Pearson 2025 Trading Update (Unaudited)
Rhea-AI Summary
Pearson (LSE:PSO) reported underlying group sales growth of 4% for FY2025 with Q4 accelerating to 8%. Group adjusted operating profit was guided at £610–615m at a £:$ rate of 1.32, up c.6% on an underlying basis. Free cash flow conversion exceeded 95% in 2025, with a £0.1bn State Aid tax recovery and net debt of c.£1.1bn. Business drivers include Virtual Learning (+8% FY; +20% Q4), Enterprise Learning & Skills (+6% FY; +13% Q4) and Assessment & Qualifications (+4% FY). Medium‑term guidance remains mid‑single digit sales CAGR, ~+40bps margin per year and 90–100% average FCF conversion. Full year results: 27 February 2026.
Positive
- Underlying group sales growth of 4% FY2025
- Q4 sales acceleration to 8%
- Group adjusted operating profit maintained at £610–615m (rate £:$ 1.32)
- Free cash flow conversion >b>95% in 2025 and £0.1bn State Aid recovery
- Virtual Learning +8% FY and +20% Q4
- Enterprise Learning & Skills +6% FY and +13% Q4
Negative
- Loss of New Jersey US Student Assessment contract will be a headwind in H1 2026
- International Higher Education sales declined 7% FY2025
- Net debt remains c.£1.1bn, limiting capital flexibility
News Market Reaction
On the day this news was published, PSO declined 9.73%, reflecting a notable negative market reaction. Argus tracked a trough of -5.2% from its starting point during tracking. Our momentum scanner triggered 37 alerts that day, indicating elevated trading interest and price volatility. This price movement removed approximately $986M from the company's valuation, bringing the market cap to $9.15B at that time. Trading volume was very high at 3.9x the daily average, suggesting heavy selling pressure.
Data tracked by StockTitan Argus on the day of publication.
Key Figures
Market Reality Check
Peers on Argus
PSO’s modest 0.14% gain contrasts with mixed peer moves: NYT +1.41%, SCHL +0.71%, but WLY -2.13% and GCI -1.09%, indicating the reaction is more company-specific than sector-driven.
Historical Context
| Date | Event | Sentiment | Move | Catalyst |
|---|---|---|---|---|
| Dec 11 | AI partnership | Positive | +1.8% | Global AI learning partnership with IBM using watsonx and Pearson tools. |
| Dec 04 | AI survey report | Neutral | +0.9% | UK educator survey on AI readiness and demand for related training. |
| Nov 18 | Product launch | Positive | -0.1% | Launch of AI-powered Communication Coach integrated into Microsoft 365. |
| Oct 23 | Education partnership | Positive | -0.4% | Partnership to expand career-connected virtual learning for energy sector. |
| Oct 17 | Trading update | Positive | +2.1% | Nine‑month trading update with Q3 sales growth and in-line profit guidance. |
Recent news has generally been positive around AI and partnerships, with three events showing aligned positive price reactions and two instances (product/partnership updates) where shares edged lower despite constructive headlines.
Over the last few months, Pearson has emphasized AI-enabled learning and strategic partnerships. An AI collaboration with IBM on Dec 11, 2025 and the Communication Coach launch on Nov 18, 2025 followed an earlier nine‑month trading update on Oct 17, 2025 that flagged underlying Group sales up 4% in Q3 and 2% year-to-date. Today’s update, confirming 4% full‑year underlying sales growth and adjusted operating profit of £610–615m, builds on that guidance-consistent trajectory and highlights ongoing AI and enterprise expansion.
Market Pulse Summary
The stock moved -9.7% in the session following this news. A negative reaction despite largely in-line numbers would fit prior instances where positive operational news, such as AI product launches or partnerships, coincided with slight price declines. The update confirms 4% underlying sales growth and adjusted operating profit of £610–615m, plus free cash flow conversion above 95%. Pressure could stem from segment mix, ongoing weakness in International Higher Education, or concern over contract headwinds flagged for H1 2026 rather than the 2025 delivery itself.
Key Terms
underlying growth rates financial
non-GAAP measures financial
IFRS regulatory
free cash flow conversion financial
CAGR financial
basis points financial
AI-generated analysis. Not financial advice.
Strong execution delivers 2025 financial performance in line with guidance, with all business units contributing to growth. Good strategic progress underpins our confidence for 2026 and beyond.
Highlights
- Underlying Group sales growth of
4% for the full year, with Q4 accelerating to8% . - Group adjusted operating profit of
£610 -615m at £:$ of 1.32 for the full year, up c.6% on an underlying basis. - Strong cash generation with free cash flow conversion of more than
95% 1 plus£0.1b n State Aid repayment. - Delivered against our 2025 strategic priorities, with Q4 highlights including:
- Leading on the application of innovative technologies with the launch of Communication Coach - an AI-powered learning solution integrated into Microsoft 365, enabling professionals to enhance communication skills seamlessly within the flow of work, marking our first go-to-market collaboration with Microsoft (link here).
- Ongoing Enterprise momentum, including a new strategic partnership with IBM (link here) and winning a strategic vocational skilling contract for the construction sector in
Saudi Arabia . Pearson Professional Assessments (formerly known as Pearson VUE) selected to be the test delivery provider for Google Cloud certifications.
Omar Abbosh, Pearson's Chief Executive, said:
"In 2025 we successfully delivered against our financial and strategic priorities by expanding our partnerships, growing our Enterprise reach, and advancing the use of AI to improve learning and upskilling. All of this was achieved thanks to the strong delivery of our people, who have been focused on executing for our customers. We enter 2026 with momentum, are excited about the opportunities that lie ahead, and remain well positioned to deliver value to our stakeholders."
Underlying Group sales growth of
- Assessment & Qualifications sales grew
4% for the full year with all sub-business units contributing to growth. Pearson Professional Assessments secured several new contracts, with continued strong customer retention supporting future growth. US Student Assessment renewed and extended several key contracts in the year, although lost the contract withNew Jersey , which will be a headwind in H1 2026. In Clinical Assessment, sales grew due to the continued traction of our products in the market, pricing and digital product growth.UK & International Qualifications benefited from volume, pricing, and International growth. Sales growth accelerated in Q4, with sales up8% , driven by new contract launches in Pearson Professional Assessments and the return to growth in US Student Assessment as phasing normalised. - Virtual Learning sales increased
8% for the full year with strong performance in H2. Sales increased20% in Q4, driven by a13% increase in 2025/26 academic year enrolments in the Fall semester, favourable mix and funding. - Higher Education sales were up
2% for the full year and flat in Q4. US Higher Education sales grew3% for the full year, driven by enrolments and pricing in our core Courseware business, partly offset by K-12 declines given the transitionary period, with adoption share maintained. In the year, there was growth of1% in US digital subscriptions and19% in Inclusive Access. International Higher Education faced ongoing challenging trading conditions in mature markets, declining7% for the full year. - English Language Learning sales grew
1% for the full year driven by Institutional. Pearson Test of English (PTE) sales were flat, performing well against a tough market backdrop. Sales growth accelerated in Q4 to8% , driven by a strong performance in Institutional, particularly in key Latin American markets andAsia , partially offset by expected declines in PTE following volume strength ahead of test enhancements in Q3. - Enterprise Learning & Skills sales grew
6% for the full year and13% in Q4, with a solid performance in Vocational Qualifications and continued quarter-on-quarter improvement in Enterprise Solutions, driven by the recently announced partnerships.
Strong financial position
- Pearson's financial position remains robust, with a strong balance sheet, net debt of c.
£1.1b n and a 2025 free cash flow conversion of more than95% 1 plus recovery of the£0.1b n in relation to State Aid taxes.
Medium Term Outlook unchanged
- 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 conversion1, in the region of
90% to100% , on average, across the period.
Financial calendar
- Full year results will be announced on 27 February 2026. We will hold an in-person presentation and Q&A session, during which we will outline the 2026 outlook.
Financial summary
Underlying growth for the fourth quarter and financial year ended 31 December 2025 compared to the equivalent period in 2024.
Sales | Q4 | Full Year |
Assessment & Qualifications | 8 % | 4 % |
Virtual Learning | 20 % | 8 % |
Higher Education | 0 % | 2 % |
English Language Learning | 8 % | 1 % |
Enterprise Learning & Skills | 13 % | 6 % |
Total | 8 % | 4 % |
Throughout this announcement: a) growth rates are stated on an underlying basis unless otherwise stated. Underlying growth rates exclude currency movements and portfolio changes. b) The 'business performance' measures are non-GAAP measures. Please refer to full year and half-year results for further detail and reconciliations to the equivalent statutory heading under IFRS. | ||
1Free cash flow conversion calculated as free cash flow divided by adjusted earnings. | ||
Contacts
Investor Relations | Alex Shore Steph Crinnegan | +44 (0) 7720 947 853 +44 (0) 7780 555 351 |
Gemma Terry Brennan Matthews | +44 (0) 7841 363 216 +1 (332) 238-8785 | |
Media Teneo Pearson | Ed Cropley Laura Ewart | +44 (0) 7492 949 346 +44 (0) 7798 846 805 |
About Pearson
At Pearson, our purpose is simple: to help people realise the life they imagine through learning. We believe that every learning opportunity is a chance for a personal breakthrough. That's why our Pearson employees are committed to creating vibrant and enriching learning experiences designed for real-life impact. We are the world's lifelong learning company, serving customers with digital content, assessments, qualifications, and data. For us, learning isn't just what we do. It's who we are. Visit us at pearsonplc.com.
Notes
Forward looking statements: Except for the historical information contained herein, the matters discussed in this statement include forward-looking statements. In particular, all statements that express forecasts, expectations and projections with respect to future matters, including trends in results of operations, margins, growth rates, overall market trends, the impact of interest or exchange rates, the availability of financing, anticipated cost savings and synergies and the execution of Pearson's strategy, are forward-looking statements. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will occur in future. They are based on numerous assumptions regarding Pearson's present and future business strategies and the environment in which it will operate in the future. There are a number of factors which could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, including a number of factors outside Pearson's control. These include international, national and local conditions, as well as competition. They also include other risks detailed from time to time in Pearson's publicly-filed documents and you are advised to read, in particular, the risk factors set out in Pearson's latest annual report and accounts, which can be found on its website (www.pearsonplc.com). Any forward-looking statements speak only as of the date they are made, and Pearson gives no undertaking to update forward-looking statements to reflect any changes in its expectations with regard thereto or any changes to events, conditions or circumstances on which any such statement is based. Readers are cautioned not to place undue reliance on such forward-looking statements.
FAQ
What were Pearson (PSO) underlying sales growth rates for FY2025 and Q4 2025?
What operating profit guidance did Pearson (PSO) report for 2025?
How strong was Pearson's cash generation in 2025 and what is net debt for PSO?
Which Pearson (PSO) segments showed the fastest growth in Q4 2025?
What medium‑term outlook did Pearson (PSO) set after the 2025 trading update?
When will Pearson (PSO) publish full year FY2025 results and host the presentation?
