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What: Shares of Rally Software (NYSE:RALY) 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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