Pearson (LSE:PSON), the education and assessment group, reported underlying revenue growth of 4% for the six months to 30 June, in line with expectations.
Adjusted operating profit rose 14% on an underlying basis to £276m, with margin expanding 140 basis points to 15.5%, aided by a 2025 product development impairment and investment phasing.
Free cash flow increased £103m to £259m, while adjusted earnings per share rose 18% to 28.9p, or 19% at constant currency.
"We have delivered a good first-half performance and executed well against our strategy," said chief executive Omar Abbosh, adding the company is "uniquely placed to meet the growing customer demand for reskilling in an AI driven world."
Virtual Learning revenue grew 19% on strong enrolment momentum, with Spring semester enrolment growth accelerating to 15%. Assessment & Qualifications returned to growth in the second quarter as expected, up 2% in the first half, though US Student Assessment fell 6% following the previously disclosed loss of the New Jersey contract. English Language Learning revenue declined 3%, hurt by tougher conditions for its Pearson Test of English product.
Net debt rose to £1.3bn from £1bn a year earlier after £350m of share buybacks, acquisition spend and dividends. The interim dividend rises 5% to 8.2p.
Pearson reiterated 2026 guidance of mid-single digit underlying revenue growth, adjusted operating profit of £640m-£685m, and free cash flow conversion of 90%-100%. The company reports its nine-month trading update on 22 October.
News Intelligence what this means for the company
Pearson delivered H1 results in line with expectations: 4% underlying revenue growth, 14% adjusted operating profit growth to £276m, and 18% EPS growth to 28.9p, while reiterating its 2026 guidance of mid-single-digit revenue growth and £640m–£685m adjusted operating profit. The profit beat was driven partly by a 2025 product development impairment and investment phasing rather than operational outperformance, and margin expansion of 140 basis points masks a mixed divisional picture—Virtual Learning surged 19% on strong enrolment, but US Student Assessment fell 6% due to the New Jersey contract loss and English Language Learning declined 3%.
- Virtual Learning's 19% growth and 15% Spring enrolment acceleration suggest Pearson is capturing demand for reskilling in AI-driven sectors, a tailwind the CEO highlighted; sustained momentum here is critical to offset headwinds in Assessment & Qualifications and English Language Learning.
- Net debt rose to £1.3bn from £1bn despite £259m free cash flow, reflecting £350m returned to shareholders via buybacks and dividends; the company's 90%–100% free cash flow conversion guidance for 2026 will be tested if revenue growth remains at the low end of mid-single digits.
The H1 result confirms Pearson is executing its strategy and generating cash, but the profit beat is partly accounting-driven and divisional momentum is uneven. Reiteration of 2026 guidance signals confidence, yet the company faces execution risk on sustaining Virtual Learning growth while stabilizing Assessment & Qualifications and English Language Learning—both of which remain under pressure.
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