Pearson Stock Price, News & Analysis

Pearson (PSON.L) released a report titled 'Lost in Transition: Fixing the Skills Gap' at the World Economic Forum Annual Meeting, revealing that inefficient career transitions and learning gaps cost the U.S. economy $1.1 trillion annually (5% of GDP). The research warns of a potential global 'skills chasm' between employer needs and employee capabilities.

The report emphasizes two critical actions: prioritizing 'learning to learn' and developing modern skilling pathways. The first focuses on metacognitive skills that can accelerate yearly learning progress by seven months. The second promotes work-based learning and estimates the U.S. could gain $40 billion annually by reducing transition time from education to work by six weeks.

The research, based on Pearson's Faethm data, explores solutions including virtual reality for career exploration, lifelong learning financing, digital wallets for skills tracking, and AI-powered career mapping.

Pearson (PSO) reported 3% underlying Group sales growth for 2024 (excluding OPM and Strategic Review businesses), with adjusted operating profit of £595-600m at £:$ of 1.28, representing a ~10% increase from 2023. The company achieved a margin of ~16.8% (up from 15.6% in 2023) and free cash flow conversion exceeded 100%.

Key performance highlights include: Assessment & Qualifications up 3%, Higher Education grew 1%, English Language Learning increased 8%, and Workforce Skills rose 6%. Virtual Learning declined 4% due to OPM ASU contract completion. The company announced a new strategic AI partnership with Microsoft and is evolving its Workforce Skills unit to become Enterprise Learning and Skills, focusing on enterprise customers.

The company maintains a strong financial position with net debt under £0.9bn and appointed Naseem Tuffaha as Chief Business Officer.

Pearson (PSO) and Microsoft (MSFT) announced a strategic partnership to address AI skilling challenges in the workforce. The collaboration combines Pearson's learning expertise with Microsoft's cloud and AI technologies to develop new AI-powered products and services.

Key aspects of the partnership include: Pearson leveraging Microsoft Azure Cloud and AI infrastructure to scale personalized learning services; development of new AI credentials and certifications; extension of Pearson VUE's Microsoft certification partnership through 2029; and Pearson's deployment of Microsoft 365 Copilot across its workforce.

The partnership addresses critical market needs, as IDC research shows lack of skilled workers is the biggest challenge for AI implementation, with 66% of leaders unwilling to hire candidates without AI skills. Pearson's research indicates generative AI could save U.S. workers 78 million hours weekly on routine tasks.

Pearson (PSON.L) and the Centre for Economics and Business Research (Cebr) released a report showing that a £130 million annual investment in school technology over the next decade could generate up to £8.7 billion in economic benefits for the UK, with a return of £7.90 for every £1 invested.

The analysis focuses on three key areas: device provision, broadband improvement, and teacher training. Key benefits include:

• £900 million in teacher time savings in the first year
• £200 million in additional earning potential by year 10
• £180 million in economic productivity benefits by year 10
• Two million kg of CO2E savings by year 10

Current challenges include insufficient device provision in schools (only 34% of secondary and 31% of primary schools have adequate devices), slow internet speeds, and teacher training in digital skills. Pearson plans to launch a Digital in Schools project in 2025 to help unlock EdTech benefits.

Pearson (PSON.L) released new insights showing increased AI adoption in higher education. Students using Pearson's AI tools are 4x more likely to engage in active studying, with an 11-percentage-point increase in students reporting better grades and study efficiency. Usage data reveals that students using AI-generated flashcards were nearly 3x more likely to return and practice.

The analysis shows 38% of student inputs demonstrate higher cognitive complexity, while 25% involved critical thinking skills. AI sessions in MyLab and Mastering increased 95% from fall 2023 to 2024. Faculty adoption is also growing, with 77% of surveyed educators envisioning AI integration in teaching methods, particularly for generating examples, providing tutoring services, and developing instructional content.

Pearson reported positive Q3 2024 performance with 5% underlying sales growth, resulting in 3% growth for the nine-month period. All divisions delivered growth in Q3, including Higher Education up 4%, Assessment & Qualifications up 6%, Virtual Learning up 4%, English Language Learning up 2%, and Workforce Skills up 6%. The company signed a new multi-year enterprise deal with ServiceNow and expanded partnership with Degreed. AI initiatives showed progress with double-digit year-over-year billings growth in Higher Education products featuring AI study tools. The company completed its £500m share buyback, issued a £350m Educational Bond, and maintains a strong financial position with Moody's upgrading its rating to Baa2.

Pearson's Skills Map U.S. predicts 1.9 million new jobs will be created through 2028, despite automation, AI, and demographic shifts reshaping the job market. The report, based on an analysis of 85 million U.S. job ads, emphasizes that all jobs are becoming 'tech jobs' as businesses integrate advanced technologies.

Key findings include:

• Technology expertise will be in high demand across all sectors
• Human skills remain essential
• Upskilling and reskilling will be critical

The report focuses on the 'Three A's' - automation, AI, and an aging population - as key drivers of change. It highlights the growing importance of blending technical expertise with industry-specific skills and the need for businesses to rethink workforce strategies.

Pearson has launched a Generative AI Foundations certification to address the growing demand for AI skills across industries. The program, developed by Certiport, a Pearson VUE business, aims to equip professionals and students, including high schoolers, with essential skills for working with generative AI technologies. The certification is part of Certiport's Critical Career Skills portfolio and was created in partnership with Mindstone, a global leader in AI training.

The certification will be available from October 1 through Mindhub and Certiport, with flexible purchasing options. It will validate proficiency in key areas such as understanding generative AI methods and models, mastering prompt engineering basics, and grasping the societal impact of AI. According to the 2024 Work Trend Index Annual Report, 66% of business leaders would not hire candidates lacking AI skills, highlighting the importance of such certifications in the current job market.

Pearson's Connections Academy has expanded its college and early career program to over 20 schools, now covering more than half of its supported schools in the US. This expansion provides tens of thousands of middle and high school students with opportunities to earn college credits and industry certifications. The program's tri-credit approach offers high school credit, industry-recognized micro-credentials, and eligibility for college credit towards US bachelor's degree programs.

The initiative has doubled career partnerships, increasing students' exposure to industry experiences. New partnerships include Future Business Leaders of America, The Home Depot, HOSA-Future Health Professionals, and the SEMI Foundation. The program also provides access to career assessments, post-secondary planning, career coaching, and engagement with professionals in STEM, film, and creative careers.