Riverbed Technology 8-K Riverbed Technology Reports Record Revenue for Third Quarter Fiscal 2011

Exhibit 99.1

Riverbed Technology Reports Record Revenue for Third Quarter Fiscal 2011

• Total revenue increases more than 28% year-over-year

• Reports highest operating profit in company’s history

Riverbed Technology (NASDAQ:RVBD), the IT performance company, today reported financial results for its third quarter ended September 30, 2011 (Q3’11).

Reporting on a GAAP basis, revenue for Q3’11 was $190 million, an increase of 28% from $148 million of GAAP revenue reported in the third quarter of fiscal year 2010 (Q3’10). Non-GAAP revenue increased 29% to $191 million.

GAAP net income for Q3’11 was $19 million, or $0.12 per share. This compares to GAAP net income of $14 million, or $0.09 per diluted share, in Q3’10. Non-GAAP net income for Q3’11 was $40 million, or $0.24 per diluted share, as compared to non-GAAP net income for Q3’10 of $27 million, or $0.17 per diluted share.

“We are very pleased with our third quarter financial results,” said Jerry M. Kennelly, Riverbed^® president and CEO. “We were able to generate record revenue and strong sequential and year-over-year growth against the backdrop of an uncertain global economy. We achieved record non-GAAP operating margin of 30% and record non-GAAP net income of $40 million during a quarter in which we closed two acquisitions. Riverbed has evolved into a company that delivers a performance platform to dramatically improve IT. Our market position is stronger than ever and we are excited about the opportunity before us.”

“Our third quarter results underscore the compelling value Riverbed delivers to customers and the strength of our operating model and balance sheet,” said Randy S. Gottfried, Riverbed chief financial officer. “During the third quarter we generated $90 million in cash flow from operations. We exited the period with $559 million in cash and investments after repurchasing $20 million of Riverbed shares and paying out $120 million for acquisitions.”

Q3’11 Financial Highlights

• Total non-GAAP revenue grew 29% year-over-year to $191 million

• Product revenue grew 28% year-over-year to $132 million

• Non-GAAP service revenue grew 30% year-over-year to $59 million

• Record non-GAAP gross margin of 79.0%, compared to 78.0% in Q3’10

• Record non-GAAP operating profit of $57 million, increased 38% year-over-year

• Record non-GAAP operating margin of 30.1%, compared to 28.1% in Q3’10

• Record non-GAAP net income of $40 million, increased 51% year-over-year

• Deferred revenue grew 37% year-over-year to $148 million

Q3’11 Business Highlights

• Acquired two privately-owned companies, Zeus Technology and Aptimize Limited, broadening our product solution set to include Application Delivery Controllers (ADC) and extending our total addressable market opportunity.

• Identified as the WAN optimization controller Advanced Platform worldwide market share leader for Q211 based on revenue in the Gartner report, “Market Share: Application Acceleration Equipment, Worldwide, 2Q11” published by J. Skorupa, N. Pham on September 27, 2011.

• Selected for this year’s InformationWeek 500, an annual listing of the nation’s most innovative users of business technology. Riverbed was selected based on its innovation and successful entry into two new markets — public cloud and cloud storage.

• Announced Steelhead(R) appliance solutions accelerate VMware vSphere(R) Replication, a new feature of VMware vCenter(TM) Site Recovery Manager(TM) 5. The combination of the Riverbed and VMware solutions address the challenges of replicating data across the WAN in cloud and virtualized environments.

Conference Call

Riverbed will host a conference call today, October 19, 2011, at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) to discuss its third quarter 2011 results and outlook for the fourth quarter of 2011. 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.

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, including non-GAAP revenue, non-GAAP operating profit, non-GAAP operating margin, non-GAAP net income, non-GAAP gross margin and non-GAAP operating margin, 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, adjustments related to our tax valuation allowance and the interim tax cost of the one-time transfer of intellectual property rights between Riverbed legal entities:

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 the acquisition deferred support revenue was reduced by $4 million in the adjustment to fair value. Because these are typically one-year contracts, our GAAP revenues for an 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 related payroll tax 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 incur significant expenses in connection with our acquisitions 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 retention costs, integration related professional services, adjustments to the fair value of the acquisition related contingent consideration and foreign exchange losses on the acquisition related contingent consideration. We believe it is useful for investors to understand the effects of these items on our total operating expenses.

Forward-Looking Statements

This press release contains forward-looking statements, including statements relating to expected future growth. 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; difficulties encountered in integrating new or acquired businesses and technologies; the inability to identify and realize the anticipated benefits of acquisitions; the expense and impact of legal proceedings; 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-K filed with the SEC for the period ended December 31, 2010, and our subsequent Forms 10-Q filed with the SEC. 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 delivers performance for the globally connected enterprise. With Riverbed, enterprises can successfully and intelligently implement strategic initiatives such as virtualization, consolidation, cloud computing, and disaster recovery without fear of compromising performance. By giving enterprises the platform they need to understand, optimize and consolidate their IT, Riverbed helps enterprises to build a fast, fluid and dynamic IT architecture that aligns with the business needs of the organization.

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

###

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,
	2011			2010		2011		2010
Revenue:
Product	$	132,061		$	102,841	$	361,073	$	262,083
Support and services		57,722			44,965		162,568		124,373
Total revenue		189,783			147,806		523,641		386,456
Cost of revenue:
Cost of product		26,968			21,889		74,386		57,133
Cost of support and services		17,998			12,878		49,633		36,476
Total cost of revenue		44,966			34,767		124,019		93,609
Gross profit		144,817			113,039		399,622		292,847
Operating expenses:
Sales and marketing		70,208			56,517		195,029		158,575
Research and development		30,999			21,951		89,250		61,500
General and administrative		15,353			12,078		43,949		34,393
Acquisition-related costs		2,732			—		4,124		2,725
Total operating expenses		119,292			90,546		332,352		257,193
Operating profit		25,525			22,493		67,270		35,654
Other income (expense), net		(151	)		384		688		683
Income before provision for income taxes		25,374			22,877		67,958		36,337
Provision for income taxes		6,049			8,967		24,305		14,790
Net income	$	19,325		$	13,910	$	43,653	$	21,547
Net income per share, basic	$	0.12		$	0.10	$	0.28	$	0.15
Net income per share, diluted	$	0.12		$	0.09	$	0.26	$	0.14
Shares used in computing basic net income per share		155,367			145,978		153,981		143,662
Shares used in computing diluted net income per share		167,031			157,930		166,920		153,546

Riverbed Technology, Inc.

Condensed Consolidated Balance Sheets

In thousands

	September 30,			December 31,
	2011			2010
ASSETS
Current assets:
Cash and cash equivalents	$	153,856		$	165,726
Short-term investments		321,829			259,245
Trade receivables, net		70,614			50,726
Inventory		15,399			15,180
Deferred tax assets		17,034			20,832
Prepaid expenses and other current assets		30,191			30,958
Total current assets		608,923			542,667
Long-term investments		83,575			76,169
Fixed assets, net		27,745			21,522
Goodwill		117,689			25,653
Intangible assets, net		73,449			30,789
Deferred tax assets, non-current		45,728			35,775
Other assets		22,577			3,506
Total assets	$	979,686		$	736,081
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	37,419		$	27,015
Accrued compensation and related benefits		32,393			32,915
Other accrued liabilities		48,026			18,813
Deferred revenue		114,425			89,026
Total current liabilities		232,263			167,769
Deferred revenue, non-current		33,295			26,511
Other long-term liabilities		21,833			4,381
Total long-term liabilities		55,128			30,892
Stockholders’ equity:
Common stock		633,028			518,052
Retained earnings		62,962			19,309
Accumulated other comprehensive income (loss)		(3,695	)		59
Total stockholders’ equity		692,295			537,420
Total liabilities and stockholders’ equity	$	979,686		$	736,081

Riverbed Technology, Inc.

Condensed Consolidated Statements of Cash Flows

In thousands

Unaudited

	Nine months ended September 30,
	2011			2010
Operating activities:
Net income	$	43,653		$	21,547
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		16,477			11,388
Stock-based compensation		68,000			50,496
Deferred taxes		(6,463	)		(10,267	)
Excess tax benefit from employee stock plans		(34,482	)		(9,600	)
Changes in operating assets and liabilities:
Trade receivables		(15,892	)		4,792
Inventory		(219	)		(3,603	)
Prepaid expenses and other assets		(14,405	)		(3,377	)
Accounts payable		7,982			12,906
Accruals and other liabilities		6,354			14,385
Acquisition-related contingent consideration		1,552			(5,249	)
Income taxes payable		42,546			8,355
Deferred revenue		32,184			21,492
Net cash provided by operating activities		147,287			113,265
Investing activities:
Capital expenditures		(12,017	)		(7,876	)
Purchase of available for sale securities		(504,074	)		(430,659	)
Proceeds from maturities of available for sale securities		294,511			307,970
Proceeds from sales of available for sale securities		135,926			40,862
Acquisitions, net of cash acquired		(120,179	)		—
Net cash used in investing activities		(205,833	)		(89,703	)
Financing activities:
Acquisition-related contingent consideration		—			(9,909	)
Proceeds from issuance of common stock under employee stock plans, net of repurchases		41,996			40,504
Cash used to net share settle equity awards		(10,088	)		(2,300	)
Payments for repurchases of common stock		(20,017	)		—
Excess tax benefit from employee stock plans		34,482			9,600
Net cash provided by financing activities		46,373			37,895
Effect of exchange rate changes on cash and cash equivalents		303			129
Net increase (decrease) in cash and cash equivalents		(11,870	)		61,586
Cash and cash equivalents at beginning of period		165,726			67,749
Cash and cash equivalents at end of period	$	153,856		$	129,335

Riverbed Technology, Inc.

Supplemental Financial Information

In thousands

Unaudited

	Three months ended						Nine months ended
	September 30,		June 30,		September 30,		September 30,
	2011		2011		2010		2011		2010
Revenue by Geography
United States	$	106,326	$	96,516	$	80,839	$	293,181	$	202,970
Europe, Middle East and Africa		49,847		40,028		38,405		128,924		106,660
Rest of the world		33,610		33,751		28,562		101,536		76,826
Total revenue	$	189,783	$	170,295	$	147,806	$	523,641	$	386,456
As a percentage of total revenues:
United States		56%		57%		55%		56%		53%
Europe, Middle East and Africa		26%		23%		26%		25%		28%
Rest of the world		18%		20%		19%		19%		19%
Total revenue		100%		100%		100%		100%		100%
Revenue by Sales Channel
Direct	$	7,068	$	9,705	$	7,721	$	25,028	$	23,999
Indirect		182,715		160,590		140,085		498,613		362,457
Total revenue	$	189,783	$	170,295	$	147,806	$	523,641	$	386,456
As a percentage of total revenues:
Direct		4%		6%		5%		5%		6%
Indirect		96%		94%		95%		95%		94%
Total revenue		100%		100%		100%		100%		100%

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,
	2011		2011		2010		2011		2010
Reconciliation of Support and Service Revenue:
U.S. GAAP as reported	$	57,722	$	53,435	$	44,965	$	162,568	$	124,373
Adjustments:
Deferred revenue adjustment (6)		813		—		—		813		—
As Adjusted	$	58,535	$	53,435	$	44,965	$	163,381	$	124,373
Reconciliation of Total Revenue:
U.S. GAAP as reported	$	189,783	$	170,295	$	147,806	$	523,641	$	386,456
Adjustments:
Deferred revenue adjustment (6)		813		—		—		813		—
As Adjusted	$	190,596	$	170,295	$	147,806	$	524,454	$	386,456
Reconciliation of Gross Profit:
U.S. GAAP as reported	$	144,817	$	130,197	$	113,039	$	399,622	$	292,847
Adjustments:
Stock-based compensation (1)		1,834		2,011		1,487		5,586		4,361
Payroll tax on stock-based compensation (2)		20		167		54		426		128
Amortization on intangibles (3)		2,880		1,607		740		6,047		2,220
Inventory fair value adjustment (4)		120		125		—		359		—
Deferred revenue adjustment (6)		813		—		—		813		—
As adjusted	$	150,484	$	134,107	$	115,320	$	412,853	$	299,556
Reconciliation of Gross Margin:
U.S. GAAP as reported		76.3%		76.5%		76.5%		76.3%		75.8%
Adjustments:
Stock-based compensation (1)		1.0%		1.1%		1.0%		1.0%		1.1%
Payroll tax on stock-based compensation (2)		0.0%		0.1%		0.0%		0.1%		0.0%
Amortization on intangibles (3)		1.5%		0.9%		0.5%		1.2%		0.6%
Inventory fair value adjustment (4)		0.1%		0.1%		0.0%		0.1%		0.0%
Deferred revenue adjustment (6)		0.1%		0.0%		0.0%		0.0%		0.0%
As Adjusted		79.0%		78.7%		78.0%		78.7%		77.5%
Reconciliation of Operating Profit:
U.S. GAAP as reported	$	25,525	$	20,213	$	22,493	$	67,270	$	35,654
Adjustments:
Stock-based compensation (1)		22,504		23,555		17,331		68,000		50,496
Payroll tax on stock-based compensation (2)		234		1,507		516		3,900		1,513
Amortization on intangibles (3)		3,968		2,171		1,195		8,262		3,585
Acquisition-related costs (5)		4,200		2,772		—		6,942		4,156
Inventory fair value adjustment (4)		120		125		—		359		—
Deferred revenue adjustment (6)		813		—		—		813		—
As Adjusted	$	57,364	$	50,343	$	41,535	$	155,546	$	95,404
Reconciliation of Operating Margin:
U.S. GAAP as reported		13.4%		11.9%		15.2%		12.8%		9.2%
Adjustments:
Stock-based compensation (1)		11.8%		13.8%		11.8%		13.0%		13.1%
Payroll tax on stock-based compensation (2)		0.1%		0.9%		0.3%		0.7%		0.4%
Amortization on intangibles (3)		2.1%		1.3%		0.8%		1.6%		0.9%
Acquisition-related costs (5)		2.2%		1.6%		0.0%		1.3%		1.1%
Inventory fair value adjustment (4)		0.1%		0.1%		0.0%		0.1%		0.0%
Deferred revenue adjustment (6)		0.4%		0.0%		0.0%		0.2%		0.0%
As Adjusted		30.1%		29.6%		28.1%		29.7%		24.7%

	Three months ended									Nine months ended
GAAP to Non-GAAP Reconciliations:	September 30,			June 30,			September 30,			September 30,
	2011			2011			2010			2011			2010
Reconciliation of Net Income:
U.S. GAAP as reported	$	19,325		$	11,283		$	13,910		$	43,653		$	21,547
Adjustments:
Stock-based compensation (1)		22,504			23,555			17,331			68,000			50,496
Payroll tax on stock-based compensation (2)		234			1,507			516			3,900			1,513
Amortization on intangibles (3)		3,968			2,171			1,195			8,262			3,585
Acquisition-related costs (5)		4,681			2,772			—			7,423			4,156
Inventory fair value adjustment (4)		120			125			—			359			—
Deferred revenue adjustment (6)		813			—			—			813			—
Income tax adjustments (7)		(11,565	)		(6,527	)		(6,333	)		(23,588	)		(20,644	)
As Adjusted	$	40,080		$	34,886		$	26,619		$	108,822		$	60,653
Reconciliation of Net Income per share, diluted:
U.S. GAAP as reported	$	0.12		$	0.07		$	0.09		$	0.26		$	0.14
Adjustments:
Stock-based compensation (1)		0.14			0.14			0.11			0.42			0.33
Payroll tax on stock-based compensation (2)		—			0.01			—			0.02			0.01
Amortization on intangibles (3)		0.02			0.01			0.01			0.05			0.02
Acquisition-related costs (5)		0.03			0.02			—			0.04			0.03
Income tax adjustments (7)		(0.07	)		(0.04	)		(0.04	)		(0.14	)		(0.13	)
As Adjusted	$	0.24		$	0.21		$	0.17		$	0.65		$	0.40
Non-GAAP Net income per share, basic	$	0.26		$	0.23		$	0.18		$	0.71		$	0.42
Non-GAAP Net income per share, diluted	$	0.24		$	0.21		$	0.17		$	0.65		$	0.40
Shares used in computing basic net income per share (8)		155,367			154,543			145,978			153,981			143,662
Shares used in computing diluted net income per share (8)		167,031			167,270			157,930			166,920			153,546
Non-GAAP adjustments:
Support and services revenue	$	813		$	—		$	—		$	813		$	—
Cost of product		3,250			2,018			877			7,210			2,623
Cost of support and services		1,604			1,892			1,404			5,208			4,086
Sales and marketing		10,593			10,699			7,904			31,415			23,723
Research and development		7,699			8,764			4,923			23,769			14,775
General and administrative		5,148			5,365			3,934			15,767			11,818
Other acquisition costs		2,732			1,392			—			4,094			2,725
Other expense (9)		481			—			—			481			—
Provision for income taxes		(11,565	)		(6,527	)		(6,333	)		(23,588	)		(20,644	)
Total Non-GAAP Adjustments	$	20,755		$	23,603		$	12,709		$	65,169		$	39,106

(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 Compensation effective 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) The inventory fair value adjustment recorded pursuant to our acquisition is excluded from our non-GAAP operating expenses as this cost would not have otherwise occurred in the period presented.

(5) We incurred expenses in connection with our acquisitions, 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.

(6) 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.

(7) The non-GAAP tax rate excludes the income tax effects of non-GAAP adjustments. Additionally, the non-GAAP tax rate includes adjustments to our tax valuation allowance on deferred tax assets and excludes the interim tax cost of the one-time transfer of intellectual property rights between our legal entities.

(8) Shares used in computing basic and diluted net income per share is reflective of the stock split for all periods presented.

(9) We incurred expenses, including revaluation of the contingent consideration, in connection with our acquisitions, which would not have otherwise occurred in the period presented as part of our other income (expense); therefore, these costs are excluded from our non-GAAP other income (expense).