Welcome to the Skillsoft Corp. first quarter 2023 financial results conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. I will now turn the conference over to Eric Boyer, SVP of Investor Relations. Thank you, sir. You may begin.
Good afternoon, and welcome to Skillsoft's first quarter fiscal 2023 earnings call. After the market closed, we issued our Q1 earnings press release and posted supplemental materials to the Skillsoft Investor Relations website. Today's call will contain forward-looking statements about the company's business outlook and expectations, including statements concerning financial and business trends, our expected future business and financial performance, financial condition and outlook. These forward-looking statements and all statements that are not historical facts reflect management's beliefs and predictions as of today and therefore are subject to risks and uncertainties that could cause actual results to differ materially from expectations. For a discussion of the material risks and other important factors that could affect our actual results, please refer to the risks described in the safe harbor discussion found in the company's SEC filings.
During the call, we will also discuss certain non-GAAP financial measures which are not prepared in accordance with generally accepted accounting principles. GAAP requires accounting periods before and after the merger and de-SPAC on June 11, 2021 to be separated into predecessor and successor periods to reflect the change in ownership and lack of comparability between periods due to different ownership and investment bases. In addition, Global Knowledge activity is only reflected in the GAAP financial statements after June 11. References on this call to combined GAAP results reflect the combination of the predecessor period before June 11 that excludes Global Knowledge with the successor period after June 11.
For all non-GAAP measures in the supplemental materials and in today's commentary, the company is providing normalized results as if Skillsoft and Global Knowledge had been combined for all periods presented, which we believe is useful to investors to show the trends of the go-forward company. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures, those as well as how we define these metrics and other metrics, is included in our earnings press release, which has been furnished to the SEC and is also available on our website. After our prepared remarks, Jeff Tarr, CEO, and Gary Ferrera, CFO, will be available to take questions. With that, it's my pleasure to turn the call over to Jeff.
Thanks, Eric. Good afternoon, and thank you for joining us. I'm very pleased to report that in Q1, we grew bookings in our Skillsoft Content segment by 22%. This is the fourth consecutive quarter of growth in this segment and the first quarter of double-digit growth under the leadership of our new management team, which stepped in with our return to public markets a year ago. It's particularly noteworthy that it follows seven straight years of declines. These results are due to new organically developed and acquired capabilities, early success in our go-to-market strategy, and strong demand for the transformative learning experiences we offer organizations and their employees. The Skillsoft Content segment, which includes the Percipio platform, is almost entirely subscription in nature and high margin, and we expect it to be the main driver of future value creation for the company.
The strength of the content segment was offset in the quarter by a decline in our lower margin transactional instructor-led training business and somewhat due to a loss of a large customer for the company's payroll solution. On this call, I'll discuss the acquisition of Codecademy, which greatly enhances our tech and dev offering and a number of important product enhancements made in the quarter. Finally, I'll talk to actions we are taking to improve our Global Knowledge instructor-led training business and our longer-term strategy to further transition the business to subscription revenue. Let's start with the Codecademy acquisition, which closed in April. This combination nearly doubles our reach, creating one of the world's largest communities of learners, totaling more than 90 million people across more than 160 countries.
When combined with Skillsoft's existing tech and dev offerings, enterprise customer reach, and Percipio learning platform, we have created an industry leader in tech and dev and an important driver of future growth. We see a long runway for cross-selling Codecademy into our large enterprise customer base. We've already completed a light integration of the Codecademy platform into Percipio. We've also developed sales enablement programs and have begun working with more than 50 enterprise customers who have expressed interest in Codecademy, including some of the world's largest banks, healthcare companies, and professional services firms. Moving on to product enhancements in the quarter. As employees make new demands on their employers, labor and skills gaps have emerged as the number one threat to business, according to Fortune's recently released survey of Fortune 500 CEOs. This threat ranked higher than inflation, recession, geopolitics, and cybersecurity.
Skillsoft is uniquely positioned to help organizations address this enormous challenge. While others approach learning from a primarily consumer perspective, we've long operated at the intersection of both the organization and its employees, propelling organizations and people to grow together through transformative learning experiences. Experiences that are absorbing, trusted, connected, and that deliver exponential results to our 17,000 business customers and community of 90 million learners. Our recent product enhancements advance these objectives, contributing to increases in customers, learners, and usage. Let me share a few notable examples. As already mentioned, we recently completed the first phase of the technical integration of Codecademy into Percipio, our immersive AI-driven learning platform. This is an important enabler to cross-selling Codecademy to our enterprise customers and to helping them address critical skills gaps in programming and data science.
As we advance our integration, we are blending Skillsoft micro videos, Codecademy hands-on learning, the coaching solution we acquired with Pluma, and instructor-led training from Global Knowledge to create more absorbing and immersive learning journeys. During the quarter, we also launched skills benchmarks, which use objective standards to efficiently profile learners' knowledge in particular areas and recommend personalized AI-curated learning journeys. By giving both the organization and the learner a clear understanding of the point of departure from a skills perspective and a clear path forward, we deliver an exponential return on investment. We've already released 125 skills benchmarks and expect to launch 500 by year-end. We've also made our transformative learning experiences more absorbing with gamification features, including our recently launched digital flashcards that reinforce learning and recall on the go.
We've made our learning experiences more connected with new social features, including the addition of shared playlists. We've kept a sharp focus on enhancing customer ROI with the addition of goals and reminders, propelling organizations and their learners forward towards a set of shared learning objectives. These new features, combined with a $120 million investment in new content over the last four years, content that's trusted and designed for the way people learn online, have contributed to the growth of our subscription business. Our migration to Percipio has also been a big driver of this transition to growth, lifting our content dollar retention rate above 101%, a 10 percentage point increase over last year.
I'm proud that we're winning more new major accounts, including PayPal and Saks in Q1, and that we're seeing a number of encouraging metrics, including 31% growth in new business, a 13% increase in new logos, and a 16% increase in average deal size. In Q1, our strong subscription growth was offset by declines in Global Knowledge. Global Knowledge is transactional in nature and more sensitive to macroeconomic headwinds, including customer investment in new major IT projects, investment from our partners in training their customers, and our ability to maintain full staffing in entry-level inside sales. It's also lower margin and has lower impact on adjusted EBITDA. We are working on initiatives that we believe will help improve the performance of this segment in the back half of the year.
For example, we've launched new products and initiatives with our technology partners to train their customers, supplemented hard-to-fill inside sales positions with outside resources, and implemented targeted increases in go-to-market spend. We're also taking important steps to shift this transactional revenue to our higher-margin subscription offerings, consistent with our longer-term strategy. We're embedding instructor-led training into subscriptions and cross-selling both Skillsoft and Codecademy to Global Knowledge customers. An exciting example is a recently launched subscription that offers comprehensive training on a wide range of Microsoft products, such as Azure and Dynamics, combined with important competencies such as Agile and DevOps. We've also been cross-training a subset of Global Knowledge salespeople to sell both Skillsoft and Codecademy subscriptions. We believe proactively increasing our percentage of subscription revenue is the right strategic decision that will accrete to growth and margin and create a more valuable company.
Before I turn it over to Gary, I want to briefly speak about our engagement with two great causes that align with our deep commitment to opening doors to new possibilities through learning. We recently announced an initiative with iamtheCODE, whose mission is to train 1 million young women and girls in marginalized communities to code by 2030. iamtheCODE will be launching its digital learning platform powered by Skillsoft's Percipio in some of Africa's largest refugee camps, where tens of thousands will have access to the curriculum. We're also partnering with our long-standing customer, Adecco, to help train Ukrainian refugees in much-needed soft skills so that they can find new jobs as they rebuild their lives. We're proud to be a partner with these great causes.
In summary, we're pleased with the progress we've made putting our higher-margin content subscription business on a solid growth trajectory. We're committed to improving the performance of Global Knowledge and will accelerate our transition towards even more subscription revenue for the long term. With that, I'll now turn the call over to Gary.
Thanks, Jeff. I will now begin with a summary of our Q1 results before turning to our thoughts on the remainder of the year. As I describe our results, they will be presented as if Skillsoft and Global Knowledge had been combined and their fiscal quarters had been aligned to end on January 31, 2021. In addition, for comparability, the results that I describe will include approximately one month of Codecademy in both Q1 FY 2023 and Q1 FY 2022. Bookings for the total company for the first quarter were $125 million, down 5% compared to the prior year. Bookings were flat year-over-year when excluding the SumTotal segment. This was driven by significant growth in the content segment of 22%, offset by a 15% decline in the Global Knowledge segment, which is the larger of the two segments in Q1.
Turning to revenue, combined GAAP revenue was $164 million in the quarter. Adjusted revenue in the quarter was $170 million, up 1% over the prior year. As a reminder, our outlook is based on adjusted gross revenue. You will notice that this quarter, as with Q4, there is a much smaller difference between adjusted revenue and GAAP revenue. This relates to our adoption of a new accounting standard, ASU 2021-08, Accounting for Contract Assets and Contract Liabilities. Non-GAAP revenue adjustments are expected to be significantly smaller due to this change. Our GAAP net loss was $22 million for the quarter. Q1 adjusted EBITDA was $33 million, down $4 million, a decrease of 12% compared to last year. Adjusted EBITDA margin for the quarter was 19%.
As I mentioned on the last call, when comparing adjusted EBITDA year-over-year, you need to also consider the increases in public company costs as we move through the first full year as a public company. In addition, Q1 adjusted EBITDA and margins significantly outperformed the expectations we provided on our last call. This was partially due to slightly higher revenue than anticipated, but primarily driven by the fact that our higher-margin content segment outperformed expectations while the lower-margin Global Knowledge segment underperformed expectations. Public company costs and hiring also ramped more slowly than anticipated in the first quarter. We ended the quarter with $76 million in cash versus $155 million at year-end. The decrease in cash balance was due to the acquisition of Codecademy at the beginning of the quarter, as well as the $47 million decrease in borrowings on our accounts receivable facility.
At quarter end, net leverage was 4.1x due to the lower cash balance, and EBITDA from this quarter was below prior year Q1 EBITDA due to increased public company costs as well as the inclusion of the Codecademy acquisition. Let's now move to the individual segments. Bookings for the content segment in Q1 were $51 million, an increase of $9 million or 22% year-over-year. This growth was driven by contributions from the Pluma acquisition, new customers, and DRR or dollar retention rate of 101% versus 91% in the year ago period. Codecademy performed as expected with bookings growth of 24%. We are also very encouraged by the pipeline that has been built within our enterprise customer base since our acquisition of Codecademy in early April.
Adjusted revenue for Skillsoft content in Q1 was $90 million, up $5 million or 5% year-over-year. This increase was driven by new business and growth in prior year bookings. Bookings for Global Knowledge in Q1 were $56 million, a decrease of $10 million or 15% year-over-year. This decline was due to its more transactional nature and its greater sensitivity to macroeconomic headwinds, including investment levels in IT spending and open sales positions due to the tight labor market. Q1 adjusted revenue for Global Knowledge was $51 million, a decrease of $3 million or 6% year-over-year. The decline was largely due to lower in-quarter bookings, which typically convert to revenue within two quarters. Now turning to SumTotal. Q1 bookings were $19 million, a decrease of $7 million or 26%, due mainly to a large contract loss in the legacy payroll business.
Adjusted revenue for the quarter was $29 million, flat year-over-year. In terms of outlook, we continue to feel good about our content subscription segment performing well throughout the remainder of the year. However, we are now tracking towards the low end of our bookings and revenue outlook due to the primarily transactional Global Knowledge segment, which is starting off the year slower than planned. We are taking actions on multiple fronts that we believe can positively impact the second half of the year. If the macro environment worsens or these efforts do not take hold, Global Knowledge could further weigh on the overall bookings and revenue outlook for the year. However, we are also taking actions to deliver our adjusted EBITDA outlook of approximately $167 million, even if Global Knowledge does not see improving results in the second half.
This is in part aided by the strength within our higher-margin content business and Global Knowledge being our lowest margin business and therefore having a smaller impact on total company profitability. Now focusing on the more immediate future. While we are very pleased with the 22% growth in the content segment in Q1, it is by far the smallest quarter of the year for content bookings. We do not anticipate recording that level of percentage growth as we continue throughout the year.
In addition, Q2 last year was our strongest growth quarter, with total bookings growth of 18% and content bookings growth of 9%, making it a tough comp. More specifically for Q2, we would expect bookings and revenue to approximate or be slightly down to prior year as the continued growth in the content segment in Q2 is not expected to make up for the near-term decline in Global Knowledge segment. We expect EBITDA to be up on a sequential basis from Q1 fiscal year 2023, with margins approximating 20%. With that, I'll turn it back over to Jeff.
Thank you, Gary. Before opening the call for questions, I'd like to take a moment to thank our dedicated team members. Bringing a company public, forming a new management team, completing three acquisitions, and returning our subscription business to growth has required tremendous dedication and sacrifice from our more than 3,000 employees. With that, operator, please open the call for questions.
Thank you, sir. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing any star keys. One moment, please, while we poll for any questions. Our first question comes from the line of Raimo Lenschow with Barclays. Please proceed with your question.
Thank you. Couple of questions, if I may. First, Jeff, it's good to see the progress in content, where we get probably most of the questions from investors will be more on the Global Knowledge side, and SumTotal. Can you speak a little bit to, I know it's transaction-focused, but, you know, since we're going back, like some companies in our space have said there's like no impact, and there's a little bit impact, there's some other impact and little bit of impact in Europe. You're showing a little bit more already. Could you speak to that, like in terms of how that's kind of showing up for you? That's the first question. Second question is on SumTotal. Obviously, that was kind of something that kind of impacted, you know, that loss of the one contract impacted the quarter.
What's the confidence in terms of like holding the line here for the rest of the year? Then the third question is on Codecademy. You talked about a little bit around the cross-sell opportunity into the enterprise space. Could you speak to that in terms of like how clients are taking that up? Is that like a blanket contract to enable people? And what's the cadence in terms of uptake that you're expecting there? Sorry for the three questions, but thank you.
Okay, Raimo, that's great. Thank you. First of all, Global Knowledge is, as I said, a transactional business. We sell seats in virtual classes and in actual physical classrooms. I think I understood your question to be how does the macro affect Global Knowledge? It's in a few ways. First of all, Global Knowledge is sold in bulk when customers undertake new big IT projects. If new big IT projects start, that's when you need to start training your employees. When those get moved to the right by customers, purchases of Global Knowledge slow down. Secondly, we help our large partners or the largest IT hardware and software vendors in the world train their customers. When their growth slows, their spending on training their customers slows.
Finally, this is a business that has more exposure to Europe relative to the rest of our business, and that shows up both in demand and in Forex impact. That's why we believe we got off to a slow start in this business. As I mentioned, there is the fact that we've had a harder time maintaining full staffing levels in our inside sales organization. Those jobs are just harder to fill in this environment, and we're taking action to supplement that by both ramping up our recruiting and engaged a couple of outsourced services firms to help us with that, and we're launching a number of new products with our customers to again ramp Global Knowledge in the back half. Your second question was on SumTotal.
SumTotal, as we've said in the past, about 80% of SumTotal historically, at least last year, is the Learning Management System or LMS business. That part of the business is performing well and continues to perform well. Last year, 20% of the business was in legacy human capital management modules, payroll being one of them, time management being another. Those aren't core to the Learning Management System part of the business. They're subscale relative to competitors in that space. We lost one large customer that takes that percentage of the business down from about 20% down to about 15%. That helps you size, you know, the pressure that we could see over time. That pressure would show up in the legacy business.
The Learning Management, the LMS business is actually quite strong. Your final question was on Codecademy and the cross-sell opportunity and how we're selling it. We are selling Codecademy for business. In terms of it's an add-on to our subscription product, so it's at an additional charge. It addresses really critical skills gaps in the enterprise in the area of data science and coding. While it's early, at the end of the quarter, we were only one month in, we're seeing really strong interest from our customers in the Codecademy offering as we expected.
Okay, perfect. Very clear. Thanks, Jeff.
Thank you very much.
Thank you. Our next question comes from the line of Robert Simmons with D.A. Davidson. Please proceed with your question.
Hey, thanks for taking the question. I guess first off, you sort of answered this, but where would you say the Global Knowledge regions was focused? You said, there was European exposure for sure, but was there also industry? And then, what is your exposure directly to the war impacted areas?
Yeah. First of all, I can tell you we're not impacted significantly directly by the war. We really have negligible exposure to Ukraine and Russia. It's more in Europe about Forex and the economy in general. Globally, it's really just about you know, some of the pressure we've all seen as some of the large hardware and software vendors have reported, that we're just not seeing as much growth as we were seeing in IT spending. I think the other key factor to keep in mind is the first half was very strong in Global Knowledge last year. We had a really strong bounce back from COVID. We also believe in hindsight, benefited from some delayed spending in IT as the world started to open back up.
Really tough comparison the first half in Global Knowledge.
Got it. Where are you in the process of filling out some of the kind of executive or kind of high-level roles that you need to as a public company? You said that some of the hiring have been delayed in the quarter. Are you substantially done with the kind of the most important hires that you need to make?
I think you're asking. Are you asking about leadership team hires?
Yeah, that kind of thing.
Yeah, yeah. I feel great about our leadership team. That was a key effort in the first phase of the new Skillsoft, staffing that leadership team, and that team is now working really well together to grow the business. I think you see the impact of that on the subscription business, which is really performing very strongly. It's the highest margin part of our business. It's where we've placed a lot of focus because we see it as the most important part of our future. Not that the other components aren't important, but we are trying to migrate the business to subscriptions. As we talked about with Global Knowledge, we see we've been moving some of that content into subscription offerings.
We've been cross-selling subscriptions and that is the result of that, the leadership team that we put in place and the people that they've in turn hired. Our 3,000 team members across the organization that are working really hard to grow this business.
Yeah, Robert, the hiring we were talking about was the inside sales team and people like that, where it was slower, and we hadn't been on focus.
Yeah, it's very focused. It's the inside sales for Global Knowledge in particular.
Got it. With your Workday adjustment, how quickly do you expect that cohort of legacy customers to migrate to Percipio? Also, how big is it?
You know, in terms of Workday, they're an important learning management system provider and a human capital management system provider. Having that connector in general availability is really important to our customers. In terms of the migration to Percipio, we feel really good about the progress. I think you see that in the retention rate that's now over 100%. We've got approximately 10% of our revenue base sitting on Skillport. What we're actually seeing is the retention rates on Skillport are way up. The reason for that is the customers who are still on Skillport are really sticky. I mean, these are customers who in many cases have really deep integrations into their software. They are resellers, they're government customers, and so they're gonna take a little longer to move.
As you can see, it's not holding back our dollar retention rates materially as it had in past years with DRR up 10 percentage points year-over-year.
Got it. Great. Thank you very much.
Thanks, Robert. Thank you. As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the queue. You may press star two if you'd like to remove your question from the queue. Our next question comes from the line of Raj Sharma with B. Riley. Please proceed with your question.
Hi. Thank you for taking my questions. Can we go back to the Global Knowledge decline in revenues year-over-year and sort of the outlook is impacting your guidance. Is this COVID pandemic related or is it sort of any economic slowdown here or is this just one-off a project that didn't come through? Then, if you can give more color on that, I know you said that it industries or geographies were equally impacted or. Also how are you feeling confident that you know, that you would be able to reverse this on Global Knowledge declining, then I have a couple more questions.
Okay, super. Thank you. In terms of quantifying, Raj, how much of the Global Knowledge shortfall is macro, we've quantified it as about 50% macro, and that's multiple projects. That's not just one large project. About 50% of it, we believe is due to staffing in our inside sales organization. Logically, the staffing piece of it is easier to address. The economy is obviously not in our control, although we are working to launch new products with partners that are better suited to the market that we're in today. In terms of industry geography, last year our business in Europe delivered very strong growth in GK as it bounced back from COVID.
This year we're not seeing Europe as a driver of growth, at least so far in the year. That's where we see the single biggest change in trend. In terms of confidence going forward, I'm confident that we're gonna be able to staff up the inside sales organization and supplement that with third-party resource. I have less visibility into IT spending, customer spending, and so that's why we're pointing people to the lower end of our guidance.
Got it. Then going to the Skillsoft part and the content, was there organic growth? I know that includes one month of Codecademy. I wanted to understand if you were not going to break out the Codecademy revenues going forward, and they are gonna be lumped in content. Is that sort of the right way to look at the business? Just want to understand the organic growth versus the additions from Codecademy.
Yeah. The addition from Codecademy was minimal and it's not even a full month. So we're talking less than $1 million in the numbers. When you look at the pro forma numbers, it's growing from that by 24%, but its impact in the content business, that 22% would basically be 22% whether Codecademy was in there or not.
Right. Are you gonna break out the Codecademy numbers going forward or are they gonna be lumped into?
The plan is to have it in content. We'll give color when it makes sense, but the way it's being sold, everything, it's just part of the content business.
Great. The last part I want to understand the engagement of the platform, engagement levels of the Percipio platform. Have they changed? I see that the retention rates are higher. I want to understand the engagement. Also, on the digital adoption by federal agencies, where is that tracking with your FedRAMP certification last quarter?
First of all, we are seeing increases in usage on the platform. This quarter was an all-time high in terms of usage on Percipio, and that's to be expected. It's a very high engagement platform, and we continue to add features and functionality. One of the metrics I'm super pleased with is the number of blockchain-based digital badges that we've issued. It's pushing up against 30 million blockchain-based digital badges. That's a huge number and really important because those digital badges are transferable. They're portable. They move with the learner. We feel really good about the usage and the uptake in Percipio. The second part of your question, if you could just remind me what that...
what you're looking for.
Yeah, just the federal agencies.
Oh, FedRAMP.
I know you were looking to at some point, right, the adoption by federal agencies to ramp up.
Yes.
significantly and bring your overall adoption to 100%. Yeah.
That's all in flight. As we know, the U.S. government doesn't move all that fast, you know, for good reason on IT projects. We're still early. We just received FedRAMP certification a quarter ago, so no updates there.
Got it. All right. I'll take it offline. Thank you so much for answering my questions.
Okay.
Thanks.
Thank you. Our next question comes from Arvind Ramnani with Piper Sandler. Please proceed with your question.
Hi. Thanks for taking my questions. You know, just wanted to double-click on the Codecademy and Global Knowledge integration. You know, you certainly provided some color as part of prepared remarks, but if you can clarify, you know, how do you expect these two basically offerings to combine? And then the follow-up to that would, you know, for the Codecademy, like, users, would they experience anything different? Like, how does the user experience change for each of these consumers?
Let me start with the latter. The Codecademy experience hasn't changed for Codecademy customers. They continue to enjoy the same service that they've always enjoyed. The only real change is that users of Percipio can now access Codecademy through Percipio, and that's an important first step in cross-selling Codecademy to our enterprise customers. I believe we're off to a very good start with that. In terms of integration, I think I can start by sharing, you know, first of all, Codecademy runs as a, you know, Zach Sims reports directly to me running the Codecademy business. That hasn't changed. From an enterprise sales perspective, we've brought enterprise sales for Global Knowledge, Skillsoft, Tech and Dev, and Codecademy together under one leader that's focused on Tech and Dev sales globally.
Now, within that, there are individual teams. There's you know, enterprise teams that are focused on enterprise customers. For the most part, the enterprise teams sell the full suite of offerings. There are inside sales teams that are dedicated generally to specific products. The inside sales team selling Global Knowledge is dedicated to Global Knowledge. That's how we've integrated sales for our Tech and Dev offerings.
Great. Then, you know, just kind of, you know, as you look out over the next, you know, I guess 18 months or 2 years, would you expect, kind of, you know, kind of from a secular perspective, Global Knowledge to kind of continue to become a sort of an insignificant portion of revenue? How should we be thinking of the Global Knowledge business, I don't know, maybe not even in 2 years, maybe in 3 or 4 years?
The way I first think about it is, think about us continuing to drive strong growth in our subscription business. That includes Skillsoft, in the Skillsoft business that sits on Percipio. It includes Codecademy, which is entirely subscription, and that's where we're seeing the growth. On the transaction side, Global Knowledge, look to us to take capabilities from Global Knowledge and increasingly embed those in subscription offerings and look for our sales teams who are dealing with our enterprise customers, supporting our enterprise customers, look for them to move dollars from transaction business to subscription business, which is where the margin is and where we believe the value creation can sit. Over time, I'd look for that subscription business to grow faster than transaction. That should drive transaction, say, below 20% as a percentage of revenue.
I think there's a place for transactional more revenue in our business. It just should be a smaller percentage than it is today.
Great. Just one last question. You know, from what I recall, you know, Global Knowledge acquisition was done maybe right before kind of the SPAC transaction. You know, given that it's relatively new, you know, have things played out as per your expectation when you did the acquisition or has some of the decline come as a surprise?
First of all, the acquisition was closed essentially simultaneously to the de-SPAC transaction. It outperformed our expectations last year. While we're early in the year, at this point, I'd say it's underperformed our expectations this year. I'd say that what's offsetting that is that so far this year, the subscription business is overperforming our expectations. So that's, I think, a complete picture of performance relative to expectations.
Thank you for answering my questions.
My pleasure.
Thank you. As one final reminder, if you would like to ask a question, please press star one on your telephone keypad. One moment, please, while we poll for any more questions. Okay, at this time, I'm not seeing any questions coming in. Jeff, I'd like to pass it back over to you for any closing remarks.
Super. Thanks, everyone, for participating in the call, and we'll certainly keep you updated as we advance through the year. Thank you.
Thank you, everyone. This does conclude today's conference call. You may disconnect your lines at this time. Thank you for your participation, and have a great day.