By Dhirendra Tripathi
Investing.com – Pearson ADRs (NYSE:PSO) surged 7.4% in premarket trading Friday after the education services provider said it will buy back shares worth 350 million pound ($470 million).
The intention to repurchase shares follows the company achieving its 2021 targets, which indicates the company now has a grip on the business. The company’s textbooks publishing business has been in doldrums for more than six years now, thanks to the booming demand for online education amid the ample supply of discounted offers.
While the pandemic aggravated the distress at its traditional business, the company has also gone about playing the ‘digital first’ game, selling directly to consumers via its Pearson+ app and to businesses looking to train staff.
The company closed December with 2.75 million registered users on its app including 133,000 paid subscriptions. It has now acquired Clutch Prep, an online video-based learning service to fuel Pearson+ with original video tutorials.
Demand for assessment and qualification services grew 19% in the year. Growth in the IT sector led to a 19% growth in professional certification. US student assessment and English language learning rose 17% each, the latter benefiting from the recovery in both international courseware and Pearson Test of English.
The British company reported 2021 adjusted operating profit of 385 million pounds on sales of 3.42 billion pounds. It expects 2022 revenue to be higher.
The company is confident of getting 416 million pounds in adjusted operating profit in 2022, in line with current market expectations. The higher education business will continue being a drag on operations although the revenue decline should slow this year, according to the company.
It expects pricing pressure to continue due to the shift from print to ebooks and Pearson+, and from bundles to digital only.