Pearson (PSON) H2 2025 earnings summary

Executive summary

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

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

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

• Strategic focus on core businesses, enterprise skilling, and early careers, with investments in product innovation and operational efficiency.

• Dividend increased by 5%, with a £350m share buyback underway.

Financial highlights

• Adjusted EPS up 4% to GBP 0.645; 9% at constant FX.

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

• Adjusted operating profit grew to £614m, with a margin of 17.2%.

• Statutory profit declined 6% due to a one-off GBP 87 million non-cash impairment in higher ed platforms.

• Net debt at GBP 1.1 billion, up GBP 0.2 billion YoY; net debt/EBITDA at 1.3x.

Outlook and guidance

• 2026 guidance: group sales of £3.6bn, adjusted operating profit GBP 640–685 million, free cash conversion 90–100%.

• Margin improvement of 40bps per annum expected in the medium term.

• Growth expected to be H2 weighted, but less so than 2025; Q1 2026 expected to decline due to contract loss and headwinds.

• A&Q to grow low-to-mid single digits; virtual learning and higher ed to accelerate; English and enterprise segments to see higher growth.