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Pearson sales rise as 2 million users sign up for new app

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·Reporter
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CARDIFF, WALES - SEPTEMBER 20: A child raises their hand during a maths lesson at Llanishen High School on September 20, 2021 in Cardiff, Wales. All children aged 12 to 15 across the UK will be offered a dose of the Pfizer-BioNTech Covid-19 vaccine. Parental consent will be sought for the schools-based vaccination programme. (Photo by Matthew Horwood/Getty Images)
The company, which is the world’s biggest educational publisher, said the Pearson+ app had a “promising start”. Photo: Matthew Horwood/Getty Images

Education group Pearson (PSON.L) reported a 10% rise in sales in the first nine months of the year, as 2 million users signed up to its new Netflix-style app.

The company, which is the world’s biggest educational publisher, said the Pearson+ app had a “promising start”, and reiterated its guidance for full-year adjusted operating profit of around £377m.

It added that a further 100,000 students are using the platform on a direct subscription deal with the company.

The direct-to-consumer service was first launched in July in an attempt to recapture sales it had lost to the second-hand book market. It is offering unlimited access to content to provide more reliable subscription revenues.

However, shares fell more than 6% on the day, leading the FTSE laggards, as it also revealed that its higher education unit had taken a 7% hit.

Pearson shares slumped to the bottom of the FTSE. Chart: Yahoo Finance
Pearson shares slumped to the bottom of the FTSE. Chart: Yahoo Finance

It blamed a strong US jobs market that lured students away from colleges and into the workforce instead, suffering a 9% fall in the country during the period.

“While no market data for the full back-to-school period is available as yet, Pearson’s internal analysis indicates a decline in enrolments, particularly in community colleges, following a surge in COVID-19 infections from September, and a strengthening of the US labour market,” it said.

But it did manage to see growth in the UK and Canada markets, as well as for online learning.

Revenue from its Virtual Learning division grew 14% in the first nine months of 2021, and English Language Learning sales rose by 15% as international travel and visa testing resumed.

Sales at its workforce skills unit were up 5%, and its assessment and qualifications division grew 24% when compared to last year.

Read more: FTSE 100 surges to highest level since February 2020

“We are encouraged with our strategic, financial and operational progress, despite the continuing effects of COVID-19 in some markets and its impact on enrolments in the back to school period,” chief executive Andy Bird said.

“At this important stage of the year, we are on track to meet market expectations for the full year.”

Bird, who came to the helm a year ago, is a former head of Disney International.

Group net debt is down year-over-year to £0.7bn from last year’s £0.9bn, with management summarising the company’s financial position as "robust".

"Some impact from the pandemic is still being felt, while the company’s record for transformations is arguably patchy," Keith Bowman, equity analyst at Interactive Investor, said.

"An estimated price/earnings ratio above the three- and 10-year averages, even after a significant decline in share price since the summer peak, also suggests the shares are not obviously cheap. For now, and given the company’s ongoing transition, analyst consensus opinion currently points to a hold.”

Watch: US jobless claims hit pandemic-era low of 293,000

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