Pearson (PSON) Q1 2025 TU earnings summary

Executive summary

• Underlying Group sales grew 1% in Q1 2025, with momentum expected to build in H2.

• All business units performed in line with expectations; Higher Education saw 6% sales growth.

• Strategic progress includes new AI-powered products, contract wins, and a redefined brand.

• £350m share buyback program launched; £0.1bn State Aid recovery received.

Financial highlights

• Assessment & Qualifications sales up 1%; Pearson VUE declined slightly, with H2 growth expected.

• Virtual Learning sales decreased 4%, reflecting prior partner school losses; enrolments up 5% on a same school basis.

• Higher Education sales up 6%, driven by AI study tools and digital subscriptions.

• English Language Learning sales down 6%, with improvement expected in Q2 and beyond.

• Enterprise Learning & Skills sales up 1%, supported by new contracts and partnerships.

Outlook and guidance

• 2025 sales growth and adjusted operating profit expected in line with market expectations.

• Low single-digit sales growth anticipated in H1, with stronger growth in H2.

• Beyond 2025, targeting mid-single digit sales CAGR, 40bps annual margin improvement, and 90-100% free cash conversion.

• Segment guidance: Assessment & Qualifications to grow low/mid-single digit; Virtual Learning to return to growth in H2; Higher Education to see higher growth than 2024; English Language Learning to moderate due to election impacts; Enterprise Learning & Skills to grow high single digit.

• Adjusted net finance costs expected at ~£65m; effective tax rate 24-25%.