$PSO earnings report

Pearson reported 5% underlying Group revenue growth for the nine-month period ended 30 September 2026, accelerating to 6% in Q3. The acceleration was led by Assessment & Qualifications, where Q3 growth reached 10%, and by Virtual Learning, which grew 13% in Q3 after 17% growth for the nine-month period. The company said the quarter was in line with expectations and reiterated its expectation for mid-single digit underlying revenue growth in 2026.

Virtual Learning was the largest reported growth contributor, supported by strong enrolment growth, funding upside and favourable mix. Fall-semester enrolments for the 2026/27 academic year rose 8%, and Pearson opened five new schools, bringing its network to 46 schools across 32 states. Assessment & Qualifications benefited from new contract launches and demand for trusted AI-skills verification. Professional Assessments included a global certification programme with Anthropic, while Clinical Assessment and UK & International Qualifications also contributed to nine-month growth.

Higher Education grew 2% in both the nine-month period and Q3. Inclusive Access grew 20% over the nine-month period, while Q3 US Courseware performance was solid. However, K12 declines from delayed adoptions and funding pressures partly offset that progress. English Language Learning was the principal drag, declining 4% for the nine-month period and 5% in Q3 as PTE faced tight migration policies, geopolitical disruption and a strong comparator following prior-year test enhancements. Enterprise Learning & Skills maintained growth, rising 7% for the nine-month period and 6% in Q3 through Vocational Qualifications contracts and Enterprise Solutions partnerships.

Pearson narrowed its 2026 adjusted operating profit guidance to £650m-£675m from the previously stated £640m-£685m range, while maintaining its free cash flow conversion expectation of 90-100%. The guidance includes lower amortisation following the £87m non-cash, one-off impairment of legacy product development assets in 2025. The company is also restructuring into four customer-focused business units effective from 1 January 2027. It expects c.£50m of one-off reorganisation costs across FY26 and FY27, with savings to be reinvested into growth-orientated core capabilities.

Capital deployment focused on assessment and enterprise capabilities. Pearson completed the ITS acquisition and agreed to acquire Workera, which is expected to complete before year end. The acquisitions are intended to extend assessment, verification, workforce intelligence and enterprise offerings. Key execution points are sustained Virtual Learning enrolment momentum, PTE conditions, the expected Q4 reversal of US Student Assessment delivery-phasing benefits, Workera completion and integration, and disclosure of historical proforma financial performance for the new reporting structure.

Pearson delivered £1,779m of revenue in the six months to 30 June 2026, up 3% on a headline basis and 4% on an underlying basis. The result was described as in line with expectations. Virtual Learning was the principal growth engine, with revenue up 19% on an underlying basis, while Enterprise Learning & Skills grew 7%. Assessment & Qualifications returned to growth in Q2 and grew 2% in H1, while Higher Education grew 2%. These gains offset a 3% decline in English Language Learning.

Profit performance outpaced revenue. Adjusted operating profit rose 14% to £276m, and the adjusted operating profit margin increased 140bps to 15.5% from 14.1%. Operating leverage and cost efficiencies were the stated drivers, partially offset by investment and inflation. Virtual Learning adjusted operating profit increased to £49m from £39m, Enterprise Learning & Skills rose to £51m from £43m, and Higher Education moved to £21m from a loss of £3m. Assessment & Qualifications adjusted operating profit declined to £157m from £170m because sales mix and one-time delivery costs more than offset trading performance.

Statutory earnings did not move in line with adjusted profit. Statutory operating profit increased to £252m from £240m, but profit for the period declined to £149m from £166m and basic earnings per share declined to 24.0p from 24.8p. Higher net finance costs and a higher statutory tax rate contributed to this divergence. Adjusted earnings per share rose 18% to 28.9p, supported by adjusted operating profit growth and the reduction in issued shares from the buyback programme, partly offset by interest costs and tax.

Cash flow was strong, with operating cash flow rising to £337m and free cash flow increasing to £259m. The filing attributes the operating cash improvement to working-capital movements, including payment timing benefits expected to reverse in H2, and proceeds from a one-off US insurance-policy settlement. Net debt increased to £1,343m from £1,069m at the end of 2025 because free cash flow was more than offset by the £350m buyback programme, other own-share purchases and dividends. Pearson also issued a £350m bond in April 2026.

Management reiterated its 2026 outlook for mid-single digit underlying revenue growth, adjusted operating profit of £640m-£685m at FX rates as at the end of 2025, and free cash flow conversion of 90-100%. The outlook calls for English Language Learning to return to growth in Q4, despite persistent Pearson Test of English headwinds. Delivery through H2 is particularly important because Pearson stated that some businesses have seasonal bias, with a higher proportion of profit and operating cash flow typically generated in the second half.