Pearson Revenue Falls 5% Due to Coronavirus

Pearson plc revealed this week that trade rebased its revenue by 5 percent for the period from the end of April until June 1st.

As the company was still affected by the negative impact of the flu virus, which caused travel bookings to fall, its shares fell as much as 5 percent on the news. In the fourth quarter, it reported turnover of £2.3 billion. That was around 3 percent higher than the first quarter of 2018.

International Financial Reporting Standards (IFRS)

Pearson plc is a Canadian-based multinational publishing and education business, specializing in financial education, health, and digital learning. The UK company, at the time, had over $43 billion in revenue from its 180,000 courses, covering 94 countries and offices around the world.

The company revealed that financial services account for a third of its fees and paid content revenues, in what is an industry that’s being closely watched as technology is poised to eat into its revenue base. A crucial subject to keep an eye on as you read this is what’s happening with banks’ initiatives to better engage with consumers and/or customers; for example, NatWest is piloting paid services on its app that could eventually extend to its website, and Barclaycard recently launched payments with and off-line contactless based purchases.

New Vehicles Mobility

Additionally, investment in Pearson plc was always likely to be guided by the trend on the cycle of vehicle sales, a notoriously difficult industry to predict. In Q1, the company spent $297 million on capital investment, a 57 percent jump from the $184 million spent in the same period in 2018.

At the time of the quarter, the company explained that the increase was mainly as a result of the acquisition of Newton Software in January 2019. The acquisition enabled the company to strengthen its digital and mobile operations within the educational services business. The company added that it had also made an “encouraging” start to a new agreement to supply 3M Freight with Driver Academy Course Management software in the quarter.

Book Publishing

As we head into a time of consolidation in the publishing industry, Pearson plc remains a stable company with decent profits in the United States, in book publishing, which derives about a third of its revenue from the classroom.

To provide additional assurance to investors, Pearson plc also signed a new asset purchasing agreement with Goldman Sachs. In April, the global investment bank issued new 11.3 million shares at an average price of £2.69, equating to a maximum potential value of £250 million. The new deal brings in potential liquidity to the company and generates steady cashflows.

Pearson plc is scheduled to report its earnings on Wednesday, June 12th and is expected to post revenue of £2.00 billion.

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