Riverbed Technology 8-K Riverbed Technology Reports Third Quarter 2008 Financial Results

Exhibit 99.1

Riverbed Technology Reports Third Quarter 2008 Financial Results

• Record revenue of $86.5 million increases 37% over prior year

• More than 500 new customers added in the September quarter

• Generated more than $26 million in operating cash flow

• Cash and marketable securities total $281.5 million at September 30 and zero debt

SAN FRANCISCO, CA – October 23, 2008 – Riverbed Technology (NASDAQ: RVBD), the technology and market leader in wide-area data services (WDS), today reported financial results for its third fiscal quarter ended September 30, 2008 (Q3-08). Revenues for Q3-08 were $86.5 million. Revenues for Q3-08 increased 36.7% from $63.3 million reported in the third quarter of fiscal year 2007 (Q3-07) and increased 6.1% from $81.6 million reported in the second quarter of fiscal year 2008 (Q2-08).

Reporting on a GAAP basis, the net loss for Q3-08 was $12.4 million, or $0.17 loss per diluted share. Q3-08 GAAP results include a one-time $11.0 million charge for the settlement of the patent infringement lawsuit with Quantum Corporation. This compares to a GAAP net loss of $0.9 million in Q2-08, or $0.01 loss per diluted share, and GAAP net income of $2.8 million, or $0.04 per diluted share, in Q3-07.

Non-GAAP net income for Q3-08 was $11.0 million, or $0.15 per share, as compared to non-GAAP net income for Q2-08 of $9.9 million, or $0.13 per share, and non-GAAP net income for Q3-07 of $12.4 million, or $0.17 per share. Q3-08 Non-GAAP net income excludes stock-based compensation, stock-based payroll expenses, and related income tax effects, and a one-time $11.0 million charge for the legal settlement with Quantum. Q2-08 and Q3-07 non-GAAP net income excludes stock-based compensation, stock-based payroll expenses, and related income tax effects. A reconciliation between GAAP and non-GAAP information is contained in the tables below.

“We are very pleased with the results we delivered for our third quarter,” stated Jerry M. Kennelly, chairman, president and chief executive officer of Riverbed^®. “Despite weakness in the global economy, we generated record revenues. Our outperformance in the third quarter was driven by strength in the government vertical, continued deployment within our customer base, and new customer purchases. The cost to deploy Riverbed Steelhead^® products is fairly low, while the business value they deliver in terms of improved application performance, IT efficiency, and worker productivity is substantial. We believe this return on investment makes WAN optimization a high priority even in a tighter spending environment.”

Q3-08 Financial Highlights

• Record revenue of $86.5 million, up 6% sequentially and 37% year-over-year

• Cumulative customer count now exceeds 5,000 after adding more than 500 new customers

• Accounts receivable days sales outstanding improved to 45 days as of September 30, 2008, from 50 days as of June 30, 2008

• Cash flow from operations increased to $26.5 million compared to $9.8 million in Q2-08 and $14.5 million in Q3-07

• Cash, cash equivalents, and marketable securities increased 5% sequentially and 22% year-over-year to $281.5 million after the repurchase of $12.5 million of Riverbed stock in Q3-08

Q3-08 Business Highlights

• Announced an OEM agreement to embed VMware software as the virtualization platform for the Riverbed Services Platform. With the VMware platform inside Steelhead appliances, enterprises can further consolidate their IT infrastructure and improve manageability by running up to five remote office virtual edge services, without the need for separate dedicated servers.

• Accepted into the Microsoft Protocol Optimization Licensing Program, enabling the company to build further on its expertise and success accelerating and optimizing Microsoft Windows-based applications over the wide-area network.

• Continued to strengthen its service provider channel, announcing partnerships with Digital Hands and Pacnet for managed services.

• The company outlined its technology vision at its Analyst Meeting in September, including the vision for the Atlas appliance.

Conference Call

Riverbed will host a conference call today, October 23, 2008, at 2:45 p.m. PT (5:45 p.m. ET) to discuss its third quarter results. The call will be broadcast live over the Internet atwww.riverbed.com/investors. A replay of the conference call will also be available via webcast atwww.riverbed.com/investors for 12 months.

Steelhead Products

Riverbed WDS solutions enable organizations of all sizes to overcome a host of severe problems, including poor application performance and insufficient bandwidth at remote sites. By speeding the performance of applications between data centers, remote offices and mobile workers by five to 50 times and in some cases up to 100 times, the Riverbed award-winning Steelhead WDS products enable companies to consolidate IT, improve backup and replication processes to ensure data integrity, and improve staff productivity and collaboration. Steelhead products have been deployed in organizations ranging from the world’s largest corporations with offices around the globe to small companies with a couple of sites that are just miles apart. To learn more, view Riverbed’s demo:www.riverbed.com/pr/jack.

Forward Looking Statements

This press release contains forward-looking statements, including statements relating to the expected demand for Riverbed’s products and services, and statements relating to Riverbed’s ability to meet the needs of distributed organizations. These forward-looking statements involve risks and uncertainties, as well as assumptions that, if they do not fully materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. The risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements include our ability to react to trends and challenges in our business and the markets in which we operate; our ability to anticipate market needs or develop new or enhanced products to meet those needs; the adoption rate of our products; our ability to establish and maintain successful relationships with our distribution partners; our ability to compete in our industry; fluctuations in demand, sales cycles and prices for our products and services; shortages or price fluctuations in our supply chain; our ability to protect our intellectual property rights; general political, economic and market conditions and events; and other risks and uncertainties described more fully in our documents filed with or furnished to the Securities and Exchange Commission. More information about these and other risks that may impact Riverbed’s business are set forth in our Form 10-Q filed with the SEC on July 29, 2008. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we assume no obligation to update these forward-looking statements. Any future product, feature or related specification that may be referenced in this release are for information purposes only and are not commitments to deliver any technology or enhancement. Riverbed reserves the right to modify future product plans at any time.

About Riverbed

Riverbed Technology is the technology and market leader in wide-area data services (WDS) solutions for companies worldwide. By enabling application performance over the wide area network (WAN) that is orders of magnitude faster than what users experience today, Riverbed is changing the way people work, and enabling a distributed workforce that can collaborate as if they were local. Additional information about Riverbed (Nasdaq: RVBD) is available at www.riverbed.com.

Riverbed Technology, Riverbed, Steelhead, RiOS, Interceptor, and the Riverbed logo are trademarks or registered trademarks of Riverbed Technology, Inc. All other trademarks used or mentioned herein belong to their respective owners.

MEDIA CONTACT

Kristalle Ward

Riverbed Technology

415-247-8140

kristalle.ward@riverbed.com

INVESTOR RELATIONS CONTACT

Renee Lyall

Riverbed Technology

415-247-6353

Renee.Lyall@riverbed.com

###

Riverbed Technology, Inc.

GAAP Condensed Consolidated Statements of Operations

In thousands, except per share amounts

Unaudited

	Three months ended September 30,					Nine months ended September 30,
	2008			2007		2008			2007
Revenue:
Product	$	65,238		$	52,508	$	185,574		$	133,335
Support and services		21,309			10,802		55,547			26,761
Total revenue		86,547			63,310		241,121			160,096
Cost of revenue:
Cost of product		16,653			14,029		45,153			37,053
Cost of support and services		7,174			4,111		20,151			9,999
Total cost of revenue		23,827			18,140		65,304			47,052
Gross profit		62,720			45,170		175,817			113,044
Operating expenses:
Sales and marketing		34,855			25,139		100,992			63,035
Research and development		14,582			10,890		43,278			27,384
General and administrative		10,419			7,177		29,925			16,814
Other charges		11,000			—		11,000			—
Total operating expenses		70,856			43,206		185,195			107,233
Operating income (loss)		(8,136	)		1,964		(9,378	)		5,811
Other income, net		1,287			2,754		5,059			7,028
Income (loss) before provision for income taxes		(6,849	)		4,718		(4,319	)		12,839
Provision for income taxes		5,574			1,950		8,335			2,868
Net income (loss)	$	(12,423	)	$	2,768	$	(12,654	)	$	9,971
Net income (loss) per share, basic	$	(0.17	)	$	0.04	$	(0.18	)	$	0.15
Net income (loss) per share, diluted	$	(0.17	)	$	0.04	$	(0.18	)	$	0.14
Shares used in computing basic net income (loss) per share		71,005			69,069		70,915			67,397
Shares used in computing diluted net income (loss) per share		71,005			74,360		70,915			72,934
Stock-based compensation expense included in above:
Cost of product	$	54		$	27	$	131		$	68
Cost of support and services		1,125			806		3,470			1,798
Sales and marketing		5,921			4,455		17,869			10,741
Research and development		3,419			2,511		9,879			5,958
General and administrative		2,512			1,564		6,808			3,614
Total stock-based compensation expense	$	13,031		$	9,363	$	38,157		$	22,179

Riverbed Technology, Inc.

Non-GAAP Condensed Consolidated Statements of Operations

In thousands, except per share amounts

Unaudited

	Three months ended September 30,				Three months ended September 30,				% change
	2008		% of Revenues		2007		% of Revenues
Revenue:
Product	$	65,238	75	%	$	52,508	83	%	24	%
Support and services		21,309	25	%		10,802	17	%	97	%
Total revenue		86,547	100	%		63,310	100	%	37	%
Cost of revenue:
Cost of product		16,598	25	%(a)		14,002	27	%(a)	19	%
Cost of support and services		6,049	28	%(a)		3,304	31	%(a)	83	%
Total cost of revenue		22,647	26	%		17,306	27	%	31	%
Gross profit		63,900	74	%		46,004	73	%	39	%
Operating expenses:
Sales and marketing		28,924	33	%		20,518	32	%	41	%
Research and development		11,151	13	%		8,280	13	%	35	%
General and administrative		7,885	9	%		5,569	9	%	42	%
Other charges		—				—
Total operating expenses		47,960	55	%		34,367	54	%	40	%
Operating income		15,940	18	%		11,637	18	%	37	%
Other income, net		1,287	1	%		2,754	4	%	-53	%
Income before provision for income taxes		17,227	20	%		14,391	23	%	20	%
Provision for income taxes		6,236	7	%		1,950	3	%	220	%
Net income	$	10,991	13	%	$	12,441	20	%	-12	%
Net income per share, basic	$	0.15			$	0.18
Net income per share, diluted	$	0.15			$	0.17
Shares used in computing basic net income per share		71,005				69,069
Shares used in computing diluted net income per share		74,472				75,002

(a) Cost of product and cost of support and services are reflected as percent of product and support and services revenues, respectively.

Riverbed Technology, Inc.

Non-GAAP Condensed Consolidated Statements of Operations

In thousands, except per share amounts

Unaudited

	Nine months ended September 30,				Nine months ended September 30,				% change
	2008		% of Revenues		2007		% of Revenues
Revenue:
Product	$	185,574	77	%	$	133,335	83	%	39	%
Support and services		55,547	23	%		26,761	17	%	108	%
Total revenue		241,121	100	%		160,096	100	%	51	%
Cost of revenue:
Cost of product		45,020	24	%(a)		36,985	28	%(a)	22	%
Cost of support and services		16,677	30	%(a)		8,199	31	%(a)	103	%
Total cost of revenue		61,697	26	%		45,184	28	%	37	%
Gross profit		179,424	74	%		114,912	72	%	56	%
Operating expenses:
Sales and marketing		83,080	34	%		51,983	32	%	60	%
Research and development		33,328	14	%		21,240	13	%	57	%
General and administrative		23,087	10	%		13,103	8	%	76	%
Other charges		—				—
Total operating expenses		139,495	58	%		86,326	53	%	62	%
Operating income		39,929	17	%		28,586	18	%	40	%
Other income, net		5,059	2	%		7,028	4	%	-28	%
Income before provision for income taxes		44,988	19	%		35,614	22	%	26	%
Provision for income taxes		16,173	7	%		2,868	2	%	464	%
Net income	$	28,815	12	%	$	32,746	20	%	-12	%
Net income per share, basic	$	0.41			$	0.49
Net income per share, diluted	$	0.39			$	0.45
Shares used in computing basic net income per share		70,915				67,397
Shares used in computing diluted net income per share		74,503				73,440

(a) Cost of product and cost of support and services are reflected as percent of product and support and services revenues, respectively.

Riverbed Technology, Inc.

Non-GAAP Condensed Consolidated Statements of Operations

In thousands, except per share amounts

Unaudited

	Three months ended September 30,				Three months ended June 30,				% change
	2008		% of Revenues		2008		% of Revenues
Revenue:
Product	$	65,238	75	%	$	62,607	77	%	4	%
Support and services		21,309	25	%		18,985	23	%	12	%
Total revenue		86,547	100	%		81,592	100	%	6	%
Cost of revenue:
Cost of product		16,598	25	%(a)		14,521	23	%(a)	14	%
Cost of support and services		6,049	28	%(a)		5,649	30	%(a)	7	%
Total cost of revenue		22,647	26	%		20,170	25	%	12	%
Gross profit		63,900	74	%		61,422	75	%	4	%
Operating expenses:
Sales and marketing		28,924	33	%		28,354	35	%	2	%
Research and development		11,151	13	%		11,512	14	%	-3	%
General and administrative		7,885	9	%		7,684	9	%	3	%
Other charges		—				—
Total operating expenses		47,960	55	%		47,550	58	%	1	%
Operating income		15,940	18	%		13,872	17	%	15	%
Other income, net		1,287	1	%		1,472	2	%	-13	%
Income before provision for income taxes		17,227	20	%		15,344	19	%	12	%
Provision for income taxes		6,236	7	%		5,417	7	%	15	%
Net income	$	10,991	13	%	$	9,927	12	%	11	%
Net income per share, basic	$	0.15			$	0.14
Net income per share, diluted	$	0.15			$	0.13
Shares used in computing basic net income per share		71,005				71,143
Shares used in computing diluted net income per share		74,472				74,610

(a) Cost of product and cost of support and services are reflected as percent of product and support and services revenues, respectively.

Riverbed Technology, Inc.

GAAP to Non-GAAP Reconciliation

In thousands, except per share amounts

Unaudited

	Three months ended September 30, 2008								Nine months ended September 30, 2008
	GAAP			Adjustments			Non-GAAP		GAAP			Adjustments			Non-GAAP
Reconciliation of gross profit:
Total revenue	$	86,547		$	—		$	86,547	$	241,121		$	—		$	241,121
Total cost of revenue		23,827			(1,180	)(a)		22,647		65,304			(3,607	)(a)		61,697
Gross profit	$	62,720		$	1,180		$	63,900	$	175,817		$	3,607		$	179,424
Reconciliation of operating expenses:
Sales and marketing	$	34,855		$	(5,931	)(a)	$	28,924	$	100,992		$	(17,912	)(a)	$	83,080
Research and development		14,582			(3,431	)(a)		11,151		43,278			(9,950	)(a)		33,328
General and administrative		10,419			(2,534	)(a)		7,885		29,925			(6,838	)(a)		23,087
Other charges		11,000			(11,000	)(d)		—		11,000			(11,000	)(d)		—
Total operating expenses	$	70,856		$	(22,896	)	$	47,960	$	185,195		$	(45,700	)	$	139,495
Reconciliation of operating income (loss), net income (loss) and net income (loss) per share:
Operating income (loss)	$	(8,136	)	$	24,076	(a)	$	15,940	$	(9,378	)	$	49,307	(a)	$	39,929
Income (loss) before provision for income taxes	$	(6,849	)	$	24,076	(a)	$	17,227	$	(4,319	)	$	49,307	(a)	$	44,988
Income tax provision	$	5,574		$	662	(b)	$	6,236	$	8,335		$	7,838	(b)	$	16,173
Net income (loss)	$	(12,423	)	$	23,414		$	10,991	$	(12,654	)	$	41,469		$	28,815
Net income (loss) per share, basic	$	(0.17	)				$	0.15	$	(0.18	)				$	0.41
Net income (loss) per share, diluted	$	(0.17	)				$	0.15	$	(0.18	)				$	0.39
Shares used in computing basic net income (loss) per share		71,005						71,005		70,915						70,915
Shares used in computing diluted net income (loss) per share		71,005			3,467	(c)		74,472		70,915			3,588	(c)		74,503

Use of Non-GAAP Financial Information:

To supplement our condensed consolidated financial statements presented on a GAAP basis, Riverbed uses non-GAAP measures of operating results, net income (loss) and net income (loss) per share, which are adjusted to exclude stock-based compensation expense and payroll tax expense related to stock option exercises, other one time charges, exclude our tax valuation allowance and certain other extraordinary items from the tax rate, and to include dilutive shares where applicable. We believe these adjustments are appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future. These adjustments to our current period GAAP results are made with the intent of providing both management and investors a more complete understanding of Riverbed’s underlying operating results and trends and our marketplace performance. The non-GAAP results are an indication of our baseline performance that are considered by management for purpose of making operational decisions. In addition, these non-GAAP results are the primary indicators management uses as a basis for our planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for net income (loss) or basic and diluted net income (loss) per share prepared in accordance with generally accepted accounting principles in the United States. Non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles and are subject to limitations.

GAAP to Non-GAAP Reconciliations:

(a) Stock-based compensation expense and payroll tax on stock option exercises

	Three months ended September 30, 2008						Nine months ended September 30, 2008
	Stock-based compensation expense		Payroll tax on stock option exercises		Total		Stock-based compensation expense		Payroll tax on stock option exercises		Total
Cost of revenue	$	1,179	$	1	$	1,180	$	3,601	$	6	$	3,607
Sales and marketing		5,921		10		5,931		17,869		43		17,912
Research and development		3,419		12		3,431		9,879		71		9,950
General and administrative		2,512		22		2,534		6,808		30		6,838
	$	13,031	$	45	$	13,076	$	38,157	$	150	$	38,307

Excluded amount represents stock-based compensation expense. Stock-based compensation is a non-cash expense accounted for in accordance with the intrinsic value method under Accounting Principles Board No. 25 through December 31, 2005, and with the fair value recognition provisions of Statement of Financial Accounting Standards No. 123(R) effective January 1, 2006. While a large component of our expense, we believe investors want to exclude the effects of stock-based compensation expense in order to compare our financial performance with that of other companies and between time periods.

(b) Income tax provision

	Three months ended September 30, 2008		Nine months ended September 30, 2008
GAAP provision for income taxes	$	5,574	$	8,335
Effects of exclusion of stock-based compensation and valuation allowance		662		7,838
Non-GAAP provision for income taxes	$	6,236	$	16,173

The non-GAAP tax rate excludes the effect of stock-based compensation expense as well as discrete tax benefits on stock option exercises. Additionally, the non-GAAP tax rate does not assume a full valuation allowance on our deferred tax assets.

(c) Non-GAAP diluted earnings per share and non-GAAP diluted weighted average shares outstanding were calculated excluding the effects of expensing stock options under SFAS 123(R).

(d) Excluded amount represents litigation settlement.

Riverbed Technology, Inc.

GAAP to Non-GAAP Reconciliation

In thousands, except per share amounts

Unaudited

	Three months ended September 30, 2007							Nine months ended September 30, 2007
	GAAP		Adjustments			Non-GAAP		GAAP		Adjustments			Non-GAAP
Reconciliation of gross profit:
Total revenue	$	63,310	$	—		$	63,310	$	160,096	$	—		$	160,096
Total cost of revenue		18,140		(834	)(a)		17,306		47,052		(1,868	)(a)		45,184
Gross profit	$	45,170	$	834		$	46,004	$	113,044	$	1,868		$	114,912
Reconciliation of operating expenses:
Sales and marketing	$	25,139	$	(4,621	)(a)	$	20,518	$	63,035	$	(11,052	)(a)	$	51,983
Research and development		10,890		(2,610	)(a)		8,280		27,384		(6,144	)(a)		21,240
General and administrative		7,177		(1,608	)(a)		5,569		16,814		(3,711	)(a)		13,103
Total operating expenses	$	43,206	$	(8,839	)	$	34,367	$	107,233	$	(20,907	)	$	86,326
Reconciliation of operating income, net income and net income per share:
Operating income	$	1,964	$	9,673	(a)	$	11,637	$	5,811	$	22,775	(a)	$	28,586
Net income	$	2,768	$	9,673		$	12,441	$	9,971	$	22,775		$	32,746
Net income per share, basic	$	0.04				$	0.18	$	0.15				$	0.49
Net income per share, diluted	$	0.04				$	0.17	$	0.14				$	0.45
Shares used in computing basic net income per share		69,069					69,069		67,397					67,397
Shares used in computing diluted net income per share		74,360		642	(b)		75,002		72,934		506	(b)		73,440

GAAP to Non-GAAP Reconciliations:

(a) Stock-based compensation expense and payroll tax on stock option exercises

	Three months ended September 30, 2007						Nine months ended September 30, 2007
	Stock-based compensation expense		Payroll tax on stock option exercises		Total		Stock-based compensation expense		Payroll tax on stock option exercises		Total
Cost of revenue	$	833	$	1	$	834	$	1,866	$	2	$	1,868
Sales and marketing		4,455		166		4,621		10,741		311		11,052
Research and development		2,511		99		2,610		5,958		186		6,144
General and administrative		1,564		44		1,608		3,614		97		3,711
	$	9,363	$	310	$	9,673	$	22,179	$	596	$	22,775

Excluded amount represents stock-based compensation expense. Stock-based compensation is a non-cash expense accounted for in accordance with the intrinsic value method under Accounting Principles Board No. 25 through December 31, 2005, and with the fair value recognition provisions of Statement of Financial Accounting Standards No. 123(R) effective January 1, 2006. While a large component of our expense, we believe investors want to exclude the effects of stock-based compensation expense in order to compare our financial performance with that of other companies and between time periods.

(b) Non-GAAP diluted earnings per share and non-GAAP diluted weighted average shares outstanding were calculated excluding the effects of expensing stock options under SFAS 123(R).

Riverbed Technology, Inc.

GAAP to Non-GAAP Reconciliation

In thousands, except per share amounts

Unaudited

	Three months ended June 30, 2008
	GAAP			Adjustments			Non-GAAP
Reconciliation of gross profit:
Total revenue	$	81,592		$	—		$	81,592
Total cost of revenue		21,531			(1,361	)(a)	$	20,170
Gross profit	$	60,061		$	1,361		$	61,422
Reconciliation of operating expenses:
Sales and marketing	$	34,930		$	(6,576	)(a)	$	28,354
Research and development		15,088			(3,576	)(a)	$	11,512
General and administrative		10,133			(2,449	)(a)	$	7,684
Total operating expenses	$	60,151		$	(12,601	)	$	47,550
Reconciliation of operating income, net income and net income per share:
Operating income (loss)	$	(90	)	$	13,962	(a)	$	13,872
Income before provision for income taxes	$	1,382		$	13,962	(a)	$	15,344
Income tax provision	$	2,251		$	3,166	(b)	$	5,417
Net income	$	(869	)	$	10,796		$	9,927
Net income per share, basic	$	(0.01	)				$	0.14
Net income per share, diluted	$	(0.01	)				$	0.13
Shares used in computing basic net income per share		71,143						71,143
Shares used in computing diluted net income per share		71,143			3,467	(c)		74,610

GAAP to Non-GAAP Reconciliations:

(a) Stock-based compensation expense and payroll tax on stock option exercises

	Stock-based compensation expense		Payroll tax on stock option exercises		Total
Cost of revenue	$	1,356	$	5	$	1,361
Sales and marketing		6,559		17		6,576
Research and development		3,559		17		3,576
General and administrative		2,444		5		2,449
	$	13,918	$	44	$	13,962

Excluded amount represents stock-based compensation expense. Stock-based compensation is a non-cash expense accounted for in accordance with the intrinsic value method under Accounting Principles Board No. 25 through December 31, 2005, and with the fair value recognition provisions of Statement of Financial Accounting Standards No. 123(R) effective January 1, 2006. While a large component of our expense, we believe investors want to exclude the effects of stock-based compensation expense in order to compare our financial performance with that of other companies and between time periods.

(b) Income tax provision

GAAP provision for income taxes	$	2,251
Effects of exclusion of stock-based compensation and valuation allowance		3,166
Non-GAAP provision for income taxes	$	5,417

The non-GAAP tax rate excludes the effect of stock-based compensation expense as well as discrete tax benefits on stock option exercises. Additionally, the non-GAAP tax rate does not assume a full valuation allowance on our deferred tax assets.

(c) Non-GAAP diluted earnings per share and non-GAAP diluted weighted average shares outstanding were calculated excluding the effects of expensing stock options under SFAS 123(R).

Riverbed Technology, Inc.

Supplemental Financial Information

In thousands

Unaudited

Revenue by Geography

	Q3-07			Q4-07			Q1-08			Q2-08			Q3-08
Customers within the United States	$	38,736		$	46,973		$	40,502		$	47,596		$	54,289
Customers within Europe, Middle East and Africa		12,661			15,670			19,623			19,270			20,476
Customers within the rest of the world		11,913			13,667			12,857			14,726			11,782
Total revenue	$	63,310		$	76,310		$	72,982		$	81,592		$	86,547
As a percentage of total revenues:
Customers within the United States		61	%		62	%		55	%		58	%		63	%
Customers within Europe, Middle East and Africa		20	%		21	%		27	%		24	%		24	%
Customers within the rest of the world		19	%		17	%		18	%		18	%		13	%
Total revenue		100	%		100	%		100	%		100	%		100	%
Revenue by Sales Channel
	Q3-07			Q4-07			Q1-08			Q2-08			Q3-08
Direct	$	7,516		$	9,251		$	8,063		$	7,290		$	5,649
Indirect		55,794			67,059			64,919			74,302			80,898
Total revenue	$	63,310		$	76,310		$	72,982		$	81,592		$	86,547
As a percentage of total revenues:
Direct		12	%		12	%		11	%		9	%		7	%
Indirect		88	%		88	%		89	%		91	%		93	%
Total revenue		100	%		100	%		100	%		100	%		100	%

Riverbed Technology, Inc.

Condensed Consolidated Balance Sheets

In thousands

	September 30, 2008			December 31, 2007
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	117,324		$	162,979
Marketable securities		164,180			83,103
Trade receivables, net		43,245			50,072
Other receivables		1,022			1,273
Inventory		13,796			9,413
Prepaid expenses and other current assets		10,396			5,136
Total current assets		349,963			311,976
Fixed assets, net		21,614			18,826
Other assets		9,146			6,800
Total assets	$	380,723		$	337,602
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	18,539		$	20,325
Accrued compensation and related benefits		13,029			14,290
Other accrued liabilities		27,469			9,381
Deferred revenue		40,451			26,845
Total current liabilities		99,488			70,841
Deferred revenue non-current		9,836			6,634
Other long-term liabilities		302			409
Total long-term liabilities		10,138			7,043
Stockholders’ equity:
Common stock and additional paid-in-capital		318,067			295,487
Deferred stock-based compensation		(1,469	)		(3,287	)
Accumulated deficit		(45,189	)		(32,535	)
Accumulated other comprehensive loss		(312	)		53
Total stockholders’ equity		271,097			259,718
Total liabilities and stockholders’ equity	$	380,723		$	337,602

Riverbed Technology, Inc.

Condensed Consolidated Statements of Cash Flows

In thousands

Unaudited

	Nine months ended September 30,
	2008			2007
Operating activities:
Net income (loss)	$	(12,654	)	$	9,971
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		7,338			3,418
Stock-based compensation		38,157			22,179
Provision for inventory		4,797			935
Excess tax benefit from employee stock plans		(1,427	)		—
Changes in operating assets and liabilities:
Trade receivables		5,521			(19,645	)
Inventory		(12,517	)		(5,394	)
Prepaid expenses and other assets		(5,065	)		(174	)
Accounts payable and other current liabilities		16,102			12,139
Income taxes payable		4,762			2,645
Deferred revenue		17,385			9,051
Net cash provided by operating activities		62,399			35,125
Investing activities:
Capital expenditures		(10,761	)		(5,707	)
Purchase of available for sale securities		(121,077	)		(69,132	)
Proceeds from sales and maturities of available for sale securities		39,803			10,980
Increase in other assets		(1,404	)		(2,100	)
Net cash used in investing activities		(93,439	)		(65,959	)
Financing activities:
Proceeds from public offering, net of expenses		—			87,681
Proceeds from issuance of common stock under employee stock plans, net of repurchases		9,119			7,094
Payments for repurchases of common stock		(24,992	)		—
Excess tax benefit from employee stock plans		1,427			—
Net cash provided by (used in) financing activities		(14,446	)		94,775
Effect of exchange rate changes on cash and cash equivalents		(169	)		74
Net increase (decrease) in cash and cash equivalents		(45,655	)		64,015
Cash and cash equivalents at beginning of period		162,979			105,330
Cash and cash equivalents at end of period	$	117,324		$	169,345