DragonWave Inc.(TSX/AIM:DWI), a leading provider of carrier-grade microwave equipment for high capacity broadband wireless systems, today issued financial results for its second quarter of fiscal year 2008 ended August 31, 2007.  All figures are prepared in accordance with Canadian generally accepted accounting principles (GAAP) and are reported in Canadian dollars. 

Revenue for the second quarter was $9.9 million, compared with $5.2 million for the same period of last fiscal year, an increase of 91%. Sequential growth from the first quarter of fiscal year 2008 was 15%. These results reflect another record for quarterly revenues. 

Revenue from customers in North America grew to $8.2 million, more than double the $4.0 million reported in the same quarter of fiscal year 2007.  Revenue from outside North America grew to $1.7 million, up from $1.2 million in the same quarter of fiscal year 2007, representing an increase of 40% year-over-year.

Gross margin for the second quarter was 37%, a 2% increase from last quarter, and a 3% improvement from the 34% recorded in the same quarter of fiscal year 2007.  This increase is as a result of continued cost reduction programs and a favourable product mix.

For the second quarter fiscal year 2008, the Loss from Operations was $1.8 million, compared to the loss of $1.4 million in the second quarter of fiscal year 2007.  Expenses increased from $3.2M to $5.4M due to increased staffing levels, marketing activities required to support the growing international business, and the engineering activity to comply with local certification and approval processes.  Net loss for the quarter was $2.1 million versus $2.5 million in fiscal Q2 2007 primarily due to the elimination of interest expense on the convertible debt that was in place prior to the IPO.

“DragonWave made good progress during the quarter.  We’ve seen very strong growth in North America where revenue more than doubled and we had strong growth internationally, while continuing to improve our margins.  We continue to be well positioned as a leader in the high growth IP Ethernet based, high capacity wireless backhaul equipment market” said Peter Allen, President and CEO of DragonWave.

The DragonWave management team will discuss the full results on a conference call to be held on October 5, 2007 at 8:30 a.m. eastern time (1:30 p.m.BST). 

Presentation material and a webcast link will be made available from the Investor Relations portal of DragonWave’s web site at http://www.dragonwaveinc.com/financialreports.asp.

Conference Call Details:

o Beginning at 8:30 a.m., EDT, (1:30 p.m. BST)
o Local call: 416-642-5212
o Toll free North American: 1-866-321-6651
o Toll free United Kingdom: 08-08-234-6237 or 08-08-234-6235 or
     08-00-032-3524

A replay of the call will be made available at http://www.dragonwaveinc.com, through the Investor Relations portal.

About DragonWave Inc.
DragonWave™ is a leading provider of high-capacity wireless Ethernet equipment used in emerging IP networks. DragonWave designs, develops, and markets carrier-grade microwave radio frequency networking equipment that wirelessly transmit broadband voice, video and other data.  DragonWave’s wireless Ethernet products, which are based on a native Ethernet platform, function as a wireless extension to an existing fibre-optic core telecommunications network. The principal application for DragonWave’s products is the backhaul function in a wireless communications network. Additional applications for DragonWave’s products include point-to-point transport in private networks, including municipal and enterprise networks. DragonWave’s corporate headquarters are located in Ottawa, Ontario, and have sales locations in Europe and North America.  The company's Web site is http://www.dragonwaveinc.com

FORWARD LOOKING STATEMENTS
This release contains certain forward-looking statements. Readers are cautioned not to place undue reliance upon any such forward-looking statements.  Forward-looking statements are based on the company’s current expectations and assumptions that are subject to a variety of risks and uncertainties that are difficult to predict and that may be beyond DragonWave’s control.

Actual results could differ materially from those expressed in any forward-looking statements due to factors including the following: 

• DragonWave’s growth is dependent on the development and growth of the market for broadband wireless access.
• DragonWave faces intense competition from several competitors and if it does not compete effectively with these competitors, its revenues may not grow and could decline.  DragonWave also faces competition from indirect competitors.
• DragonWave’s success depends on its ability to develop new products and enhance existing products.
• DragonWave has a history of losses and cannot provide assurance that it will attain profitability.
• If DragonWave is required to change its pricing models to compete successfully, its margins and operating results may be adversely affected.
• DragonWave relies on a small number of customers for a large percentage of its revenue.
• DragonWave’s ability to sell products and services is dependent upon it establishing and maintaining relationships with channel partners.
• DragonWave’s quarterly revenue and operating results can be difficult to predict and can fluctuate substantially.
• DragonWave has a lengthy and variable sales cycle.

Additional risks which can also impact upon forward looking statements are identified in DragonWave’s Annual Information Form which is available online at www.sedar.com. DragonWave assumes no obligation to update these forward-looking statements as a result of new information or future events.

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