RACKSPACE, INC. AND SUBSIDIARIES-

                       CONSOLIDATED STATEMENTS OF INCOME



                                                                       Years Ended December 31,
                                                               2005                2006             2007
                                                                (In thousands, except per share data)
Net revenues                                               $     138,768       $     223,966      $ 362,017
Costs and expenses:
Cost of revenues                                                  40,987              64,889        118,225
Sales and marketing                                               21,837              35,667         53,930
General and administrative                                        38,968              59,832        102,777
Depreciation and amortization                                     20,193              32,335         56,476

Total costs and expenses                                         121,985             192,723        331,408

Income from operations                                            16,783              31,243         30,609

Other income (expense):
Interest expense                                                    (808 )            (1,095 )       (3,643 )
Interest and other income                                            633                 572            828

Total other income (expense)                                        (175 )              (523 )       (2,815 )

Income before income taxes                                        16,608              30,720         27,794
Income taxes                                                       5,836              10,900          9,965

Net Income                                                 $      10,772       $      19,820      $  17,829

Net income per share
Basic                                                      $        0.12       $        0.20      $    0.18

Diluted                                                    $        0.11       $        0.19      $    0.17

Weighted average number of shares outstanding
Basic                                                             91,793             100,310        101,278

Diluted                                                           99,657             104,032        106,618

Pro forma net income per share
Basic (unaudited)                                                                                 $    0.18

Diluted (unaudited)                                                                               $    0.17

Pro forma weighted average number of shares outstanding
Basic (unaudited)                                                                                   101,278

Diluted (unaudited)                                                                                 106,618