Key Takeaways Several companies have recently announced higher quarterly dividend payouts, a positive sign. Both PSO and AXP carry favorable Zacks Ranks, indicating upward trending earnings estimate revisions. Everybody loves dividends, as they provide a passive income stream, limit drawdowns in other positions, and provide more than one way to profit from an investment.And when considering dividend-paying stocks, those with a history of boosting their payout are prime considerations, reflecting their comm ...

Financial Performance - Total sales for 2024 were £3,552 million, representing a headline decrease of 3% compared to £3,674 million in 2023[15]. - Adjusted operating profit was £600 million, reflecting a year-on-year increase of 10% on an underlying basis[15]. - Free cash flow reached £490 million, with a free cash flow conversion rate of 117%[15]. - Underlying sales growth increased by 3% year-on-year, taking into account portfolio adjustments and foreign exchange[15]. - In 2024, Pearson generated a total shareholder return of 36% and distributed £474 million through dividends and share buyback programs[68]. - The Board recommended a 6% increase in the final dividend, resulting in a full-year dividend of 24.0p per share[69]. - Pearson's return on capital in 2024 was 10.5%[66]. - Adjusted operating profit for 2024 is projected at £600 million, reflecting a year-on-year increase of 10% on an underlying basis[80]. - Underlying sales growth for the year was 3%, excluding OPM and Strategic Review businesses, with operating cash conversion at 110% and free cash flow conversion at 117%[81]. - The company expects underlying sales growth and adjusted operating profit to align with current market expectations for 2025[182]. - In 2025, the company anticipates free cash flow conversion of 90-100% and a £0.1bn State Aid repayment[182]. - The effective tax rate on adjusted profit before tax is projected to be between 24% and 25%[182]. - Intangible amortisation charges in 2024 were £41m, down from £48m in 2023, due to decreased amortisation from disposals and increased from acquisitions[187]. Business Growth and Strategy - The company scaled AI across its products and services, enhancing generative AI tools in Higher Education courseware and developing new AI tools in English Language Learning and Virtual Learning[15]. - In 2024, Higher Education returned to growth, driven by the expansion of AI study tools products in the US[31]. - The Assessment & Qualifications business demonstrated strong financial performance and customer retention, with plans for geographic expansion and new contract wins in 2025[23]. - The company signed deals with ServiceNow, Degreed, Microsoft, and AWS to prepare employees and organizations for the future of work[15]. - The Workforce Skills unit will evolve into Enterprise Learning and Skills, focusing on talent planning and development solutions[40]. - Pearson expanded its AI-powered study tools across various platforms, including Pearson+ eTextbooks and MyLab, enhancing educational support for students and teachers[44]. - The partnership with Microsoft aims to equip the workforce for the AI-driven economy, focusing on personalized learning and new AI credentials[61]. - Pearson's collaboration with AWS will accelerate the delivery of AI-powered learning solutions globally[64]. - The company plans to expand market presence by enhancing formative assessment capabilities and broadening the enterprise customer base[100]. - The company is focusing on building its capabilities in data analytics to identify skill gaps and provide solutions to workforce challenges[103]. - Investment priorities are aligned with growth opportunities, particularly in Assessments & Verification, Enterprise Skills, and Early Careers[103]. - The company plans to launch a new brand in 2025, aiming to strengthen its position as a leader in lifelong learning[105]. - The brand strategy focuses on reframing the perception of learning, emphasizing its importance alongside sleep, nutrition, and exercise[105]. - The company will implement the brand transformation in phases, starting with critical growth areas such as Enterprise Skilling and Early Careers[108]. - The company aims to refine its offerings based on ongoing consultations with employers, identifying Enterprise as a medium-term growth vector[120]. Customer Engagement and Community Impact - Engagement with over 9,000 educators and 2,000 students in the UK through the Pearson School Report provides insights into the educational landscape[116]. - In 2024, employees volunteered over 33,000 hours in support of 360 causes, with participation in Learning for Impact activities increasing to 11%[148]. - The company donated $90,360 in humanitarian aid to the American Red Cross for hurricane relief in 2024[148]. - The company conducted research on the impact of English skills on job satisfaction, with 85% of respondents indicating English is important for their work life[133]. - The company is committed to creating exceptional employee experiences, recognizing that managers account for up to 70% of employee engagement variance[152]. - In 2024, 88% of employees participated in the engagement survey, with a Grand Mean score of 4.16 on a 5-point Likert scale, up from 82% and 4.09 in 2023[154]. Digital and Product Development - Digital sales growth was reported at +3% in 2024, with underlying growth in group digital and digital-enabled sales also at +3%[169]. - The number of Pearson+ registered users reached 10.1 million in 2024, an increase from 9.8 million in 2023[169]. - The net retention rate for Credly enterprise customers was reported at 91% in 2024, compared to 88% in 2023[169]. - VUE test volumes reached 2.3 million in 2024, down from 2.7 million in 2023[169]. - The average time for PTE speed of score return improved to 1.3 days in 2024, up from 1.0 days in 2023[169]. - The number of Mondly paid subscriptions increased to 495,000 in 2024, compared to 432,000 in 2023[169]. - The company reported a Grand Mean score of 4.24 on a 5-point Likert scale for employee engagement, up from 4.21 in 2023[169]. Sales Performance by Segment - Sales decreased by £122m or 3% from £3,674m in 2023 to £3,552m in 2024[178]. - Adjusted operating profit increased by £27m or 5% from £573m in 2023 to £600m in 2024[178]. - Operating cash flow was £662m in 2024, up from £587m in 2023[175]. - Free cash flow increased to £490m in 2024 from £387m in 2023[175]. - Adjusted earnings per share rose to 62.1p in 2024 from 58.2p in 2023[175]. - In Assessment & Qualifications, sales increased by 2% on a headline basis and 3% on an underlying basis, with adjusted operating profit up 7% in underlying terms[191]. - Virtual Learning sales decreased by 21% on a headline basis and 4% on an underlying basis, with adjusted operating profit down 13% in headline terms[195]. - Higher Education sales decreased by 3% on a headline basis but grew by 1% on an underlying basis, with adjusted operating profit increasing by 12% in underlying terms[197]. - English Language Learning sales increased by 1% on a headline basis and 8% on an underlying basis, with adjusted operating profit up 30% in underlying terms[199]. - Pearson VUE sales were up 3% in underlying terms, with a contract renewal rate of 99% for 2024[192]. - In Clinical Assessment, sales increased by 4% in underlying terms due to pricing and digital product growth[194]. - US digital subscriptions grew by 3%, with Inclusive Access up 24%[198].

Core Insights - Pearson has appointed Arden Hoffman as an independent Non-Executive Director, effective June 1, 2025, bringing expertise in workforce and talent development [1][2][3] - Arden Hoffman currently serves as Chief People Officer at General Motors, where she leads talent management and organizational development [2][3] - The appointment aligns with Pearson's mission to empower individuals through learning and growth, reflecting a commitment to innovation in the workforce [2][3] Company Overview - Pearson's purpose is to help individuals realize their imagined lives through learning, emphasizing the importance of personal breakthroughs through educational opportunities [5] - The company positions itself as a lifelong learning organization, providing digital content, assessments, qualifications, and data to enhance real-life impact [5] Leadership Background - Arden Hoffman has a strong background in human resources and talent development, having held senior roles at Cruise, Dropbox, Google, and Goldman Sachs [2][3] - She holds an M.B.A from the Wharton School of the University of Pennsylvania and a bachelor's degree in Rhetoric from the University of California-Berkeley [3] Strategic Alignment - Omid Kordestani, Pearson Chair, expressed enthusiasm for Hoffman's addition to the Board, highlighting her passion for learning and experience in tech-driven businesses [3] - Hoffman's expertise is expected to be invaluable as Pearson navigates transformational shifts in learning and workforce dynamics [3]

Group 1 - Pearson plc has a long history, established in 1836, and has evolved from a traditional publishing house into a major company [1] - The mission of Grassroots Trading emphasizes providing objective and unbiased research, focusing on small- to mid-cap companies, and identifying opportunities in larger companies [1]

Financial Data and Key Metrics Changes - The company reported a 10% increase in profit, with the EBIT margin expanding from 15.6% to 16.9% [49] - Adjusted EPS increased by 7% to 62.1p, reflecting trading performance and reduced share count due to buybacks [50] - Free cash flow increased by more than £100 million to £490 million, with operating cash conversion at 110% and free cash flow conversion at 117% [57][58] Business Line Data and Key Metrics Changes - Assessments and Qualifications delivered solid performance, with a margin increase to 23% [55] - Virtual Learning margins increased to 13%, despite a decline in absolute profit due to previous school losses [56] - Higher Education returned to growth, with a 3.5% growth in H2, while English Language Learning grew by 8% [53][64] Market Data and Key Metrics Changes - The company opened three new virtual schools, contributing to a 4% increase in enrollments on a same-school basis [52] - The English Language Learning segment is expected to moderate growth due to potential impacts from elections on immigration rates [64] - Workforce Skills grew by 6%, driven by solid performance in Vocational Qualifications and recent partnership contracts [53] Company Strategy and Development Direction - The company aims to leverage AI across its products and services, enhancing customer engagement and operational efficiency [10][12] - Strategic partnerships with AWS and Microsoft are expected to enhance technology capabilities and expand market reach [44][45] - The focus for 2025 includes maintaining financial performance, leading in innovative technologies, and growing the enterprise customer segment [78][80] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate changes in the U.S. administration, particularly regarding school choice and workforce development [95][96] - The outlook for English Language Learning remains positive despite short-term fluctuations, supported by demographic trends [64][105] - The company anticipates continued growth in all business units, with a focus on execution and capturing market share [61][64] Other Important Information - The company announced a £350 million share buyback program, reflecting confidence in future performance [50][71] - The balance sheet remains strong, with net debt at £0.9 billion and upgrades in long-term issuer ratings from Moody's and Fitch [59][60] Q&A Session Summary Question: What are the implications of partnerships with AWS and Microsoft? - The partnerships involve collaboration on product development, leveraging AI capabilities, and expanding existing customer relationships, with potential for mid-single-digit growth [90][94] Question: How might new U.S. administration policies affect the business? - The administration's focus on school choice and workforce development aligns well with the company's offerings, particularly in virtual schools and skills training [95][96] Question: Can you elaborate on the guidance for English Language Learning? - Growth is expected to moderate due to external factors, but the institutional business remains strong, with confidence in future demographic trends [105][106] Question: What visibility does the company have for H2 growth? - While there is no perfect visibility, the company has a detailed budget and is confident in growth dynamics based on contract renewals and market share [116][117] Question: How does the company plan to maintain growth in Higher Education? - The company is focusing on new business wins, product enhancements, and international market expansion to sustain growth [125][126]

Core Insights - Pearson has appointed Sharon Hague as President of its English Language Learning (ELL) division, effective March 3, 2025, to lead the business's expansion and development of AI-powered products globally [1][2][3] - Sharon Hague has a 25-year tenure at Pearson and previously served as Managing Director for Pearson School Qualifications and Assessments, where she successfully increased student reach and delivered consistent sales and margin growth [2][4] - CEO Omar Abbosh expressed confidence in Sharon's ability to continue the success of the ELL business, emphasizing her focus on learners and educators, as well as her experience with tech-powered solutions [3][4] Leadership Transition - Sharon Hague succeeds Gio Giovannelli, who is leaving Pearson after 12 years to pursue new opportunities, having significantly expanded Pearson's footprint and product portfolio in multinational markets [1][4] - The leadership change is expected to drive further growth in the ELL division, which is a key area for Pearson's global strategy [1][2] Company Overview - Pearson is recognized as a leading lifelong learning company, serving customers in nearly 200 countries with a workforce of approximately 18,000 employees [5] - The company's mission is to help individuals realize their potential through learning, emphasizing the importance of creating impactful learning experiences [5]

Core Insights - The company demonstrated strong financial performance in 2024, with underlying sales growth of 3% and adjusted operating profit increasing by 10% to £600 million [5][8][12] - A new strategic partnership with AWS aims to enhance AI capabilities and expand the company's presence in the Enterprise skills market [4][8] - The company announced a £350 million share buyback program, reflecting confidence in its financial position and future growth [5][10] Financial Performance - Total sales decreased by 3% to £3,552 million in 2024, primarily due to currency movements and portfolio changes [44][46] - Adjusted operating profit rose by 10% to £600 million, with a margin expansion from 15.6% to 16.9% [8][12] - Free cash flow increased by £103 million to £490 million, representing a conversion rate of 117% [8][65] Strategic Initiatives - The company is focusing on the accelerated rollout of AI across its product offerings, which remains a key priority for 2025 [8][12] - The partnership with AWS will enhance the company's learning products and services through expanded cloud infrastructure and AI capabilities [4][8] - The company aims to bridge the skills gap in the economy by expanding its presence in the Enterprise skills market [4][8] Business Unit Performance - Assessment & Qualifications saw a 3% increase in sales, while Virtual Learning sales decreased by 4% due to the final impact of previous school losses [23][28] - Higher Education returned to growth with a 1% increase in sales, driven by gains in adoption share and pricing [31][32] - English Language Learning experienced strong performance with an 8% sales growth, particularly in the Institutional segment [34][35] Outlook and Guidance - The company expects to deliver low to mid-single digit underlying sales growth in 2025, with a focus on contract renewals and new customer acquisitions [12][26] - Adjusted operating profit is anticipated to align with current market expectations, with a projected effective tax rate of 24% to 25% [12][58] - The medium-term outlook remains unchanged, with expectations for sustained margin improvement and strong free cash flow conversion [13][12]

Core Insights - Inefficient career transitions and learning gaps are costing the U.S. economy $1.1 trillion annually, which represents 5% of GDP [1][8] - The report "Lost in Transition: Fixing the Skills Gap" highlights a potential global skills chasm between employer needs and employee capabilities, calling for a fundamental shift in learning and skills development approaches [2][3] Economic Impact - The report details the economic and personal impacts of learning gaps during major career transitions, including shifts from school to work, layoffs, and disruptions from AI automation [3] - It emphasizes that improving learning methods and developing modern skilling pathways are critical for immediate action across education and business sectors [3][4] Learning Strategies - The concept of "Learning to Learn" is vital for creating an adaptive workforce capable of continual upskilling and career pivots, with a study indicating that these methods can accelerate learning progress by seven months [4] - Pearson advocates for dynamic and efficient skilling pathways that align with future workforce needs, promoting work-based learning such as apprenticeships [5] Economic Opportunities - By shortening transition times from formal education to work by six weeks, the U.S. could potentially gain $40 billion annually [5] - Implementing these approaches could unlock trillions for economies and create life-changing opportunities for millions globally [6] Call to Action - The report warns that without action, the skills gap could widen into a chasm, necessitating collaboration among employers, educators, workers, and government to find solutions [7]

Core Insights - American Express Company (AXP) has expanded its partnership with Toronto Pearson Airport to enhance benefits for American Express Cardmembers, aiming to improve their airport experience [1][4]. Benefits of the Partnership - Eligible American Express Cardmembers will have expedited access to the Priority Security Lane at Terminals 1 and 3 through single-use QR codes [2]. - Complimentary valet car service is available for Cardmembers departing from Terminal 1, with parking fees waived when charged to an eligible American Express Card [2]. - A 15% discount on parking rates at the Express Park facility in Terminal 1 and Daily Park facilities in Terminals 1 and 3 will be provided, reflected as a statement credit [3]. - Cardmembers can also receive a 15% discount on car cleaning and detailing services at Terminal 1 [3]. Strategic Implications - The bundled benefits are expected to enhance travel convenience and enjoyment for passengers, reinforcing American Express's strong presence in Canada's transit system [4]. - The expansion reflects American Express's commitment to maintaining the attractiveness of its card offerings, potentially retaining existing Cardmembers and attracting new ones [5]. - The card-issuing business is a significant revenue source for American Express, and this initiative is anticipated to contribute to top-line growth, with management confident in achieving long-term revenue growth of 10% [5]. Financial Performance - American Express shares have increased by 73.2% over the past year, outperforming the industry growth of 24.5% [6].

Core Insights - Microsoft and Pearson announced a strategic collaboration to address the global challenge of skilling for the AI era, focusing on AI-powered products and services for employers, workers, and learners [1][3] - The partnership aims to combine Pearson's expertise in learning and assessment with Microsoft's cloud and AI technologies to enhance workforce readiness in an AI-driven economy [1][3] Industry Context - A global IDC survey identified the lack of skilled workers as the primary challenge for enterprises implementing AI technology [2] - The 2024 Work Trend Index Annual Report revealed that 66% of leaders would not hire individuals without AI skills [2] - Pearson's research indicates that generative AI could save U.S. workers 78 million hours weekly by automating routine tasks [2] Collaboration Details - The partnership will involve several initiatives, including the integration of Microsoft Azure Cloud capabilities and AI tools into Pearson's services [4][5] - Pearson will enhance its content and assessment services using Microsoft’s AI infrastructure, aiming to provide personalized learning experiences to millions globally [5] - New AI credentials and certifications will be developed to help individuals build AI proficiency and technical skills [5] Commitment to Workforce Development - Microsoft will extend its partnership with Pearson VUE, focusing on Microsoft Cloud and Office certifications through 2029, benefiting millions of learners [5][6] - Pearson plans to deploy Microsoft 365 Copilot across its workforce to improve efficiency and productivity [5][6] - In 2024, Microsoft and its partners trained over 23 million people in digital skills, while Pearson launched a Generative AI Foundations certification [6]