Pearson lifts profit guidance despite slight Q3 slowdown

Educational publishing giant Pearson has lifted its profit guidance for the full year by £20m despite a slowdown in revenue growth in the third quarter.

The company said it is now expected to make an adjusted operating profit of £570-575m for the 2023 financial year, compared with the current consensus estimate of £552m.

Nevertheless, the company said that third-quarter revenue growth slowed to just 2% in the three months to 30 September, down from the 5% increase seen across the first half.

Virtual Learning revenues were down 20% year-on-year, worse than the 15% fall in the first half, which Pearson said was expected after a contract loss with the Arizona State University. The Higher Education sales decline also worsened from 2% to 5% but in line with its expectations.

However, the Assessment and Qualifications division, which represents nearly half of total sales, saw revenues rise 8%, up from 7% in the first half. The other divisions, English Language Learning and Workforce Skills, continued to perform well, while revenues from businesses that are under strategic review struggled.

Overall, excluding lines of business under strategic review and the struggling OPM unit, revenues were up 3% year-on-year, and Pearson now expects full-year growth to be "at the higher end of the low to mid-single digit range we have guided to".