Press Release

Redback Networks Announces Second Quarter 2006 Operating Results

SAN JOSE, Calif, July 25, 2006 - Redback Networks Inc. (NASDAQ:RBAK), a leading provider of next generation broadband networking systems, today announced its second quarter results for the period ending June 30, 2006. Net revenue for the second quarter of 2006 was $68.2 million, an increase of 18 percent from the first quarter of 2006. Net revenue was up $33.7 million, or 97 percent, over the second quarter of 2005.

Redback Networks generated $112.8 million in cash in the second quarter of 2006, including $83.1 million from a secondary offering in May 2006.

"As the evolution of broadband networks accelerates on a worldwide basis, Redback continues to make significant progress on its business strategy,” said Kevin DeNuccio, president and chief executive officer, Redback Networks. “We believe Redback and SmartEdge® technology are becoming synonymous with Triple Play and IPTV build outs around the globe. Our vision of a single converged broadband network for all communication and entertainment services continues to gain mass adoption with customers.”

With the adoption of Statement of Financial Accounting Standards No. 123R (FAS 123R) as of January 1, 2006, Redback Networks is reporting stock-based compensation expense in its generally accepted accounting principles (GAAP) results.

GAAP net loss for the second quarter of 2006 was $1.8 million or $0.03 per share attributable to common stockholders compared to a GAAP net loss of $7.2 million or $ 0.13 per share in the second quarter of 2005. Non-GAAP net income for the second quarter of 2006 was $7.6 million or $0.10 per share, compared to a non-GAAP net loss of $(2.9) million or $ (0.05) per share for the second quarter of 2005. Excluded from the non-GAAP results for the second quarter of 2006 were charges relating to amortization of intangible assets, FAS123R stock-based compensation, amortization of the fair value of warrants issued in connection with a lease agreement, certain federal and state income taxes, and accretion of a dividend payable to preferred stockholders.

For comparative purposes, GAAP pre-tax income excluding stock-based compensation for the second quarter of 2006 was $4.9 million, compared with a GAAP pre-tax loss excluding stock-based compensation of $5.9 million for the second quarter of 2005.

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

As previously disclosed on June 30, 2006, Redback Networks’ Board of Directors has commenced a review and analysis of Redback’s historical stock option grants. The Board of Directors has established a committee which is being assisted in its review by independent legal counsel. The review is ongoing and depending upon the final results of the review, it is possible that additional facts may come to light which may require us to change our accounting treatment of stock options and to make material adjustments to our results of operations for this period or other periods.

Second Quarter Conference Call, July 25, 2006, 1:45 p.m.

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: Domestic Dial-in: 1-800-559-2403 and International Dial-in: 1-847-619-6534. A live web cast is also available from the investor relations portion of the Redback’s web site, http://ir.redback.com. A telephone replay of the conference call will be available later in the day. Replay information will be available at Domestic Dial-in: 1-877-213-9653 and International Dial-in: 1-630-652-3041 Passcode: 15121699. Information on these calls and web cast can also be found on the company’s web site.

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 growth of our SmartEdge product line and our customer base. 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: final review of quarterly results by the Company’s independent auditors; the final results and conclusions of the independent review into historical stock option practices; 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 Annual Report on Form 10-K for the year ended December 31, 2005, the Quarterly Report on Form 10-Q for the quarter ended March 31, 2006, and Redback’s other most recent reports on 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.