8 million, representing 32% to 34% growth over fiscal year 2013; and GAAP net loss per basic and diluted share of approximately $(1.19) to $(1.16), based on 19.8 million weighted average shares of common stock outstanding. About Rally Rally Software is a leading global provider of cloud-based solutions for managing Agile software development. The Rally Agile application lifecycle management (ALM) platform transforms the way organizations manage the software development lifecycle by closely aligning software development and strategic business objectives, facilitating collaboration, increasing transparency and automating manual processes. Companies use Rally to accelerate the pace of innovation, improve productivity and more effectively adapt to rapidly changing customer needs and competitive dynamics. Rally and the Rally logo are the property of Rally. Trade names, trademarks and service marks of other companies are the property of their respective holders. Forward-looking Statements This press release contains forward-looking statements, including statements regarding Rally's business outlook and future financial performance. The Private Securities Litigation Reform Act of 1995 has established that these statements qualify for safe harbors from liability. Any forward-looking statements contained in this press release represent Rally's estimates and expectations as of the date of this press release and are based upon Rally's actual performance in the first quarter of fiscal 2014 and the first two months of the second quarter of fiscal 2014, and are not a representation that such estimates or expectations will be achieved. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from Rally's current estimates and 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, Rally's ability to expand its relationships with existing customers, Rally's 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, Rally's ability to manage growth effectively, Rally's ability to maintain, protect and enhance its 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 Rally's reports filed with the SEC, including its Quarterly Report on Form 10-Q filed with the SEC on June 13, 2013. Rally undertakes no obligation to update publicly any forward-looking statements for any reason after the date of this press release to conform these statements to actual results or to changes in Rally's estimates or expectations.