Pearson plc

Good morning, everyone, and welcome to Pearson's 2026 Q1 Trading Update. We will begin with a brief update on our first quarter performance, followed by an open Q&A session. If you'd like to ask a question, press star 1. To withdraw your question, press star 2. For operator assistance, press star 0. And with that, I'll hand over to Omar.

Thank you, Alex. Good morning, everyone, and thank you for joining us today. I'm here in London with our CFO, Sally Johnson. Many of you will already have seen our Q&A results announced this morning, and so I'll just pick out a few key points, and then we'll open it up for Q&A. First, we're encouraged by the good stuff of 2026, reporting revenue growth of 4%. I'm pleased with the momentum that we're seeing in our business, driven by continued strong execution from all our teams. We remain confident in achieving our guidance for 2026, and we reconfirm our medium-term outlook. Looking at performance by business unit. Assessments and qualifications declined 1% as we had expected, and this is on track to return to growth in Q2 and beyond. Supported by new business such as the Standards and Testing Agency in the UK, and recently extended or awarded contracts including ATCA and Google CLAC. Virtual learning delivered another standout result with 21% revenue growth, driven by another excellent enrollment performance, which accelerated from the fall semester. It was further encouraged by preliminary market share data, which indicates that we're gaining share in the market. Higher education delivered 2% growth, with another solid performance in our core US core courseware business, which continues to deliver sustained growth. We expect higher education revenue growth for the year to be higher than 2025, with improvements in the K-12 channel and international markets. English language learning was up 2%, reflecting growth in the institutional business, driven by China and our enterprise offerings. We continue to expect VTE to return to growth this year, driven by share gains in pricing, although the market remains pressured, including in the Middle East, which I'll touch on in a moment. And lastly, enterprise learning and skills grew 8%, supported by good growth in vocational qualifications and continued momentum in enterprise solutions. The strength of our Q1 results illustrates the message we gave at the prelims. Pearson is successful thanks to our unique characteristics and enduring competitive strengths. you'll remember that about 90% of our profit comes from operation complex, interconnected, hybrid physical and digital services which comprise assessments, virtual schools and print. And these demand uncompromising quality levels and trust. The remaining approximately 10% of profit comes from primary digital courseware, where we're deeply integrated in the critical workflow that decision makers use to perform their roles. We're seeing the benefits of these characteristics and strengths in our Q1 performance, and they underpin our confidence in delivering attractive long-term growth. Second, we've made good strategic progress against the priorities we set out for 2026. Let me share a couple of examples. We continue to expand our AI learning and skilling programs through the launch of our Foundations of AI course for U.S. schoolteachers, and together with Adobe, we launched the first professional certification for Adobe Firefly. These reflect our opportunity in helping learners and workers upskill in the AI era. In enterprise skilling, our teams have been further developing the strategic relationships across our nine partners, including recently with Salesforce, as reflected in our Q1 result. We are just at the beginning of what we can achieve with these partners, and we're working with these companies that are amongst the world's leading technology players to shape the approach, tools, and solutions for reskilling in the AI era. This is why they have committed hundreds of millions of dollars in incremental revenues up to 2030 to Pearson. We're using Pearson's proprietary content, data, and assessment capabilities with their scale to serve their skilling needs, those of their partner ecosystems, and those of their customers. Communication Coach developed alongside Microsoft is just one example in this area. Third, We want to acknowledge the conflict in the Middle East. Our first priority is and always will be the safety of our people, and we're committed to doing everything we can to support them. This region, including near-adjacent countries such as Turkey and Pakistan, represents approximately 2% of our revenues, mainly across ANQ and ELL. We do not expect the conflict to impact full-year group growth in any meaningful way, but our teams are dealing with operational considerations such as the announced changes to school exam delivery this year, where we're leveraging well-established contingency arrangements to support schools and students. And we are seeing early signs of possible disruption to the migration and study abroad market relevant for our PCE business. However, both of these factors are small in the context of Pearson's overall performance, and thanks to our very resilient business model, we remain confident in our 2026 guidance. Lastly, as you know, This is our wonderful and lovely Sally's last set of results. So I wanted to say thank you again. What a fantastic partner she is and a friend she's been to me and the whole Pearson executive team. Sally has been working very closely with Simon, Simon Robson, our new CFO, to ensure a very smooth transition, and we look forward to introducing you to Simon at our interim results this summer. And with that, Sally and I are pleased to answer your questions.

Thank you. As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. If you'd like to withdraw from the queue, please press star two. Our first question is from Kieran Donnelly with Citi. Please go ahead. Thanks for the presentation or the comments. Just on A&Q, can you just remind us of the dynamics going into Q2 around any impact from the New Jersey contract loss? and just trying to help us understand the return to growth comments in Q2 within ANQ. And then just in virtual learning, those enrollment growth numbers are very strong versus some peers that have reported recently. Can you just help us understand any dynamics around the enrollment growth trends in there?