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Riverbed Technology, Inc.

Condensed Consolidated Balance Sheets
As of September 30, 2009 and December 31, 2008

September December
(in thousands) 30, 2009 31, 2008
ASSETS (unaudited)
Current assets:
Cash and cash equivalents 75,709 95,378
Marketable securities 221,058 172,398
Trade receivables, net of allowances of $1,527 and
$770 as of September 30, 2009 and December
31, 2008, respectively 47,099 46,839
Inventory 12,100 10,637
Deferred tax assets 8,730 6,185
Prepaid expenses and other current assets 15,169 12,605
Total current assets 379,865 344,042
Fixed assets, net 21,810 21,993
Goodwill 11,711 -
Intangibles, net 20,584 -
Deferred tax assets, non-current 35,360 27,033
Other assets 5,115 5,449
Total assets 474,445 398,517

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable 21,267 18,290
Accrued compensation and benefits 19,766 13,137
Other accrued liabilities 26,583 13,342
Deferred revenue 58,472 45,194
Total current liabilities 126,088 89,963
Deferred revenue, non-current 17,561 12,967
Other long-term liabilities 2,892 1,758
Total long-term liabilities 20,453 14,725
Commitments and contingencies
Stockholders' equity":
Preferred stock, $0.0001 par value - 30,000
shares authorized, no shares outstanding - -
Common stock ; $0.0001 par value - 600,000
shares authorized; 69,194 and 69,145 shares 343,637 315,882
Accumulated deficit -15,781 -21,934
Accumulated other comprehensive income (loss) 48 -119
Total stockholders' equity 327,904 293,829
Total liabilities and stockholders' equity 474,445 398,517

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Riverbed Technology, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)

Three months ended Nine months ended

September 30, September30,
2009 2008 2009 2008
Revenue:
Product 69,543 65,238 190,322 185,574
Support and services 32,506 21,309 90,925 55,547
Total revenue 102,049 86,547 281,247 241,121
Cost of revenue:
Cost of product 14,982 16,653 43,776 45,153
Cost of support and services 9,410 7,174 27,385 20,151
Total cost of revenue 24,392 23,827 71,161 65,304
Gross profit 77,657 62,720 210,086 175,817
Operating expenses:
Sales and marketing 44,192 34,855 127,003 100,992
Research and development 17,302 14,582 50,368 43,278
General and administrative 9,297 10,419 27,382 29,925
Other charges - 11,000 - 11,000
Acquisition-related costs
(credits) -3,008 - -4,447 -
Total operating expenses 67,783 70,856 200,306 185,195
Operating income (loss) 9,874 -8,136 9,780 -9,378
Other income, net 141 1,287 824 5,059
Income (loss) before
provision for income taxes 10,015 -6,849 10,604 -4,319
Provision for income taxes 4,546 5,574 4,451 8,335
Net income (loss) 5,469 -12,423 6,153 -12,654
Net income (loss) per
common share:
Basic 0.08 -0.17 0.09 -0.18
Diluted 0.08 -0.17 0.09 -0.18
Shares use in computing net
income (loss) per common
share:
Basic 69,370 71,005 69,035 70,915
Diluted 71,968 71,005 71,040 70,915

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Riverbed Technology, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

Nine months ended

September 30,
2009 2008
Operating Activities:
Net Income (loss) 6,153 -12,654
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 10,376 5,739
Stock-based compensation 40,431 38,157
Excess tax benefit from employee stock plans -1,694 -1,427
Change in operating assets and liabilities:
Trade receivables 1,608 5,521
Inventory -1,017 -7,720
Prepaid expenses and other current assets -2,128 -4,870
Accounts payable 2,398 1,599
Accruals and other current liabilities 8,603 14,503
Acquisition-related contingent consideration -4,947 -
Income taxes payable 6,562 4,762
Deferred revenue 17,073 17,385
Net cash provided by operating activities 73,399 60,995
Investing Activities:
Capital expenditures -7,173 -10,761
Purchase of available for sale securities -244,208 -264,179
Proceeds from maturities of available for sale securities 181,761 143,102
Proceeds from sales of available for sale securities 13,500 39,803
Net cash used in investing activities -76,589 -92,035
Financing Activities:
Proceeds from issuance of common stock under
15,512 9,119
employee stock plans, net of repurchases
Payments for repurchases of common stock -29,016 -24,992
Payments of debt -5,004 -
Excess tax benefit from employee stock plans 1,694 1,427
Net cash used in financing activities -16,814 -14,446
Effect of exchange rate changes on cash and cash
equivalents 335 -169
Net decrease in cash and cash equivalents -19,669 -45,655
Cash and cash equivalents at beginning of period 95,378 162,979
Cash and cash equivalents at end of period 75,709 117,324

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Points to note from Analyst Conference Call

1. Quarter saw record revenue, cashflow, and operating profit and the
company still has no debt on its books.

2. Top 3 trends going forward driving customer spending will be on Server

utilization, Cloud computing and Storage utilization - all of which use WAN
optmization.

3.One main competitive differentiator is the GITC security certification

acquired from the US Department of Defense.

4. Revenue break-up by geogrpahy:

US -57%
EMEA -25%
Rest of World - 18% (with strong performance in Australia and New Zealand)

5. Q4 guidance factors lower Govt. spending and a return to a more normal

level of margins with respect to Gross and Operating Margins.

6. The Fed and the US Govt. were the primary drivers of Q3 numbers. US
enterprise growth was flat to negative. This is not expected to continue into
Q4.

7. International business expected to be robust in Q4 with rebound from

Europe specifically.

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