ii view: shares in education firm Pearson marked lower
Broadly accelerating fourth-quarter sales growth and a former Microsoft executive at the helm. We assess prospects for this major training provider in the AI era.
14th January 2026 16:05
by Keith Bowman from interactive investor
Full-year trading update to 31 December
- Adjusted revenue up 4%
- Expects adjusted operating profit of around £612.5 million, potentially up 6% from 2024
Guidance:
- Expects to deliver a mid-single digit underlying sales growth over the medium term
- Expects sustained margin improvement over the medium term
Chief executive Omar Abbosh said:
"In 2025 we successfully delivered against our financial and strategic priorities by expanding our partnerships, growing our Enterprise reach, and advancing the use of AI to improve learning and upskilling.
“We enter 2026 with momentum, are excited about the opportunities that lie ahead, and remain well positioned to deliver value to our stakeholders."
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ii round-up:
Pearson (LSE:PSON) today detailed full-year 2025 sales and profit that matched City expectations, although the learning and training provider flagged a big headwind for 2026 at its biggest sales generating Assessment and Qualifications (A&Q) division.
Aided by 20% growth in Virtual learning sales during the fourth quarter, annual revenue for 2025 was up 4% on the year before, driving operating profit up around 6% to a potential £612.5 million. Several US contract renewals were won by the A&Q division last year, but the loss of its New Jersey contract is expected to hinder during the first half of 2026.
Shares in the FTSE 100 company fell 6% in UK trading having come into this latest news down by close to a fifth in 2025. The FTSE 100 index gained 21.5% last year, while fellow media sector company WPP (LSE:WPP) fell by almost 60%.
Highlighting itself as the world's leading learning company, Pearson operates across the five divisions of A&Q (Assessment and Qualifications), Virtual Learning, Higher Education, English Language Learning and Workplace or Enterprise skills.
A&Q sales, generating close to a half of all sales in 2024, rose 4% in 2025, accelerating to growth of 8% in the final fourth quarter.
Virtual Learning and English Language related sales, each accounting for just over a tenth of 2024 revenue, improved 8% and 1% in 2025, with fourth-quarter sales accelerating to growth of 20% and 8% respectively.
Workplace or Enterprise related sales, accounting for 6% of 2024 revenues, improved 6% over the full year, accelerating to 13% in the final quarter.
Only Higher Education demand slowed, proving flat in Q4 following on from growth of 2% over the full year. The division generated just under a quarter of 2024 sales.
Pearson reiterated hopes for mid-single digit sales growth over the medium term. Broker UBS repeated its ‘buy’ stance on the shares post the update.
London headquartered Pearson is expected to provide more detailed 2026 guidance at full year 2025 results on 27 February.
ii view:
Started by Samuel Pearson as a civil engineering business in 1844, Pearson today employs over 17,000 people. Geographically, the US generated most sales during the group’s last financial year at 69%. That was followed by the UK at 14%, Asia Pacific 9% and the rest of the world the balance of 8%.
For investors, predicting the exact impact of AI on the education sector offers difficulty and uncertainty, with tech giants such as Google owner Alphabet Inc Class A (NASDAQ:GOOGL) potentially taking an interest. Small adjusted losses for both Higher Education and English Language Learning were reported at the half-year results. A forecast price/earnings (PE) ratio broadly matching the three-year average may suggest the shares are not obviously cheap, while sizeable sales generated overseas can see currency moves impacting.
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More favourably, a refocused strategy and what Pearson previously noted as an addressable $80 billion marketplace, should not be ignored. A push to enhance products via AI is now utilising the services of Microsoft Corp (NASDAQ:MSFT) and Amazon.com Inc (NASDAQ:AMZN) AWS. Demand for IT skills regularly assists its A&Q business, while an increased emphasis for 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.
In all, significant uncertainty regarding the role which AI will take in the future generates caution. That said, potentially sizeable workforce retraining due to AI and a consensus analyst fair value estimate above £12.25 per share offer reasons for hope.
Positives:
- Diversity of business divisions
- Refocused strategy
Negatives:
- Uncertain economic outlook
- Currency movements can hinder performance
The average rating of stock market analysts:
Strong hold
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