Pearson plc

Group revenue increased 4% on an underlying basis in H1. Group adjusted operating profit rose 14% to GBP 226 million, with 140 basis points of margin expansion to 15.5%. Adjusted EPS increased 19% at constant exchange rates and 18% on a headline basis to 28.9p. Free cash flow was GBP 259 million, up GBP 103 million year over year. Net debt increased by GBP 0.3 billion to GBP 1.3 billion at June 2026. For full year 2026, Pearson reiterated guidance for mid-single-digit underlying revenue growth, adjusted operating profit of GBP 640 million to GBP 685 million, and free cash conversion of 90% to 100%. It also proposed a 5% increase in the interim dividend to 8.2p.

Omar Abbosh framed the quarter as proof that Pearson’s model is working: human-led, trust-based assessment and verification businesses are producing resilient profit and cash flow, while AI and digital change are creating new demand. He highlighted the new AI lab certification contract as evidence that Pearson is well positioned as organizations need trusted skills validation for AI adoption. His tone was upbeat and confident, while also candid about specific execution issues such as the U.K. primary testing platform delay and tougher conditions in English language mobility markets.

Simon Robson said the first half was in line with expectations and described Pearson’s financial position as robust. He cited 4% underlying revenue growth, adjusted operating profit of GBP 226 million, 15.5% margin, and adjusted EPS of 28.9p, noting the profit lift came from operating leverage and cost efficiencies partly offset by investment and inflation. He also pointed to free cash flow of GBP 259 million, strong working capital discipline, and net debt of GBP 1.3 billion, and said capital allocation priorities remain unchanged: invest in the business, remain disciplined on M&A, return excess capital, and maintain an efficient balance sheet.

Analysts focused on three main areas: the new AI lab certification contract, divisional growth and margin sustainability, and capital allocation after the buyback. Management said the AI lab deal was already launched, had moved from discussion to launch in a handful of months, and had already seen the first tens of thousands of test takers, but emphasized it is still early days. On A&Q margins, Simon said H1 was weighed down by the exit of New Jersey, the first-year lower-margin profile of the U.K. SATs contract, and one-time delivery costs, which should normalize; on buybacks, he said the company would not expand the program and would stay disciplined on M&A while continuing to return excess capital.