RAINMAKER REPORTS CONTINUED PROFITABILITY IN Q2 2006;
EPS OF $0.05 PER SHARE
Record Revenue of $11.3 million up 40% Year-Over-Year

Campbell, Calif., August 2, 2006 - Rainmaker Systems, Inc. (NASDAQ: RMKR), a leading outsource provider of sales and marketing services, today reported financial results for the second quarter ended June 30, 2006.

Second Quarter 2006 Key Results:

• Revenue increased to a record $11.3 million
  
• GAAP net income of $771,000, or $0.05 per diluted share
  
• Gross margins of 50%
  
• Record EBITDA of $1.6 million, or 14% of net revenue
  
• Cash and cash equivalents of $15 million

Rainmaker generated record net revenue of $11.3 million in the second quarter, compared to $8.0 million in the same quarter last year, representing 40 percent year-over-year growth.

Gross margin was 50% in the second quarter of 2006, compared to 37% in the second quarter of 2005, and 50% in the first quarter of 2006.

Second quarter GAAP net income was $771,000, or $0.05 per diluted share, compared to a net loss of $1.5 million, or a loss of $0.15 per share, for the second quarter of 2005, and GAAP net income of $820,000, or $0.06 per diluted share, in the first quarter of 2006. The second quarter performance follows the seasonably strong first quarter, and reflects investments in sales, marketing and technology, as previously indicated.

EBITDA reached a record $1.6 million, or 14% of revenue, in the second quarter, compared to an EBITDA loss of $0.5 million in the same quarter last year, and EBITDA of $1.5 million in the first quarter of 2006.

The results for the second quarter of 2006 include approximately $17,000 of FAS123R employee stock option expense. The tax rate for the second quarter of 2006 was approximately 2%, reflecting utilization of tax net operating losses (NOL’s).

Second quarter 2006 EPS results are based on 14.4 million weighted average shares outstanding, calculated using the treasury stock method. Total shares outstanding at June 30, 2006 were approximately 13.8 million common shares, and 2.7 million unexercised options and warrants with an average strike price of approximately $4.00 per share.

Total cash and cash equivalents at June 30, 2006 were $15 million, compared with $15.4 million at March 31, 2006. Working capital increased to $3.7 million at June 30, 2006, as compared to $2.1 million at March 31, 2006.

Second-Quarter Highlights

• Rainmaker signed a new client engagement with a world leader in information security, to provide a comprehensive, technology-based solution to increase software subscription sales and streamline the renewal process for resellers and end customers.
  
• Rainmaker extended for another year its annual service sales agreement with its existing top 50 global hardware manufacturer client.
  
• Rainmaker expanded its current agreement with its leading Fortune 50 global software client to become a preferred vendor of choice for lead generation services within US business markets.
  
• Rainmaker signed a new client engagement for lead generation services with a Fortune 100 global leader in wireless and broadband communications.
  
• Rainmaker signed a new client engagement with the global leader in decision management and advanced analytic solutions to provide a strategic, end-to-end lead qualification program to enable increased sales productivity.
  • Rainmaker was selected to implement a lead generation program to support the aftermarket partners of one of the world’s largest B2B distributors of semiconductors, enterprise network and computer equipment, and embedded subsystems.

Business Outlook and Financial Guidance
“We believe our continued strong momentum in the second quarter reflects the positive results we are generating across multiple areas of our business,” said Michael Silton, CEO of Rainmaker Systems. “This includes achieving significant success with three key objectives: generating continued profitability on a GAAP basis, creating new expanded revenue opportunities, and further growing and diversifying our customer base with the signing of new client agreements. Going forward, we remain focused on leveraging our strengthened capabilities to create additional revenue opportunities. Based on the strength of our new client signings and renewal of existing client agreements, we see continued positive momentum in our business."

For 2006, Rainmaker is raising its revenue guidance to grow revenue to a range of $45 million to $46 million, and is guiding to continued quarterly GAAP net income in 2006. The company continues to invest in sales, marketing and technology based on the significant opportunities in the market.

Conference Call
Rainmaker Systems will host a conference call and webcast today at 1:30 p.m. Pacific Time to discuss its second quarter fiscal 2006 results. Those wishing to participate in the live call should dial (800) 218-8862 using the password “Rainmaker.” A replay of the call will be available for one week beginning approximately one hour after the call’s conclusion by dialing (800) 405-2236 and entering 11064990 followed by the “#” key when prompted for a code. To access the live webcast of the call, go to the Investor Relations section of Rainmaker’s website at www.rmkr.com. A webcast replay of the conference call will be available for one year on the Calls/Events page of the Investor Relations section at www.rmkr.com.

About Rainmaker Systems, Inc.
Rainmaker Systems, Inc. is a leading provider of business-to-business sales and marketing services, leveraging integrated telesales, marketing, web technologies, and data analytics to achieve higher revenue for clients. Our core activities include lead qualification and nurturing management, lead generation for product sales, subscription and service contract sales, and contract renewals and warranty extension sales. Our services are available individually or as an integrated solution.

Rainmaker helps approximately 50 companies ranging from Fortune 500 to dynamic technology start-ups, grow their revenues and increase customer loyalty by providing lead generation and contract renewal sales solutions. For more information, visit www.rmkr.com and www.sunsetdirect.com.

NOTE: Rainmaker Systems, the Rainmaker logo, Sunset Direct and Contract Renewals Plus are registered with the U.S. Patent and Trademark Office. All other service marks or trademarks are the property of their respective owners.

Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of the Company. We wish to caution you that these statements involve risks and uncertainties and actual events or results may differ materially. Among the important factors which could cause actual results to differ materially from those in the forward-looking statements are general market conditions, unfavorable economic conditions, our ability to execute our business strategy, the effectiveness of our sales team and approach, our ability to target, analyze and forecast the revenue to be derived from a client and the costs associated with providing services to that client, the date during the course of a calendar year that a new client is acquired, the length of the integration cycle for new clients and the timing of revenues and costs associated therewith, our client concentration given that the Company is currently dependent on a few large client relationships, potential competition in the marketplace, the ability to retain and attract employees, market acceptance of our service programs and pricing options, our ability to maintain our existing technology platform and to deploy new technology, our ability to sign new clients and control expenses, the possibility of the discontinuation of some client relationships, the financial condition of our clients' business and other factors detailed in the Company's filings with the Securities and Exchange Commission, including our recent filings on Forms 10-K and 10-Q.


Steve Valenzuela
Chief Financial Officer
Rainmaker Systems, Inc.
(408) 626-2439
steve.valenzuela@rmkr.com

Todd Kehrli or Jim Byers
Investor Relations
MKR Group, LLC
(818) 556-3700
rkmr@mkr-group.com