Pearson (PSON) H2 2025 earnings summary

Executive summary

• Achieved 4% revenue/underlying sales growth and 6% profit increase in 2025, with margin expansion to 17.2%.

• Embedded AI-driven innovation across products, improving learner engagement and outcomes, and delivering operational efficiencies.

• Secured long-term enterprise contracts and strategic partnerships, growing revenue backlog to hundreds of millions through 2030.

• Strategic focus on core assessments, virtual schools, and expansion in early careers and enterprise skilling.

• 2026 guidance includes further sales and profit growth, margin improvement, and continued investment in innovation.

Financial highlights

• Adjusted EPS up 4% to GBP 0.645 (64.5p); 9% at constant FX rates.

• Free cash flow conversion at 125% (98% excluding state aid recovery); free cash flow increased to GBP 527m.

• Dividend increased by 5%; GBP 350 million share buyback commenced.

• Net debt at GBP 1.1 billion; leverage at 1.3x EBITDA.

• Return on capital up 80bps to 11.3%, over 250bps above post-tax WACC.

Outlook and guidance

• 2026 guidance: group sales of GBP 3.6bn and adjusted operating profit GBP 640–685 million.

• Free cash conversion expected at 90–100%; effective tax rate ~25%; interest ~GBP 80 million.

• Margin improvement of 40bps per annum targeted over the medium term.

• Growth in all business units expected, with H2 weighting less pronounced than 2025.