Datawatch Corporation Reports Results for Second Quarter 2008.

CHELMSFORD, Mass. -- Datawatch Corporation (NASDAQ-CM: DWCH), a leader in Enterprise Information Management (EIM), today announced results for its second quarter ended March 31, 2008.

Revenues for the quarter ended March 31, 2008 were $5,873,000, compared to $6,149,000 for the quarter ended March 31, 2007. Net income for the second quarter of fiscal 2008 was $83,000, or $0.01 per diluted share, compared to net income of $424,000, or $0.07 per diluted share, for the second quarter of fiscal 2007. Revenues for the six months ended March 31, 2008 were $11,940,000 as compared to $11,925,000 in the comparable period of fiscal 2007. Year to date net income was $330,000 or $0.06 per diluted share as compared to $458,000 or $0.08 per diluted share during the same period a year ago.

As of March 31, 2008, the Company had $4,027,000 in cash and cash equivalents, an increase of $186,000, or five percent, compared to September 30, 2007.

Commenting on the Q2 results, President and CEO Ken Bero said, "As the Business Intelligence (BI) and Enterprise Content Management (ECM) markets converge, Datawatch is witnessing a growing opportunity as a leading provider of software solutions for the emerging Enterprise Information Management (EIM) market. Over 35,000 companies worldwide use Monarch, our flagship Business Intelligence product. Over the past 12 months, we've continued to focus on our Monarch desktop business and at the same time have worked aggressively to take advantage of the growing demand for EIM solutions that solve enterprise-wide business issues."

"The $276,000 decline in revenue in the second quarter of 2008 compared to the year earlier period is attributable to the expected leveling of Monarch upgrade revenues as well as a business climate that continues to be turbulent. However, as planned, we are beginning to see healthy enterprise license revenue growth. For example, Q2 licenses and subscriptions of enterprise solutions increased more than 25% as compared to Q1 2008. Our pipeline of enterprise opportunities continues to increase both in quality and quantity," added Bero.

"Historically, much of our revenue growth has been driven by the recurring cycle of Monarch upgrades. New upgrades generally are introduced approximately every 18-24 months, with the bulk of upgrade adoptions typically occurring early in the upgrade cycle," said Bero. "Although new product revenue for the core Monarch desktop business continues to grow, the Company is moving into the later stages of the current product's upgrade cycle. Other factors impacting Monarch sales include the slower than expected adoption of the new Microsoft Vista operating system, which drives users to upgrade their application software, as well as lower than expected European Monarch revenue this quarter," continued Bero.

"Second quarter services revenue was very strong. Also in the second quarter, Datawatch released Monarch Version 9 French edition, closed three new enterprise-level Datawatch ES opportunities, and continued to sign partnerships with Hyland Software OnBase and IBM Content Manager OnDemand partners for our Monarch RMS product. We continue to be excited and optimistic about our business and the Company's prospects over the long run," concluded Bero.

As previously announced, Datawatch will host a live webcast to discuss its second quarter 2008 results today at 2:00 p.m. (EST). The webcast can be accessed at: http://www.investorcalendar.com/IC/CEPage.asp?ID=128437. Please register at least 15 minutes early to download any necessary audio software. An archive of the broadcast will be available for 30 days at the same location.

ABOUT DATAWATCH CORPORATION

Datawatch Corporation, a leader in Enterprise Information Management, helps companies make better decisions and solve business problems by simplifying access to information. Unique among EIM vendors, Datawatch transforms the massive amounts of data and documents generated inside or outside a company into actionable insight, without any changes needed to existing systems. Datawatch customers benefit from the right information, in the right context, at the right time. More than 35,000 organizations worldwide rely on Datawatch products including its market-leading Monarch report and data mining solutions. Founded in 1985, Datawatch is based in Chelmsford, Mass. with offices in London, Sydney and Manila. For more information, visit www.datawatch.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

Any statements contained in this press release that do not describe historical facts may constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Any such statements contained herein are based on current expectations, but are subject to a number of risks and uncertainties that may cause actual results to differ materially from expectations. The factors that could cause actual future results to differ materially from current expectations include the following: risks associated with the uncertainty of the current economic climate; risks associated with fluctuations in quarterly operating results; Datawatch's dependence on its principal products; risks associated with international sales; risks associated with distributor sales; risks associated with acquisitions; an unfavorable result in any litigation; market acceptance of new products; dependence on the introduction of new products and possible delays in those introductions. Further information on factors that could cause actual results to differ from those anticipated is detailed in various publicly-available documents, which include, but are not limited to, filings made by Datawatch from time to time with the Securities and Exchange Commission, including but not limited to, those appearing in the Company's Annual Report on Form 10-K for the year ended September 30, 2007 and its Quarterly Report on Form 10-Q for the quarter ended December 31, 2007. Any forward-looking statements should be considered in light of those factors.

Datawatch, the Datawatch logo, Datawatch ES, Monarch and Monarch RMS are trademarks or registered trademarks of Datawatch Corporation in the United States and/or other countries. All other names are trademarks or registered trademarks of their respective companies.

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