Directors’ Deals: Pearson executive cashes in as digital growth boosts shares

Pearson, which has at various points owned the Financial Times, half of The Economist, Penguin Books, Madame Tussauds, a prestigious Bordeaux vineyard and a stake in financial adviser Lazard, has reinvented itself from a sprawling conglomerate into a focused education and learning company.

The FTSE 100 giant spent years struggling to justify a protracted and painful transformation, as its pivot from print textbooks to digital learning prompted a decade-long restructuring. More recently, though, accelerating sales growth and expanding margins suggest the strategy is finally paying off.

The heaviest lifter has been Pearson’s virtual learning division, where first-half revenues rose 19 per cent thanks to higher enrolments and new virtual schools. The company is also capitalising on the AI boom through study tools that are already driving engagement and revenue, particularly in higher education.

Beyond traditional education, Pearson has been securing highly profitable enterprise AI skilling contracts with tech giants such as Microsoft, Amazon Web Services and Google Cloud. The monetisation of these deals is helping support Pearson’s target of mid-single-digit underlying revenue growth and sustained margin improvement.

That is picking up the slack from slower growth elsewhere. The assessment and qualifications arm, the company’s largest division, returned to growth in the second quarter after losing a New Jersey contract last year. English language learning sales fell 3 per cent in the half, however, as demand for the Pearson Test of English weakened.

Risks including AI disruption, falling US higher education enrolments and tighter immigration policies remain, yet the shares have risen nearly a fifth this year. Tom ap Simon, Pearson’s US-based president of virtual learning, took the opportunity to sell about $1.96mn worth (£1.4mn) of shares via American depositary receipts on August 10.

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