Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Steve O’Brien – JP Morgan.
Steve O’Brien – JP Morgan
I just wanted to touch on the top line guidance for next quarter, pipeline was up 24%, deferred revenue up $1.5 million quarter-over-quarter, and looks like accounts receivable and inventory you suggest you're gearing up for stronger demand heading into the next fiscal year. So how much of guidance should we attribute to seasonality and how much to some element of conservatism here?
Michael E. Healy
Typically the September quarter does have a drop-off in orders. We experienced the same last quarter. Because everyone is pushing through the quarter, through the end of the fiscal year, partners and sales guys, to get on the podium for the end of the year. So we do expect a drop-off in orders.
Our guidance, we have taken all our metrics into consideration, including our roll up from the sales organization and look at all our external factors and come up with our guidance and that's what we reflect in the $30.0 million to $35.0 million number we gave you.
I wouldn't say it's any more conservative or aggressive than any other quarter we've given guidance.
Steve O’Brien – JP Morgan
So on that same topic, how did the quarter progress seasonally in the fourth quarter, or between the three months, and then we're almost halfway Q1 here, how does Q1 typically shake out on a month-to-month basis? Is it any different from other quarters, like Q4?
John W. Combs
Let me tell you first about Q4. Usually, in Q4, we get about half our business in the first two months of a quarter and the other 50% in the last half. The June quarter was more back-end loaded than prior quarters in the past. Looking to this quarter, July was a stronger month than was April, which was a pleasant surprise for us. But that's where we sit as we are today.
Michael E. Healy
I think the only thing I forgot to mention is in Europe especially it's very choppy. In July and August everyone is on vacation so you really don't see much progress in Europe until you get back and everyone's back from holiday in September. But typically from that side of the business, most of the orders come in in the month of September.
Steve O’Brien – JP Morgan
Can I just follow-up on the gross margin in product this quarter. It seemed like there was some promotional activities that led to the sequential decline. Do you expect those kind of promotional activities to continue and can you help us understand whether they were key factors that drove the more back-end loaded June that we saw.
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