OTTAWA, Canada, July 11, 2012 — DragonWave Inc. (TSX: DWI; NASDAQ: DRWI) a leading global supplier of packet microwave radio systems for mobile and access networks, today announced financial results for the first quarter of fiscal year 2013, ended May 31, 2012. All figures are in U.S. dollars and were prepared in accordance with U.S. generally accepted accounting principles.

Revenue for the first quarter of fiscal year 2013 was $13.0 million, compared with $9.2 million in the fourth quarter of fiscal year 2012 and $11.0 million in the first quarter of fiscal year 2012. Revenue from customers within North America was $10.1 million, compared with $4.8 million in the fourth quarter of fiscal year 2012 and $8.2 million in the first quarter of fiscal year 2012. DragonWave had two customers who each contributed more than 10% of revenue in the first quarter.

Gross margin for the first quarter of fiscal year 2013 was 32%, compared with 13% in the fourth quarter of fiscal year 2012 and 42% in the first quarter of fiscal year 2012. The gross margin in the fourth quarter of fiscal year 2012 reflects the inclusion of an inventory impairment provision of $1.7 million.

Net and comprehensive loss applicable to shareholders in the first quarter of fiscal year 2013 was ($12.6) million or ($0.35) per basic and diluted share. This compares to a net and comprehensive loss applicable to shareholders of ($13.4) million or ($0.38) per basic and diluted share in the fourth quarter of fiscal year 2012 and ($9.9) million or ($0.28) per basic and diluted share in the first quarter of fiscal year 2012.

"We recently completed a transformational event for DragonWave — the acquisition of Nokia Siemens Networks' microwave transport business," said DragonWave President and CEO Peter Allen. "Nokia Siemens Networks continues to strengthen its position as a leading global supplier of complete solutions for broadband mobile networks. Industry-best packet microwave backhaul from DragonWave is a key component of Nokia Siemens Networks' complete solution for broadband mobile networks. In turn, Nokia Siemens Networks gives DragonWave the leverage of its large direct sales channel and access to its customer base of tier one mobile operators throughout the world."

Cash, cash equivalents, restricted cash, and short-term investments totaled $42.6 million at the end of the first quarter of fiscal year 2013, compared to $53.0 million at the end of the fourth quarter of fiscal year 2012.

The results for the first quarter of fiscal year 2013 do not include any revenue from the microwave transport business acquired by DragonWave from Nokia Siemens Networks or DragonWave's new supply relationship with Nokia Siemens Networks, as the transactions closed on June 1, 2012 after the end of the first quarter.

DragonWave expects revenue for the second quarter of fiscal year 2013 to be in the range of $35 million to $45 million.

The DragonWave management team will discuss the results on a webcast and conference call beginning at 8:30 a.m. Eastern Time tomorrow, July 12, 2012.

The live webcast and presentation slides will be available at the Investor Relations section of the DragonWave website at: http://investor.dragonwaveinc.com/events.cfm

DragonWave® is a leading provider of high-capacity packet microwave solutions that drive next-generation IP networks. DragonWave's carrier-grade point-to-point packet microwave systems transmit broadband voice, video and data, enabling service providers, government agencies, enterprises and other organizations to meet their increasing bandwidth requirements rapidly and affordably. The principal application of DragonWave's products is wireless network backhaul. Additional solutions include leased line replacement, last mile fiber extension and enterprise networks. DragonWave's corporate headquarters is located in Ottawa, Ontario, with sales locations in Europe, Asia, the Middle East and North America. For more information, visit http://www.dragonwaveinc.com.

Certain statements in this release, including the estimate of the revenue range for the second quarter of fiscal year 2013 and the statements regarding our relationship with and the transactions involving Nokia Siemens Networks (the "NSN Transactions"), constitute forward-looking statements or forward-looking information within the meaning of applicable securities laws. These statements are subject to certain assumptions, risks and uncertainties. Material factors and assumptions used to develop revenue estimates include DragonWave's expectations regarding: the network deployment plans of its existing and new customers, and the volume and timing of orders, shipments and revenue recognition. Material factors and assumptions relating to our relationship with Nokia Siemens Networks and the NSN Transactions include the parties' beliefs regarding the industry and markets in which the parties operate; successful integration of the product lines acquired from Nokia Siemens Networks; and expectations regarding potential synergies and prospects for the business. There are risks arising out of the NSN Transactions, including that expected synergies will not materialize; that unexpected costs will be incurred to integrate the business; or that end-customer demand will not meet expectations. Material risks and uncertainties relating to the NSN Transactions are described under the heading "Risks and Uncertainties" in the MD&A dated July 11, 2012 and on pages 19-22 of the Company's Annual Information Form, dated May 11, 2012. Readers are cautioned not to place undue reliance on forward-looking statements. These statements are provided to assist external stakeholders in understanding DragonWave's expectations as of the date of this release and may not be appropriate for other purposes. Actual results, performance, achievements or developments of DragonWave may differ materially from the results, performance, achievements or developments expressed or implied by such statements. Risk factors, in addition to those detailed above, that may cause the actual results, performance, achievements or developments of DragonWave to differ materially from the results, performance, achievements or developments expressed or implied by such statements can be found in DragonWave's Annual Information Form dated May 11, 2012 and other public documents filed by DragonWave with Canadian and United States securities regulatory authorities, which are available at www.sedar.com and www.sec.gov, respectively, and include the following:

DragonWave assumes no obligation to update or revise any forward-looking statements or forward-looking information, whether because of new information, future events or otherwise, except as expressly required by law.



Assets
Current Assets
Cash and cash equivalents	42,248		52,798
Restricted cash	400		177
Trade receivables	13,516		9,850
Inventory	25,591		27,043
Other current assets	5,533		5,501
Future income tax asset	180		69

	87,468		95,438
Long Term Assets
Property and equipment	4,650		5,184
Future income tax asset	1,817		1,308
Deferred financing cost	435		—
Intangible assets	3,319		6,264
Goodwill	11,927		11,927

	22,148		24,683
Total Assets	109,616		120,121

Liabilities
Current Liabilities
Accounts payable and accrued liabilities	15,796		12,720
Deferred revenue	1,184		723
Contingent royalty	219		372
Contingent consideration	—		1,884

	17,199		15,699
Long Term Liabilities
Contingent royalty	184		1,292
Other long term liabilities	666		1,063

	850		2,355
Commitments
Shareholders' equity
Capital stock	174,076		172,264
Contributed surplus	4,999		4,606
Deficit	(78,027	)	(65,448	)
Accumulated other comprehensive loss	(9,692	)	(9,658	)

Total Shareholder's equity	91,356		101,764
Non-controlling interests	211		303

Total Equity	91,567		102,067
Total Liabilities and Shareholder's equity	109,616		120,121

Shares issued & outstanding	36,001,067		35,586,206

CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)

Expressed in US $000's except share and per share amounts

	Three months ended

	May 31, 2012			May 31, 2011
REVENUE
Cost of sales		12,974			11,049
Gross profit		8,841			6,405

		4,133			4,644

EXPENSES
Research and development		4,399			6,266
Selling and marketing		3,658			4,080
General and administrative		5,270			3,963
Government assistance		—			(350	)

		13,327			13,959

Income (loss) before amortization of intangible assets and other items		(9,194	)		(9,315	)
Amortization of intangible assets		(542	)		(587	)
Accretion expense		(22	)		(276	)
Restructuring expense		(798	)		—
Interest income		29			84
Investment gain		—			39
Impairment of intangible assets		(2,869	)		—
Gain on change in estimate of contingent liabilities		1,190			—
Foreign exchange gain		(1,003	)		120

Income (loss) before income taxes		(13,209	)		(9,935	)
Income tax expense (recovery)		(572	)		9

Net Income (loss)		(12,637	)		(9,944	)
Net Loss Attributable to Non-Controlling Interest		58			54

Net Income (loss) applicable to shareholders		(12,579	)		(9,890	)
Foreign currency translation differences for foreign operations		68			3

Comprehensive Income (Loss)		(12,647	)		(9,893	)
Comprehensive Income (Loss) applicable to Non-Controlling Interest		34			2

Comprehensive Income (Loss) applicable to shareholders		(12,613	)		(9,891	)
Income (loss) per share
Basic		(0.35	)		(0.28	)
Diluted		(0.35	)		(0.28	)
Weighted Average Shares Outstanding
Basic		35,931,347			35,429,049
Diluted		35,931,347			35,429,049

	Three months ended

	May 31, 2012			May 31, 2011
Operating Activities
Net Income (Loss)		(12,637	)		(9,944	)
Items not affecting cash
Amortization of property and equipment		754			829
Amortization of intangible assets		542			587
Accretion expense		22			276
Non cash royalty amortization		(93	)		(201	)
Impairment of intangible assets		2,869			—
Gain on change in estimate of contingent liabilities		(1,190	)		—
Stock-based compensation		404			492
Unrealized foreign exchange loss		1,116			1
Non cash future income tax expense (recovery)		(572	)		9
Inventory impairment		34			57

		(8,751	)		(7,894	)
Changes in non-cash working capital items		463			(1,324	)

		(8,288	)		(9,218	)

Investing Activities
Acquisition of property and equipment		(220	)		(449	)
Acquisition of intangible assets		(466	)		(314	)
Purchase of short term investments		—			(22,432	)
Maturity of short term investments		—			17,508

		(686	)		(5,687	)

Financing Activities
Initial formation contribution by non-controlling interest in DW-HFCL		—			555
Deferred financing cost		(435	)		—
Issuance of common shares net of issuance costs		43			178

		(392	)		733

Effect of foreign exchange on cash and cash equivalents		(1,184	)		(6	)
Net decrease in cash and cash equivalents		(10,550	)		(14,178	)
Cash and cash equivalents at beginning of period		52,798			77,819

Cash and cash equivalents at end of period		42,248			63,641

Cash paid during the period for interest		—			—


Investor Contact: John Lawlor VP, Investor Relations DragonWave Inc. jlawlor@dragonwaveinc.com Tel: 613-895-7000		Media Contact: Nadine Kittle Marketing Communications DragonWave Inc. nkittle@dragonwaveinc.com Tel: 613-599-9991 ext 2262