Excluding non-subscription revenues, the growth rate was 20%. On the international front, revenues increased 25%, up to $43.1 million. Excluding non-subscription revenue and holding currencies constant, revenue growth from overseas operations advanced 26%. By region, quarterly revenues from European and Pacific Rim operations were $34.3 million and $8.8 million respectively. Subscriptions by non-U.S. based clients were $179.1 million, representing 31% of the company-wide total.

The operating expenses were $78.5 million and non-GAAP operating margins expanded 90 basis points from Q1 to 32.6%.

Cost of sales, as a percentage of revenue, was up 2.3% over prior year. Drivers of the increase were higher compensation, performance-based stock option expense and additional data cost. Higher compensation was driven by new employees. The rise in stock-based compensation reflects the incremental charge from performance-based stock options. The increase in data cost is driven by variable payments to data vendors from additional content subscriptions and more for proprietary data collection.

SG&A expense, expressed as a percentage of revenue, declined 60 basis points, year over year. This decrease was driven by lower compensation and marketing expenses, partially negated by the one-time charge related to performance options. Lower compensation came from leveraging non-sales staff through enhanced internal information systems. Marketing expenses declined from a higher number of events in the prior year.

Employee count at February 29, 2008, was 1,828.

Excluding DealMaven, the firm’s headcount is up 22% from a year ago, and 10% over the past six months.

The annual effective tax rate for the quarter was 34.2%.

Included in the rate was the effect from expiration of the US Federal R&D Tax Credit in December 31, 2007. The effective tax rate is based on current enacted tax laws and fiscal 2008 now appropriately reflects the R&D credit only for the first four months of the fiscal year. The expiration of the R&D tax credit caused FactSet’s fiscal 2008 effective tax rate to rise by 70 basis points in Q2.

The other income was $1.4 million for the quarter, a 20% decline year-over-year.

The decrease was caused by FactSet’s reallocation of its investments to U.S. government-backed securities in late 2007 and the Federal Reserve lowering U.S. interest rates by 150 basis points during Q2.

The quarter was excellent for FactSet, reflected by the organic ASV growth rate of 22.5% and higher levels of profitability.

Excluding the DealMaven acquisition and currency effects, ASV increased by a record $30.3 million during the quarter. Top-line growth is also contributing to higher margins in earnings per share. Excluding incremental stock-based compensation, the operating margin accelerated to 32.6%, up 90 basis points sequentially from the first quarter and EPS was up 19% over the last 12 months. These results were achieved despite a difficult selling environment to IB clients. The performance this quarter is indicative of broad-based growth among the investment management client base. The growth came from all geographies and across many product lines. The key ingredient enabling the firm to attract more clients and users continues to be combining expansive functionality and premium content choices with first-class client service.

During the last 12 months free cash flows rose 23% to $115 million.

Free cash flows generated during the second quarter were $23.7 million, up 33% over the year-ago quarter. Drivers of free cash flow during Q2 were record levels of net income and higher non-cash expenses partially offset by a decline in working capital. The decrease in working capital was caused by an $8 million increase in accounts receivable and the timing of US Federal estimated tax payments.

The firm believes that the increase in accounts receivable is not a concern for two reasons:

- During the second quarter, the firm issues invoices for services to be provided over the next 12 months that aggregated to $11 million. Accordingly, this increased accounts receivable.
- It’s normal for receivables to rise during Q2. The increase this year was 12%, which was lower than the 14% increase in the year-ago period. Over the last 12 months accounts receivable has increased 1% while ASV has advanced 22%. Days sales Outstanding at quarter end were 45 days versus 55 days a year ago.

The ending cash and marketable security balance was $147 million, down $24 million from November 30.

During Q2, the firm invested $35.7 million to repurchase common stock, acquired DealMaven for $14 million, and paid a quarterly dividend of $5.8 million. Including the $125 million increase, the share repurchase program announced this past January there are $117 million remaining in repurchase authorization.

Capital expenditures during the quarter were $7.4 million.

Expenditures for computer equipment were $5.2 million, and the remainder covered office space expansion. Major computer expenditures included adding six Hewlitt Packard Integrity mainframes to the company data center, which successfully completed the transition to HP Integrity mainframes in both data centers well ahead of schedule.