Q1 2023 Skillsoft Corp Earnings Call
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Greetings and welcome to the Skillsoft Corp, first quarter 2023 financial results Conference call.
At this time all participants are in a listen only mode.
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 and please note that this conference is being recorded.
Now I'll turn the conference over to Eric Boyer SVP of Investor Relations. Thank you Sir you may begin.
Good afternoon, and welcome to <unk> first quarter fiscal 2023 earnings call. After the market close we issued our Q1 earnings press release and posted supplemental materials to the skull Salt 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.
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 in these back on June 11, 2021 to be separated the predecessor and successor periods to reflect the change in ownership or lack of comparability between periods.
It has different ownership and investment thesis. In addition, global knowledge activities only reflected in the GAAP financial statements. After June 11th references on this call to combined GAAP results reflect the combination of the predecessor period before June 11th that excludes global knowledge with his successor period After June 11th.
For all non-GAAP measures in the supplemental materials in todays 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.
Reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures.
As well as how we define these metrics and other metrics is included in our earnings press release, which has been furnished to 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 am 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 in the first quarter of double digit growth under the leadership of our new management team, which stepped in with a return to public markets a year ago.
It is particularly noteworthy as 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.
Skillsoft content segment, which includes the precipitate platform, it's almost entirely subscription in nature and high margin and.
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 in some total due to a loss of a large customer for the company's payroll solution.
On this call I will discuss the acquisition of code Academy, 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 existing tech and Dev offerings enterprise customer reach and precipitate a learning platform we.
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 precipitous.
We've also developed sales enablement programs and have begun working with more than 50 enterprise customers, who have expressed interest in coke ketamine.
Putting some of the world's largest banks health care companies and professional services firms.
Moving on to product enhancements in the quarter as.
As employees make new demands on their employers labor and skills gaps have emerged as the number one threat to business. According to <unk> recently released survey of Fortune 500 Ceos.
This threat ranked higher than inflation recession, geopolitics and cyber security.
<unk> 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 17000 business customers and community of 90 million learners.
Our recent product enhancements and advance these objectives contributing to increases in customers learners and usage let.
Let me share a few notable examples.
As already mentioned, we recently completed the first phase of the technical integration of Codecademy M to precipitate.
Our immersive AI driven learning platform.
This is an important enabler to cross selling codecademy to our enterprise customers and helping them address critical skills gaps and 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 Puma and instructor led training from global knowledge to create more absorbing an immersive learning dreams.
During the quarter, we also launched skills benchmarks, which is objective standards to officially 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 reinforced learning and recall on the gout.
We've made our learning experiences more connected with new social features including the addition of shared playlists.
And we've kept a sharp focus on enhancing customer ROI with the addition of goals and reminders.
Selling organizations and their learners forward towards a set of shared learning objectives.
These new features.
Bind 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 precipitate has also been a big driver of this transition to growth lifting our content dollar retention rate above 101%.
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 are 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.
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 and entry level inside sales.
It's also a 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 are embedding instructor led training into subscriptions and cross selling both skillsoft and <unk> to global knowledge customers.
An exciting example is our 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 Dev ops.
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 initiative with I am the code, whose mission is to train 1 million young women and girls and marginalized communities to code by 2030.
I am the code will be launching its digital learning platform powered by Skillsoft recipient and 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 of Deco to help train Ukrainian refugees and 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.
And with that I'll now turn the call over to Gary.
Thanks, Jeff I'll 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 it will be presented as if skillsoft and global knowledge had been combined and their fiscal quarters had been aligned as of January 31 2021.
In addition for comparability the results that I described will include approximately one month codecademy in both Q1 FY 'twenty three in Q1 FY 'twenty two.
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 sum total segment.
This was driven by significant growth in the content segment of 22% offset by a 15% decline in the global Mountain 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 was a much smaller difference between adjusted revenue and GAAP revenue.
This relates to our adoption of a new accounting standard ASU 2021, Dash zero eight 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 ramp more slowly than anticipated in the first quarter.
We ended the quarter was $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 four one times 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 Coke Ketamine 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 Paloma acquisition, new customers and Dr art or dollar retention rate of 101% versus 91% in the year ago period.
So ketamine performed as expected with bookings growth of 24%.
We're 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 skill salt 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 it's more transactional nature, and it's greater sensitivity to macroeconomic headwinds, including investment levels and spending in 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 some total.
Q1 bookings were $19 million, a decrease of $7 million or 26% due mainly to a large contract loss and 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're 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 whole 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 net 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 call.
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 stigma.
We expect EBITDA to be up on a sequential basis from Q1 fiscal year 'twenty three 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.
It required tremendous dedication and sacrifice from our more than 3000 employees with that operator, please open the call for questions.
Thank you Sir at this time, we'll 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 and for participants using speaker equipment. It may be necessary to pick up your handset before pressing any sarkies.
One moment, please while we poll for any questions.
Sure.
Our first question comes from the line of Raimo <unk> with Barclays. Please proceed with your question.
Couple of questions if I may.
First Jeff is good to see the progress in content, where we get probably most of the question from investors will be more on the global knowledge side.
In sum total and can you speak a little bit too.
I know, it's transactional focus, but it's since been going back like some companies in our space have said there was like no impact and there is a little been impact of some of the impact and the.
Europe .
We're showing a little bit more with you could you speak to that like in terms of how that's.
Showing up for you and that's the first question second question is on some total.
Obviously that was kind of something that just kind of impacted.
Lots of one contract impacted the quarter, but what confidence on in terms of like holding the line here for the rest of the year and then the third question is on code Academy, you've talked about a little bit of a little bit around the cross sell opportunity into the enterprise space could you speak to that in terms of like how clients have taken that off is that like a blanket.
Contract.
People, what's the and what's the cadence in terms of uptake that you're expecting I'm sorry for the for your questions, but thank you.
Okay Rainbow that's great. Thank you so first of all global knowledge is.
Transactional business, we sell seats and virtual classes and an actual physical classrooms, and 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 projects, so as new big projects start that's when you need to start training our employees and when those get moved to the right by customers' purchases of global knowledge slowdown.
Secondly, we help our large partners are the largest.
Hardware and software vendors in the world train their customers and so when their growth slows their spending on training their customers. The flows and then 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.
Forex impact so that's why we believe we got off to a slow start in this business and as I mentioned.
There is the fact that we have a harder time, maintaining full staffing levels in our inside sales organization. Those jobs are just harder to sell in this environment and we're taking action to supplement that by both ramping up our recruiting and also engaged engaged couple of outsourced services firms to help us with that.
And we're launching a number of new products with our with our customers.
Again welcome.
Global knowledge in the back half.
Your second question was on some total.
Sum total as we've said in the past at 80% or sub towards historically at least last year was the.
<unk> learning management system or LMS business in that part of the business is performing well.
It continues to perform well.
Last year, 20% of the business was in the legacy human capital management modules.
Payroll being one of them time management being another those are core to the learning management system part of the business. They are subscale relative to competitors in that space and we lost one large customer that takes that percentage of the business down for about 20% down.
About 15% so that helps you size.
The pressure that we could see over time that pressure would show up in our legacy business, but the learning management. The LMS business is actually quite strong.
And then you're right.
Final question was on code Academy, and the cross sell opportunity and how we're selling it.
Our selling codecademy for business.
But in terms of its an add on to our subscription product. So it's adding additional charge.
It addresses really critical skills gaps in the enterprise in the area of data science and coding.
And while it's early at the end of the quarter, we were only one month.
We're seeing really strong interest from our customers and the coke category offering as we expected.
Okay, perfect very clear thanks, Jeff.
Thank you.
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.
Where would you say that the global content sorry, the global knowledge, which is what it was was focused you said it was European exposure sure was it also industry and then.
What is your exposure to directly to.
The war impacted areas.
Yes so.
First of all I can tell you, we're not impacted significantly directly by.
The war.
Negligible exposure to Ukraine and Russia.
It's more in Europe about Forex and the economy in general.
Globally, it's really just about 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 that fair.
First half was very strong global knowledge last year, we had a really strong bounce back from Covid. We also while we believe in hindsight benefitted from some delayed spending in it.
As the World started to open back up.
So really tough compares in the first half of global knowledge.
Got it and.
Where are you in the process of filling out some of the kind of executive.
Kind of high level roles in each you as a public company I think you said that some of the some of the hiring of a delay in the quarter.
Are you done.
North of kind of the most important hires that you need to make.
I think youre asking are you asking about leadership team hires.
That kind of thing.
We haven't I feel great about our leadership team.
That was a key effort in the first phase of the new scale soft was staffing this leadership team and that team is now working really well together.
I think you've seen the impact of that on the subscription business, which is really performing very strongly 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 are important but we are trying to migrate the business to subscriptions.
We talked about with global knowledge, we see we can.
And moving some of that content into subscription offerings, we've been cross selling subscriptions.
And that is the result of that our leadership team that we put in place and the people that they have a turn higher and then our 3000 team members across the organization that are working really hard to grow. This business you Robert the hiring we were talking about with the inside sales team.
People like that where it was slower than we had been yes, it's very focused it's us it's the inside sales for global knowledge in particular.
Got it and then.
We did a workday adjustment how quickly do you expect that cohort.
Legacy customers to migrate cheap recipient and then also how big is it.
So.
In terms of workday. They are an important learning management system provider and human capital management system provider, so having that that.
Connector and general availability is really important to our customers in terms of the migrations for CBL out we feel really good about the progress I think you see that.
Retention rate, that's now over 100%.
We've got approximately 10% of our revenue base sitting on scale port.
And what we're actually seeing is the retention rates are skill port are way up and the reason for that is the customers who are still on skill port.
A really sticky I mean these are these are customers who in many cases have really deep integrations into their their software.
They are reseller with government customers and so they're going to take a little longer to move but as you can see it's not holding back our dollar retention rates materially as it had in past years with <unk>.
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, Thanks for taking my questions.
Yes.
Can I go back to that can we go back to the global knowledge.
The decline in revenues year on year and sort of the outlook is impacting your <unk>.
Guidance is this COVID-19 pandemic related or is it sort of any any economic slowdown here or is this just one off.
A project that Didnt come through and then.
If you could give more color on that I know, you said that it industries or geographies.
Equally impacted or and also how are you feeling confident that this.
That you'd be able to reverse this.
The modest decline in the amount of a couple more questions.
Okay Super. Thank you so in terms of quantifying Raj the how much of the global knowledge shortfall is macro.
Yes.
We've quantified it as about 50% macro and Thats multiple large projects that's not just one large project.
And about 50% of it we believe is due to staffing in our inside sales organization. So.
Logically that staffing piece of it is easier to address that.
The economy is not obviously not in our control, although we are <unk>.
Working to launch new products products with partners that are better suited.
The market that we're in today.
Terms of industry geography last year, our business in Europe delivered very strong growth and GK asset bounce back from Europe , and Baxter bounce back from Covid and and this year, we're not seeing Europe as a driver of growth at least so far.
In the year. So that's what we see the single biggest change in trend.
And then in terms of cost going forward.
Confident that we're going to be able to staff up the inside sales organization and supplement that with with third party resource.
But I have less visibility into IP spending customer spending.
That's why we were pointing people to the lower end of our guidance.
Got it and then.
Going to the skilled soft part and the content.
Was there organic growth I know that the includes one month of quota carrying me I wanted to understand if you will.
Not going to break out the quota academy revenues going forward and they are going to be larger in context and is that sort of the.
The right way to look at the business.
Wanted to understand the organic growth, we're seeing key additions from quota capital.
Yes. The addition from code Academy was minimal.
It's not even a full month.
So we're talking less than $1 million in the numbers and when you look at the pro forma numbers.
Yeah.
It's growing from that by 24%, but its impact in the content business that 22% with basically 22% weather cognizant.
Right and then are you going to break out the code Academy numbers going forward or are they going to be lumped up lumped in.
The plan is either in content will give color when it makes sense, but the way it's being sold everything it's just part of the content business.
Great and then the last part.
I wanted to understand the engagement on the platform engagement levels and the precision platform have they changed.
I see that the retention rates are higher I wanted to understand the engagement and then also.
On the digital adoption by federal agencies, where is that tracking.
Fed ramp certification last quarter.
Yeah. So first of all we are seeing increases in the usage on the platform. So this quarter was our all time high in terms of usage on <unk> and that's to be expected.
Very high engagement platform, we continue to add features and functionality in one of the metrics I'm Super pleased with the number of blockchain based digital badges that we've issued.
It's pushing up against 30 million blockchain based digital badges.
A huge number and it really important.
Because those digital badges R R.
Transferable there.
The portable they move with with the learner. So we feel really good about the usage and the uptake in precipitate out.
The second part of your question if you could just remind me with that.
Yeah, just the federal agencies.
Looking to at some point right and the adoption by federal agencies to be.
To ramp up so you got to get anything you overall adoption.
<unk> quite as we know that less government move.
All of that fast.
Good reason on key projects. So we're still early we just received bedrock certification a quarter ago. So no updates there.
Got it all right I'll take it offline. Thank you so much scratching a question okay. Thanks.
Thank you and our next question comes from Arvind Roman <unk> with Piper Sandler. Please proceed with your question.
Hi.
Thanks for taking my questions.
I just wanted to double click on the CT academic and global knowledge integration.
Certainly.
Provide some color.
Right after our prepared remarks, but if you can if you can clarify.
How do you expect these two.
Basically the offerings to combine and then the follow up to that.
For the quarter Academy.
Users would they expand say anything different.
How does the user experience change for each of these.
Each of these consumers.
So so let me start with the latter two academy experience Hasnt changed for Coke had with customers.
They continue to enjoy the same service that they've always enjoy the single biggest.
The only real change is that you.
Users of <unk> can now access code Academy through for CPI, and that's an important first step in cross selling codecademy to our enterprise customers and I believe we're off to a very good start with that in terms of integration I think it's.
I can start by sharing personal codecademy runs as a as a.
Zach continues to Zach Sanders reports directly to me running the Codecademy business. So that hasnt changed from an enterprise sales perspective, we brought enterprise sales or global knowledge, Skillsoft Tech and Dev and tow cabinet together under one leader.
It's focused on tech and Dev sales globally now within that there are individual teams.
Enterprise teams that are focused on enterprise customers and for the most part the enterprise teams sell the full suite of offerings.
Then there are inside sales teams that are dedicated generally to specific product. So the inside sales team selling global knowledge is dedicated to global knowledge.
And so that that's how we integrated sales for our tech and Dev offerings.
Great Great and then.
Uh huh.
As you look out over the next I.
I guess 18 months to two years.
What do you what do you expect.
Kind of.
You know kind of from a secular perspective.
Knowledge to kind of continue.
Continuing to become sort of an insignificant portion of revenue how should we be thinking of the global knowledge business.
I don't know.
Maybe not even two years, maybe three or four years.
Yes, the way first I think about it is think about us continuing to drive strong growth in our subscription business that includes skillsoft.
The <unk> business that sits on Principia. It includes tow Cadillac, which is entirely subscription and that's what we're seeing is growth.
So then on the transaction side global knowledge look to us to take capabilities from global knowledge and increasingly embeds dose and subscription offerings.
Look for our sales teams, who are dealing with R. R.
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 say so over time I looked.
For that subscription business to grow faster than transaction.
And that should drive transaction say below 20% as a percentage of revenue I think there's a place for transaction low revenue in our business. It just should be a smaller percentage than it is today.
Great and just.
One last question.
From what I recall.
Global knowledge acquisition was done maybe right before.
This back spectrum action.
And.
Given that that's it.
Relatively new.
Is this sort of like.
Yeah, Thanks, Pedro I suppose your expectation when you when you did the acquisition or are.
Has some of the decline came as a surprise.
I would say so first of all the acquisition was closed essentially simultaneously to that deal.
Back transaction.
It outperformed our expectations last year.
And.
While we're early in the year at this point I'd say, it's underperformed our expectations this year.
I would say that what's offsetting that is that so far this year the subscription business, it's over performing our expectations. So so that I think that would be a complete picture of.
Performance relative to expectations.
Thank you for answering my questions.
And pleasure.
Thank you and 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.
Thanks to everyone for participating in the call.
We'll certainly keep you updated as we advance through the year. Thank you.
Thank you everyone that does conclude today's conference call. You may disconnect. Your lines at this time. Thank you for your participation and have a great day.
Okay.
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Yeah.
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