REG - Pearson PLC - Pearson Q1 2026 Trading Update

PearsonAnnouncement

01/05/2026 07:01

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RNS Number : 6895C  Pearson PLC  01 May 2026

Pearson Q1 2026 Trading Update (Unaudited)
 1(st) May 2026  Continued execution drives good Q1 result. On track to deliver 2026 guidance.

Highlights
 ·             Underlying Group sales up 4% in Q1.
 ·             All business units performing in line with expectations; continued strong
               performance in Virtual Learning with underlying sales up 21%, and Assessment
               & Qualifications expected to return to growth from Q2.
 ·             On track to deliver 2026 full year guidance.
 ·             Continued progress against our 2026 priorities, including:
               o                                        Advancing core business and enterprise power metrics, with an Enterprise
                                                        strategic partnership with Salesforce and US Student Assessment contract win
                                                        in Wyoming (link here
                                                        (https://plc.pearson.com/en-GB/news-and-insights/news/pearson-awarded-new-statewide-assessment-contract-wyoming)
                                                        ).
               o                                        Leading with the application of innovative technologies, including the roll
                                                        out of Communication Coach - an AI-powered learning solution integrated into
                                                        Microsoft 365.
               o                                        Expansion of AI learning offerings through the launch of a Foundations of AI
                                                        course for teachers (link here
                                                        (https://plc.pearson.com/en-GB/news-and-insights/news/pearson-empowers-teachers-foundations-ai-pk-12-educators-course)
                                                        ) and the first professional certification for Adobe Firefly (link here
                                                        (https://plc.pearson.com/en-GB/news-and-insights/news/pearson-and-adobe-launch-first-firefly-professional-certification-advance)
                                                        ), helping to upskill learners and workers in the AI era.
 ·             £350m share buyback programme progressing well.

Omar Abbosh, Pearson's Chief Executive, said:

"We have had an encouraging start to the year, with a good performance in line
with our expectations and continued progress against our strategy. We are
executing with discipline, advancing our core business and enterprise
offerings, while applying innovative technologies to enhance learner
experiences. We remain confident in the momentum we are seeing for 2026 and in
our ability to deliver attractive growth for our shareholders."

Underlying Group sales growth of 4% in Q1 2026
 ·             Assessment & Qualifications sales were down 1%, as expected. Growth in
               Pearson Professional Assessments was driven by continued momentum from new
               contracts launched last year, partially offset by headwinds in PDRI. Clinical
               Assessment grew due to the continued traction of our products, particularly in
               International markets, pricing, and digital product growth. US Student
               Assessment won a new statewide assessment contract in Wyoming in the period,
               but sales declined impacted by the previously disclosed loss of the New Jersey
               contract. UK & International Qualifications declined slightly due to
               delivery phasing, reversing in Q2.
 ·             Virtual Learning sales grew 21%, reflecting strong enrolment momentum within
               2025/2026 academic year with enrolment growth increasing to 15%, alongside
               funding upside that phased earlier than last year, and favourable mix.
               Enrolment performance continues to be supported by ongoing investment in
               marketing and strong execution.
 ·             Higher Education sales were up 2%, driven by continued solid performance in
               our core US Courseware business, partially offset by challenging trading
               conditions in mature International markets. In the quarter, there was growth
               of 19% in Inclusive Access and 2% in US digital subscriptions.
 ·             English Language Learning sales increased 2%, driven by Institutional. Pearson
               Test of English (PTE) declined slightly due to a continued tough market
               backdrop.
 ·             Enterprise Learning & Skills sales were up 8%. Vocational Qualifications
               grew well, in part benefitting from revenue phasing. Enterprise Solutions grew
               strongly, driven by the monetisation of strategic partnerships, including
               Salesforce.

On track to deliver 2026 guidance and medium term outlook unchanged
 ·             For 2026, we expect to deliver mid-single digit underlying sales growth,
               adjusted operating profit of £640m-£685m at FX rates as at the end of 2025
               (£:$ 1.35), including the impact of the 2025 product development
               impairment(1), and free cash flow conversion(2) of 90%-100%.
 ·             Over the medium term, Pearson continues to be 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 conversion, in the region of 90% to 100%, on average, across
               the period.

Strong financial position

 ·             Pearson's financial position remains strong, with low leverage and strong
               liquidity.
 ·             Our £350m share buyback programme is progressing well. As at 31(st) March
               2026, £219m of shares had been repurchased at an average price of 964p per
               share.
 ·             In April 2026, we successfully issued a £350m 10-year bond under our Euro
               Medium Term Note (EMTN) programme.

Financial summary
 Sales                             Q1 2026

                                   Underlying growth
 Assessment & Qualifications       (1)%
 Virtual Learning                  21%
 Higher Education                  2%
 English Language Learning         2%
 Enterprise Learning & Skills      8%
 Total                             4%

 

Throughout this announcement growth rates are stated on an underlying basis
unless otherwise stated. Underlying growth rates exclude currency movements,
and portfolio changes.

2026 guidance summary

 

 Underlying Sales growth  Group                             Mid-single digit growth.
                          Assessment & Qualifications       Low to mid-single digit growth, driven by new contracts, products and pricing.
                                                            Returning to growth from Q2, supported by new business and recently awarded
                                                            contracts.
                          Virtual Learning                  Stronger growth than 2025, particularly in H1, driven by a full year of
                                                            enrolment growth.
                          Higher Education                  Will grow more than 2025, supported by continued product and platform
                                                            innovation, pricing and Inclusive Access in our core US courseware business,
                                                            with improvement in the K12 channel.
                          English Language Learning         Higher growth than 2025 driven by market share gains and pricing, with PTE
                                                            returning to growth. Growth will again be Q4 weighted given the seasonality of
                                                            the business.
                          Enterprise Learning & Skills      Growth to be driven by a solid performance in Vocational Qualifications and
                                                            strategic account growth in Enterprise Solutions.
 Group Profit             Adjusted Operating Profit         £640m-£685m at FX rates as at the end of 2025 (£:$ 1.35), which includes
                                                            lower amortisation in 2026 following the 2025 product development
                                                            impairment.
                          Interest                          Adjusted net finance costs of c.£80m - includes associated costs of funding
                                                            the £350m share buyback.
                          Tax rate                          We expect the effective tax rate on adjusted profit before tax to be c.25%.
 Cash flow                                                  We expect a free cash flow conversion of 90-100%.
 FX                                                         Every 1c movement in £:$ rate equates to approximately £5m adjusted
                                                            operating profit impact.

 

(1)The 2025 product development impairment relates to a £87m non-cash,
one-off impairment of legacy product development assets arising from a
strategic platform convergence. This convergence is expected to deliver
ongoing operational improvements and results in a c.£15m per annum adjusted
operating profit improvement, on average, over the next 6 years in Higher
Education.

(2)Free cash flow conversion calculated as free cash flow divided by adjusted
earnings.

 

 

Contacts
 Investor Relations   Alex Shore                               +44 (0) 7720 947 853

                      Steph Crinnegan                          +44 (0) 7780 555 351
                      Brennan Matthews                          +1 (332) 238-8785
 Media

 Edelman Smithfield   Latika Shah                              +44 (0) 7950 671 948

 Pearson              Laura Ewart                              +44 (0) 7798 846 805
 Conference call      We will hold a conference call to discuss Pearson's Q1 2026 Trading Update
                      today at 09:00 (BST). Dial in details are outlined below:

                      United Kingdom: +44 20 3936 2999

                      United States: +1 855 979 6654

                      Access Code: 729911

                      Global Dial-In Numbers
                      (https://www.netroadshow.com/events/global-numbers?confId=97417)
                      (https://www.netroadshow.com/events/global-numbers?confId=97417)

 

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.

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