Rackspace IPO Auction Commences

SAN ANTONIO — July 29, 2008 — Rackspace® Hosting, Inc. today announced that the auction for its proposed initial public offering of its common stock has commenced. Rackspace announced that it expects the offering to price after the stock market closes on or about Thursday, August 7, 2008.

Goldman, Sachs & Co., Credit Suisse Securities (USA) LLC and Merrill Lynch & Co. are acting as joint book-running managers for the offering. W.R. Hambrecht + Co., LLC, Jefferies & Company, Inc., Cowen and Company, LLC, RBC Capital Markets Corporation, JMP Securities LLC, Signal Hill Capital Group LLC, and E*TRADE Securities LLC are the co-managers for the offering. Rackspace will offer 12,700,000 shares of its common stock in the offering. The selling stockholders will offer an additional 2,300,000 shares of common stock in the offering. Rackspace and the selling stockholders have also granted the underwriters a 30-day option to purchase up to an aggregate of 2,250,000 additional shares. Rackspace is conducting the offering as a modified Dutch auction. The preliminary prospectus, which is available at Rackspace’s auction website www.rackspaceipo.com, contains further information about Rackspace, the offering and the structure of the auction. In addition, the site also provides a link to a recording of the management presentation to prospective investors.

Rackspace’s auction website also contains information about how to contact the underwriters to open a brokerage account with one of the underwriters.

A registration statement relating to these securities has been filed with the Securities and Exchange Commission but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time that the registration statement becomes effective.  This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. No offer to buy securities can be accepted and no part of the purchase price can be received until the registration statement has become effective, and any such offer may be withdrawn or revoked, without obligation or commitment of any kind, at any time until the notice of its acceptance has is given after the effective date.

Copies of the preliminary prospectus for the offering may be obtained from Goldman, Sachs & Co., Attention: Prospectus Department, 85 Broad Street, New York, New York 10004, by facsimile at 212-902-9316 or by e-mail at prospectus-ny@ny.email.gs.com; from Credit Suisse Securities (USA) LLC, Prospectus Department, One Madison Avenue, New York, NY 10010, telephone 800-221-1037; or from Merrill Lynch & Co., 4 World Financial Center, New York, NY 10080, telephone 866-500-5408.

About Rackspace Hosting

Rackspace® Hosting, Inc. provides IT systems and computing as a service to more than 33,000 customers worldwide. Rackspace Hosting’s offerings include managed hosting, email hosting, cloud hosting and platform hosting.

Rackspace IPO Auction Commences

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