Rackspace Managed Hosting Reports Fourth Quarter and Year-End 2005 Results; Company Grows 60 Percent in 2005 and Plans to Add Nearly 400 Jobs in 2006

Business Wire, Jan 30, 2006

SAN ANTONIO -- Rackspace Managed Hosting today announced its continuing operations fourth quarter and year-end results for 2005. The company's revenue was $41 million in the fourth quarter of 2005 and $139 million for the year, representing a 58 percent increase over the fourth quarter of 2004 and a 60 percent increase over 2004 annual revenues. Additionally, Rackspace grew its net income by 129 percent, to 11 million, in 2005.

Rackspace adopted Economic Value Added (EVA) in 2005 to focus the company on creating sustainable shareholder value. The company's EVA for fourth quarter 2005 was $2 million and $6 million for the year.

"Rackspace achieved a significant milestone in 2005, surpassing the $100 million mark in revenue and begins 2006 with a strong financial position and a loyal customer base that grows with us month over month," said Lanham Napier, president, Rackspace Managed Hosting. "The secret to our success is our delivery of Fanatical Support(TM) to our customers. As we continue our mission to make hosting an excellent service experience for all enterprises, we're gaining market share against players like IBM, Savvis and AT&T."

Rackspace added more than 600 new customers in the fourth quarter of 2005 and more than 2,000 new customers for the year. To support the company's rapid growth, Rackspace added 250 employees in 2005 and plans to hire up to 400 more in 2006 across all areas of the company including sales, support and data center operations.

Napier added that it is Rackspace's "fanatical" company culture and service-oriented talent which drives the success of the company. "First and foremost we look for a great service attitude and then leverage the individual strengths of each employee to allow them to do what they do best everyday. The result is happy, engaged employees fueling company growth of more than 50 percent a year."

For more information on careers at Rackspace, please visit http://www.rackspacecareers.com/.> About Rackspace Managed Hosting

Rackspace Managed Hosting(TM) is the leading managed hosting provider for customers of all sizes -- from start-ups to enterprise businesses. Founded in 1998, Rackspace has built a world-class service organization based on its philosophy of Fanatical Support(TM). The company offers a wide range of managed services for enterprise hosting platforms and currently hosts 15 percent of the Fortune 100 Companies. For more information, visit www.rackspace.com, or call 800-961-2888.