Pearson boosts 2023 profit outlook, upgrades guidance

Education giant Pearson (LSE: PSON) announced a robust Q3 performance, prompting an upgrade in its 2023 profit guidance. The company’s shares rose by 1.7% to 934.80 pence in early trading on Monday.

In the third quarter, Pearson experienced a 2% year-on-year increase in revenue on an underlying basis. The nine-month period also saw a consistent 2% rise in revenue. The company now anticipates group revenue growth, excluding OPM and strategic review businesses, to be at the higher end of its existing low-to-mid-single-digit guidance. Adjusted operating profit is expected to range between £570 million to £575 million, marking a £20 million increase from prior guidance.

The stellar performance was underlined by an 11% underlying revenue growth in the Assessment & Qualifications division, encompassing Pearson VUE. The English Language Learning segment, including Pearson Test of English, experienced a significant 21% growth, while Workforce Skills grew by 3%. However, Virtual Learning faced a 29% dip, and Higher Education witnessed an 8% decline in underlying revenue.

CEO Andy Bird stated, “This third quarter performance illustrates the continuing momentum across our businesses, led by Pearson VUE and Pearson Test of English. Our Higher Education business reported as expected and remains on plan to return to growth next year.”

Pearson’s confidence in its future prospects is reflected in its share buyback program. The company repurchased £115 million of its shares, part of its £300 million buyback initiative initiated in September.

Moreover, Pearson confirmed the commencement of its new chief executive, Omar Abbosh, on January 8, succeeding Bird, who had led the company since 2020. Abbosh, formerly head of Microsoft Corp’s Industry Solutions business, brings a wealth of experience to the role.