Press Release

Redback Networks Announces Third Quarter 2006 Operating Results

SAN JOSE, Calif, October 19, 2006 -- Redback Networks Inc. (NASDAQ: RBAK), a leading provider of next generation broadband networking systems, today announced its third quarter results for the period ending September 30, 2006. Net revenue increased 95 percent to $70.9 million for the third quarter of 2006 compared to $36.4 million for the same quarter last year. Net revenue was up 4 percent for the third quarter of 2006 compared to the second quarter of 2006.

Redback Networks generated $4.5 million in cash in the third quarter of 2006, boosting its overall cash total to $176.0 million. Redback Networks also added 18 new customers in the third quarter for its SmartEdge® family of multi-service edge routers, including a top 20 carrier worldwide. In less than two years, Redback has won more than 200 SmartEdge customers worldwide, including 12 of the largest 20 carriers. Redback has more than 500 SmartEdge and SMS customers worldwide, including 15 of the 20 largest carriers.

"On a worldwide basis, Redback continues to drive the wire-line carrier market in the deployment of triple-play networks,” said Kevin DeNuccio, president and chief executive officer, Redback Networks. “Broadband networks are becoming more video-centric and we believe Redback and SmartEdge technology are at the center of a paradigm shift in network routing to multi-service broadband networks.”

“We believe up to 2 billion wireless and wire-line customers will be upgraded to new broadband networks from 250 million broadband users today,” said DeNuccio. “This network upgrade is up to ten times larger than the last Internet build-out. This trend reinforces our vision that a single broadband network will unify communication and entertainment services over time. In short, the network is shaping up to be the next mass medium.”

GAAP net loss for the third quarter of 2006 was $2.4 million or $(0.03) per share attributable to common stockholders compared to a GAAP net loss of $8.4 million or $(0.15) per share in the third quarter of 2005.

Non-GAAP net income was $9.1 million or $0.12 per share, compared to a non-GAAP net loss of $4.2 million or $(0.08) per share for the third quarter of 2005. Excluded from the non-GAAP results for the third quarter of 2006 were charges relating to amortization of intangible assets, 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 which was in the second quarter of 2006 and the previous quarters.

For comparative purposes, GAAP pre-tax income excluding stock-based compensation for the third quarter of 2006 was $6.4 million, compared with a GAAP pre-tax loss excluding stock-based compensation of $7.3 million for the third quarter of 2005.

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.

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

Third Quarter Conference Call, October 19, 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.

Twelve of the top 20 carriers worldwide deploy Redback's SmartEdge family of multi-service edge routers to deliver multiple broadband services to tens of millions of business and residential customers worldwide. These customers include British Telecom, Belgacom, BellSouth, China Telecom, China Netcom, Chunghwa Telecom, Korea Telecom, France Telecom and Turk Telecom, among others.

About Redback Networks

Redback Networks Inc. manages 50 million broadband connections (SMS+SmartEdge products) for 15 of the top 20 carriers worldwide. Redback’s multi-service routing platform delivers next generation broadband services such as VoIP, IPTV, Video-on-Demand and on-line gaming. Redback Networks has more than 500 carrier customers worldwide and is based in San Jose, CA. In 2006, Redback marks its 10 year anniversary, celebrating ten years of broadband innovation. For more information, visit Redback Networks at www.redback.com.

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. All other products or services mentioned are the trademark, service marks, registered trademarks or registered service marks of their respective owners.

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, our expectations of continued growth of our SmartEdge product line and our customer base, expectations regarding the trend in growth of upgrades to broadband networks and the expected impact on the growth of the Company as a result of such trends. 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; 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 June 30, 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 measures, which are adjusted from results based on GAAP to exclude certain items. These non-GAAP measures 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 measures 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.