MINNEAPOLIS -- Digi International® Inc. (NASDAQ: DGII, http://www.digi.com) reported revenue of $44.6 million for the first fiscal quarter of 2008, compared with $41.8 million for the first fiscal quarter of 2007, an increase of $2.8 million, or 6.6%.

Revenue from embedded products in the first quarter of fiscal 2008 was $20.7 million compared to $16.6 million in the first quarter of fiscal 2007, an increase of $4.1 million, or 24.5%. Revenue from non-embedded products was $23.9 million in the first quarter of fiscal 2008 compared to $25.2 million in the first quarter of fiscal 2007, a decrease of $1.3 million, or 5.2%.

The gross profit margin, as a percentage of net sales, was 53.6% in the first fiscal quarter of 2008 compared to 52.6% in the first fiscal quarter of 2007. Gross profit was higher than the comparable quarter a year ago by 8.5%, primarily due to product and mix changes within both the embedded and non-embedded product groups, as well as licensing revenue.

Total operating expenses in the first fiscal quarter of 2008 were $19.3 million, compared to $17.7 million in the first fiscal quarter of 2007. Operating expenses were higher in the first fiscal quarter of 2008 compared to the comparable quarter a year ago primarily as a result of incremental headcount due to overall growth, resulting in increased compensation-related sales and marketing and research and development expenses. The increased expenses in the first quarter of fiscal 2008 compared to the same period in the prior year resulted from the Drop-In Networking initiative, launched in June 2007 as well as increased international expenses.

Digi reported operating income of $4.6 million, or 10.3% of net sales, in the first fiscal quarter of 2008 compared to $4.3 million, or 10.3% of net sales, in the first fiscal quarter of 2007. Operating income in the first quarter of fiscal 2008 increased by $0.3 million, or 6.8%, compared to the first quarter of fiscal 2007.

Net income was $3.7 million in the first fiscal quarter of 2008, or $0.14 per diluted share, compared to $3.8 million, or $0.15 per diluted share in the comparable quarter of the prior year. The first quarter of fiscal 2007 net income benefited $0.5 million, or $0.02 per diluted share, as a result of a retroactive benefit from the extension of the research and development credit.

Digi's cash and cash equivalents and marketable securities balance, including long-term marketable securities, was $90.9 million at December 31, 2007, an increase of $3.3 million over the cash and cash equivalents and marketable securities balance at the end of fiscal 2007, or September 30, 2007. At December 31, 2007, Digi's current ratio was 9.2 to 1, and the Company had no debt other than capital lease obligations.

“As we have stated in the past, our fiscal first quarter generally produces modest results,” said Joe Dunsmore, Digi’s Chief Executive Officer. “Our non-embedded revenue decreased compared to the same quarter in the prior fiscal year primarily due to mature product line decreases. However, we experienced an increase in embedded product revenue, an overall improvement in gross profit margins and a modest growth in operating income.”

Digi International (Nasdaq: DGII)