Pearson NYSE: PSO reported higher revenue, profit and earnings per share for the first half of 2026 and said it remains on track to meet its full-year guidance, as growth in Virtual Learning, Enterprise Learning & Skills and several assessment businesses offset pressure in English language testing.
Revenue rose 4% on an underlying basis, while adjusted operating profit increased 14% to £276 million. The company’s adjusted operating margin expanded 140 basis points to 15.5%. Adjusted earnings per share rose 19% at constant exchange rates, or 18% on a headline basis, to £0.289.
Chief Executive Omar Abbosh said the first-half performance reflected Pearson’s exposure to assessments and verification, virtual schools and print, which together account for about 90% of company profit. He said these businesses benefit from complex delivery workflows and positions in regulated markets.
“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,” Abbosh said. “We’re on track to deliver our guidance for the year.”
Cash Flow, Dividend and Outlook
Free cash flow increased by £103 million from the prior year to £259 million. Pearson said operating cash flow benefited from working-capital management, the timing of payables and one-off proceeds from the settlement of a U.S. insurance policy.
Net debt stood at £1.3 billion at the end of June 2026, up £0.3 billion from a year earlier. The company said cash generation was more than offset by share buybacks, acquisition spending and dividends.
Pearson proposed a 5% increase in its interim dividend to £0.082 per share and said its £350 million accelerated share repurchase program had been completed. Chief Financial Officer Simon Robson said the company’s capital-allocation priorities remain unchanged: investing in the business, pursuing disciplined mergers and acquisitions, paying dividends and distributing excess capital.
For the full year, Pearson maintained guidance for mid-single-digit underlying revenue growth, adjusted operating profit of £640 million to £685 million at exchange rates prevailing at the end of 2025, and free-cash-flow conversion of 90% to 100%.
Robson said growth is expected to improve in the second half and to be weighted toward the third quarter, reflecting seasonal back-to-school activity in Higher Education and other business-unit dynamics. He also said the fourth-quarter comparison will be more demanding after a strong fourth quarter in 2025.
Virtual Learning and Enterprise Growth
Virtual Learning was the company’s fastest-growing major segment, with revenue up 19%. Pearson attributed the result to enrollment momentum in the 2025-2026 academic year, funding and favorable business mix. Spring-semester enrollment growth accelerated to 15%, while segment margin rose to 18% on operating leverage.
The company renewed all 10 of its long-term contracts during the period and expects to open five schools for the upcoming academic year. Tom ap Simon, president of Higher Education and Virtual Learning, said the market remains supported by U.S. school-choice trends and parents taking a more active role in education decisions.
He said Pearson is gaining share through greater discipline in marketing and enrollment conversion. The company also highlighted its career-pathways offerings in virtual schools, which it said can help students consider career choices earlier and improve retention.
Enterprise Learning & Skills revenue grew 7%, supported by solid Vocational Qualifications performance and continued strong growth in Enterprise Solutions. Abbosh said Enterprise Solutions is helping businesses deliver AI upskilling programs, including an AI fluency program for Cognizant’s sales and consulting teams.
Pearson also said it expanded its strategic-account network to 10 relationships in the first half, creating additional joint go-to-market and monetization opportunities.
AI Certification and Assessment Performance
Abbosh highlighted a new agreement with an unnamed leading AI laboratory to deliver a global certification program. The company said the program has launched through its Pearson Professional Assessments network after being developed in a matter of months, rather than the 18 to 24 months Pearson said such programs historically could require.
“The first tens of thousands of people are coming through the doors,” Abbosh said during the question-and-answer session, while cautioning that it remains early in the rollout.
Assessment & Qualifications revenue increased 2% in the first half and returned to growth in the second quarter. Growth was driven by clinical assessment, U.K. and international qualifications, and Pearson Professional Assessments, partly offset by a decline in U.S. student assessment following the previously disclosed loss of the New Jersey contract.
Segment margin declined to 20%, reflecting sales mix and delivery costs. Robson said the end of the mature New Jersey contract and the first-year delivery of the U.K. primary-school SATs contract affected the margin. He also cited one-time SATs delivery costs, which the company does not expect to recur next year.
Pearson delivered its first large-scale U.K. primary-school testing cycle, marking about 2 million papers. Abbosh acknowledged that technical issues with the new platform caused a short delay in results, and said the company moved to support schools and strengthen delivery for future testing cycles.
Higher Education and English Language Headwinds
Higher Education revenue rose 2%, supported by U.S. core courseware and a return to growth in the K-12 channel. Inclusive Access growth accelerated to 23% in the second quarter and represented 50% of Pearson’s U.S. core courseware business.
Tom ap Simon said college enrollments are facing slight headwinds, in line with Pearson’s expectations, but said the company remains focused on delivering second-half growth through Inclusive Access, K-12 improvements and an international turnaround plan. Higher Education margin rose to 6%, helped by operating leverage, cost efficiencies and lower amortization following a 2025 product-development impairment.
English Language Learning revenue declined 3%. Institutional business grew, but that was more than offset by declines in Pearson Test of English. Pearson updated its outlook for the segment, saying growth is less certain because of softer study-abroad trends, tight migration policies and geopolitical disruption.
Abbosh said the Pearson Test of English market is still declining, though at a slower rate than in 2025, when it fell 15%. Pearson expects institutional growth to be supported by market-share gains and pricing, while Pearson Test of English is expected to continue declining amid challenging market conditions.
About Pearson (NYSE:PSO)
Pearson plc is a global education company headquartered in London, England, with significant operations in North America, Europe, Asia, and Latin America. Tracing its roots back to 1844, Pearson evolved from its early beginnings into one of the world's leading providers of educational content, digital learning tools, and assessment services. The company's American subsidiary trades on the New York Stock Exchange under the symbol PSO.
Pearson's core business encompasses a broad portfolio of products and services for learners, educators, and institutions.
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