REG - Pearson PLC - Pearson 2024 Trading Statement

PearsonAnnouncement

16/01/2025 07:00

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RNS Number : 5071T  Pearson PLC  16 January 2025

Pearson 2024 Trading Update (Unaudited)

 16(th) January 2025  Delivered on financial(1) and strategic priorities for 2024. Entering 2025
                      with continued confidence. New strategic partnership with Microsoft
                      progressing our Enterprise focus and technology transformation.

 

Highlights

 

 ·         Underlying Group sales growth(2) of 3% for the full year, excluding OPM(3) and
           the Strategic Review(4) businesses.
 ·         Group adjusted operating profit of £595-600m at £:$ of 1.28 for the full
           year, up c.10% on an underlying basis compared to 2023, resulting in a margin
           of c.16.8% (2023: 15.6%).
 ·         Free cash flow conversion in excess of 100%(5), ahead of guidance.
 ·         Successfully delivered our 2024 strategic priorities with progress in
           Enterprise and scaling AI across our products and services including the
           recent launch of an AI powered Digital Language Tutor (link here
           (https://plc.pearson.com/en-GB/news-and-insights/news/pearson-launches-digital-language-tutor-tackle-workplace-communication)
           ).
 ·         New multi-year strategic Enterprise AI partnership with Microsoft (link here
           (https://plc.pearson.com/en-GB/news-and-insights/news/pearson-and-microsoft-announce-multi-year-partnership-transform-future)
           ):
           o                                                                 Extending our commercial relationship with Pearson VUE;
           o                                                                 Future collaboration on innovation and joint go-to-market activities,
                                                                             including in AI upskilling; and
           o                                                                 Opportunity to enhance our AI and technology capabilities across the business.

 

Omar Abbosh, Pearson's Chief Executive, said:

"I am pleased with the progress Pearson has made in 2024, successfully
executing against our financial and strategic priorities. I'm particularly
encouraged to see the growing commercial momentum of our AI enhanced offerings
and the strategic Enterprise partnerships that we have established, such as
the latest with Microsoft. These reflect the strength of our proposition and
the opportunities that lie ahead.

 

The Group is well positioned, with continued confidence, as we look to build
on our strategic and operational progress and deliver long-term future value
for our shareholders."

 

Underlying sales growth(2) of 3% for 2024, excluding OPM(3) and Strategic
Review(4) businesses; 2% in aggregate

 ·             Assessment & Qualifications sales were up 3% for the full year and 4% in
               Q4. Pearson VUE performance was driven by favourable mix, with PDRI seeing
               good growth. In Clinical Assessment, sales grew due to pricing, digital
               product growth and successful new product launches. UK & International
               Qualifications benefited from volume, pricing, and International growth. US
               Student Assessment performance was supported by several key contract renewals.
 ·             Virtual Schools sales decreased 1% for the full year, due to the previously
               announced partner school losses, the impact of which will normalise in H1
               2025. 2024/25 academic year enrolments were up 4% on a same school basis and
               we opened 3 new schools in 2024 taking our total number of schools to 40.
               Virtual Learning sales declined 4% for the full year attributable to the final
               portion of the OPM ASU contract in the first half of 2023. Virtual Learning
               sales declined 5% in Q4 as expected, driven by a tough comparator which saw
               funding improvements in Virtual Schools in 2023.
 ·             Higher Education sales grew 1% for the full year and 2% in Q4, in line with
               expectations. In US Higher Education full year sales growth was driven by
               continued gains in adoption share, enrolments, and pricing, partially offset
               by mix impacts. In the year, there was growth of 3% in US digital
               subscriptions and 24% in Inclusive Access. We accelerated the rollout of AI
               within our products in the fourth quarter. Pearson+ registered users increased
               1% compared to the prior Fall semester, with paid subscriptions flat over the
               same period and in addition we have been successful in monetising our Channels
               product.
 ·             English Language Learning sales increased 8% for the full year with all three
               business sub-units contributing to growth. Institutional continues to deliver
               strong performance especially in the Middle East and LatAm. Pearson Test of
               English (PTE) performed well against a tough market backdrop of tightening
               migration policies. We continue to incorporate AI within our English Language
               business unit, launching our first AI powered Digital Language Tutor in the
               fourth quarter. In Q4 sales grew 11%, an improvement on Q3 due to phasing of
               revenue in Institutional as expected.
 ·             Workforce Skills sales grew 6% for the full year, with a solid performance in
               both Vocational Qualifications and Workforce Solutions. Q4 sales increased by
               4% driven by a strong performance in Workforce Solutions partially offset by
               Vocational Qualifications, as the business had a tough comparator with strong
               double digit growth in the prior year.

Evolution of Workforce Skills

 ·             Pearson has a significant opportunity to help enterprises drive productivity
               and growth by transforming how they evaluate, assess, and reskill their
               workforce, as well as delivering world-class vocational training and
               qualifications. To sharpen our focus on the enterprise customer segment, we
               have formed a global enterprise sales team to enable us to better meet the
               needs of these customers with a full suite of Pearson solutions. From January
               this year, Workforce Skills will evolve to become Enterprise Learning and
               Skills, bringing together Pearson's enterprise sales capabilities globally
               (excluding those of Pearson VUE). The Enterprise Learning and Skills business
               unit will be led by Vishaal Gupta.
 ·             This simplification of the business unit structure will result in modest
               revenues and costs being transitioned into the Enterprise Learning and Skills
               business unit from Higher Education. More detail on the financial impact of
               this change will be outlined at the full year results. We also note that the
               sub-unit Workforce Solutions becomes Enterprise Solutions.

 

Strong financial position

 ·             Pearson's financial position remains robust, with a strong balance sheet, net
               debt of less than £0.9bn and 2024 free cash flow conversion in excess of
               100%(5).

 

Executive Changes

 ·             We announce the appointment of Naseem Tuffaha as Chief Business Officer.
               Naseem has a successful track record of high growth and operational excellence
               at Microsoft, and more recently The Trade Desk.

 

Financial calendar

 ·             Full year results will be announced on 28 February 2025. We will hold an
               in-person presentation and Q&A session, during which we will outline the
               2025 outlook.

 

 Financial summary

 Underlying growth for the fourth quarter and financial year ended 31(st)
 December 2024 compared to the equivalent period in 2023.

Sales                                            Q4      Full Year
 Assessment & Qualifications                      4%      3%
 Virtual Learning                                 (5)%    (4)%
 Higher Education                                 2%      1%
 English Language Learning                        11%     8%
 Workforce Skills                                 4%      6%
 Strategic Review(4)                              (100)%  (100)%
 Total                                            3%      2%
 Total, excluding OPM(3) and Strategic Review(4)  3%      3%

 

 For an accompanying data sheet providing 2024 metrics relating to sales across
 select key businesses as well as a breakdown of US Higher Education Courseware
 college units and Pearson+ metrics, please follow this link
 (https://plc.pearson.com/en-GB/investors/performance/results-reports-presentations)
 .

 

 

For an accompanying data sheet providing 2024 metrics relating to sales across
select key businesses as well as a breakdown of US Higher Education Courseware
college units and Pearson+ metrics, please follow this link
(https://plc.pearson.com/en-GB/investors/performance/results-reports-presentations)
.

 

(1)2024 consensus on the Pearson website dated 30th August 2024; adjusted
operating profit of £598m at £:$ 1.27. As a reminder, every 1c movement in
£:$ rate will equate to approximately £5m adjusted operating profit impact.

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

(3) We completed the sale of the Pearson Online Learning Services (POLS)
business in June 2023 and as such have removed it from underlying measures
throughout. Within this specific measure we exclude our entire OPM business
(POLS and ASU) to aid comparison to guidance.

(4) Strategic Review is sales in international courseware local publishing
businesses which have been wound down. As expected, there are no sales in
these businesses in 2024.

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

 

 

 

Contacts

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

                     Gemma Terry         +44 (0) 7841 363 216
                     Steph Crinnegan     +44 (0) 7780 555 351

                     Brennan Matthews    +1 (332) 238-8785
 Media

 Teneo               Ed Cropley          +44 (0) 7492 949 346

 Pearson             Laura Ewart         +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.

 

 

 

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