In This Article:
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Revenue Growth: Sales increased by 3%.
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Profit Growth: Profits grew by 10%.
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EBIT Margin: Achieved an EBIT margin of 16.9%.
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Free Cash Flow Conversion: Strong free cash flow conversion at 117%.
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Adjusted EPS: Increased by 7% to 62.1%.
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Operating Cash Conversion: Operating cash conversion at 110%.
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Dividend Increase: Dividend increased by 6%.
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Share Buyback: Announced a GBP350 million share buyback.
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Net Debt: Net debt stood at GBP0.9 billion.
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Return on Capital: Increased slightly to 10.4%.
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Assessments and Qualifications Margin: Increased to 23%.
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Virtual Learning Margin: Increased to 13%.
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English Language Learning Growth: Delivered a strong 8% performance.
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Workforce Skills Margin: Turned profitable with a 4% margin.
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Virtual Schools Enrollment: '24, '25 enrollments up 4% on a same school basis.
Release Date: February 28, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Pearson PLC (NYSE:PSO) delivered a financial performance in line with market expectations, achieving a 3% sales growth and a 10% profit increase.
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The company successfully renewed key contracts in US student assessments and scaled its qualifications business internationally.
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Pearson PLC (NYSE:PSO) is building momentum in the enterprise business, evidenced by a new partnership with AWS.
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The company is scaling the application of AI across its products and services, leading to commercial benefits.
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Pearson VUE achieved a customer retention rate of 99%, showcasing strong customer loyalty and satisfaction.
Negative Points
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The virtual schools segment experienced a 1% decline due to known school losses, although enrollments were up 4% on a same school basis.
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Higher education margins remained flat due to inflation and one-off investment and restructuring costs.
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The English language learning segment faces potential headwinds from immigration market fluctuations due to upcoming elections.
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Despite enrollment growth in US higher education, the number of paid users to Pearson did not increase.
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The company faces challenges in maintaining growth rates in virtual schools and improving margins in higher education.
Q & A Highlights
Q: Can you explain the partnerships with AWS and Microsoft in simple terms? What are the expected outcomes and revenue implications? A: The partnerships involve leveraging AWS and Microsoft's AI capabilities and engineers to enhance Pearson's product offerings. These companies are also expanding as customers of Pearson, utilizing a range of Pearson services. The collaboration includes joint go-to-market strategies, where software engineers from both sides work together to develop new AI-driven products. Financially, these partnerships aim to underpin and expand existing business, with potential for mid-single-digit growth and additional opportunities from joint market activities. Omar Abbosh, CEO