Arsene Wenger was frustrated to see his side surrender a two-goal lead in Germany - but insists their Champions League performance at Schalke shows they are beginning to get back to their best.
Arsenal have struggled for form in recent weeks and suffered a surprise 2-0 loss to the Bundesliga side when the teams met two weeks ago.
Arsenal looked set to exact some revenge when, against the run of play, they went two goals ahead thanks to Theo Walcott and Olivier Giroud.
However, Klaas Jan Huntelaar reduced the deficit in first-half stoppage time and the Gunners saw victory snatched from their grasp when Jefferson Farfan's strike deflected in off Thomas Vermaelen.
"For us it was important first of all not to lose and if possible to win," Wenger said afterwards.
"We managed the first part, not the second one.
"I felt that overall we played reasonably well, but we dropped physically in the second half and the regret we have is that overall we conceded the goal just before half-time and we missed a chance at the end of the game.
"I think the two, of course, have a big impact on the result overall. Schalke never gave up and worked hard.
"I believe we have shown a good response to Saturday's game and you feel the team is getting better.
"I think in one month, if we continue to develop, we will be there."
Schalke remain top of Group B after last night's result, staying a point ahead of Arsenal and two ahead of third-place Olympiacos.
Arsenal next face group strugglers Montpellier at home in their next game, where they could secure qualification.
"The group is open," Wenger said. "I believe we are of course in a position where you want to win our home game.
"If we win, we have a 50% chance to be through because Schalke plays Olympiacos here. They are in a position where they have absolutely to win that game as well.
"It will of course depend on our result first against Montpellier and then we will see what happens here.
"It could go to last game; we could, with luck, do it in the next game. Anyway, we are in a position where we must win against Montpellier."
Huub Stevens' side could also secure qualification in matchday five after a game in which Schalke responded well to going behind.
"I think we started really good," the German side's manager said.
"The first 17 minutes were probably the best that we played this season.
"Then we had a dreadful 24 minutes, which of course was a very big disappointment for us.
"We had to catch up the game and luckily we made it 2-1 before half-time, which was really good. It gave us confidence.
"Then we managed to equalise to make it 2-2 and overall I think this is a just result."
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