Pearson (NYSE:PSO) reported that its strategic pivot toward digital-first education is yielding high-margin results, with fourth-quarter sales growth doubling the annual rate.
The London-based education giant guided fiscal-year 2025 adjusted operating profit to between £610 million and £615 million, representing a roughly 6% underlying increase that sits at the top end of analyst expectations.
The "lifelong learning" company saw group underlying sales grow 4% for the full year, powered by a blistering 8% jump in the final quarter.
This acceleration was spearheaded by the Virtual Learning division, which saw sales surge 20% in the fourth quarter.
The jump was driven by a strong 2025/26 academic year enrollment cycle and the successful rollout of AI-powered study tools that have increased student retention and engagement.
Pearson’s results highlight a robust operational performance across its newly realigned segments.
Beyond the virtual classroom, the Enterprise Learning & Skills division grew 6% for the year, with a 13% spike in the fourth quarter as corporations increased spending on vocational training and professional upskilling.
The Assessment & Qualifications arm, traditionally the company's bedrock, also grew 4%, supported by a rebound in U.S. school testing and professional certifications.
The firm maintained its reputation as a "cash machine," reporting a free cash flow conversion rate exceeding 95%.
This liquidity was further bolstered by a £0.1 billion State Aid tax recovery from the U.K. government.
Pearson ended the year with net debt of approximately £1.1 billion, a lean position that allows for continued shareholder returns and strategic investment.
Looking ahead, management reiterated its medium-term guidance of mid-single-digit sales growth and an annual margin expansion of 40 basis points.
The company is scheduled to report its finalized full-year results on February 27, 2026.