Pearson plc's Q2 2025 Earnings Call Highlights Strong Performance and Strategic Progress
Pearson plc, a global leader in education and learning solutions, delivered impressive results during its Q2 2025 earnings call. The company reported an EPS of $0.3203, surpassing the expected $0.3058. This strong performance reflects the company’s continued focus on strategic growth and operational efficiency.
Strategic Focus and Market Dynamics
Omar Paul Abbosh, CEO of Pearson, emphasized that the company’s strategy remains unchanged and is well established across the organization. Two key trends—demographics and artificial intelligence (AI)—continue to shape the educational landscape. As AI transforms the workforce, Pearson is positioned to play a critical role in developing the skills needed for the future.
Abbosh outlined three main takeaways from the call:
- Strategic Clarity: Pearson’s approach remains consistent, with a focus on building medium-term growth engines through enterprise business expansion and product innovation.
- Execution Focus: The company is making progress against its strategic goals, with clear proof points demonstrating effective execution.
- Confidence in Trajectory: The combination of strategic clarity and strong execution reinforces confidence in Pearson’s medium-term growth outlook.
The company also highlighted its resilience in the face of market dynamics. While certain segments may face challenges, Pearson’s diversified portfolio allows it to benefit from overall market growth while remaining resilient to subsegment trends.
Key Business Segments and Performance
Pearson’s performance across its key business units was strong, with several areas showing significant growth:
- Assessments & Qualifications: Sales grew by 2%, driven by strong performance in clinical assessments and UK & International Qualifications. However, there were declines in Pearson VUE and US Student Assessment due to contract pauses and PDRI headwinds.
- Virtual Learning: Sales declined slightly due to previous school losses, but enrollment and retention trends improved, with positive momentum expected in H2.
- Higher Education: Sales grew by 4%, supported by strong monetization of the Study Prep Tool and continued engagement with AI-driven study tools.
- English Language Learning (ELL): Sales declined by 3%, primarily due to a strong comp period in H1 2024. However, the PTE business remained stable.
- Enterprise Learning & Skills: Sales grew by 4%, driven by solid performance in vocational qualifications and momentum in enterprise solutions.
Operational Improvements and Innovation
Pearson is making significant strides in operational improvements, including:
- Revenue Operations Transformation: Led by Chief Business Officer Naseem Tuffaha, this initiative aims to improve revenue visibility and scalability.
- Modern Marketing Approach: Under Chief Marketing Officer Ginny Ziegler, the company is focusing on cost efficiencies and enhanced brand presence.
- Performance Culture: Pearson has streamlined roles and reduced job families, leading to better performance management and more efficient communication.
- AI-Driven Simplification: The company has implemented AI-powered service agents and content development tools, significantly improving speed to market.
Strategic Partnerships and Growth Opportunities
Pearson continues to expand its strategic partnerships, including new collaborations with Microsoft, AWS, and Google Cloud. These relationships are unlocking new revenue opportunities and enabling co-innovation in education and workforce development.
Additionally, Pearson is investing in targeted markets, such as formative assessment through its partnership with McGraw Hill and expanding test prep capabilities via Pearson VUE. The company is also redirecting investments into AI and immersive learning technologies, partnering with industry leaders like Meta and Google XR.
Early Careers and Enterprise Skilling
Pearson is strengthening its position in two key growth vectors:
- Early Careers: The acquisition of eDynamic Learning adds a core pillar to Pearson’s Early Careers strategy, providing job-ready skills for the next generation of workers.
- Enterprise Skilling: With AI transforming the workforce, Pearson is helping enterprises develop talent planning and skill verification capabilities. This aligns with the needs of CEOs who are seeking ways to navigate the evolving skills landscape.
Financial Performance and Outlook
Sally Kate Miranda Johnson, CFO of Pearson, provided an overview of the financial results. Sales grew by 2% on an underlying basis, with adjusted operating profit up 2% to GBP 242 million. Adjusted EPS was down to 24.5p, impacted by FX headwinds, though the share buyback helped offset some of the decline.
The company maintained a strong balance sheet, with free cash flow up to GBP 156 million. Net debt decreased to GBP 1 billion, driven by strong cash performance and the completion of a GBP 350 million share buyback.
Looking ahead, Pearson remains confident in its 2025 outlook. Key business unit growth expectations include:
- Assessments & Qualifications: Low to mid-single-digit growth, with H2 weighted toward Q4.
- Virtual Learning: Expected to return to growth in H2, driven by enrollment increases and new school openings.
- Higher Education: Growth will be higher than in 2024, fueled by sales team transformation and AI-driven innovations.
- English Language Learning: Full-year growth will moderate due to PTE performance in H2.
- Enterprise Learning & Skills: High single-digit growth, supported by new contracts and pipeline activity.
Conclusion
Pearson’s Q2 2025 results reflect strong execution, strategic focus, and a commitment to innovation. With a diversified portfolio, operational improvements, and expanding partnerships, the company is well-positioned to drive long-term growth and deliver value to stakeholders. As the world continues to evolve, Pearson remains a key player in shaping the future of learning.