The initial public offering of Rally Software (NYSE:RALY), which operates a cloud platform for software coding, came out sizzling today. The company not only priced 6 million shares at $14 — above its $11 to $13 range — but the stock has since surged 30%.
Rally’s platform is based on a type of software coding approach known as “agile” that focuses on speeding up development and improving quality of design.
However, Rally has supercharged agile techniques by leveraging the cloud, which allows for collaboration worldwide with teams of programmers that can number in the thousands. The cloud also makes it possible to provide real-time updates so that projects are kept on track.
While Rally does face big-time competitors like IBM (NYSE:IBM), Hewlett-Packard (NYSE:HPQ) and Microsoft (NASDAQ:MSFT), those players focus primarily on older technology, which has helped RALY snag customers from them and other rivals.
And Rally’s growth has been impressive. Revenues have picked up from $19.9 million three years ago to $43.8 million in 2012. Those sales are drawn from more than 1,000 customers, including 34 Fortune 100 members. Big names buying from Rally include Cisco (NASDAQ:CSCO), General Electric (NYSE:GE), Sony (NYSE:SNE) and Intuit (NASDAQ:INTU).
The current market for software development tools is about $5.2 billion, according to a report from IDC, but this might understate the potential for Rally. After all, software is becoming a competitive advantage for many industries, and even traditional companies are building apps to improve their business, whether to take advantage of the cloud, social networking or mobile. So continued growth seems likely.
To learn more about this mega-trend, I interviewed Rally CEO Tim Miller. You can see what he had to say below:
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities, and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.