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DRAGONWAVE ANNOUNCES RECORD RESULTS FOR THIRD QUARTER FISCAL 2010
Revenue Outlook for Fiscal Year 2010 Increased to $170 Million
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1/7/2010 - Ottawa, Canada
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DragonWave Inc. (TSX: DWI; NASDAQ: DRWI) a leading global supplier of packet microwave radio systems for mobile and access networks, today announced record financial results for the third quarter of fiscal year 2010, ended November 30, 2009. All figures are prepared in accordance with Canadian generally accepted accounting principles (GAAP) and are reported in Canadian dollars.
This press release contains statements, including statements regarding our revenue expectations for our 2010 fiscal year, that constitute forward-looking statements or forward-looking information. Readers are cautioned that such statements are based on DragonWave’s current views and actual outcomes are not certain. For more information, see the note on forward-looking statements below.
Revenue for the third quarter of fiscal 2010 increased 421% to $55.8 million, compared with $10.7 in the third quarter of fiscal 2009. Revenue from customers within North America increased to $52.7 million, compared with $6.4 million in the third quarter of the prior fiscal year.
Net income doubled to $12.6 million or $0.37 per diluted share for the third quarter of fiscal 2010, compared with $6.3 million or $0.21 per diluted share in the second quarter of 2010. Gross margin for the third quarter increased to 43%, from 42% in the prior quarter of fiscal 2010, while operating margin increased to 23%, from 18% in the prior quarter.
“DragonWave delivered solid results again this quarter,” said DragonWave President and CEO Peter Allen. “The Company continues to scale the business to meet expanding worldwide demand for our market-leading packet microwave solutions.”
Third Quarter Fiscal Year 2010 Performance Summary
• Revenue: $55.8 million, up 421% versus Q3 FY09 and 57% versus Q2 FY2010
• Gross margin: 43%, versus 35% in Q3 FY09 and 42% in Q2 FY2010
• Operating margin: 23%, versus 18% in Q2 FY2010
• Net income: $12.6 million, versus $ 6.3 million in Q2 FY2010
• Diluted EPS: $0.37, versus $0.21 in Q2 FY2010
• Total cash generated from operations: $12.2 million
• DSO performance: 39 days, based on ending balance
• Ending cash, cash equivalents and short-term investments: $104.0 million
• A single North American customer accounted for 82% of total fiscal third quarter revenue, and was the only greater-than-10% contributor in the quarter
• Shipped product to 13 new customers in Q3 FY10, bringing year-to-date total to 32 new customers
Revenue for the first nine months of fiscal year 2010 was $107.3 million, an increase of 235% compared with $32.0 million for the same period of the prior fiscal year. Net income for the first nine months of fiscal 2010 was $16.0 million or $0.51 per diluted share, compared with a net loss of $3.8 million or $0.13 loss per diluted share for the same nine-month period of the prior fiscal year.
Revenue Outlook for Full-Year FY2010
Based on continuing strength of the DragonWave business, the Company expects revenue of approximately $170 million in fiscal year 2010.
Conference Call Details:
The DragonWave management team will discuss the results on a conference call at 8:30 a.m. Eastern Time tomorrow, January 8, 2010. Presentation slides and a webcast link will be available at the Investor Relations section of the DragonWave website at: http://www.dragonwaveinc.com/irevents.asp
Conference call dial-in numbers:
• Local call: 613-212-0152
• Toll free North America: 1-888-205-4499
• Toll free United Kingdom: 00-800-8358-7000
• Participant Pass Code: 34594#
A replay of the call will be available in the Investor Relations section of the DragonWave website at www.dragonwaveinc.com.
To review Management’s Discussion and Analysis for the quarter, please go to www.sedar.com.
Forward-Looking Statements
Certain statements in this release, including the estimate of revenue for the 2010 fiscal year provided above, 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 such estimates include:
• DragonWave’s expectations regarding the scale of future network deployment plans by its existing customers;
• DragonWave's expectations regarding the volume of anticipated order activity;
• The timing of network deployments by DragonWave’s existing customers occurring within currently anticipated schedules; and
• The capacity of DragonWave’s supply chain to scale to fulfil demand.
Readers are cautioned not to place undue reliance on such statements.
These statements are provided to enable external stakeholders to understand 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 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 Canadian and United States securities regulatory authorities, which are available at www.sedar.com and www.sec.gov, respectively, and include the following:
• DragonWave relies on a small number of customers for a large percentage of its revenue.
• DragonWave's growth is dependent on the development and growth of the market for high-capacity wireless communications services.
• 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 relies on its suppliers to supply components for its products and the Company is exposed to the risk that these suppliers will not be able to supply components on a timely basis, or at all.
• DragonWave's success depends on its ability to develop new products and enhance existing products.
• If DragonWave is required to change its pricing models to compete successfully, its margins and operating results may be adversely affected.
• DragonWave's quarterly revenue and operating results can be difficult to predict and can fluctuate substantially.
• DragonWave has a lengthy and variable sales cycle.
DragonWave assumes no obligation to update or revise any forward-looking statements or forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by law.
DragonWave Incorporated
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.
DragonWave® and Horizon® are registered trademarks of DragonWave Inc.
The company's Web site is http://www.dragonwaveinc.com.
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