DATAWATCH SCHEDULES THIRD QUARTER FISCAL 2008 CONFERENCE CALL AND EARNINGS RELEASE

Chelmsford, MA - July 29, 2008 - Datawatch Corporation (NASDAQ-CM: DWCH), a leader in Enterprise Information Management (EIM), today announced results for its third quarter ended June 30, 2008.

Revenues for the quarter ended June 30, 2008 were $5,775,000, compared to $6,483,000 for the quarter ended June 30, 2007. Net income for the third quarter of fiscal 2008 was $91,000, or $0.02 per diluted share, compared to net income of $382,000, or $0.06 per diluted share, for the third quarter of fiscal 2007. Revenues for the nine months ended June 30, 2008 were $17,715,000, as compared to $18,408,000 in the comparable period of fiscal 2007. Year to date net income was $421,000, or $0.07 per diluted share, as compared to $840,000, or $0.14 per diluted share, during the same period a year ago.

As of June 30, 2008, the Company had $4,446,000 in cash and cash equivalents, an increase of $605,000, or 16 percent, compared to September 30, 2007.

Commenting on the Q3 results, President and CEO Ken Bero said, "The turbulent economy in our two biggest markets, North America and Europe, has been a challenge. Sales cycles for our enterprise products have lengthened as companies carefully scrutinize the expected return from every dollar they are spending. In addition, revenues for Monarch—our desktop Business Intelligence product—continue to level off due to the fact that we are well into the latest upgrade cycle."

"While the current sales environment is certainly more difficult," continued Bero, "Datawatch is proactively managing expenses while continuing to make strategic investments in the business for the long term. During the quarter, our enterprise sales pipeline continued to grow, and we added to our IBM reseller channel and strengthened our partnership with Microsoft. We are also preparing to launch several new products in the coming months, including Monarch BI Server—a Business Intelligence solution specifically designed for the SMB and departmental market. Although Q3 was a tough quarter, we accomplished a lot of the groundwork necessary for future success and continue to be optimistic about the Company’s outlook."

As previously announced, Datawatch will host a live webcast to discuss its third quarter 2008 results today at 2:00 p.m. (EST). The webcast can be accessed at: http://www.investorcalendar.com/IC/CEPage.asp?ID=132272. 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.

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 Reports on Form 10-Q for the quarters ended December 31, 2007 and March 31, 2008. Any forward-looking statements should be considered in light of those factors.

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ABOUT DATAWATCH CORPORATION

Datawatch Corporation (NASDAQ-CM: DWCH), 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.

Datawatch, the Datawatch logo, Monarch and Monarch BI Server 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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Investor Contact:
Datawatch Investor Relations
978-441-2200 ext. 8323
investor@datawatch.com

Media contacts:

Lisa G. Kilpatrick
Manager, Marketing Communications and Public Relations
lisa_kilpatrick@datawatch.com
Phone (978) 441-2200, ext. 8240
Fax: (978) 453-4443

Susan Willson
Greenough Communications
swillson@greenoughcom.com
Phone (617) 275-6529