Pearson maintains guidance after first quarter

(Sharecast News) - Pearson reported a 1% rise in underlying group sales for the first quarter of 2025, in line with expectations, and said it remained on track to deliver its full-year guidance, with stronger momentum anticipated in the second half. The FTSE 100 education publisher said all business units performed in line with forecasts, with higher education leading the way as underlying sales rose 6%.

It said the division benefited from continued adoption of AI study tools and growth in digital subscriptions, including a 22% increase in Inclusive Access and 4% growth in US digital offerings.

International expansion was also supported by the release of 25 AI-translated titles for the Spring semester.

Assessment and qualifications posted a 1% increase in sales, despite a slight decline in Pearson VUE due to contract timing.

Growth in clinical assessment and UK and international qualifications offset a small decline in US student assessment.

Virtual learning declined 4%, reflecting prior partner school losses and funding timing effects, although enrolments rose 5% on a same school basis.

English language learning fell 6%, reflecting a strong comparator in the prior year.

Despite a tough market backdrop and lower volumes, the Pearson Test of English business grew.

The group highlighted continued investment in AI tools, including the Smart Lesson Generator and Digital Language Tutor.

Enterprise learning and skills sales rose 1%, supported by contract wins such as with the UK Ministry of Defence and new partnerships with Microsoft and AWS.

Vocational qualifications and Enterprise Solutions were identified as areas of pipeline growth.

Pearson reiterated its full-year outlook, forecasting low single-digit sales growth in the first half and stronger growth in the second.

The group said it remained confident in its medium-term targets, including mid-single-digit compound annual sales growth, an average annual 40 basis point margin improvement, and strong free cash conversion of 90% to 100%.

It launched a £350m share buyback programme in March and said it had repurchased £65m by the end of April.

The company had also recovered £100m in state aid during the quarter and said it maintained a strong financial position with low leverage and solid liquidity.

On the executive front, chief technology officer Dave Treat has assumed leadership of the company's digital and technology operations following the departure of chief information officer Marykay Wells in early April.

"We continue to make good progress against our strategy, supporting our medium term growth outlook," said chief executive officer Omar Abbosh.

"We are confident of delivering on our expectations for the year given our clear path to achieving stronger growth in the second half, whilst we recognise the heightened uncertainties around the global economy.

"Financial and operating performance in our smallest quarter was in line with our plans and we continue to build AI enhanced offerings across the business and make progress on our Enterprise initiatives."

At 0835 BST, shares in Pearson were down 3.28% at 1,136p.

Reporting by Josh White for Sharecast.com.