Pearson plc

Pearson reported H1 2026 underlying revenue growth of 4%, adjusted operating profit up 14% to GBP 226 million, margin expansion of 140 basis points to 15.5%, and adjusted EPS up 19% at constant exchange rates to 28.9p. Free cash flow was GBP 259 million, up GBP 103 million versus last year, and net debt increased by GBP 0.3 billion to GBP 1.3 billion at June 2026. For the full year, management reiterated guidance for mid-single-digit underlying revenue growth, adjusted operating profit of GBP 640 million to GBP 685 million at end-2025 FX rates, and free cash conversion of 90% to 100%. Business-unit guidance included A&Q low to mid-single-digit growth, Virtual Learning stronger growth than 2025, Higher Education growth above 2025, ELL impacted by a more uncertain market backdrop, and ELS driven by vocational and strategic account growth.

Omar Abbosh framed the quarter as evidence that Pearson’s model is resilient and that the company is benefiting from both core execution and structural demand tied to AI and skills validation. He pointed to the new AI lab certification launch, faster-than-usual rollout, and expanded strategic partnerships as proof that Pearson is well positioned where technology is reshaping workforce needs. His tone was upbeat but measured, repeatedly stressing that the team is focused on simplification, operational leverage and building toward medium-term margin expansion.

Simon Robson emphasized that the H1 performance was driven by operating leverage and cost efficiencies, partially offset by investment and inflation. He cited adjusted operating profit of GBP 226 million, margin of 15.5%, EPS of 28.9p, free cash flow of GBP 259 million, and net debt of GBP 1.3 billion, while noting that cash performance benefited from disciplined working capital, payables timing and one-off insurance proceeds. He also said capital allocation priorities are unchanged, highlighted the completed GBP 350 million buyback, and noted a proposed 5% increase in the interim dividend to 8.2p.

Analysts focused on the AI lab certification contract, A&Q margin recovery, capital allocation, ACT exposure, college enrollments, and the cadence of second-half growth. Management said the AI lab relationship has already launched, with the first tens of thousands of users through the exam, but stressed it is still early days. On A&Q margins, they cited mix pressure from the New Jersey contract ending and the first year of the UK SATs contract, plus one-time delivery costs, saying these should normalize over time. They also said ACT services should continue beyond this year, college enrollments remain slightly under pressure, and Q3 will carry more of the year’s growth because of seasonality and an unusually strong Q4 comparable last year.