About Pearson Education, Inc.
Pearson is the world's top educational publisher of textbooks and related material. The company provides learning material and assessment and digital services to schools, colleges, and universities, in addition to professional and vocational education. The UK-based company has operations in some 70 countries but generates most of its revenue in the US from the college education system. Pearson's recent history has been characterized by a move away from other branches of publishing, such as literature, to solely focus on education; it has been selling its stake in Penguin Random House, one of the world's major publishing houses.
Pearson divides its operations along geographic lines. Its North American business, which generates some two-thirds of revenue, offers learning materials ("courseware") and assessment and digital services in the US and Canada. The Core School segment (20% of sales) provides similar products and services in other mature markets such as the UK, Australia, and Italy; and Growth School (the remaining 15% of sales) covers developing countries such as Brazil, China, India, and South Africa.
Courseware accounts for around half of sales, assessments generate 30% of sales, and services nearly 20%.
The company's courseware brands include Revel, MyLab & Mastering, Pearson ELT, and Bug Club. In the UK Pearson operates exam board Edexcel, which offers internationally recognized GCSEs and A-Levels and is the country's only privately owned exam board. Pearson VUE provides electronic testing for regulatory and certification boards in over 150 countries.
Though it operates in more than 70 countries around the world, Pearson's largest markets are North America (nearly two-thirds of sales) and the UK (around 10% of sales). The Asia-Pacific region accounts for more than 10%.
Sales and Marketing
Pearson's traditional customer base comprises companies, organizations, and institutions in the education sector, but more and more it sells directly to students. The company's services are increasingly delivered digitally, and in 2018 56% of tests in the US were taken digitally.
Note: Growth rates may differ after conversion to US Dollars.
Pearson has struggled to grow its revenue over the last five years while taking some heavy net losses. In fiscal 2018 the company's sales reduced 9% to £4.1 billion due to asset disposals (test prep business in China and a reduced stake in Penguin Random House), unfavorable currency movements, and a slight organic decline in North America due to pressure on print courseware revenue.
Net income grew 45% to £590 million due to a reduction in operating expenses relating to the company's ongoing cost savings initiative. The bottom line benefited from reduced headcount, shared services centers, and a reduction in legacy applications, data centers, and office locations.
Pearson's cash balance declined £105 million during 2018, ending the year at £525 million. The company generated £462 million from its operations and £211 million from its investing activities, while financing activities used £729 million. Pearson's main cash uses were asset purchases, debt repayments, equity buybacks, and dividend payouts. Debt reduction has been a key priority over the last few years, and in 2018 its net debt reduced a further 67% to £143 million, down 91% since 2014.
Pearson has more or less completed its transition to being solely an educational materials provider, allowing its executives to focus on driving uptake of digital resources and managing the structural decline in demand for print services. Digital offers better margins, more predictable revenue, and provides new routes to customers, particularly in the direct-to-consumer business. It also ties in with Pearson's efforts to promote "lifelong learning"; learning throughout life is a worthy aspiration for any individual but provides Pearson with a neat way of retaining customers beyond their youth and early adulthood, paving the way to long-term, stable revenue growth. In addition to its Virtual Schools and Online Program Management, Pearson aims to tap into adult education via investment in its Professional Certification and English Language Learning & Assessment businesses. To date, Pearson's investments in digital mean the channel accounts for more than 60% of total revenue, 55% of its US Higher Education Courseware business, and 56% of test papers.
On the internal front, the company is mid-way through a cost-saving and cash-raising program, which aims to save £300 million by the end of 2019; the program has been more successful than anticipated, surpassing its goal, and will reach £330 million or so. Pearson is raising cash by divesting assets, including its test preparation business in China, Wall Street English, Mexican joint venture UTEL, and its UK K12 Courseware business, as well as the progressive sell-off of its stake in Penguin Random House. In addition to helping fund the digital transition, the proceeds have been used to pay down debt over the last few years, which stood at a very manageable £143 million at the end of 2018.
221 RIVER ST
Hoboken, NJ 07030-5989
Phone: 1 (201) 236-7000
Employer Type: Privately Owned
Vice President of Bookseller R: Tom Hoffa
Vice President And Senior Coun: Michael Lee
Vice President and Senior Coun: Dan Lennon
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