Pearson 2024 Trading Update
(Unaudited)
|
16th January
2025
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Delivered on financial1 and strategic priorities
for 2024. Entering 2025 with continued confidence. New strategic
partnership with Microsoft progressing our Enterprise focus and
technology transformation.
|
Highlights
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·
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Underlying Group sales growth2
of 3% for the
full year, excluding OPM3
and the Strategic
Review4
businesses.
|
|
·
|
Group adjusted operating profit of £595-600m at £:$ of 1.28
for the full year, up c.10% on an underlying basis compared to
2023, resulting in a margin of c.16.8% (2023:
15.6%).
|
|
·
|
Free cash flow conversion in excess of
100%5,
ahead of guidance.
|
|
·
|
Successfully delivered our 2024 strategic priorities with
progress in Enterprise and scaling AI across our products and
services including the recent launch of an
AI
powered Digital
Language Tutor
(link
here).
|
|
·
|
New
multi-year strategic Enterprise AI partnership
with Microsoft (link
here):
|
|
|
o
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Extending our commercial relationship with
Pearson VUE;
|
|
|
o
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Future collaboration on innovation and joint go-to-market
activities, including in AI upskilling; and
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|
|
o
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Opportunity to enhance our AI and technology capabilities
across the business.
|
Omar Abbosh, Pearson's Chief
Executive, said:
"I am pleased with the progress
Pearson has made in 2024, successfully executing against our
financial and strategic priorities. I'm particularly encouraged to
see the growing commercial momentum of our AI enhanced offerings
and the strategic Enterprise partnerships that we have established,
such as the latest with Microsoft. These reflect the strength of
our proposition and the opportunities that lie ahead.
The Group is well positioned, with
continued confidence, as we look to build on our strategic and
operational progress and deliver long-term future value for our
shareholders."
Underlying sales growth2
of 3% for 2024,
excluding OPM3 and Strategic Review4
businesses; 2% in aggregate
|
·
|
Assessment & Qualifications
sales were up 3% for the full year and 4% in Q4. Pearson VUE
performance was driven by favourable mix, with PDRI seeing good
growth. In Clinical Assessment, sales grew due to pricing, digital
product growth and successful new product launches. UK &
International Qualifications benefited from volume, pricing, and
International growth. US Student Assessment performance was
supported by several key contract renewals.
|
|
·
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Virtual Schools sales decreased 1%
for the full year, due to the previously announced partner school
losses, the impact of which will normalise in H1 2025. 2024/25
academic year enrolments were up 4% on a same school basis and we
opened 3 new schools in 2024 taking our total number of schools to
40. Virtual Learning sales declined 4% for the full year
attributable to the final portion of the OPM ASU contract in the
first half of 2023. Virtual Learning sales declined 5% in Q4 as
expected, driven by a tough comparator which saw funding
improvements in Virtual Schools in 2023.
|
|
·
|
Higher Education sales grew 1% for
the full year and 2% in Q4, in line with expectations. In US Higher
Education full year sales growth was driven by continued gains in
adoption share, enrolments, and pricing, partially offset by mix
impacts. In the year, there was growth of 3% in US digital
subscriptions and 24% in
Inclusive Access. We
accelerated the rollout of AI within our products in the fourth
quarter. Pearson+ registered users increased 1% compared to the
prior Fall semester, with paid subscriptions flat over the same
period and in addition we have been successful in monetising our
Channels product.
|
|
·
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English Language Learning sales
increased 8% for the full year with all three business sub-units
contributing to growth. Institutional continues to deliver strong
performance especially in the Middle East and LatAm. Pearson Test
of English (PTE) performed well against a tough market backdrop of
tightening migration policies. We continue to incorporate AI within
our English Language business unit, launching our first AI powered
Digital Language Tutor in the fourth quarter. In Q4 sales grew 11%,
an improvement on Q3 due to phasing of revenue in Institutional as
expected.
|
|
·
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Workforce Skills sales grew 6% for
the full year, with a solid performance in both Vocational
Qualifications and Workforce Solutions. Q4 sales increased by 4%
driven by a strong performance in Workforce Solutions partially
offset by Vocational Qualifications, as the business had a tough
comparator with strong double digit growth in the prior
year.
|
Evolution of Workforce Skills
|
·
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Pearson has a significant
opportunity to help enterprises drive productivity and growth by
transforming how they evaluate, assess, and reskill their
workforce, as well as delivering world-class vocational training
and qualifications. To sharpen our focus on the enterprise customer
segment, we have formed a global enterprise sales team to enable us
to better meet the needs of these customers with a full suite of
Pearson solutions. From January this year, Workforce Skills will
evolve to become Enterprise Learning and Skills, bringing together
Pearson's enterprise sales capabilities globally (excluding those
of Pearson VUE). The Enterprise Learning and Skills business unit
will be led by Vishaal Gupta.
|
|
·
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This simplification of the business
unit structure will result in modest revenues and costs being
transitioned into the Enterprise Learning and Skills business unit
from Higher Education. More detail on the financial impact of this
change will be outlined at the full year results. We also note that
the sub-unit Workforce Solutions becomes Enterprise
Solutions.
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Strong financial position
|
·
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Pearson's financial position remains
robust, with a strong balance sheet, net debt of less than £0.9bn
and 2024 free cash flow conversion in excess of
100%5.
|
Executive Changes
|
·
|
We announce the appointment of
Naseem Tuffaha as Chief Business Officer. Naseem has a successful
track record of high growth and operational excellence at
Microsoft, and more recently The Trade Desk.
|
Financial calendar
|
·
|
Full year results will be announced
on 28 February 2025. We will hold an in-person presentation and
Q&A session, during which we will outline the 2025
outlook.
|
|
Financial summary
Underlying growth for the fourth
quarter and financial year ended 31st December 2024
compared to the equivalent period in 2023.
|
Sales
|
Q4
|
Full Year
|
|
Assessment &
Qualifications
|
4%
|
3%
|
|
Virtual Learning
|
(5)%
|
(4)%
|
|
Higher Education
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2%
|
1%
|
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English Language Learning
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11%
|
8%
|
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Workforce Skills
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4%
|
6%
|
|
Strategic
Review4
|
(100)%
|
(100)%
|
|
Total
|
3%
|
2%
|
|
Total, excluding OPM3
and Strategic
Review4
|
3%
|
3%
|
For an accompanying data sheet
providing 2024 metrics relating to sales across select key
businesses as well as a breakdown of US Higher Education Courseware
college units and Pearson+ metrics, please follow
this link.
|
12024 consensus on the Pearson
website dated 30th August 2024; adjusted operating profit of £598m
at £:$ 1.27. As a reminder, every 1c movement in £:$ rate will
equate to approximately £5m adjusted operating profit
impact.
2Throughout this announcement growth
rates are stated on an underlying basis unless otherwise stated.
Underlying growth rates exclude currency movements, and portfolio
changes.
3 We completed the sale of the Pearson
Online Learning Services (POLS) business in June 2023 and as such
have removed it from underlying measures throughout. Within this
specific measure we exclude our entire OPM business (POLS and ASU)
to aid comparison to guidance.
4 Strategic Review is sales in
international courseware local publishing businesses which have
been wound down. As expected, there are no sales in these
businesses in 2024.
5 Free cash flow conversion calculated as
free cash flow divided by adjusted earnings.
Contacts
|
Investor Relations
|
Alex Shore
Gemma Terry
|
+44 (0) 7720 947
853
+44 (0) 7841 363
216
|
|
|
Steph Crinnegan
Brennan Matthews
|
+44 (0) 7780 555
351
+1 (332) 238-8785
|
|
Media
Teneo
Pearson
|
Ed Cropley
Laura Ewart
|
+44 (0) 7492 949
346
+44 (0) 7798 846
805
|
About Pearson
At Pearson, our purpose is simple:
to help people realise the life they imagine through learning. We
believe that every learning opportunity is a chance for a personal
breakthrough. That's why our Pearson employees are committed to
creating vibrant and enriching learning experiences designed for
real-life impact. We are the world's lifelong learning company,
serving customers with digital content, assessments,
qualifications, and data. For us, learning isn't just what we do.
It's who we are. Visit us at pearsonplc.com.
Notes
Forward looking statements: Except for the historical information contained herein, the
matters discussed in this statement include forward-looking
statements. In particular, all statements that express forecasts,
expectations and projections with respect to future matters,
including trends in results of operations, margins, growth rates,
overall market trends, the impact of interest or exchange rates,
the availability of financing, anticipated cost savings and
synergies and the execution of Pearson's strategy, are
forward-looking statements. By their nature, forward-looking
statements involve risks and uncertainties because they relate to
events and depend on circumstances that will occur in future. They
are based on numerous assumptions regarding Pearson's present and
future business strategies and the environment in which it will
operate in the future. There are a number of factors which could
cause actual results and developments to differ materially from
those expressed or implied by these forward-looking statements,
including a number of factors outside Pearson's control. These
include international, national and local conditions, as well as
competition. They also include other risks detailed from time to
time in Pearson's publicly-filed documents and you are advised to
read, in particular, the risk factors set out in Pearson's latest
annual report and accounts, which can be found on its website
(www.pearsonplc.com). Any forward-looking statements speak only as
of the date they are made, and Pearson gives no undertaking to
update forward-looking statements to reflect any changes in its
expectations with regard thereto or any changes to events,
conditions or circumstances on which any such statement is based.
Readers are cautioned not to place undue reliance on such
forward-looking statements.
