Financial Data and Key Metrics Changes - Sales increased by 2% on an underlying basis, in line with guidance set in February [31] - Adjusted operating profit also rose by 2% to £242 million, while adjusted earnings per share decreased to 24.5p due to FX headwinds [31] - Free cash flow improved significantly, up £129 million to £156 million, aided by good working capital management [37] - Net debt decreased by £200 million to £1 billion, driven by free cash flow [37] Business Line Data and Key Metrics Changes - Assessments and Qualifications sales grew by 2%, with strong growth in Clinical Assessments and UK International Qualifications, offset by declines in Pearson VUE and U.S. Student Assessment [32] - Virtual School sales declined by 1%, but enrollments increased by 5% in the spring semester [34] - Higher Education sales grew by 4%, with a notable 213% increase in digital subscriptions [34] - English Language Learning declined by 3%, while Pearson Test of English remained flat [35] - Enterprise Learning and Skills grew by 4%, supported by strong performance in Vocational Qualifications [35] Market Data and Key Metrics Changes - The medium-term outlook for PTE and ELL remains strong, supported by demographics and operational track record [10] - Federal funding accounts for a small proportion of total funding for K-12 and Higher Ed, with minimal impact from international mobility [9] Company Strategy and Development Direction - The company’s strategy remains unchanged, focusing on medium-term growth engines and innovation in products and services [6] - Emphasis on AI and skill development to address the evolving workforce demands [11] - The acquisition of eDynamic Learning is expected to enhance the company’s early career strategy and support medium-term guidance [42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company’s trajectory, citing strategic clarity and execution focus [44] - The company is well-positioned to take advantage of emerging opportunities despite market dynamics [7] - Management expects full-year financial performance to align with earlier expectations, with growth weighted towards the second half of the year [38] Other Important Information - The company is transforming revenue operations and modernizing marketing approaches to improve efficiency [19] - AI-driven simplification is progressing, with significant improvements in customer interactions and content development [20] Q&A Session Summary Question: Performance of new and renewed contracts - Management confirmed that contracts like ServiceNow and Salesforce are performing in line with expectations, with growth anticipated in 2026 [48][51] Question: Opportunities from Gen AI products - Management highlighted the potential of AI to enhance learning outcomes and drive cost efficiencies across various divisions [54][55] Question: Q3 and Q4 revenue growth expectations - Management provided insights on the expected growth drivers, including new contracts and enrollment increases in virtual schools [63][66] Question: Details on Pearson VUE contract pause - Management clarified that the pause was specific to an individual situation and not indicative of broader trends [76] Question: Expectations for English Language Learning growth - Management expressed confidence in institutional growth in the second half, particularly in Latin America [79] Question: Higher Education enrollment expectations - Management indicated that flattish enrollments are still the base case for planning, with growth expected from pricing and new product rollouts [84][88]

Financial Data and Key Metrics Changes - Sales increased by 2% on an underlying basis, in line with previous guidance [33] - Adjusted operating profit also rose by 2% to £242 million, while adjusted earnings per share decreased to 24.5p due to FX headwinds [33] - Free cash flow improved significantly, up £129 million to £156 million, supported by strong working capital management [39] - Net debt decreased by £200 million to £1 billion, driven by free cash flow [39] Business Line Data and Key Metrics Changes - Assessments and Qualifications sales grew by 2%, with strong growth in Clinical Assessments and UK International Qualifications, offset by declines in Pearson VUE and U.S. Student Assessment [34] - Virtual School sales declined by 1%, but enrollments increased by 5% in the spring semester [36] - Higher Education sales grew by 4%, with a notable 213% increase in digital subscriptions [36] - English Language Learning declined by 3%, while Pearson Test of English remained flat [37] - Enterprise Learning and Skills grew by 4%, driven by strong performance in Vocational Qualifications [37] Market Data and Key Metrics Changes - The U.S. Federal Government's hiring freeze is expected to impact PDRI in the near term, but long-term relationships position the company well for future opportunities [7][8] - The medium-term outlook for PTE and ELL remains strong, supported by demographics and operational track records [9] Company Strategy and Development Direction - The company’s strategy remains unchanged, focusing on building growth engines in the Enterprise business and innovating products and services [5] - The strategic framework includes a focus on higher growth opportunities, unlocking innovation, and embedding a high-performance culture [12] - The company is targeting growth in adjacent markets, with a focus on partnerships and operational improvements [26][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the medium-term trajectory, citing strategic clarity and execution focus [5][47] - The company is on track to deliver financial performance in line with expectations set earlier in the year [6][40] - Management highlighted the importance of AI in shaping the future of learning and driving operational efficiencies [57][59] Other Important Information - The acquisition of eDynamic Learning for £225 million is expected to support medium-term guidance, despite near-term integration costs [43] - The company is implementing operational improvements, including revenue operations transformation and modern marketing approaches [19][20] Q&A Session Summary Question: Performance of new and renewed contracts - Management confirmed that contracts like ServiceNow and Salesforce are performing in line with expectations, with growth anticipated in 2026 [51][54] Question: Opportunities from Gen AI products - Management highlighted the potential of AI to drive cost efficiencies and improve customer experiences across various divisions [57][59] Question: Q3 and Q4 revenue growth expectations - Management provided insights on expected growth driven by new contracts and the cessation of previous school losses impacting Virtual Learning [66][70] Question: Higher Education enrollment expectations - Management indicated that enrollment growth is expected to be supported by pricing strategies and new product rollouts [72][85] Question: Details on Pearson VUE contract pause - Management clarified that the pause was specific to an individual contract and not indicative of broader issues [78][80] Question: Growth expectations in English Language Learning - Management expressed confidence in growth from the institutional business in the second half, particularly in Latin America [83] Question: Adoption share performance in Higher Education - Management reported a slight increase in adoption share compared to the previous year, with a focus on upcoming sales cycles [96]

Financial Performance - Sales reached £1,722 million, reflecting a 2% underlying increase[35] - Adjusted operating profit increased by 2% underlying to £242 million[35] - Adjusted earnings per share (EPS) decreased by 4% headline to 245 pence[35] - Interim dividend increased by 5% to 78 pence[35] - Free cash flow significantly increased by £129 million to £156 million[35] - Net debt decreased from £12 billion to £10 billion[35] Segment Performance (Sales) - Assessment & Qualifications sales were £802 million, a 2% underlying increase[37] - Virtual Learning sales were £242 million, a 1% underlying decrease[37] - Higher Education sales were £337 million, a 4% underlying increase[37] - English Language Learning sales were £171 million, a 3% underlying decrease[37] - Enterprise Learning & Skills sales were £170 million, a 4% underlying increase[37] Strategic Outlook - The company reaffirms its full-year outlook and remains on track to meet 2025 priorities[36,49] - The company anticipates stronger sales growth in the second half of the year, particularly in Q4[41]

Core Viewpoint - Pearson is on track to meet its 2025 guidance, with a positive outlook for the second half of the year despite global economic uncertainties [2][4]. Financial Performance - Underlying Group sales growth was 1% in Q1 2025, with expectations for acceleration in the second half [3][5]. - Higher Education sales increased by 6%, driven by AI study tools and successful monetization of the Channels product [5][6]. - Assessment & Qualifications sales grew by 1%, while Virtual Learning sales decreased by 4% [7]. - English Language Learning sales fell by 6%, but growth is anticipated in subsequent quarters [6][8]. Strategic Initiatives - The company is expanding its professional learning capabilities with the new Pearson Skilling Suite and launching AI-powered tools [5][6]. - New contracts in Enterprise Learning & Skills, including partnerships with the UK Ministry of Defence, are contributing to growth [5][6]. - A £350 million share buyback program has been initiated, with £65 million already purchased by the end of April 2025 [5][6]. Future Outlook - Pearson expects low single-digit sales growth in H1 2025, with stronger growth anticipated in H2 [8]. - The company aims for mid-single digit underlying sales growth CAGR beyond 2025, with sustained margin improvement [6][8]. - Adjusted operating profit is expected to align with market expectations, with a free cash flow conversion of 90-100% [8].