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Digi International Reports 11.9% Revenue Increase for Fourth Fiscal Quarter of 2008 Compared to Fourth Fiscal Quarter of 2007

Exceeds Street Consensus Revenue and Earnings Per Share Estimates For Fourth Quarter and Fiscal Year 2008

(Minneapolis, MN, October 30, 2008) - Digi International® Inc. (NASDAQ: DGII, www.digi.com) reported revenue of $50.4 million for the fourth fiscal quarter of 2008, compared with $45.1 million for the fourth fiscal quarter of 2007, an increase of $5.3 million, or 11.9%. Sarian Systems, Ltd. was acquired on April 28, 2008; revenue from Sarian-branded products was $3.3 million for the fourth fiscal quarter of 2008. Spectrum Design Solutions, Inc. was acquired on July 23, 2008; revenue from Spectrum was $0.8 million for the fourth fiscal quarter of 2008 from date of acquisition.

Digi reported revenue of $185.1 million for the fiscal year ended September 30, 2008, compared to $173.3 million for the fiscal year ended September 30, 2007, an increase of $11.8 million, or 6.8%. Sarian and Spectrum contributed $5.7 million and $0.8 million respectively from their dates of acquisition.

Below is a table setting forth certain GAAP and Non-GAAP results:

A table with more detailed reconciliations between GAAP operating income and non-GAAP operating income, and between GAAP net income and net income per diluted share to non-GAAP net income and net income per diluted share, is provided later in this earnings release.

"I am very proud of the Digi team's strong finish to a year that has provided external challenges that were unforeseen entering fiscal 2008," said Joseph Dunsmore, Digi's CEO. "Digi is financially strong and very well positioned to take market share in fiscal 2009, regardless of broader economic conditions. "

Revenue from embedded products in the fourth fiscal quarter of 2008 was $23.5 million compared to $20.6 million in the fourth fiscal quarter of 2007, an increase of $2.9 million, or 14.4%. Revenue from non-embedded products was $26.9 million in the fourth fiscal quarter of 2008 compared to $24.5 million in the fourth fiscal quarter of 2007, an increase of 2.4 million, or 9.7%. Revenue from embedded products includes all Spectrum revenue of $0.8 million from date of acquisition. Revenue from non-embedded products includes all Sarian-branded revenue of $3.3 million for the fourth fiscal quarter of 2008.

Revenue in North America was $29.1 million in the fourth fiscal quarter of 2008, including all Spectrum revenue of $0.8 million, compared to $28.5 million in the fourth fiscal quarter of 2007 an increase of $0.6 million, or 2.3%. Revenue in Europe was $14.5 million in the fourth fiscal quarter of 2008, including all Sarian-branded revenue of $3.3 million, compared to $10.8 million in the comparable quarter a year ago, an increase of $3.7 million, or 34.1%. Revenue in the Asia Pacific region was $5.5 million in the fourth fiscal quarter of 2008, compared to $4.6 million in the fourth fiscal quarter of 2007, an increase of $0.9 million, or 19.3%. Latin American revenue was $1.3 million in the fourth fiscal quarter of 2008, compared to $1.2 million in the comparable quarter a year ago, an increase of $0.1 million, or 10.8%.

Gross profit was higher in the fourth fiscal quarter of 2008 compared to the same period in the prior year by $2.1 million, or 8.9%. The gross margin was 51.5% in the fourth fiscal quarter of 2008 compared to 52.8 % in the fourth fiscal quarter of 2007. The gross margin was lower in the fourth fiscal quarter of 2008 than in the comparable period a year ago due to unfavorable product mix within both the embedded and non-embedded products, including sales of Sarian non-embedded products which provide lower gross profit margins. Total operating expenses in the fourth fiscal quarter of 2008 were $20.6 million, or 41.0% of revenue, compared to $17.6 million, or 39.1% of revenue, in the fourth fiscal quarter of 2007. The increase in operating expenses in the fourth fiscal quarter of 2008 compared to the same quarter in the prior year is primarily due to incremental ongoing operating expenses for Sarian and Spectrum from their respective dates of acquisition as well as incremental operating expenses for sales, marketing and engineering as a result of Digi's Drop-In Networking initiative.

Digi reported operating income of $5.3 million, or 10.5% of net sales, in the fourth fiscal quarter of 2008 compared to $6.2 million, or 13.8% of net sales, in the fourth fiscal quarter of 2007.

Digi's investment portfolio included an investment in a bond issued by Lehman Brothers in the amount of $1.2 million. During the fourth fiscal quarter of 2008, Digi recorded a pre-tax, other than temporary impairment of $1.0 million which reduced net income by $0.7 million, after tax. This reflected the estimated permanent decline in value of this security precipitated by the bankruptcy of the security's issuer. The charge reduced earnings per diluted share for the fourth fiscal quarter and full year fiscal 2008 by $0.03.

GAAP net income was $3.6 million in the fourth fiscal quarter of 2008, or $0.14 per diluted share, compared to $5.6 million, or $0.21 per diluted share, in the fourth fiscal quarter of 2007. Non-GAAP net income and net income per diluted share for the fourth fiscal quarter of 2008 were $4.0 million, or $0.16 per diluted share, compared to $4.7 million, or $0.18 per diluted share for the fourth quarter of fiscal 2007. Please refer to the detailed reconciliation tables which reconcile GAAP net income and net income per diluted share to non-GAAP net income and net income per diluted share provided later in this earnings release.

Results for Fiscal Year Ended September 30, 2008

For the fiscal year ended September 30, 2008, Digi reported revenue of $185.1 million compared to revenue of $173.3 million for the fiscal year ended September 30, 2007, an increase of $11.8 million or 6.8%. Revenue from embedded products in fiscal 2008 was $86.6 million, including all Spectrum revenue of $0.8 million from date of acquisition, compared to $74.4 million in fiscal 2007, an increase of $12.2 million, or 16.4%. Revenue from non-embedded products, including Sarian-branded products revenue of $5.7 million from date of acquisition, was $98.5 million in fiscal 2008, compared to $98.9 million in the comparable period in 2007, a decrease of $0.4 million, or 0.4%.

Revenue in North America was $107.3 million in fiscal 2008, including revenue from Spectrum of $0.8 million from date of acquisition, compared to $112.0 million in the same period a year ago, a decrease of $4.7 million, or 4.2%. Revenue in Europe, including all Sarian-branded products revenue of $5.7 million from date of acquisition, was $53.0 million for fiscal 2008 compared to $41.4 million in the comparable period a year ago, an increase of $11.6 million, or 28.0%. Revenue in the Asia Pacific region was $19.7 million in fiscal 2008 compared to $15.6 million in fiscal 2007, an increase of $4.1 million, or 26.1%. Revenue in Latin America was $5.1 million in fiscal 2008 compared to $4.3 million in fiscal 2007, an increase of $0.8 million, or 19.5%.

Digi reported operating income of $16.5 million, or 8.9% of net sales, in fiscal 2008 compared to $20.3 million, or 11.7% of net sales, in fiscal 2007. Operating income for fiscal 2008 was $18.8 million, or 10.1% of net sales, excluding the charge for in-process research and development and other acquisition-related expenses of $2.2 million. For the fiscal year ended September 30, 2008, Digi reported GAAP net income of $12.4 million, or $0.47 per diluted share, compared to net income for the fiscal year ended September 30, 2007, of $19.8 million, or $0.76 per diluted share. Non-GAAP net income and net income per diluted share for fiscal 2008 and 2007 were $14.6 million and $0.56, and $15.4 million and $0.59, respectively.

Digi's cash and cash equivalents and marketable securities balance, including long-term marketable securities, was $73.7 million at September 30, 2008, a decrease of $13.9 million over the cash and cash equivalents and marketable securities balance at September 30, 2007. Both Sarian and Spectrum were acquired during fiscal 2008 for cash. These acquisitions represented the largest outflow of cash for the fiscal year. Please refer to the Condensed Consolidated Statements of Cash Flows which is included in this earnings release for additional cash flow details. At September 30, 2008, Digi's current ratio was 5.9 to 1 compared to 6.3 to 1 at September 30, 2007.

2008 Corporate Highlights Included

Industry Recognition for Digi

Digi Wireless Acquisitions

Digi Innovation

Digi's Wireless Drop-In Networking

Reconciliation Tables:

Guidance

For fiscal 2009, Digi projects revenue in a range of $200 million to $220 million, with a most likely revenue of $210 million, or an increase of 13.5% over fiscal year 2008. Digi projects GAAP earnings per diluted share to be in a range of $0.47 to $0.65, with a most likely earnings per diluted share of $0.56, or an increase of 19.1% over fiscal year 2008.

Fourth Quarter and Year-End 2008 Conference Call Details

Digi invites all those interested in hearing management's discussion of its quarter, on Thursday, October 30, 2008 after market close at 5:00 p.m. EDT (4:00 p.m. CDT), to join the call by dialing 866-362-5158 and entering passcode 44465608. International participants may access the call by dialing 617-597-5397 and entering passcode 44465608. A replay will be available two hours after the completion of the call, and for one week following the call, by dialing 888-286-8010 for domestic participants or 617-801-6888 for international participants and entering access code 34421408 when prompted. Participants may also access a live webcast of the conference call through the investor relations section of Digi's website, www.digi.com.

About Digi International

Digi International, based in Minneapolis, is the leader in device networking for business. Digi develops reliable products and technologies that enable companies to connect and securely manage local or remote electronic devices over the network or via the web.

Forward-Looking Statements

This press release contains statements that constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which generally can be identified by the use of forward-looking terminology such as "anticipate," "believe," "target," "estimate," "may," "will," "expect," "plan," "project," "should," or "continue" or the negative thereof or other variations thereon or similar terminology. Such statements are based on information available to management as of the time of such statements and relate to, among other things, expectations of the business environment in which the Company operates, projections of future performance, perceived opportunities in the market and statements regarding the Company's mission and vision. Such statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions, including risks related to the highly competitive market in which the Company operates, rapid changes in technologies that may displace products sold by the Company, declining prices of networking products, the Company's reliance on distributors, delays in the Company's product development efforts, uncertainty in consumer acceptance of the Company's products, continued or increasing weakness in North America and developing weakness in other regions due to changes in economic conditions, the current uncertainty in global economic conditions which could negatively affect product demand, the recent financial crises affecting the banking system and financial markets which could negatively impact the financial solvency of the Company's customers and suppliers, the extreme volatility in fixed income, credit and equity markets which could result in actual amounts realized on the Company's debt securities or other investments that differ significantly from current market values, the ability to achieve the anticipated benefits and synergies associated with acquisitions, and changes in the Company's level of revenue or profitability. These and other risks, uncertainties and assumptions identified from time to time in the Company's filings with the Securities and Exchange Commission, including without limitation, its annual report on Form 10-K for the year ended September 30, 2007 and its quarterly reports on Form 10-Q, could cause the Company's future results to differ materially from those expressed in any forward-looking statements made by or on behalf of the Company. Many of such factors are beyond the Company's ability to control or predict. These forward-looking statements speak only as of the date for which they are made. The Company disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

This release includes non-GAAP operating income, non-GAAP net income and earnings per diluted share data. Management understands that there are material limitations on the use of non-GAAP measures. Non-GAAP measures are not substitutes for GAAP measures, such as operating income or net income, for the purpose of analyzing financial performance. The disclosure of these measures does not reflect all charges and gains that were actually recognized by the Company. These non-GAAP measures are not in accordance with, or an alternative for measures prepared in accordance with, generally accepted accounting principles and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Digi believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with Digi's results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate Digi's results of operations in conjunction with the corresponding GAAP measures.

Digi believes that providing operating income and net income and earnings per diluted share exclusive of the impact of in-process research and development and other acquisition-related expenses, the write down of impaired investments, and the impact of the reversal of tax reserves and other discrete tax benefits permits investors to compare results with prior periods that did not include these items. Management uses the aforementioned non-GAAP measures to monitor and evaluate ongoing operating results and trends and to gain an understanding of the comparative operating performance of the Company. In addition, shareholders in the Company have expressed an interest in seeing financial performance measures exclusive of the impact of decisions relating to acquisitions, investments and taxes, which while important, are not central to the core operations of Digi's business.

Digi International Inc.
Condensed Consolidated Statement of Operations

Digi International Inc.
Condensed Consolidated Balance Sheet

Digi International Inc.
Condensed Consolidated Statement of Cash Flows

Investor Contacts:
S. (Kris) Krishnan
Digi International
952-912-3125
Email: S. (Kris) Krishnan

Tom Caden
Dian Griesel Inc.
212-825-3210
Email: Tom Caden

For more information, visit Digi's Web site at www.digi.com, or call 877-912-3444 (U.S.) or 952-912-3444 (International).

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