Pearson [LON:PSON] delivered a solid performance in 2025, with underlying growth metrics broadly in line with market expectations and strategic execution expected to underpin further momentum into 2026 and beyond.
The London-listed education group’s latest trading update revealed a resilient trading environment amidst broader macroeconomic headwinds, helping to stabilise investor sentiment and laying foundations for medium-term growth.
For the year ended 31 December 2025, Pearson reported underlying Group sales growth of 4%, with an acceleration to 8% in the fourth quarter as several business units contributed to the improvement. Group adjusted operating profit was placed at £610m-£615m, which is roughly 6% ahead on an underlying basis compared with the prior year at a GBP/USD exchange rate of 1.32. Free cash flow conversion exceeded 95%, bolstered by the £0.1bn State Aid tax repayment received during the year.
Chief executive Omar Abbosh described 2025 as a year of “strong delivery against financial and strategic priorities,” highlighting partnerships with major technology players and the rollout of AI-enabled learning solutions as illustrative of its evolving proposition. Among these innovations, the launch of Communication Coach, an AI-powered tool integrated into Microsoft 365 to support communication skills, stood out as the group’s first go-to-market collaboration with Microsoft. It signals Pearson’s intent to leverage artificial intelligence in core product offerings.
The company also secured strategic contracts, including vocational skilling initiatives in Saudi Arabia and certification delivery for Google Cloud.
Pearson’s performance varied across segments. Assessment & Qualifications delivered a 4% increase in sales, underpinned by contract renewals and new wins, albeit with the loss of a significant US state contract expected to weigh on H1 2026 results.
Virtual Learning proved a particularly bright spot, with sales up 8% for the year and a notable 20% jump in Q4 driven by higher enrolments in the 2025/26 academic year and favourable product mix. Higher Education sales eked out a 2%, while English Language Learning advanced modestly by 1%, with underlying momentum picking up in key international markets in the final quarter. Enterprise Learning & Skills grew 6%, reflecting continued demand for vocational and corporate solutions.
Pearson shares, which have lagged broader indices and sub-sector peers, have been under pressure (down over 16% in the last 12 months), with some analysts pointing to concerns that growth remains heavily weighted to the year’s closing quarter and that artificial intelligence presents both opportunity and disruption risks.
JPMorgan, for instance, has argued that AI represents a tailwind for Pearson, given its repository of verified content that can be embedded into AI-enabled educational products, and a recent trim in the bank’s price target still implies substantial upside in the shares from current levels.
Looking ahead, Pearson affirmed its medium-term outlook, pointing to a target of mid-single-digit compound annual growth in underlying sales and sustained margin improvement, along with strong free cash flow generation of 90–100% on average over the period.
The educational publisher also reiterated its confidence in the strategic priorities that have driven recent progress: digital transformation, technology partnerships and expanded global reach. Armchair traders will likely want to also focus on the full year results due on 27 February 2026, when management is expected to articulate the outlook for the year ahead against a backdrop of evolving market dynamics and competitive pressures.
Pearson’s update underscores the dual realities of a business in transition, namely steady financial execution and the strategic imperative to harness innovation, as it seeks to balance near-term delivery with long-term growth aspirations.
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