RAINMAKER REPORTS RECORD REVENUE AND RECORD PROFITS IN THIRD QUARTER
Revenue Growth of 42%, 8% Sequentially; EPS of $0.06

Campbell, Calif., November 1, 2006 – Rainmaker Systems, Inc. (NASDAQ: RMKR), a leading provider of outsourced sales and marketing services, today reported record financial results for the third quarter ended September 30, 2006.

Third Quarter Financial Highlights:

• Revenue increased to a record $12.2 million, up 42% year-over-year
  
• Record GAAP net income of $869,000, or $0.06 per diluted share
  
• Record EBITDA of $1.7 million, or 14% of net revenue
  
• Cash and cash equivalents increased by $4 million to $19 million
  

Rainmaker achieved record third quarter net revenue of $12.2 million, representing a 42% increase over net revenue of $8.6 million in the third quarter of 2005 and an 8% sequential increase from net revenue of $11.3 million in the second quarter of 2006. Revenue includes approximately $180,000 from ViewCentral, for the period from the acquisition’s closing on September 15, 2006.

Gross margin was 49% in the third quarter of 2006, compared to 43% in the third quarter of 2005, and 50% in the second quarter of 2006.

Third quarter GAAP net income was $869,000, or $0.06 per diluted share, compared to a net loss of $716,000, or a loss of $0.03 per share, for the third quarter of 2005, and GAAP net income of $771,000, or $0.05 per diluted share, in the second quarter of 2006.

Third quarter non-GAAP net income, excluding stock based compensation of $21,000, amortization of intangible assets from acquisitions of $366,000, and net revenue adjustments related to fair value purchase accounting of $23,000, was $1.2 million, or $0.08 per diluted share, compared to a non-GAAP net loss of $460,000, or a loss of $0.04 per share, for the third quarter of 2005, and non-GAAP net income of $1.1 million, or $0.07 per diluted share, in the second quarter of 2006. See Exhibit A below for a reconciliation of US GAAP net income (loss) to non-GAAP net income (loss).

EBITDA in the third quarter was a record $1.7 million, or 14% of revenue, compared to EBITDA of $194,000 in the same quarter last year and EBITDA of $1.6 million in the second quarter of 2006. See Exhibit B below for a reconciliation of US GAAP net income (loss) to EBITDA.

The tax rate for the third quarter of 2006 was approximately 11%.

Third quarter 2006 EPS results are based on 15.0 million weighted average shares outstanding, calculated using the treasury stock method. Total shares outstanding at September 30, 2006 were approximately 14.6 million common shares, including 755,000 shares issued to shareholders of ViewCentral. In addition, Rainmaker had 2.6 million unexercised options and warrants with an average strike price of approximately $4.00 per share.

Total cash and cash equivalents at September 30, 2006 increased to $19 million, compared with $15 million at June 30, 2006.

Nine-Month 2006 Results
For the first nine months of 2006, Rainmaker reported record revenue of $34.6 million, compared to $23.1 million for the first nine months of 2005; and record GAAP net income for the first nine months of 2006 of $2.5 million, compared to a GAAP net loss of $4.7 million in the first nine months of 2005. GAAP net income per diluted share for the first nine months of 2006 was a record $0.18 per share, compared to a net loss of $(0.46) per share for the first nine months of 2005.

Third-Quarter Business Highlights

• Over 100 industry leading clients
  
• Fortune 50 hardware client expands relationship to include online channel renewals
  
• Announced interoperability with Salesforce.com
  
• Completed acquisition of ViewCentral, fourth acquisition in two years
  

Business Update
"Our record financial results reflect continued strong client momentum and the expanded revenue opportunities we are generating with our growing customer base, which has now exceeded a key milestone of more than 100 world class clients," said Michael Silton, CEO of Rainmaker Systems. "During the quarter, we significantly expanded our service capabilities with the completed acquisition of ViewCentral, adding their proven marketing and training solutions to our revenue delivery platform. We are successfully leveraging our expanded suite of services to create cross-selling opportunities and drive increased customer adoption, including both new client signings and expanded agreements with existing customers. Looking ahead, we believe we are well positioned to build on our solid growth momentum and achieve our longer-term goal of growing revenue in excess of 20 percent annually."

Financial Guidance
For 2006, Rainmaker is raising its revenue guidance to grow full year revenue to a range of $48 million to $48.5 million, representing approximately 48% annual growth.

In the fourth quarter, the Company expects non-cash amortization of intangibles related to the ViewCentral acquisition to be approximately $270,000, bringing total amortization of intangibles to approximately $570,000 for the fourth quarter for all of our past acquisitions, including ViewCentral.

The Company continues to invest in technology based on the significant opportunities in the market and is committed to maintaining profitability.

Conference Call
Rainmaker Systems will host a conference call and webcast today at 1:30 p.m. Pacific Time to discuss its third quarter fiscal 2006 results. Those wishing to participate in the live call should dial (800) 218-0530 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 11071571 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
Rainmaker Systems, Inc. is a leading provider of business-to-business sales and marketing services. Through the use of proprietary technologies and enhanced data analytics, our solutions leverage integrated multi-channel communications to accelerate the sales process and achieve higher revenue for our clients. Our core services include complete lead qualification and management, new product sales, webcast event management, online sales of training classes, channel enablement, subscription renewals, and service contract sales.

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, Inc.
(323) 468-2300
rkmr@mkr-group.com