Datawatch Corporation Reports Results For Third Quarter Fiscal 2007

CHELMSFORD, Mass., July 30 /PRNewswire-FirstCall/ -- Datawatch Corporation (NASDAQ: DWCH) , a leader in Enterprise Information Management (EIM), today announced results for its third fiscal quarter of 2007.

Revenues for the quarter ended June 30, 2007 were $6,483,000, up by 21% when compared to $5,344,000 for the quarter ended June 30, 2006. Net income for the third quarter fiscal 2007 was $382,000 or $0.06 per diluted share, compared to a net loss of $(315,000), or $(0.06) per diluted share, for the third quarter fiscal 2006.

Revenues for the nine months ended June 30, 2007 were $18,408,000, up by 19% when compared to $15,485,000 for the nine months ended June 30, 2006. Net income for the nine months ended June 30, 2007 was $840,000 or $0.14 per diluted share, compared to a net loss of $(24,000), or $(0.00) per diluted share for the nine months ended June 30, 2006.

As of June 30, 2007, the company had $2,591,000 in net cash and marketable securities, an increase of $729,000, or 39%, compared to September 30, 2006. In March 2007, the company also completely paid down its loan of $1,000,000 and has no long-term debt.

Commenting on the third quarter's results, President and CEO Robert Hagger said, "We are very pleased with the results for both the current quarter and year to date. The investments we have made in strengthening the management team and in sales and marketing are now paying off. The market for Information Management and Document Storage requirements, combined with the need to turn data into actionable information through Business Analytics is growing, and we are poised to take advantage of these dynamics."

The quarter saw a strong boost to revenues with the continued adoption of Monarch Version 9.0, the company's report mining and analysis solution, which was released in February. The latest release of Monarch provides improved Microsoft Office Excel capabilities, is compatible with the new Microsoft Windows Vista operating system and Microsoft Office 2007 product suite, and integrates with Microsoft Office SharePoint Server. In addition to strong sales of Monarch V9, the quarter saw the closing of four enterprise orders in excess of $100,000 each.

During the third quarter, Datawatch announced the release of two new products, Datawatch|MailManager and BDS|Workflow. In addition, the company held its annual user conference in Orlando, Florida. The event showcased Monarch V9 as well as the Enterprise suite of solutions and hosted a record number of attendees.

"We continue to invest in product and infrastructure, focusing on execution and the market opportunity in front of us" said Ken Bero, chief operating officer. "We are very pleased with the quarter's results and satisfied with our position as we enter the last fiscal quarter of this year."

As previously announced, Datawatch will host a live webcast to discuss its third quarter fiscal 2007 results today at 2:00 p.m. (EDT). The webcast can be accessed at: http://www.vcall.com/IC/CEPage.asp?ID=118478. 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 20,000 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 http://www.datawatch.com/.

Datawatch, the Datawatch logo, Monarch, Datawatch|MailManager and BDS|Workflow 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.

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 Form 10-K for the year ended September 30, 2006 and Form 10-Q for the quarters ended December 31, 2006 and March 31, 2007. Any forward-looking statements should be considered in light of those factors.

                          DATAWATCH CORPORATION
             Condensed Consolidated Statements of Operations
               Amounts in Thousands (except per share data)
                               (Unaudited)


                                      Three Months Ended  Nine Months Ended
                                             June 30,          June 30,
                                           2007    2006       2007    2006
  REVENUE:
    Software licenses and subscriptions  $4,091  $3,386    $10,786  $9,985
    Maintenance and services              2,392   1,958      7,622   5,500
      Total Revenue                       6,483   5,344     18,408  15,485

  COSTS AND EXPENSES:
    Cost of software licenses and
     subscriptions                          691     580      1,788   1,744
    Cost of maintenance and services        922   1,000      2,937   2,804
    Sales and marketing                   2,515   2,488      6,999   6,637
    Engineering and product development     750     571      2,243   1,427
    General and administrative            1,205     996      3,483   2,907
      Total costs and expenses            6,083   5,635     17,450  15,519
  INCOME (LOSS) FROM OPERATIONS             400    (291)       958     (34)
  Other income (expense), net                10      (9)       (43)     24

  INCOME (LOSS) BEFORE INCOME TAXES         410    (300)       915     (10)
  Provision for income taxes                 28      15         75      14
  NET INCOME (LOSS)                        $382   $(315)      $840    $(24)

  Net income (loss) per share - Basic     $0.07  $(0.06)     $0.15  $(0.00)
  Net income (loss) per share - Diluted   $0.06  $(0.06)     $0.14  $(0.00)

  Weighted-Average
   Shares Outstanding - Basic             5,570   5,508      5,534   5,470
  Weighted-Average
   Shares Outstanding - Diluted           6,032   5,508      5,976   5,470



                          DATAWATCH CORPORATION
                  Condensed Consolidated Balance Sheets
                           Amounts in Thousands
                               (Unaudited)


                                                 June 30,      September 30,
                                                   2007              2006

    Cash and equivalents                         $2,591            $1,862
    Accounts receivable, net                      4,345             3,786
    Inventories                                      22                37
    Prepaid expenses                                577               653
             Total current assets                 7,535             6,338
    Property and equipment, net                     932             1,129
    Other intangible assets, net                  9,000             8,558

                                                $17,467           $16,025

    Line of Credit                                   $-            $1,000
    Accounts payable and accrued expenses         3,761             3,121
    Deferred revenue (current portion)            4,350             4,468
    Accrued acquisition costs - IDARS business      734               215
             Total current liabilities            8,845             8,804

    Deferred revenue (long-term portion)            198                 -
    Other long-term liabilities                     303               266
             Total long-term liabilities            501               266

            Total shareholders' equity            8,121             6,955

                                                $17,467           $16,025