Riverbed Technology 8-K Second Quarter 2009 Financial Results

Exhibit 99.1

Riverbed Technology Reports

Second Quarter 2009 Financial Results

• Revenue increases 12% over prior year

• Cumulative customer count exceeds 6,500

• $269 million in cash and marketable securities and no debt

SAN FRANCISCO, CA – July 23, 2009 – Riverbed Technology (NASDAQ: RVBD), the IT infrastructure performance company for networks, applications and storage, today reported financial results for its second quarter ended June 30, 2009 (Q2’09).

Total GAAP revenue for Q2’09 was $91.0 million, an increase of 12% from $81.6 million of GAAP revenue reported in the second quarter of fiscal year 2008 (Q2’08). The GAAP net loss for Q2’09 was $290,000, or $0.00 per diluted share. This compares to a GAAP net loss of $869,000, or $0.01 per diluted share, in Q2’08.

Non-GAAP revenue for Q2’09 was $91.6 million, an increase of 12% from $81.6 million of revenue reported in Q2’08. Non-GAAP net income for Q2’09 was $10.3 million, or $0.14 per diluted share, as compared to non-GAAP net income for Q2’08 of $9.9 million, or $0.13 per diluted share.

“ Riverbed has continued to deliver revenue growth in a persistently challenging global economic environment, and the second quarter marks our 14^th consecutive quarter of year-over-year top line expansion,” said Jerry M. Kennelly, Riverbed® president and CEO. “We experienced another strong quarter of new customer additions, ending the second quarter with more than 6,500 customers. As we look forward, we believe that Riverbed is well positioned to capture the full opportunity of the WAN optimization market. Our competitive position remains strong, our pipeline is healthy, and we are targeting revenue and profit growth in the third quarter.”

Q2’09 Financial Highlights

• Revenue increased 12% year-over-year

• Non-GAAP gross margins increased to 76.1%

• Non-GAAP operating profit increased 11% year over year

• Deferred revenue increased to $70 million

• Cash, cash equivalents, and marketable securities of $269 million and no debt

Q2’09 Business Highlights

• Identified as both the WAN optimization controller (WOC) Advanced Platform and WOC worldwide market share leader for Q1’09 based on revenue in the Gartner report, “Market Share: Application Acceleration Equipment, Worldwide, Q1’09”

• Positioned by Gartner in the leaders quadrant in the “Magic Quadrant for WAN Optimization Controllers 2009”

• Introduced Cascade 8.3, providing ‘out-of-the-box’ WAN optimization intelligence, with an enhanced level of automation, ease-of-use, and consolidated enterprise visibility

• Partnered with Check Point Software Technologies to offer Check Point Security Gateway R70 ™ on the Riverbed Services Platform, providing customers a comprehensive set of centrally managed security protections

• Partnered with Websense to deliver Websense Web Security on the Riverbed Services Platform, enabling organizations to consolidate WAN and Web security deployments, making their IT infrastructure faster, less expensive, and more secure

• Extended relationship with Microsoft and will support Microsoft Windows Server 2008 R2 and BranchCache on the Riverbed Services Platform

• Awarded the 2009 STAR Award for Best Practices in Emerging Company Support by the Service & Support Professionals Association

Conference Call

Riverbed will host a conference call today, July 23, 2009, at 2:30 p.m. Pacific Time (5:30 p.m. Eastern Time) to discuss its second quarter fiscal year 2009 results and outlook for the third quarter of 2009. The call will be broadcast live over the Internet at www.riverbed.com/investors. A replay of the conference call will also be available via webcast at www.riverbed.com/investors for 12 months.

Forward Looking Statements

This press release contains forward-looking statements, including statements relating to revenue and profit growth in the third quarter, 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 for the quarter ended March 31, 2009. 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.

Use of Non-GAAP Financial Information

To supplement our financial results presented in accordance with Generally Accepted Accounting Principles (GAAP), this press release and the accompanying tables and the related earnings conference call contain certain non-GAAP financial measures that we believe are helpful in understanding our past financial performance and future results. For reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled, “GAAP to Non-GAAP Reconciliations.” Our non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read in conjunction with our consolidated financial statements prepared in accordance with GAAP. Our management regularly uses our supplemental non-GAAP financial measures internally to understand and manage our business and forecast future periods. Our non-GAAP financial measures include adjustments based on the following items, as well as the related income tax effects and adjustments related to our tax valuation allowance:

Support deferred revenue: Business combination accounting rules require us to account for the fair value of support contracts assumed in connection with our acquisitions. The book value of our deferred support revenue was reduced by approximately $2.0 million in the adjustment to fair value. Because these are typically one-year contracts, our GAAP revenues for the one year period subsequent to the acquisition of a business do not reflect the full amount of service revenues on assumed support contracts that would have otherwise been recorded by the acquired entity. The non-GAAP adjustment is intended to reflect the full amount of such revenues. We believe this adjustment is useful to investors as a measure of the ongoing performance of our business because we have historically experienced high renewal rates on support contracts, although we cannot be certain that customers will renew these contracts.

Stock-based compensation expenses: We have excluded the effect of stock-based compensation and stock-based payroll expenses from our non-GAAP operating expenses and net income measures. Although stock-based compensation is a key incentive offered to our employees, we continue to evaluate our business performance excluding stock-based compensation expenses. Stock-based compensation expenses will recur in future periods.

Amortization of intangible assets: We have excluded the effect of amortization of intangible assets from our non-GAAP net income. Amortization of intangible assets is a non-cash expense, and it is not part of our core operations. Investors should note that the use of intangible assets contributed to revenues earned during the periods presented and will contribute to future period revenues as well.

Acquisition related and other expenses: We incurred significant expenses in connection with our acquisition of Mazu and also incurred certain other operating expenses, which we would not have otherwise incurred in the periods presented as a part of our continuing operations. Acquisition related and other expenses consist of transaction costs, costs for transitional employees, other acquired employee related costs, integration related professional services, and adjustments to the fair value of the acquisition related contingent consideration. We believe it is useful for investors to understand the effects of these items on our total operating expenses.

About Riverbed

Riverbed Technology is the IT infrastructure performance company. The Riverbed family of wide area network (WAN) optimization solutions liberates businesses from common IT constraints by increasing application performance, enabling consolidation, and providing enterprise-wide network and application visibility – all while eliminating the need to increase bandwidth, storage or servers. Thousands of companies with distributed operations use Riverbed to make their IT infrastructure faster, less expensive and more responsive. Additional information about Riverbed (NASDAQ: RVBD) is available at www.riverbed.com.

About the Magic Quadrant

The Magic Quadrant is copyrighted 2009 by Gartner, Inc. and is reused with permission. The Magic Quadrant is a graphical representation of a marketplace at and for a specific time period. It depicts Gartner’s analysis of how certain vendors measure against criteria for that marketplace, as defined by Gartner. Gartner does not endorse any vendor, product or service depicted in the Magic Quadrant, and does not advise technology users to select only those vendors placed in the “Leaders” quadrant. The Magic Quadrant is intended solely as a research tool, and is not meant to be a specific guide to action. Gartner disclaims all warranties, express or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

Riverbed Technology, Riverbed, Steelhead, RiOS, Interceptor, Think Fast, the Riverbed logo, Mazu, Profiler and Cascade 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 June 30,						Six months ended June 30,
	2009			2008			2009			2008
Revenue:
Product	$	60,314		$	62,607		$	120,779		$	120,336
Support and services		30,673			18,985			58,419			34,238
Total revenue		90,987			81,592			179,198			154,574
Cost of revenue:
Cost of product		14,389			14,564			28,794			28,500
Cost of support and services		9,466			6,967			17,975			12,977
Total cost of revenue		23,855			21,531			46,769			41,477
Gross profit		67,132			60,061			132,429			113,097
Operating expenses:
Sales and marketing		42,025			34,930			82,811			66,137
Research and development		17,028			15,088			33,066			28,696
General and administrative		9,092			10,133			18,085			19,506
Acquisition-related costs		(2,959	)		—			(1,439	)		—
Total operating expenses		65,186			60,151			132,523			114,339
Operating income (loss)		1,946			(90	)		(94	)		(1,242	)
Other income, net		45			1,472			683			3,772
Income before provision for income taxes		1,991			1,382			589			2,530
Provision (benefit) for income taxes		2,281			2,251			(95	)		2,761
					��
Net income (loss)	$	(290	)	$	(869	)	$	684		$	(231	)
Net income (loss) per share, basic	$	—		$	(0.01	)	$	0.01		$	—
Net income (loss) per share, diluted	$	—		$	(0.01	)	$	0.01		$	—
Shares used in computing basic net income (loss) per share		69,007			71,143			68,868			70,870
Shares used in computing diluted net income (loss) per share		69,007			71,143			70,576			70,870

Riverbed Technology, Inc.

GAAP to Non-GAAP Reconciliation

In thousands, except per share amounts

Unaudited

	Three months ended									Six months ended
GAAP to Non-GAAP Reconciliations:	June 30,			March 31,			June 30,			June 30,
	2009			2009			2008			2009			2008
Reconciliation of Total Revenue:
U.S. GAAP as reported	$	90,987		$	88,211		$	81,592		$	179,198		$	154,574
Adjustments:
Deferred revenue adjustment (5)		658			316			—			974			—
As Adjusted	$	91,645		$	88,527		$	81,592		$	180,172		$	154,574
Reconciliation of Gross Profit:
U.S. GAAP as reported	$	67,132		$	65,297		$	60,061		$	132,429		$	113,097
Adjustments:
Stock-based compensation (1)		1,237			1,118			1,356			2,355			2,422
Payroll taxes on option exercises (2)		17			—			5			17			5
Amortization on intangibles (3)		740			326			—			1,066			—
Deferred revenue adjustment (5)		658			316			—			974			—
As Adjusted	$	69,784		$	67,057		$	61,422		$	136,841		$	115,524
Reconciliation of Gross Margin:
U.S. GAAP as reported		73.8	%		74.0	%		73.6	%		73.9	%		73.2	%
Adjustments:
Stock-based compensation (1)		1.4	%		1.3	%		1.7	%		1.3	%		1.5	%
Amortization on intangibles (3)		0.8	%		0.4	%		0.0	%		0.6	%		0.0	%
Deferred revenue adjustment (5)		0.1	%		0.0	%		0.0	%		0.2	%		0.0	%
As Adjusted		76.1	%		75.7	%		75.3	%		76.0	%		74.7	%
Reconciliation of Operating Income (Loss):
U.S. GAAP as reported	$	1,946		$	(2,040	)	$	(90	)	$	(94	)	$	(1,242	)
Adjustments:
Stock-based compensation (1)		13,738			12,782			13,918			26,520			25,126
Payroll taxes on option exercises (2)		252			26			44			278			105
Amortization on intangibles (3)		1,195			526			—			1,721			—
Acquisition-related costs (4)		(2,459	)		1,887			—			(572	)		—
Deferred revenue adjustment (5)		658			316			—			974			—
As Adjusted	$	15,330		$	13,497		$	13,872		$	28,827		$	23,989
Reconciliation of Net Income (Loss):
U.S. GAAP as reported	$	(290	)	$	974		$	(869	)	$	684		$	(231	)
Adjustments:
Stock-based compensation (1)		13,738			12,782			13,918			26,520			25,126
Payroll taxes on option exercises (2)		252			26			44			278			105
Amortization on intangibles (3)		1,195			526			—			1,721			—
Acquisition-related costs (4)		(2,459	)		1,887			—			(572	)		—
Deferred revenue adjustment (5)		658			316			—			974			—
Income tax adjustments (6)		(2,808	)		(7,295	)		(3,166	)		(10,103	)		(7,176	)
As Adjusted	$	10,286		$	9,216		$	9,927		$	19,502		$	17,824
Non-GAAP Net income per share, basic	$	0.15		$	0.13		$	0.14		$	0.28		$	0.25
Non-GAAP Net income per share, diluted (7)	$	0.14		$	0.13		$	0.13		$	0.27		$	0.24
Shares used in computing basic net income per share		69,007			68,728			71,143			68,868			70,870
Shares used in computing diluted net income per share (7)		73,611			71,306			74,610			72,458			74,518

	Three months ended									Six months ended
GAAP to Non-GAAP Reconciliations:	June 30,			March 31,			June 30,			June 30,
	2009			2009			2008			2009			2008
Non-GAAP adjustments:
Support and services revenue	$	658		$	316		$	—		$	974		$	—
Cost of product		855			421			42			1,276			77
Cost of support and services		1,139			1,023			1,319			2,162			2,350
Sales and marketing		6,768			6,338			6,576			13,106			11,981
Research and development		3,747			3,303			3,576			7,050			6,519
General and administrative		3,176			2,616			2,449			5,792			4,304
Other acquisition costs		(2,959	)		1,520			—			(1,439	)		—
Provision (benefit) for income taxes		(2,808	)		(7,295	)		(3,166	)		(10,103	)		(7,176	)
Total Non-GAAP Adjustments	$	10,576		$	8,242		$	10,796		$	18,818		$	18,055

(1) Stock-based compensation expense is calculated in accordance with the fair value recognition provisions of Statement of Financial Accounting Standards No. 123 (R) effective January 1, 2006.

(2) Payroll tax on stock option exercises represents the incremental cost for employer payroll taxes on stock option exercises.

(3) The intangible assets recorded at fair value as a result of our acquisition are amortized over the estimated useful life of the respective asset.

(4) We incurred expenses in connection with our acquisition, which would not have otherwise occurred in the period presented as part of our operating expenses; therefore, these costs are excluded from our non-GAAP operating expenses.

(5) Business combination accounting rules require us to account for the fair value of deferred revenue assumed in connection with an acquisition. The non-GAAP adjustment is intended to reflect the full amount of support and service revenue that would have otherwise been recorded by the acquired entity.

(6) The non-GAAP tax rate excludes the income tax effects of non-GAAP adjustments. Additionally, the non-GAAP tax rate does not assume a valuation allowance on our deferred tax assets.

(7) 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.

Condensed Consolidated Balance Sheets

In thousands

	June 30, 2009			December 31, 2008
ASSETS
Current assets:
Cash and cash equivalents	$	50,643		$	95,378
Marketable securities		218,525			172,398
Trade receivables, net		49,061			46,839
Inventory		9,176			10,637
Deferred tax assets		7,751			6,185
Prepaid expenses and other current assets		13,129			12,605
Total current assets		348,285			344,042
Fixed assets, net		22,357			21,993
Goodwill		11,711			—
Intangible assets, net		21,779			—
Deferred tax assets, non-current		32,818			27,033
Other assets		5,144			5,449
Total assets	$	442,094		$	398,517
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	16,342		$	18,290
Accrued compensation and related benefits		14,677			13,137
Other accrued liabilities		21,443			13,342
Deferred revenue		54,024			45,194
Total current liabilities		106,486			89,963
Deferred revenue, non-current		15,865			12,967
Other long-term liabilities		2,283			1,758
Total long-term liabilities		18,148			14,725
Stockholders’ equity:
Common stock		338,750			315,882
Accumulated deficit		(21,250	)		(21,934	)
Accumulated other comprehensive loss		(40	)		(119	)
Total stockholders’ equity		317,460			293,829
Total liabilities and stockholders’ equity	$	442,094		$	398,517

Riverbed Technology, Inc.

Condensed Consolidated Statements of Cash Flows

In thousands

Unaudited

	Six months ended June 30,
	2009			2008
Operating activities:
Net income (loss)	$	684		$	(231	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		6,647			3,574
Stock-based compensation		26,520			25,126
Deferred taxes		(6,508	)		—
Excess tax benefit from employee stock plans		(1,340	)		(1,427	)
Changes in operating assets and liabilities:
Trade receivables		(166	)		4,107
Inventory		1,907			(5,900	)
Prepaid expenses and other assets		(122	)		(1,004	)
Accounts payable		(2,159	)		(3,278	)
Accruals and other liabilities		1,472			3,821
Acquisition-related contingent consideration		(2,454	)		—
Deferred revenue		10,740			11,108
Net cash provided by operating activities		35,221			35,896
Investing activities:
Capital expenditures		(5,560	)		(8,120	)
Purchase of available for sale securities		(178,446	)		(197,023	)
Proceeds from maturities of available for sale securities		118,599			102,382
Proceeds from sales of available for sale securities		13,500			24,003
Acquisitions, net of cash acquired		(20,469	)		—
Net cash used in investing activities		(72,376	)		(78,758	)
Financing activities:
Proceeds from issuance of common stock under employee stock plans, net of repurchases		12,675			6,540
Payments for repurchases of common stock		(16,806	)		(12,484	)
Payment of debt		(5,004	)		—
Excess tax benefit from employee stock plans		1,340			1,427
Net cash used in financing activities		(7,795	)		(4,517	)
Effect of exchange rate changes on cash and cash equivalents		215			79
Net decrease in cash and cash equivalents		(44,735	)		(47,300	)
Cash and cash equivalents at beginning of period		95,378			162,979
Cash and cash equivalents at end of period	$	50,643		$	115,679

Riverbed Technology, Inc.

Supplemental Financial Information

In thousands

Unaudited

Revenue by Geography
	Q2-08			Q3-08			Q4-08			Q1-09			Q2-09
United States	$	47,596		$	54,289		$	50,803		$	48,304		$	49,640
Europe, Middle East and Africa		19,270			20,476			28,077			24,338			24,934
Rest of the world		14,726			11,782			13,348			15,569			16,413
Total revenue	$	81,592		$	86,547		$	92,228		$	88,211		$	90,987
As a percentage of total revenues:
United States		58	%		63	%		55	%		55	%		55	%
Europe, Middle East and Africa		24	%		24	%		30	%		28	%		27	%
Rest of the world		18	%		13	%		15	%		17	%		18	%
Total revenue		100	%		100	%		100	%		100	%		100	%
Revenue by Sales Channel
	Q2-08			Q3-08			Q4-08			Q1-09			Q2-09
Direct	$	7,290		$	5,649		$	6,701		$	7,765		$	8,232
Indirect		74,302			80,898			85,527			80,446			82,755
Total revenue	$	81,592		$	86,547		$	92,228		$	88,211		$	90,987
As a percentage of total revenues:
Direct		9	%		7	%		7	%		9	%		9	%
Indirect		91	%		93	%		93	%		91	%		91	%
Total revenue		100	%		100	%		100	%		100	%		100	%