Rainmaker Systems Inc. –

SCOTTS VALLEY, Calif. – Rainmaker Systems Inc., a marketing services company, went public November 17, offering 5 million shares at $8 apiece. The company’s stock priced at the bottom of its $8 to $10 filing range.

Underwritten by Donaldson, Lufkin & Jenrette Inc., Thomas Weisel Partners L.L.C., SG Cowen Securities Corp. and DLJdirect Inc., the initial public offering left 37.4 million shares outstanding.

There were no selling shareholders. ABS Capital Partners and Santa Cruz Operation Inc. were venture backers.

The company provides marketing services for software and hardware companies using telemarketing, direct mail, e-mail and the Internet. Rainmaker focuses on customer retention by selling new subscriptions and renewals, service contracts, training services and upgrades for clients such as Lotus Development Corp., Novell Inc. and Sun Microsystems Inc.

The company plans to use the expected $35.9 million in proceeds generated from the IPO for general corporate purposes, including expansion, new client acquisition and capital expenditures.

Rainmaker Systems earned $771,000 in 1997 and $2.6 million in 1998.

Alok Mohan, chairman at Santa Cruz, joined the company’s board of directors in 1996. Andrew Sheehan, a general partner at ABS, followed in February 1999.

Rainmaker Systems – Selected Financial

(in thousands, except per share data)

Year Ended December 31 Nine Months Ended September 30

1996 1997 1998 1998* 1999*

Total revenue 26,935 39,500 50,377 36,567 42,035

Net income (loss) 431 771 2,550 2,317 -4,582

Net income (loss) per share 0.02 0.04 0.12 0.11 0.4