Good morning, everyone, and welcome to Pearson's 2025 Interim Results. Today, we will host a presentation followed by a Q&A session. [Operator Instructions] And with that, I'll hand over to Omar.

Thank you, Alex. Good morning. It's a pleasure to be with you again today, I've been looking forward to it. As well as hearing from Sally and me, we'll be joined later today by our colleagues, Art, Tom, Vishaal, Sharon and Tony for Q&A. Now we're very aware that the external world has changed significantly since our prelims in February. So I wanted to first provide a view of the market dynamics that are relevant for our business and our perspective on these. I'll then move on to an update of the strategic and operational progress that we've made so far this year before handing over to Sally, who will give you an overview of our interim financial results. And then we'll open up, as usual, for your questions. But before we get going, let me first outline the key takeaways. Firstly, our strategy remains unchanged and is now well established across the organization. The 2 seismic trends of demographics and AI that we outlined this time last year are playing out exactly as expected. And in a world where AI is decreasing the half-life of skills, we have a vital role to play in shaping the future of learning. We're building medium-term growth engines for the company, for example, by gaining momentum in our Enterprise business, while in parallel innovating to ensure our products and services continue to lead the way in the world of learning. Secondly, our execution is going to plan, and I'll share some proof points with you today. And thirdly, when you put together our strategic clarity and the progress we're making with our execution focus, it only strengthens my conviction in Pearson's medium-term trajectory. And we're also on track to deliver a full year financial performance in line with the expectations we set out…

Thank you, Omar. And good morning, everybody. We have delivered another solid performance in the first half with sales up 2% on an underlying basis, in line with the guidance that we set out at prelims in February. Adjusted operating profit was also up 2% underlying to GBP 242 million. Adjusted earnings per share were down to 24.5p, with the positive underlying trading performance and a reduction in share count due to the share buyback more than offset by FX headwinds. Our balance sheet remained strong, driven by another good cash performance, enabling continued investment in the business as well as increased shareholder returns with the $225 million acquisition of eDynamic Learning and the GBP 350 million share buyback, which is expected to complete in H2. Reflecting our performance and confidence in the outlook, we're proposing a 5% increase in our interim dividend to 7.8p. At the beginning of the year, we announced that Workforce Skills would evolve to become Enterprise Learning & Skills, incorporating our IT Pro business, which was previously in Higher Ed. The comparative figures for H1 2024 have therefore been restated to reflect the modest financial transfers between segments, resulting in a GBP 22 million sales and GBP 6 million profit moving from Higher Ed to Enterprise Learning & skills. The full year impact of this is now expected to be GBP 45 million of sales and GBP 12 million of profit. Walking through the key elements of business unit sales performance. Assessments and qualification sales grew 2% with strong growth in Clinical Assessments and UK & International Qualifications, partially offset by declines in Pearson VUE and US Student Assessment. The VUE decline is due to the pause in a contract delivered in 2024 and recommencing in H2 2025 and headwinds in PDRI. Virtual school sales…

Thank you, Sally. So as you've heard, firstly, our strategy remains the same and is now well established across the organization, and this is driving demand for what we do. I believe Pearson has a vital role to play in shaping the future of learning, especially in a world of AI-driven transformation. Secondly, we're executing well against our strategy, including core operational improvements, with progress to unlock our medium- term growth vectors. And thirdly, our strategic clarity and our execution focus strengthen my conviction in Pearson's medium-term trajectory and that we are on track to deliver on our 2025 priorities. With that, Sally and I, along with Art, Tom, Vishaal, Sharon and Tony will be happy to take your questions. Operator, over to you.

[Operator Instructions] Our first question today comes from James Tate with Goldman Sachs.

it's James Tate from Goldman Sachs. I've got two questions, please. I think, firstly, on VUE's new and renewed contracts, I know you talked about them having a greater contribution to growth in Q4, but you mentioned ServiceNow and a couple of others already online. Are these all operating and performing in line with your prior expectations? And as we start to think more of that 2026, is it fair to assume that VUE should grow at least mid-single digits as it gets almost a full year benefit from a lot of these new deals. And I guess, secondly, you've highlighted some of the new GenAI products rolled out across the portfolio. Could you also provide some more detail on what you see as the opportunity from the technology to drive cost efficiencies across the business? Have these progressed so far? And are there certain divisions where you see greater potential?

Thank you very much, James. Appreciate your questions. So as you know, we're probably not going to offer too much guidance on '26 at this point, but I'll let Art talk to you about VUE and what he's seeing with the contracts around ServiceNow, Salesforce and the others. Over to you, Art.

On VUE, in particular, Omar mentioned three specific contracts. Salesforce launched last month. ServiceNow and the Association of Social Work Boards are launching later in this year. And all of those contracts as well as the VUE testing contract portfolio, in general, is performing according to expectations. So launch efforts as well as our view as to what the volumes that are going to run through those contracts is absolutely in line with what our expectations are and reflected in the guidance that Sally has given.

Thank you, Art. On GenAI, let me say something about the customer-facing products and then perhaps I'll ask Sally to comment on how we see it playing out in terms of our core operations. So I'm particularly excited about the fact that we are getting more and more evidence, including in the last few months from 2 million students in the U.S., that when we apply AI correctly in the flow of study, you get higher order outcomes in terms of people's reasoning. So I think there are more and more studies that have happened and that we'll see more of that when you use AI as a teleportation device that moves you from here to the answer, you actually don't learn. But when you use AI as a map to take you through the different stages to get to the endpoint, you really do learn and that's our approach. And the work that Tony and the team have been doing across our product set is just really excellent in that space. But to your question on cost efficiencies in our operations, I'll ask Sally to comment.

Yes, of course. So one of the things that's really special about Pearson is that not only can we have AI usage for our customers and our products, but obviously, we have the benefits that other companies do in terms of generating cost efficiencies across our business. The things that Omar called out for things like content generation, which we're using AI in, now that can be around actually just creation of content or a really nice example would be translation so that we can get our products, for example, in international higher education into languages that just weren't cost-effective before, and we can get them to market in a faster way as well. So it's great for our top line and our customers and also for our cost base as well. Another example is customer services, where we're putting AI capabilities, and again, helps from a cost point of view, but also helps to make our customer experience more effective as well. So there's lots of examples of where we're using it across the front office and the back office, generating cost savings, making the experience, improve for our customers as well and helping the top line.

Our next question comes from Luke Holbrook with Morgan Stanley.

I've got -- my main question centers around the Q3 and Q4 weighting for this year again because you're guiding to 4.4% revenue growth for 2025, we've seen 2% in H1. And I guess with the Q4 weighting, you're looking at 7% potential growth, maybe even a little bit higher than that. But could you just walk us through with what -- some of what you've discussed today around Virtual School contracts launching, Salesforce contracts, other partnerships, VUE contract recommencing. Can you just help us bridge, in a financial context, how we get to that and what's underpinned into Q4? And then I've just got a follow-up.

Sure. Why don't I take that one and then we'll take your follow-up. So your math is right in terms of the number you're quoting for the second half, first of all. And then it's known things that we've known about from the start of the year in each of the business units, it's slightly different between the business units. So in A&Q and VUE, in particular, and in ELS, it's about those contracts that you've heard Omar and Art talk about and those coming online. In answer to James' question on VUE, just to point out, it might not be obvious to folks who are deep in the business, it does take a while once we're awarded a contract for that to transition sometimes from a previous provider to us. So that's why it feels like we maybe announced some of these a while ago, but they're only coming online now, just in case that's not clear. Then in Virtual Schools, you'll remember, for the '24-'25 school year, we were impacted by the loss of that California school. That is now passed. And so we're now thinking about the '25-'26 academic year, which is what impacts H2 revenue, and that will be driven by enrollment growth and we won't have that lost school issue anymore. And then last but not least, English Language Learning, where we had a tough comp in the first half of the year, which isn't reflected in the second half of the year.

Understood. And just my second question would just be on the Higher Ed. We saw a step down in growth into Q2, noticing your enrollments look relatively good in that quarter. Just what's the delta on the step down? Or is that just a law of small numbers on the quarterly phasing?

You want to take that?

I mean, a small number is a piece of it, but let's throw it over to Tom.

Yes. James (sic) [ Luke ], thanks for the question. So a couple of things really happened. Firstly, the core Higher Education business continued and was exactly where we were expecting it to be for the half year. What's really happened is that some of that deceleration you've seen in the second quarter is somewhat of a function of what we were expecting to see in the college and career readiness business this year. It's been a smaller adoption cycle. Then secondly, we've obviously been getting our new go-to-market team up and running. And as you can appreciate, bringing [ 70 ] new people on board and establishing all those relationships is inevitably going to have a few teething problems, which is why we were clear with where we would be from that point of view. And then the third thing I would say was that there have been some delays in terms of some of the federal government spending for about $7 billion that would go out of the states. Now that doesn't have any impact on the money that we receive from the states from a college and career readiness perspective, but it did make [ superintendent ] just delayed purchasing a little bit. So we feel good about where we are from a K-12 perspective. We feel pleased with the overall performance in Higher Education. And we feel confident about the full year guidance.

Thank you, Tom, and thanks for being up in the middle of the night.

Our next question comes from Nick Dempsey with Barclays.

I've got three. So the first one, just on Pearson VUE. Can you give us any information -- more information on the contract that was paused? Why was it paused and exactly when does that come back in? And is it common for large contracts that can move the needle on that subdivision to be paused like that? Second question, in English Language Learning, if we're expecting PTE to still decline for this year, it feels like you need a really strong growth in the institutional business in the second half. How much of that can you already see coming through? And how much of it is kind of a hope in terms of the sales that you achieved from September? And then thirdly, on Higher Education, are you still expecting full 2025 enrollments to be flattish, as I think you said before? And if so, I guess, you're going to need to see growth from other factors coming through. So is that going to be more weighting to Inclusive Access, more price? Or how should we think about that?

Thank you very much, Nick. So on VUE, I mean, I'm going to ask Art to make a quick comment. But I think I can say that this is a very specific individual situation, not something you should expect to see repeated. But over to you, Art.

It's absolutely the case, Omar. It is an international partner. The pause on the contract commenced in the back half of 2024. We are confident in the resumption later this year. And as Omar said, the circumstances are very specific to this customer and not something related to the product or service offering, and thus, it is in fact something that we do not -- that is unusual.

For Sharon, how are you feeling about institutional in the back half? I mean, Nick's asking us if we're just being a bit hopeful here.

Thanks for the question, Nick. So a couple of things to just mention. Obviously, the second half of the year weighting for English as a whole, but particularly for institutional, it's not a new feature of this business. Of course, it's driven very heavily by the academic year cycles and the fact that we have a particularly strong business in Latin America. So we're performing as we expected for the first half of the year. And feeling good about growth in our institutional business in the second half of the year where we expect to see that growth being driven by the business in LatAm, where we're expecting share gains and a strong focus on government deals. And we're very, very focused on the execution plan and working closely with a number of governments across the world to land those deals. So we're performing as we expect right now, and looking forward to strong performance in institutional for the second half of the year.

Thank you, Sharon. And then, Tom, on Higher Ed, the weighting of enrollment and what else that might assume about the shape of the business in the second half?

Yes, sure. So it's obviously a dangerous game to be playing in terms of getting enrollments at the end of July, given back to school is just around the corner, so I'll stay well clear of that. But I would say that we feel good about where we're seeing growth coming from in terms of pricing. You've seen the IA mix up 21% in the first half of the year. So we're pleased about that in terms of the growth in IA year-over-year. And then lastly, some of the work we've been doing on Study Prep will help support us in the second half of the year as we're excited about the rollout of those products. So that's some of the key drivers, which we feel confident about getting into the back half of the year.

Thanks, Tom.

Can I just have a very quick follow-up. I think you talked before about flattish enrollment in fall '25 being what you were using when you were thinking about the year. I know you don't want to guess those. Is that still your base case for your planning, Tom?

Yes. Yes, it is.

Our next question comes from Adam Berlin with UBS.

A few questions for me. The first question is just on higher ed following on from the last question. Can you talk about adoption share performance during the recent sales cycle? Did you win more share than last year? That's the first question. Second question is can you talk a little bit about this eDynamics business you bought? Can you just be clear exactly what it does? Which business unit will we go into? How much revenue? How fast is it growing? Obviously, we want to put it into our models for next year. So any more information you can provide would be very helpful. And then my third question is if you deliver what you're saying you're going to deliver, you're going to have this high single-digit growth in H2. Is that going to -- it feels to me that the drivers of that should all continue into H1 and 2026. Any reasons why that wouldn't be a fair assumption?

Okay. I'm going to start with Tom. Just a couple of points on eDynamics and then, Tom, you can pick up on the adoption share topic and also maybe get a bit more into exactly what eDynamic does. So I'm really happy with the deal that we've done here. I think we've been very disciplined on not just the financial terms of the transaction, which Sally outlined some of earlier, but actually on really tight strategic alignment. I mean, this company is a company that we've been working with for many years. We know that 1 plus 1 equals 3 in this case because we've trialed it for real with customers. And so I feel very happy about it being a strong addition to our Early Careers strategy. And so it's going to be run by Tom and his team in Higher Ed and so he can talk to you a little bit more about the content of what it is. So Tom, can you pick up first on the adoption share thing and then back on eDynamics, please?

Yes, sure. So from an adoption share perspective in the first half of the year, we increased our share slightly this spring compared to fall last year. And as you know, Nick, the -- sorry, Adam, it's obviously 4:15 in the morning, so I need a little bit more coffee. So in that context, we're obviously very focused on our fall adoption share. As you know, our sales team has got a good degree of understanding of what's going on in the market at this stage. They've made their final sort of forecast as it were based on all the selling that they've done. And so we're feeling good about where we are in that construct. And then from an eDynamics perspective, the way to think about it really is if you are a middle school or predominantly a high school kid in the U.S. and you are looking for a CTE program, they sell a broad portfolio of content into those schools. So for example, you want to be a journalist, if you want to learn more about business, for example, if you want to do an early course in coding, that's the sort of the courses and the courseware that it provides. And that's incredibly important because what we're seeing is that the worlds of work and high school are blurring. We see that as you think about sort of growth continuing in the U.S. from a higher education perspective, high school is becoming increasingly important. And we see really good evidence that people who have done CTE courses in high school, a, those high schools have better graduation rates overall. So it's good from an academic outcomes perspective in terms of efficacy. And secondly, more of those students are more likely to go on to 2-year or 4-year colleges. And so that's why we think this is really important strategically because it is an extension of what we do, a high-quality outstanding content. And we think we can bring a lot to the eDynamics team in terms of the -- me and the team have built in terms of this business, and we're delighted to be acquiring them and moving forward.

Thanks, Tom. And Sally, do you want to pick up the last question?

Yes. Why don't I pick up the specifics on the end of that one and then your one about H2. In case it wasn't obvious, given that Tom answered the EDL question from a business unit perspective, it's going to be going into Higher Ed. From a growth perspective, you can think of it as being alongside some of our higher growth business units. And then I gave you the 13x EBITDA multiple so that you can work back to the EBITDA number. The [ DA ] bit, of course, is relevant for this business. And I do need to think about the acquisition accounting for deferred revenue, which will impact 2026. And then in terms of thinking about H2 and the exit rate into next year, I'm not going to guide on 2026 at this point, but all the things that we're talking about in terms of these new customer contracts coming online, of course, are going to be customer contracts that move into next year. The comp things are not quite so relevant for next year, but Virtual Schools and that '25-'26 academic year, obviously relevant for the first half of '26 as well.

Thanks, Sally.

Sorry, Sally. eDynamics margin, is that broadly in line with the group or...

Yes, they've got great margins -- nice margins.

At this time, we have no further questions from the telephone lines. And so I'll hand over to you, Alex, to read the written questions.

So Steve, I think we've answered your questions already, but obviously come back to me if that's not the case. And then, Sami, again, we've answered some of them, but I'll pose the remaining one. Do you expect to sustain double-digit organic revenue growth in Clinical Assessment and UK Qualifications in H2?

So actually, I'm really happy with how the launch of the new products in Clinical have been faring in the market. But so, Art, do you want to comment a little bit on how you would like to guide Sami on his question on PSQ and Clinical?

Would love to. I don't believe we're giving sub-BU guidance for H2 on the call, but very happy to comment on the trading characteristics of both of those business units. Omar teed it up very nicely with Clinical. Strong product releases have carried over into this year. And a headline for that business continues to be very, very strong digital adoption. You will have seen in the notes that the State of Tennessee has adopted our digital library subscription, which was a very, very nice win for us. And upcoming in the second half, we have product releases that we're very, very happy about, most notably the Wechsler Memory Scale and the Delis-Kaplan Executive Functioning System, 2 products that we expect good performance out of. And then in the UK & International Quals business, strong volume performance throughout the year. Very, very good international growth. We expect those trends to continue throughout the second half, and they're absolutely part of the story around us reaffirming our guidance for the full year.

Any further questions?

Just one quick confirmation from Sami. What is the share of IA in your U.S. Higher Ed business?

Over to you, Tom. Do we break that one out? The share of IA?

Well, I mean, we said last year, it was mid-30%. So that's a good starting point. And then obviously, we disclosed it was up 21% for the first half and we've disclosed the overall Higher Education growth rate, so you can probably extrapolate from there. But we're pleased with our IA growth rate in the first half. And really, we think what we're really about is meeting the customer where they are. And so there was a glorious win we recently had at the University of Indiana in anatomy and physiology. And actually, it was a wonderful opportunity to reinvent what was, by and large, a print adoption into a digital IA courseware adoption where they've been using a print book of ours and one of our competitors' digital products, but they haven't really been using the digital product properly at all. And once we were able to walk the faculty member through the fabulous quality of the mastering platform that we have as well as his real love for our product, that actually secured the adoption and that turned a sort of a $2,000 print adoption into a sort of $100,000-plus adoption more broadly, which is just a beautiful example of our sales team really getting close to the customer, understanding what the customer needs are. And that was something that we used IA for because it was able to bring pricing down for the students. And it's just a really good example of one of our sales reps listening to the customer, understanding what they need, being clear about their pedagogical desires and understandings and providing a great solution to the faculty and the students at really good pricing.

Great. Thanks, Tom. Alex?

I see a bit of piecemeal question answering here, but I'll let you off. So 2 more, both for A&Q. Do you expect US Student Assessment will revert to growth in H2? And then also, how should we think about the scale and impact of VUE test prep in '25 and '26?

Okay. Those are both for you, Art. So the first one is around do we expect US Student Assessments to go back to growth in H2?

Yes, we do. Again, the results of -- our expectations for each sub-BU are baked into that overall H2 guidance. But specific to US School Assessment, in H1, we had the impact of some delivery timings that in the second half will contribute very positively to the overall picture. So good outlook there. On the test prep business in the second half of '25, complemented by the launch of the Pearson Skilling Program, which we announced earlier this year, that business is continuing to scale. Our go-to-market hires are getting placed out in the field and continuing to deliver. And we do expect to see results from that in H2, which, again, are part of the story around the overall second half guidance.

Thank, you, Art. Okay, so I think that's it in terms of questions. So all of you online who joined us today, thank you so much for being with us. We appreciate you and look forward to talking to you next. Thank you.

Thank you.