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We're making strategic investments in our organization to drive future growth and made good progress on these initiatives in the second quarter. We added an additional business development individual to our software business and hired a senior scientific resource into our consulting practice, with business development expertise. We experienced success in our consulting recruiting efforts in a very competitive market, increasing our consulting staff by 7% in the quarter and 15% year-over-year. Additionally, we have placed three consultants in Europe during the quarter in support of increasing our physical presence in this market. Overall, we made good progress on all key initiatives and I am encouraged with the results and the team we have in place.

With regard to our financial results for the Company as a whole, our revenue increased 15% for the quarter and 11% year-to-date, both metrics are in line with our historical annual growth range of 10% to 15%. The second and third quarters are typically our strongest growth quarters, so we appear to be in line with these expectations for the year. Our gross margin of 74% was an increase over last year's second quarter gross margin and this year's first quarter gross margin, which were both 71%. The gross margin improvement was contributed too by increases from both the software and consulting revenues.

Our net income and earnings per share results were up in year-over-year comparisons, but not to the level of our revenue growth increase, even after adjusting last year's second quarter results for the one-time tax benefit received in that period. John will speak to the adjustment later in the call. On an adjusted basis, net income was slightly up year-over-year and earnings per share increased to $0.12 from $0.11 year-over-year. This outcome is reflective of the investments we're making in sales and marketing resources, fees related to more aggressive consulting recruitment, the cost of initial placements of staff in Europe and the significant refactoring project in our software business that is impacting on our R&D expense. These investments are being made to position the Company to support future revenue growth at or above our historical range. That said, the impact of these investments will diminish in coming quarters and our expectation is that our year-over-year comparisons for the full year of fiscal year '19 will be in line with fiscal year '18 full year results. For example, our SG&A cost, which had crept up to 36% of revenue in the first quarter, fell back to 33% in this quarter and total operating expenses stepped down from 43% in the first quarter to 42% in the second quarter. Our mix of revenues for the quarter remained consistent. Our software revenues represented 56% of total revenues. They were 57% for fiscal year '18 and grew at 12% for the second quarter year-over-year. Our consulting revenues were 44% of total revenues and grew at 19% for the quarter year-over-year.

Turning to our second quarter fiscal -- second quarter fiscal results by division. In our Lancaster division, software revenues were up 12% year-over-year and consulting revenue in this division declined 8% year-over-year. Our Lancaster division continues to enjoy good overall revenue growth in line with seasonality with strong renewal rates. Consulting revenue was down due to, A, the timing of certain project milestones and ,B, allocation of resources to the refactoring project.

Breaking down our key software metrics for the division, 74% of revenue was from renewals, 16% from new licenses, 10% from consulting. Our renewal rates were 85% based on accounts and 93% based upon fees. Our license units of 246 were up 8% year-over-year. We added 12 new commercial companies and 10 non-profit groups. We have projects with 22 companies and four funded collaborations. Overall, we work with top 20 pharmaceutical companies and nearly 200 organizations worldwide.

A highlight in the quarter was the expansion of licenses at both the US and China FDA. As a reminder, established relationships with regulatory bodies serves as a strong business development tool for us, as regulators often move on to major pharmaceutical companies and bring positive experience with our software to them. In addition, if a regulator utilizes our software, it can encourage pharmaceutical companies to embrace modeling and simulation software as well.

We also experienced an expansion of licenses with multiple domestic Asian customers. We sell in Asia through distributors and growth in this geography is in excess of our overall growth rate. Major highlight during the quarter was the release of version 6 of DDDPlus advancing our competitive position with this important product line. We ended the quarter in Lancaster division with 41 full time employees, up from 40 in the prior quarter and up from 37 year-over-year.

Buffalo achieved 23% revenue growth year-over-year, its highest growth quarter since 2017. This performance reflects strong client demand and increased consulting resources to deliver projects. Buffalo has built a solid pipeline of new and existing clients. As I've previously mentioned, it was a good recruiting quarter for the Buffalo division, increasing our capacity to deliver projects and strategically adding resources with business development skill sets and initiating a presence in Europe. Such presence enhances our accessibility by clients, benefiting both new business development as well as project performance. We ended the quarter with 42 full time employees in our Buffalo division, up from 40 in the prior quarter and up from 37 year-over-year.

Our RTP division initiated key projects closed at the end of -- or after the first quarter, which contributed to robust 25% year-over-year revenue growth. The DILIsym RENAsym SBIR grant was approved for the initiation of Phase II, the 2019 portion of this $1.7 million aggregate grant is estimated to be approximately $900,000.

In addition, our IPFsym, USP mechanistic modeling project sponsored by a pharmaceutical company for up to approximately $2.7 million commenced during the second quarter. This platform is expected to be available for license to all pharmaceutical companies upon completion in 2021. Significantly, these projects demonstrate progress in our ability to expand into new therapeutic areas with a mechanistic modeling skill and know-how of our RTP organization. We ended the quarter with 17 full time employees at our RTP division, up from 16 in the prior quarter and up from 15 year-over-year.

Overall, this was a good quarter for Simulations Plus, with strong growth, consistent profitability and excellent progress on initiatives with future growth impact.

Let me turn the call over to John to review the detailed financial results. John?

John R. Kneisel -- Chief Financial Officer

Thanks, Shawn. Beginning on this slide, where -- the consolidated net revenues for our second quarter of fiscal year '19 were up 15.2%, approximately $1.1 million to $8.5 million compared to $7.4 million for the prior year. By division, Lancaster's revenues were 10% -- were up 10% to $5 million, Buffalo's revenues were up 22.8% to $2.3 million. In RTP, North Carolina's revenues were up 24.8% to $1.2 million. Consolidated software related revenues were up $522,000 or 12.3% and consulting service revenues were up $593,000 or 19%. We saw modest cost of sales increase this quarter of $92,000 compared to the prior year due to the growth in year-over-year employees salaries and benefits. This increase was offset by more direct contract costs, primarily CRO expenses related to contracts in our North Carolina division.

The gross profit increased 19.5% to $6.3 million, representing 73.9% gross margin in the second quarter of fiscal year '19 compared to $5.2 million or 71.2% gross margin same quarter last year. SG&A expenses were $2.8 million or 33.2% of revenue for the second quarter this fiscal year and then increased to $470,000 or 20.1% compared to 5. -- 3. -- sorry about that, $2.3 million or 31.8% of revenue in the second quarter of fiscal year '18.

The increase in SG&A expenses comes from increased licenses and commissions on sales, wage and salary increases from stock compensation, increased costs of new and full time CEO and increased FTEs and our attendant insurance and related expenses as well as higher percentage of G&A allocated from scientific personnel during the period. We also incurred higher than normal recruiting expenses during this period.

Our research and development during the period, we incurred approximately $1.3 million of R&D expenses of which $724,000 was expensed or 8.5% of revenue during the period, an increase of about $240,000 or about 49.5% compared to last year of $484,000 or 6.5% of revenue in the second quarter last year. The increase in R&D expenses was primarily a result of costs associated with scientific research activities in Lancaster.

Income from operations for the second quarter of fiscal year '19 was $2.7 million, was up $313,000 or 13% compared to $2.4 million in the year ago quarter. This was primarily a result of revenue outpacing our increases in quarterly costs. Our provision for income taxes was $596,000 with an effective tax rate of about 22.1% for the quarter, compared to a benefit of $1.1 million a year ago, which showed effective tax benefit rate of 45.7%. For those who followed SLP, you'll recall that last year we recorded a $1.5 million tax benefit in our second quarter of '18. That benefit was attributable to the new Federal Tax Act that became effective in January 1, 2018.

Deferred tax liabilities are our books recorded to reflect the -- that the company will in the future pay income taxes associated with transactions that took place in the past or in the current period. And estimated tax rate that will be in place at the time the taxes are paid is used to fund the tax liability account. When the federal government changed the tax rates as of January 1, 2018, the estimated rates we were using changed from 34% to 21%. That result didn't -- we recalculated our deferred liability and posted that difference as a one-time adjustment to income taxes in the amount of $1.5 million last year. Because we posted such a large credit last year, that's the reason our tax expense went up so much this year, and they affected both this quarter and our six-month results. That was effect of about $0.08 per share on last year's and -- effective EPS change or the difference in EPS this year. Our 22% rate this quarter is a bit lower than anticipated on the annual basis based on tax credits and other permanent differences in the calculation. We anticipate that the rate on an annual basis will be somewhere in the 23% to 24% range.

Our net income for the quarter was $2.1 million, which was a decrease of about $1.4 million. However, that included that $1.5 million tax benefit posted last year. Taking that into account, net income would have been up about $125,000 for the quarter. On a per share basis, net income was $0.12 per diluted share in the first quarter of fiscal '19, last year was $0.19 per share in the quarter, but that also included about an 8% effect from the tax benefit. EBITDA was $3.4 million in the first quarter of 2019, up 10.3% compared to $3.1 million in the quarter last year.

Turning to the six-month slides. We'll cover some high-level areas here. Our consolidated net revenues for the year for 2019 were up 11% or approximately $1.6 million to $16 million compared to $14.4 for the prior year. By division, Lancaster revenues were up $9.1 or -- to $9.3 million, Buffalo revenues were up 15.3% to $4.3 million and RTP revenues were up 11% to $2.3 million. Consolidated software and software related revenues were up $780,000 or about 10% and consulting service revenues were up $1.2 million or 18%.

Gross profit was up $1 million or 9.7% with margins slightly decreased by 0.8% to $72.5 million from $73.3 million the prior year. SG&A expenses were up 16.5% over the prior year, combination of salaries, recruiting, benefit related costs as well as licenses and commissions as we discussed earlier talking about the quarter. SG&A as a percentage of revenues year-to-date is at 34.5% down from 36% in last quarter and is coming down more in line with our annual expectations.

R&D expense as a percentage for the year is at 8.5%, it's still on the higher side, but it's expected to come back a bit more toward the 7% level year-to-date by the end of the year. One last comment on the year-to-date information relates to the tax provision. As I mentioned, with the quarter, we're expecting that rate to be somewhere in the 23.4% range. It was just under 23% on the year-to-date calculations.

Turning to the next slide, this is our view of revenue by quarter. On a quarterly basis starting in 2015 through the most recent quarter, it illustrates the seasonality of our business with third quarter typically being our strongest with a drop off in the third quarter coinciding with the typical slowdown of our clients purchasing in projects during the summer months. Our fiscal year, being at $8.31 million the last quarter, Q4 is the summertime season. Revenues in our recent quarter though reached $8.5 million, which is almost our peak performance from last year at $8.6 million.

This slide is a slide of our income from operations by quarter. Data illustrates the general track record of increases of both the year-over-year sequentially through the first to third quarters with the fourth quarter typically being the lightest of the year. In the next slide, we see similar pattern of net income with third quarter typically being the strongest. We've shaded the effects of that $1.5 million deferred tax benefit, which I discussed earlier that tends to skew the presentation without calling out that difference. As expected on the next slide, diluted earnings per share follows the same pattern and tracks with net income. Going on to EBITDA, again, EBITDA follows those same seasonal patterns with the third quarter being the highest, so EBITDA really shows the seasonality of it. Moving on to slide 16, this is our revenues by region of the world. North America being our highest area, but you can see that Asia and Europe are strongly represented and we see them as growing sources of revenue for the Company.

On slide 17 here, we provide this chart on a quarterly -- as a quarterly view of cash and cash outflows for dividends, acquisitions and other major uses of cashes -- cash and the impact on our cash balances over the last 4.5 fiscal years. Beginning with the first quarter of fiscal '15 on the far left, the blue bars on the bottom illustrate the consistent dividend payout. Beginning in fiscal year '18, the Board increased the quarterly dividend payment to $0.06 per share, up from $0.05 per share in fiscal year '17. Moving up the chart, the red bars represent cash from -- used for acquisition activity. We spent nearly $15 million over the past four to five fiscal years. Most notably on the slide has been our ability to return cash to our shareholders through consistent dividends, while at the same time being able to invest for growth through acquisitions.

We maintain a healthy balance sheet with ample amounts of cash and zero borrowed debt as we continue to increase the value of the Company. Just today, we announced the -- with our earnings release that the Board of Directors has voted to distribute another $0.06 per share quarterly dividend that will be payable May 1st. On the next slide, so -- show some of the ratios we've historically tracked on these calls, all stable, in line with historical trends and getting better as the Company continues its profitable history.

Now, I'll turn the call back to you, Shawn.

Shawn O'Connor -- Chief Executive Officer

Thank you, John. In summary, this was a strong quarter for the Company. Revenue growth overall, especially in our consulting business, was strong and came in at the high end of our historical annual organic growth range. Profitability and positive cash flow were good and we are achieving this while making investments in sales and marketing, international presence and recruiting strategies that support future accelerated growth opportunities. We're well positioned at the midpoint of our fiscal year.

We'll now open the call up to any questions that you might have.

Questions and Answers:

Cameron Donahue -- Partner and Regional Vice President

Thank you, Shawn. (Operator Instructions) We'll begin with a question by Howard Hapler (ph) . Please stand by. What are the sales and marketing initiatives designed to drive future growth?

Shawn O'Connor -- Chief Executive Officer

Well, we touched on several of them during the course of the call today. Business development resources on the software side, we've added a new employee into the sales side of the organization there. On the consulting side, hiring consultants, seniors -- more senior consultants that have business development skills and can interact with clients in terms of identifying and pursuing new business is an important component of the way the consulting business operates and we've had some success adding there and we're looking to add more into the future in terms of senior scientific staff. Very, very competitive market for these profiles and individuals, but they are critical to supplying the demand, securing the demand to feel the growth on the consulting side of the business. We're establishing some presence in Europe. The opportunity to be face-to-face with clients that are located in that region is important easing the ability to attend conferences and other networking opportunities that highlight or bring forth project opportunities and allow us to pursue them is one component of our sales and marketing initiative as well. We've completed opening up our distributor lines in Asia to the DILIsym side of our business. These are some of the examples, there's other marketing endeavors that we're trying to focus on. We're focused on presenting our combined skills, products and services to our clients and we're seeing a bit of an uptick, some examples of where some synergies are coming to reality in terms of clients that are engaging in one of our divisions services and that's leading to opening the door for another division's services as well. So looking to leverage those opportunities that have been percolating for some time there. These are examples of our investments on the sales and marketing side.

Cameron Donahue -- Partner and Regional Vice President

The next question is, with the addition of personnel to the consulting services organization, is the structure changing or evolving?

Shawn O'Connor -- Chief Executive Officer

We've made no structural or organizational changes, if that's the question. We still operate in our three division format. Consulting services are offered out of three -- each of the divisions. We try to work together as best as we can, look for opportunities, as I just referenced in terms of leveraging in the face of the client the opportunity. As we expand geographically into Europe with more staff, as we bring on more consultants, obviously, the organization needs to evolve with that in terms of its management structure and the way we operate. But I would say that at this point in time, there's no major structural changes -- organizational changes in that business.

Cameron Donahue -- Partner and Regional Vice President

And I'm not 100% clear if this was the intention of the question, but maybe just talk as far as the expectation internally as far as how the structure of software versus services that you feel the Company will look like in the next 12 to 24 months?

Shawn O'Connor -- Chief Executive Officer

Well, I think we've organized it ourself as a result of the acquisitions into the -- into three divisions and are working to identify the synergies there. I've been a believer in my past history of looking at the business not just from its divisional structure, but looking at the business from its business line structure, its portfolio of products and services and optimizing the software business and getting the synergies that exist across the entire portfolio of those products. Similarly, on the consulting side, look at the consulting business and drive toward optimizing that and I think that's something that's new that I've brought to the table here and something that we'll look to leverage as we move forward.

Cameron Donahue -- Partner and Regional Vice President

Thank you. Next question is, how is growth progress in Korea, India and China? These are all recent areas that we've added some new basically structured growth for the software sales.

Shawn O'Connor -- Chief Executive Officer

Well, we sell through to the Asian markets our software products through distributors in those regions, some of them longer-term than others. Koreans -- Korean distributor is the newest. Philippines climbing the learning curve and building a pipeline and we've had some recent success there. I referenced China, the FDA success that we had in terms of licensing more units of several of our software products into the FDA organization there, which is very leverageable in that market. China's the second largest of our markets in that region. The growth opportunity there looks very positive. Japan is the largest market. We had success during the quarter in terms of growing units in that region. That's been our strongest region historically. And on the Indian side, in the Indian market, we've had success as well. I think Asia is going to continue to grow maybe at a pace greater than our overall growth and contribute to the success of the organization going forward. One of the things I have to look for in the future is in terms of the consulting side of the business there, that's a little bit more challenging. Historically, companies of our profile have required presence there in terms of consultants that are used locally more so than reaching out to the US market and that'll be a challenge on the consulting side, but certainly the software growth in the market is moving very well.

Cameron Donahue -- Partner and Regional Vice President

Thank you. The next question, is the Buffalo Cognigen division poised to sustain double-digit revenue growth for the second half of 2019?

Shawn O'Connor -- Chief Executive Officer

Well, we certainly took a great step up here in this quarter, getting to the 23% revenue growth level. The division has typically performed in the double-digit growth range, but hasn't for a couple of quarters, the first quarter of this year and the last quarter of the last fiscal year. And I think we're challenged in terms of the capacity, our recruiting pickup here over the last six months really has contributed to providing them the resource to support growth. As I've said before, the market is very robust out there and the demand for these types of services exists. If you can go, A, secure them, B, in the right sales and marketing position to secure that business and to have the staff to deliver the projects and I think we're impacting both of those variables here in a positive way. Can it grow double-digits going forward? I would certainly hope that that will be the case going forward, it certainly has been there the history in the past and I think we've addressed at least partially some of the issues that have constrained them here in the last six months and allow them to return to a double-digit growth going forward.

Cameron Donahue -- Partner and Regional Vice President

Thank you, Shawn. The next question is for the Lancaster division, what does the consulting service pipeline look like compared to the first half of '19? I think there may be -- OK, for the second half compared to the first half?

Shawn O'Connor -- Chief Executive Officer

The pipeline is -- the opportunities in terms of the consultants to work in that area exist and where you're looking for more resources like in our Buffalo division to add to the team there to increase our capacity. The other dynamic that exists there is that we are utilizing some of those resources on the internal project called refactoring, which is a major project we've undertaken to rewrite the GastroPlus platform. And so we're balancing the two demands there. The pipeline exists, I believe that their growth in the back half of the year will be positive unlike the step down that we took in the second quarter, third and fourth quarter pipeline should support positive year-over-year growth in the second half of the year and that's where we stand.

Cameron Donahue -- Partner and Regional Vice President

Thank you. Next question is, are you looking to improve the consulting services gross margin in Cognigen over the next year?

Shawn O'Connor -- Chief Executive Officer

Well, they improved during the second quarter and stepped up quite nicely. I think the margin in the consulting businesses, as all are I'm sure aware, is going to be less than the software revenue margins that we enjoy. But consulting margins can typically be run in the 60% gross margin level and that would be our target going forward. When you are accelerating your recruiting, you encounter some additional costs as those new recruits come on-board, A, have a ramp-up period in which they integrate themselves into the practice and become or achieve the billability targets that you're looking for in the long run, there's a ramp-up timeframe there. Two, it's a marketplace in which the resources are scarce and so you get the added expense of not just some recruiting expense, but also the fact that it's a dynamic market in terms of compensation. So there's a number of pressures there that make the margin -- pressures on the margin in the consulting side of the business, but once you've climbed up and are recruiting at a steady state on an ongoing basis, those tend to be very manageable and allow you to achieve that 60% gross margin level. I'd expect that in the long run, we will be able to achieve that.

Cameron Donahue -- Partner and Regional Vice President

Thank you. The next question is, what is the status of software applications and the missile guidance and the MRI and other opportunities that we have discussed in the past?

Shawn O'Connor -- Chief Executive Officer

Yeah. Not a primary focus for the Company right now, we're still looking for ways in which to apply our data mining, our AI capabilities going forward. But in this past quarter, I would say that our progress in that regard has been minimal, we are still looking for an opportunity to leverage our capabilities, but no progress to report at this point.

Cameron Donahue -- Partner and Regional Vice President

I guess, in conjunction with that question, there's a question as far as, could you please elaborate a bit on the AI machine learning capabilities developed by SLP?

Shawn O'Connor -- Chief Executive Officer

Well, we've developed these techniques and capabilities and they're embedded in our ADMET Predictor capabilities elsewhere in the software products. AI and data mining is a hot buzzword today, but it's been something that has been technically worked for many, many years before it gained these labels in the excitements and in many regards, we are one of the more realistic leaders in that field. In the pharmaceutical industry, there's a lot of focus, a lot of investment, a lot of effort under way in that space and we're looking for the right opportunity to leverage what we do in a commercial way that can lead to real business revenues and margin and profit going forward. And I expect that we will at some point identify and move forward on that, but we're being cautious in terms of where we place our investment dollars right now.

Cameron Donahue -- Partner and Regional Vice President

Thank you. Next question, could you comment on the competitive environment, any changes that you're seeing there?

Shawn O'Connor -- Chief Executive Officer

No new news to report there in terms of any new players. We certainly on the software side have the field of small niche players that are competitors out there. The competition that's provided from the larger players Certara in terms of their Simcyp application, nothing new to report there. On the consulting side, it's a very dynamic market and we -- from a competitive point of view, certainly there are multiple bidders in terms of each opportunity that exists out there, but it's a market that there is plenty of opportunity for all of us to play in and I think we really stand out today. We need to leverage it and do a better job of leveraging it going forward. We stand out in the context of the breadth of our capabilities run from PK/PD modeling through to mechanistic modeling and PBPK modeling capabilities out there. And so from a competitive point of view, feel very confident in terms of our ability to line up against any potential competitor in the space.

Cameron Donahue -- Partner and Regional Vice President

Thank you. The next question is, what is the status of PKPlus at this point?

Shawn O'Connor -- Chief Executive Officer

PkPlus is still growing. We're adding licenses on a quarterly basis at a -- I think a good quarter in comparison to our previous quarters, but it's like -- it's growing off of a very small base. And so it'll find it's footprint out there and it's slowly growing, not a significant or material contributor to revenue at this point, but we continue to see it grow.

Cameron Donahue -- Partner and Regional Vice President

Thank you, Shawn. At this point, it looks like there is no further questions.

Shawn O'Connor -- Chief Executive Officer

Good. Well, I appreciate everyone's attention. It's been a great quarter for Simulations Plus, look forward to reporting progress at the end of the next quarter. Thanks, everyone.

Cameron Donahue -- Partner and Regional Vice President

And just as a final comment, before we close, the Company will be presenting at the Investor Conference of B. Riley on May 22nd and 23rd in Beverly Hills. And this concludes today's conference call and webinar. If you missed any part of today's presentation, the replay will be available at our website, simulations-plus.com. Thank you for joining us today.

Duration: 40 minutes

Call participants:

Cameron Donahue -- Partner and Regional Vice President

Shawn O'Connor -- Chief Executive Officer

John R. Kneisel -- Chief Financial Officer

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