THE ADVISORY BOARD COMPANY REPORTS
FISCAL YEAR 2007 SECOND QUARTER RESULTS

Company Reports Quarterly Revenues of $46.7 Million and 17% Contract Value Growth;
Announces Launch of New Research Program

WASHINGTON, D.C. — (October 30, 2006) – The Advisory Board Company (NASDAQ:ABCO) today announced financial results for the second quarter of its fiscal year ending March 31, 2007. For the quarter, revenues increased 15% to $46.7 million, from $40.5 million for the second quarter of fiscal year 2006. Net income was $7.2 million, or $0.37 per diluted share, compared to $7.0 million, or $0.35 per diluted share, for the same period a year ago. Contract value grew 17% to $186.3 million as of September 30, 2006, up from $159.8 million as of September 30, 2005.

For the six months ended September 30, 2006, revenues increased 15% to $90.9 million, from $79.2 million for the same period of fiscal year 2006. Net income was $13.7 million, or $0.70 per diluted share, compared to $13.7 million, or $0.68 per diluted share, for the same period a year ago.

Effective April 2006, the Company adopted Statement of Financial Accounting Standards No. 123R (SFAS No. 123R), which provides the accounting rules for share-based compensation. In addition, in February 2006, the Company received notification that it had been certified as a Qualified High Technology Company (QHTC) for income tax purposes. To analyze results on a comparable basis to the prior year, the Company’s management uses and is providing adjusted financial results, including adjusted net income and earnings per diluted share that excludes share-based compensation expense and employer taxes paid in connection with exercises of employee stock options. The adjusted results for all periods presented also include effective income tax rates calculated assuming adoption of the provisions of SFAS No. 123R and the Company’s certification as a QHTC.

Including the adjustments discussed above, adjusted net income for the second quarter of fiscal year 2007 was $9.3 million, up 23% from $7.6 million for the second quarter of fiscal year 2006. Adjusted earnings per diluted share for the second quarter of fiscal year 2007 was $0.48, an increase of 26% from $0.38 in the same quarter in the prior year. Adjusted net income for the six months ended September 30, 2006 was $17.9 million, or $0.91 per diluted share compared to $14.9 million or $0.75 per diluted share in the same period a year ago. A reconciliation of the Company’s reported and adjusted results is set forth in the notes to the financial highlights table included below.

Frank Williams, Chairman and Chief Executive Officer, commented, “We are quite pleased with our financial results for the second quarter. Our contract value growth of 17% was driven by a healthy renewal environment, as well as success in cross-selling and the strong performance of our new program introductions. Our success continues to be driven by cutting-edge, highly applicable research, as well as an ongoing focus on program innovation. Our model of providing proven best practices continues to resonate in the marketplace as our members consistently report that our membership programs are having a dramatic positive impact on their most important strategic and operational issues.”

He added, “I am also pleased to announce our latest launch, the Bad Debt Performance Program. This program assists Chief Financial Officers in improving bad debt performance by integrating best practices and improved information and analytics to support hospitals’ efforts to increase self-pay collections and appropriately identify charity care. Through best practice research, performance benchmarking data, and a robust, web-based analytical tool, the program enhances a member institution’s ability to classify accounts based on likelihood to pay, develop workflow based on the classifications and prioritize collections efforts, thereby optimizing collections resources and reducing bad debt. We have already established a strong charter membership for the program, including St. Jude Medical Center, Meridian Health System, H. Lee Moffitt Cancer Center, Roper St. Francis Healthcare, Riverside Health System and Rush North Shore Medical Center. The program is off to a strong start, and we are very excited about its potential.”

Share Repurchase

During the three months ended September 30, 2006, the Company repurchased 245,039 shares of its common stock at a total cost of approximately $11.9 million. Through September 30, 2006, the Company has repurchased shares at a total cost of approximately $109.6 million and has $40.4 million available under the program for future share repurchases. Repurchases will continue to be made in open market and privately negotiated transactions subject to market conditions. No minimum number of shares has been fixed. The Company is funding its share repurchases with cash on hand and cash generated from operations.

Outlook for Remainder of Calendar Year 2006

For the quarter ending December 31, 2006, the Company’s revenue guidance is approximately $48.5 million and adjusted diluted earnings per share guidance is $0.43. The Company increased its adjusted diluted earnings per share guidance for the four quarters ending December 31, 2006 to $1.80. Adjusted diluted earnings per share excludes share-based compensation under FAS No. 123R and employer taxes paid in connection with the exercise of employee stock options.

The Company will hold an investor conference call to discuss its second quarter performance this evening, October 30, 2006, at 6:00 p.m. Eastern time. The conference call will also be available via live web cast on the Company’s web site at www.advisoryboardcompany.com in the section entitled “Investor Information” found under the tab “About Us.” To participate by telephone, the dial-in number is 866.270.6057 and the access code is 84515385. Investors are advised to dial in at least five minutes prior to the call to register. The web cast will be archived for seven days: from 8:00 p.m. Monday, October 30, until 8:00 p.m. Monday, November 6, 2006.

Forward Looking Statements

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You are hereby cautioned that these statements may be affected by certain factors, among others, set forth below and in the Company’s filings with the Securities and Exchange Commission, and consequently, actual operations and results may differ materially from the results discussed in the forward-looking statements. Factors that could cause actual results to differ materially from those indicated by forward-looking statements include, among others, the dependence on renewal of membership-based services, dependence on key personnel, the need to attract and retain qualified personnel, management of growth, new product development, competition, risks associated with anticipating market trends, industry consolidation, variability of quarterly operating results, the possible impact on our financials associated with some of our newer programs that are more dependent upon technology, various factors that could affect our income tax rate or our ability to use our existing deferred tax assets, whether the Office of Tax and Revenue of the District of Columbia withdraws our QHTC status, the effect of the amount, type and timing of future share-based compensation arrangements, changes in estimates or assumptions under SFAS No. 123R, and possible volatility of our stock price. These and other factors are discussed more fully in the Company’s filings with the Securities and Exchange Commission. The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise.

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About The Advisory Board Company

The Advisory Board Company provides best practices research and analysis to the health care industry, focusing on business strategy, operations and general management issues. The Company provides best practices and research through discrete annual programs to a membership of more than 2,500 hospitals, health systems, pharmaceutical and biotech companies, health care insurers, and medical device companies in the United States. Each program typically charges a fixed annual fee and provides members with such services as best practice research reports, executive education, on-line analytical tools and other supporting research services.

THE ADVISORY BOARD COMPANY
FINANCIAL HIGHLIGHTS
(In thousands, except per share data)
(Unaudited)

(1)

In order to allow investors to assess results on a basis consistent with those used by management, the following tables reconcile GAAP to adjusted amounts for the three and six months ended September 30, 2006 and 2005, respectively. Adjusted results exclude the share-based compensation expense recognized by the Company in accordance with SFAS No. 123R and employer taxes paid in connection with the exercise of employee stock options. In addition, for comparison purposes the Company’s effective tax rate and diluted share count for the three and six months ended September 30, 2005 have been adjusted to reflect the Company’s certification as a QHTC and include the effects of SFAS No. 123R.

THE ADVISORY BOARD COMPANY
RECONCILIATION OF GAAP TO ADJUSTED RESULTS
(In thousands, except per share data)
(Unaudited)

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Reconciliation of non-GAAP Financial Measures

The Company believes its calculations of adjusted results, including adjusted net income and diluted earnings per share, provide additional information about the Company’s ongoing operating performance as well as additional information to compare to prior periods. The Company’s management uses the adjusted presentations to evaluate projected operating results on a basis that allows for comparability without regard to changes affecting variables arising from its stock-based compensation programs and the timing of notification of the Company’s QHTC tax status, and provides such information publicly to allow investors to assess results on a basis consistent with those used by management. Although these non-GAAP financial measures adjust expense and other items to exclude the accounting treatment of share-based compensation expense, they should not be viewed as a pro forma presentation reflecting the elimination of the underlying share-based compensation programs, as those programs are an important element of the Company’s compensation structure and generally accepted accounting principles indicate that all forms of share-based payments should be valued and included as appropriate in results of operations. Accordingly, a limitation of these adjusted results is that they do not reflect all of the elements of compensation that the Company believes to be necessary to attract and retain employees and they may not be comparable with results of companies that maintain different compensation programs or account for such programs on a different basis. Management compensates for this aspect of the non-GAAP financial measures by separately evaluating its share-based compensation arrangements. The Company is not able to reconcile its outlook for the remainder of calendar year 2006 to GAAP as future results are dependent upon a number of unknown factors, including the extent (if any) to which employee stock options are exercised, whether employees forfeit outstanding options upon termination from the Company, and future stock price.

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(1)

Effective April 1, 2006, the Company adopted Statement of Financial Accounting Standards No. 123R, “Share-Based Payment” (SFAS No. 123R), which provides the accounting rules for share-based compensation. During the three and six months ended September 30, 2006, the Company recognized approximately $1.0 million and $2.1 million in cost of services, approximately $0.7 million and $1.4 million in member relations and marketing, and approximately $1.4 million $2.8 million in general and administrative expense for share-based compensation related to the adoption of SFAS No. 123R and in employer taxes associated with the exercise of employee stock options. The Company has recorded all these expenses in the same line items as other compensation paid to the relevant categories of employees.

(2)

In February 2006, the Company received notification from the Office of Tax and Revenue of the District of Columbia that the Company had been certified effective January 1, 2004, as a Qualified High Technology Company (“QHTC”) under the New E-Conomy Transformation Act of 2000, as amended (the “Act”). The results of operations for the three and six months ended September 30, 2005, were reported prior to the Company’s notice of certification and include income taxes at an effective rate of 40.5%. This certification had the effect of reducing the Company’s statutory income tax rate as well as providing other benefits. Had the Company received notification of the certification and adopted the provisions of SFAS No. 123R prior to reporting results for the three and six months ended September 30, 2005, the Company’s reported effective tax rate for fiscal 2006 would have been reduced by 5.2% to an effective rate of 35.3%.

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