DragonWave Inc.
TSX : DWI
AIM : DWI

DragonWave Inc.

May 07, 2008 16:46 ET

DragonWave Announces Fiscal 2008 Results

67% growth in revenue to $40.4 Million for FY2008

OTTAWA, CANADA--(Marketwire - May 7, 2008) - DragonWave Inc. ("DragonWave"), (TSX:DWI)(AIM:DWI) a leading global supplier of next-generation wireless networks, today issued financial results for fiscal year 2008 ended February 29, 2008. All figures are prepared in accordance with Canadian generally accepted accounting principles (GAAP) and are reported in Canadian dollars.

Revenue for the year was $40.4 million, compared with $24.2 million for the same period of the last fiscal year, an increase of 67%.

Revenue from customers in North America grew to $28.1million, a 45% increase from the $19.4 million reported in fiscal year 2007. Revenue from outside North America grew to $12.3 million, up from $4.8 million in fiscal year 2007, representing an increase of 160% year-over-year.

Gross margin for the year was 38%, up 5% from 33% gross margin reported in fiscal 2007. Gross margin for Q4 fiscal year 2008 was 41% up 2% sequentially from Q3 fiscal 2008 and up 7% from Q4 fiscal 2007.

For the fiscal year 2008, the loss from operations was $7.2 million, compared to a loss of $5.9 million in fiscal year 2007. Expenses increased from $13.9 million to $22.6 million due to increased staffing levels, sales and marketing activities required to support the growing international business, market driven R&D associated with major near term opportunities and the engineering activity to comply with local certification and approval processes. Net loss for the year was $8.3 million versus $10.7 million in fiscal 2007.

"DragonWave made good progress during the year as we've continued to execute our strategy. We've seen very strong growth in all markets, but particularly outside North America, while continuing to improve our gross margins. We have captured 50 new customers and we are seeing excellent traction for our Horizon product line. 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 results on a conference call May 8, 2008 at 8:30 a.m. Eastern time (1:30 GMT).

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/irevents.asp

Conference Call Details:

- Beginning at 8:30 a.m., EDT

- Local call: 416-883-0139

- Toll free North American: 1-888-458-1598

- Toll free United Kingdom: 00-800-8358-7111

- Participant Pass Code: 88802#

For a replay of the call, it will be made available on DragonWave Inc. web site, through the Investor Relations portal.

To review Management's Discussion and Analysis for the quarter, please go to www.sedar.com.

About DragonWave

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 is located in Ottawa, Ontario, with sales locations in Europe, Middle East and North America. The company's Web site is hhttp://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 forbroadband 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.




CONSOLIDATED STATEMENTS OF OPERATIONS, COMPREHENSIVE LOSS AND DEFICIT
(Expressed in Cdn $000's except share and
per share amounts)
For the For the
year ended year ended
February 29, February 28,
2008 2007
$ $
--------------------------------------------------------------------------
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REVENUE 40,404 24,170
Cost of sales 24,980 16,124
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Gross profit 15,424 8,046
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EXPENSES
Research and development 10,378 6,107
Selling and marketing 8,858 5,983
General and administrative 3,885 2,554
Investment tax credits (492) (739)
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22,629 13,905
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Loss from operations (7,205) (5,859)

Interest income 1,109 -
Interest expense (203) (492)
Interest expense on debt component of redeemable
Amortization of deferred debt (500) (3,610)
Amortization of deferred
financing charges - (100)
Gain on disposal
of property and equipment - 34
Patent Fee - (435)
Foreign exchange loss (1,453) (262)
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Loss before income taxes (8,252) (10,724)
Income taxes - -
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Net loss and comprehensive loss (8,252) (10,724)
Deficit, beginning of year (63,619) (52,895)
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Deficit, end of year (71,871) (63,619)
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Loss per share
Basic and fully diluted (0.35) (2.96)
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Basic and diluted weighted average
number of shares outstanding 23,448,504 3,615,466
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CONSOLIDATED BALANCE SHEETS
(Expressed in Cdn $000's)
As at As at
February 29, February 28,
2008 2007
$ $
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ASSETS
Current
Cash and cash equivalents 1,551 1,334
Short Term Investments 31,908 -
Accounts receivable 11,433 7,677
Other receivables 1,092 986
Inventory 10,584 6,898
Prepaid expenses 424 332
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Total current assets 56,992 17,227
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Deferred financing charges - 2,735
Property and equipment 2,823 578
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2,823 3,313
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59,815 20,540
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LIABILITIES AND SHAREHOLDERS' EQUITY
(DEFICIENCY)
Current
Line of credit 550 4,443
Accounts payable and accrued liabilities 9,055 8,647
Deferred revenue 1,713 630
Convertible debt - 13,020
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Total current liabilities 11,318 26,740
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Debt component of redeemable
preferred shares - 18,004
-------------------------------------------------------------------
11,318 44,744
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Commitments

Shareholders' equity (deficiency)
Capital stock 119,435 21,753
Contributed surplus 933 17,662
Deficit (71,871) (63,619)
-------------------------------------------------------------------
Total shareholders' equity (deficiency) 48,497 (24,204)
-------------------------------------------------------------------
59,815 20,540
-------------------------------------------------------------------



STATEMENTS OF CASH FLOWS
(Expressed in Cdn $000's except share and
per share amounts)
For the For the
year ended year ended
February 29, February 28,
2008 2007
$ $
--------------------------------------------------------------------------

OPERATING ACTIVITIES
Net loss (8,252) (10,724)
Items not affecting cash:
Amortization of property and equipment 563 511
Interest expense on debt component of preferred
shares 350 2,348
Amortization of deferred financing costs - 100
Interest expense on debt component of
convertible debt 150 1,262
Gain on disposal of property and equipment - (34)
Stock-based compensation expense 327 92
Warrant expense 64 239
Unrealized foreign exchange loss 573 1
Accrued interest on fair value of short term
investments (534)
Changes in non-cash working capital items (3,420) (1,960)
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Cash flows used in operating activities (10,179) (8,165)
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INVESTING ACTIVITIES
Acquisition of property and equipment (2,808) (334)
Proceeds on the disposal of property
and equipment - 34
Purchase of short term investments (31,374) -
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Cash flows used in investing activities (34,182) (300)
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FINANCING ACTIVITIES
Repayment of capital lease obligations - (12)
Repayment of line of credit (3,893) 1,691
Issuance of convertible debt - 3,000
Issuance of common stock net of stock
issuance costs 49,043 -
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Cash flows provided by financing activities 45,150 4,679
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Effect of foreign exchange on cash and cash
equivalents (572) (1)

Net increase (decrease) in cash and cash
equivalents 217 (3,787)
Cash and cash equivalents at beginning of
period 1,334 5,121
Cash and cash equivalents at end of period 1,551 1,334
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Cash paid during the period for:
Interest 203 253
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Contact Information

  • DragonWave Inc.
    Russell Frederick
    Chief Financial Officer
    613-599-9991 ext. 2253
    rfrederick@dragonwaveinc.com
    or
    DragonWave Inc.
    Bruce Chick
    Director, Investor Relations
    613-599-9991 ext. 2517
    bchick@dragonwaveinc.com
    or
    Canaccord Adams Limited
    Andrew Chubb
    44 20 7050 6500