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Riverbed Technology Reports Record Third Quarter 2012 Revenue And Profits

Riverbed Technology, Inc. (NASDAQ:RVBD), the performance company, today reported financial results for its third quarter ended September 30, 2012 (Q3'12).

GAAP revenue for Q3’12 was $219 million, an increase of 10% compared to $198 million in the second quarter 2012 (Q2’12) and an increase of 15% compared to $190 million in the third quarter 2011 (Q3’11). GAAP net income for Q3’12 was $25 million, or $0.15 per diluted share, compared to $18 million, or $0.11 per diluted share, in Q2’12 and $19 million, or $0.12 per diluted share, in Q3’11.

Non-GAAP revenue for Q3’12 was $219 million, an increase of 10% compared to $199 million in Q2’12 and an increase of 15% compared to $191 million in Q3’11. Non-GAAP net income for Q3’12 was $46 million, or $0.28 per diluted share, compared to $37 million, or $0.23 per diluted share, in Q2’12 and $40 million, or $0.24 per diluted share, in Q3’11.

“The results we are announcing today reflect Riverbed’s position as a leader in the evolution to the software defined data center,” said Jerry M. Kennelly, President and CEO. “Sales of new products continued to ramp in the third quarter, and we saw strong enterprise growth as customers embrace Riverbed as a strategic vendor whose products deliver the best performance and highest availability.”

“Healthy revenue growth and good cost control generated record profits,” added Randy S. Gottfried, Chief Financial Officer. “Cash and investments grew by more than $100 million and totaled more than $670 million at September 30, 2012.”

Financial Highlights

  • Total revenue increased 10% sequentially and 15% year-over-year to record $219 million
  • Product revenue increased 12% sequentially and 9% year-over-year to record $145 million
  • Record Non-GAAP gross margin of 79.6%, compared to 77.8% in Q2’12
  • Non-GAAP operating profit increased 26% sequentially and 10% year-over-year to record $63 million
  • Non-GAAP net income increased 23% sequentially and 15% year-over-year to record $46 million
  • Total cash and investments of $670 million at September 30, 2012, compared to $550 million at June 30, 2012, and $559 million at September 30, 2011

Business Highlights

  • Upgraded Riverbed® Optimization System (RiOS®), the software that powers the Steelhead® appliance, with the addition of inbound quality of service (QoS). Inbound QoS provides the control needed over all incoming traffic to guarantee stable bandwidth with predictable levels of performance.
  • Enhanced strategic relationship with VMware across all Riverbed product solutions
    • Riverbed Cloud Steelhead will be further integrated with VMware vCloud Director to simplify deployment, configuration, and management of wide area network optimization-as-a-service for the Virtual Data Center
    • Previewed a solution leveraging Riverbed Granite™ edge virtual server infrastructure (edge-VSI) to deliver higher performance for distributed VMware View environments
    • Riverbed Cascade® will support VMware VXLAN providing IT organizations with an application-aware network performance management solution for software defined networking
    • Integrated Riverbed Stingray™ Traffic Manager with VMware vFabric Application Director to allow customers to create application blueprints that can be used to provision and scale multi-tier applications, faster and smarter in a hybrid cloud environment
  • Steelhead Cloud Accelerator received the Best of TechEd Award in the Cloud Computing category
  • Launched Cascade 9.6 reinforcing commitment to the Federal market
    • Met the testing requirements of the Joint Interoperability Test Command (JITC), a military organization under the Defense Information Systems Agency (DISA)
    • Achieved Federal Information Processing Standard (FIPS) and the Security Technical Implementation Guide (STIG) validations
    • Reached EAL3+ Evaluation Status under the Common Criteria for Information Technology Security Evaluation and Certification Scheme (CCS)
  • Introduced new Whitewater® 3010 cloud storage gateway model appliance that offers four times the local storage capacity of previous models to handle larger backup data workloads for large scale enterprise requirements
  • Named one of the Top Workplaces for 2012, according to a survey published by the Bay Area Newspaper Group, which includes the Contra Costa Times, InsideBayArea.com, the Oakland Tribune and the San Jose Mercury News

Conference Call

Riverbed will host a conference call today, October 18, 2012, at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) to discuss its third quarter 2012 results. The call will be broadcast live over the Internet at http://www.riverbed.com/investors and a replay of the webcast will be available 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 contain certain non-GAAP financial measures, including non-GAAP revenue, non-GAAP gross margin, non-GAAP operating profit, non-GAAP net income and non-GAAP net income per diluted share, which 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:

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