Pearson plc

Pearson said H1 group revenue rose 4% underlying, group adjusted operating profit increased 14% to GBP 226 million, and adjusted EPS rose 19% at constant exchange rates to 28.9p, or up 18% on a headline basis. Group adjusted operating margin expanded 140 basis points to 15.5%. Free cash flow was GBP 259 million, up GBP 103 million year over year, and net debt increased by GBP 0.3 billion to GBP 1.3 billion at June 2026. For full year 2026, management reiterated guidance for mid-single-digit underlying revenue growth, adjusted operating profit of GBP 640 million to GBP 685 million at last year’s FX rates, and free cash conversion of 90% to 100%. They also said they expect growth to improve in H2 and to be weighted to Q3, while English Language Learning growth is less certain given market conditions.

Omar Abbosh framed Pearson as a business with durable cash generation and exposure to structural demand for skills validation, especially as AI adoption increases demand for trusted certification. He highlighted progress across core businesses, including enterprise growth, virtual schools, higher education inclusive access, and new AI-related partnerships, and repeatedly emphasized execution, simplification, and operating discipline. His tone was constructive and confident, while acknowledging specific weaknesses such as the tougher English Language Learning backdrop and the temporary issues with the new UK primary testing platform.

Simon Robson said the first half delivered 4% underlying revenue growth, 14% adjusted operating profit growth to GBP 226 million, and 140 basis points of margin expansion to 15.5%. He pointed to operating leverage and cost efficiencies as the main profit drivers, partly offset by investment and inflation, and said EPS rose to 28.9p helped by higher profit and a lower share count from buybacks. He also highlighted strong cash generation, with free cash flow of GBP 259 million, and said net debt was GBP 1.3 billion at June 2026. On capital allocation, he reiterated the approach is unchanged, cited the completed GBP 350 million buyback, and said the company will keep prioritizing investment, disciplined M&A, dividends, and returning excess capital.

Analysts pressed management on the new AI lab certification contract, A&Q growth and margins, buyback policy, ACT exposure after ETS acquired ACT, college enrollment trends, and the timing of full-year growth. Management said the AI lab relationship is already launched, has moved from first discussion to rollout in a matter of months, and is early but meaningful, with the first tens of thousands of test takers already through. On A&Q, they said margin pressure in H1 came from contract mix and one-time SATs delivery costs, but H2 should improve as new contracts, clinical AI products, and easier comps flow through. They also said Pearson’s ACT-related services continue through this year and beyond, enrollment headwinds are slight and expected, and the Q3 weighting reflects normal seasonality plus a tough Q4 comparison from last year.