ii view: Pearson gets high marks for these Q1 results

First-quarter trading update to 31 March

• Adjusted revenue up 4%

Guidance:

• Continues to expect to deliver mid-single digit underlying sales growth for the full year 
• Continues to expect to annual adjusted operating profit of £640-685 million, potentially up from £614 million in 2025

Chief executive Omar Abbosh said:

"We have had an encouraging start to the year, with a good performance in line with our expectations and continued progress against our strategy. We are executing with discipline, advancing our core business and enterprise offerings, while applying innovative technologies to enhance learner experiences. 

“We remain confident in the momentum we are seeing for 2026 and in our ability to deliver attractive growth for our shareholders."

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ii round-up:

Pearson (LSE:PSON) today reported sales that beat City forecasts, with the learning and training provider expecting a return to growth at its biggest Assessment and Qualifications (A&Q) division during the current second quarter.

Driven by a one-fifth increase in sales at the Virtual Learning division, total first-quarter adjusted sales climbed 4% year-over-year. Analysts had forecast an increase of 3%. Sales at the A&Q division, generating close to half of all sales in 2025, fell 1%, though demand from UK Primary schools is expected to help drive second-quarter growth. 

Shares in the FTSE 100 company rose 3% having come into this latest news up by a similar amount so far in 2026. The FTSE 100 index is up around 4% year-to-date, while fellow media sector company WPP (LSE:WPP) has fallen by about a fifth.

Pearson highlights itself as the world's leading learning company. The group operates across the five divisions of A&Q, Virtual Learning, Higher Education, English Language Learning, and Workplace or Enterprise Skills. 

A new contract won by the A&Q division during the period for student assessment in Wyoming helps counter the loss of a contract New Jersey USA suffered in the fourth quarter. 

Sales up 8% at the Enterprise skills division, generating just under a tenth of sales last year, beat City forecasts for growth of 6%, aided by the monetisation of strategic partnerships. Such partnerships include one with Dow Jones company Salesforce Inc (NYSE:CRM).

A push toward expanding its AI assisted learning offerings now includes a new AI foundation course for teachers, as well as the first professional certification for Adobe Inc (NASDAQ:ADBE) advanced AI graphics Firefly software. 

Pearson reiterated full year estimates for mid-single digit underlying sales growth, generating an adjusted operating profit of up to £685 million. That’s potentially up from £614 million last year.  

First- half results are likely to be announced late July or early August. 

ii view:

Originally a civil engineering business, Pearson today employs over 17,000 people. A&Q generated most sales in 2025 at 45%. Then came Higher Education at 22%, Virtual Leaning 14%, English Language Learning at 11%, and Enterprise Skills the balance of 8%. Geographically, the US generated most sales last year at 67%, followed by the UK at 14%, Asia Pacific 10%, and the rest of the world the balance of 9%.  

For investors, predicting the exact impact of AI on the education sector is difficult. Low single digit declines in profit for both the A&Q and Higher Education divisions were made in 2025. Year-end 2025 net debt of £1.1 billion rose from £0.9 billion in 2024 driven by share buybacks, while sizeable sales generated overseas can see currency moves impact the numbers. 

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To the upside, a refocused strategy, and what Pearson previously noted as an addressable $80 billion marketplace, cannot be ignored. A push to enhance products via AI is now seeing the services of Microsoft Corp (NASDAQ:MSFT) and Amazon.com Inc (NASDAQ:AMZN) AWS utilised. Demand for IT skills regularly assists its A&Q business, while an increased emphasis at its Enterprise Skills division is being given as it attempts to help the one billion people estimated by the World Economic forum that will require reskilling by 2030.   

On balance, significant uncertainty regarding the role which AI may take in the future offers caution. That said, potentially sizeable workforce retraining due to AI and a consensus analyst estimate of fair value above £11.50 per share is grounds for optimism. 

Positives: 

• Diversity of business divisions
• Refocused strategy

Negatives:

• Uncertain economic outlook
• Currency movements can hinder performance

The average rating of stock market analysts:

Hold