Pearson Plc (LON:PSON) has announced its Interim Results for the six months to 30th June 2025 (Unaudited).
Continued strategic and operational progress against medium term strategy. On track to deliver 2025 guidance with stronger growth expected in H2.
Financial Highlights
| £m | H12025 | vs H12024 | £m | H12025 | H12024 | |
| Business performance | Statutory results | |||||
| Sales | 1,722 | +2% 1 | Sales | 1,722 | 1,754 | |
| Adjusted operating profit | 242 | +2% 1 | Operating profit | 240 | 219 | |
| Operating cash flow | 126 | £(3)m | Profit for the period | 166 | 158 | |
| Free cash flow | 156 | +£129m | Net cash generated from operations | 188 | 185 | |
| Adjusted earnings per share | 24.5p | (4)%2 | Basic earnings per share | 24.8p | 23.1p | |
Highlights
· Group sales1 up 2% underlying with each business unit performing broadly in line with our expectations.
· Adjusted operating profit1 up 2% underlying to £242m.
· Strong free cash performance up £129m to £156m, including the receipt of £114m State Aid tax recovery.
· Interim dividend up 5% and £350m share buyback well underway, with ongoing balance sheet strength.
· On track to deliver 2025 guidance with stronger growth expected in H2.
· Continued strategic and operational progress, including:
o Strategic partnerships with Microsoft, AWS, and most recently, Google Cloud, progressing AI transformation agenda
o Enterprise business building momentum, with new partners such as HCLTech
o Continuing to develop product suite and apply innovative technologies including new “Go Deeper” feature within our AI-powered study tools and launch of Pearson English Express Test
o Accelerating access to adjacent markets, with a strategic collaboration with McGraw Hill in formative assessments
o Completed the acquisition of eDynamic Learning, adding a core pillar to our Early Careers strategy
Omar Abbosh, Pearson’s Chief Executive, said:
“We are on track to deliver the three priorities we set out for the year, with performance to date in line with our expectations, and are confident of stronger growth in the second half. We are making rapid progress with bringing AI-powered products to market and are scaling and enhancing our enterprise business with a range of new partnerships and deals. Our sharp focus on rigorous execution and continuous innovation is driving progress against our strategy, improving Pearson’s agility, efficiency and resilience, and positioning us to deliver consistent mid-single digit sales growth over the medium term.”
Group sales1 up 2% underlying in H1 2025
| · | Assessment & Qualifications sales were up 2% with strong growth in Clinical Assessments and UK & International Qualifications, partially offset by declines in Pearson VUE and US Student Assessment. Pearson VUE decline was driven by the pause in a contract delivered in 2024 which will recommence in H2 2025, and headwinds in PDRI, which has been impacted by US federal government hiring and spend reductions which we expect to continue in the second half. |
| · | Virtual Learning sales were down 1%, as expected, due to the final portion of the impact of previously announced school losses. 2024/25 academic year enrolments increased 5% in the Spring semester on a same school basis, with favourable retention trends, underpinning our confidence in returning to growth in H2. |
| · | Higher Education sales were up 4%, benefiting from growth in Inclusive Access of 21% and US digital subscriptions of 3%. We continued to see good monetisation of our Study Prep tool, formerly known as Channels, and ongoing engagement with our AI-powered study tools. |
| · | English Language Learning sales were down 3%, in line with expectations, with Institutional impacted by a strong comparator period in H1 2024. Pearson Test of English (PTE) was flat against the prior period, performing well against a tough market backdrop. |
| · | Enterprise Learning & Skills sales were up 4%, with another solid performance in Vocational Qualifications and Enterprise Solutions building momentum. |
Adjusted operating profit1 up 2% on an underlying basis to £242m
| · | Underlying performance driven by operating leverage on sales growth partially offset by inflation. |
| · | On a headline basis, profit was down 3% with positive underlying performance more than offset by translation currency headwinds. First half adjusted profit margin was flat against the prior period at 14% (H1 2024: 14%). |
| · | Adjusted net finance costs increased to £24m (H1 2024: £21m). The effective tax rate on adjusted profit before tax increased to 24.5% (H1 2024: 23.6%). |
| · | Adjusted earnings per share declined to 24.5p (H1 2024: 25.6p) with positive underlying trading performance, and a reduction in share count due to the share buyback programmes, more than offset by currency headwinds and increased interest. |
Good cash performance
| · | Operating cash flow was in line with the prior period at £126m (H1 2024: £129m) with continued good working capital management offsetting currency headwinds. |
| · | Free cash flow was again strong up £129m to £156m (H1 2024: £27m) given the operating cash performance and the receipt of £114m State Aid tax recovery, inclusive of interest, in the period. |
Strong balance sheet supporting continued investment and shareholder returns
| · | Net debt decreased £0.2bn to £1.0bn at 30th June 2025 (H1 2024: £1.2bn) as free cash flow was partially offset by dividends and the share buyback. |
| · | Proposed interim dividend of 7.8p (H1 2024: 7.4p), represents an increase of 5%. |
| · | Previously announced £350m share buyback programme well underway and is expected to complete in H2. As at 30th June 2025, £169m of shares had been repurchased representing 48% of the total programme. |
| · | Secured new three-year, $800m revolving credit facility, enhancing our liquidity and strategic flexibility. |
Statutory results
| · | Sales decreased 2% on a headline basis to £1,722m (H1 2024: £1,754m) with currency movements partially offset by positive underlying business performance. |
| · | Statutory operating profit increased 10% on a headline basis to £240m (H1 2024: £219m) driven by operating leverage on sales growth, gains on disposals and the reversal of impairments on property assets, partially offset by inflation and currency headwinds. |
| · | Net cash generated from operations of £188m (H1 2024: £185m). |
| · | Statutory earnings per share of 24.8p (H1 2024: 23.1p). |
Continued operational and strategic progress
Driving performance in the core business
| · | In Assessment & Qualifications, Pearson VUE won several new contracts with continued strong customer retention supporting future growth. US Student Assessment also successfully renewed and extended several key contracts in the period. In UK & International Qualifications we continued to scale internationally. In Clinical Assessments we expanded our customer set with our first statewide adoption of our digital offering. The application of AI across our products continued with the launch of an AI-powered GCSE Exam Practice Assistant, as part of our collaboration with AWS. |
| · | In Virtual Learning, we completed the rollout of our new enrolment portal which we expect to support sales growth in the second half of the year. We are also embedding our career academies across the network ahead of fall back to school and are on track to open two new schools in H2 taking our total number of schools up to 42. We also successfully secured all six of our long term school contracts being renewed in H1. We continue to apply innovative technologies through integrating AI into our study tools, driving higher course scores and end-of-semester pass rates. |
| · | In Higher Education, we continued to build upon the successful monetisation of our Study Prep tool which we expanded into international markets in the first half of this year. We continue to rollout our AI-powered study tools across disciplines – including our new “Go Deeper” feature, which further supports students with engagement, new cognitive skills and higher order learning outcomes. |
| · | In English Language Learning, we announced a partnership with BorderPass, expanding our PTE go-to-market reach for international students and skilled migrants in Canada. We are also launching our new Pearson English Express Test which expands our addressable market, responding to demand for a trusted, accessible test for US-bound learners. Within Institutional we continue to expand internationally with customer wins in LATAM. We continue to make progress on the application of innovative technologies with the recent launch of AI-powered Smart Lesson Generator and Digital Language Tutor. |
| · | In Enterprise Learning & Skills, Vocational Qualifications delivered a solid performance in the period with several new contract wins supporting pipeline growth, including apprenticeship courses with the UK Ministry of Defence, T Levels in Health and Science, and International BTEC expansion. Within Enterprise Solutions we announced strategic partnerships with Microsoft, AWS and Google Cloud and are building momentum in our Enterprise approach, with new partners such as HCLTech. We have made enhancements to our talent assessment platform, TalentLens, through combining capabilities with PDRI’s secure and scalable Palladium offering. We have also enabled third party credential uploads onto the Credly platform, to advance our goal of Credly becoming the most complete source of verified learning and skills data globally. |
Progress in unlocking faster growth adjacent market opportunities
| · | Higher Education recently completed the acquisition of eDynamic Learning, a leading Career and Technical Education (CTE) curriculum solutions provider for an enterprise value of $225m, enabling us to broaden capabilities and scale our position in the fast-growing Early Careers space. |
| · | We have operationalised our dedicated K-12 sales team within Higher Education, enabling us to expand and strengthen customer relationships with US school administrators as the demand for college and career readiness programmes grows. |
| · | Pearson VUE successfully launched the Pearson Skilling Suite and continues to make progress building out its test prep business. |
| · | Within US Student Assessment we announced an exclusive partnership with McGraw Hill to integrate our leading interim assessment capabilities directly into McGraw Hill’s K-12 curriculum solutions, unlocking go-to-market opportunities in formative assessment. |
Outlook
Reaffirm 2025 guidance
| · | We continue to expect sales growth and adjusted operating profit in line with market expectations4 for 2025 with stronger sales growth in H2, in particular in Q4. We outline our 2025 guidance later in this release. |
| · | The acquisition of eDynamic Learning is not expected to have a material impact to 2025 guidance given near term integration costs and the acquisition accounting for deferred revenue. |
Medium term outlook
| · | 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 conversion5, in the region of 90% to 100%, on average, across the period. |
