Pearson posts 5% growth over nine months, narrows adjusted profit outlook
Key Facts
Pearson reported underlying revenue growth of 5% for the nine months ended September 2026, with growth accelerating to 6% in the third quarter, as it narrowed its annual profit outlook. The group said in its trading update on 22 October that revenue performance was in line with its expectations. It now expects adjusted operating profit of between £650 million and £675 million for 2026. Its previous range was between £640 million and £685 million. The revision raises the lower end of the forecast and lowers the upper end, leaving the midpoint unchanged. The forecasts are based on exchange rates at the end of 2025.
Assessment and Qualifications was among the drivers of the acceleration, recording revenue growth of 10% in the third quarter, compared with cumulative growth of 4% over the nine months. Pearson attributed the division's performance to new contracts and demand for verification of AI skills. The assessment business thus combined contributions from new contracts with demand linked to validating workforce skills. In a separate statement on its acquisition of an assessment technology company, Art Valentine, president of Assessment and Qualifications, linked organisations' use of Pearson to trust in its services. He said: "Organisations turn to Pearson for assessment and verification they can trust."
Virtual Learning grew 17% over the nine months, outpacing the other divisions included in the group's update. Its third-quarter revenue growth was 13%, below the rate recorded for the cumulative period. Pearson said increased enrolments were among the factors supporting the business. It added that funding and revenue mix also contributed to the division's growth during the period. At its virtual schools, autumn enrolments for the 2026/27 academic year rose 8%, extending the role enrolments play in the performance of these businesses.
By contrast, English Language Learning continued to contract, with revenue falling 4% over the nine months. The decline in the third quarter was 5%, reflecting a steeper fall during the quarter than over the cumulative period. The company attributed pressure on the business to immigration policies and geopolitical disruption. It also cited a higher comparison base for the Pearson Test of English as an additional factor weighing on the division's performance. Higher Education recorded growth of 2% in both the third quarter and the nine months, maintaining the same pace of growth across the two periods.
Enterprise Learning and Skills revenue rose 7% over the nine months, while third-quarter growth was 6%. Pearson said vocational qualifications, enterprise solutions and partnerships supported the business's performance. The group's current results follow underlying sales growth of 4% for the full year 2025. Its adjusted operating profit that year was £614 million, an underlying increase of 6%, according to its previous annual results. Before the current trading update, Investing.com reported that UBS had downgraded Pearson shares from "buy" to "neutral". The bank said the share price largely reflected the growth outlook.
Alongside growth in its skills and assessment businesses, Pearson agreed to buy Workera to strengthen AI-powered assessment of enterprise employees' skills. It said in the deal announcement that it expected to complete the acquisition in the second half of 2026. Completion remains subject to customary closing conditions and approvals, according to the announcement. The group also acquired assessment technology company ITS to expand its testing and remote proctoring services. The expansion includes performance-based assessment and continuous certification, with the acquired company set to become part of Pearson's professional assessments business.
On the rest of its financial outlook, Pearson maintained its adjusted profit-to-free-cash-flow conversion forecast at 90–100% for 2026. The group expects exceptional reorganisation costs of about £50 million over the implementation period. It said these costs would be excluded from adjusted operating profit, the measure used in its annual guidance range. The reorganisation is linked to a new business unit structure for which the company announced an effective date. The structure takes effect on 1 January 2027. Pearson set 25 February 2027 as the publication date for its preliminary annual results for the financial year ending December 2026.