Pearson H1 Earnings Call Highlights

Pearson delivered a strong first half: Underlying revenue rose 4%, adjusted operating profit increased 14% to £276 million, and adjusted EPS grew 19% to £0.289. The company maintained its full-year guidance for mid-single-digit revenue growth and £640 million–£685 million in adjusted operating profit. Virtual Learning and Enterprise Learning & Skills led growth: Virtual Learning revenue jumped 19%, while Enterprise Learning & Skills increased 7%, supported by enrollment momentum, vocational qualifications and AI-upskilling programs. English-language testing remains a key weakness: English Language Learning revenue fell 3% as Pearson Test of English continued to decline amid softer study-abroad demand, tighter migration policies and geopolitical disruption. Assessment margins also faced pressure from contract changes and one-time costs related to U.K. primary-school testing.

Pearson NYSE: PSO reported higher revenue, profit and earnings per share for the first half of 2026 and said it remains on track to meet its full-year guidance, as growth in Virtual Learning, Enterprise Learning & Skills and several assessment businesses offset pressure in English language testing. Revenue rose 4% on an underlying basis, while adjusted operating profit increased 14% to £276 million. The company’s adjusted operating margin expanded 140 basis points to 15.5%. Adjusted earnings per share rose 19% at constant exchange rates, or 18% on a headline basis, to £0.289.

Chief Executive Omar Abbosh said the first-half performance reflected Pearson’s exposure to assessments and verification, virtual schools and print, which together account for about 90% of company profit. He said these businesses benefit from complex delivery workflows and positions in regulated markets. “We have delivered a good H1 financial result with revenue up 4%, profit up 14%, and EPS up 19%, alongside continued strong cash flow strength,” Abbosh said. “We’re on track to deliver our guidance for the year.”

Free cash flow increased by £103 million from the prior year to £259 million. Pearson said operating cash flow benefited from working-capital management, the timing of payables and one-off proceeds from the settlement of a U.S. insurance policy. Net debt stood at £1.3 billion at the end of June 2026, up £0.3 billion from a year earlier. The company said cash generation was more than offset by share buybacks, acquisition spending and dividends. Pearson proposed a 5% increase in its interim dividend to £0.082 per share and said its £350 million accelerated share repurchase program had been completed. Chief Financial Officer Simon Robson said the company’s capital-allocation priorities remain unchanged: investing in the business, pursuing disciplined mergers and acquisitions, paying dividends and distributing excess capital.

For the full year, Pearson maintained guidance for mid-single-digit underlying revenue growth, adjusted operating profit of £640 million to £685 million at exchange rates prevailing at the end of 2025, and free-cash-flow conversion of 90% to 100%. Robson said growth is expected to improve in the second half and to be weighted toward the third quarter, reflecting seasonal back-to-school activity in Higher Education and other business-unit dynamics. He also said the fourth-quarter comparison will be more demanding after a strong fourth quarter in 2025.

Virtual Learning was the company’s fastest-growing major segment, with revenue up 19%. Pearson attributed the result to enrollment momentum in the 2025-2026 academic year, funding and favorable business mix. Spring-semester enrollment growth accelerated to 15%,...