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Riverbed Technology (Nasdaq: RVBD  ) proved the bears wrong last night. They came out in droves after last quarter, and now they're going back into hibernation as the company put up a solid quarter that dismisses some of the macroeconomic fears that have been holding the stock back.

In the third quarter, the WAN optimization leader's revenue jumped 28% to $189.8 million from $147.8 million last year. Non-GAAP net income came out to $40 million, or $0.24 per share, compared to the previous year's $27 million and $0.17 per share. Both the top and bottom lines beat analysts' estimates, which were looking for $185.3 million and $0.21 earnings per share.

The company hit a handful of records, including non-GAAP gross margin of 79% and non-GAAP operating margin of 30.1%. Deferred revenue, an important gauge of the company's sales pipeline, rose 37% to $148 million.

During the quarter, Riverbed spent roughly $120 million acquiring two privately owned companies, Zeus Technology and Aptimize Limited, adding Application Delivery Controllers to its arsenal, expanding its addressable opportunities. The balance sheet remains rock solid, with $476 million in cash and investments.

Part of last quarter's plunge was due to softness in the Europe, Middle East, and Africa (EMEA) segment, which Riverbed CEO Jerry Kennelly had attributed to regional economic conditions as well as the company's own execution. Kennelly was confident that EMEA would improve under new EMEA sales leadership. This has largely come to fruition, with EMEA revenue this quarter growing 30% year over year, and the geographic segment now accounts for 26% of sales.

When was the last time you saw Cisco (Nasdaq: CSCO  ) put up growth figures like that? Riverbed is a much better buy than the networking Goliath. The company is also growing at the expense of rival Blue Coat Systems (Nasdaq: BCSI  ) , whose digits have been precipitously shrinking of late.

Despite its lofty valuation, trading at roughly 66 times earnings, this stock is still a lot cheaper than it was over the summer, and its sell-off was less than warranted. Sign up for a free trial to read the recommendation that talked me into being a shareholder. While you're at it, add Riverbed Technology to your Watchlist to stay up to speed.

Fool contributor Evan Niu owns shares of Riverbed Technology, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Cisco Systems. Motley Fool newsletter services have recommended buying shares of Cisco Systems and Riverbed Technology and writing puts in Riverbed Technology. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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  • Report this Comment On October 20, 2011, at 8:47 PM, mcintorb wrote:

    Why all the "non-GAAP" BS? How about some GAAP numbers? The company might want to spin a story around the "non-GAAP" numbers, but no reason MF should be following suit. By all means present both (and explain the variances), but it's beneath you guys to publish non-GAAP without the GAAP numbers.

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