Riverbed Makes It Official

As expected, Riverbed Technology Inc. (Nasdaq: RVBD) is looking to go public, using the emerging WAN optimization market and its strong partnerships as the springboard.

The startup filed for an IPO with the SEC after hours last night, one day after Byte and Switch reported it was poised to take the plunge. (See Sources: Riverbed Reaches for IPO. Riverbed is looking to raise $74.75 million in the offering; Goldman Sachs & Co. , Citigroup , Deutsche Bank AG , and Thomas Weisel Partners are the underwriters.

Riverbed did not disclose the estimated price of shares, number of shares, nor the target date for the offering but it is not expected to price shares until the second half of the year.

In the filing, the startup revealed it has yet to make a profit. Riverbed lost $17.4 million in 2005, which followed $9.8 million in losses in 2004. Riverbed and its investors apparently were satisfied with its revenue growth last year, however. Revenue jumped from $2.5 million in 2004 to $22.9 million last year. The vendor also reported 68 customers for its Steelhead appliances in 2004 and 501 new customers last year.

According to the filing, Riverbed's revenue for the fourth quarter of 2005 was about $10.1 million, up from $7 million the previous quarter.

Riverbed's revenue is expected to receive a boost from OEM deals with HP Inc. (NYSE: HPQ) and switch vendor McData Corp. (Nasdaq: MCDTA). (See McData Hits Remote Control and HP Upgrade Features OEM Crowd.) The filing says it has customers through those partners but has not recognized revenue yet. The HP deal started last June, and McData began its OEM deal with Riverbed in March.

According to Infonetics Research Inc. , the fast-growing WAN optimization appliance market increased 49% worldwide in 2005 to $236 million, and unit shipments increased 39%. Infonetics forecasts double-digit annual growth at least through 2009, with annual unit shipments almost tripling and revenue more than doubling. (See WAN Market Tops $236M.)

Riverbed's main competitors are public companies Cisco Systems Inc. (Nasdaq: CSCO), Juniper Networks Inc. (NYSE: JNPR), and Packeteer Inc. (Nasdaq: PKTR), and startups Expand Networks Inc. , and Tacit Networks Inc. .

While frequently billed as a WAFS appliance, Riverbed's Steelhead product in fact works much like a WAN optimizer. It tweaks TCP to reduce protocol "chattiness" caused by repetitious packet exchanges. At the same time, it offers application-specific algorithms to reduce the overhead caused by Windows, HTTP, and MAPI traffic. The Steelhead appliance also reduces file transfer times by sending a reference to a file in place of the actual file.

Riverbed is the second storage startup to file for an IPO in the past month. Backup software vendor CommVault Systems Inc. filed for an IPO of up to $150 million March 20 (See CommVault's Taking the Plunge.)

Other startups are generating similar buzz. Force10 Networks Inc. has also been identified as a possible IPO prospect, and security specialist Sourcefire Inc. (Nasdaq: FIRE), which Check Point Software Technologies Ltd. (Nasdaq: CHKP) recently tried (and failed) to acquire, is said to be mulling its own IPO. (See Force10 Takes $40M, Talks IPO, US Checks Check Point, and Check Point, Sourcefire Team.)

— James Rogers and Dave Raffo, Senior Editors, Byte and Switch

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loftenter 12/5/2012 | 2:57:15 PM
re: Riverbed Makes It Official We are deploying a lot of Riverbed Steelhead appliances for our customers. It is really helping them consolidate their servers and storage while still giving their end users the application performance that is critical to productivity. Also, with Steelhead Mobile we can also help those mobile workers and traveling execs.

Justin Lofton
Systems Engineer
[email protected]
Tredent Data Systems, Inc.
WAN Optimization
green 12/5/2012 | 3:56:26 AM
re: Riverbed Makes It Official hi,

how can a company with no earnings go public ? did I fall asleep and go back in time and land in 2000 again ? which sucker is going to buy this POS ?
Craig 12/5/2012 | 3:56:23 AM
re: Riverbed Makes It Official Riverbed
metroman 12/5/2012 | 3:56:23 AM
re: Riverbed Makes It Official They are riding on the coat tails of Peribit who were sold to JNPR for $337 million.

I am not sure of the value of these companies - optimising protocols to reduce WAN costs seems interesting until you look at the downward trend in WAN bandwidth charges. Not sure where the bandwidth cost decreases outweigh the cost of the hardware....???

Honestly 12/5/2012 | 3:56:22 AM
re: Riverbed Makes It Official As usual, James Rogers missed the hottest of competitors, Silver Peak Systems. Silver Peak's system is purposely built to scale for the forthcoming large enterprise adoption and If James would have taken the time to research Juniper's recent earning call, or read Gartner, he would have seen that Peribit/Juniper is losing momentum.

Bottom line is that Silver Peak and Riverbed are getting far down the short list bakeoffs and others are fading. Stay tuned because the customer knows best.
Craig 12/5/2012 | 3:56:22 AM
re: Riverbed Makes It Official riverbed
materialgirl 12/5/2012 | 3:56:21 AM
re: Riverbed Makes It Official Dear Honestly,
What you say about Riverbed versus JNPR or CSCO sounds true. What do you think is driving the divergence? Are these guys also the reason behing the recent bad quarter at FFIV?

Also, as to the post on WAN bandwidth prices, I believe one reason these boxes are hot is that they also lower latency and jitter, at least on a point-to-point basis, which can be much more valuable than a lower WAN bandwidth bill.
metroman 12/5/2012 | 3:56:20 AM
re: Riverbed Makes It Official How can you have lower latency and jitter than having no box on the wire?

Latency and Jitter are concerns for real time applications rather than enterprise application optimisation.

Honestly 12/5/2012 | 3:56:17 AM
re: Riverbed Makes It Official You may need to research what applications Silver Peak Systems supports. Gee dude is VOIP real time.???
Honestly 12/5/2012 | 3:56:16 AM
re: Riverbed Makes It Official Multi function, real cost. To really see divergence consider Silver Peak point to multipoint, scale, multi porotocol, real cost and TCO for the CIO. None of the other three can really touch this breadth, however Riverbed is doing well with the small branch opportunity and FV bought older generation technology. Juniper has failed, I think to expand on and sell what they bought. OOuuuch
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