Financial Data and Key Metrics Changes - In 2025, the company achieved a revenue growth of 4% and a profit increase of 6%, with adjusted EPS rising by 4% to GBP 0.645, reflecting solid trading performance despite currency headwinds [35][36] - The adjusted operating profit margin expanded from 16.9% to 17.2%, driven by operating leverage from sales growth and continued cost savings [35][38] - Free cash flow conversion was strong at 125%, including state aid recovery, and 98% without it, supporting a 5% increase in dividends [35][39] Business Line Data and Key Metrics Changes - The Assessments and Qualifications (A&Q) segment grew by 4%, with strong performance in clinical assessments and qualifications, benefiting from digital growth and international expansion [36][37] - Virtual Learning saw an 18% increase in sales in H2, with fall enrollments up 13%, supported by enhancements to the enrollment platform and targeted marketing [36][37] - Enterprise Learning and Skills (ELS) grew by 6%, with a notable 20% growth in enterprise solutions in Q4 [36][38] Market Data and Key Metrics Changes - The English Language Learning (ELL) segment maintained revenue levels despite a 15% decline in global market volumes, indicating market share gains [36][37] - The company is focusing on expanding its presence in the early careers market, estimated at a $6 billion opportunity in the U.S., which has been historically underserved [30][31] Company Strategy and Development Direction - The company aims to leverage mega trends in demographics and AI to drive demand for skilling and validation of skills, positioning itself as a leader in lifelong learning [4][8] - The strategy includes focusing on core businesses while investing in faster-growing segments like early careers and enterprise skilling, with a commitment to innovation and operational excellence [12][46] - The company has established nine significant partnerships with major tech firms, enhancing its enterprise solutions and creating new revenue opportunities [24][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver improved financial performance in 2026, guided by strong execution and strategic focus [46][41] - The management highlighted the importance of validated skills in the AI era, suggesting that the demand for trusted educational content will increase [70][71] - The company anticipates mid-single-digit CAGR in underlying sales growth and sustained margin improvement over the medium term [41][42] Other Important Information - The company has initiated a GBP 350 million share buyback program, reflecting proactive capital allocation to enhance shareholder value [35][45] - The company is transitioning its higher education platforms to streamline offerings, which will incur a one-off impairment but is expected to improve profitability in the long term [39][40] Q&A Session Questions and Answers Question: Can you provide more detail on the moving parts of A&Q growth in 2026? - Management indicated that without the New Jersey contract loss, A&Q growth could be higher than the guided 4%, supported by new contracts and strong performance in existing relationships [56][58] Question: What is the outlook for revenue growth in enterprise solutions? - Management expressed confidence in ELS growth, noting that while it is currently a smaller division, it is expected to grow significantly due to new contracts and partnerships [64][66] Question: What are the primary risks associated with generative AI for Pearson? - Management acknowledged potential risks from AI tools but emphasized that Pearson's focus on validated skills and trusted content positions it well to benefit from the demand for reliable educational resources [70][71]

Pearson (NYSE:PSO) H2 2025 Earnings call February 27, 2026 04:30 AM ET Company ParticipantsArt Valentine - President of Assessment and QualificationCiaran Donnelly - Head of European Media ResearchOmar Abbosh - CEOSally Johnson - CFOTom ap Simon - President of Higher Education and Virtual LearningTony Prentice - Chief Product Officer and President of Direct to ConsumerVishaal Gupta - President of Enterprise Learning and SkillsNone - Company RepresentativeNone - Video NarratorConference Call ParticipantsJame ...