REG - Pearson PLC - Result of AGM

Pearson's exposure to the U.S. might raise some concerns, AJ Bell's Russ Mould says. The dollar's weakness against sterling is a potential concern for the headline numbers going forward, Mould notes. The London-listed education company's expected accelerated growth in the second of the half remains uncertain given the current environment in the U.S., he says. Additionally, Trump administration's plans for the Education Department might not be helpful either, he adds. Shares are down 2.3% at 1,147.50 pence. (najat.kantouar@wsj.com)

Q1 2025 saw 1% underlying sales growth, with Higher Education up 6% and momentum expected to accelerate in H2. Strategic AI initiatives, new contracts, and a £350m share buyback support a positive outlook, despite global uncertainties.

Original document: Pearson PLC [PSON] Earnings Release — May. 2 2025

Pearson said Friday its underlying group sales for the first quarter ended March 31 were up 1%.

The educational publishing and services company confirmed it remains on track to achieve its 2025 guidance with low single-digit sales growth in the first half and stronger growth expected in the second half.

Beyond 2025, the company expects to achieve a mid-single-digit compound annual growth rate in underlying sales.

Pearson Q1 2025 Trading Update (Unaudited)

PR Newswire

LONDON, May 2, 2025

Pearson on track to deliver 2025 guidance(1) with expected Q1 result and momentum building for the second half

LONDON, May 2, 2025 /PRNewswire/ --

Highlights

• Underlying Group sales up 1%, with growth expected to accelerate in the second half of the year
• All business units performing in line with expectations; strong start for Higher Education with underlying sales up 6%
• Good progress against our 2025 strategic priorities, including:
  -- Expanding professional learning capabilities with our new Pearson
  Skilling Suite (link here)
  -- Continuing to lead on the application of innovative technologies,
  with the launch of an AI-powered Smart Lesson Generator (link here)
  -- New contract wins in Enterprise Learning & Skills; including with
  UK Ministry of Defence (link here)
  -- Launch of redefined Pearson brand to embrace the future of
  learning (link here)
• GBP350m share buyback programme launched and progressing; GBP0.1bn State Aid recovery received in full

Omar Abbosh, Pearson's Chief Executive, said:

"We continue to make good progress against our strategy, supporting our medium term growth outlook. We are confident of delivering on our expectations for the year given our clear path to achieving stronger growth in the second half, whilst we recognise the heightened uncertainties around the global economy.

Financial and operating performance in our smallest quarter was in line with our plans and we continue to build AI enhanced offerings across the business and make progress on our Enterprise initiatives."

Underlying Group sales growth of 1% in Q1 2025

• Assessment & Qualifications sales were up 1%. Pearson VUE declined slightly, with growth expected to be weighted to H2 driven by the timing of new contracts and the test prep business building during the year, supported by the recent launch of the Pearson Skilling Suite programme. Clinical Assessment grew due to the continued traction of our products in the market, with further new product releases planned this year, and digital product growth. US Student Assessment saw a small decline due to changes in programme services and timing of delivery. UK & International Qualifications sales benefitted from International growth.
• Virtual Learning sales decreased 4%, in line with guidance, reflecting the impact of previous partner school losses and timing of funding upsides in the prior period. 2024/25 academic year enrolments increased by 5% in the Spring semester on a same school basis, with positive retention trends.
• Higher Education sales were up 6% benefitting from the continued innovation and roll out of AI study tools for students and educators and the ongoing successful monetisation of the Channels product. In the quarter, there was growth of 22% in Inclusive Access and 4% in US digital subscriptions. In our International business, 25 AI translated titles were made available for Spring semester courses, expanding the reach of Pearson learning experiences faster and more efficiently.
• English Language Learning sales decreased 6%, in line with guidance. Institutional declined due to a strong comparator period in Q1 2024, and we expect performance to improve in Q2 and beyond. Pearson Test of English (PTE) performed well against a tough market backdrop and despite a decline in volumes we grew the business. We continue to lead on the application of innovative technologies with the recent launch of AI-powered Smart Lesson Generator and Digital Language Tutor.
• Enterprise Learning & Skills sales were up 1%. Vocational Qualifications delivered a solid performance with new contract wins supporting pipeline growth, including apprenticeship courses with the UK Ministry of Defence and T Levels in Health and Science. Enterprise Solutions announced strategic partnerships with Microsoft and AWS in the quarter as we build momentum in our Enterprise approach and related sales capability.

On track to achieve 2025 guidance and medium term outlook unchanged

• We expect sales growth and adjusted operating profit in line with market expectations1 for 2025. We expect low single-digit sales growth in H1 with stronger growth in H2. We outline our previously issued 2025 guidance later in this release.
• Beyond 2025, Pearson is positioned to deliver a mid-single digit underlying sales growth CAGR, sustained margin improvement that will equate to an average increase of 40 basis points per annum and strong free cash conversion2, in the region of 90% to 100%, on average, across the period.

Strong financial position

• Pearson's financial position remains strong, with low leverage and strong liquidity.
• The GBP0.1bn previously paid in relation to State Aid was recovered in full during Q1 2025.
• In March 2025 we commenced our GBP350m share buyback programme, with GBP65m purchased up to 30th April 2025.

Executive Change

• Dave Treat, Pearson's Chief Technology Officer, has assumed leadership of the company's digital and technology operation alongside his current architectural and innovation responsibilities, effective 7th April 2025. Dave joined Pearson last July and will play a crucial role in scaling Pearson's AI offerings, bolstering our innovation pipeline, and driving collaboration across different business units.
• Marykay Wells, who led the Digital and Technology team as Chief Information Officer, decided to leave Pearson, effective 4th April 2025. We want to thank Marykay for her work on our technology foundations and capabilities.

Financial summary

 
                                    Q1 2025 
Sales                           Underlying growth 
-----------------------------  ------------------ 
Assessment & Qualifications                   1 % 
-----------------------------  ------------------ 
Virtual Learning                            (4) % 
-----------------------------  ------------------ 
Higher Education                              6 % 
-----------------------------  ------------------ 
English Language Learning                   (6) % 
-----------------------------  ------------------ 
Enterprise Learning & Skills                  1 % 
-----------------------------  ------------------ 
Total                                         1 % 
-----------------------------  ------------------ 
 
 
 
Throughout this announcement growth rates are stated on an underlying basis 
unless otherwise stated. Underlying growth rates exclude currency movements, 
and portfolio changes. 
 

2025 guidance summary

 
Underlying  Group             In line with market expectations(1) . We expect 
 Sales                        low single-digit sales growth in H1 with 
 growth                       stronger growth in H2. 
----------  ----------------  ------------------------------------------------ 
            Assessment &      Sales to grow low to mid-single digit. Growth 
             Qualifications   will be H2 weighted with new and renewed 
                              contracts and the test prep business building 
                              during the year. 
----------  ----------------  ------------------------------------------------ 
            Virtual Learning  Sales to decline in H1 given the final impact of 
                              previous school losses and the timing of funding 
                              in the previous year. Return to growth in H2 and 
                              the full year driven by enrolment increases, 
                              partially from new school openings, for the 
                              25/26 academic year. 
            ----------------  ------------------------------------------------ 
            Higher            Sales growth in 2025 will be higher than in 2024 
             Education        as we build on the successful results of our 
                              sales team transformation and product 
                              innovations, particularly using AI. Growth will 
                              be relatively stable throughout the year. 
            ----------------  ------------------------------------------------ 
            English           Sales growth will moderate given the likely 
             Language         impacts of elections on immigration rates in 
             Learning         2025 affecting our PTE business, which is 
                              expected to decline in the year. Q1 declined in 
                              line with expectations and we expect growth to 
                              increase each quarter thereafter. We remain 
                              confident in the medium term outlook given 
                              demographic projections. 
            ----------------  ------------------------------------------------ 
            Enterprise        Sales to grow high single digit with Vocational 
             Learning &       Qualifications seeing solid growth and the 
             Skills           addition of several new contracts for Enterprise 
                              Solutions. Growth will increase quarter on 
                              quarter. 
----------  ----------------  ------------------------------------------------ 
Group       Adjusted          In line with market expectations(1) . 
 Profit      Operating 
             Profit 
            ----------------  ------------------------------------------------ 
            Interest          Adjusted net finance costs of c.GBP65m