Press Release

Redback Networks Announces Fourth Quarter and Fiscal Year 2004 Operating Results 

SAN JOSE, Calif., January 26, 2005 — Redback Networks Inc. (NASDAQ: RBAK), a leading provider of broadband networking systems, today announced its fourth quarter and fiscal year 2004 results for the period ended December 31, 2004. Net revenue for the fourth quarter of 2004 was $32.1 million, up from $21.0 million in net revenue for the third quarter of 2004, an increase of 53 percent. Net revenue was up $3.7 million, or 13 percent, over the fourth quarter of 2003. Net revenue for the 2004 fiscal year was $115.6 million, compared with $107.5 million in fiscal year 2003.

“We are pleased with the strength of our Q4 results and especially the momentum of our next-generation SmartEdge platform for integrated video, voice and data broadband networks,” said Kevin DeNuccio, president and chief executive officer, Redback Networks. “Year over year, sales for SmartEdge were up 228 percent indicating the traction and momentum we have achieved.”

GAAP net loss for the fourth quarter of 2004 was $12.0 million or $0.23 per share attributable to common stockholders based on weighted average shares outstanding of 53.0 million, compared to a GAAP net loss of $24.9 million or $0.14 per share attributable to common stockholders based on weighted average shares outstanding of 183.0 million in the fourth quarter of 2003. Non-GAAP net loss for the fourth quarter of 2004 was $4.2 million or $0.08 per share based on weighted average shares outstanding of 53.0 million, compared to a non-GAAP net loss of $24.2 million or $0.13 per share for the fourth quarter of 2003 based on weighted average shares outstanding of 183.0 million. Excluded from the non-GAAP results for the fourth quarter of 2004 were charges relating to amortization of intangible assets, including those arising from fresh start accounting, accretion of a dividend payable to the preferred stockholders, amortization of stock-based compensation and amortization of the fair value of warrants issued in connection with a lease agreement.

See the attached table for a reconciliation of our non-GAAP results to GAAP results.

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 Relation. 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: 10555031. 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 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 and, in conjunction with the NetOp™ Element and Policy Manager platform, 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.