Riverbed Technology, Inc. Reports Record Fourth Quarter and Full Year 2006 Financial Results

• Quarterly Revenues Increase by 37% Sequentially and 219% Year-Over-Year
• Over 300 New Customers Added

SAN FRANCISCO--(BUSINESS WIRE)--Riverbed Technology, Inc. (Nasdaq:RVBD), the performance leader in wide-area data services (WDS), today released financial results for the fourth quarter and full year ended December 31, 2006.

Revenues for the fourth quarter of 2006 were $33.8 million, which represents a sequential increase of 37% from the immediately preceding quarter and a year-over-year increase of 219% from the fourth quarter of last year. The net loss on a GAAP basis for the fourth quarter of 2006 was $2.4 million, or $0.04 per share, compared to a net loss of $3.1 million, or $0.16 per share, in the third quarter of 2006 and a net loss of $4.7 million, or $0.43 per share, in the fourth quarter of 2005. Riverbed’s fourth quarter of 2006 GAAP results included $4.8 million of non-cash stock-based compensation expenses.

Excluding the impact of stock-based compensation in all periods, assuming preferred shares were converted as of the later of their issuance or the beginning of the respective periods, and including dilutive shares in the fourth quarter of 2006, the non-GAAP net income for the fourth quarter of 2006 was $2.4 million, or $0.03 per share, compared to a non-GAAP net loss of $1.0 million, or $0.02 per share, in the third quarter of 2006 and a non-GAAP net loss of $4.2 million, or $0.09 per share, in the fourth quarter of 2005.

Revenues for the year ended December 31, 2006 were $90.2 million, a 293% increase from $22.9 million in the prior year. The GAAP net loss for the full year 2006 was $15.8 million, or $0.59 per share, which compares with a GAAP net loss of $17.4 million, or $1.85 per share, in 2005.

”Our early and rapid success in the WDS market is testament to our innovative technology, strong competitive position and the business-critical need for wide-area data solutions,” noted Jerry Kennelly, Riverbed® president and chief executive officer. “As market acceptance and understanding of the capabilities of WDS grows, the Global 2000 are embracing our solutions to overcome the competing demands of globalization and IT centralization.”

”The fourth quarter of 2006 marked the first quarter in which Riverbed was profitable on a non-GAAP basis, demonstrating the operating leverage in our model,” said Randy Gottfried, Riverbed chief financial officer.

2006 Highlights

Riverbed’s focus on delivering industry-leading performance, scalability, and simplicity to distributed organizations of all sizes was reflected in a number of key business initiatives and milestones.

• Initial public offering—Riverbed successfully completed its initial public offering, raising $87.5 million, net of underwriting discounts and other transaction expenses. Riverbed’s IPO was the best performing IPO of 2006 as reported in the Wall Street Journal.
• Industry recognition—Riverbed’s Steelhead® Appliance product family was recognized for its excellence by many well-respected trade publications in 2006, including InfoWorld (the Best WAN Accelerator of 2006 and 2007), Byte and Switch (WAN Optimization), Network Computing (Well-Connected Award, Remote Office Solution), and eWeek (Excellence Award, Top Products of 2006, and Top Five Storage Developments of the Year). In addition, Gartner positioned the company in the Leaders quadrant in the "WAN Optimization Controller Magic Quadrant" published in October 2006 and authored by Andy Rolfe and Joe Skorupa. This report positions vendors in one of four quadrants based on the companies' vision and ability to execute on that vision.
• Product innovation – Riverbed expanded its product line both at the high- and low-ends of the market, providing customers with the speed, scale and simplicity needed to meet the demands of a decentralized workforce and centralized data. The company began shipping the next generation of the Riverbed Optimization System (RiOS™), version 3.0, as well as the Interceptor™ appliance and eight new Steelhead appliances that deliver high scalability and acceleration for up to one million simultaneous connections at 4 Gbps throughput. In addition, the company introduced two new smaller-scale Steelhead appliances that meet the needs of small remote offices and large-scale deployments.
• Expanded patent portfolio — Riverbed was awarded a patent on its core WDS technology. This system patent is the foundation for Riverbed’s proven technology for speeding application performance by 5X to 50X and in some cases up to 100X and addresses the limitations of geography for global businesses.
• New customer growth—Riverbed rapidly grew its customer base in 2006. In January, the company announced its 500^th customer and by end-of-year had over 1,600 customers.
• Customer Wins—Riverbed expanded its success with customers to global brands, announcing Liz Claiborne, Hilton Grand Vacations, Asiana Airlines, the UK Royal Navy and LG Electronics.
• Global Expansion—Riverbed expanded its presence in 2006, establishing additional offices worldwide.