Pearson (NYSE:PSO) executives used the company’s 2025 full-year results presentation to emphasize what CEO Omar Abbosh described as strong secular demand for “skilling and the validation of skills,” driven by demographic shifts and the advance of AI. Management said 2025 delivered results in line with expectations and showed “significant strategic progress,” while guidance for 2026 calls for further improvement in the financial profile.
2025 results: growth, margin expansion, and strong cash generation
For 2025, Pearson reported 4% sales growth, with underlying adjusted operating profit up 6% to GBP 614 million. Adjusted operating profit margin expanded to 17.2% from 16.9%, which CFO Sally Johnson said came despite currency headwinds.
Cash performance remained a central theme. Free cash flow increased 8%, with free cash flow conversion of 125% including a state aid tax recovery, and 98% excluding it. Pearson increased its dividend by 5% and began a further GBP 350 million share buyback program. Year-end leverage was 1.3x, below Pearson’s stated medium-term cap of 2x EBITDA.
Business unit highlights: virtual learning strength and steady performance elsewhere
Pearson’s business-unit commentary highlighted accelerating performance in several areas, particularly in the second half.
- Assessments & Qualifications (A&Q): Sales grew 4%, with management pointing to stronger second-half performance. Executives cited strength in clinical assessment and qualifications, digital growth, and international expansion. The company also referenced scope extensions and new awards with enterprises including Google and ACCA, and noted adjacent-market progress in U.S. student assessment through a partnership with McGraw Hill.
- Virtual Learning: This unit delivered a “standout year,” with second-half sales up 18%. Johnson said fall enrollments increased 13%, aided by enhancements to the enrollment platform, improved retention, targeted marketing, career academies, and strong underlying market growth. Segment margin increased to 16% on operating leverage.
- Higher Education: Pearson reported faster growth than 2024 despite a K-12 transition and challenging international conditions. Management highlighted strength in Inclusive Access, while also pointing to execution and platform simplification opportunities as areas for improvement in 2026.
- English Language Learning (ELL): ELL continued to grow, driven by institutional demand. Pearson said PTE revenue was flat year-on-year, outperforming a market where global volumes declined about 15%, and management emphasized market share gains.
- Enterprise Learning and Skills (ELS): The unit grew 6%, with management citing strength in vocational qualifications and momentum in enterprise solutions, which grew 20% in Q4.
AI and operational efficiencies: productivity gains and “flight to safety” theme
Abbosh positioned AI as both a product and operational catalyst. The company described embedding AI-based innovation across products and services and said it is seeing “tangible improvements” in learner engagement and outcomes. Pearson highlighted statistics presented during the event, including that students using Pearson’s AI were said to be “24 times more likely to become active readers,” alongside measures of higher-order learning behaviors.
On operations, Pearson discussed AI-enabled cost optimization and process improvements. Management said teams using AI content development tools reduced content editing time by at least 40%, translation costs by nearly a third, and content alignment costs by a quarter. AI customer service agents handled more than 130,000 customer interactions, with roughly a 40% reduction in volumes where agents were deployed. In 2025, Pearson generated about 200 basis points of margin through cost savings, which Abbosh said were being reinvested.
In Q&A, Abbosh argued Pearson is less exposed to risks faced by purely digital, direct-to-consumer models. He said AI-driven proliferation of low-quality content and deepfakes is contributing to a “giant flight to safety,” with greater demand for trusted sources, verified identities, and validated skills—areas he said align with Pearson’s role in assessment and verification.
Enterprise partnerships and backlog: multi-year commitments through 2030
Management repeatedly pointed to enterprise as a key medium-term growth vector. Abbosh said Pearson has revenue commitments from nine leading technology and services companies and described “hundreds of millions of dollars” in incremental cumulative revenue commitments through 2030, alongside “hundreds of millions” of locked-in revenues with existing customers.
Executives described these relationships as encompassing Pearson selling to partners, Pearson buying engineering services and AI capabilities from partners, and joint innovation/go-to-market efforts. Examples cited included integrating learning products to support Amazon’s workforce development, English language assessments for TCS, certifications at scale for Google through Pearson Professional Assessments, Credly as a credentialing partner to Microsoft’s skilling platform, and sales skilling for IBM and Cognizant.
Abbosh also addressed questions about the risk of pricing tied to employment levels, stating that enterprise partnership economics are based on “hard commits and dollars,” and characterizing the backlog as legally contracted.
2026 outlook: mid-single-digit growth and higher profit guidance
For 2026, Pearson guided to mid-single-digit sales growth and adjusted operating profit of GBP 640 million to GBP 685 million at FX rates as at the end of 2025. Free cash conversion is expected to be 90% to 100%. Management guided to an effective tax rate of about 25% and interest of around GBP 80 million, reflecting the new buyback program. Johnson said guidance includes new investment and higher-than-average transformation costs weighted to the first half.
By segment, management expects A&Q to grow low-to-mid single digits, with Q1 impacted by the loss of the New Jersey contract and headwinds at PDRI, before returning to growth in later quarters. Virtual Learning is expected to grow “even more strongly” than in 2025 on a full year of enrollment growth. Pearson expects Higher Education and English to grow more than in 2025, with English benefiting from PTE returning to growth and continued market share gains. ELS growth is expected to be driven by vocational qualifications and strategic account growth in enterprise solutions.
Pearson also discussed a leadership transition: Abbosh congratulated Johnson on her 26-year career at Pearson and said the company expects to introduce incoming CFO Simon Robson, previously Group CFO at Sky, in the coming months.
About Pearson (NYSE:PSO)
Pearson plc is a global education company headquartered in London, England, with significant operations in North America, Europe, Asia, and Latin America. Tracing its roots back to 1844, Pearson evolved from its early beginnings into one of the world’s leading providers of educational content, digital learning tools, and assessment services. The company’s American subsidiary trades on the New York Stock Exchange under the symbol PSO.
Pearson’s core business encompasses a broad portfolio of products and services for learners, educators, and institutions.
