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Rackwise, Inc. Reports Record Second Quarter Revenues

  Rackwise, Inc. Reports Record Second Quarter Revenues

     358% growth over last year driven by multiple positive developments

Business Wire

FOLSOM, Calif. -- August 10, 2012

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."

Guy A. Archbold, Rackwise, Inc. Chief Executive Officer, commented, “We are
extremely pleased with our Company’s progress during the second quarter. The
reported results demonstrate that continued execution of our strategic plan is
producing positive financial performance. Among our noteworthy achievements
during this period was the introduction of Rackwise DCiM X™, which has
received an overwhelming response from the market for its superior robust
capabilities coupled with accelerated return on investment potential and
shorter time to value compared with other similar products currently
available. Equally important, we added several new large customers in both the
private and public sectors which have the potential to significantly expand
deployments of Rackwise^® product solutions in managing not only their own
local and global network of data centers and IT infrastructure but those of
their clients and customers around the world. Our customer list is increasing
in size, quality and global name recognition, which we believe validates the
efficacy of our products and services and affords Rackwise vital credibility
in the DCIM and IT markets. We believe we are well positioned to take our
business to the next level. With several prospective customers currently
evaluating our solutions, we have a solid pipeline of potential new business
expected to close in the coming months. We look forward to the second half of
the year and anticipate similar sequential improvement with continued strong
momentum.”

Rackwise, Inc.
Condensed Consolidated Financial Information
(Unaudited)

               Three-month period ending           Six-month period ending
                 June 30,                              June 30,
                 2012             2011               2012             2011
                                                                          
Revenues         $ 1,192,489        $ 260,106          $ 1,876,638        $ 796,581
Gross            $ 1,136,157        $ 210,401          $ 1,758,341        $ 698,110
profits
Operating        $ 3,361,517        $ 1,296,470        $ 6,221,206        $ 2,279,644
expenses^(1)
Net loss^(2)     $ (2,671,444 )     $ (1,266,410 )     $ (4,900,559 )     $ (2,165,537 )
Net loss per     $ (.03       )     $ (.03       )     $ (.05       )     $ (.05       )
share^(2)
                                                                                       

      Includes non-cash expenses related to stock-based compensation of
(1)  $530,935 and $83,172 for the three-month periods ending June 30, 2012
      and 2011, respectively; and $996,395 and $162,809 for six-month periods
      ending June 30, 2012 and 2011, respectively.
      
(2)   Absent non-cash expenses related to stock-based compensation, net loss
      and net loss per share are:
      

        Three-month period ending           Six-month period ending
          June 30,                              June 30,
          2012             2011               2012             2011
                                                                   
Net       $ (2,140,509 )     $ (1,183,238 )     $ (3,904,164 )     $ (2,002,728 )
loss
Net
loss      $ (.02       )     $ (.03       )     $ (.04       )     $ (.05       )
per
share
                                                                                

About Rackwise, Inc.

Rackwise, Inc. (RACK.OB) is a leader in software development and marketing
within the growing data center infrastructure management (“DCIM”) market for
IT infrastructure tracking, monitoring, modeling, and management. The
Company’s flagship product, Rackwise DCiM X™, incorporates open architecture
designs into a vendor agnostic platform affording IT professionals maximum
flexibility for efficient integration in any computing environment. The
Rackwise DCiM X™ offering  provides features and functionalities to assure
reliability, identify hidden capacity, and improve efficiencies resulting in
accelerated returns on investments through significantly optimized data center
facilities and IT infrastructures. DCiM X™ integrates device level, real-time
monitoring with advanced modeling, reporting, analytics and other critical
capabilities, enabling clients to more effectively manage today’s high density
computing configurations and virtualized data centers, mitigate risks
associated with cascading faults and other potential inefficiencies within the
infrastructure, and facilitate progress to more sustainable “green” data
centers. Rackwise^® products and services  are used by over 150 companies
worldwide. For more information, visit www.rackwise.com.

Rackwise^®, DCiM™ and DCiM X™ are trademarks of Rackwise, Inc. Other
designated trademarks and brands mentioned herein are the property of their
respective owners.

Safe Harbor Statement

Any statements contained in this press release that do not describe historical
facts may constitute forward-looking statements as that term is defined in the
Private Securities Litigation Reform Act of 1995. Any forward-looking
statements contained herein are based on current expectations, but are subject
to a number of risks and uncertainties. The factors that could cause actual
future results to differ materially from current expectations include, but are
not limited to, risks and uncertainties relating to the availability of
additional funding; and the Company’s business, product development, marketing
and distribution plans and strategies. These and other factors are identified
and described in more detail in the Company’s filings with the SEC, including,
the Company’s current reports on Form 8-K. The Company does not undertake to
update these forward-looking statements.

Contact:

MKR Group, Inc.
Mr. Todd Kehrli, 323-468-2300
rack@MKR-Group.com
www.mkr-group.com
or
Porter, LeVay& Rose, Inc.
Mr. Michael Porter, 212-564-4700
mike@plrinvest.com
www.plrinvest.com
or
Rackwise, Inc.
Mr. Jeff Winzeler, 916-984-6000
Chief Financial Officer
corpinfo@rackwise.com
www.rackwise.com
 
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