Pearson plc

Pearson reported first-half 2026 underlying revenue growth of 4%, adjusted operating profit of GBP 226 million, up 14%, with 140 basis points of margin expansion to 15.5%. Adjusted EPS rose 19% at constant exchange rates to 28.9p. By segment, Assessment & Qualifications revenue increased 2%, Virtual Learning grew 19% with margin at 18%, Higher Education revenue grew 2%, English Language Learning revenue declined 3%, and Enterprise Learning & Skills revenue grew 7%. 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 the full year, management reiterated underlying revenue growth in the mid-single digits, adjusted operating profit of GBP 640 million to GBP 685 million at constant FX, and free cash conversion of 90% to 100%.

Omar Abbosh emphasized that Pearson is benefiting from its “verification infrastructure” role in skills and assessment, especially as AI adoption increases demand for trusted credentials. He highlighted new work with a leading AI lab, expansion in enterprise AI upskilling, and ongoing simplification of the business through standardized processes, AI-enabled customer service, and more unified go-to-market execution. His tone was confident and upbeat, but he also acknowledged specific headwinds in English Language Learning and a temporary delay in U.K. primary test results due to platform issues.

Simon Robson said his first three months reinforced his view that Pearson has leading positions, structural growth opportunities, and resilient cash generation. He detailed H1 adjusted operating profit of GBP 226 million, 15.5% margin, adjusted EPS of 28.9p, and free cash flow of GBP 259 million, with strength driven by working capital discipline, payables timing, and one-off insurance proceeds. He also noted that net debt rose to GBP 1.3 billion, reflecting buybacks, acquisitions, and dividends, while capital allocation priorities remain unchanged, including the GBP 350 million buyback and a 5% interim dividend increase to 8.2p.

Analysts pressed management on the new AI lab certification deal, the sustainability of Assessment & Qualifications growth, capital allocation, ACT’s ownership change, college enrollment trends, and why full-year growth is expected to be weighted to Q3. Management said the AI lab program is already live, that the contract is early but could be meaningful, and that A&Q growth should be supported by new contracts, the SATs contract, clinical momentum, and easier comparisons. On capital allocation, Simon said Pearson will remain disciplined, continue investing in the business, evaluate M&A carefully, and return excess capital without changing policy.