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 2023
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 2023 Nine Month Trading Update (Unaudited)
30th October
2023
|
Strong operational momentum and financial performance continues;
full year profit guidance upgraded
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Highlights
●
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Underlying Group revenue growth1 of
5%, excluding OPM2 and
the Strategic Review3 businesses,
with particularly strong performances in Pearson VUE and Pearson
Test of English.
|
●
|
Full year Group adjusted operating profit guidance upgraded by
c.£20m to £570m - £575m at £:$ of 1.24. Current
Vuma consensus is £552m at £:$ of 1.244.
|
●
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Initiated £300m share buyback programme.
|
●
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We are hosting an investor seminar focused on our Assessment &
Qualifications business on Monday 6th November at the New York
Stock Exchange.
|
Andy Bird, Pearson's Chief
Executive, said:
"This third quarter performance
illustrates the continuing momentum across our businesses, led by
Pearson VUE and Pearson Test of English. Our Higher Education
business reported as expected and remains on plan to return to
growth next year. We've received positive initial feedback from our
Generative AI tools and are evolving our AI capabilities to create
further opportunities to maximise the potential of our trusted,
proprietary content and data sets. I would like to thank every
employee for supporting me over the last three years and creating a
period of sustained growth and strategic progress. Pearson is well
positioned for the next stage of its growth and development and
poised to take advantage of long-term future
opportunities."
Underlying revenue
growth1 of
5%, excluding OPM2 and
Strategic Review3 businesses;
2% in aggregate
●
|
Assessment
& Qualifications revenue was up 8% largely driven by a strong
performance in Pearson VUE with good growth in IT and healthcare,
alongside the commencement of new contracts. There was also good
growth across US Student Assessments, Clinical and UK &
International Qualifications, due to new contract wins, good
government funding and price increases respectively.
|
●
|
Virtual Learning revenue decreased 20%, primarily due to an 81%
expected decrease in the OPM business given the previously
announced ASU contract loss. Virtual Schools declined 4%, with Q3
impacted by enrolments for the 2023/24 academic year, which were
lower due to the previously cited loss of a larger partner school.
Excluding the impact of this school, enrolments were up
2%.
|
●
|
Higher
Education revenue was down 5%, in line with expectations, driven by
pricing mix impact and the previously highlighted deferral of
revenue into Q4 this year due to a revenue recognition shift driven
by Pearson+ and platform product growth. Pearson+ continued to perform well, with c.30%
growth in paid subscriptions to 30th September
versus prior year Fall semester. On a calendar year basis this
represents c.80% growth in paid subscriptions to
30th September.
|
●
|
English
Language Learning revenue increased 34% largely driven by excellent
Pearson Test of English (PTE) volume growth, alongside strong
performance in Institutional and Mondly.
|
●
|
Workforce
Skills revenue grew 8%, with a solid performance in both Vocational
Qualifications and Workforce Solutions.
|
●
|
Revenue
in businesses under Strategic Review3 decreased
60% as expected.
|
Share buyback
●
|
Previously
announced buyback to repurchase £300m of shares commenced,
with £115m of shares repurchased as at 27th October
2023.
|
Strong financial position
●
|
Pearson's
financial position remains robust, with a strong balance
sheet.
|
2023 outlook - full year guidance upgraded
●
|
Group revenue growth, excluding OPM2 and
Strategic Review3 businesses,
will be at the higher end of the low to mid-single digit range we
have guided to.
|
●
|
Full year Group adjusted operating profit guidance upgraded by
c.£20m to £570m - £575m at £:$ of
1.244.
|
●
|
Remain on track to achieve £120m of cost efficiencies in 2023,
with Group margin to improve to mid-teens for 2023.
|
●
|
Tax rate expected to be in the range of 23-24%, and interest charge
expected to be c.£35m.
|
Financial
summary
Underlying growth
for the third quarter and nine months ended 30th September 2023
compared to the equivalent period in 2022
|
Revenue
|
Q3
|
Nine
months
|
Assessment
& Qualifications
|
11%
|
8%
|
Virtual
Learning
|
(29)%
|
(20)%
|
Higher
Education
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(8)%
|
(5)%
|
English
Language Learning
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21%
|
34%
|
Workforce
Skills
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3%
|
8%
|
Strategic
Review3
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(67)%
|
(60)%
|
Total
|
2%
|
2%
|
Total, excluding OPM2 and
Strategic Review3
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3%
|
5%
|
[1]Throughout this announcement
growth rates are stated on an underlying basis unless otherwise
stated. Underlying growth rates exclude currency movements, and
portfolio changes.
2We have completed the sale of
the Pearson Online Learning Services (POLS) business and as such
have removed 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 revenues
in international courseware local publishing businesses being wound
down, which will continue to be reported separately until
dissipated.
42023 consensus on the Pearson
website; adjusted operating profit of £568m at £:$ 1.20.
Every 1c movement in £:$ rate equates to approximately
£4m adjusted operating profit. Therefore Vuma consensus at
£:$ 1.24 is £552m.
Assessment
& Qualifications
In Assessment & Qualifications, revenue increased
8%.
Pearson VUE revenue was up 11% driven by particularly good performance in
IT and healthcare, alongside the commencement of new contracts. The
integration of PDRI continued to progress well, with further
multi-year US federal government contract wins across a number of
federal agencies, including the US Air Force, Drug Enforcement
Administration, Bureau of Alcohol, Tobacco, Firearms and
Explosives, and Department of Homeland
Security.
In US Student Assessment, revenue increased 8% driven by
commencement of new contracts following new business
wins.
In Clinical Assessment, revenue increased 4% supported
by good government funding and
continued focus on health and wellbeing.
In UK and International Qualifications, revenue increased 8% driven
by price increases and good international growth.
As previously stated, contract timing in Assessment &
Qualifications has seen delivery in earlier quarters meaning Q4
growth will be lower than average. That said, we now expect full
year revenue growth to be mid-single digit.
Virtual
Learning
In Virtual Learning, revenue decreased 20%.
Virtual Schools revenue was down 4%, driven by enrolment declines
for the 2022/23 academic year and lower district partnership
renewals, offset by good retention rates. Enrolments for the
2023/24 academic year were lower due to the previously cited loss
of a larger partner school. Excluding the impact of this school,
enrolments were up 2%. Applications for our Connections Academy
Career Pathways programme have been encouraging.
Revenues in our Online Program Management business were down 81% on
an underlying basis due to the loss of revenue following the wind
down of the ASU contract. Pearson Online Learning Services revenues
are no longer included in underlying measures following the
completion of the disposal.
The termination of the ASU contract will continue to impact growth
in Q4. Full year revenue growth expectations for Virtual Schools
remain unchanged.
Higher
Education
In Higher Education, revenue declined 5%.
In the US, we saw declines in line with expectations, driven by
pricing mix impact and the previously highlighted deferral of
revenue into Q4 due to revenue recognition shift given the growth
of Pearson+ and platform products. Excluding this phasing impact,
revenue would have declined low single digit, in line with our
expectations for the full year. Recently published National Student
Clearinghouse data suggests Fall 2023 enrolments in Pearson's
addressable market are up 1%, meaning the year to date enrolment
impact is flat. There was encouraging growth in our platform
products and Pearson+ continued to perform well, with c.30% growth
in paid subscriptions to 30th September
versus prior year Fall semester. On a calendar year basis this
represents c.80% growth in paid subscriptions to
30th September.
We have also seen strong growth in Inclusive Access with revenue
associated with not-for-profit institutions up 26% year-on-year and
now representing 30% of US Higher Education revenue. We see this
channel as an opportunity for Pearson+ in the
future.
Generative AI study tools designed to help students better learn
and understand challenging subjects were launched in beta within
select titles for Pearson+ and Mastering for Fall back-to-school.
Whilst it is still early days, engagement with these study tools to
date has been encouraging and we are gaining valuable insights from
students which will help to shape future product
developments.
We continue to expect low-single digit revenue decline for the full
year.
English
Language Learning
In English Language Learning, revenue was up 34%.
PTE momentum continued following a strong first half performance,
with volume growth primarily driven by Australia and India, and
with growth in most other markets. PTE is now being accepted for
Canadian Student Direct Stream visa applications. We are ready to
begin delivering PTE for economic immigration visa applications as
soon as we receive confirmation of an operational start date from
Immigration, Refugees and Citizenship Canada. We are excited by the
size of the Canadian opportunity and will be investing in building
our brand awareness in this competitive market.
Within Institutional, performance was strong, with particularly
good growth in LATAM and Middle East markets.
Our Online Self-Study business, Mondly, continues to perform well,
with some early successes in the B2B market, and we are trialling
several beta products using AI for speaking practice.
Full year 2023 revenue growth expected to be at least 25%. We are
investing a portion of the operating leverage to support future
growth opportunities.
Workforce
Skills
In Workforce Skills, revenue was up 8%.
There was solid performance in both the Vocational Qualifications
and Workforce Solutions businesses.
We now expect full year revenue growth to be high-single
digits.
Upcoming
Investor Seminar
We are hosting an investor seminar focused on our Assessment &
Qualifications business on Monday 6th November
at the New York Stock Exchange. The presentation will take place
from 09:00 - 10:30 EST. Please RSVP to amy.plavecky@pearson.com if
you wish to join in-person. Alternatively, register here to receive
log in details if you would prefer to join the presentation
virtually: https://pearson-nyc.connectid.cloud/.
Directorate
Change
Omar Abbosh will assume the role of Chief Executive Officer and
Executive Director on 8th January
2024, succeeding Andy Bird.
Contacts
Investor Relations
|
Jo
Russell
James
Caddy
|
+44
(0) 7785 451 266
+44
(0) 7825 948 218
|
|
Gemma
Terry
Brennan
Matthews
|
+44
(0) 7841 363 216
+1
(332) 238-8785
|
Media
Teneo
Pearson
|
Charles
Armitstead
Laura
Ewart
|
+44
(0) 7703 330 269
+44
(0) 7798 846 805
|
Virtual event
|
Pearson's
2023 nine month trading update is taking place today at 08:30
(GMT). Register to receive log in details:
https://pearson.connectid.cloud/register
|
|
About
Pearson
At
Pearson, our purpose is simple: to add life to a lifetime of
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 leading learning
company, serving customers in c.200 countries 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.
|
PEARSON
plc
|
|
|
Date: 30
October 2023
|
|
|
By: /s/
NATALIE WHITE
|
|
|
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------------------------------------
|
|
Natalie
White
|
|
Deputy
Company Secretary
|
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