Pearson profits surge as it goes all-in on AI under new boss Omar Abbosh

Educational publisher Pearson has bet on the growth of AI, according to its new CEO, after its profits almost doubled in 2023.

In its full-year results, the FTSE 100-listed educational publisher reported a strong performance in 2023, having seen sales of its English courses rise 30 per cent and sales of assessments and qualifications rise of seven percent.

“Pearson is well positioned today, providing a stable platform for continued growth that can benefit from the inflection point we see with the development of AI,” said the company’s CEO Omar Abbosh.

Abbosh replaced Andy Bird as Pearson’s boss in January, having left Microsoft, where he served as president of industry solutions.

He said: ‘I am optimistic about the opportunities brought about by this advancement in technology, underpinned by our trusted brand, large, high-quality data sets and strong capabilities in assessment, content and services. We have an exciting future ahead of us.”

Previously, Pearson had said that AI was “integrated” into its operations and that it would be exploring more ways to use the technology.

Today, the company said it will continue to “infuse” its products and services with artificial intelligence solutions, so it can continue to be a leader in innovation.

The move is part of the textbook publisher’s push to reinvent itself as a digital-focused company, which has seen it acquire brands such as Credly, Mondly, Navvy and ClutchPrep, all of which have a digital focus.

The company said its operating profit almost doubled to £498 million, from £271 million in 2022, while full-year sales fell per cent to £3.67 billion, from £3.84 billion. a year ago.

Abbosh added: ‘2023 was another year of strong operational and financial performance, with results once again exceeding initial expectations, driven by our Assessment and Qualifications and English Language Learning businesses.

“Our consistently strong cash generation has sustained investment to support our future growth and deliver continued value to shareholders.”

Pearson shares rose 3.4 percent to 993.60 pence each in morning trading in London.

What’s next for Pearson?

So far, the company’s future in the AI ​​sphere looks bright and its pivot towards digital shows no signs of slowing down.

eToro analyst Adam Vetesse said: “Pearson continues to prove that an old dog can learn new tricks as the publisher continues its digital transformation journey, even touting the integration of AI in this latest update.”

For next year, the company said it expects to deliver stronger underlying sales growth, meeting its consensus estimate of £621 million in adjusted operating profit, up from £573 million in 2023.

Following the strong performance, Pearson said it will pay a final dividend of 15.7p, taking its full-year payout to 22.7p, a six per cent year-on-year increase.

It also pledged to expand its £300m share buyback programme, which it launched in September, by adding a further £200m. He said the extended buyback was made possible by its strong cash flow position due to the success of its English language courses and exams unit.

“Assessments and qualifications, particularly English courses, have driven growth and there is plenty of cash being generated to facilitate a dividend increase and the expansion of its buyback programme, which will keep shareholders happy,” Vetesse added.

“Pearson is on a solid trajectory at the moment and with some cost savings this year it could well continue to pay off.”