Ottawa, Canada, October 8, 2014 — 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 second quarter of fiscal year 2015, ended August 31, 2014. All figures are in U.S. dollars and were prepared in accordance with U.S. generally accepted accounting principles.

Revenue for the second quarter of fiscal year 2015 was $37.9 million, compared with $28.8 million in the first quarter of fiscal year 2015 and $25.5 million in the second quarter of fiscal year 2014. Revenue from the Nokia channel represented 60% of revenue in the second quarter of fiscal year 2015, versus 61% in both the first quarter of this fiscal year and the second quarter of fiscal year 2014. DragonWave had one other customer that contributed greater than 10% of revenue in the second quarter of fiscal year 2015.

Gross margin for the second quarter of fiscal year 2015 was 15.5%, compared with 20.5% in the first quarter of fiscal year 2015 and 11.0% in the second quarter of fiscal year 2014. The gross margin in the second quarter of fiscal year 2015 reflects the inclusion of an inventory impairment provision of $1.2 million. If you exclude this provision, the gross margin before inventory provision was 18.8% during the second quarter of fiscal year 2015.

Net loss applicable to shareholders in the second quarter of fiscal year 2015 was $8.9 million or ($0.14) per basic and diluted share. This compares to a net loss applicable to shareholders of $6.6 million or ($0.11) per basic and diluted share in the first quarter of fiscal year 2015 and a net loss applicable to shareholders of $10.5 million or ($0.28) per basic and diluted share in the second quarter of fiscal year 2014.

"We delivered another quarter of strong sequential growth," said DragonWave President and CEO Peter Allen. "Our product leadership together with strong global capex cycles underpin the business momentum we are experiencing. We anticipate fiscal third-quarter revenue to grow between 20% and 30% compared to our fiscal second quarter."

Cash and cash equivalents totaled $33.6 million at the end of the second quarter of fiscal year 2015, compared to $15.6 million at the end of the first quarter of fiscal year 2015.

The DragonWave management team will discuss the results on a webcast and conference call beginning at 8:30 a.m. Eastern Time on October 9, 2014.

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, including a range of products ideally suited to support the emergence of underlying small cell networks. 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.

This press release contains certain information that is not consistent with financial measures prescribed under GAAP. We break out "Gross margin before inventory provisions" as this measure allows management to evaluate our operational performance and compare to prior periods more effectively. The closest GAAP measure is gross margin, which as set forth in the release was 15.5% for the second quarter of fiscal year 2015. "Gross margin before inventory provisions" does not have any standardized meaning prescribed by GAAP, is therefore unlikely to be to be comparable to similar measures presented by other companies, and is not designed to replace other measures of financial performance or the statement of operations as an indicator of performance. This measure should not be considered in isolation or as a substitute for other measures of performance calculated according to GAAP. We use this non-GAAP measure because it provides additional information on our existing and active commercial operations performance.

Certain statements in this release constitute forward-looking statements within the meaning of applicable securities laws. Forward-looking statements include statements as to DragonWave's growth opportunities and the potential benefits of, and demand for, DragonWave's products, as well as our expectations regarding Q3 FY2015 revenues and the funnel for both direct sales and the Nokia channel. These statements are subject to certain assumptions, risks and uncertainties, including our view of the relative position of DragonWave's products compared to competitive offerings in the industry, the timing of orders and deliveries, revenues and expenses, and constraints in the supply chain. Readers are cautioned not to place undue reliance on such statements. DragonWave's actual results, performance, achievements and developments may differ materially from the results, performance, achievements or developments expressed or implied by such statements. Risk factors 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 the public documents filed by DragonWave with U.S. and Canadian securities regulatory authorities. DragonWave assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by law.

Forward-looking 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. Material risks and uncertainties relating to our business are described under the heading "Risks and Uncertainties" in the MD&A dated October 8, 2014 and in the Company's Annual Information Form 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.

CONSOLIDATED BALANCE SHEETS

Expressed in US $000's except share amounts

(Unaudited)



Assets
Current Assets
	Cash and cash equivalents	33,572		18,992
	Trade receivables	32,921		17,408
	Inventory	20,394		30,416
	Other current assets	5,616		5,909
	Deferred tax asset	119		69

		92,622		72,794
Long Term Assets
	Property and equipment	3,274		3,168
	Deferred tax asset	1,508		1,536
	Deferred financing cost	46		60
	Intangible assets	1,220		1,635
	Goodwill	11,927		11,927

		17,975		18,326
Total Assets		110,597		91,120

Liabilities
Current Liabilities
	Accounts payable and accrued liabilities	34,160		29,964
	Deferred revenue	870		984
	Capital lease obligation	598		1,795

		35,628		32,743
Long Term Liabilities
	Debt facility	19,000		15,000
	Other long term liabilities	2,198		574
	Warrant liability	4,104		1,360

		25,302		16,934
Shareholders' equity
	Capital stock	220,914		198,593
	Contributed surplus	7,766		7,118
	Deficit	(169,897	)	(154,505	)
	Accumulated other comprehensive loss	(9,618	)	(9,682	)

Total Shareholders' equity		49,165		41,524
	Non-controlling interests	502		(81	)

Total Equity		49,667		41,443
Total Liabilities and Equity		110,597		91,120

Shares issued & outstanding		75,242,381		58,008,746

CONSOLIDATED STATEMENTS OF OPERATIONS

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

(Unaudited)

		Three months ended						Six months ended

		August 31, 2014			August 31, 2013			August 31, 2014			August 31, 2013
REVENUE			37,933			25,453			66,704			49,985
	Cost of sales		32,040			22,659			54,925			44,371

Gross profit			5,893			2,794			11,779			5,614

EXPENSES
	Research and development		4,428			4,783			8,693			10,085
	Selling and marketing		3,308			3,175			6,673			6,557
	General and administrative		4,429			4,433			8,855			9,181

			12,165			12,391			24,221			25,823

Loss before other items			(6,272	)		(9,597	)		(12,442	)		(20,209	)
	Amortization of intangible assets		(339	)		(437	)		(648	)		(996	)
	Accretion expense		—			(56	)		(40	)		(121	)
	Interest expense		(379	)		(380	)		(804	)		(918	)
	Gain on change in estimate		—			342			101			342
	Gain on contract amendment		—			—			—			5,285
	Warrant issuance expenses		(221	)		—			(221	)		—
	Fair value adjustment — warrant liability		(1,002	)		—			(852	)		—
	Foreign exchange gain (loss)		253			(397	)		374			(495	)

Loss before income taxes			(7,960	)		(10,525	)		(14,532	)		(17,112	)
	Income tax expense		450			76			545			168

Net Loss			(8,410	)		(10,601	)		(15,077	)		(17,280	)
	Net (Gain) Loss Attributable to Non-Controlling Interest		(454	)		92			(419	)		146

Net Loss applicable to shareholders			(8,864	)		(10,509	)		(15,496	)		(17,134	)
Net loss per share
	Basic		(0.14	)		(0.28	)		(0.25	)		(0.45	)
	Diluted		(0.14	)		(0.28	)		(0.25	)		(0.45	)
Weighted Average Shares Outstanding
	Basic		63,894,060			38,112,887			61,056,200			38,086,403
	Diluted		63,894,060			38,112,887			61,056,200			38,086,403


Investor Contact: John Lawlor Investor Relations DragonWave Inc. jlawlor@dragonwaveinc.com Tel: 613-599-9991 ext 2424		Media Contact: Nadine Kittle Marketing Communications DragonWave Inc. nkittle@dragonwaveinc.com Tel: 613-599-9991 ext 2262		Media Contact: Becky Obbema Interprose Public Relations (for DragonWave) Becky.Obbema@interprosepr.com Tel: (408) 778-2024