PSO

Interested in Pearson, PLC? Here are five stocks we like better. Pearson delivered a strong first half: Underlying revenue rose 4%, adjusted operating profit increased 14% to £276 million, and adjusted EPS grew 19% to £0.289. The company maintained its full-year guidance for mid-single-digit revenue growth and £640 million–£685 million in adjusted operating profit. Virtual Learning and Enterprise Learning & Skills led growth: Virtual Learning revenue jumped 19%, while Enterprise Learning & Skills increased 7%, supported by enrollment momentum, vocational qualifications and AI-upskilling programs. English-language testing remains a key weakness: English Language Learning revenue fell 3% as Pearson Test of English continued to decline amid softer study-abroad demand, tighter migration policies and geopolitical disruption. Assessment margins also faced pressure from contract changes and one-time costs related to U.K. primary-school testing. Will ChatGPT Be the Final Nail in the Coffin for Chegg? 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. → Why SK hynix Could Be the Best AI Chip Stock to Buy Now 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.” → Microsoft Just Flipped the AI Spending Narrative Overnight 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. → Carrier Earnings Could Send the Stock to a New All-Time High 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 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. 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 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. 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. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Pearson H1 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

Good H1 performance and reiterating 2026 guidance. Uniquely positioned to benefit from accelerating demand for reskilling in an AI-driven world. LONDON, July 31, 2026 /PRNewswire/ -- Financial Highlights Highlights Underlying Group revenue growth of 4%, in line with expectations, supported by continued strong performance in Virtual Learning and Assessment & Qualifications returning to growth in Q2. Group adjusted operating profit of £276m, up 14% underlying with 140bps margin expansion to 15.5%, driven by trading performance, the impact of the 2025 product development impairment3 and investment phasing. Strong free cash performance up £103m to £259m. Adjusted earnings per share increased 19% at constant exchange rates4 and 18% on a headline basis. Interim dividend up 5% and £350m share buyback completed, with continued balance sheet strength. Reiterating 2026 guidance: mid-single digit underlying revenue growth, adjusted operating profit of £640m-£685m at FX rates as at the end of 2025 (£:$ 1.35), and free cash flow conversion5 of 90%-100%. Continued momentum in Enterprise, including a new agreement with a leading AI lab to deliver their global certification programme, and strategic account growth with a new partnership with Adobe. Omar Abbosh, Pearson's Chief Executive, said: "We have delivered a good first-half performance and executed well against our strategy, with a focus on driving operational improvements while innovating to build learning and assessment experiences that help our customers progress in their lives. We are reiterating our full year guidance and remain confident in Pearson's long-term growth opportunities. We are excited about the future and believe Pearson is uniquely placed to meet the growing customer demand for reskilling in an AI driven world." Underlying Group revenue growth of 4% in H1 2026 Assessment & Qualifications returned to growth in Q2 as expected, with H1 revenue up 2%, driven by a strong performance in Clinical Assessment and growth in Pearson Professional Assessments and UK & International Qualifications, partially offset by a decline in US Student Assessment impacted by the previously disclosed loss of the New Jersey contract. Virtual Learning revenue grew 19%, reflecting strong enrolment momentum in the 2025/2026 academic year, with enrolment growth accelerating to 15% in the Spring semester, alongside funding growth and favourable mix. Higher Education revenue grew 2%, driven by a solid performance in core US Courseware and a return to growth in K12. This was partially offset by a decline in International Higher Education due to challenging trading conditions in mature markets. Inclusive Access growth increased to 20% and now represents 50% of the core US Courseware business. English Language Learning revenue declined 3%, with growth in Institutional more than offset by Pearson Test of English (PTE), where market conditions have become more difficult. Despite these conditions, we outperformed the market and remain confident in the long-term attractiveness of the business, although we expect market headwinds to persist in the near term. Enterprise Learning & Skills revenue grew 7%, with another solid performance in Vocational Qualifications and strong growth in Enterprise Solutions driven by the monetisation of our strategic partnerships. Group adjusted operating profit up 14% on an underlying basis to £276m Underlying performance up 14% driven by operating leverage and continued cost efficiencies, partially offset by investment and inflation. This result was impacted by the 2025 product development impairment, alongside investment phasing. On a headline basis, profit also increased 14%, reflecting underlying performance, with the contribution from the acquisition of eDynamic Learning offset by adverse currency movements. First half adjusted profit margin increased 140bps to 15.5% (H1 2025: 14.1%). Adjusted net finance costs increased to £35m (H1 2025: £24m). The effective tax rate on adjusted profit before tax increased to 25.8% (H1 2025: 24.5%) due to a one-off tax charge arising on the settlement of a US insurance policy in the period ended 30 June 2026. As this was a non-recurring item, we expect the full-year effective tax rate to normalise. Adjusted earnings per share increased 18% to 28.9p (H1 2025: 24.5p) reflecting adjusted operating profit growth and the reduction in issued shares due to the share buyback programme, partially offset by increased interest costs and higher tax charge. Adjusted earnings per share increased 19% at constant exchange rates. Strong cash performance Operating cash flow increased £211m to £337m (H1 2025: £126m), driven by movements in working capital, including payment timing benefits expected to reverse in H2, and the one-off proceeds from the settlement of a US insurance policy. Free cash flow remained strong, increasing by £103m to £259m (H1 2025: £156m), driven by the strong operating cash performance. This was partially offset by the normalisation of cash interest and tax payments following the one off state aid refund received in the prior period. Strong balance sheet supporting continued investment and shareholder returns Net debt increased £0.3bn to £1.3bn at 30th June 2026 (H1 2025: £1.0bn) as strong free cash flow generation was more than offset by share buybacks, acquisition spend and dividends. Proposed interim dividend of 8.2p (H1 2025: 7.8p), represents an increase of 5%. During the first half of 2026, we repurchased £350m of shares at an average purchase price of 998p. We successfully issued a £350m 10-year bond under our Euro Medium Term Note (EMTN) programme. Statutory results Revenue increased 3% on a headline basis to £1,779m (H1 2025: £1,722m) with positive underlying business performance partially offset by currency movements. Statutory operating profit increased 5% on a headline basis to £252m (H1 2025: £240m) driven by underlying operating profit growth partially offset by movements in property charges and other net gains and losses. Net cash generated from operations of £427m (H1 2025: £188m). Statutory earnings per share of 24.0p (H1 2025: 24.8p). Outlook Reiterating 2026 guidance For 2026, we expect to deliver mid-single digit underlying revenue growth, adjusted operating profit of £640m-£685m at FX rates as at the end of 2025 (£:$ 1.35), including the impact of the 2025 product development impairment, and free cash flow conversion of 90%-100%. Medium term outlook Over the medium term, Pearson continues to be positioned to deliver a mid-single digit underlying revenue growth CAGR, sustained margin improvement that will equate to an average increase of 40 basis points per annum and strong free cash conversion, in the region of 90% to 100%, on average, across the period. Financial Calendar 2026 Nine Month Trading Update will be announced on 22 October 2026. Contacts 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. Operational review Assessment & Qualifications In Assessment & Qualifications, revenue increased 2% on an underlying basis and was flat on a headline basis due to currency movements offsetting trading. Adjusted operating profit declined 6% on an underlying basis, as trading performance was more than offset by sales mix and one-time delivery costs. On a headline basis profit decreased 8%, reflecting the underlying performance and adverse currency movements. Pearson Professional Assessments revenue increased 3% on an underlying basis, driven by continued momentum from new contracts launched last year, partially offset by headwinds in PDRI. Enterprise growth was strong, with Google Cloud certifications launching in the period. We also secured new contracts with customers, including with a leading AI lab, while customer retention remained high, supporting future growth. US Student Assessment revenue decreased 6%, driven by the previously disclosed loss of the New Jersey contract, partially offset by the biennial NAEP testing cycle and delivery phasing benefits that are expected to reverse in H2. During the period we secured a new statewide assessment contract in Wyoming. Clinical Assessment revenue increased 8% in underlying terms due to the continued traction of our products, including in international markets, pricing and digital product growth. We entered into an exclusive agreement with Giunti Psychometrics to expand the reach of our Spanish-language clinical assessments and tools across Latin America. UK & International Qualifications revenue increased 6% in underlying terms driven by new contracts, volume and pricing, with international expansion remaining a key strategic priority. Virtual Learning Virtual Learning revenue increased 19% on an underlying basis, driven by strong enrolment growth, funding and favourable mix. On a headline basis revenue was up 16% with currency movements partially offsetting trading. Adjusted operating profit increased 31% on an underlying basis, driven by operating leverage on strong revenue growth. On a headline basis, profit increased 26%, reflecting trading performance partially offset by currency movements. Enrolment growth for the 2025/26 academic year accelerated to 15% in the Spring semester, reflecting strength of demand for virtual schooling, targeted marketing investment and strong execution. We were successful in all 10 long term contract renewals and are on track to open 5 new schools for the 2026/27 academic year, which will take our network to 46 schools in 32 states. We continue to develop our career offerings and have expanded our relationship with The Home Depot's Path to Pro programme to connect more students with careers in skilled trades. Higher Education Higher Education revenue increased 2% on an underlying basis driven by a solid performance in core US Courseware and a return to growth in K12, partially offset by a decline in International Higher Education due to challenging trading conditions in mature markets. On a headline basis revenue was up 4% reflecting the underlying performance and the eDynamic Learning acquisition partially offset by currency movements. Adjusted operating profit increased on an underlying basis, driven by operational leverage, continued cost efficiencies and lower amortisation following the 2025 product development impairment. On a headline basis, profit also benefited from the acquisition of eDynamic Learning, partially offset by currency movements. Our AI-powered study tools continue to deliver measurable improvements in learning outcomes, with recent research demonstrating that they drive a 90% improvement in initial mastery compared with legacy education tools. Inclusive Access remains a key strategic priority, with growth increasing to 20% and now accounting for 50% of our US core Courseware business. Integration of the prior year acquisition of eDynamic Learning is progressing well, with sales teams and capabilities across our wider Early Career portfolio brought together to create a more integrated education-to-employment ecosystem. English Language Learning In English Language Learning, revenue declined 3% on an underlying basis, with growth in Institutional more than offset by PTE. On a headline basis, revenue also declined 3% with currency movements offsetting portfolio changes. Adjusted operating profit increased on an underlying basis, with cost efficiencies more than offsetting trading performance. On a headline basis, profit also benefited from favourable currency movements. Within Institutional, we continue to expand our footprint with customer wins in Latin America, Asia and Europe. PTE revenue declined, with volumes down 3%, as market conditions became more difficult driven by tight migration policies and geopolitical disruption. Despite these conditions, we outperformed the market and remain confident in the long-term attractiveness of the business, although we expect market headwinds to persist in the near term. Enterprise Learning & Skills In Enterprise Learning & Skills, revenue increased 7% on an underlying basis and 6% on a headline basis. Adjusted operating profit increased by 18% in underlying terms due to operating leverage on revenue growth partially offset by investment. On a headline basis, profit increased 19%, reflecting underlying trading performance and currency movements. Vocational Qualifications delivered another solid performance, supported by new contract launches, including the vocational skilling programme for construction in Saudi Arabia. We continued to secure new business and renew existing contracts, extending our partnership with the Jordanian Ministry of Education and securing four new T Level contracts in the UK, including Engineering and Manufacturing. Enterprise Solutions continued to be a key driver of growth, through powering enterprise AI upskilling at scale, and delivering a suite of AI learning programs to our strategic partners. We secured a new strategic partnership with Salesforce, focused on accelerating AI readiness and skills development across its global workforce, while also adding Adobe, taking our strategic partner ecosystem to 10. We continue to embed AI across our products and services, with the AI-powered Math Tutor in the GED & Me mobile app driving improved learner outcomes. 2026 guidance summary Financial Review Operating result Revenue for the six months to 30 June 2026 increased on a headline basis by £57m or 3% to £1,779m for the six months to 30 June 2026 compared to £1,722m for the same period in 2025 and adjusted operating profit increased by 14% on a headline basis to £276m in the first half of 2026 compared to £242m in the first half of 2025 (for a reconciliation of this measure see note 2 to the condensed consolidated financial statements). The headline basis simply compares the reported results for the six months to 30 June 2026 with those for the equivalent period in the prior year. We also present revenue and profits on an underlying basis which excludes the effects of exchange, the effect of portfolio changes arising from acquisitions and disposals and the impact of adopting new accounting standards that are not retrospectively applied, when relevant. Our portfolio change is calculated by excluding revenue and profits made by businesses disposed in 2025 or 2026 and by ensuring the contribution from acquisitions is comparable year on year. For prior year acquisitions, the corresponding pre-acquisition period is excluded from the current year. Portfolio changes mainly relate to the disposals of Copp Clark in 2025 and Yazigi in 2026, and the acquisition of eDynamic Learning in 2025. On an underlying basis, revenue increased by 4% in the first six months of 2026 compared to the equivalent period in 2025 and adjusted operating profit increased by 14%. Currency movements decreased revenue by £28m and adjusted operating profit by £4m, and portfolio changes increased revenue by £13m and adjusted operating profit by £4m. There were no new accounting standards adopted in the first half of 2026 that impacted revenue or profits. Adjusted operating profit includes the results from discontinued operations when relevant but excludes charges for acquired intangible amortisation and impairment, acquisition related costs, gains and losses arising from disposals, the cost of major reorganisation, when relevant, property charges, one off-costs related to the UK pension scheme, when relevant, and certain other one-off material items. A summary of these adjustments is included below and in note 2 to the condensed consolidated financial statements. Product development impairment charges in the second half of 2025 relate to the impairment of product development assets as a result of courseware platform convergence. There were no such amounts in the first half of 2025 or 2026. Intangible amortisation charges to the end of June 2026 were £22m compared to a charge of £20m in the equivalent period in 2025. Other net gains and losses in 2026 relate to a loss on the disposal of a business in our English Language Learning division and costs relating to a prior year acquisition. Other net gains and losses in 2025 relate to the gain on disposal of a business in our Higher Education division, a fair value gain relating to a previous disposal and costs relating to prior year acquisitions and disposals. There were no property charges in 2026. In 2025, there was a gain of £11m in the period to 30 June 2025 and £25m for the year ended 31 December 2025, relating to reversals of impairments of property assets that were previously impaired through property charges. The impairment reversals arose primarily from new sublets on previously vacant space in corporate properties. The reported operating profit of £252m in the first half of 2026 compares to a profit of £240m in the first half of 2025. The increase has been driven by operating leverage on revenue growth, continued cost efficiencies, the impact of the 2025 product development impairment and contributions from the acquisition of eDynamic Learning, partially offset by investment, inflation and unfavourable foreign exchange movements, as well as a reduction in one-off gains recorded in H1 2025 related to the disposals of subsidiaries and property related impairment reversals. Due to seasonal bias in some of the Group's businesses, Pearson typically makes a higher proportion of its profits and operating cash flows in the second half of the year. Net finance costs Net finance costs increased on a headline basis from a net cost of £22m in the first half of 2025 to a net cost of £47m in the same period in 2026. The increase is primarily due to fair value losses on investments held at fair value through profit and loss (FVTPL) and an increase in average net debt. Adjusted net finance costs reflected in adjusted earnings to 30 June 2026 was £35m, compared to a net cost of £24m in the first half of 2025. The increase is primarily due to an increase in average net debt. In the period to 30 June 2026, the total of items excluded from adjusted earnings was a net expense of £12m compared to net income of £2m in the first half of 2025. For a reconciliation of the adjusted measure see note 3 to the condensed consolidated financial statements. Taxation The reported tax on statutory earnings for the six months to 30 June 2026 was a charge of £56m compared to a charge of £52m in the period to 30 June 2025. This equates to an effective tax rate of 27.3% (2025: 23.9%), with the increase from prior year principally being due to a discrete tax charge arising on a settlement of a US insurance policy in the period ended 30 June 2026, together with the non recurrence of the prior year non-taxable impairment reversal. The total adjusted tax charge for the period was £62m (2025: £54m), corresponding to an effective tax rate on adjusted profit before tax of 25.8% (2025: 24.5%). The full year effective tax rate on adjusted profit before tax is expected to be approximately 25%, with the interim tax rate increased due to the tax effect of the discrete item noted above, which has been recognised in full in the period to 30 June 2026. For a reconciliation of the adjusted measure see note 4 to the condensed consolidated financial statements. In the first half of 2026, there was a net tax payment of £50m (2025: £35m net tax receipt). The prior year net receipt included a £97m repayment from HMRC in respect of the State Aid matter, with an additional £17m of associated interest also received in the period, with the balance principally related to tax payments in the US and the UK. Other comprehensive income Included in other comprehensive income are the net exchange differences on translation of foreign operations. The gain on translation of £47m at 30 June 2026 compares to a loss at 30 June 2025 of £263m. The gain in 2026 arises from an overall strengthening of the majority of currencies to which the Group is exposed, in particular the US dollar. A significant proportion of the Group's operations are based in the US and the US dollar closing rate at 30 June 2026 was £1:$1.32 compared to the opening rate of £1:$1.35. At the end of June 2025, the US dollar rate was £1:$1.37 compared to the opening rate of £1:$1.25. Also included in other comprehensive income at 30 June 2026 is an actuarial loss of £9m in relation to retirement benefit obligations. The loss arises largely from losses on assets and an increase in assumed life expectancies, partially offset by a decrease in liabilities driven by a higher discount rate. The loss in 2026 compares to an actuarial loss at 30 June 2025 of £12m. Fair value losses of £1m (2025: losses of £6m) have been recognised in other comprehensive income relating to movements in the value of investments in listed and unlisted securities held at fair value through other comprehensive income (FVOCI). Cash flow and working capital Our operating cash flow measure is used to align cash flows with our adjusted profit measures (see note 12 to the condensed consolidated financial statements). Operating cash flow increased on a headline basis by £211m from an inflow of £126m in the first half of 2025 to an inflow of £337m in the first half of 2026. The increase is largely explained by movements in working capital including payment timing effects and proceeds from the one-off settlement of a US insurance policy, partially offset by increased investment. The equivalent statutory measure, net cash generated from operations, was an inflow of £427m in 2026 compared to an inflow of £188m in 2025. Compared to operating cash flow, this measure includes, when relevant, reorganisation costs but does not include regular dividends from associates. It also excludes capital expenditure on property, plant, equipment and software, and additions to right of use assets as well as disposal proceeds from the sale of property, plant, equipment and right of use assets (including the impacts of transfers to/from investment in finance lease receivable). Free cash flow increased on a headline basis by £103m from £156m in 2025 to £259m in 2026. When compared to operating cash flow, free cash flow includes tax paid/received, net finance costs paid and, when relevant, net costs paid for major reorganisation and special pension contributions. The increase year on year is mainly due to strong operating cash flow partially offset by an increase in tax and interest payments as a result of the one-off receipt of monies in 2025 related to the State Aid tax matter. In the first half of 2026, there was an overall decrease of £1m in cash and cash equivalents (including overdrafts) from £333m at the end of 2025 to £332m at 30 June 2026. The decrease in 2026 is primarily due to net cash generated from operations of £427m and net inflows from borrowings of £282m, being more than offset by dividends paid of £108m, share buyback programme payments of £352m, own share purchases of £56m, net tax payments of £50m, net interest payments of £28m, capital expenditure on property, plant, equipment and software of £82m, and payments of lease liabilities of £38m. Liquidity and capital resources The Group's net debt increased from £1,069m at the end of 2025 to £1,343m at the end of June 2026. The increase is largely due to free cash flow of £259m which is more than offset by the £350m share buyback programme which completed in May 2026, other own share purchases and dividend payments. In April 2026, the Group issued a £350m bond, adding additional liquidity to the Group. At 30 June 2026, the Group had approximately £1.3bn in total liquidity immediately available from cash and its RCFs maturing February 2029 and June 2029. In assessing the Group's ability to continue as a going concern for the period until 31 December 2027, the Board analysed a variety of downside scenarios, including a severe but plausible scenario, where the Group is impacted by a combination of all principal risks from H2 2026, as well as reverse stress testing to identify what conditions would be required to either breach covenants or run out of liquidity. The severe but plausible scenario modelled a severe reduction in revenue, profit and operating cash flow from risks continuing throughout 2027. In all scenarios, the Group would maintain comfortable liquidity headroom and sufficient headroom against covenant requirements during the period under assessment even before modelling the mitigating effect of actions that management would take in the event that these downside risks were to crystallise. The directors concluded that the likelihood of the reverse stress test scenario was remote. Post-retirement benefits Pearson operates a variety of pension and post-retirement plans. The UK Group pension plan has by far the largest defined benefit section. This plan has a strong funding position and a surplus with a very substantially de-risked investment portfolio including approximately 50% of the assets in buy-in contracts. Outside the UK, most of the companies operate defined contribution plans. The charge to profit in respect of worldwide pensions and retirement benefits amounted to £21m in the period to 30 June 2026 (30 June 2025: £21m) of which a charge of £35m (30 June 2025: £33m) was reported in operating profit and income of £14m (30 June 2025: £12m) was reported against other net finance costs. The overall surplus on UK Group pension plans of £514m at the end of 2025 has decreased to a surplus of £506m at the end of June 2026. The decrease has arisen principally due to asset returns being lower than expected, an increase in assumed life expectancies and inflation over the period being slightly higher than was expected at the beginning of the year. In total, our worldwide net position in respect of pensions and other post-retirement benefits decreased from a net asset of £482m at the end of 2025 to a net asset of £475m at the end of June 2026. Businesses acquired and disposed The Group made no acquisitions of subsidiaries in the first half of 2026 or 2025. The cash outflow in the first half of 2026 relating to acquisition of subsidiaries was £4m (2025: £4m) arising from the payment of deferred consideration in respect of prior year acquisitions. In addition, there was a cash outflow relating to investments of £1m (2025: £5m). In the second half of 2025, the Group completed the acquisition of 100% of eDynamic Holdings LP ('eDynamic Learning'), a leading Career and Technical Education (CTE) curriculum solutions provider for cash consideration of £168m. The Group disposed of Yazigi, a small business in our English Language Learning division, for £3m in the first half of 2026, resulting in a loss on disposal of £1m. The Group disposed of Copp Clark in the first half of 2025 for consideration of £9m, resulting in a gain on disposal of £8m. The gains and losses have been recorded within other net gains and losses. In 2026, the cash inflow relating to the disposal of businesses was £2m (2025: inflow of £9m). Dividends The dividend accounted for in the six months to 30 June 2026 is the final dividend in respect of 2025 of 17.4p. An interim dividend for 2026 of 8.2p was declared by the Board in July 2026 and will be accounted for in the second half of 2026. The interim dividend will be paid on 14 September 2026 to shareholders who are on the register of members at close of business on 14 August 2026 (the Record Date). Shareholders may elect to reinvest their dividend in the Dividend Reinvestment Plan (DRIP). The last date for receipt of DRIP elections and revocations will be 21 August 2026. A Dividend Reinvestment Plan (DRIP) is provided by our Registrar, Computershare Investor Services. The DRIP enables the Company's shareholders to elect to have their cash dividend payments used to purchase the Company's shares. More information can be found at www.computershare.com/Investor. Share buyback On 21 January 2026 a £350m share buyback programme was announced in order to return capital to shareholders. In the first half of 2026, the programme has completed with c35m shares bought back at a cash cost of £352m. The nominal value of the cancelled shares of £9m has been transferred to the capital redemption reserve. Post balance sheet events On 20 July 2026, the US District Court granted final approval of the settlement of the class action of Bartz et al vs. Anthropic in which the court had ruled that Anthropic faced liability for downloading and maintaining pirated books for its general purpose library for AI training. Pearson is a claimant in the settlement and expects to be eligible for monetary distribution for qualifying titles, subject to further court proceedings and claims administration. The Group has not recorded anything in the interim financial statements in relation to the matter as the amount and timing of any settlement are not yet certain. Principal risks and uncertainties In the 2025 Annual Report and Accounts, we set out our assessment of the principal risk issues that face the business under the categories: accreditation risk, artificial intelligence, content and channel risks, capability risk, competitive marketplace risk, customer expectations risk, portfolio change, and reputation and responsibility. We also noted in our 2025 Annual Report and Accounts that the Group continues to closely monitor significant near-term and emerging risks which have been identified as climate transition, economic changes, tax, sanctions and geopolitics. The principal risks and uncertainties are summarised below. The selection of principal risks will be reviewed in the second half of the year alongside the Group's long-term strategic planning process. However, these risks have not changed materially from those detailed in the 2025 Annual Report. Accreditation Risk Termination or modification of accreditation due to policy changes or failure to maintain the accreditation of our courses and assessments by states, countries and professional associations, reducing their eligibility for funding or attractiveness to learners. Regulatory bodies may also require modification of tests to continue to receive accreditation which may reduce the convenience to learners or increase the cost of delivery. Artificial Intelligence, Content and Channel Risk The risk that our intellectual property is harder to protect as a result of increased content generation through AI, and that our content and method of delivery (channel) is, or is perceived to be, insufficiently differentiated in terms of outcomes or learner experience. This could lead to lost sales and a significant decline in our market value. Capability Risk Inability to meet our contractual obligations or to transform as required by our strategy, due to infrastructure, systems or organisational challenges. Competitive Marketplace Risk Significant changes in our target markets could make those markets less attractive. This could be due to significant changes in demand or in supply, which impact the addressable market, market share and margins (e.g. changes in enrolments, in-sourcing of learning and assessment by customers, open educational resources, a shift from in-person to virtual learning or vice versa, or innovations in areas such as generative AI). Customer Expectations Rising end-user expectations increase the need to offer differentiated value propositions, risking margin pressure to meet these expectations and potential loss of sales if not successful. Portfolio Change Failure to effectively execute desired or required portfolio changes to promote scale or capability and increase focus on key business units and geographic markets, due to either execution failures or inability to secure transactions at appropriate valuations. Reputation and Responsibility Reputational and responsibility risks involve failing to meet obligations and demands of key stakeholders, including legal, regulatory, ethical and behavioural expectations. These risks extend beyond direct consequences to include broader societal and cultural perceptions. Risks arise not only from our actions, but also from being perceived as misaligned with societal expectations or ideological divides, especially in a polarised environment. The accompanying notes to the condensed consolidated financial statements form an integral part of the financial information. 6,2256,458Financial liabilities – borrowings10(1,687)(1,426)(1,419)Financial liabilities – derivative financial instruments(3)(3)(2)Deferred income tax liabilities(79)(68)(89)Retirement benefit obligations(35)(35)(36)Provisions for other liabilities and charges(12)(11)(12)Other liabilities(59)(64)(76)Non-current liabilities(1,875)(1,607)(1,634)Trade and other liabilities(1,027)(902)(1,043)Financial liabilities – borrowings10(70)(62)(62)Financial liabilities – derivative financial instruments(1)(11)(1)Current income tax liabilities(33)(13)(47)Provisions for other liabilities and charges(8)(25)(8)Current liabilities(1,139)(1,013)(1,161)Liabilities classified as held for sale---Total liabilities(3,014)(2,620)(2,795)Net assets3,3593,6053,663Share capital149163158Share premium2,6612,6522,658Treasury shares(29)(22)(9)Reserves562796841Total equity attributable to equity holders of the company3,3433,5893,648Non-controlling interest161615Total equity3,3593,6053,663 The condensed consolidated financial statements were approved by the Board on 30 July 2026. For the purposes of the cash flow statement, cash and cash equivalents are presented net of overdrafts repayable on demand. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTSfor the period ended 30 June 2026 1. Basis of preparation The condensed consolidated financial statements have been prepared in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the UK's Financial Conduct Authority and in accordance with UK-adopted IAS 34 'Interim Financial Reporting'. The condensed consolidated financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2025, which were prepared in accordance with UK-adopted International Accounting Standards and with the requirements of the Companies Act 2006 and in accordance with IFRS accounting standards as issued by the International Accounting Standards Board (IASB). In respect of accounting standards applicable to the Group, there is no difference between UK-adopted IASs and IFRS accounting standards as issued by the IASB. The condensed consolidated financial statements have also been prepared in accordance with the accounting policies set out in the 2025 Annual Report and have been prepared under the historical cost convention as modified by the revaluation of certain financial assets and liabilities (including derivative financial instruments) at fair value. No new standards and interpretations that apply to annual reporting periods beginning on or after 1 January 2026 have had a material impact on the financial position of the Group. In assessing the Group's ability to continue as a going concern for the period until 31 December 2027, the Board analysed a variety of downside scenarios, including a severe but plausible scenario, where the Group is impacted by a combination of all principal risks from H2 2026, as well as reverse stress testing to identify what conditions would be required to either breach covenants or run out of liquidity. The severe but plausible scenario modelled a severe reduction in revenue, profit and operating cash flow from risks continuing throughout 2027. At 30 June 2026, the Group had available liquidity of c£1.3bn, comprising central cash balances and the undrawn element of its $1.8bn Revolving Credit Facilities (RCFs) maturing February 2029 and June 2029, but which have options to extend the maturities until 2030. Even under a severe downside case, the Group would maintain comfortable liquidity headroom and sufficient headroom against covenant requirements during the period under assessment even before modelling the mitigating effect of actions that management would take in the event that these downside risks were to crystallise. The directors concluded that the likelihood of the reverse stress test scenario was remote. The directors have confirmed that they have a reasonable expectation that the Group has adequate resources to continue in operational existence and to meet its liabilities as they fall due for the assessment period to 31 December 2027. The condensed consolidated financial statements have therefore been prepared on a going concern basis. The preparation of condensed consolidated financial statements requires the use of certain critical accounting assumptions. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas requiring a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the condensed consolidated financial statements, have been set out in the 2025 Annual Report. The financial information for the year ended 31 December 2025 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The independent auditors' report on the full financial statements for the year ended 31 December 2025 was unqualified and did not contain an emphasis of matter paragraph or any statement under section 498 of the Companies Act 2006. The condensed consolidated financial statements and related notes for the six months to 30 June 2026 are unaudited but have been reviewed by the auditors and their independent review opinion is included at the end of these condensed consolidated financial statements. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTSfor the period ended 30 June 2026 2. Segment information The Group has five main global business units, which are each considered separate operating segments for management and reporting purposes. These five business units are Assessment & Qualifications, Virtual Learning, English Language Learning, Higher Education and Enterprise Learning and Skills. There were no material inter-segment sales. The following table reconciles the Group's measure of segmental performance, adjusted operating profit, to statutory operating profit: NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS for the period ended 30 June 2026 2. Segment information continued Adjusted operating profit is one of the Group's key business performance measures. The measure includes the operating profit from the total business but excludes charges for acquired intangibles amortisation and impairment, acquisition related costs, gains and losses arising from disposals, the cost of major reorganisation and associated property charges, one-off costs related to the UK pension scheme and certain other one-off material items. Product development impairment - These charges in the second half of 2025 relate to the impairment of product development assets as a result of courseware platform convergence. There were no such amounts in the first half of 2025 or 2026. Intangible amortisation – These represent charges relating to intangibles acquired through business combinations. These charges are excluded as they reflect past acquisition activity and do not necessarily reflect the current year performance of the Group. Intangible amortisation charges in the first half of 2026 were £22m compared to a charge of £20m in the equivalent period in 2025. Other net gains and losses – These represent profits and losses on the sale of subsidiaries, joint ventures, associates and other financial assets and are excluded from adjusted operating profit in order to show the performance of the Group on a more comparable basis year on year. Other net gains and losses also includes costs related to business closures and acquisitions. Other net gains and losses in 2026 relate to a loss on the disposal of a business in our English Language Learning division and costs relating to a prior year acquisition. Other net gains and losses in the first half of 2025 relate to the gain on disposal of a business in our Higher Education division, a fair value gain relating to a previous disposal and costs relating to prior year acquisitions and disposals. Property charges – In 2026, there were no property charges. In 2025, there was a gain of £11m in the period to 30 June 2025 and £25m for the year ended 31 December 2025, relating to reversals of impairments of property assets that were previously impaired through property charges. The impairment reversals primarily arose from new sublets on previously vacant space in corporate properties. Adjusted operating profit should not be regarded as a complete picture of the Group's financial performance. For example, adjusted operating profit includes the benefits of major reorganisation programmes but excludes the significant associated costs, and adjusted operating profit excludes costs related to acquisitions, and the amortisation of intangibles acquired in business combinations, but does not exclude the associated revenues. The Group's definition of adjusted operating profit may not be comparable to other similarly titled measures reported by other companies. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTSfor the period ended 30 June 2026 2. Segment information continued For the year ended 31 December 2025, the Group changed how it disaggregates revenue to better align with the current business model and how revenue is managed by the CODM. The 2025 half year comparative disclosures have been represented. The following table analyses the Group's revenue streams by business model: NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS for the period ended 30 June 2026 3. Net finance income / costs Adjusted net finance costs is the finance cost measure used in calculating adjusted earnings. Adjusted net finance costs primarily consists of interest costs related to bonds, the RCF and lease liabilities, partially offset by interest income on cash deposits and lease receivables. The above table reconciles net finance income to adjusted net finance costs. Net finance income relating to retirement benefits has been excluded from our adjusted earnings as we believe the income statement presentation does not reflect the economic substance of the underlying assets and liabilities. Also excluded are interest costs relating to acquisition or disposal transactions as it is considered part of the acquisition cost or disposal proceeds rather than being reflective of the underlying financing costs of the Group. Foreign exchange, fair value movements on investments classified as FVTPL and other gains and losses on derivatives are excluded from adjusted earnings as they represent short-term fluctuations in market value and are subject to significant volatility. Other gains and losses may not be realised in due course as it is normally the intention to hold the related instruments to maturity. Interest on certain tax provisions is excluded from our adjusted measure in order to mirror the treatment of the underlying tax item. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS for the period ended 30 June 2026 4. Income tax The adjusted income tax charge excludes the tax benefit or charge on items that are excluded from the profit or loss before tax (see note 2). The adjusted tax charged in the period ended 30 June 2026 has been calculated by applying management's best estimate of the weighted average annual effective rate of tax which is expected to apply to the Group for the year ended 31 December 2026 to the adjusted profit before tax for the period ended 30 June 2026, whilst overlaying discrete items which occurred in the first half of the year. Adjusting items have been tax effected on an item by item basis based on the applicable statutory tax rate in the country to which the item relates. The tax benefit from tax deductible goodwill and intangibles is added to the adjusted income tax charge as this benefit more accurately aligns the adjusted tax charge with the expected rate of cash tax payments. The statutory tax charge in the period ended 30 June 2026 is higher than the period ended 30 June 2025 due to the settlement of a US insurance policy in the first half of 2026 resulting in an additional tax liability. The Group is within the scope of the UK legislation in relation to Pillar Two which was effective from 1 January 2024. Based on the most recent forecast financial information available for the constituent entities in the Group, the Pillar Two effective tax rates in most of the jurisdictions in which the Group operates are above 15%. However, there are a limited number of jurisdictions where the transitional safe harbour relief does not apply, including jurisdictions that may not meet the 17% effective tax rate threshold required to qualify for the effective tax rate safe harbour test in 2026. In most of these jurisdictions, the Pillar Two effective tax rate is close to 15%, and the Group does not expect a material exposure to Pillar Two income taxes in any of these jurisdictions. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS for the period ended 30 June 2026 5. Earnings per share Basic earnings per share is calculated by dividing the profit or loss attributable to equity shareholders of the company (earnings) by the weighted average number of ordinary shares in issue during the period, excluding ordinary shares purchased by the company and held as treasury shares. Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares to take account of all dilutive potential ordinary shares and adjusting the profit attributable, if applicable, to account for any tax consequences that might arise from conversion of those shares. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS for the period ended 30 June 2026 6. Adjusted earnings per share In order to show results from operating activities on a consistent basis, an adjusted earnings per share is presented which excludes certain items as set out below. Adjusted earnings is a non-GAAP financial measure and is included as it is a key financial measure used by management to evaluate performance and allocate resources to business segments. The measure also enables users of the accounts to more easily, and consistently, track the underlying operational performance of the Group and its business segments over time by separating out those items of income and expenditure relating to acquisition and disposal transactions, major reorganisation programmes and certain other items that are also not representative of underlying performance (see notes 2, 3 and 4 for further information and reconciliation to equivalent statutory measures). The adjusted earnings per share includes both continuing and discontinued businesses on an undiluted basis when relevant. The company's definition of adjusted earnings per share may not be comparable to other similarly titled measures reported by other companies. 7. Dividends and share buyback The directors are declaring an interim dividend of 8.2p per equity share, payable on 14 September 2026 to shareholders on the register at the close of business on 14 August 2026. This interim dividend, which will absorb an estimated £49m of shareholders' funds, has not been included as a liability as at 30 June 2026. On 21 January 2026, the Board announced a £350m share buyback programme in order to return capital to shareholders. In the first half of 2026, the programme has completed with c35m shares bought back at a cash cost of £352m. The nominal value of the cancelled shares of £9m has been transferred to the capital redemption reserve. On 27 February 2025, the Board approved a £350m share buyback programme in order to return capital to shareholders. The programme completed in 2025, with c32m shares bought back at a cash cost of £352m. The nominal value of the cancelled shares of £8m was transferred to the capital redemption reserve. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTSfor the period ended 30 June 2026 8. Exchange rates Pearson earns a significant proportion of its revenue and profits in overseas currencies, the most important being the US dollar. The relevant rates are as follows: 9. Current and non-current intangible assets There were no significant acquisitions or disposals in the first half of 2026 or 2025. In the second half of 2025, the acquisition of eDynamic Learning resulted in the recognition of additional goodwill of £102m and intangible assets of £71m. Other movements in the goodwill balance relate to foreign exchange differences. Other movements in the other intangibles balance relate to additions, amortisation and foreign exchange differences. The Group has assessed its remaining goodwill and non-current intangibles for impairment triggers and concluded that a full goodwill impairment review is not required at 30 June 2026. The 2025 Annual Report sets out the key assumptions by segment. The discount rate, perpetuity growth rate and other assumptions used in the impairment review, and the sensitivity to changes in those assumptions remain broadly the same as the position outlined in the 2025 Annual Report. There were no impairments to non-current intangible assets in the first half of 2026 or 2025. There were no impairments to product development assets in the first half of 2026. In the second half of 2025, impairment charges of £87m were recorded related to the impairment of product development assets as a result of courseware platform convergence. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS for the period ended 30 June 2026 10. Net debt Included in borrowings at 30 June 2026 are lease liabilities of £456m (non-current £393m, current £63m). This compares to lease liabilities of £481m (non-current £419m, current £62m) at 30 June 2025 and £478m (non-current £416m, current £62m) at 31 December 2025. The net lease liability at 30 June 2026 after including the investment in finance leases noted above was £399m (2025 half year: £407m, 2025 full year: £412m). Net debt excluding net lease liabilities is £944m (2025 half year: £620m, 2025 full year: £657m). In 2026, the movement on borrowings from 31 December 2025 primarily reflects the new £350m bond. For the purposes of the cash flow statement, cash and cash equivalents are presented net of overdrafts of £7m (at 30 June 2025: £nil; 31 December 2025: £nil) which are repayable on demand. These overdrafts are excluded from cash and cash equivalents disclosed on the balance sheet. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS for the period ended 30 June 2026 11. Classification of assets and liabilities measured at fair value Level 1 valuations are based on unadjusted quoted prices in active markets for identical financial instruments. Cash and cash equivalents include money market funds which are treated as FVTPL under IFRS 9 with the fair value movements recognised as finance income or cost. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS for the period ended 30 June 2026 11. Classification of assets and liabilities measured at fair value continued The fair values of level 2 assets and liabilities are determined by reference to market data and established estimation techniques such as discounted cash flow and option valuation models. Within level 3 assets, the fair value of our investments in unlisted securities are determined by reference to the financial performance of the underlying asset and amounts realised on the sale of similar assets. Individually these assets are immaterial and therefore no sensitivities have been disclosed. Level 3 assets also include the contingent consideration receivable in respect of the sale of the POLS business in 2023, which comprises a 27.5% share of positive adjusted EBITDA in each calendar year for 6 years from the disposal date and 27.5% of the proceeds received by the purchaser in relation to any future monetisation event. The valuation of the contingent consideration has been determined on the basis of a discounted cash flow model, and valued by a third-party specialist. The key inputs into the discounted cash flow model are the estimates of adjusted EBITDA for the 6 year period and the estimate of the valuation of the business thereafter. Reasonably possible changes in assumptions for the inputs into the model would not have a material impact on the carrying value of the contingent consideration, and therefore sensitivities have not been disclosed. The contingent consideration payable in respect of prior year acquisitions is measured as the net present value of the expected cashflows. The movements in fair values of level 3 financial assets measured at fair value, being principally the investments in unlisted securities and contingent consideration receivable, are shown in the table below. There have been no transfers in classification during 2026 or 2025. The movement in the total fair value of the total deferred and contingent consideration payable measured at fair value or amortised cost is shown in the table below. At 30 June 2026, this comprised £13m (2025: £16m) of consideration measured at amortised cost and £1m (2025: £1m) measured at fair value. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS for the period ended 30 June 2026 11. Classification of assets and liabilities measured at fair value continued The market value of the Group's bonds is £1,035m (30 June 2025: £683m; 31 December 2025: £685m) compared to their carrying value of £1,060m (30 June 2025: £708m; 31 December 2025: £706m). For all other financial assets and liabilities, fair value is not materially different to carrying value. 12. Cash flows Operating cash flow and free cash flow are non-GAAP measures and have been disclosed as they are part of the Group's corporate and operating measures. These measures are presented in order to align the cash flows with corresponding adjusted profit measures. The table below reconciles the statutory profit and cash flow measures to the corresponding adjusted measures. The table on the next page reconciles operating cash flow to free cash flow to net debt. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS for the period ended 30 June 2026 12. Cash flows continued 13. Contingencies, tax uncertainties and other liabilities There are Group contingent liabilities that arise in the normal course of business in respect of indemnities, warranties and guarantees in relation to former subsidiaries and in respect of guarantees in relation to subsidiaries, joint ventures and associates. In addition, there are contingent liabilities of the Group in respect of unsettled or disputed tax liabilities, legal claims, contract disputes, royalties, copyright fees, permissions and other rights. None of these claims are expected to result in a material gain or loss to the Group. The Group is under assessment from the tax authorities in Brazil challenging the deduction for tax purposes of goodwill amortisation for the years 2012 to 2020 and 2022. Similar assessments may be raised for other years. Potential total exposure (including possible interest and penalties) could be up to BRL 1,478m (£215m) for periods up to 30 June 2026, with additional potential exposure of BRL 92m (£13m) in relation to deductions expected to be taken in future periods. Such assessments are common in Brazil. The Group believes that the likelihood that the tax authorities will ultimately prevail is low and that the Group's position is strong. At present, the Group believes no provision is required. 14. Related parties Related party transactions in the six months ended 30 June 2026 were substantially the same in nature to those disclosed in note 35 of the Annual Report and Accounts for the year ended 31 December 2025. All related party transactions are on an arm's length basis. There were no other material related party transactions in the period that have materially affected the financial position or performance of the Group and no guarantees have been provided to related parties in the year. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTSfor the period ended 30 June 2026 15. Events after the balance sheet date On 20 July 2026, the US District Court granted final approval of the settlement of the class action of Bartz et al vs. Anthropic in which the court had ruled that Anthropic faced liability for downloading and maintaining pirated books for its general purpose library for AI training. Pearson is a claimant in the settlement and expects to be eligible for monetary distribution for qualifying titles, subject to further court proceedings and claims administration. The Group has not recorded anything in the interim financial statements in relation to the matter as the amount and timing of any settlement are not yet certain. STATEMENT OF DIRECTORS' RESPONSIBILITIES The directors confirm that these condensed consolidated financial statements have been prepared in accordance with UK-adopted International Accounting Standard 34 'Interim Financial Reporting' and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8 namely: An indication of important events that have occurred during the first six months and their impact on the condensed consolidated financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and Material related party transactions in the first six months and any material changes in related party transactions described in the 2025 Annual Report. The directors of Pearson plc are listed in the 2025 Annual Report. There have been the following changes to the Board since the publication of the Annual Report. Sally Johnson – resigned 7 May 2026 Simon Robson – appointed 8 May 2026 A list of current directors is maintained on the Pearson plc website: www.pearsonplc.com. By order of the Board Omar AbboshChief Executive30 July 2026 Simon RobsonChief Financial Officer30 July 2026 INDEPENDENT REVIEW REPORT TO PEARSON PLC Independent Review Report on the condensed consolidated interim financial statements Conclusion We have been engaged by Pearson plc (the Company) to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2026 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated balance sheet, the condensed consolidated statement of changes in equity, the condensed consolidated cash flow statement and the explanatory notes. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2026 is not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority. Basis for Conclusion We conducted our review in accordance with International Standard on Review Engagements 2410 (UK) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" (ISRE) issued by the Financial Reporting Council. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with UK adopted international accounting standards and IFRS accounting standards, as issued by the International Accounting Standards Board (IASB). The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with UK adopted International Accounting Standard 34, "Interim Financial Reporting". Conclusions Relating to Going Concern Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for Conclusion section of this report, nothing has come to our attention to suggest that management have inappropriately adopted the going concern basis of accounting or that management have identified material uncertainties relating to going concern that are not appropriately disclosed. This conclusion is based on the review procedures performed in accordance with this ISRE, however future events or conditions may cause the entity to cease to continue as a going concern. Responsibilities of the directors The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority. In preparing the half-yearly financial report, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so. Auditor's Responsibilities for the review of the financial information In reviewing the half-yearly report, we are responsible for expressing to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report. Our conclusion, including our Conclusions Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report. Use of our report This report is made solely to the company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed. Ernst & Young LLPLondon30 July 2026 View original content to download multimedia:https://www.prnewswire.com/news-releases/pearson-interim-results-for-the-six-months-to-30th-june-2026-unaudited-302839585.html

4% revenue growth in Q1 gave Pearson a “good start to 2026,” with management reaffirming full‑year guidance and citing broad momentum led by Virtual Learning (+21%) alongside steady gains in Higher Education, ELL and Enterprise learning. Assessment & Qualifications fell 1% as expected but is forecast to return to growth in Q2, supported by new and extended contracts (including the U.K. STA, ACCA, Google Cloud and NCT) and management says it is “very confident” about A&Q’s recovery. Pearson is accelerating strategic AI and enterprise partnerships—launching initiatives like a Foundations of AI course and an Adobe Firefly certification—and says partners have committed “hundreds of millions” of incremental revenue to 2030, while completing an accelerated share buyback and managing a CFO transition. Interested in Pearson, PLC? Here are five stocks we like better. Will ChatGPT Be the Final Nail in the Coffin for Chegg? Pearson (NYSE:PSO) reported a “good start to 2026,” posting 4% revenue growth in its first-quarter trading update, as management reiterated confidence in achieving full-year guidance and reconfirmed its medium-term outlook. Chief Executive Officer Omar Abbosh said the performance reflected “continued strong execution from all our teams,” with momentum across much of the portfolio despite a modest decline in Assessment & Qualifications that the company said was anticipated. → Meta Posted Its Best Sales Growth Since 2021—So Why Did Shares Fall? Abbosh outlined results across Pearson’s business units, highlighting strength in Virtual Learning and steady growth in several other segments. Assessment & Qualifications (A&Q): Revenue declined 1%, which Abbosh said was expected. He said the business is “on track to return to growth in Q2 and beyond,” supported by new business including the U.K. Standards and Testing Agency and extended or awarded contracts such as ACCA and Google Cloud. Virtual Learning: Revenue increased 21%, which Abbosh called “another standout result,” driven by strong enrollment trends that “accelerated from the fall semester.” He added that preliminary market share data indicates Pearson is gaining share. Higher Education: Revenue grew 2% on what Abbosh described as “another solid performance” in Pearson’s U.S. core courseware business. He said Pearson expects Higher Education revenue growth this year to be higher than 2025, citing improvements in the K-12 channel and international markets. English Language Learning (ELL): Revenue rose 2%, reflecting institutional growth driven by China and enterprise offerings. Abbosh said Pearson still expects PTE to return to growth this year, supported by share gains in pricing, while noting the market remains pressured. Enterprise learning and skills: Revenue grew 8%, supported by growth in vocational qualifications and “continued momentum in enterprise solutions,” Abbosh said. Abbosh also emphasized Pearson’s business mix, noting that about 90% of profit comes from “operationally complex, interconnected, hybrid, physical and digital services,” including assessments, virtual schools, and print, while the remaining ~10% comes from primarily digital courseware integrated into customer workflows. → 5 Stocks to Buy in May Before the Next AI Surge Hits In Q&A, Citi analyst Ciarán Donnelly asked about the expected return to growth in A&Q in Q2, including impacts from the New Jersey contract loss and PDRI comparisons. CFO Sally Johnson said A&Q’s Q1 dynamics included a comparison related to PDRI, with the “federal impact” occurring in Q2 of last year, making it less relevant for Q2 comparisons this year. She added that the New Jersey impact spans both Q1 and Q2. Johnson said Q2 growth is expected to be supported by underlying business performance and newer contracts, citing “Salesforce and ServiceNow that started in the second half of last year.” She also pointed to Pearson’s NCT contract in the U.K. qualifications business—exam delivery for primary school students—as a seasonal contributor in the summer term. “Very confident in A&Q growth in Q2,” Johnson said. → Verizon’s Signal Strength: The Turnaround Call Is Loud and Clear On Virtual Learning, Johnson said enrollments were up 15% for Pearson. She attributed the performance to category tailwinds and execution, including enrollment process improvements and marketing. Johnson also noted Pearson added “enrollments in year,” which she linked partly to the timing of marketing spend. She said Q2 growth will still be “very good,” but not “quite as high as it was in Q1” because Pearson saw a small amount of funding upside in Q1 that it would “normally get in Q2.” Deutsche Numis analyst Steve Liechti asked about phasing, and Johnson said Virtual Learning’s semester-driven pattern means Q1 and Q2 “generally would look very similar,” and that the company’s H1 can resemble H2 of the prior year. She referenced that Pearson had previously cited 18% growth in Virtual Learning in the second half of last year. Goldman Sachs analyst James Tate asked about Pearson’s U.S. student assessment activity, including contract expansions in Maryland and a win in Wyoming. Johnson said both contracts contribute “a small amount in the second half of 2026,” with additional upside in 2027 when Pearson has a full year of benefit. She also described the tender environment as typical for the business and pointed to Pearson’s recent retention performance. “I’d remind you of our track record in terms of our retention rate,” she said, citing 96% last year, “and that included New Jersey.” Abbosh highlighted strategic progress in AI-related learning and enterprise partnerships. He cited the launch of Pearson’s Foundations of AI course for U.S. school teachers and, with Adobe, what he described as the first professional certification for Adobe Firefly. He also said Pearson has been developing relationships across nine partners, including Salesforce, and positioned the partnerships as long-term opportunities. Abbosh said these partners have “committed hundreds of millions of dollars of incremental revenues up to 2030 to Pearson,” with joint efforts spanning product development and go-to-market initiatives. Communication Coach, developed with Microsoft, was cited as one example. In response to a question about enterprise learning and skills trends, Abbosh said the segment’s Q1 strength came in part from virtual and vocational qualifications, which he noted are typically weighted toward the first half. He said enterprise solutions tied to partnerships are “trending in a very good way,” while noting that the contracts are designed to ramp over time. Abbosh also described near-term demand from technology companies for training sales teams, partners, and end customers on rapidly evolving AI tools. Abbosh addressed the conflict in the Middle East, saying Pearson’s “first priority” is the safety of its people and that the company is supporting employees. He said the region, including nearby countries such as Turkey and Pakistan, represents about 2% of Pearson’s revenue, primarily across A&Q and ELL, and that Pearson does not expect the conflict to affect full-year group growth “in any meaningful way.” He said Pearson is managing operational considerations such as announced changes to school exam delivery, using “well-established contingency arrangements,” and noted early signs of potential disruption to the migration and study abroad market relevant to PTE, while reiterating confidence in 2026 guidance. Abbosh also marked the call as Johnson’s final set of results as CFO, saying she has been working closely with incoming CFO Simon Robson to ensure a smooth transition, with plans to introduce Robson at interim results in the summer. On capital allocation, Tate asked about the accelerated share buyback expected to be completed by the end of May and leverage levels. Johnson said the company is currently in the midst of the buyback and that there is “no capital allocation for the board to be making a decision on” at present, adding that future decisions would follow Pearson’s stated capital allocation policy. 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. The article "Pearson Q1 Earnings Call Highlights" was originally published by MarketBeat.

Pearson delivered a solid 2025 with 4% sales growth, adjusted operating profit of £614 million and a margin of 17.2%, while adjusted EPS rose to £0.645; free cash flow conversion was strong (125% including a tax recovery, 98% excl.), the dividend was raised 5% and a new £350m buyback was announced with year‑end leverage at 1.3x. The company is embedding AI across products and operations, reporting large productivity gains (content editing time down ≥40%, translation costs ~33% lower), claims of much higher learner engagement, and roughly 200bps of margin improvement from cost savings that are being reinvested. Pearson highlighted enterprise momentum—revenue commitments from nine major tech/service partners and “hundreds of millions” of incremental contracted revenue through 2030—and guided for mid‑single‑digit sales growth in 2026 with adjusted operating profit of £640–685m and free cash conversion of 90–100%. Interested in Pearson, PLC? Here are five stocks we like better. Will ChatGPT Be the Final Nail in the Coffin for Chegg? Pearson (NYSE:PSO) executives used the company’s 2025 full-year results presentation to emphasize what CEO Omar Abbosh described as strong secular demand for “skilling and the validation of skills,” driven by demographic shifts and the advance of AI. Management said 2025 delivered results in line with expectations and showed “significant strategic progress,” while guidance for 2026 calls for further improvement in the financial profile. For 2025, Pearson reported 4% sales growth, with underlying adjusted operating profit up 6% to GBP 614 million. Adjusted operating profit margin expanded to 17.2% from 16.9%, which CFO Sally Johnson said came despite currency headwinds. → Diamondback Sees Resilient Demand Despite Cautious Guidance Adjusted EPS rose 4% to GBP 0.645, reflecting solid trading and a reduced share count from buybacks, partially offset by higher interest costs. Johnson noted adjusted EPS grew 9% at constant FX. Cash performance remained a central theme. Free cash flow increased 8%, with free cash flow conversion of 125% including a state aid tax recovery, and 98% excluding it. Pearson increased its dividend by 5% and began a further GBP 350 million share buyback program. Year-end leverage was 1.3x, below Pearson’s stated medium-term cap of 2x EBITDA. → AI Is Separating Software Winners From Losers, 2 Experts Explain Pearson’s business-unit commentary highlighted accelerating performance in several areas, particularly in the second half. Assessments & Qualifications (A&Q): Sales grew 4%, with management pointing to stronger second-half performance. Executives cited strength in clinical assessment and qualifications, digital growth, and international expansion. The company also referenced scope extensions and new awards with enterprises including Google and ACCA, and noted adjacent-market progress in U.S. student assessment through a partnership with McGraw Hill. Virtual Learning: This unit delivered a “standout year,” with second-half sales up 18%. Johnson said fall enrollments increased 13%, aided by enhancements to the enrollment platform, improved retention, targeted marketing, career academies, and strong underlying market growth. Segment margin increased to 16% on operating leverage. Higher Education: Pearson reported faster growth than 2024 despite a K-12 transition and challenging international conditions. Management highlighted strength in Inclusive Access, while also pointing to execution and platform simplification opportunities as areas for improvement in 2026. English Language Learning (ELL): ELL continued to grow, driven by institutional demand. Pearson said PTE revenue was flat year-on-year, outperforming a market where global volumes declined about 15%, and management emphasized market share gains. Enterprise Learning and Skills (ELS): The unit grew 6%, with management citing strength in vocational qualifications and momentum in enterprise solutions, which grew 20% in Q4. Abbosh positioned AI as both a product and operational catalyst. The company described embedding AI-based innovation across products and services and said it is seeing “tangible improvements” in learner engagement and outcomes. Pearson highlighted statistics presented during the event, including that students using Pearson’s AI were said to be “24 times more likely to become active readers,” alongside measures of higher-order learning behaviors. → NVIDIA’s AI Boom Isn’t Slowing After Blowout Q4 On operations, Pearson discussed AI-enabled cost optimization and process improvements. Management said teams using AI content development tools reduced content editing time by at least 40%, translation costs by nearly a third, and content alignment costs by a quarter. AI customer service agents handled more than 130,000 customer interactions, with roughly a 40% reduction in volumes where agents were deployed. In 2025, Pearson generated about 200 basis points of margin through cost savings, which Abbosh said were being reinvested. In Q&A, Abbosh argued Pearson is less exposed to risks faced by purely digital, direct-to-consumer models. He said AI-driven proliferation of low-quality content and deepfakes is contributing to a “giant flight to safety,” with greater demand for trusted sources, verified identities, and validated skills—areas he said align with Pearson’s role in assessment and verification. Management repeatedly pointed to enterprise as a key medium-term growth vector. Abbosh said Pearson has revenue commitments from nine leading technology and services companies and described “hundreds of millions of dollars” in incremental cumulative revenue commitments through 2030, alongside “hundreds of millions” of locked-in revenues with existing customers. Executives described these relationships as encompassing Pearson selling to partners, Pearson buying engineering services and AI capabilities from partners, and joint innovation/go-to-market efforts. Examples cited included integrating learning products to support Amazon’s workforce development, English language assessments for TCS, certifications at scale for Google through Pearson Professional Assessments, Credly as a credentialing partner to Microsoft’s skilling platform, and sales skilling for IBM and Cognizant. Abbosh also addressed questions about the risk of pricing tied to employment levels, stating that enterprise partnership economics are based on “hard commits and dollars,” and characterizing the backlog as legally contracted. For 2026, Pearson guided to mid-single-digit sales growth and adjusted operating profit of GBP 640 million to GBP 685 million at FX rates as at the end of 2025. Free cash conversion is expected to be 90% to 100%. Management guided to an effective tax rate of about 25% and interest of around GBP 80 million, reflecting the new buyback program. Johnson said guidance includes new investment and higher-than-average transformation costs weighted to the first half. By segment, management expects A&Q to grow low-to-mid single digits, with Q1 impacted by the loss of the New Jersey contract and headwinds at PDRI, before returning to growth in later quarters. Virtual Learning is expected to grow “even more strongly” than in 2025 on a full year of enrollment growth. Pearson expects Higher Education and English to grow more than in 2025, with English benefiting from PTE returning to growth and continued market share gains. ELS growth is expected to be driven by vocational qualifications and strategic account growth in enterprise solutions. Pearson also discussed a leadership transition: Abbosh congratulated Johnson on her 26-year career at Pearson and said the company expects to introduce incoming CFO Simon Robson, previously Group CFO at Sky, in the coming months. 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. The article "Pearson H2 Earnings Call Highlights" was originally published by MarketBeat.

Confident in outlook, guiding to mid-single digit sales growth for 2026 and beyond. Strong financial position, with £350m share buyback well underway. LONDON, Feb. 27, 2026 /PRNewswire/ -- Financial Highlights Highlights Underlying Group sales growth of 4% for the full year. Group adjusted operating profit of £614m, up 6% underlying with margin expansion from 16.9% to 17.2%. Operating cash conversion remained strong at 93%, with an increase in working capital given high Q4 sales growth. Free cash flow up 8%, resulting in free cash flow conversion3 of 125%. Adjusted earnings per share increased 9% at constant exchange rates4, and 4% on a headline basis. Full year dividend per share up 5% to 25.2p. Recently announced £350m share buyback programme well underway. Significant strategic progress in delivering our 2025 priorities: Continued to lead with the application of innovative technologies, deepening and scaling AI across our offering, driving measurable improvements in learner outcomes and saving educators meaningful time, whilst embedding AI as a foundational capability within Pearson. Advanced our enterprise strategy, securing eight partnerships with industry-leading firms with continued momentum into 2026, announcing a new strategic partnership with Salesforce. Positive outlook for 2026: mid-single digit underlying sales growth, adjusted operating profit of £640m-£685m at FX rates as at the end of 2025 (£:$ 1.35), including the impact of the 2025 product development impairment, and free cash flow conversion of 90%-100%. Medium term guidance reiterated. Omar Abbosh, Pearson's Chief Executive, said: "We delivered on our goals in 2025, making significant progress in scaling AI across our products and services and building tangible momentum in our enterprise offering. The partnerships we secured with leading technology companies are a recognition of Pearson's unique role at the intersection of education, skills and workforce development, underpinned by our unrivalled strength in assessments which positions us to deliver meaningful shareholder value over the medium term. Through our unique competitive positioning, we look to the future with confidence as we meet the growing and urgent need among enterprises and learners to adapt to an AI-enabled world." Statutory results Sales increased 1% on a headline basis to £3,577m (2024: £3,552m) with currency movements partially offsetting underlying business performance. Statutory operating profit decreased 6% to £507m (2024: £541m). Underlying operating profit growth and the reversal of prior property provisions were more than offset by adverse currency movements and an £87m non-cash, one-off impairment of legacy product development assets arising from strategic platform convergence. This convergence is expected to deliver ongoing operational improvements and results in a c.£15m per annum adjusted operating profit improvement, on average, over the next 6 years in Higher Education. 2026 priorities Deliver on 2026 guidance for Group underlying sales growth, adjusted operating profit and free cash flow. Lead with the application of innovative technologies, including AI powered learning and assessment products and services, driving better attainment outcomes and enhanced experiences. Progress core business and enterprise power metrics. 2025 Financial Performance Underlying Group sales growth of 4% for the full year Assessment & Qualifications sales grew 4% with all sub-business units contributing to growth. Virtual Learning delivered a strong performance with 8% sales growth for the full year, and H2 up 18% driven by a 13% increase in 2025/26 Fall semester enrolments, as well as favourable mix and funding. Higher Education sales grew 2%, with US Higher Education up 3% driven by enrolments and pricing in core Courseware with adoption share maintained. English Language Learning sales increased 1%, driven by Institutional, with Pearson Test of English (PTE) performing well against a tough market backdrop. Enterprise Learning & Skills sales grew 6% with a solid performance in Vocational Qualifications and continued quarter-on-quarter improvement in Enterprise Solutions. Adjusted operating profit up 6% on an underlying basis to £614m Underlying performance up 6% driven by sales growth and continued cost savings, partially offset by investment and inflation. Adjusted operating profit margin rose to 17.2% (2024: 16.9%). Headline adjusted operating profit growth was 2% reflecting business performance and portfolio changes partially offset by currency movements. Adjusted net finance costs increased to £57m (2024: £45m). The effective tax rate on adjusted profit before tax held broadly flat at 24.5% (2024: 24.4%). Adjusted earnings per share increased 4% to 64.5p (2024: 62.1p) reflecting adjusted operating profit growth and the reduction in issued shares due to the 2025 share buyback, partially offset by increased interest costs. Adjusted earnings per share increased 9% at constant exchange rates. Strong cash performance Operating cash conversion remained strong at 93%, with an increase in working capital given high Q4 sales growth and increased investment spend. Operating cash inflow decreased on a headline basis from £662m in 2024 to £571m in 2025 given these factors as well as currency movements. Free cash flow increased 8%, resulting in free cash flow conversion of 125%, driven by the £0.1bn recovery of State Aid taxes. Free cash flow conversion excluding the recovery of State Aid taxes was 98%, at the top end of guidance. Strong balance sheet supporting continued investment and shareholder returns Year-end net debt of £1.1bn (2024: £0.9bn), with free cash flow more than offset by the share buyback, acquisition of eDynamic Learning and dividends. Net debt / adjusted EBITDA ratio of 1.3x (2024: 1.1x). Proposed final dividend of 17.4p (2024: 16.6p) which equates to a full year dividend of 25.2p (2024: 24.0p) an increase of 5% compared to 2024. In 2025 we completed a £350m share buyback, reducing our share count by 5%. In line with our capital allocation framework and supported by strong free cash flow, we commenced a further £350m share buyback in January 2026. Secured new three-year, $800m revolving credit facility, enhancing our liquidity and strategic flexibility. Return on capital was 11.3% (2024: 10.5%). Continued operational and strategic progress, strengthening our core business while expanding into faster growth adjacent markets Assessment & Qualifications: Pearson Professional Assessments continued to lead the global market in large-scale testing services, securing several new contracts and maintaining strong customer retention supporting future growth. US Student Assessment announced an integrated partnership with McGraw Hill embedding formative assessments into core K12 curricula, and although we lost the contract with New Jersey we subsequently renewed and extended several key contracts, including Maryland and others at a late stage of contract completion. In UK & International Qualifications, we commenced the delivery of the new UK Government Test Operations Services contract and we expanded our digital offerings, including increased adoption of onscreen assessment and ActiveHub, our flagship teaching and learning platform. In Clinical Assessment we have implemented the first statewide adoption of our digital platform in Tennessee and expanded our pharmaceutical business. Key innovations included the launch in Clinical Assessment of Revibe, a wearable device designed to support individuals experiencing challenges with focus and attention such as those with ADHD, alongside the integration of AI by Pearson Professional Assessment to drive efficiencies in assessment generation. Virtual Learning: We completed the launch of a new enrolment portal across our school network, helping to remove friction in the enrolment process. During the year, we made targeted marketing investments to capitalise on strong market demand for virtual schooling. We continue to enhance our career offering through new and extended partnerships and also embedded our career programmes across the school network, supporting students in their transition to the workforce. We deepened the integration of AI into our study tools, contributing to higher course scores and end-of-semester pass rates, and expanded our teacher AI custom assessment tool network-wide, driving increased adoption and usage allowing teachers to focus on meaningful student interactions by halving the time it takes to create custom student assessments. Higher Education: We expanded the successful monetisation of our Study Prep tool, extending reach into International markets. Our AI powered study tools continue to deliver measurable improvements in learning outcomes, with our latest research showing repeat usage of our AI study tools increases the likelihood of a student becoming an active reader by 24 times. We also saw sustained momentum in our Inclusive Access offerings, achieving another year of strong double digit sales growth. We made significant strategic progress in expanding into the fast growing Early Careers space, broadening capabilities in career-readiness solutions which support learners as they transition from formal education into the workforce. We established a dedicated direct sales force to deepen and expand our relationships with US school administrators and completed the acquisition of eDynamic Learning – North America's largest provider of digital Career and Technical Education. English Language Learning: We launched the PTE Express test, addressing growing demand for trusted online testing among US-bound learners, and renewed our agreement with Australia's Department of Home Affairs. Within Institutional, we continued to expand internationally, securing customer wins in key markets including Latin America and Asia. We also continued to make progress on the application of innovative technologies with the launch of Communications Coach - an AI-powered learning solution integrated into Microsoft 365, enabling professionals to enhance communication skills seamlessly within the flow of work, marking our first go-to-market collaboration with Microsoft. Enterprise Learning & Skills: Vocational Qualifications secured several new contract wins including apprenticeship courses with the UK Ministry of Defence, the Uzbekistan Ministry of Education, and the Kingdom of Saudi Arabia, alongside International BTEC expansion. Within Enterprise Solutions, we launched a global go to market approach, establishing a dedicated enterprise sales team supported by marketing and delivery. We also signed strategic partnerships with eight industry-leading firms, securing sales opportunities and collaborating on joint go-to market initiatives across a broad range of learning experiences. Confident in future thanks to AI trends driving major multi-year demand for upskilling and the validation of skills The advancement of AI drives large scale reconfiguration of industries, occupations, roles and educational approaches. This is proving a major demand driver for skilling and the validation of skills. Pearson's core capability is assessment and verification and we already see resultant demand from enterprises. Approximately 90% of 2025 adjusted operating profit was generated from assessments, virtual schools and print. These are operationally complex, large-scale services with very high quality requirements. These services often need high levels of security, statistical evidence bases while meeting regulatory outcomes, where trust in delivery standards is critical. We use AI and other technologies to enhance the productivity of our operations and improve services to customers. The remaining approximately 10% of 2025 adjusted operating profit was generated primarily from digital courseware, where AI technologies play an important role in personalisation. We have made significant progress in advancing the application of AI to improve learning outcomes, and this continues to be a company priority. We benefit from our deep integration into the learning ecosystem, significant proprietary data, and demand for trusted pedagogy. Outlook 2026 guidance Medium term outlook Over the medium term, Pearson is well 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 conversion, in the region of 90% to 100%, on average, across the period. Financial Calendar 2026 Q1 Trading Update will be announced on 1 May 2026. Executive change Sally Johnson, Group Chief Financial Officer (CFO), has informed the Board of her decision to leave the company later this year to take up the role of CFO at a large privately owned business. The Board would like to thank Sally for her contribution and leadership during her tenure as Group CFO. Following a carefully managed succession process, Simon Robson, currently CFO at Sky, will succeed Sally as Group CFO. Simon will join Pearson on 30 March 2026 and assume the role of Group CFO and Executive Director on 8 May 2026, ensuring a smooth and orderly transition. Simon brings extensive financial leadership from Sky, one of Europe's largest media, technology and connectivity businesses. Having joined Sky in 1997, he has held a number of senior finance and strategy roles, including CFO of Sky Deutschland from 2015 to 2018, followed by Deputy Group CFO, before being appointed Group CFO in June 2020. A chartered certified accountant, Simon brings a strong track record of delivering high‑impact financial strategy and operational excellence. There is no further information to be declared in accordance with LR 6.4.8. Contacts 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. Operational review Assessment & Qualifications In Assessment & Qualifications, sales increased 4% on an underlying basis and 1% on a headline basis with currency movements partially offsetting trading. Adjusted operating profit increased 1% in underlying terms due to operating leverage on sales growth partially offset by investment and inflation, and decreased 2% in headline terms due to currency movements offsetting trading. Pearson Professional Assessments sales increased 1% on an underlying basis driven by new contract launches partially offset by the pause in a contract delivered in 2024, which resumed in Q3, and headwinds in PDRI, which has been impacted by US federal government hiring and spend reductions. In US Student Assessment, sales increased 2% on an underlying basis supported by scope increases with existing customers. In Clinical Assessment, sales increased 8% on an underlying basis due to the continued traction of our products in the market, pricing and digital product growth. In UK & International Qualifications, sales increased 9% on an underlying basis driven by volume, pricing and strong International growth. For Assessment & Qualifications, we expect low to mid-single digit underlying sales growth in 2026. This will be driven by new contracts, products and pricing. 2026 priorities include expansion into adjacent markets, including high stakes test prep and formative assessments, along with key contract renewals and new wins. We will also continue to expand internationally, enhance operational excellence, and accelerate innovation, particularly through AI. Virtual Learning Virtual Learning sales grew 8% on an underlying basis, with strong performance in H2 driven by enrolment performance, favourable mix and funding. On a headline basis sales were up 4% with currency movements partially offsetting trading. Adjusted operating profit increased 29% in underlying terms, due to operating leverage on sales growth, and 23% in headline terms due to this partially offset by currency movements. Enrolments for the 2025/26 academic year increased by 13% in the Fall semester, benefiting from targeted marketing investments to capture demand. We also successfully opened two new schools for the 2025/26 academic year bringing our total number of schools to 41 across 31 states and renewed all six of our long term school contracts. For Virtual Learning, we expect even stronger underlying sales growth in 2026 than 2025, driven by a full year of enrolment growth. 2026 priorities include continuing to capture growing demand for US virtual schooling, further strengthening of our marketing and enrolment capabilities, targeted school expansion and the ongoing application of AI to personalise teaching and learning. Higher Education In Higher Education, sales increased 2% on an underlying basis and decreased 1% on a headline basis due to currency movements more than offsetting trading and portfolio changes. Adjusted operating profit was flat in underlying terms driven by operating leverage on sales growth offset by investment in the business and inflation, and decreased 3% in headline terms due to currency movements more than offsetting trading and portfolio changes. In US Higher Education, underlying sales grew 3%, driven by enrolment growth and pricing in our core Courseware business, partly offset by expected declines in the K12 channel due to the transitionary period, with adoption share maintained. We delivered strong growth in Inclusive Access, up 19%, and achieved 2% growth in US digital subscriptions. In addition, we continued to see strong monetisation of our Study Prep tool and sustained engagement with our AI-powered study tools. International Higher Education faced ongoing challenging trading conditions in mature markets, declining 7% for the full year. For Higher Education, we expect underlying sales to grow more in 2026 than 2025, supported by continued product and platform innovation, pricing and Inclusive Access in our core US courseware business as well as improvement in the K12 channel. 2026 priorities include building on our Early Careers offerings, continuing to enhance access and integration across our Inclusive Access offerings in the US, while focusing internationally on emerging markets, digital expansion and content localisation. English Language Learning In English Language Learning, sales grew 1% on an underlying basis, driven by Institutional, and decreased 4% on a headline basis due to currency movements more than offsetting trading. Adjusted operating profit increased by 16% in underlying terms due to cost savings partially offset by inflation and was flat in headline terms due to currency movements offsetting trading. PTE continued to perform well against a challenging market backdrop of tightening migration policies. While volumes declined 5%, sales remained flat and we continued to gain market share. Our Institutional business delivered a solid performance, with strength in key Latin American markets and Asia. For English Language Learning, we expect higher underlying sales growth in 2026 than 2025, driven by market share gains and pricing, with PTE returning to growth. 2026 priorities include continued strong operational performance, refreshing our Institutional product suite developing next‑generation solutions for institutional and government partners, and supporting enterprise customers with advanced upskilling capabilities. Enterprise Learning & Skills In Enterprise Learning & Skills, sales were up 6% on an underlying basis and 4% on a headline basis due to currency movements more than offsetting trading. Adjusted operating profit increased by 40% in underlying terms due to operating leverage on sales and increased 45% in headline terms due to trading performance and favourable currency movements. Vocational Qualifications delivered a solid performance while Enterprise Solutions growth improved quarter-on-quarter as we build momentum in our enterprise approach and related sales capability, driven by the recently announced partnerships. For Enterprise Learning & Skills in 2026, we expect underlying sales growth to be driven by a solid performance in Vocational Qualifications and strategic account growth in Enterprise Solutions. 2026 priorities include addressing growing demand for trusted talent solutions that help employees work more effectively with AI, deepening value from our strategic partners and broadening our validated skills data to support workforce mobility at scale. Financial Review Operating result Sales increased on a headline basis by £25m or 1% from £3,552m in 2024 to £3,577m in 2025 and adjusted operating profit increased by 2% on a headline basis to £614m in 2025 compared to £600m in 2024 (for a reconciliation of this measure see note 2 to the condensed consolidated financial statements). The headline basis simply compares the reported results for 2025 with those for 2024. We also present sales and profits on an underlying basis which excludes the effects of exchange, the effect of portfolio changes arising from acquisitions and disposals and the impact of adopting new accounting standards that are not retrospectively applied, when relevant. Our portfolio change is calculated by excluding sales and profits made by businesses disposed in 2024 or 2025 and by ensuring the contribution from acquisitions is comparable year on year. For prior year acquisitions, the corresponding pre-acquisition period is excluded from the current year, and for current year acquisitions, the results for the current year are excluded. Portfolio changes mainly relate to the acquisition of eDynamic Learning and disposal of Copp Clark in 2025. On an underlying basis, sales increased by 4% in 2025 compared to 2024 and adjusted operating profit increased by 6%. Currency movements decreased sales by £112m and adjusted operating profit by £26m, and portfolio changes increased sales by £7m and adjusted operating profit by £2m. There were no new accounting standards adopted in 2025 that impacted sales or profits. Adjusted operating profit includes the results from discontinued operations when relevant but excludes charges for acquired intangible amortisation and impairment, acquisition related costs, gains and losses arising from disposals, the cost of major reorganisation and associated property charges, one off-costs related to the UK pension scheme and certain other one-off material items. A summary of these adjustments is included below and in note 2 to the condensed consolidated financial statements. Costs of major reorganisation – In 2025, there are no costs of major reorganisation. In 2024, there was a release of £2m relating to amounts previously accrued. Product development impairment charges in 2025 relate to the impairment of product development assets as a result of courseware platform convergence. There were no such amounts in 2024. Intangible amortisation charges in 2025 were £42m compared to a charge of £41m in 2024. This is due to increased amortisation from recent acquisitions partially offset by decreased amortisation from assets reaching the end of their useful economic lives. UK pension discretionary increases in 2024 related to one-off pension increases awarded to certain cohorts of pensioners in response to the cost of living crisis. There were no such amounts in 2025. Other net gains and losses in 2025 relate to the gain on disposal of Copp Clark, a business in our Higher Education division, a fair value gain relating to a previous disposal and costs relating to current and prior year acquisitions and disposals. Other net gains and losses in 2024 related to costs related to prior year acquisitions and disposals, partially offset by a gain on the partial disposal of our investment in an associate. Property charges in 2025 are a gain of £25m relating to reversals of impairments of property assets that were previously impaired through property charges. Impairment reversals have arisen from new sublets on previously vacant space in corporate properties. There were no such amounts in 2024. The reported operating profit of £507m in 2025 compares to a profit of £541m in 2024. The decrease has been driven by unfavourable foreign exchange movements, the product development impairment, investment and inflation, partially offset by operating leverage on sales growth and cost savings, as well as a reduction in one-off pension charges and property related impairment reversals. Net finance costs Net finance costs increased on a headline basis from a net cost of £31m in 2024 to a net cost of £50m in 2025. The increase is primarily due to increased net borrowing costs given increased average net debt following last year's share buy back and movements on derivatives. Adjusted net finance costs reflected in adjusted earnings in 2025 was £57m, compared to a net cost of £45m in 2024. The increase is primarily due to increased net borrowing costs given increased average net debt following last year's share buy back and movements on derivatives. In 2025, the total of items excluded from adjusted earnings was net income of £7m compared to net income of £14m in 2024. For a reconciliation of the adjusted measure see note 3 to the condensed consolidated financial statements. Taxation The reported tax on statutory earnings in 2025 was a charge of £121m compared to a charge of £75m in 2024. This equates to an effective tax rate of 26.5% (2024: 14.7%), with the increase from prior year principally due to the release of the State Aid uncertain tax provision in the prior year. The total adjusted tax charge in 2025 was £136m (2024: £136m), corresponding to an effective tax rate on adjusted profit before tax of 24.5% (2024: 24.4%). For a reconciliation of the adjusted measure see note 4 to the condensed consolidated financial statements. In 2025, there was a net tax payment of £2m (2024: £119m net tax payment). This includes a £97m receipt from HMRC in respect of the State Aid matter, with an additional £17m of associated interest also received in the period. The interest element is classified within interest received in the cash flow statement. This repayment is a result of the Court of Justice of the European Union handing down its decision on 19 September 2024 determining that the United Kingdom controlled foreign company group financing partial exemption did not constitute State Aid, thereby resulting in a refund of the £97m of tax paid (plus £17m of interest) under the Charging Notices issued by HMRC in 2021. The balance excluding the State Aid repayment, principally relates to tax payments in the US and the UK, and decreased due to lower tax liabilities and installment payments for 2025. A net deferred tax liability of £31m is recognised in 2025 compared to a net deferred tax liability of £11m in 2024. The overall amount increased mainly due to the ongoing utilisation of tax losses and other tax attributes. The current tax creditor principally consists of provisions for tax uncertainties. Other comprehensive income Included in other comprehensive income are the net exchange differences on translation of foreign operations. The loss on translation of £193m in 2025 compares to a loss in 2024 of £35m. The loss in 2025 arises from an overall weakening of the majority of currencies to which the Group is exposed, in particular the US dollar. A significant proportion of the Group's operations are based in the US and the US dollar closing rate at 31 December 2025 was £1:$1.35 compared to the opening rate of £1:$1.25. At the end of 2024, the US dollar rate was £1:$1.25 compared to the opening rate of £1:$1.27. Also included in other comprehensive income at 31 December 2025 is an actuarial gain of £10m in relation to retirement benefit obligations. The gain arises largely from a decrease in liabilities driven by lower long-term inflation assumptions and updates to commutation factors. The gain in 2025 compares to an actuarial gain in 2024 of £5m. Fair value losses of £7m (2024: losses of £2m) have been recognised in other comprehensive income and relate to movements in the value of investments in unlisted securities held at fair value through other comprehensive income (FVOCI). Cash flow and working capital Our operating cash flow measure is used to align cash flows with our adjusted profit measures (see note 12 to the condensed consolidated financial statements). Operating cash flow decreased on a headline basis by £91m from an inflow of £662m in 2024 to an inflow of £571m in 2025 due to an increase in working capital given high Q4 sales growth. The equivalent statutory measure, net cash generated from operations, was an inflow of £731m in 2025 compared to an inflow of £811m in 2024. Compared to operating cash flow, this measure includes reorganisation costs but does not include regular dividends from associates. It also excludes capital expenditure on property, plant, equipment and software, and additions to right of use assets as well as disposal proceeds from the sale of property, plant, equipment and right of use assets (including the impacts of transfers to/from investment in finance lease receivable). In 2025, reorganisation cash outflow was £nil compared to £8m in 2024. Free cash flow increased on a headline basis by £37m from £490m in 2024 to £527m in 2025. When compared to operating cash flow, free cash flow includes tax paid/received, net finance costs paid and net costs paid for major reorganisation. The increase year on year is mainly due to the receipt of monies in respect of the State Aid tax matter offset by the reduction in operating cash flow. In 2025, there was an overall decrease of £210m in cash and cash equivalents from £543m at the end of 2024 to £333m at 31 December 2025. The decrease in 2025 is primarily due to the net cash generated from operations of £731m being more than offset by dividends paid of £160m, share buyback programme payments of £352m, own share purchases of £72m, capital expenditure on property, plant, equipment and software of £134m, payments for the acquisition of subsidiaries of £167m, and payments of lease liabilities of £77m. Liquidity and capital resources The Group's net debt increased from £853m at the end of 2024 to £1,069m at the end of 2025. The increase is largely due to free cash flow of £527m being more than offset by the share buyback programme, dividend payments and cash outflows related to acquisitions. In May 2025, the Group repaid its €300m bond and closed out various related derivatives. In June 2025, the Group secured a new three-year, $800 million revolving credit facility (RCF). This facility can be utilised for general corporate purposes, enhancing our liquidity, and is in addition to the Group's existing RCF. At 31 December 2025, the Group had drawn £0.3bn on its Revolving Credit Facilities. At 31 December 2025, the Group had approximately £1.3bn in total liquidity immediately available from cash and its RCFs maturing June 2028 and February 2029. In assessing the Group's ability to continue as a going concern for the period until 30 June 2027, the Board analysed a variety of downside scenarios, including a severe but plausible scenario, where the Group is impacted by a combination of all principal risks from H1 2026, as well as reverse stress testing to identify what would be required to either breach covenants or run out of liquidity. The severe but plausible scenario modelled a severe reduction in revenue, profit and operating cash flow from risks continuing throughout 2026 and 2027. In all scenarios, the Group would maintain comfortable liquidity headroom and sufficient headroom against covenant requirements during the period under assessment even before modelling the mitigating effect of actions that management would take in the event that these downside risks were to crystallise. The directors concluded that the likelihood of the reverse stress test scenario was remote. Post-retirement benefits Pearson operates a variety of pension and post-retirement plans. The UK Group pension plan has by far the largest defined benefit section. This plan has a strong funding position and a surplus with a very substantially de-risked investment portfolio including approximately 50% of the assets in buy-in contracts. We have some smaller defined benefit sections in the US and Canada but, outside the UK, most of the companies operate defined contribution plans. The charge to profit in respect of worldwide pensions and retirement benefits amounted to £43m in 2025 (2024: £60m) of which a charge of £68m (2024: £81m) was reported in operating profit and income of £25m (2024: £21m) was reported against other net finance costs. In 2024, a charge of £13m related to one-off discretionary pension increases was excluded from adjusted operating profit, with no such amounts in 2025. The overall surplus on UK Group pension plans of £484m at the end of 2024 has increased to a surplus of £514m at the end of 2025. The increase has arisen principally due to asset returns being higher than expected and inflation over the period being slightly lower than was expected at the beginning of the year. In total, our worldwide net position in respect of pensions and other post-retirement benefits increased from a net asset of £450m at the end of 2024 to a net asset of £482m at the end of 2025. Businesses acquired and disposed On 24 July 2025, the Group completed the acquisition of 100% of eDynamic Holdings LP ('eDynamic Learning'), a leading Career and Technical Education (CTE) curriculum solutions provider for cash consideration of £168m. For further details, see note 10 to the condensed consolidated financial statements. The cash outflow in 2025 relating to the acquisition of subsidiaries of £167m includes £4m arising from the payment of deferred consideration in respect of the prior year. The cash outflow in 2024 relating to acquisitions of subsidiaries was £39m, arising from the payment of deferred consideration in respect of prior year acquisitions, mainly Credly and Mondly, which were acquired in 2022. In addition, there was a cash outflow relating to investments of £5m (2024: £7m). The Group disposed of Copp Clark in 2025 for consideration of £9m, resulting in a gain on disposal of £8m, which has been recorded within other net gains and losses. There were no disposals of subsidiaries in 2024 with cash outflows relating primarily to prior year disposals. In 2025, the cash inflow relating to the disposal of businesses was £8m (2024: outflow of £7m). Dividends The dividend accounted for in the 2025 financial statements totalling £160m represents the final dividend in respect of 2024 of 16.6p and the interim dividend for 2025 of 7.8p. We are proposing a final dividend for 2025 of 17.4p bringing the total paid and payable in respect of 2025 to 25.2p.This final 2025 dividend, which was approved by the Board in February 2026, is subject to approval at the forthcoming AGM. For 2025, the dividend is covered 2.6 times by adjusted earnings. The final dividend will be paid on 8 May 2026 to shareholders who are on the register of members at close of business on 20 March 2026 (the Record Date). Shareholders may elect to reinvest their dividend in the Dividend Reinvestment Plan (DRIP). The last date for receipt of DRIP elections and revocations will be 16 April 2026. A Dividend Reinvestment Plan (DRIP) is provided by our Registrar, Computershare Investor Services. The DRIP enables the Company's shareholders to elect to have their cash dividend payments used to purchase the Company's shares. More information can be found at www.computershare.com/Investor. Share buyback On 27 February 2025, the Board approved a £350m share buyback programme in order to return capital to shareholders. The programme completed in 2025. During 2025, c32m shares have been bought back at a cash cost of £352m. The nominal value of the cancelled shares of £8m has been transferred to the capital redemption reserve. On 21 January 2026, a further £350m share buyback programme was announced. The programme commenced on 21 January 2026. In the period from 21 January to 25 February 2026, an additional c7m of shares have been repurchased. The accompanying notes to the condensed consolidated financial statements form an integral part of the financial information. The condensed consolidated financial statements were approved by the Board on 26 February 2026. 4,053 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS for the year ended 31 December 2025 1. Basis of preparation The condensed consolidated financial statements have been prepared in accordance with the accounting policies set out in the 2024 Annual Report, which has been prepared in accordance with UK-adopted International Accounting Standards and have also been prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (IASB). There are no changes to accounting standards that have a material impact on the condensed consolidated financial statements for the year ended 31 December 2025. The condensed consolidated financial statements have been prepared under the historical cost convention as modified by the revaluation of certain financial assets and liabilities (including derivative financial instruments) at fair value. In assessing the Group's ability to continue as a going concern for the period to 30 June 2027, the Board analysed a variety of downside scenarios, including a severe but plausible scenario, where the Group is impacted by a combination of all principal risks from by all principal risks in both 2026 and 2027, adjusted for probability weighting, as well as reverse stress testing to identify what would be required to either breach covenants or run out of liquidity. The net impact of the risks modelled in the severe but plausible scenario was to reduce free cashflow during the period under assessment by c41%. At 31 December 2025, the Group had available liquidity of c£1.3bn, comprising central cash balances and the undrawn element of its $1.8bn Revolving Credit Facilities maturing June 2028 and February 2029, but which have options to extend the maturities until 2030. Even under a severe downside case, the Group would maintain comfortable liquidity headroom and sufficient headroom against covenant requirements during the period under assessment. That is, even before modelling the mitigating effect of actions that management would take in the event that these downside risks were to crystallise. The directors concluded that the likelihood of the reverse stress test scenario was remote. The directors have confirmed that they have a reasonable expectation that the Group has adequate resources to continue in operational existence and to meet its liabilities as they fall due for the assessment period to 30 June 2027. The condensed consolidated financial statements have therefore been prepared on a going concern basis. The preparation of condensed consolidated financial statements requires the use of certain critical accounting assumptions. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas requiring a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the condensed consolidated financial statements, have been set out in the 2024 Annual Report. In 2025, the valuation of acquired intangible assets recognised on the acquisition of a business is also determined to be a key area of estimation. The Group has also assessed the impact of the uncertainty presented by the volatile macro-economic and geo-political environment on the condensed consolidated financial statements, specifically considering the impact on key judgements and significant estimates along with other areas of increased risk including financial instruments, hedge accounting and translation methodologies. No material accounting impacts relating to the areas assessed were recognised in 2025. The Group has assessed the impacts of climate change on the condensed consolidated financial statements. The assessment did not identify any material impact on the Group's significant judgements or estimates, the recoverability of the Group's assets at 31 December 2025 or the assessment of going concern for the period to 30 June 2027. The Group will continue to monitor these areas of increased judgement, estimation and risk for material changes. The financial information for the year ended 31 December 2024 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The independent auditors' report on the full consolidated financial statements for the year ended 31 December 2024 was unqualified and did not contain an emphasis of matter paragraph or any statement under section 498 of the Companies Act 2006. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS for the year ended 31 December 2025 1. Basis of preparation continued This preliminary announcement does not constitute the Group's full consolidated financial statements for the year ended 31 December 2025. The Group's full consolidated financial statements will be approved by the Board of Directors and reported on by the auditors in March 2026. Accordingly, the financial information for 2025 is presented unaudited in the preliminary announcement. Operating segments – In January 2025, the Group announced that Workforce Skills would evolve to become Enterprise Learning and Skills, incorporating our IT Pro business which was previously within Higher Education. Comparative figures for 2024 segment information have been restated to reflect this move between segments (see note 2). 2. Segment information The Group has five main global business units, which are each considered separate operating segments for management and reporting purposes. These five business units are Assessment & Qualifications, Virtual Learning, English Language Learning, Higher Education and Enterprise Learning and Skills. In January 2025, the Group announced that Workforce Skills would evolve to become Enterprise Learning and Skills, incorporating our IT Pro business which was previously within Higher Education. Comparative figures have been restated to reflect the move between segments, resulting in £45m of sales and £12m of adjusted operating profit being transferred from Higher Education to Enterprise Learning and Skills for the year ended 31 December 2024. There were no material inter-segment sales. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS for the year ended 31 December 2025 2. Segment information continued The following table reconciles the Group's measure of segmental performance, adjusted operating profit, to statutory operating profit: Adjusted operating profit is one of the Group's key business performance measures. The measure includes the operating profit from the total business but excludes charges for acquired intangibles amortisation and impairment, acquisition related costs, gains and losses arising from disposals, the cost of major reorganisation and associated property charges, one off-costs related to the UK pension scheme and certain other one-off material items. Costs of major reorganisation – In 2025, there are no costs of major reorganisation. In 2024, there was a release of £2m relating to amounts previously accrued. Product development impairment charges in 2025 relate to the impairment of product development assets as a result of courseware platform convergence. There were no such amounts in 2024. Intangible charges – These represent charges relating to intangibles acquired through business combinations. These charges are excluded as they reflect past acquisition activity and do not necessarily reflect the current year performance of the Group. UK pension discretionary increases – Charges in 2024 related to one-off pension increases awarded to certain cohorts of pensioners in response to the cost of living crisis. There were no such amounts in 2025. Other net gains and losses – These represent profits and losses on the sale of subsidiaries, joint ventures, associates and other financial assets and are excluded from adjusted operating profit in order to show the performance of the Group on a more comparable basis year on year. Other net gains and losses also includes costs related to business closures and acquisitions. Other net gains and losses in 2025 relate to the gain on disposal of Copp Clark, a business in our Higher Education division, a fair value gain relating to a previous disposal and costs relating to current and prior year acquisitions and disposals. Other net gains and losses in 2024 related to costs related to prior year acquisitions and disposals, partially offset by a gain on the partial disposal of our investment in an associate. Property charges – In 2025, a gain of £25m relates to reversals of impairments of property assets that were previously impaired through property charges. Impairment reversals have arisen from new sublets on previously vacant space in corporate properties. There are no such charges in 2024. Adjusted operating profit should not be regarded as a complete picture of the Group's financial performance. For example, adjusted operating profit includes the benefits of major reorganisation programmes but excludes the significant associated costs, and adjusted operating profit excludes costs related to acquisitions, and the amortisation of intangibles acquired in business combinations, but does not exclude the associated revenues. The Group's definition of adjusted operating profit may not be comparable to other similarly titled measures reported by other companies. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS for the year ended 31 December 2025 3. Net finance income / costs Net interest payable is the finance cost measure used in calculating adjusted earnings. The table below reconciles statutory net finance costs to net interest payable . Net finance income relating to retirement benefits has been excluded from our adjusted earnings as we believe the income statement presentation does not reflect the economic substance of the underlying assets and liabilities. Also excluded are interest costs relating to acquisition or disposal transactions as it is considered part of the acquisition cost or disposal proceeds rather than being reflective of the underlying financing costs of the Group. Foreign exchange, fair value movements on investments classified as FVTPL and other gains and losses on derivatives are excluded from adjusted earnings as they represent short-term fluctuations in market value and are subject to significant volatility. Other gains and losses may not be realised in due course as it is normally the intention to hold the related instruments to maturity. Interest on certain tax provisions is excluded from our adjusted measure in order to mirror the treatment of the underlying tax item. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS for the year ended 31 December 2025 4. Income tax The increase in the statutory rate of tax in 2025 is principally due to the release of the State Aid uncertain tax provision in the prior year. In 2025, other tax items of £1m consists primarily of movements in provisions for tax uncertainties and the recognition of previously unrecognised tax losses. In 2024, other tax items of £13m consists primarily of movements in provisions for tax uncertainties. Adjusted income tax is the tax measure used in calculating adjusted earnings. The table below reconciles the statutory income tax charge to the adjusted income tax charge. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS for the year ended 31 December 2025 4. Income tax continued The adjusted income tax charge excludes the tax benefit or charge on items that are excluded from the profit or loss before tax (see notes 2 and 3). The tax benefit from tax deductible goodwill and intangibles is added to the adjusted income tax charge as this benefit more accurately aligns the adjusted tax charge with the expected rate of cash tax payments. The Group is within the scope of the UK legislation in relation to Pillar Two which was effective from 1 January 2024. Based on the most recent financial information available for the constituent entities in the Group, the Pillar Two effective tax rates in most of the jurisdictions in which the Group operates are above 15%. There are a limited number of jurisdictions where the transitional safe harbour relief does not apply, including jurisdictions that may not meet the 16% effective tax rate threshold required to qualify for the effective tax rate safe harbour test in FY25. However, the Group does not expect a material exposure to Pillar Two income taxes in those jurisdictions. In 2025, a repayment of £97m was received from HMRC in respect of State Aid. This repayment is a result of the Court of Justice of the European Union handing down its decision on 19 September 2024 determining that the United Kingdom controlled foreign company group financing partial exemption did not constitute State Aid, thereby resulting in a refund of the £97m of tax paid (plus interest) under the Charging Notices issued by HMRC in 2021. 5. Earnings per share Basic earnings per share is calculated by dividing the profit or loss attributable to equity shareholders of the company (earnings) by the weighted average number of ordinary shares in issue during the period, excluding ordinary shares purchased by the company and held as treasury shares. Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares to take account of all dilutive potential ordinary shares and adjusting the profit attributable, if applicable, to account for any tax consequences that might arise from conversion of those shares. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS for the year ended 31 December 2025 6. Adjusted earnings per share In order to show results from operating activities on a consistent basis, an adjusted earnings per share is presented which excludes certain items as set out below. Adjusted earnings is a non-GAAP financial measure and is included as it is a key financial measure used by management to evaluate performance and allocate resources to business segments. The measure also enables users of the accounts to more easily, and consistently, track the underlying operational performance of the Group and its business segments over time by separating out those items of income and expenditure relating to acquisition and disposal transactions, major reorganisation programmes and certain other items that are also not representative of underlying performance (see notes 2, 3 and 4 for further information and reconciliation to equivalent statutory measures). The adjusted earnings per share includes both continuing and discontinued businesses on an undiluted basis when relevant. The company's definition of adjusted earnings per share may not be comparable to other similarly titled measures reported by other companies. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS for the year ended 31 December 2025 7. Dividends The directors are declaring a final dividend of 17.4p per equity share, payable on 8 May 2026 to shareholders on the register at the close of business on 20 March 2026. This final dividend, which will absorb an estimated £109m of shareholders' funds, has not been included as a liability as at 31 December 2025. 8. Exchange rates Pearson earns a significant proportion of its sales and profits in overseas currencies, the most important being the US dollar. The relevant rates are as follows: 9. Intangible assets Acquisitions resulted in the recognition of additional goodwill of £102m (2024: £1m) and intangible assets of £71m (2024: £1m) (see note 10 for further details). There were no significant impairments to acquisition related or other non-current intangibles in 2025 or 2024. In 2025, impairment charges of £87m were recorded (2024: £nil) related to the impairment of product development assets as a result of courseware platform convergence. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS for the year ended 31 December 2025 10. Acquisitions On 24 July 2025, the Group completed the acquisition of 100% of eDynamic Holdings LP ('eDynamic Learning'), a leading Career and Technical Education curriculum solutions provider, for cash consideration of £168m, with a further £3m paid into an escrow account in relation to a provision provided for on the opening balance sheet. The acquired business will form part of the Higher Education division. Net assets acquired of £66m were recognised on the Group's balance sheet including £71m of intangible assets, comprising customer relationships, technology, content and the brand, that will be amortised over periods up to 16 years. This transaction has resulted in the recognition of £102m of goodwill, which represents the expected growth of the business, the workforce and know-how acquired and the anticipated synergies, none of which can be recognised as separate intangible assets. The goodwill is not deductible for tax purposes. Details of the fair values of the assets and liabilities recognised at the acquisition date and the related consideration is shown in the table below. eDynamic Learning generated revenues of £10m and a loss after tax of £1m for the period from acquisition date to 31 December 2025. If the acquisition of eDynamic Learning had occurred on 1 January 2025, the Group's revenue and profit after tax would have been £18m higher and £1m higher, respectively. The quoted profit numbers include the impact of purchase price adjustments made on acquisition, including the amortisation of acquired intangibles and reduced revenue and profit following fair value adjustments to the acquired deferred revenue balance. Total acquisition-related costs of £7m (2024: £5m; 2023: £12m) were recognised within other net gains and losses. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS for the year ended 31 December 2025 11. Net debt Included in borrowings at 31 December 2025 are lease liabilities of £478m (non-current £416m, current £62m). This compares to lease liabilities of £517m (non-current £452m, current £65m) at 31 December 2024. The net lease liability at 31 December 2025 after including the investment in finance leases noted above was £412m (2024: £434m). Net debt excluding net lease liabilities is £657m (2024: £419m). In 2025, the movement on borrowings from 31 December 2024 primarily reflects the repayment of the €300m bond offset by the drawdown of £0.3bn on the RCF. For the purposes of the cash flow statement, cash and cash equivalents are presented net of overdrafts of £nil (2024: £nil) which are repayable on demand. When relevant, these overdrafts are excluded from cash and cash equivalents disclosed on the balance sheet. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS for the year ended 31 December 2025 12. Cash flows Operating cash flow and free cash flow are non-GAAP measures and have been disclosed as they are part of the Group's corporate and operating measures. These measures are presented in order to align the cash flows with corresponding adjusted profit measures. The table below reconciles the statutory profit and cash flow measures to the corresponding adjusted measures. The table on the next page reconciles operating cash flow to free cash flow to net debt. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS for the year ended 31 December 2025 12. Cash flows continued 13. Contingencies, tax uncertainties and other liabilities There are Group contingent liabilities that arise in the normal course of business in respect of indemnities, warranties and guarantees in relation to former subsidiaries and in respect of guarantees in relation to subsidiaries, joint ventures and associates. In addition, there are contingent liabilities of the Group in respect of unsettled or disputed tax liabilities, legal claims, contract disputes, royalties, copyright fees, permissions and other rights. None of these claims are expected to result in a material gain or loss to the Group. The Group is under assessment from the tax authorities in Brazil challenging the deduction for tax purposes of goodwill amortisation for the years 2012 to 2020. Similar assessments may be raised for other years. Potential total exposure (including possible interest and penalties) could be up to BRL 1,423m (£193m) for periods up to 31 December 2025, with additional potential exposure of BRL 92m (£12m) in relation to deductions expected to be taken in future periods. Such assessments are common in Brazil. The Group believes that the likelihood that the tax authorities will ultimately prevail is low and that the Group's position is strong. At present, the Group believes no provision is required. 14. Related parties There were no material related party transactions in the period that have materially affected the financial position or performance of the Group and no guarantees have been provided to related parties in the year. 15. Events after the balance sheet date On 21 January 2026, a £350m share buyback programme in order to return capital to shareholders was announced. The programme commenced on 21 January 2026. 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Cognizant Technology Solutions CTSH is scheduled to report its fourth-quarter 2025 results on Feb. 4, 2026. The Zacks Consensus Estimate for fourth-quarter 2025 earnings is pegged at $1.32 per share, unchanged over the past 30 days. This indicates a 9.09% increase from the figure reported in the year-ago quarter. Cognizant expects fourth-quarter 2025 revenues between $5.27 billion and $5.33 billion, indicating growth of 3.8-4.8% and an increase of 2.5-3.5% on a cc basis. The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $5.31 billion, indicating a year-over-year increase of 4.42%. Cognizant Technology Solutions Corporation price-eps-surprise | Cognizant Technology Solutions Corporation Quote Cognizant’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 5.78%. Let’s see how things have shaped up for the upcoming announcement. Cognizant’s fourth-quarter 2025 performance is likely to have benefited from an expanding clientele and a robust pipeline that includes a favorable mix of new opportunities. In the third quarter of 2025, CTSH signed 16 large deals year-to-date, each with a total contract value of $100 million or more. The company also saw growth in mega deals, with two signed in the third quarter of 2025 and one in the second quarter of 2025. These deals are expected to have contributed to revenue growth in the to-be-reported quarter. The growing demand for GenAI solutions across industries like financial services, healthcare and manufacturing is expected to provide continued growth opportunities in the fourth quarter of 2025, particularly in areas like fraud detection, medical imaging and predictive maintenance. CTSH’s NextGen initiative is expected to have played a pivotal role in enhancing operational efficiency in the to-be-reported quarter. However, the company is facing weak demand in the products and resources segment due to tariff policy concerns and spending pressures. Macroeconomic uncertainties, muted discretionary spending and ongoing cost optimization pressures across some sectors remain a concern Cognizant’s robust network of partners, which includes Pearson PSO, Rubrik RBRK, Microsoft MSFT, Lineage, SmartestEnergy, Kramp, Pegasystems, Omron, DocuSign, ServiceNow, NVIDIA, Boehringer Ingelheim, CrowdStrike, Zscaler, IBM, Palo Alto Networks and Amazon, is likely to have driven growth during the fourth quarter. On Dec. 18, 2025, Cognizant announced a multi-year strategic partnership with Microsoft so that global enterprises become AI-powered frontier firms that redefine work, unlock new value and scale innovation responsibly. Under this agreement, Cognizant and Microsoft will jointly build industry-grade AI solutions, co-sell globally and collaborate on large-scale deals across key sectors, including Financial Services, Healthcare and Life Sciences, Retail and Manufacturing. Cognizant’s partnership with Rubrik has been noteworthy. In October 2025, CTSH announced an expanded partnership with Rubrik to launch a global Business Resilience-as-a-Service (BraaS) offering, which helps enterprises to accelerate recovery from cyber incidents and ransomware attacks through a subscription-based, pay-as-you-go model. In September 2025, Cognizant and Pearson formed a global strategic partnership to enhance AI-driven learning, support early and mid-career development and build future-ready workforce skills. The collaboration with Pearson will integrate generative and agentic AI, digital credentials and immersive technologies to create innovative, scalable education and workforce solutions for global learners and organizations. Cognizant’s expanding clientele and robust AI-driven solutions are expected to have contributed to its growth prospects and drive top-line growth in the to-be-reported quarter. Cognizant currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Microsoft Corporation (MSFT) : Free Stock Analysis Report Cognizant Technology Solutions Corporation (CTSH) : Free Stock Analysis Report Pearson, PLC (PSO) : Free Stock Analysis Report Rubrik, Inc. (RBRK) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Cognizant Technology Solutions CTSH is scheduled to report its third-quarter 2025 results on Oct. 29. The Zacks Consensus Estimate for third-quarter 2025 earnings is pegged at $1.29 per share, unchanged over the past 30 days. This represents a 3.20% increase from the figure reported in the year-ago quarter. Cognizant expects third-quarter 2025 revenues between $5.27 billion and $5.35 billion, indicating growth of 4.6%-6.1% and an increase of 3.5%-5% on a cc basis. The company anticipates a little more than 200 basis points of inorganic contribution from the Belcan acquisition in the third quarter of 2025. The Zacks Consensus Estimate for third-quarter revenues is pegged at $5.33 billion, indicating a year-over-year increase of 5.63%. Cognizant’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 6.26%. Cognizant Technology Solutions Corporation price-eps-surprise | Cognizant Technology Solutions Corporation Quote Let’s see how things have shaped up for the upcoming announcement. Cognizant’s third-quarter 2025 performance is likely to have benefited from an expanding clientele and a robust pipeline that includes a favorable mix of new opportunities. In the second quarter of 2025, CTSH won six large deals, including two mega deals valued at $1 billion each. This is likely to have contributed to the to-be-reported quarter’s performance as well. The growing demand for GenAI solutions across industries like financial services, healthcare, and manufacturing is expected to have provided continued growth opportunities in the third quarter of 2025, particularly in areas like fraud detection, medical imaging, and predictive maintenance. New partnerships, such as the collaboration with WRITER and the launch of Cognizant Agent Foundry, are expected to have driven enterprise-scale adoption of Agentic AI and further strengthen CTSH’s position in the market in the third quarter of 2025. CTSH’s NextGen initiative is expected to have played a pivotal role in enhancing operational efficiency in the to-be-reported quarter. Despite Cognizant’s expanding clientele, weak demand in the products and resources segment due to tariff policy concerns and spending pressures remains a concern. Macroeconomic uncertainties, muted discretionary spending, and ongoing cost optimization pressures across some sectors have also been a headwind. Cognizant’s robust network of partners, which includes Pearson PSO, Lineage LINE, SmartestEnergy, Kramp, Pegasystems, Alphabet’s GOOGL cloud business Google Cloud, Omron, DocuSign, ServiceNow, NVIDIA, Boehringer Ingelheim, CrowdStrike, Zscaler, IBM, Palo Alto Networks, and Amazon, is likely to have driven growth during the third quarter. In September 2025, Cognizant and Pearson formed a global strategic partnership to enhance AI-driven learning, support early and mid-career development and build future-ready workforce skills. The collaboration with Pearson will integrate generative and agentic AI, digital credentials and immersive technologies to create innovative, scalable education and workforce solutions for global learners and organizations. In July 2025, Cognizant announced a collaboration with Lineage, the largest global temperature-controlled warehouse REIT. This partnership aims to improve Lineage’s customer service by providing better resources, reliable service models, and next-generation Agentic AI technologies to enhance its customer care operations. In June 2025, Cognizant, in collaboration with Alphabet’s cloud platform Google Cloud, launched Cognizant Autonomous Customer Engagement, which is an AI-driven contact center solution powered by Alphabet’s Google Cloud to deliver hyper-personalized, omnichannel customer experiences with enhanced efficiency and scalability. Cognizant’s expanding clientele and robust AI-driven solutions are expected to contribute to its growth prospects and drive top-line growth in the to-be-reported quarter. Cognizant currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Cognizant Technology Solutions Corporation (CTSH) : Free Stock Analysis Report Pearson, PLC (PSO) : Free Stock Analysis Report Lineage, Inc. (LINE) : Free Stock Analysis Report Alphabet Inc. (GOOGL) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Release Date: August 01, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Pearson PLC (NYSE:PSO) reported a 2% increase in sales and adjusted operating profit for the first half of 2025, aligning with their February guidance. The company is making significant progress in strategic partnerships, including new relationships with Google Cloud, Microsoft, and AWS, which are expected to drive revenue growth. Pearson PLC (NYSE:PSO) is expanding its enterprise learning and skills segment, with new contract wins from HCL Tech and Google Cloud, indicating strong growth potential. The acquisition of e-dynamic Learning is expected to support Pearson's medium-term growth strategy, with the business having strong margins and a track record of good growth. AI-driven innovations are enhancing Pearson's product offerings, improving learning outcomes, and generating cost efficiencies across the business. Pearson PLC (NYSE:PSO) faces near-term pressure from hiring freezes affecting its PDRI segment, which could impact future opportunities. The English language learning segment saw a 3% decline, with the Pearson Test of English expected to decline in the second half of the year. Higher education enrollments are expected to remain flat, requiring growth from other factors such as inclusive access and pricing. The company is experiencing FX headwinds, which have impacted adjusted earnings per share, despite positive underlying trading performance. The integration of e-dynamic Learning may incur near-term costs and deferred revenue impacts, potentially affecting 2025 group guidance. Warning! GuruFocus has detected 9 Warning Signs with FRA:CIG. Q: Are the new contracts, such as those with ServiceNow and Salesforce, performing in line with expectations, and what is the growth outlook for 2026? A: Omar Abbosh, CEO: While we are not providing specific guidance for 2026, the contracts with ServiceNow, Salesforce, and others are performing as expected. Arthur Valentine added that the launch efforts and expected volumes are in line with expectations and reflected in the guidance provided. Q: Can you provide more details on how technology is driving cost efficiencies across Pearson? A: Sally Kate Johnson, CFO: AI is being used for content generation and translation, allowing faster market entry and cost savings. AI capabilities are also being integrated into services to improve customer experience and reduce costs. Q: What is driving the expected revenue growth in the second half of 2025? A: Sally Kate Johnson, CFO: The growth is driven by new and renewed contracts in assessments and qualifications, enrollment growth in virtual schools, and a strong performance in English language learning. The impact of previous school losses will no longer be a headwind. Q: Can you explain the recent acquisition of e-dynamic Learning and its expected impact? A: Omar Abbosh, CEO: E-dynamic Learning is a leader in career and technical education, providing content for middle and high school students. It will be integrated into the higher education segment and is expected to support medium-term growth with strong margins and cash flow. Q: How is Pearson addressing the decline in English Language Learning, particularly with PTE? A: Sharon, Head of English Language Learning: The second half of the year is expected to see growth driven by institutional business, particularly in Latin America, with a focus on government deals and share gains. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.