UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of October
2024
PEARSON plc
(Exact
name of registrant as specified in its charter)
N/A
(Translation
of registrant's name into English)
80 Strand
London, England WC2R 0RL
44-20-7010-2000
(Address
of principal executive office)
Indicate
by check mark whether the Registrant files or will file annual
reports
under
cover of Form 20-F or Form 40-F:
Form
20-F
X
Form 40-F
Indicate
by check mark whether the Registrant by furnishing the
information
contained
in this Form is also thereby furnishing the information to
the
Commission
pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934
Yes
No X
Pearson 2024 Nine Month Trading Update (Unaudited)
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29th October
2024
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Continued progress on 2024 priorities with good financial and
operational performance; all divisions delivered underlying sales
growth in Q3; on track to meet full year expectations.
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Highlights
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Advancing our 2024 strategic priorities:
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Progressing in Enterprise: signed a new meaningful multi-year
enterprise deal with ServiceNow and expanded our partnership with
Degreed.
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Scaling AI across our products and services: double-digit
year-over-year billings growth in Higher Education products with AI
study tools, and developing English Language Learning Teaching Pal
to create customised lesson content and activities.
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Underlying Group sales
growth1:
up 5% in Q3, resulting in 3% growth for the nine-month period,
excluding OPM2 and
Strategic Review3 businesses.
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Delivered a comprehensive performance: all divisions grew in Q3,
including Higher Education.
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On track to meet full-year expectations.
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Omar Abbosh, Pearson's Chief
Executive, said:
"Pearson is delivering on the three priorities for 2024 that I
identified at the start of the year. First, our focus on
operational and financial performance has driven growth across all
divisions this quarter and we are on track to meet full-year
expectations. Second, we are accelerating our AI capabilities
across the business and starting to see the commercial benefit.
Third, expanded enterprise relationships with companies such as
ServiceNow demonstrate progress on our intention to expand in
workforce learning."
Underlying sales
growth1 of
3% for the nine months, 5% for Q3, excluding OPM2 and
Strategic Review3 businesses;
2% in aggregate for the nine months
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Assessment & Qualifications sales were up 3% for the nine-month
period, with growth accelerating in Q3, as expected, and all
businesses contributing to growth.
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Virtual Learning sales were up 4% for Q3 due to 4% growth in
Virtual Schools, with 2024/25 academic enrolments up 4% on a same
school basis. Virtual Learning sales declined 4% for the nine-month
period attributable to the final portion of the OPM ASU contract in
the first half of 2023.
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Higher Education returned to growth in Q3 with sales up 4% and is
on track to grow for the full year, driven by the operational and
business changes implemented over the past 18 months. Higher
Education sales were flat for the nine-month period.
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English Language Learning sales were up 7% for the nine-month
period driven by a strong performance in Institutional. In Q3,
sales were up 2% with some Institutional sales moving to
Q4.
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Workforce Skills sales were up 6% for the nine-month period and
also for Q3, with solid performances in both Vocational
Qualifications and Workforce Solutions.
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Strong financial position
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Pearson's financial position remains robust, with a strong balance
sheet.
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Moody's recently upgraded Pearson's long-term issuer rating to Baa2
and moved the outlook to stable
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We completed our £500m share buyback with 7% of shares bought
back.
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We issued a £350m Educational Bond.
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The UK government and other parties have successfully appealed
against the 2019 European Commission decision that the UK
controlled foreign company group financing partial exemption
partially constitutes State Aid. This means that the £105m
previously paid in relation to this will be recovered at some point
in the future and we will release the related £63m tax
provision in 2024, with the impact of the provision release
captured outside of adjusted earnings.
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2024 outlook - full year guidance reaffirmed
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Group underlying sales growth, adjusted operating profit, interest
and tax outlook for 2024 remain in line with market
expectations4.
As guided, free cash flow conversion is expected to be
95-100%.
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We expect interest to be in line with guidance of c.£45m with
recovery of interest on the State Aid payment offset by increased
interest given our recent bond issue.
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Financial
summary
Underlying
growth for the third quarter and nine months ended 30th September
2024 compared to the equivalent period in 2023.
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Sales
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Q3
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Nine months
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Assessment & Qualifications
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6%
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3%
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Virtual Learning
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4%
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(4)%
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Higher Education
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4%
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0%
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English Language Learning
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2%
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7%
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Workforce Skills
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6%
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6%
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Strategic Review
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(100)%
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(100)%
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Total
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4%
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2%
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Total, excluding OPM2 and
Strategic Review3
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5%
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3%
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1Throughout this announcement
growth rates are stated on an underlying basis unless otherwise
stated. Underlying growth rates exclude currency movements, and
portfolio changes.
2We completed the sale of the
Pearson Online Learning Services (POLS) business in June 2023 and
as such have removed it from underlying measures throughout. Within
this specific measure we exclude our entire OPM business (POLS and
ASU) to aid comparison to guidance.
3Strategic Review is sales in
international courseware local publishing businesses which have
been wound down. As expected, there are no sales in these
businesses in 2024.
42024 consensus on the Pearson
website dated 30th August
2024; adjusted operating profit of £598m at £:$ 1.27.
Based on the strengthening of the £:$ rate, our average rate
for profits through the first 9 months of 2024 is 1.28. As a
reminder, every 1c movement in £:$ rate will equate to
approximately £5m adjusted operating profit
impact.
Assessment
& Qualifications
In Assessment & Qualifications, sales growth accelerated in Q3
to 6%, with the business unit up 3% for the nine-month
period.
Pearson VUE sales were up 3% for the nine-month period driven by
favorable mix and value-added services, with PDRI seeing good
growth. We have launched a new Generative AI Foundations
certification, to be delivered on Pearson VUE's online testing
platform (OnVUE) and in physical test centres. This certificate
will equip professionals and students with the essential skills
needed to work with these technologies.
In US Student Assessment, sales were up 1% for the nine-month
period as phasing normalised.
In Clinical Assessment, sales were up 3% for the nine-month period,
due to pricing, digital product growth and successful new product
launches.
In UK and International Qualifications, sales were up 7% for the
nine-month period largely driven by volume, pricing and
International growth.
We continue to expect low to mid-single digit sales growth for the
full year.
Virtual
Learning
In Virtual Learning, sales were up 4% for Q3 due to 4% growth in
Virtual Schools with 2024/25 academic enrolments up 4% on a same
school basis. Virtual Learning sales declined 4% for the nine-month
period attributable to the final portion of the OPM ASU contract in
the first half of 2023.
In Virtual Schools, we previously announced the opening of 3 new
schools this year and a further 19 career programmes. This brings
our total number of schools to 40, with 24 career programmes,
across 30 states for the 2024/25 academic year. Students now have
access to expanded college and early career readiness offerings,
including through credentials via Credly, and college cost savings
via new partnerships with institutions like Southern New Hampshire
University.
We have also embedded AI study tools into our Virtual Schools
content so that when high school students struggle with quizzes and
practice tests, they can receive step-by-step help to walk them
through tough material.
Full year expectations for Virtual Schools remain unchanged with
sales expected to be down a similar rate to 2023 reflecting the
previously announced school losses. As a reminder, Q4 performance
will be impacted by the
catch up in funding that we saw in Q4 last
year.
Higher
Education
In Higher Education, sales grew 4% in Q3 and were flat for the
nine-month period, in line with expectations.
In US Higher Education, Q3 sales growth was driven by gains in
adoption share, enrolments and pricing partially offset by mix
impacts and revenue deferral. In the nine-month period, there was
3% growth in US digital subscriptions and Inclusive Access growth
of 24%.
We continue to see good engagement with our AI study tools with
over 5 million student interactions in the nine-month period to
September following the roll out of our AI study tools. We extended
the AI study tools to more than 90 titles for Fall Back to School.
This has helped to drive double-digit billings growth
year-over-year in products with AI study tools.
On 1st October 2024, Pearson began to directly distribute our
proprietary Advanced Placement (AP®), Dual Enrollment, and
Career and Technical Education (CTE) materials into states and
school districts, which were previously distributed by a third
party. The dedicated sales team that Pearson has invested in will
enable us to expand and strengthen customer relationships with US
school administrators as the demand for college and career
readiness programmes grows.
We continue to expect sales growth for the full year.
English
Language Learning
In English Language Learning, sales increased 2% for Q3 and 7% for
the nine-month period.
Institutional performance continued to be strong for the nine-month
period, with particularly good growth in LATAM and Middle East
markets, albeit sales were down in Q3 due to phasing shifts to
Q4.
We are infusing AI into our English Language Learning division with
the development of Teaching Pal, an AI-powered tool designed to
simplify educators' work by creating customised lesson content and
activities, leveraging our trusted IP.
We continue to expect high-single digit sales growth for the full
year.
Workforce
Skills
In Workforce Skills, sales increased 6% for Q3 and the nine-month
period.
There was solid performance in both the Vocational Qualifications
and Workforce Solutions businesses.
Pearson has many of the assets that enterprises need to address
their problems in talent planning, talent sourcing and talent
development, and through bundling our existing products we can
unlock synergies across the company. We have recently signed a
meaningful multi-year deal with ServiceNow. The first phase is
aimed at reshaping how their employees and professional communities
develop and verify critical skills and drive productivity in the
era of AI, using Pearson's research, insights and Credly
capabilities.
We are also expanding our partnership with Degreed through
integrating Faethm data sets into Degreed's platform,
offering real-time insights into the most relevant skills across
industries, allowing companies to benchmark skills, identify gaps,
and prioritise key areas for upskilling.
Contacts
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Investor Relations
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Jo Russell
Alex Shore
Gemma Terry
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+44 (0) 7785 451 266
+44 (0) 7720 947 853
+44 (0) 7841 363 216
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Brennan Matthews
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+1 (332) 238 8785
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Media
Teneo
Pearson
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Ed Cropley
Laura Ewart
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+44 (0) 7492 949 346
+44 (0) 7798 846 805
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Virtual event
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Pearson's 2024 nine month trading update is taking place today at
08:30 (GMT). Register to receive log in details:
https://pearson.connectid.cloud/register
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About
Pearson
At
Pearson, our purpose is simple: to help people realise the life
they imagine through learning. We believe that every learning
opportunity is a chance for a personal breakthrough. That's why our
Pearson employees are committed to creating vibrant and enriching
learning experiences designed for real-life impact. We are the
world's lifelong learning company, serving customers with digital
content, assessments, qualifications, and data. For us, learning
isn't just what we do. It's who we are. Visit us at
pearsonplc.com.
Notes
Forward looking statements: Except
for the historical information contained herein, the matters
discussed in this statement include forward-looking statements. In
particular, all statements that express forecasts, expectations and
projections with respect to future matters, including trends in
results of operations, margins, growth rates, overall market
trends, the impact of interest or exchange rates, the availability
of financing, anticipated cost savings and synergies and the
execution of Pearson's strategy, are forward-looking statements. By
their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that will occur in future. They are based on numerous
assumptions regarding Pearson's present and future business
strategies and the environment in which it will operate in the
future. There are a number of factors which could cause actual
results and developments to differ materially from those expressed
or implied by these forward-looking statements, including a number
of factors outside Pearson's control. These include international,
national and local conditions, as well as competition. They also
include other risks detailed from time to time in Pearson's
publicly-filed documents and you are advised to read, in
particular, the risk factors set out in Pearson's latest annual
report and accounts, which can be found on its website
(www.pearsonplc.com). Any forward-looking statements speak only as
of the date they are made, and Pearson gives no undertaking to
update forward-looking statements to reflect any changes in its
expectations with regard thereto or any changes to events,
conditions or circumstances on which any such statement is based.
Readers are cautioned not to place undue reliance on such
forward-looking statements.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
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PEARSON
plc
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Date: 29
October 2024
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By: /s/
NATALIE WHITE
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Natalie
White
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Deputy
Company Secretary
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