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 May
2025
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 Q1 2025 Trading Update (Unaudited)
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2nd May
2025
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Pearson on track to deliver 2025 guidance1 with
expected Q1 result and momentum building for the second
half
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Highlights
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Underlying
Group sales up 1%, with growth expected to accelerate in the second
half of the year
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All
business units performing in line with expectations; strong start
for Higher Education with underlying sales up 6%
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Good
progress against our 2025 strategic priorities,
including:
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o
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Expanding professional learning capabilities with our new Pearson
Skilling Suite (link here)
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o
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Continuing to lead on the application of innovative technologies,
with the launch of an AI-powered Smart
Lesson Generator (link here)
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o
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New contract wins in Enterprise Learning & Skills; including
with UK Ministry of Defence (link here)
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Launch of redefined Pearson brand to embrace the future of learning
(link
here)
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£350m
share buyback programme launched and progressing; £0.1bn State
Aid recovery received in full
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Omar Abbosh, Pearson's Chief Executive, said:
"We continue to make good progress against our
strategy, supporting our medium term growth
outlook. We are confident of delivering on
our expectations for the year given our clear path to achieving
stronger growth in the second half, whilst we recognise the
heightened uncertainties around the global
economy.
Financial and operating performance in our smallest quarter was in
line with our plans and we continue to build AI enhanced offerings
across the business and make progress on our Enterprise
initiatives."
Underlying Group sales growth of 1% in Q1 2025
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Assessment &
Qualifications sales were up 1%. Pearson VUE declined slightly,
with growth expected to be weighted to H2 driven by the timing of
new contracts and the test prep business building during the year,
supported by the recent launch of the Pearson Skilling Suite
programme. Clinical Assessment grew due to the continued traction
of our products in the market, with further new product releases
planned this year, and digital product growth. US Student
Assessment saw a small decline due to changes in programme services
and timing of delivery. UK & International Qualifications sales
benefitted from International growth.
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Virtual
Learning sales decreased 4%, in line with guidance, reflecting the
impact of previous partner school losses and timing of funding
upsides in the prior period. 2024/25 academic year enrolments
increased by 5% in the Spring semester on a same school basis, with
positive retention trends.
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Higher Education sales were up 6% benefitting
from the continued innovation and roll out of AI study tools for
students and educators and the ongoing successful monetisation of
the Channels product. In the quarter, there was growth
of 22%
in Inclusive Access and
4% in US digital subscriptions. In our International business, 25
AI translated titles were made available for Spring semester
courses, expanding the reach of Pearson learning experiences faster
and more efficiently.
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English
Language Learning sales decreased 6%, in line with guidance.
Institutional declined due to a strong comparator period in Q1
2024, and we expect performance to improve in Q2 and beyond.
Pearson Test of English (PTE) performed well against a tough market
backdrop and despite a decline in volumes we grew the business. We
continue to lead on the application of innovative technologies with
the recent launch of AI-powered Smart Lesson Generator and Digital
Language Tutor.
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Enterprise Learning
& Skills sales were up 1%. Vocational Qualifications delivered
a solid performance with new contract wins supporting pipeline
growth, including apprenticeship courses with the UK Ministry of
Defence and T Levels in Health and Science. Enterprise Solutions
announced strategic partnerships with Microsoft and AWS in the
quarter as we build momentum in our Enterprise approach and related
sales capability.
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On track to achieve 2025 guidance and medium term outlook
unchanged
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We expect sales growth and adjusted operating profit in line with
market expectations1 for
2025. We expect low single-digit sales growth in H1 with stronger
growth in H2. We outline our previously issued 2025 guidance later
in this release.
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Beyond 2025, Pearson is positioned to deliver a mid-single digit
underlying sales growth CAGR, sustained margin improvement that
will equate to an average increase of 40 basis points per annum and
strong free cash conversion2, in the region of 90% to 100%, on average, across
the period.
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Strong financial position
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Pearson's
financial position remains strong, with low leverage and strong
liquidity.
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The
£0.1bn previously paid in relation to State Aid was recovered
in full during Q1 2025.
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In
March 2025 we commenced our £350m share buyback programme,
with £65m purchased up to 30th April
2025.
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Executive Change
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Dave
Treat, Pearson's Chief Technology Officer, has assumed leadership
of the company's digital and technology operation alongside his
current architectural and innovation responsibilities, effective
7th April 2025.
Dave joined Pearson last July and will play a crucial role in
scaling Pearson's AI offerings, bolstering our innovation pipeline,
and driving collaboration across different business
units.
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Marykay
Wells, who led the Digital and Technology team as Chief Information
Officer, decided to leave Pearson, effective 4th April 2025. We
want to thank Marykay for her work on our technology foundations
and capabilities.
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Financial summary
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Sales
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Q1 2025
Underlying growth
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Assessment & Qualifications
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1%
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Virtual Learning
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(4)%
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Higher Education
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6%
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English Language Learning
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(6)%
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Enterprise Learning & Skills
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1%
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Total
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1%
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Throughout this announcement growth rates are stated on an
underlying basis unless otherwise stated. Underlying growth rates
exclude currency movements, and portfolio changes.
2025 guidance summary
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Underlying Sales growth
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Group
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In line
with market expectations1. We expect low
single-digit sales growth in H1 with stronger growth in
H2.
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Assessment & Qualifications
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Sales to grow low to mid-single digit. Growth will be H2 weighted
with new and renewed contracts and the test prep business building
during the year.
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Virtual Learning
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Sales to decline in H1 given the final impact of previous school
losses and the timing of funding in the previous year. Return to
growth in H2 and the full year driven by enrolment increases,
partially from new school openings, for the 25/26 academic
year.
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Higher Education
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Sales growth in 2025 will be higher than in 2024 as we build on the
successful results of our sales team transformation and product
innovations, particularly using AI. Growth will be relatively
stable throughout the year.
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English Language Learning
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Sales growth will moderate given the likely impacts of elections on
immigration rates in 2025 affecting our PTE business, which is
expected to decline in the year. Q1 declined in line with
expectations and we expect growth to increase each quarter
thereafter. We remain confident in the medium term outlook given
demographic projections.
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Enterprise Learning & Skills
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Sales to grow high single digit with Vocational Qualifications
seeing solid growth and the addition of several new contracts for
Enterprise Solutions. Growth will increase quarter on
quarter.
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Group
Profit
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Adjusted Operating Profit
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In line with market expectations1.
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Interest
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Adjusted net finance costs of c.£65m reflecting the impact of
the Education Bond and £350m share buyback programme which
commenced in March.
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Tax rate
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We expect the effective tax rate on adjusted profit before tax to
be between 24% and 25%.
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Cash
flow
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We expect a free cash flow conversion2 of
90-100% plus the £0.1bn State Aid repayment which was received
in full during Q1 2025.
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FX
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Every 1c movement in GBP:USD rate equates to approximately £5m
adjusted operating profit impact.
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12025 consensus on the Pearson
website dated 27th January
2025; underlying sales growth 4.4%, adjusted operating profit of
£656m at £:$ 1.23. The average £:$ rate for Q1
2025 was 1.27, which if held for the full year would imply an
updated adjusted operating profit consensus of c.£636m,
applying the FX guidance stated above.
2Free cash flow conversion
calculated as free cash flow divided by adjusted
earnings.
Contacts
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Investor Relations
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Alex
Shore
Steph
Crinnegan
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+44
(0) 7720 947 853
+44
(0) 7780 555 351
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Gemma
Terry
Brennan
Matthews
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+44
(0) 7841 363 216
+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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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: 02 May
2025
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By: /s/
NATALIE WHITE
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------------------------------------
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Natalie
White
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Deputy
Company Secretary
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