Riverbed Technology 8-K Riverbed Technology Reports Record Third Quarter Results and Announces Two-for-One Stock Split

Exhibit 99.1

Riverbed Technology Reports Record Third Quarter Results and Announces Two-for-One Stock Split

Revenue increases 17% sequentially and 45% year-over-year to $148 million

• 26^th consecutive quarter of year-over-year revenue growth

• Record operating profit

• Cash flow from operations of $42 million

Riverbed Technology (NASDAQ: RVBD), the IT performance company, today reported financial results for its third quarter ended September 30, 2010 (Q3’10). Revenues for Q3’10 were $147.8 million, up 17% compared to the second quarter of 2010 (Q2’10), and up 45% compared to the third quarter of 2009 (Q3’09).

Reporting on a GAAP basis, net income for Q3’10 was $13.9 million, or $0.18 per diluted share. This compares to GAAP net income of $6.6 million, or $0.09 per share, in Q2’10 and $5.5 million, or $0.08 per share, in Q3’09. GAAP net income increased 112% over the prior quarter and 154% over the prior year.

Non-GAAP net income for Q3’10 was $26.6 million, or $0.34 per diluted share. This compares to non-GAAP net income of $19.2 million, or $0.25 per diluted share, in Q2’10, and $14.5 million, or $0.19 per diluted share, in Q3’09. Non-GAAP net income increased 38% sequentially and 84% over the prior year. A reconciliation between GAAP and non-GAAP information is contained in the tables below.

“WAN optimization continues to be a strategic spending priority for IT as organizations consolidate and virtualize their global data infrastructures. Riverbed^® reported a record-breaking third quarter with growth across all major geographies and industry verticals and is the undisputed technology and market leader,” said Jerry M. Kennelly, Riverbed president and CEO. “In the third quarter, deployment sizes continued to grow as we expanded our presence in the enterprise. We executed well, with the strongest top line growth Riverbed has reported in more than two years, and bottom line growth outpaced the top line, resulting in a 28% non-GAAP operating margin.”

Q3’10 Financial Highlights

• Total revenue increased 17% sequentially and 45% year-over-year

• Product revenue increased 22% sequentially and 48% year-over-year

• Non-GAAP operating profit increased 36% sequentially and 84% year-over-year

• Non-GAAP operating margin increased to 28.1% compared to 24.2% in Q2’10 and 22.0% in Q3’09

• Days sales outstanding decreased to 27 days from 32 days in Q2’10 and 42 days in Q3’09

• Cash and investments grew to $469 million compared to $422 million in Q2’10 and $297 million in Q3’09

Q3’10 Business Highlights

• Identified as the Advanced Platform WAN optimization controller worldwide market share leader with 40.3% share for Q2’10 based on revenue in the Gartner September 2010 report, “Market Share: Application Acceleration Equipment, Worldwide, 2Q10” (J. Skorupa and N. Pham, September 15, 2010).

• Further enhanced competitive position with the release of Virtual Steelhead. Virtual Steelhead^® extends the reach of Riverbed’s market-leading WAN optimization solutions enabling customers to deploy Riverbed WAN optimization solutions in a wider range of environments that may have specialized requirements, such as ruggedized environments or environments with space limitations, as well as data centers that have been heavily virtualized.

• Launched Steelhead Mobile 3.1 offering the industry’s only mobile WAN optimization solution for Apple Mac desktops and laptops. Mobile 3.1 also optimizes Citrix Virtual Desktop deployments and Microsoft applications including Exchange 2010 and Sharepoint and Microsoft Online.

• Achieved EAL4+ certification under the Common Criteria for Information Technology Security Evaluation and Certification Scheme (CCS). By obtaining this certification, Riverbed assures federal agencies and departments that its WAN optimization solution meets stringent government requirements mandated for commercial information security products purchased by the U.S. government for use in national security systems.

Stock Split

Riverbed also announced today that its Board of Directors has approved a two-for-one stock split of the company’s outstanding shares of common stock to be effected in the form of a stock dividend. The stock split will entitle each stockholder of record at the close of business on Monday, November 1, 2010, to receive one additional share for every one share owned as of that date. The additional shares resulting from the stock split are expected to be distributed by the company’s transfer agent on or about Monday, November 8, 2010. Upon the completion of the stock split, Riverbed will have approximately 147 million shares of common stock outstanding.

Conference Call

Riverbed will host a conference call today, October 21, 2010, at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) to discuss its third quarter 2010 results and outlook for the fourth quarter of 2010. 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 for 12 months.

Forward Looking Statements

This press release contains forward-looking statements, including statements related to WAN optimization as an IT spending priority and statements related to the record date for the stock split; the date of the distribution of the stock dividend; the amount of the distribution and the number of shares outstanding after the stock split. 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; additional issuances of common stock before the distribution date; unanticipated delays in effecting the stock split in the form of a stock dividend caused by system or other errors; 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 June 30, 2010. 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 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 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 atwww.riverbed.com.

Riverbed and any Riverbed product or service name or logo used herein are trademarks of Riverbed Technology, Inc. All other trademarks used herein belong to their respective owners.

INVESTOR RELATIONS CONTACT

Renee Lyall

Riverbed Technology

415-247-6353

Renee.Lyall@riverbed.com

MEDIA CONTACT

Kristalle Ward

Riverbed Technology

415-247-8140

kristalle.ward@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,
	2010		2009			2010		2009
Revenue:
Product	$	102,841	$	69,543		$	262,083	$	190,322
Support and services		44,965		32,506			124,373		90,925
Total revenue		147,806		102,049			386,456		281,247
Cost of revenue:
Cost of product		21,889		14,982			57,133		43,776
Cost of support and services		12,878		9,410			36,476		27,385
Total cost of revenue		34,767		24,392			93,609		71,161
Gross profit		113,039		77,657			292,847		210,086
Operating expenses:
Sales and marketing		56,517		44,192			158,575		127,003
Research and development		21,951		17,302			61,500		50,368
General and administrative		12,078		9,297			34,393		27,382
Acquisition-related costs (credits)		—		(3,008	)		2,725		(4,447	)
Total operating expenses		90,546		67,783			257,193		200,306
Operating income		22,493		9,874			35,654		9,780
Other income, net		384		141			683		824
Income before provision for income taxes		22,877		10,015			36,337		10,604
Provision for income taxes		8,967		4,546			14,790		4,451
Net income	$	13,910	$	5,469		$	21,547	$	6,153
Net income per share, basic	$	0.19	$	0.08		$	0.30	$	0.09
Net income per share, diluted	$	0.18	$	0.08		$	0.28	$	0.09
Shares used in computing basic net income per share		72,989		69,370			71,831		69,035
Shares used in computing diluted net income per share		78,965		71,968			76,773		71,040

Riverbed Technology, Inc.

GAAP to Non-GAAP Reconciliation

In thousands, except per share amounts

Unaudited

	Three months ended									Nine months ended
GAAP to Non-GAAP Reconciliations:	September 30,			June 30,			September 30,			September 30,
	2010			2010			2009			2010			2009
Reconciliation of Operating Income:
U.S. GAAP as reported	$	22,493		$	11,028		$	9,874		$	35,654		$	9,780
Adjustments:
Stock-based compensation (1)		17,331			17,715			13,911			50,496			40,431
Payroll tax on stock-based compensation (2)		516			573			40			1,513			318
Amortization on intangibles (3)		1,195			1,195			1,195			3,585			2,916
Acquisition-related costs (credits) (4)		—			—			(3,004	)		4,156			(3,576	)
Deferred revenue adjustment (5)		—			—			505			—			1,479
As Adjusted	$	41,535		$	30,511		$	22,521		$	95,404		$	51,348
Reconciliation of Operating Margin:
U.S. GAAP as reported		15.2%			8.7%			9.7%			9.2%			3.5%
Adjustments:
Stock-based compensation (1)		11.8%			14.1%			13.6%			13.1%			14.4%
Payroll tax on stock-based compensation (2)		0.3%			0.5%			0.0%			0.4%			0.1%
Amortization on intangibles (3)		0.8%			0.9%			1.2%			0.9%			1.0%
Acquisition-related costs (credits) (4)		0.0%			0.0%			-2.9%			1.1%			-1.3%
Deferred revenue adjustment (5)		0.0%			0.0%			0.4%			0.0%			0.5%
As Adjusted		28.1%			24.2%			22.0%			24.7%			18.2%
Reconciliation of Net Income:
U.S. GAAP as reported	$	13,910		$	6,554		$	5,469		$	21,547		$	6,153
Adjustments:
Stock-based compensation (1)		17,331			17,715			13,911			50,496			40,431
Payroll tax on stock-based compensation (2)		516			573			40			1,513			318
Amortization on intangibles (3)		1,195			1,195			1,195			3,585			2,916
Acquisition-related costs (credits) (4)		—			—			(3,004	)		4,156			(3,576	)
Deferred revenue adjustment (5)		—			—			505			—			1,479
Income tax adjustments (6)		(6,333	)		(6,807	)		(3,626	)		(20,644	)		(13,729	)
As Adjusted	$	26,619		$	19,230		$	14,490		$	60,653		$	33,992
Reconciliation of Net Income per share, diluted:
U.S. GAAP as reported	$	0.18		$	0.09		$	0.08		$	0.28		$	0.09
Adjustments:
Stock-based compensation (1)		0.21			0.22			0.17			0.66			0.55
Payroll tax on stock-based compensation (2)		0.01			0.01			—			0.02			—
Amortization on intangibles (3)		0.02			0.02			0.02			0.05			0.04
Acquisition-related costs (credits) (4)		—			—			(0.04	)		0.05			(0.05	)
Deferred revenue adjustment (5)		—			—			0.01			—			0.02
Income tax adjustments (6)		(0.08	)		(0.09	)		(0.05	)		(0.27	)		(0.19	)
As Adjusted	$	0.34		$	0.25		$	0.19		$	0.79		$	0.46
Non-GAAP Net income per share, basic	$	0.36		$	0.27		$	0.21		$	0.84		$	0.49
Non-GAAP Net income per share, diluted (7)	$	0.34		$	0.25		$	0.19		$	0.79		$	0.46
Shares used in computing basic net income per share		72,989			71,936			69,370			71,831			69,035
Shares used in computing diluted net income per share (7)		78,965			76,477			75,301			76,773			73,406

	Three months ended									Nine months ended
GAAP to Non-GAAP Reconciliations:	September 30,			June 30,			September 30,			September 30,
	2010			2010			2009			2010			2009
Non-GAAP adjustments:
Support and services revenue	$	—		$	—		$	505		$	—		$	1,479
Cost of product		877			881			860			2,623			2,136
Cost of support and services		1,404			1,398			1,121			4,086			3,283
Sales and marketing		7,904			8,030			6,742			23,723			19,848
Research and development		4,923			5,102			3,629			14,775			10,679
General and administrative		3,934			4,072			2,798			11,818			8,590
Other acquisition costs (credits)		—			—			(3,008	)		2,725			(4,447	)
Provision for income taxes		(6,333	)		(6,807	)		(3,626	)		(20,644	)		(13,729	)
Total Non-GAAP Adjustments	$	12,709		$	12,676		$	9,021		$	39,106		$	27,839

(1) Stock-based compensation expense is calculated in accordance with the fair value recognition provisions of Financial Accounting Standards Board Accounting Standards Codification (ASC) Topic 718,Compensation - Stock Compensationeffective January 1, 2006.

(2) Payroll tax on stock-based compensation represents the incremental cost for employer payroll taxes on stock option exercises and restricted stock units vested and released.

(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, such as revaluation of the contingent consideration, in connection with our acquisition, which would not have otherwise occurred in the period presented as part of our operating expenses; therefore, these costs or credits 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 ASC Topic 718 for the three and nine month periods ended September 30, 2009.

Riverbed Technology, Inc.

Condensed Consolidated Balance Sheets

In thousands

	September 30,		December 31,
	2010		2009
ASSETS
Current assets:
Cash and cash equivalents	$	129,335	$	67,749
Short-term investments		263,319		257,938
Trade receivables, net		43,676		48,468
Inventory		13,345		9,742
Deferred tax assets		13,006		9,451
Prepaid expenses and other current assets		20,567		16,816
Total current assets		483,248		410,164
Long-term investments		76,614		—
Fixed assets, net		21,142		21,698
Goodwill		11,312		11,312
Intangible assets, net		15,804		19,389
Deferred tax assets, non-current		45,265		38,619
Other assets		3,712		4,097
Total assets	$	657,097	$	505,279
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	31,318	$	19,053
Accrued compensation and related benefits		25,124		18,692
Other accrued liabilities		17,444		25,976
Deferred revenue		83,734		64,478
Total current liabilities		157,620		128,199
Deferred revenue, non-current		24,208		21,972
Other long-term liabilities		3,514		2,801
Total long-term liabilities		27,722		24,773
Stockholders’ equity:
Common stock		464,905		367,236
Retained earnings (Accumulated deficit)		6,698		(14,849	)
Accumulated other comprehensive gain (loss)		152		(80	)
Total stockholders’ equity		471,755		352,307
Total liabilities and stockholders’ equity	$	657,097	$	505,279

Riverbed Technology, Inc.

Condensed Consolidated Statements of Cash Flows

In thousands

Unaudited

	Nine months ended
	September 30,
	2010			2009
Operating activities:
Net income	$	21,547		$	6,153
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		11,388			10,376
Stock-based compensation		50,496			40,431
Deferred taxes		(10,267	)		(10,019	)
Excess tax benefit from employee stock plans		(9,600	)		(1,694	)
Changes in operating assets and liabilities:
Trade receivables		4,792			1,608
Inventory		(3,603	)		(1,017	)
Prepaid expenses and other assets		(3,377	)		(2,128	)
Accounts payable		12,906			2,398
Accruals and other liabilities		14,385			8,603
Acquisition-related contingent consideration		(5,249	)		(4,947	)
Income taxes payable		8,355			6,562
Deferred revenue		21,492			17,073
Net cash provided by operating activities		113,265			73,399
Investing activities:
Capital expenditures		(7,876	)		(7,173	)
Purchase of available for sale securities		(430,659	)		(244,208	)
Proceeds from maturities of available for sale securities		307,970			181,761
Proceeds from sales of available for sale securities		40,862			13,500
Acquisitions, net of cash acquired		—			(20,469	)
Net cash used in investing activities		(89,703	)		(76,589	)
Financing activities:
Acquisition-related contingent consideration		(9,909	)		—
Proceeds from issuance of common stock under employee stock plans, net of repurchases		40,504			15,512
Cash used to net share settle equity awards		(2,300	)		—
Payments for repurchases of common stock		—			(29,016	)
Payment of debt		—			(5,004	)
Excess tax benefit from employee stock plans		9,600			1,694
Net cash provided by (used in) financing activities		37,895			(16,814	)
Effect of exchange rate changes on cash and cash equivalents		129			335
Net increase (decrease) in cash and cash equivalents		61,586			(19,669	)
Cash and cash equivalents at beginning of period		67,749			95,378
Cash and cash equivalents at end of period	$	129,335		$	75,709

Riverbed Technology, Inc.

Supplemental Financial Information

In thousands

Unaudited

	Three months ended						Nine months ended
	September 30,		June 30,		September 30,		September 30,
	2010		2010		2009		2010		2009
Revenue by Geography
United States	$	80,839	$	63,820	$	58,264	$	202,970	$	156,208
Europe, Middle East and Africa		38,405		36,842		25,747		106,660		75,019
Rest of the world		28,562		25,565		18,038		76,826		50,020
Total revenue	$	147,806	$	126,227	$	102,049	$	386,456	$	281,247
As a percentage of total revenues:
United States		55%		51%		57%		53%		56%
Europe, Middle East and Africa		26%		29%		25%		28%		27%
Rest of the world		19%		20%		18%		19%		17%
Total revenue		100%		100%		100%		100%		100%
Revenue by Sales Channel
Direct	$	7,721	$	6,982	$	6,640	$	23,999	$	22,637
Indirect		140,085		119,245		95,409		362,457		258,610
Total revenue	$	147,806	$	126,227	$	102,049	$	386,456	$	281,247
As a percentage of total revenues:
Direct		5%		6%		7%		6%		8%
Indirect		95%		94%		93%		94%		92%
Total revenue		100%		100%		100%		100%		100%