Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from David Koning with Robert W. Baird.
David Koning – Robert W. Baird & Co., Inc.
My question is revenue growth decelerated this quarter and certainly it was the toughest comp in quite a while. The last year I guess Q3 2007 growth 15% organic was certainly a tough comp. Do you expect organic growth to resume in the double digit range over the next several quarters, giving the comps start to ease again a little bit?
Kevin D. Williams
At this point, David, I don’t know that I’m prepared to say in the next several quarters. I think we will finish up the fiscal year with about double digit top line growth and right at double digit organic growth. We’re still 12% year-to-date organic, so I think we’ll finish out the year, obviously, with more than double digit organic growth. But like I said, we’re right in the middle of next year’s budget and it’s a little tough for us to estimate what the organic growth is going to be for next year, especially with the challenges that Jack and I both mentioned on the predictability of software and hardware sales, at this time.
David Koning – Robert W. Baird & Co., Inc.
And I guess that the most important business, still the support and service business growing very nicely. The margins were down, what 260 basis points or something like that year-over-year in that business. Was that a function, mainly, of a touch comp and we get back to kind of normal slight margin progression? Maybe you could talk a little about why the gross margin was down year-over-year.
Kevin D. Williams
Well, there was a couple of key factors in there, David, and one of them I mentioned in my prepared comment on the tough comps on one-time deconversion fees in our Outlink division. If you look back over the last 2+ years that I went back and looked, our average one-time deconversion fees in a given quarter averages between $1 million-$2 million and actually this quarter, last year was slightly higher than that and the quarter we just finished, the one-time deconversion fees were basically nonexistent. So that had about 150 basis points of that.
Then we also had some large Passport, our ATM customers that renewed contracts in the first half of the fiscal year, and obviously there is huge competition in that market, so it’s kind of a good news/bad news. We resigned all the large customers for another five years, but it was obviously at a lower per-transaction-fee, which is going to have an impact on the margins which we saw in this quarter.
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