Press Release

Redback Networks Announces Fourth Quarter and Fiscal Year 2005 Operating Results

SAN JOSE, Calif., January 26, 2006 — Redback Networks Inc. (NASDAQ: RBAK), a leading provider of broadband networking systems, today announced its fourth quarter and fiscal year 2005 results for the period ended December 31, 2005. Net revenue for the fourth quarter of 2005 was $48.0 million, an increase of 32 percent from the third quarter of 2005. Net revenue was up $15.9 million, or 50 percent, over the fourth quarter of 2004. Net revenue for the fiscal year 2005 jumped to $153.3 million, compared with $115.6 million in fiscal year 2004.

“I am very pleased with the progressive revenue growth and profitability in the quarter and excited about the adoption of our SmartEdge® product family for deployment towards advanced and personalized IP based services,” said Kevin DeNuccio, president and chief executive officer, Redback Networks. “Year over year, sales for our SmartEdge Service Gateway were up 105%, creating a strong footprint for continued growth in 2006.”

GAAP net income for the fourth quarter of 2005 was $0.3 million or $ 0.01 per share attributable to common stockholders compared to a GAAP net loss of $12.0 million or $ (0.23) per share in the fourth quarter of 2004. Non-GAAP net income for the fourth quarter of 2005 was $0.4 million or $ 0.01 per share, compared to a non-GAAP net loss of $4.2 million or $ (0.08) per share for the fourth quarter of 2004. Excluded from the non-GAAP results for the fourth quarter of 2005 were charges relating to amortization of intangible assets, amortization of stock-based compensation, sale of inventory as scrap, amortization of the fair value of warrants issued in connection with a lease agreement, partial recovery on investment that previously had been written down, accretion of a dividend payable to the preferred stockholders and a benefit from the change in estimate of pre-bankruptcy liability.

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 2:30 p.m. Pacific Time. The conference telephone number is 1-847-619-6819. A live web cast is also available from the investor relations portion of the Redback’s web site at http://ir.redback.com. A telephone replay of the conference call will be available later in the day. Replay information will be available at 1-877-213-9653 or 1-630-652-3041 access code: 13605124.

About Redback Networks
Redback Networks Inc., a leading provider of next-generation broadband networking equipment, enables carriers and service providers to build Smart Broadband Networks that are personalized, adaptive and efficient. The Smart Broadband Network provides advanced IP based subscriber services to consumers, businesses and wholesale customers. The company's carrier-class, scalable SmartEdge product family combines carrier class edge routing, advanced subscriber management and high density Ethernet aggregation functions. In conjunction with the NetOp™ Element and Policy Manager platforms the SmartEdge family provides a powerful and flexible infrastructure solution that enables delivery of next-generation Broadband IP 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, service providers and ISPs. 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. NetOp is a trademark of Redback Networks Inc.

Note Regarding Forward Looking Statements
The statements contained in this press release that are not purely historical are forward-looking statements which are subject to the safe harbor provisions of the Private Litigation reform Act of 1995. These statements include but are not limited to statements regarding our expected financial results and expectations of continued sales and revenue growth and growth of our SmartEdge product line. These statements are only predictions and involve a number of risks and uncertainties, the outcome of which could materially and/or adversely affect Redback’s actual future results. These risks include without limitation the following: growth trends in the networking industry and in various geographic regions; variations in customer demand for products and services; the timing of orders and manufacturing lead times; changes in customer order trends or customer or product mix, and other risks relating to Redback’s business as set forth in the Quarterly Report on Form 10Q for the quarter ended September 30, 2005 and Redback’s other most recent reports on Form 10-K, Form 10-Q and Form 8-K, and amendments thereto, on file with the Securities and Exchange Commission (SEC), and other reports filed with the SEC from time to time. 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.

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.