Pearson interim results: profit and cash rise as 2026 guidance holds

Pearson has delivered a solid first half of 2026, with underlying revenue up 4%, adjusted operating profit up 14% and free cash flow rising 66% to £259 million.

The education and assessment group also reiterated its full-year guidance, increased the interim dividend by 5% and completed a £350 million share buyback.

The headline performance is encouraging, particularly the margin improvement and growth in Virtual Learning. However, investors also need to consider weaker statutory earnings, higher net debt and some temporary support within the cash result.

The figures can be checked in the original company announcement, while further company information is available on the Pearson PLC share page.

Pearson's first-half figures at a glance

Metric	H1 2026	H1 2025	Change
Revenue	£1,779 million	£1,722 million	3% headline, 4% underlying
Adjusted operating profit	£276 million	£242 million	14%
Adjusted operating margin	15.5%	14.1%	Up 140 basis points
Operating cash flow	£337 million	£126 million	167%
Free cash flow	£259 million	£156 million	66%
Adjusted earnings per share	28.9p	24.5p	18%
Statutory operating profit	£252 million	£240 million	5%
Basic earnings per share	24.0p	24.8p	Down 3%
Interim dividend	8.2p	7.8p	5%

Underlying growth excludes currency movements and changes to Pearson's portfolio, making it a useful measure of how the existing businesses performed.

The 140 basis-point margin expansion means Pearson converted a larger proportion of revenue into adjusted operating profit. One basis point is one-hundredth of a percentage point, so 140 basis points equals 1.4 percentage points.

Virtual Learning was the standout performer

Virtual Learning produced the strongest growth in the portfolio. Revenue increased 19% on an underlying basis to £280 million, while adjusted operating profit rose 31% underlying to £49 million.

Enrolment growth for the 2025/26 academic year accelerated to 15% in the spring semester. Pearson was also successful in all 10 long-term contract renewals and plans to open five new schools for the 2026/27 academic year. That would take its network to 46 schools across 32 US states.

This is a useful demonstration of operating leverage. Revenue growth was accompanied by faster profit growth as Pearson spread its costs across a larger business.

Enterprise Learning & Skills also performed well. Underlying revenue increased 7% to £180 million and adjusted operating profit rose 18% underlying to £51 million.

Pearson added Adobe to its strategic partner ecosystem and secured a partnership with Salesforce focused on AI readiness and workforce skills development. It also signed an agreement with a leading AI laboratory to deliver a global certification programme.

These agreements support management's argument that Pearson can benefit from rising demand for reskilling as artificial intelligence changes workplace requirements.

Higher Education returned to profit

Higher Education revenue rose 2% underlying to £350 million. Adjusted operating profit improved from a £3 million loss to a £21 million profit.

The result benefited from operational leverage, cost efficiencies and lower amortisation following the £87 million product development impairment recorded in 2025. That impairment related to Pearson bringing legacy courseware platforms together and is expected to improve adjusted operating profit by approximately £15 million per year, on average, over six years.

Inclusive Access, which gives students access to course materials through their institution, grew by 20% and now represents 50% of Pearson's core US Courseware business.

That shift is strategically important because it increases Pearson's participation in digital distribution. International Higher Education remained weaker, however, due to challenging conditions in mature markets.

Not every division moved forward

Assessment & Qualifications returned to revenue growth in the second quarter, but its first-half profit performance was softer.

Underlying revenue increased 2% to £803 million, while adjusted operating profit declined 6% underlying to £157 million. Sales mix and one-time delivery costs more than offset the benefit of revenue growth.

US Student Assessment revenue fell 6%, reflecting the previously disclosed loss of the New Jersey contract. Delivery phasing provided some first-half support, but Pearson expects that benefit to reverse during the second half.

English Language Learning revenue declined 3% to £166 million. Pearson Test of English volumes fell 3% as tighter migration policies and geopolitical disruption created more difficult market conditions.

Management expects these headwinds to persist in the near term, although the division is forecast to return to growth in the fourth quarter. The segment's adjusted operating loss improved from £7 million to £2 million.

Strong cash flow needs some context

Operating cash flow increased from £126 million to £337 million, while free cash flow rose from £156 million to £259 million.

That is a substantial improvement, but the quality of the increase deserves attention. Pearson said operating cash flow benefited from working-capital movements, including payment timing effects that are expected to reverse in the second half, as well as one-off proceeds from the settlement of a US insurance policy.

Free cash flow is the cash available after operating expenses, capital investment, interest and tax. It is important because it helps fund dividends, acquisitions, debt reduction and share buybacks.

Net debt nevertheless increased from £1,069 million at the end of 2025 to £1,343 million at 30 June 2026. Free cash generation was more than offset by the buyback, dividends, acquisition-related spending and other share purchases.

Pearson also issued a £350 million 10-year bond and reported approximately £1.3 billion of immediately available liquidity.

Shareholder returns remain prominent

The proposed interim dividend is 8.2p per share, up from 7.8p. It is due to be paid on 14 September 2026 to shareholders on the register at the close of business on 14 August 2026.

Pearson also completed its £350 million share buyback, purchasing approximately 35 million shares at an average price of 998p. Buybacks reduce the number of shares in issue and can support earnings per share, although they also use cash that could otherwise reduce debt or fund investment.

Adjusted earnings per share increased 18% to 28.9p, helped by higher adjusted profit and the lower share count. Basic statutory earnings per share slipped from 24.8p to 24.0p, reflecting higher finance costs and taxation despite the rise in operating profit.

What the maintained guidance means

Pearson continues to expect mid-single-digit underlying revenue growth in 2026, adjusted operating profit of £640 million to £685 million and free cash flow conversion of 90% to 100%.

Free cash flow conversion compares cash generation with adjusted earnings. A high conversion rate indicates that accounting profits are translating into cash.

The medium-term targets also remain unchanged: mid-single-digit underlying revenue growth, an average annual margin improvement of 40 basis points and free cash flow conversion averaging 90% to 100%.

The first-half performance keeps Pearson on course, with Virtual Learning, Higher Education and Enterprise Learning & Skills providing the main momentum. The key tests for the remainder of 2026 will be whether Assessment & Qualifications profit stabilises, English Language Learning returns to growth and cash generation remains strong after the temporary first-half benefits unwind.