Managed Hosting Specialist Continues Rapid Growth and New Customer Acquisition

SAN ANTONIO — May 22, 2006 — Rackspace Managed Hosting today announced in the first quarter of 2006, the company’s revenue grew 58 percent over the same period in 2005 to $45.7 million. Net income in the first quarter of 2006 was $4.2 million, a 121 percent increase over the same quarter the previous year. Rackspace has experienced 29 consecutive quarters of revenue growth since the company’s inception.
                                  
Rackspace significantly expanded its leadership team in the first quarter of 2006, filling two key roles. Major Horton was named Rackspace’s chief financial officer, and Alan Schoenbaum was named general counsel. Horton joined Rackspace as the former vice president and general manager of Dell Financial Services’ commercial financial services group and Schoenbaum was a partner with Akin Gump Strauss Hauer & Feld LLP.  

"Our first quarter performance and growth illustrate the company’s consistency and stability while reflecting additional market share gains in the managed hosting industry," said Major Horton, chief financial officer, Rackspace Managed Hosting. “Rackspace’s continual focus on Fanatical Support™ drives the company’s success and solidifies our position as a leading enterprise hoster in the industry.”

Rackspace now manages nearly 20,000 servers in its data centers and signed hundreds of new customers in the first quarter of 2006, including organizations such as Roto-Rooter, the Chicago Convention and Tourism Bureau, Navy JROTC, University of California Press and  Tvext™/Broadband Television Network Corporation. Additionally, the company was ranked 16th in the Top 50 Best Places to Work in Texas published by Texas Monthly magazine.