Press Release

Redback Announces Second Quarter 2004 Operating Results Fourth Consecutive Quarter of Revenue Growth; Positive Cash from Operations; GAAP Net Loss per Share (LPS) $ 0.20, Non-GAAP LPS $ 0.04

SAN JOSE, Calif., July 21, 2004 — Redback Networks Inc. (NASDAQ: RBAK), a leading provider of broadband networking systems, today announced its second quarter 2004 results for the period ended June 30, 2004. Net revenue for the second quarter of 2004 was $32.3 million, a 45 percent increase from $22.2 million in revenue for the second quarter of 2003. Net revenue was $30.2 million for the first quarter of 2004. The company achieved positive cash flow from operations, ending its second quarter of 2004 with $44.4 million of unrestricted cash.

“We are pleased to achieve several important strategic and financial milestones this quarter as well as attaining significant wins with our next-generation SmartEdge platform in some of the world’s largest broadband DSL networks for video and other advanced applications,” said Kevin DeNuccio, president and chief executive officer, Redback Networks. “The second quarter of 2004 has been one of critical achievement and success.”

Financial highlights from the quarter:

· 45 percent increase in revenues for the second quarter of 2004, compared to second quarter of 2003, representing the fourth consecutive quarter of revenue growth

· Generated cash from operations and increased unrestricted cash from $42.0 million at March 31, 2004 to $44.4 million at June 30, 2004

· Significant decrease in loss from operations: o GAAP net loss from operations was $10.4 million for the second quarter of 2004 compared with $45.9 million during the second quarter of 2003 o Non-GAAP net loss from operations was $2.0 million for the second quarter of 2004 compared with $21.5 million during the second quarter of 2003

Business highlights from the quarter:

· Won major next-generation broadband customer deployments with two of the top ten DSL network providers in the world

· Surpassed the milestone of more than 500 revenue shipments of SmartEdge® Router and Service Gateway systems to over 80 service provider customers worldwide

· Continued product and technology innovation with the introduction of Session Level Reliability for new standard of uninterruptible broadband sessions and Dynamic Bandwidth Selection for dynamically increasing bandwidth without requiring a restarting of the session or application

GAAP net loss for the second quarter of 2004 was $10.7 million or $0.20 per share attributable to common stockholders based on weighted average shares outstanding of 52.1 million, down from a GAAP net loss of $51.0 million or $0.28 per share, attributable to common stockholders based on weighted average shares outstanding of 180.8 million in the second quarter of 2003. Non-GAAP net loss for the second quarter of 2004 was $2.2 million or $0.04 per share based on weighted average shares outstanding of 52.1 million, down from a non-GAAP net loss of $26.3 million or $0.15 per share for the second quarter of 2003 based on weighted average shares outstanding of 180.8 million. Excluded from the non-GAAP results for the second quarter of 2004 were charges of $8.5 million relating to amortization of intangible assets resulting from fresh start accounting, amortization of stock-based compensation, amortization of fair value of warrants issued in connection with a lease agreement and accretion of a dividend payable to the preferred stockholders.

See the attached table for a reconciliation of our non-GAAP results to GAAP results or go to the Investor section of our website.

Redback Networks will discuss these quarterly results in an investor conference call today at 1:45 p.m. Pacific Time. The conference telephone number is 1-847-619-6368. A live web cast is also available from the investor relations portion of the Redback’s web site, www.redback.com, under Investor Center. A telephone replay of the conference call will be available later in the day. Replay information will be available at 1-630-652-3018, access code: 9386106. Information on these calls and web cast can also be found on the company’s web site.

About Redback Networks Inc.

Redback Networks Inc., a leading provider of next-generation broadband networking equipment, enables carriers and service providers to build third-generation Smart Broadband Networks that can profitably deliver simplified, personalized, portable subscriber services to consumers and businesses. The company's carrier-class, consumer-scale SmartEdge Router and Service Gateway platforms for Consumer IP combine subscriber management systems and edge routing in conjunction with the NetOp™ Element and Policy Manager platform to provide a powerful, flexible infrastructure for managing both subscribers and value-added services.

Founded in 1996 and headquartered in San Jose, Calif., with sales and technical support centers located worldwide, Redback Networks maintains a growing and global customer base of more than 500 carriers and service providers, including major local exchange carriers (LECs), inter-exchange carriers (IXCs), PTTs and service providers. For more information, visit Redback Networks at www.redback.com.

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REDBACK and SmartEdge are trademarks registered at the U.S. Patent and Trademark Office and in other countries.

Note Regarding Forward Looking Statements

The statements contained in this press release that are not purely historical are forward-looking statements that involve a number of risks and uncertainties, the outcome of which could materially and/or adversely affect Redback’s actual future results . All forward-looking statements included in this document are based upon information available as of the date hereof, and Redback assumes no obligation to update these statements. These risks and other risks relating to Redback’s business are set forth in the documents filed by Redback with the Securities and Exchange Commission (SEC), specifically the most recent report on Form 10-K, Form 10-Q, Form 8-K, Redback’s Registration Statement on Form S-3 (File No. 333-114352), and amendments thereto, and the other reports filed from time to time with the SEC.

Non-GAAP Disclosure

To supplement our consolidated financial statements presented in accordance with GAAP, we use non-GAAP financial results, which are adjusted from results based on GAAP to exclude certain items. These non-GAAP results are provided to enhance the user’s overall understanding of our current financial performance and our prospects in the future. Specifically, we believe the non-GAAP results provide useful information to both management and investors by excluding certain items that we believe are not indicative of our core operating results. The presentation of this additional information is not meant to be considered in isolation or as a substitute for results prepared in accordance with United States GAAP.