Pearson 2026 H1 Earnings Call

Good morning, everyone, welcome to Pearson's 2026 interim results. Today, we will host a presentation followed by a Q&A session. There will be two ways to submit your questions. If you'd like to ask your questions personally, please use the numbers that are displayed on screen. These lines will open following the main presentation. Alternatively, please type your questions into the Questions tab at the top right of the screen, and we will address them in turn at the end. With that, I'll hand over to Omar.

Thank you, Alex. Good morning. It's a pleasure to be with you again today. I've really been looking forward to it. I'm pleased to be joined by Simon Robson, our great new CFO. Simon will run you through our financial results for the first half, alongside his initial reflections following early engagement with the Pearson teams and many of you in the investment community as well. As usual, we'll be joined by our colleagues, Art, Tom, Vishal and Sharon for Q&A. Let me start with the key takeaways from today's presentation. First, we have delivered a good H1 financial result with revenue up 4%, profit up 14%, and EPS up 19%, alongside continued strong cash flow strength. Second, we're on track to deliver our guidance for the year. Third, we continue to be excited about the future for Pearson.

Our relationship with a leading AI lab reinforces our conviction that advances in technology are driving major demand for the validation of new skills, with Pearson uniquely placed to benefit. Before we go into the results, let me begin with reminding you of Pearson's unique characteristics and enduring strengths that drive resilient profit and cash flow, that help deliver our encouraging financial result in H1. 90% of our profit comes from assessments and verification, virtual schools, and print. These businesses are driven by human-led services where complex, interconnected physical and digital workflows enable large-scale delivery, often within highly regulated markets. Our services act as verification infrastructure for skills globally, spanning companies, industry associations, states, and government agencies.

The remaining 10% of Pearson's profit comes from digital courseware, predominantly in US higher ed, where we are deeply embedded in critical workflows of decision-makers, delivering solutions that enable educators to deliver courses end-to-end. These characteristics, alongside our competitive strengths underpinned by trust, deliver a clear value proposition for our customers, powering our financial performance. Let me come next to our guidance for this year. As we have showed you several times before, this is the framework by which we operate. Execution against this framework is already translating into delivery. We grew revenue by 4% in H1 and remain on track for our full year guidance. Our confidence in driving consistent mid-single digit top-line growth and margin expansion over the medium term is underpinned by continued execution against this framework. This includes core business improvements, unlocking execution synergies, and driving our medium-term growth vectors.

Let me pick out a few highlights across each of those areas. Firstly, we continue to drive performance across our core businesses. In Assessment & Qualifications, we're delivering continued enterprise growth with our Google Cloud certification program launching in H1, and securing a new contract with a leading AI lab, which I'll talk more about shortly. Our clinical assessment business delivered strong growth, benefiting from international demand and digital expansion. In U.K. and international qualifications, we delivered the first large-scale testing cycle for U.K. primary schools, marking approximately 2 million papers. As some of you may have seen, technical issues with the new platform led to a short delay in the delivery of results. We apologize for the disruption and moved quickly to support schools and strengthen delivery for future cycles. Moving to Virtual Learning. This business unit is clearly having a standout year underpinned by a positive market environment, recent share gains, investment, and ongoing strong execution.

We were successful in all 10 long-term contract renewals this year and are on track to open five new schools for the upcoming academic year. We're continuing to feel confident about the sustainability of strong growth for this business into the medium term. In Higher Education, Inclusive Access continues to be a key priority, and we're seeing improved performance here reflecting go-to-market changes implemented in H1, including revised incentives and better market intelligence for our sales teams. Inclusive Access growth accelerated to 23% in Q2 and now represents 50% of our U.S. core Courseware business.

In Enterprise Learning & Skills, Enterprise Solutions continue to be a key driver of growth through powering enterprise AI upskilling at scale, including delivering a suite of AI learning programs to our strategic partners. For example, we delivered a strategic AI fluency program for Cognizant's global sales and consulting teams, enabling them to become more effective individually while also supporting high-stakes technical sales conversations. In Vocational Qualifications, we continue to execute strongly, including in international markets, where we extended our contract with the Jordanian Ministry of Education and successfully launched a vocational skilling program for construction in Saudi Arabia. Lastly, in English Language Learning, institutional performed well with continued enterprise growth. The backdrop for international mobility has become more difficult since we last spoke, with softer study abroad trends, continued tight migration policies, and the geopolitical disruption weighing on demand.

With this backdrop, I'm pleased that our teams are outperforming the market and executing well, showing clear operational resilience. We expect market headwinds to persist in the near term, we do remain confident in the long-term attractiveness of this business, given demographic factors. Let me touch upon progress in unlocking value through our execution synergies. We continue to identify areas of opportunity to break down silos, fix fragmented approaches, and drive operational effectiveness. Let me pick out a few examples across the implementation of Pearson-wide operational systems. Our work to date on content development processes has identified nearly 150 distinct content tools and over 140 different approaches to describe, tag, and structure content assets across Pearson. We're systematically working through to standardize our approach here, moving towards Pearson-wide workflows supported by agentic technologies.

We continue to make AI-enabled process improvements, for example, included in customer services, where AI self-service is handling 40% of customer interactions across voice, chat, and email in our initial rollout phases. Our new revenue operations team is driving a more consistent, disciplined approach to forecasting and sales incentives. We're consolidating more than 130 individual sales incentive plans across Pearson into about 30 streamlined role-based plans aligned to a common set of principles. Second, we're continuing to drive product innovation and leverage benefits from our modern software approach, combining new technologies alongside our data, quality IP, and core assessment capabilities. We have launched new products in ambient assessment, like Communication Coach, and have been pleased with early feedback from customers. We're also expanding our clinical business with AI-enabled functionality that enhances our platform offering, supporting our continued digital strength.

We're leveraging our data and applying our learning science to drive improved learner outcomes. For example, at higher ed, where our latest research shows that by using our AI adaptive products, students were 90% more likely to reach initial mastery in a topic versus legacy education tools. Lastly, we're leveraging our strategic partners to unlock value and improve operational effectiveness. Our latest strategic partnership announcement is with Adobe, who are supporting our efforts to rebuild and upgrade our digital estate, enabling easier selling and purchasing. To shine a light on where we are today, we manage 4,500 web domains, of which over 300 are product-focused. We're simplifying this web estate and redesigning it to fit core customer personas and journeys. In parallel, we're upgrading our e-commerce capabilities to improve performance, ensuring our customer platforms are ready for LLM discoverability and agent-driven experiences.

As you can hear, there are a lot of activities ongoing across the group to drive execution synergies. We're investing in these changes because we are very confident that they will continue to deliver cost efficiencies underpinning our 40 basis points medium-term guide, as well as increasing our operational agility and supporting an improved and more consistent top-line performance. Finally, I want to share an update on our progress with our medium-term growth vectors, firstly with enterprise skilling. The first half results demonstrate growing momentum across our key enterprise offerings. Pearson Professional Assessments grew well, Enterprise Solutions delivered strong double-digit growth, and we're seeing continued enterprise opportunities for our English offerings. We are delivering continued success in strategic account growth, increasing our network to 10 during the first half. These new long-term relationships secure incremental joint go-to-market and monetization opportunities for Pearson.

I now want to spend a few moments on AI skills verification. We've spoken before about the widening gap between the pace of AI innovation, people's ability to use it effectively, and the returns enterprises are seeking from AI. Our agreement with a leading AI lab to deliver their global certification program reinforces our leadership in skills verification and our conviction that AI adoption increases demand for trusted, validated new skills. I'm particularly proud of how quickly our team moved from initial discussion to global launch across our Pearson Professional Assessments network in just a matter of months. This speed reflects both the pace and the technology industry expects and Pearson's agility in delivering at global scale. Overall, this agreement is a clear signal of the demand we expect to see as organizations scale AI adoption, and Pearson is uniquely positioned to help meet that need.

In early careers, we continue to make progress in unlocking this large adjacent market opportunity. The eDynamic Learning integration is progressing well. We are pleased with performance, and we continue to expect this deal to be supportive of our medium-term guidance. We have also successfully brought together our sales teams and capabilities across our early career assets that we first signaled at Prelims, including eDynamic Learning, Certiport, and Career and Technical Education, meaning Pearson now offers a complete explore, learn, practice, and certification continuum. This revised go-to-market approach is unlocking near-term cross-sell revenue synergies, and initial school district customer feedback has been encouraging, meaning we feel confident in our value prop. Our ability to address this large market opportunity. Now, let me hand over to Simon for a deeper look at our first-half financials.

Thanks, Omar. Great to be with you all. Good morning. Before I get on to the first-half results and full-year outlook, let me take a couple of minutes to reflect on my first three months in this role. I have been spending most of my time engaging with Omar and the executive team, going deep on the business and our offerings, and connecting with colleagues from across Pearson. I have also met and listened to many of you across the investor and analyst community, which has been an important investment of my time. Everything I have seen so far has reinforced my conviction that Pearson combines leading positions in attractive markets, structural growth opportunities, and resilient cash generation. The speed that Omar and the leadership team are moving at to unlock these opportunities is impressive.