Question-and-Answer Session
Operator
(Operator Instructions)
Our first question comes from the line of Min Park with Goldman Sachs. Please go ahead with your question.
Min Park - Goldman Sachs
Yes, thank you. Just a couple of quick questions please. First, last quarter, you noted that pricing was getting a bit more aggressive in Americas, but your operating margin in the region came in pretty solid. And then I guess this quarter you are suggesting that as pricing continues, that it might actually hurt your consolidated gross margin. Is it actually getting worse or is it that you are having less leverage to mitigate the similar kind of pricing pressure you saw last quarter?
Jeff Howells
Min, this is Jeff. I'll start with that. And I think what Bob was saying is that in May, especially North America, large deals became even more competitive than we had seen. So, as we exit the quarter, and entered this new quarter, there is more aggressive pricing than we had seen in quite a while.
Min Park - Goldman Sachs
Okay. And then can you just help us understand why your operating expenses are outpacing your revenue growth? Or you are just making more incremental investments in Europe apart from the Scribona acquisition?
Jeff Howells
Well, as a percentage of sales, it has gone up, as we have invested in various things, primarily in the Americas versus Europe. Not that Europe didn't go up as a percentage of sales. One, because of the $4 million in incremental acquisition costs, but some select investments because that market is proving very strong for us. Ex-Israel, we grew 2% year-over-year in local currencies. And we think there is pretty good opportunity ahead, so we are making selective investments. But more of the dollar increase relates to what we've been spending over the last three or four quarters in the Americas.
Min Park - Goldman Sachs
Great. Thank you very much.
Bob Dutkowsky
And Min, I think it's important to note, the company made a lot of investments in Europe over the last three or four years, and so we had some catching up to do in the Americas in terms of modernized systems, both the one desk system that we talk about as well as the some back-office accounting systems.
And we also have invested heavily in our sales coverage model to try to achieve better performance, better penetration and better growth in that strategic SMB market. And in the quarter that we just reported, we grew SMB at over 10% in the quarter. So the investments are strong, but they're beginning to yield the results.
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