Testing helps Pearson profits hit £573m in 2023

Published 01/03/2024

A 30% growth in English language learning sales and strong results for its assessments & qualifications portfolio helped Pearson to reach an operating profit of £573 million in 2023, the group’s financial results show.

The performance, with adjusted profits up 31% on 2022, was largely led by Pearson Test of English testing volumes growing 49%.

Favourable migration policy in Australia and market share gains in India made PTE the “outstanding contributor” for 2023, Pearson said.

While assessments & qualifications and English language learning sales grew to £1.5bn and £445m, respectively, other parts of the business were less successful in the past year.

Sales from Pearson’s workforce skills division – which encompasses BTEC, GED, Credly, TalentLens, Faethm, Pearson College and Apprenticeships – grew to £220m from £204m in 2022.

However, virtual learning sales fell to £616m from £820m the previous year and higher education dropped to £855m from £898m.

Excluding the OPM business and the strategic review portfolio (which saw sales drop to £9m from £154m in 2022), Pearson noted that underlying group sales grew by 5%.

Together with the businesses, overall sales decreased 4% to £3.6bn from £3.8bn in 2022.

In a statement, Pearson chief executive Omar Abbosh said the group 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”.

“I am optimistic about the opportunities this advancement in technology brings, underpinned by our trusted brand, large high quality data sets and strong capabilities in assessment, content and services,” Abbosh said.

Despite the strong performance, UK universities did withdraw offers after raising concerns about cheating in the online version of PTE last year.

The group’s high stakes language test for professionals, Pearson VUE, grew 6.7% to reach 20.7m tests delivered from 19.7 in 2022.

VUE Partner retention fell from 99.9% to 93.6% in 2023, which Pearson said was indicative of a “high contract renewal track record”.

Average speed of PTE speed of score return improved to one day from 1.3 in 2022.

“I am optimistic about the opportunities this advancement in technology brings”

The growth in PTE test volumes to 1.2m in 2023, from 827,000 the previous year, brings Pearson level, if not above, TOEFL test volumes, which are not made public.

TOEFL executive director, Srikant Gopal, said last year that its 2023 volumes were “on track” to surpass previous results, thanks to growth in momentum in China and India, among other key markets.

“Clearly, the folks at Pearson are doing something right,” sector commentator and testing expert, Michael Goodine, wrote online.

The results show a huge 87% decrease in Pearson’s Online Program Management business.

The group said the fall, which hit the sales in virtual learning portfolio, was expected after it lost a contract with ASU.

Sales from the Pearson Online Learning Services – which the company sold to private equity firm in 2023 – are no longer included in underlying measures after it was sold in early 2023.

Virtual schools sales declined 2%, with enrolments for the 2023/24 academic year lower due to the previously announced loss of a larger partner school, the report added.

Overall, the company said it delivered £120m of cost efficiencies in 2023 and its disposal of the POLS business will see it focus its portfolio towards “future growth opportunities”.

Pearson said PTE’s recognition for the Canadian Student Direct Stream and economic immigration visa applications last year “grants access to the full potential of the Canadian market”.

“We continue to invest in building our brand awareness and testing capacity in the PTE market,” the company added.

The opening of the company-owned Pearson VUE testing centres in Chandigarh, India, allows it to deliver more than 14,000 tests per month in the market.

In 2024, Pearson expects its sales in its assessment & qualifications division to see “low to mid-single digit” growth, while in English language learning it expects high single digit sales growth.

Similarly, workforce skills will achieve high single digit sales growth, while higher education is expected “to return to sales growth”.

Virtual schools will see a fall similar fall of 2% this year, but two new schools in the US will see the division return to growth beyond 2024.

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