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Executives

Stuart Clark - President, CEO, Director

Andrew Hajducky - CFO, EVP, Treasurer

Andrea Kramer - IR

Analysts

Randy Hugen - Piper Jaffray

Ashley Hemphill - William Blair

George Grose - American Capital Partners

Interactive Data Corporation (IDC) Q2 2008 Earnings Call July 24, 2008 11:00 AM ET

Operator

Good morning my name is Terry, and I will be your conference operator today. At this time I will like to welcome everyone to the Interactive Data second quarter 2008 financial results conference call. All lines have been placed on mute to prevent any background noise. After the speakers remark, there will be a question-and-answer session. (Operator Instructions). Thank you. I would now like to turn the call over to Mr. Andrea Kramer, you may begin your conference.

Andrea Kramer

Thank you very much operator. Good morning everybody and thank you for participating in Interactive Data Corporation’s second quarter 2008 financial results conference call. Joining me are Stuart Clark Company's President and Chief Executive Officer and Andrew Hajducky, our Chief Financial Officer.

As is our practice and as we referenced in our news release this morning, we are presenting a set of slide as an optional visual compliment to our remarks. You can download and print these slides from our website to follow on or you can view in advance of the slides through the webcast view, if you are listening to the call over the Internet.

Turning to slide number one, I will briefly review the agenda. After I recite the safe harbor statement, Stuart will briefly review our financial performance and then share his thoughts on highlights across the organization. Andrew Hajducky will then review our results in 2008 outlook in details. We will then open the call for questions and answers.

With that said, slide number two covers our safe harbor statement. This conference call will contain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reformat Act of 1995 and Federal Securities Laws, including statements regarding the company's future financial performance, future operating results and plans and expectations and other statements that are not historical facts.

These forward-looking statements are based on management current plans, expectations, and assumptions. They are subject to known and unknown risks, uncertainties, and other factors that may cause the companies actual results to be materiality different from those contemplated by the forward-looking statements. The company undertakes no obligation to update these forward-looking statements to reflect subsequent events.

For further information on risks factors that may effect these forward-looking statements in the company's business, please refer to the press release issued by the company today as well as to its most recent annual report on From 10-K and quarterly report on From 10-Q filed with the SEC which are available on the company's website at www.interactivedata.com. An audio reply of this call will also be made available on Interactive Data's website. Further, more during this conference call management will make reference to certain non-GAAP financial measures such as organic revenue growth, adjusted revenue, adjusted cost and expense amount.

The reconciliation of these measures to GAAP measures are set forth following the financial tables in our earning release or in the slides relating to this conference call. Both of which are posted on company's website under the heading Investor Relations. Please note, that all the numbers in our prepared remarks are either for the second quarter of 2008 for the first six months of 2008 or comparisons are with the comparable period in 2007 unless otherwise noted and all comparisons are done on a GAAP basis unless otherwise noted.

With that said, I will now turn the call over to Stuart.

Stuart Clark

Thank you Andy. Good morning everybody and thank you for joining us. As Andy has mentioned there are slides available on our website that support our commentary. We will indicate these slides while referencing as we move along.

So let’s turn to slide 4 to start my commentary. I am pleased with our results for the second quarter of 2008, particularly in light of the turbulent market conditions. Our total revenue grew 9.5% to 186.1 million. Thanks in large part to our Pricing and Reference Data business. This business will see us again, a stand out performer delivering 10.5% organic revenue growth. Its third consecutive quarter of organic revenue growth is accepted 10%. This is important, we saw a continued momentum for our Real-Time Data Feed business, which reported organic revenue growth above the 9%. Overall our organic revenue growth was 7.7% for the quarter.

On a geographic basis, we enjoyed growth in all regions. Our growth in North America has continued to be strong, which is noteworthy given that the US economy appears to be the hardest hit thus far by the after shocks of the credit crunch. Our solid growth in Europe continued primarily as a result of gains that our pricing on Reference Data business. Our growth in Asia Pacific was very strong although it is all a relatively small base.

With that said, we believe that this region has an outstanding long-term growth prospect. Our operating performance was consistent with prior quarters as our second quarter revenue growth outpaced operational spending. This led to a 13.6% increase in income from operations and 15.1% growth in net income. Net cash provided by operating activities was particularly strong this quarter with a 29.1% increase.

In terms of strategic and operational highlights during the quarter, there were several that is fair mentioning. First we announced plans to acquire Kler's Financial Data Service, a leading provider of reference data to the Italian financial market place. Second, we made good progress with our product development activities by delivering range of enhancement and new capabilities across our broad range of offerings. I will expand all these activities in a few minutes, when I will review the progress in each of our businesses.

Third, we have implemented a formalized CEO succession process to identify the next leader for Interactive Data consistent with my plans to retire during 2009. As we lead into the discussion on our businesses, I would like first of all to keep my perspective on the market close, so let’s turn to slide 5. While market conditions have been volatile for much of the past quarter, we have continued to generate strong new sales level while renew rates across our institutional businesses remained at approximately 95%.

In this market environment, we expect that our customers will be cost conscious, but at the same time we also expect that they will make the necessary investments to respond to key trends affecting in their businesses. These trends encompass the heightened scrutiny around valuation of securities, increased regulation, and its associated impact on risk management and compliance, the increasing adoption of low latency data to power automated trading systems and the continued need to differentiate management operating income in order to attract high network customers.

We have invested in and we will continue to invest in a high value data services, analytics and solutions, invite the best position then to be relevant to these trend for the foreseeable future. Geographically, we have continued to see market conditions as better in Europe and Asia than in North America. With that said, we are pleased with our progress in most major geographic areas.

Looking ahead, we expect to produce another year of solid results and have raised our full year outlook for revenue and income from operations. As I have already mentioned, we will continue to invest in high value offerings across our organization and to start this, we are making a modest increase in our capital expenditure plan in order to increase our capacity to manage the expected growth in market data volumes.

Let's turn to slide 6, so that we can discuss key highlights of the business unit level. As is our custom, we will begin this review, with our Institutional Services Segment and start with our Interactive Data Pricing and Reference Data business. This business reported revenue of a $117.8 million up 11.5% or 11.2% before the effects of foreign exchange. Excluding the impact of foreign exchange and the Xcitek business we acquired last May, the organic revenue growth for this business was 10.5% primarily due to new evaluations in Reference Data business, with a 15 customers in both North America and Europe.

We are seeing that this business is extremely well positioned to help customers worldwide with evaluation, regulation and risk management activities. These are areas where spending is simply not discretionary.

In this context, our evaluated pricing and Reference Data services continued to gain interaction in the marketplace with new and existing customers, as well as a growing range of redistribution partner. We are also seeing that new accounting rules like FAS157 are opening up new opportunities for us to showcase our capabilities and expertise.

In this context, we are actively working with clients to help them better appreciate the ways in which we produce our evaluation, as well as pursuing initiatives to develop new offering that could address clients need for greater transparency of evaluation and information. During the quarter we also made important progress in enhancing key evaluation and Reference Data services.

A major highlight in the quarter occurred in late June, when we announced an agreement to acquire Kler's Financial Data Service, a leading provider of reference data to the Italian financial community. We believe that acquiring Kler's, which is based in Rome, would allow us to accomplish two important objectives simultaneously. First it support our goal of growing our business internationally by giving us a more substantial presence in Italy.

Second, it will enhance the reference data content to interactive data already collects processes and delivers to 1000 of financial institutions and redistribution partners around the world. Kler's will bring us access to a very rich platform of Italian fixed income data, tax and regulatory information, any form of data, as well as adjusting relationships with all the major Italian banks and local software companies.

Although the Kler's business is relatively small today, we are very confident that it has attractive growth prospects, as we take its content to our global customer base, bring out global content and products from across our other businesses to their Italian customers and develop new evaluated pricing services for unlisted Italian bonds.

Looking ahead, expanding the breadths and depths of the data we cover, remains a top priority especially in the area of derivatives. We are making good progress in this area to cost effectively accelerate our ability to deliver independent evaluation of highly complex OTC derivative products and we hope to be in a position to share more news on this front later this quarter.

I would now like to move on Slide 7 to review our Real-Time services business. This business reported second quarter 2008 revenue of $37.9 million, which was up 11.3% or 5.8% excluding the impacts of foreign exchange. We saw another strong quarter performance within our Real-Time Data Feed services business, which turned of at 9% in the quarter on an organic basis. Our Managed Solutions business, however, was unable to continue on its growth trajectory and was up only marginally on an organic basis.

Within our Real-Time Data Feed business, we are continuing to win business within the global institutional marketplace. We made good progress in both the U.S. and Europe to win new institutional customers and also enjoys success in expanding our existing relationships with a number of large mutual and hedged fund customers.

Earlier this month, we introduced our new generation high-speed data distribution network, which is designed to allow us to more effectively manage rapidly growing data volumes. In combination, with the launch of the European Real-Time ticker plant earlier this year and our on going efforts to broaden our markets coverage. We have made steady incremental progress in enhancing our capacity and content.

As a result, interacted data is increasingly viewed as a critical alternative for providing Real-Time Data for applications within the institutional market segment. It is also important to note that the operations support to this business and the investment to fortify our Real-Time infrastructure benefit all of the Interactive Data's businesses, not just our Real-Time Data business. Andy will discuss this dynamic in more details in terms of our capital spending plans. With regards to our Managed Solution business, which is the smaller part of our Real-Time services, we continued on our growth trajectory in the US. In Europe, however our growth rate was reduced last quarter due to more difficult market conditions in the general marketplace, which is where a significant percentage of the Managed Solution business is based.

Never the less we believe that our long-term prospects for this business remain attractive as reflected in our recently announce business wins at Bank Julius Baer and Contois Contour.

Moving on to slide 8 the third business in our institutional services segment is Interactive Data Fixed Income Analytics, which reported second quarter 2008 revenue of $8.1 million, which was essentially flat compared with the prior years quarter.

We are making some good progress on the new sales front, as this was the first quarter in some times where new sales exceeded cancellation in each month of the quarter. We are on schedule with the transition for the next generation bondage offering, which will enter the beta test phase later this summer.

As you may recall, this business is also in the midst of a leadership transition. We have made considerable progress on this front and hope to finalize our selection of the Managing Director for this business later during the third quarter.

Let's turn to slide 9 for a review of our eSignal business, which comprises our active trader services segment. eSignal is a leader in providing real-time streaming market data platform and decision support tool to nearly 62,000 active traders, individual investors and investment community professionals. This business reported second quarter 2008 revenue up $22.3 million, a slight increase of 1.2% or 0.9% before the effects of foreign exchange. The core market for this business, the active trader who relies on technical trading strategies, continues to be relatively soft, as reflected in our subscriber numbers. In terms of progress with product development, we introduced a number of new features across the newest versions of our eSignal, eSignal pro, eSignal advance care offerings to see better growth prospects for the active trader segment, sorry we see better growth prospects for the active trader service segment outside of North America. To that end eSignal announced an adjusted these reseller agreement to extend the sales and support capabilities for that region. We believe however, that the most promising near term prospects for this business lie in the institutional marketplace with regional on online brokerages. During the quarter, we closed the small deal with a Southeastern regional brokerage firm that we believe has potential to grow above the time.

Finally moving to slide 10, I would like to briefly cover the CEOs succession process that was initiated two months ago based on my previously announced intention to retire as President and CEO of Interactive Data during 2009. As I explain at our annual meeting and in subsequent conversations with our staff, business partners, customers, and shareholders, I feel absolutely committed to my roll at Interactive Data and I remain as enthusiastic as I have ever been about our prospects.

However, in September this year I celebrate 40 years of working with Interactive Data or one of it is predecessors companies and I turn 61 years old later this year. As a result, I believe that it is an appropriate time to formally start the succession planning process in order to identify the executive who will lead Interactive Data into it is next phase of growth. Led by Rona Fairhead, the Nominating and Corporate Governance Committee of the Board has moved ahead with its plan to identify and screen potential successors and has engaged the services of an executive recruiting firm to ensure that this process is as rigorous as possible. My role has not and will not change during the search process. Once the board has appointed my successor, I plan to work closely with this individual to ensure an orderly, seamless transition of leadership consistent with my plan to retire at some point next year.

That said, our expectations for 2008 will be another year of solid financial results at Interactive Data and I look forward to sharing news of our progress, achievements and performance over the coming quarters.

I would now like to transition the call to Andy for the financial review. Over to you, Andy.

Andrew Hajducky

Thank you, Stuart. Let's begin our discussion on slide number 12. As a reminder, all of the numbers in my commentary are for the second quarter of 2008. All comparisons are with the second quarter of 2007, unless otherwise noted. All comparisons are done on a GAAP basis, again unless otherwise noted.

Total quarterly revenue of $186.1 million grew 9.5% from the prior year's quarter. Before the effects of foreign exchange, our revenue grew 8.2%. The Xcitek market data assets, which we acquired back in May of 2007, contributed an incremental $785,000 of revenue in this quarter. As Stuart mentioned, excluding the impact of foreign exchange, acquisitions and related inter-company eliminations, our organic revenue growth was 7.7%. Our growth this quarter was primarily due to the strong performances at Interactive Data Pricing Reference Data, and the Real Time Data Feed Card of our Real Time services.

Now on slide number 13, which gives you our revenue mix by geography. As you can see, we are expanding our business in each major region. We continue to generate outstanding growth in North America. As Stuart discussed our European growth rate has moderated due to the slowdown in our Managed Solutions business in this region. We are generating good growth in Asia Pac region albeit on a small revenue base.

Moving on to slide number 14, I will review our operating performance. Cost of services increased by $5.4 million or 9.7% to $61.3 million. The increase primarily reflects the effect of foreign exchange, higher communication data acquisition cost and higher personal related expenses associated with increased head count and our annual merit increase.

SG&A expenses increased by $2.8 million or 4.8% to $61.2 million. The primary factors for this increase were again, the effects of foreign exchange, higher personal related expenses, primarily attributable to increased head count and increased premises expenses. Depreciation, amortization expense increased 16.8% or $13.7 million, due to the timing of the capital expenditures in prior quarters, and adjustment in the second quarter 2007 that was associated with the reversal of previously appreciated capitalized development cost and the amortization then associated with the acquisition Xcitek.

Income from operations grew 13.6% to $50 million. Our revenue growth has continued to outpace spending and is then driving consistent year-over-year improvement in our operating margins. Even the timing and magnitude of our acquisition, this trend has become even more transparent in our GAAP results and will continue to provide non-GAAP operating metrics, which further illustrate the operating leverage in our business model.

Income before income tax is up $51.9 million increased 12.8% as a result of lower interest income caused primarily by lower interest rates. Our effective tax rate was 35.4%, which is a slight decrease from the rate applied in the year ago quarter. We reported 15.1% increase in net income to $33.5 million or $0.35 per diluted share.

Turning now on to slide number 15, I will briefly review our balance sheet and cash flow highlights. Starting with our cash position, Interactive Data ended the second quarter 2008 with no outstanding debt and our cash, cash equivalents and marketable securities totalled $254.8 million, which is a $7.6 million increase over our balance at the end of the first quarter. The increase in our cash, cash equivalents and marketable securities reflects another strong quarter of net cash provided by operating activities, which was partially offset by the payment of our regular quarterly dividend, stock repurchase activity and modest changes in working capital.

In terms of upcoming uses of cash, we are expecting that the acquisition of Kler's will be completed shortly and that will consume close to $30 million, depending upon the exchange rate at the date of closing. Our Board recently declared our regular, quarterly dividend of $0.15 per common share and that will be paid at the end of the third quarter. In addition, we anticipate being active with our ongoing stock buyback program.

Now, to move on slide 16, in the second quarter of 2008, we generated $38.8 million in net cash provided by operating activities. This represents a 29.1% increase over the last year, primarily due to the increase in net income and higher non-cash expenses. As you can see from the table on this slide, this translates into a 29% increase in net cash provided by operating activities per diluted share to $0.40 per diluted share.

In terms of shareholder returns, 73% of the net cash provided by operating activities was retuned to shareholders as a result of $14.1 million that we used to pay our regular, quarterly dividend and the $14.2 million that we spent to repurchase our common stocks during the quarter.

Slide 17, provides further insight into the strength of our balance sheet. Our accounts receivable balance at quarter-end was $114.6 million, which translate into DSOs of 58 days. This is down one day compared to the first quarter 2008, and 2007 year-end DSO levels and unchanged from the same time last year.

Our current ratio was 2.8 at the end of the second quarter, which is at the high-end of our historical range, up from 2.5 at the end of the first quarter of 2008, 1.9 at year-end and 2.5 for the second quarter of 2007. In terms of capital spending, our capital expenditures during the quarter totaled $7.8 million. We continued to direct the majority of our capital spending, back into our technical infrastructure, particularly to scale our ability to stay ahead of the curve in terms of the anticipated growth in real time market data volumes.

On slide 18, we provide an update on our stock buyback activity. During the second quarter, we repurchased 512,000 shares of our common stock at an average price of $27.74 per share for a total expenditure of $14.2 million. Entering the second quarter 2008, we have more than 1.8 million shares available for repurchase under our current program.

Now moving on to slide 19, I will review our outlook for 2008. As Stuart mentioned, we have raised our 2008 outlook in several areas. More specifically, we are planning for 2008 revenue growth over 2007 in the 8 to 10% range versus our original expectation for top line growth in the 7% to 9% range. We now expected our 2008 income from operations will grow in the range of 11% to 13% compared with our original forecasted growth in the 9% to 11% range. We anticipate that our 2009 effective tax rate will be in a range of 36% to 38%, which is unchanged from our prior guidance.

As a reminder, this is a notable increase on our effective tax rate over 2007, as our effective tax rate last year of 31.8% benefited from a number of discreet and one time items that are not expected to reoccur in 2008. Our 2008 net income growth target, we are targeting 2008 net income growth in the 3% to 6% range. This target is unchanged despite our expectation of higher income from operating growth due to the expected impact of lower interest rates on our interest income.

In terms of capital expenditures, we have modestly accelerated our spending plans and now anticipate 2008 CapEx of approximately $49 million, which modestly exceed original guidance in the range of $45 to $47 million.

The increase reflects our decision to continue scaling our technical infrastructure to support our ability to take advantage of the growth opportunities we see. More specifically, we are making additional investments in our real time infrastructure, which is aimed at helping us stay out in front of the surging market data volumes.

The company's updated 2008 outlook does not include the impact of the Kler's acquisition, which is expected to be completed within next several weeks. Once completed the contribution from Kler's is not anticipated to have a material impact on the company's updated 2008 outlook. Well, that concludes my review; I will turn the call back to Stuart, so we can begin the Q&A session.

Stuart Clark

Thank you very much Andy. That concludes the management commentary. At this stage, we would be very happy to take questions. So operator, could you please open up the call?

Question-and-Answer Session

Operator

(Operator instructions). Your first question comes from Randy Hugen with Piper Jaffray.

Randy Hugen - Piper Jaffray

Great job in a tough environment here.

Stuart Clark

Thank you Randy.

Randy Hugen - Piper Jaffray

So, do you guys have any exposure at IndyMac and do you typically sell with those types of institution?

Stuart Clark

No exposure of any significance, Randy. It's not an area where we would have, what I'd call, significant exposure in some of the levels of revenue. Obviously, if you are talking about the bigger banks then, that's a slightly different situation.

Randy Hugen - Piper Jaffray

Okay. And significant progress with the eSignal platform, outside of the regional one that you talked about?

Stuart Clark

Still working on that, Randy and as highlighted in the commentary, we're very much focused on the retail brokerage and community, wouldn't think that eSignal has attracted prospects and we have a number of situations that we're trying to develop and we hope that as the year progresses, we can breath some good news on that front.

Randy Hugen - Piper Jaffray

Thanks, any change since last quarter from your clients, buying behaviors or client side towards the data trend?

Stuart Clark

Well, actually nothing that we noticed. I highlighted the fact that there must be a level of more cost consciousness going on in some segments of the market, but we've been very pleased with that performance and that's one of the reasons I emphasized the positioning of the business to gain some of the trends that we've been seeing, whether, in fact, we've been working to for a long time, areas like evaluation, regulation, vote management and low latency as deliberate data and these are areas that continue to and generate not as good sales but good prospects as well. So, we're very happy not just with the sales that didn’t bringing on board, but also with the level of conversations and opportunity that we are able to actually, trying to address. It still answers no, and we are pretty happy about that.

Randy Hugen - Piper Jaffray

Okay. Thanks a lot.

Stuart Clark

Thanks, Randy.

Operator

Thank you. Your next question comes from Ashley Hemphill with William Blair.

Stuart Clark

Hi, Ashley.

Ashley Hemphill - William Blair

Hi, guys. Going step further in terms of the trends that are positive for you guys given what’s going with this difficult credit market. Are you seeing any new players trying to come in this space? I know I ask this a lot about the competition, but I’m assuming given the kind of tailwind that you’ve seen, especially with the valuation and the regulatory compliance, I’m just wondering, any increased competition, any new players coming in, anything that you are looking at his any type threat?

Stuart Clark

Well, as we talked about last quarter in that, there are plenty of people out there who annual doing things in a differently shares of what, lets call the valuation community and, but we haven’t seen that having any impact on us that’s the first thing. The second thing is, we have positioned as a one stop provider as best as you can be that in this market, and I think the only way which would do, say we do this independent of any other level of service, that we provide to these people. I think that combination is quite compelling and again if we highlighted in the commentary we are looking to take it further, we hope that we are going to be able to make some announcement this year in relation to addressing even more complex areas of client needs in terms of OTC derivative.

So, there is more competition in a theoretical sense and that you can redevelop other participants in the market who are developing services, I would say in niche areas, but I don't think that has an impact on us. I think often those things that they may do would be complimentary to us.

There is a great deal of focus still on taking two sources or information and there are just an awful lot of asset classes that have developed within client portfolios over the last few years, but didn't used to be there before. So it's not surprising to me that there are more people who play in this area, but I just feel that we are still extremely well positioned and we're doing lots and lots of new things.

I think, the other area that again we highlighted in the commentary that's very attractive, even though we haven't fully figured that out yet, is the impact of this accounting rule FAS157 on our clients. This is putting a lot of pressure, you have to categorize the type of price that's being used in valuing portfolios.

We can think, that we can't make those designations for the customers, but what we can do is provide them better and better information to help them determine how they make their own categorization. So, and that's something that I think we will be both the support leader, and a product leader in terms of what we do. So, lots going on there and yes there are certainly niche areas of competition that will inevitably grow up in this marketplace.

Ashley Hemphill - William Blair

You know, I'm trying to gauge sort of IDC's susceptibility to any further Wall Street wrath, if there really is any, and I'm just wondering if you could give us a sense for the drivers in determining subscription value for the typical client in terms of the huger components specifically –is there that type of seat user component to the subscriptions or is that really not a factor on how you guys price your contracts?

Stuart Clark

It’s not really a factor. I mean, I am not saying there isn't anywhere but it's very rarely a factor. Our subscriptions are based very much on licenses, which you could almost think of on a departmental basis rather then a seat basis and the department would not typically be trading floor, they would typically be more in areas of using regulation, areas of used within settlement things like that.

So, the licenses are created around areas of usage rather than seat. That’s the more typical way that our licenses are created. So we haven’t seen any notable impact through the layoffs that are being going on. Again, as I think I have said in previous quarters, if you look the things that affect us, is more big institutions or institutions actually going out of business or merging with other institutions, and that’s where over time, you will see some erosion of revenue. If a client goes completely out of business then clearly you loose everything that pay. So I think those are the things to look at in the market in relation to our much more then the layoffs.

Ashley Hemphill - William Blair

Okay – okay. And –I missed actually in your commentary in terms of the Managed Solution business, I know that you mentioned there were two challenges, one was the German marketplace having some difficulty – what does the second challenge.

Stuart Clark

That may have been a mistake, or in the way I have said it.

Ashley Hemphill - William Blair

Okay.

Stuart Clark

The primary problem there is the general marketplace, which is the banking sector there has become very cost conscious and -- I suppose to an extent it's also -- the implementation time that is taking with some of the projects there now, again related to the marketplace and it's really -- that’s the problem that we were suffering in the second quarter, which was different from the first quarter.

So, we have picked up some good new business there during the quarter, which has added to our pipeline and that we are hoping that we can get this business there in Germany back on track, because Germany is still the biggest component of the market. It's still growing though, I mean I would emphasize that. This has not been a trend that’s reversed growth and we’re still seeing very positive growth in North America. So, apology if that was confusing.

Ashley Hemphill - William Blair

Oh no, I just wanted to make sure I don’t miss anything. Then, of course my typical stock buyback. Was it primarily 10b5-1 and Andy, was I wrong in sort of getting a sense that you might be more opportunistic with your purchases there in terms of the buybacks going forward and is that some sort of incitement of stock price at these levels?

Andrew Hajducky

Yeah Ashley, over the past couple of quarters, our program has been 10b5-1 program, which you are probably aware has been put in place such as basically offsetting, the effects of any dilution of exercise of options as well as our employee stock savings plan. Now, we have as I have mentioned in the commentary in the slide, there is a 1.08 million still remaining in the program, of that 500,000 relates directly to the 10b5-1 program.

Ashley Hemphill - William Blair

Thank you very much guys.

Stuart Clark

Thanks, Ashley.

Operator

Thank you. Your next question comes from George Grose with American Capital Partners.

George Grose - American Capital Partners

Good morning.

Stuart Clark - President, Chief Executive Officer

Hello, George.

Andrew Hajducky - Chief Financial Officer

Good morning.

George Grose - American Capital Partners

In the past you mentioned that consolidation can be a good think for your business as you grab then a bigger valet share of your customer spending. But as the financial services companies deal with there credit roles and we go through possibly a phase of consolidation in the marketplace that we've perhaps haven’t seen in quite sometime. How do you think this impacts your future sales?

Stuart Clark - President, Chief Executive Officer

Well, I am not sure, if I said that consolidation is a good thing in the past, I think its only in the sense that as you get consolidation it tends spin off people and ideas that then form into other businesses that become new customers for us. So, I would say overall, we don’t regard consolidation as a great thing for us. Typically if there is consolidation, we tend to end-up renegotiating licenses with the one company, let's say this replace two and our goal is always to retain as much of that business as we possibly can. I would say at the moment, we are not facing or dealing with any increasing trends in that regards, in fact we are getting some historical levels, probably not I would say they are bit lower, but that would be my response to that questions.

George Grose - American Capital Partners

Okay. I noticed the growth I guess the North American, Europe in Q2 on a year-over-year basis decreased little compared to the growth in Q1. Can you explain where the Europe was, I think in Germany, but can we view the decreases as being perhaps part of the difficult macro environment in North America and European financial institutions?

Stuart Clark

I think, compared to a year ago we are in a different market. There's no question, we were really a booming market environment a year ago, and it's not quite as good. I think, the other thing to reflect on is we were posting some very strong quarters last year, very strong in terms of revenue growth and profit growing. I think, against that background there is a background of the more difficult market conditions. We feel pretty proud what we've been able to continue doing here.

George Grose - American Capital Partners

Okay. And I think, you mentioned too, I mean, you're not really -- are you seeing the same level of commitments in dollar terms from your existing customers like when they renew their products?

Stuart Clark

Yeah. I think, I would say that we have been seeing and I would I guess point to those people who pay us more on that whether the usage component of what they have to pay or there is some variable component. We've signaled numbers still coming through quite strongly. So it hasn't seen any negative trends there that I could reflect on, George.

George Grose - American Capital Partners

I mean, pricing has really remains solid and--

Stuart Clark

It has remained very solid this year, yes.

George Grose - American Capital Partners

Okay. Lastly, I guess if you're accelerating like your CapEx spending plan for the year, I mean, can we take that as, meaning that do you feel pretty confident about where the macro environment is heading, and that we may seeing the worst of the crisis?

Stuart Clark

I love to able to be able to make a call on that but I don't think I can. I think we feel confident about where we're positioned.

Andrew Hajducky

Yeah, and again, George, what we're trying to do here is to anticipate what our customers' needs are going to be, because it's very important for us to be a bit ahead of the curve and not get caught in what I consider a volume squeeze, because you always want to make sure that you meet or exceed your customers expectation in regard to performance. So I think, with that modest increase in-- we are talking about $3 million on our capital expenditure, really serves us well going down the road in regard to meeting our customers expectations as volumes change.

George Grose - American Capital Partners

Okay. And Andy, lastly if I state myself here, do you have any exposures, a lot of exposures to Bear Sterns?

Andrew Hajducky

No. We don’t have a very significant exposure, and the area that we have the most presence within that organization is in terms of cost that we think that JP Morgan are going to be keeping eye and so, that’s actually a merger that we hope will turn out quite positively for us.

George Grose - American Capital Partners

Okay. Thank you.

Andrew Hajducky

Thank you, George.

Operator

Thank you. (Operator instructions). And at this time, there are no further questions.

Stuart Clark

Very good, I think then I'll conclude the call. I would like to thank everybody for participating today, and I hope that we've given you a better understanding of the business highlights and our enthusiasm for our prospects, and we look forward to speaking with you at our third quarter 2008 results, which will be late in October. Thank you very much indeed.

Operator

Ladies and Gentlemen, thank you for joining today's Interactive Data second quarter 2008 financial results conference call. Thank you for your participation.

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Source: Interactive Data Corporation. Q2 2008 Earnings Call Transcript
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