Pearson plc (PSO) Q2 2025 Earnings Call Transcript
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Aug 01 2025
0mins
Should l Buy PSO?
Source: SeekingAlpha
Sales Sales were up 2% on an underlying basis year-over-year. This growth was in line with the guidance set out in February.
Adjusted Operating Profit Adjusted operating profit increased by 2% year-over-year to GBP 242 million. This was driven by operating leverage on sales growth, partially offset by inflation.
Adjusted Earnings Per Share Adjusted earnings per share decreased to 24.5p year-over-year. The positive underlying trading performance and a reduction in share count due to the share buyback were more than offset by FX headwinds.
Free Cash Flow Free cash flow increased by GBP 129 million year-over-year to GBP 156 million. This was due to good working capital management offsetting the impact of FX and the receipt of the state aid recovery.
Net Debt Net debt decreased by GBP 0.2 billion year-over-year to GBP 1 billion as of June 2025. This was driven by free cash flow, partially offset by dividends and the share buyback.
Interim Dividend The interim dividend increased by 5% year-over-year to 7.8p, reflecting performance and confidence in the outlook.
Assessments & Qualifications Sales Sales grew 2% year-over-year. Growth was driven by strong performance in Clinical Assessments and UK & International Qualifications, partially offset by declines in Pearson VUE and US Student Assessment.
Virtual School Sales Sales declined 1% year-over-year. This was due to the final portion of the impact of previous school losses, although enrollments for the 2024-'25 academic year increased 5% on a same-school basis and 7% including new school openings.
Higher Education Sales Sales grew 4% year-over-year. This was driven by 21% growth in IA and 3% growth in U.S. digital subscriptions, as well as good monetization of the Study Prep Tool and engagement with AI study tools.
English Language Learning Sales Sales declined 3% year-over-year. This was due to a strong comparative period in H1 last year and a flat performance in Pearson Test of English against a tough market backdrop.
Enterprise Learning & Skills Sales Sales grew 4% year-over-year. This was driven by solid performance in Vocational Qualifications and momentum in Enterprise Solutions.
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Analyst Views on PSO
About PSO
Pearson PLC is a learning company with its principal operations in the education, assessment and certifications markets. The Company’s divisions include Assessment & Qualifications, Virtual Learning, Higher Education, English Language Learning and Enterprise Learning & Skills. The Assessment & Qualifications division includes Pearson VUE, US Student Assessment, Clinical Assessment, UK-curriculum-based qualifications, such as GCSEs and A levels, as well as courseware for English-speaking regions throughout the world. The Virtual Learning division includes virtual schools and online program management. The Higher Education includes the United States, Canadian, and International Higher Education Courseware businesses. The English Language Learning division includes Pearson Test of English, Institutional Courseware and English Online Solutions. The Enterprise Learning & Skills division includes Vocational Qualifications and Enterprise Solutions.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Robust Cash Flow: Free cash flow increased by 8%, achieving a conversion rate of 125%, demonstrating strong cash flow management amid high sales growth, thereby enhancing flexibility for future investments.
- Positive Future Outlook: The company maintains an optimistic outlook for 2026, projecting mid-single-digit underlying sales growth and adjusted operating profit between £640 million and £685 million, showcasing confidence in future market demand.
See More
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- Market Reaction Analysis: Despite Pearson's solid business performance, the market may be pricing the stock too optimistically, prompting investors to closely monitor the upcoming earnings report to assess the gap between actual performance and market expectations.
See More
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