Question-and-Answer Session
Operator
Thank you very much, sir. Our first question comes from Jonathan Ho with William Blair.
Jonathan Ho - William Blair & Co.
Morning, guys. Great results. Can you talk a little bit about the gross margins and whether there was any impact to that line given that you have higher Defense revenue and sort of our expectations for 59% in the second quarter? Just give us a little bit of color on that.
Robert E. Hult
Sure, be happy to Jonathan. I will stay with our guidance for the second quarter. So, I think I made that clear what the expectations are for guidance in Q2, which is approximately our long-term business model. You ask specifically about our ACS business and its Defense portion inside of it, I think simply I would state that it performed according to our plan. Ties very nicely into the race that we’ve been performing in that 59% range. We were only hurting in Q1 by the revenue shortfall in our Visage Imaging business which is software-based; comes with very high gross margins. So, the simple math on why we didn’t hit 59% in Q1 is we missed the revenue target for VI in Q1. ACS performed right on plan.
Jonathan Ho - William Blair & Co.
Great. And just getting into VI a little bit. Can you talk about your expectations there for sort of the rest of the year? And if VI has been sequentially declining so far in the past couple of quarters and just wanted to get a sense of whether you see that trend reversing or the pipeline conversion? Has that been pushed out or it’s just a situation where we’ve persist a little bit?
Mark Aslett
Hi Jonathan. It’s Mark. If you look at, I think, last quarter, the revenues in VI were actually up sequentially. The challenge this quarter is, I think, we have seen a somewhat of a deterioration in the market resulting in longer sales cycles. We believe that that’s really due to the overall economy. So, we don’t expect that that’s going to rebound anytime soon.
Jonathan Ho - William Blair & Co.
Okay. My last question is on SG&A. Can you kind of break out sort of the components of that decline between the prior quarter and this quarter in terms of the SG&A?
Robert E. Hult
We don’t normally do that, Jonathan. We only give you an Op Ex number in terms of forward guidance.
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