Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from the line of Mark Kelleher from Canaccord Adams, your line is opened.
Mark Kelleher - Canaccord Adams
Thanks. Congratulations, navigating a difficult environment out there.
David Sommers
Thank you, Mark.
Mark Kelleher - Canaccord Adams
First question, the gross margin seems to be very strong. Can you tell us what your pricing power is out there; tell us about the competitive environment. Who are you winning against and how long do you think that pricing advantage can stay?
David Sommers
Well Mark, we don’t really talk in an open forum about pricing power. We did as you know, I think raise prices in a small amount at the beginning of this fiscal year when we reset our product list, our price list for our products and integrated product lines.
Pricing and discounting in customer situations, particularly with our situation where we have long established relationships with our major customers, is not really so much a competitive issue as it is an issue of delivering price to value for our customers. So, we don’t have an awful lot of head-to-head price competition, because that’s not the way many of our deals, most of our deals work.
There are always competitive situations in which that what I said is generally not true in specific circumstances, but I think you can take away from this that we are not seeing pricing pressure, but you should not take away from this that we feel we have substantial pricing power to raise prices for our customers.
Mark Kelleher - Canaccord Adams
Alright and on the balance sheet, can you just talk about why the receivables jumped up a bit?
David Sommers
Yes. There can be two dynamics going on there: one, in the third quarter of every year, it’s of course the December year-end for many customers and that is often the time when many of our customers synchronize their maintenance renewals. So, they make the renewals occur at the beginning of their budget year.
When that happens and we get a renewal in the end of December, we of course bill it and receivables go up, but revenue does not, because the revenue occurs ratably over typically the next year. So, that really skews DSO in every Q3 and as I mentioned a year ago, DSO was 60 days, so it’s comparable to where it is today.
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