PEARSON PLC (PSON) SHARES: 2025 PERFORMANCE IN UK, KEY DRIVERS, MILESTONES AND RISKS —'26 OUTLOOK

How did Pearson plc (PSON) perform in 2025?

Pearson plc (LSE: PSON), the British multinational publishing and education company, delivered a mixed performance on the London Stock Exchange throughout 2025. The company's stock underwent both periods of optimism and underperformance, shaped by broader economic factors, internal restructuring, and changing dynamics within the global educational landscape.

In 2025, PSON shares opened the year trading at approximately 950p and closed the year around 1,080p, marking a year-on-year increase of nearly 13.7%. This growth occurred despite several macroeconomic headwinds, including inflationary pressures across Europe and waning post-pandemic demand for digital learning assets.

The first quarter saw relatively flat performance due to subdued earnings expectations and restructuring costs related to Pearson’s strategic realignment programme. Nonetheless, Q2 results posted a strong rebound, buoyed by rising demand in North America for professional certification and workforce training tools. This uptick helped support increased investor confidence, lifting the share price by over 6% from April to June.

Throughout Q3, management’s forward guidance and successful execution of ongoing cost-saving initiatives contributed positively to earnings. Operating profit for the full year came in at £455 million, compared to £431 million in 2024—a 5.6% increase year-over-year. Particularly noteworthy was the growing contribution from Pearson VUE, the assessment business segment, which saw revenues rise by 9% from the previous year, driven by higher exam volumes in the IT and healthcare sectors.

Despite this, challenges such as declining enrolment across higher education markets, particularly in the UK and Australia, weighed on sentiment in the final quarter. Investors remained cautious as Pearson’s Higher Education publishing arm continued to face pressure from budget-conscious universities and students favouring open-source or lower-cost alternatives.

Dividends remained stable, with a final dividend of 14.2p per share declared, taking the full-year total to 21.1p—a modest 1.4% increase from 2024. This stability appealed to income-focused investors and contributed to relative price resilience in an otherwise volatile FTSE 100 environment.

In summary, Pearson outperformed many industry peers in 2025, thanks to strong execution in testing services and professional learning. However, ongoing structural headwinds in education and rising operational costs kept a ceiling on more aggressive upward momentum in the share price.

What key factors drove performance in 2025?

Pearson’s 2025 share performance was shaped by a confluence of internal transformations and external macroeconomic influences. The key drivers can be categorised into strategic restructuring, segmental performance, technological advancements and broader economic trends.

1. Strategic Restructuring and Cost Optimisation

2025 marked the second full year of Pearson's strategic realignment push initiated in late 2023. The company continued to streamline operations, with a focus on reducing administrative overhead and consolidating underperforming business lines. These initiatives helped save approximately £50 million in operating expenses over the year, boosting adjusted operating profit margins. Investors responded positively to these developments, viewing them as crucial for long-term efficiency and cash flow stability.

2. Strength in the Workforce Skills Division

The Workforce Skills division, powered by Pearson VUE and newly enhanced micro-credentialling products, delivered double-digit revenue growth during 2025. With increased global attention on reskilling and lifelong learning, especially amid UK and US labour market shifts, demand soared. High uptake in industries like information technology, financial services, and healthcare significantly contributed to Pearson's mid-year share rally.

3. Performance of the US and International Assessment Markets

Exam services returned to pre-pandemic norms in most countries by mid-2025. Pearson VUE administered over 18 million assessments globally, up from 16.3 million in 2024. ScorePlus, a new AI-based candidate analytics tool launched in early 2025, was well-received among institutional testing clients, improving client retention rates and cross-sell capabilities.

4. Robust Free Cash Flow and Financial Stability

The company reported a free cash flow of £290 million in 2025, an 8% improvement over 2024. With net debt under control and a conservative capital structure (net debt/EBITDA remained below 1.5x), Pearson was well-positioned to reinvest in core areas and return capital to shareholders. Ratings agencies maintained Pearson's investment-grade profile, further bolstering investor confidence.

5. Technological Integration and Digital Innovation

Pearson continued to digitise its learning platforms, with the launch of Pearson Learning+ and a revamped Global English learning suite. AI integration improved content personalisation, boosting engagement and reducing churn across key geographies. The company also secured partnerships with edtech platforms and universities to co-develop learning modules, particularly those tailored for hybrid and remote education models.

These factors collectively underpinned the 2025 share price appreciation, though growth remained uneven across business units. The scalable nature of the VUE platform and enhanced digital capabilities balanced the more sluggish traditional academic publishing operations.

What could impact Pearson in 2026?

As we look ahead to 2026, Pearson faces a blend of opportunity and challenge. Investors keeping an eye on PSON shares will need to assess potential headwinds, expected catalysts, and critical milestones that may influence the company’s trajectory in the coming year.

1. Regulatory and Government Policy Changes

With education policy under scrutiny across major markets, particularly the UK and United States, regulatory changes may significantly impact Pearson's business. Upcoming reviews of academic assessment frameworks, potential changes in student funding, and increasing attention toward public educational resource mandates could limit Pearson’s market penetration in some segments.

Simultaneously, tougher data protection and AI regulation in the UK and EU may challenge Pearson's efforts to scale digital platforms heavily reliant on user analytics and adaptive technologies.

2. Currency Volatility and Global Inflation

As a multinational earning significant revenues in USD and EUR, Pearson remains exposed to currency movements. Although the pound remained relatively stable in 2025, any appreciation in sterling against other currencies in 2026 could dampen reported earnings. Moreover, global inflation—especially in North America and Asia—could put pressure on both content production costs and discretionary educational spending.

3. Transitioning Business Model Risks

Pearson's pivot from physical textbook publishing to digital subscription services continues to pose transition risks. While digital revenue now constitutes more than 70% of total income, pricing pressure from open-source platforms and freemium models persists. Subscription churn, especially among cost-sensitive university partners, remains a critical risk that could affect revenues in 2026.

4. Competitive Pressures in Edtech

Edtech remains a vibrant and rapidly evolving space. Competitors such as Duolingo, Coursera, and bespoke corporate training providers pose growing threats. These firms often have leaner structures, diversified revenue models, and agile product innovation cycles. Pearson’s scale is a double-edged sword – while it supports market dominance and scale efficiencies, it may slow down the company’s ability to quickly adapt to disruptive innovations.

5. Key Strategic Milestones to Watch

• AI Expansion: Rollout of second-generation AI tutors and adaptive learning tools scheduled for mid-2026 may enhance product differentiation.
• Emerging Market Growth: Planned entry into African and Latin American K-12 digital markets could drive medium-term expansion.
• Partnership Announcements: Upcoming alliances with global telecoms and cloud infrastructure providers may boost content delivery capabilities and new-user acquisition.
• Capital Allocation: Management’s policy on dividend hikes or potential share buybacks will be key indicators of financial health and confidence.

To thrive in 2026, Pearson will need to maintain a delicate balance between innovation and execution. Its ability to expand digital offerings without alienating core academic audiences will likely prove decisive in shaping investor sentiment.