Pearson (PSON) Q3 2024 TU earnings summary

Executive summary

• Achieved 3% underlying group sales growth for the nine-month period and 5% in Q3, with all divisions contributing to Q3 growth.

• Advanced strategic priorities: expanded enterprise deals, scaled AI across products, and returned Higher Education to growth.

• On track to meet full-year market expectations, supported by robust operational and financial performance.

Financial highlights

• Higher Education returned to growth in Q3, with 4% organic growth; sales flat for nine months.

• English Language Learning up 7% for nine months, 2% in Q3, with strong institutional growth in LATAM and Middle East.

• Virtual Schools delivered growth in Q3 but down 4% for nine months; full-year revenue expected to decline modestly due to prior school losses.

• Workforce Skills up 6% for both Q3 and nine months, with new enterprise deals including ServiceNow.

• Assessment & Qualifications sales up 3% for nine months, accelerating to 6% in Q3, with strong growth in UK/International Qualifications.

Outlook and guidance

• Full-year guidance reaffirmed: underlying sales growth, adjusted operating profit, interest, and tax outlook in line with market expectations.

• Free cash flow conversion expected at 95-100%; interest expected at c.£45m.

• Virtual Schools expected to be down 2% for the full year, with growth anticipated for the 2025/2026 academic year.

• K-12 sales team brought in-house to support early careers strategy and drive future growth.

• Anticipates good growth for Virtual Schools next year, with 4% like-for-like enrollment growth and 6% including new schools.