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 

                              reflecting the impact of the Education Bond and 
                              GBP350m share buyback programme which commenced 
                              in March. 
            ----------------  ------------------------------------------------ 
            Tax rate          We expect the effective tax rate on adjusted 
                              profit before tax to be between 24% and 25%. 
            ----------------  ------------------------------------------------ 
Cash flow                     We expect a free cash flow conversion(2) of 
                              90-100% plus the GBP0.1bn State Aid repayment 
                              which was received in full during Q1 2025. 
                              ------------------------------------------------ 
FX                            Every 1c movement in GBP:USD rate equates to 
                              approximately GBP5m adjusted operating profit 
                              impact. 
----------------------------  ------------------------------------------------ 
 
 
 
(1) 2025 consensus on the Pearson website dated 27(th) January 2025; 
underlying sales growth 4.4%, adjusted operating profit of GBP656m at GBP:$ 
1.23. The average GBP:$ rate for Q1 2025 was 1.27, which if held for the 
full year would imply an updated adjusted operating profit consensus of 
c.GBP636m, applying the FX guidance stated above. 
(2) Free cash flow conversion calculated as free cash flow divided by 
adjusted earnings. 
 

Contacts

 
Investor Relations  Alex Shore          +44 (0) 7720 947 853 
                     Steph Crinnegan      +44 (0) 7780 555 351 
                    Gemma Terry         +44 (0) 7841 363 216 
                     Brennan Matthews     +1 (332) 238-8785 
------------------  -----------------  ----------------------- 
Media 
 Teneo               Ed Cropley          +44 (0) 7492 949 346 
 Pearson             Laura Ewart         +44 (0) 7798 846 805 
------------------  -----------------  ----------------------- 
 

About Pearson

At Pearson, our purpose is simple: to help people realise the life they imagine through learning. We believe that every learning opportunity is a chance for a personal breakthrough. That's why our Pearson employees are committed to creating vibrant and enriching learning experiences designed for real-life impact. We are the world's lifelong learning company, serving customers with digital content, assessments, qualifications, and data. For us, learning isn't just what we do. It's who we are. Visit us at pearsonplc.com.

Notes

Forward looking statements: Except for the historical information contained herein, the matters discussed in this statement include forward-looking statements. In particular, all statements that express forecasts, expectations and projections with respect to future matters, including trends in results of operations, margins, growth rates, overall market trends, the impact of interest or exchange rates, the availability of financing, anticipated cost savings and synergies and the execution of Pearson's strategy, are forward-looking statements. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will occur in future. They are based on numerous assumptions regarding Pearson's present and future business strategies and the environment in which it will operate in the future. There are a number of factors which could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, including a number of factors outside Pearson's control. These include international, national and local conditions, as well as competition. They also include other risks detailed from time to time in Pearson's publicly-filed documents and you are advised to read, in particular, the risk factors set out in Pearson's latest annual report and accounts, which can be found on its website (www.pearsonplc.com). Any forward-looking statements speak only as of the date they are made, and Pearson gives no undertaking to update forward-looking statements to reflect any changes in its expectations with regard thereto or any changes to events, conditions or circumstances on which any such statement is based. Readers are cautioned not to place undue reliance on such forward-looking statements.

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SOURCE Pearson

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May 02, 2025 02:10 ET (06:10 GMT)