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Rackwise, Inc. Reports Record Second Quarter Revenues

Rackwise, Inc. (RACK.OB) (the "Company"), a leading developer of data center infrastructure management ("DCIM") software and service solutions, announced today its second quarter 2012 financial results. The Company's results reflect increased market penetration among large data center operators in both the public and private sectors, strong sales momentum driving near-term business growth, and continued strategic investments in corporate infrastructure.

Second Quarter Results

  • Revenues for the three months ended June 30, 2012 were $1,192,489 as compared with revenues of $260,106 for the three months ended June 30, 2011, an increase of $932,383, or 358%.
  • Gross profits for the three months ended June 30, 2012 and 2011 were $1,136,157 and $210,401, respectively, representing an increase of $925,756, or 440%. Gross profit margins were approximately 95% and 81% respectively, for the respective quarters.
  • Operating expenses for the second quarter 2012 were $3,361,517, compared with $1,296,470, in the year-ago quarter, an increase of $2,065,047, or 159%. The increase primarily relates to the Company's investment in sales personnel to build out its sales force, as well as research and development and product support infrastructure. Also contributing to the increase in the current quarter were additional legal, accounting and audit fees associated with public company reporting and expanded business activity, plus non-cash expenses related to stock-based compensation (including grants of stock options and restricted shares). Non–cash expenses related to stock-based compensation during the second quarter of 2012 were $530,935 versus $83,172 for the second quarter of 2011.
  • Net loss was $2,671,444, or ($.03) per share, for the second quarter of 2012, compared to a net loss of $1,266,410, or ($.03) per share, for the same period in 2011. Absent non-cash expenses related to stock-based compensation, net loss was $2,140,509, or ($.02), per share for the second quarter of 2012, compared to a net loss of $1,183,238, or ($.03), per share for the second quarter of 2011.

Six-Month Results

  • Revenues for the six months ended June 30, 2012 were $1,876,638 as compared with revenues of $796,581 for the six months ended June 30, 2011, an increase of $1,080,057, or 136%.
  • Gross profits for the six months ended June 30, 2012 and 2011 were $1,758,341 and $698,110, respectively, representing an increase of $1,060,231, or 152%. Gross profit margins were approximately 94% and 88% for the respective periods.
  • Operating expenses for the first six months of 2012 were $6,221,206, compared with $2,279,644 for the same period in 2011, an increase of $3,941,562, or 173%. The increase relates principally to recruiting and compensation costs associated with expansion of the Company’s sales force and research, development and product support staffs, in accordance with the Company’s strategic plan. Also contributing to this increase were previously noted additional professional fees associated with public company reporting and expanded business activity, as well as non-cash expenses related to stock-based compensation (including grants of stock options and restricted shares). Non-cash expenses related to stock based compensation during the first six months of 2012 were $996,395 versus $162,809 for the first six months of 2011.
  • Net loss was $4,900,559, or ($.05) per share, for the first six months of 2012, compared to a net loss of $2,165,537, or ($.05) per share, for the same period in 2011. Absent non-cash expenses related to stock based compensation, net loss was $3,904,164, or ($.04) per share, for the first six months of 2012, compared to a net loss of $2,002,728, or ($.05) per share, for the same period in 2011.

Business Highlights

  • Announced the release of Rackwise DCiM X™, the latest version of the Company’s software product for data center management providing integrated device level tracking and real-time monitoring, advanced power modeling, visualization, blade server management, fault impact analysis, and business reporting analytics among its new and enhanced features and functions empowering data center managers and information technology (“IT”) professionals to assure reliability, discover hidden capacity, and enable efficiency in managing their networks of data centers and global IT infrastructure.
  • Added several new customers, including a leading global IT infrastructure and services provider and a major west coast utility.
  • Deployed Rackwise DCiM™ solutions in conjunction with a leading global Fortune 50 contract IT services company in two significant outsourced data centers supporting 27 key agencies of a large southwestern state.
  • Expanded business relationships with several existing customers, including the U.S. Army Corps of Engineers and SLAC National Accelerator Laboratory operated by Stanford University for the U.S. Department of Energy Office of Science.
  • Executed contract renewals with a substantial number of current clients, including the U.S. Securities and Exchange Commission, McGraw-Hill, Time Warner, and Cedar Sinai Medical Center, among others.
  • Signed an agreement with Modern Power and Cooling Technology, Ltd. to expand the Company’s customer and client base in Jamaica and across the Caribbean region.
  • Subsequent to the end of the quarter, announced two significant license agreements: the first with HeidelbergCement AG, one of the world's largest manufacturers of building materials, to install and deploy Rackwise DCiM X™ in its key data centers in Germany and the U.S.; the second with Argonne National Laboratory (“Argonne”), one of the largest national laboratories for scientific engineering research in the United States, to install and deploy Rackwise DCiM™ solutions in Argonne's data centers at its principal facilities located in Illinois.

"Our results for the second quarter of 2012 directly reflect the impact of tactical and strategic measures undertaken during the last quarter of 2011 and the first half of this year," stated Jeff Winzeler, the Company's Chief Financial Officer. "We made substantial investments in human and other resources to augment our sales and marketing capabilities enabling us to achieve significantly increased revenue levels for both the second quarter and first six months of 2012 versus comparable periods of 2011, including record quarterly revenues and a 136% increase in six-month revenues. We also made considerable investments in our product development and support organizations and believe that the recently released version of our flagship product together with our other targeted investments in corporate infrastructure will continue to drive revenue growth and increase our share of the DCIM market."

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