It's a week of earnings reports from fast-growing upstarts. Yesterday, VoIP up-and-comer 8x8 (Nasdaq: EGHT) took the stage, and I examined whether it was a Rule Breaker-caliber stock. Today, Riverbed Technology (Nasdaq: RVBD) gets the spotlight.

We'll dig into the details of its fourth-quarter report in a moment. First, let's cover the basics of the business from a Foolish perspective:


Riverbed Technology


The market leader in WAN optimization, an esoteric phrase that generally refers to equipment for making connections between networks run faster and more smoothly.

CAPS stars (out of 5)


Total ratings


Percent bulls


Percent bears


Bullish pitches

93 out of 101

Highest rated peers

Digi International, Spirent Communications, Network Engines

Data current as of Jan. 28.

Riverbed's main product is the Steelhead family of appliances, which use a variety of techniques to establish and accelerate connections between networks. I know, that sounds familiar. Trust me when I say Riverbed's technology isn't the same as everything else you've already heard about.

Unlike Akamai (Nasdaq: AKAM), which caches data at points close to users, or F5 Networks (Nasdaq: FFIV), whose load balancers prioritize delivery of network traffic, Riverbed's gear strips away needless 1s and 0s in the data being delivered. Make information lighter, the theory goes, and it'll travel faster.

Customers find that pitch appealing. CEO Jerry Kennelly said during yesterday's earnings call that product revenue soared 52% during Q4, marking the sixth consecutive quarter of accelerating growth in that metric. Big sales to data center customers drove the gains, Kennelly said.

Overall, Riverbed reported a 47% year-over-year increase in revenue and a 73% gain in non-GAAP per-share earnings. Both results beat Street estimates for the quarter, while free cash flow for the full year ballooned 54% to $135 million.

With the stock up more than 4% as I write this, it's obvious investors like the looks of those numbers. Fools, meanwhile, like the stock because chief rival Cisco Systems (Nasdaq: CSCO) has yet to find a way to displace Riverbed's stand-alone devices with its own brand of integrated gear.

"Great company that is optimally positioned in a growing industry. Had a great run last year, but its valuation has me believing it still can outperform the market this year," Foolish investor nakawest wrote earlier this month.

I agree. Riverbed may trade for a premium to analysts' long-term growth projections, but they've been low so often that there's probably a lot less of a premium cooked into the valuation than it would seem at first glance. That's why I've rated the stock to outperform in my CAPS portfolio.

Now it's your turn to weigh in. What do you think of Riverbed Technology? Would you buy the stock at current levels? Use the comments section below to let us know what you think. You can also rate Riverbed Technology in Motley Fool CAPS.

Interested in more info on the stocks mentioned in this story? Add Akamai Technologies, Cisco, 8x8, F5 Networks, or Riverbed Technology to your watchlist.