(Minneapolis, MN, July 22, 2010) –Digi International® Inc. reported revenue of $47.2 million for the third fiscal quarter of 2010, compared with $44.5 million for the third fiscal quarter of 2009, an increase of $2.7 million, or 6.2%. Net income was $3.8 million, or $0.15 per diluted share, in the third fiscal quarter of 2010 compared to $1.4 million, or $0.06 per diluted share, in the year ago comparable quarter, an increase of $2.4 million. These GAAP results were impacted by favorable tax adjustments and investigation costs, which are described elsewhere in this earnings release. Other financial highlights for the third fiscal quarter of 2010 include:

“Our third fiscal quarter 2010 results show significant strength,” said Joe Dunsmore, Digi’s Chief Executive Officer. “The revenues in the first nine months of fiscal 2010 increased $9.4 million, or 7.4%, over the first nine months of the previous fiscal year. On both a GAAP and non-GAAP basis our earnings through the first nine months of fiscal 2010 are well ahead of our earnings in the same period of fiscal 2009.”

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

Business Results for the Three Months Ended June 30, 2010

Revenue from embedded products in the third fiscal quarter of 2010 was $22.3 million compared to $20.5 million in the third fiscal quarter of 2009, an increase of $1.8 million, or 9.0%. Revenue from non-embedded products was $24.9 million in the third fiscal quarter of 2010 compared to $24.0 million in the third fiscal quarter of 2009, an increase of $0.9 million, or 3.8%. Net sales in the third fiscal quarter of 2010 were unfavorably impacted by foreign currency translation of $0.5 million when compared to the same period in the prior fiscal year.

Revenue in North America was $28.5 million in the third fiscal quarter of 2010, compared to $22.6 million in the third fiscal quarter of 2009, an increase of $5.9 million, or 25.8%. Revenue in the Asia Pacific region was $5.9 million in the third fiscal quarter of 2010 compared to $4.0 million in the third fiscal quarter of 2009, an increase of $1.9 million, or 48.0%. Latin American revenue was $1.2 million in the third fiscal quarter of 2010, compared to $0.8 million in the comparable quarter a year ago. Revenue in EMEA (Europe, Middle East and Africa) was $11.6 million in the third fiscal quarter of 2010, compared to $17.1 million in the comparable quarter a year ago, a decrease of $5.5 million, or 31.9%.

Gross profit was $23.7 million in the third fiscal quarter of 2010 compared to $21.4 million in the same period in the prior year. The gross margin was 50.2% in the third fiscal quarter of 2010 compared to 48.2% in the third fiscal quarter of 2009. The gross margin was higher in the third fiscal quarter of 2010 than in the comparable period a year ago due to favorable product mix, product cost reductions, and lower manufacturing expenses.

Total operating expenses in the third fiscal quarter of 2010 were $21.2 million, or 44.8% of revenue, compared to $20.8 million, or 46.8% of revenue, in the third fiscal quarter of 2009. Total operating expenses in the third fiscal quarter of 2010 include $1.0 million of expenses pertaining to the investigation. Total operating expenses in the third fiscal quarter of 2009 include a charge for restructuring expenses of $2.0 million. Total operating expenses increased by $1.2 million, excluding the aforementioned items, primarily due to the reinstatement for fiscal 2010 of the incentive compensation program which had been eliminated in fiscal 2009 and incremental ongoing operating expenses of $0.5 million for MobiApps, acquired on June 8, 2009.

As a result of the foregoing factors, Digi reported operating income of $2.5 million, or 5.4% of net sales, in the third fiscal quarter of 2010 compared to $0.6 million, or 1.4% of net sales, in the third fiscal quarter of 2009.

Net income was $3.8 million in the third fiscal quarter of 2010, or $0.15 per diluted share, compared to $1.4 million, or $0.06 per diluted share, in the third fiscal quarter of 2009. Net income in the third fiscal quarter of 2010 decreased by $0.7 million, net of taxes, or $0.03 per diluted share as a result of expenses for the investigation. Net income in that same quarter also benefited by $2.2 million, or $0.09 per diluted share from the reversal of tax reserves associated with the conclusion of an audit of prior tax years and the statutory closing of a prior tax year. Net income in the third fiscal quarter of 2009 decreased by $1.3 million, net of taxes, or $0.05 per diluted share, due to a restructuring charge. Net income in that same quarter also benefited by $0.5 million, or $0.02 per diluted share from the reversal of tax reserves associated with the closure of a prior tax year. Please refer to the table reconciling net income and net income per diluted share to non-GAAP net income and net income per diluted share which is provided later in this earnings release.