Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Tavis Mccourt – Morgan, Keegan.
Tavis Mccourt – Morgan, Keegan
Can you elaborate on the gross margin commentary and where you see that going? Is there a currency impact to that gross margin as well or is it all just the large deals that come in at lower gross margin levels?
Theodore Schrafft
The pressure on the gross margin in the quarter is two elements. We did have a 40 basis point drop. Some of that certainly was foreign exchange impacted, no doubt about it. But my point in the comments were to say that we have gotten and continue to get, I know we actually closed another significant deal in the third quarter, and we continue to build our pipeline of what I call these large strategic global deals, again, really taking advantage of our global presence and all of our capabilities.
We see a continuing good trend there and those deals, certainly to get those deals we have to be competitively priced, and we are, and in return for competitive pricing we ask and get term and commit from these customers. I think that will put some element of pressure on gross margin but they're very, very accretive in the operating margin line.
We've been building momentum on those deals. I think we talked about one on the call last quarter, so we're very, very focused on both lines, but the operating margin is certainly the line that we're really driving and these deals are going to help us on. We'll take them all day long is the bottom line.
Tavis Mccourt – Morgan, Keegan
You made some pretty significant sales and marketing investments in the first part of this year. That line item came down quite a bit in Q3. I suspect currency helped you there, but can you talk about the investment plans for sales and marketing going forward?
Theodore Schrafft
The sales and marketing expense did drop from Q2. That basically put the commission plans in place. They're usage based commission plans and we'll talk to you more about this movement towards subscription based pricing and revenue under commitment that we're working so hard to go get and we're excited about.
Our commission plan also follows the seasonalities. Because it's usage it kind of follows the seasonality part of our business so we have invested in sales and marketing and we are going to continue to invest in sales and marketing because we are very, very strong believers of our strategy, our opportunity. So that has not changed.
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