<ARTICLE>                     5
<LEGEND>
     (Replace this text with the legend)
</LEGEND>
<CIK>                         0000792130
<NAME>                       DATAWATCH CORPORATION 
<MULTIPLIER>                                   1
<CURRENCY>                                     USD
       
                             
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                              SEP-30-1998
<PERIOD-START>                                 OCT-01-1997
<PERIOD-END>                                   SEP-30-1998
<EXCHANGE-RATE>                                1
<CASH>                                         3,575,256
<SECURITIES>                                   3,395,410
<RECEIVABLES>                                  6,401,965
<ALLOWANCES>                                   (353,000)
<INVENTORY>                                    511,669
<CURRENT-ASSETS>                               15,154,971
<PP&E>                                         4,280,100
<DEPRECIATION>                                 2,453,240
<TOTAL-ASSETS>                                 18,332,215
<CURRENT-LIABILITIES>                          6,651,543
<BONDS>                                        0
<PREFERRED-MANDATORY>                          0
<PREFERRED>                                    0
<COMMON>                                       91,803
<OTHER-SE>                                     11,544,679
<TOTAL-LIABILITY-AND-EQUITY>                   18,332,215
<SALES>                                        25,295,722
<TOTAL-REVENUES>                               25,295,722
<CGS>                                          5,212,595
<TOTAL-COSTS>                                  35,800,154
<OTHER-EXPENSES>                               0
<LOSS-PROVISION>                               0
<INTEREST-EXPENSE>                             62,306
<INCOME-PRETAX>                                5,303,996
<INCOME-TAX>                                   600,000
<INCOME-CONTINUING>                            4,703,996
<DISCONTINUED>                                 0
<EXTRAORDINARY>                                0
<CHANGES>                                      0
<NET-INCOME>                                   4,703,996
<EPS-PRIMARY>                                  .52
<EPS-DILUTED>                                  .51