Pearson (PSON) Trading Update summary

Financial performance and outlook

• Achieved 3% underlying group sales growth for 2024, excluding OPM and Strategic Review businesses, with adjusted operating profit of £595-600m, up about 10% year-on-year, and a margin of 16.8%.

• Free cash flow conversion exceeded 100%, surpassing guidance, and net debt was under £0.9bn, reflecting a robust balance sheet.

• Assessment & Qualifications sales rose 3% for the year, driven by favorable mix, pricing, and new product launches; English Language Learning grew 8%, with strong institutional and digital performance.

• Higher Education sales increased 1%, supported by digital subscriptions and Inclusive Access, while Virtual Learning declined 4% due to contract transitions.

• Workforce Skills sales grew 6%, with a strong showing in Workforce Solutions; business unit to evolve into Enterprise Learning and Skills from January 2025.

Strategic and operational highlights

• Delivered on 2024 strategic priorities, advancing enterprise focus and scaling AI across products, including launching an AI-powered Digital Language Tutor.

• Formed a multi-year strategic partnership with Microsoft to enhance AI and technology capabilities, extend commercial relationships, and drive innovation.

• Established a global enterprise sales team to better serve enterprise customers, consolidating enterprise sales under the new Enterprise Learning and Skills unit.

• Opened three new virtual schools in 2024, bringing the total to 40, with same-school enrollments up 4% for the 2024/25 academic year.

• Announced Naseem Tuffaha as Chief Business Officer, bringing experience from Microsoft and The Trade Desk.

Segment performance and business evolution

• Assessment & Qualifications saw growth in Pearson VUE, Clinical Assessment, and UK & International Qualifications, with US Student Assessment supported by contract renewals.

• Virtual Schools sales decreased 1% due to partner school losses, but impact expected to normalize in H1 2025.

• US Higher Education benefited from adoption share, enrollments, and pricing, with digital subscriptions up 3% and Inclusive Access up 24%.

• English Language Learning outperformed, especially in the Middle East and LatAm, and launched its first AI-powered Digital Language Tutor.

• Workforce Skills to be rebranded as Enterprise Learning and Skills, integrating global enterprise sales and transitioning some revenues and costs from Higher Education.