Question-and-Answer Session
Operator
(Operator instructions) And your first question comes from the line of Nathan Schneiderman.
Nathan Schneiderman – Roth Capital Partners LLC
Hi Rob and Tim, thanks very much for taking my questions. Congratulation, nice job on the quarter, great results. Handful of questions for you, the consumer business finally cash flow positive every single quarter, which is excellent news. Do you believe that, that business will remain cash flow positive on a monthly basis going forward, and then can you share with your medium-term and longer-term views on operating margin for this business, where do you think it logically goes to?
Robert LoCascio
Yes, we want to keep it, I think we turned a quarter on in Q3 every month generating cash and we want to maintain that going forward. So, yes, we will continue on generating cash in growing that business. And the operating margins are pretty much equal to the operating margins the quarter, so in the 70s percent gross margins. So, we are going to maintain and we are not adding a tremendous amount of headcount right now to the business. So, we will just sort of continue growing it out, and we are doing I think really well on the marketing side right now and getting real traction in the market.
Nathan Schneiderman – Roth Capital Partners LLC
Your gross margin, it sounds like will be similar to your main business, but what do you think on the operating margin side for the consumer business group?
Tim Bixby
It will fund it near, you know, keep it cash flow positive, but it’s – see what they did operating margins, because we wanted he taking the money and putting it back into the business and growing the business where we see opportunities. So, I would just say single digits for now.
Nathan Schneiderman – Roth Capital Partners LLC
Okay. And then, overall on operating margin, you had obviously excellent results at close to 24% pro forma, I think that may have been the best results I have ever seen, at least (inaudible) what are your thoughts on operating margin from here as you continue to see the revenue increase sequentially, do you continue to get some sequential improvements in operating margin, or will investments take that down somewhat?
Robert LoCascio
We have begun to, I think using headcount is a good proxy, as we have begun to expand our investment in people. That’s obviously where you are making long-term commitments as opposed to shorter-term sales and marketing investments. So, we have begun that process and we see headcount expanding going forward in areas where there is ROI, where there is people building products. So, you are going to see it in sales and marketing and product and R&D. So, we will still expect to get leverage out of the cost of goods line and we will bit of leverage on the G&A line. So, I think in terms of how all of that will net out in the margins, I would expect slightly less improvement over the next couple of quarters than we have seen in the past couple of quarters, because we have seen some nice surges in that as a result of revenue growth and fairly flat spending. But that being said, our business, if you get strong continued revenue growth, it does show up in the margins.
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