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Pearson Stock Drops After Softness in Higher-Education Business

Pearson dropped after the education-technology company said that revenue at its higher-education unit fell 7% in the first nine months.

Shares of Pearson  (PSO) - Get Pearson PLC Sponsored ADR Report dropped after the education-technology company said that revenue at its higher-education unit fell 7% in the first nine months. 

The U.K. company reiterated its guidance for full-year adjusted operating profit of around £377 million. 

"While no market data for the full back-to-school period is available as yet, Pearson’s internal analysis indicates a decline in enrollments, particularly in community colleges, following a surge in Covid-19 infections from September, and a strengthening of the U.S. labor market,” the company said. 

Pearson shares at last check dropped 12% to $8.82. 

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Underlying revenue for the nine months rose 10%. The English Language Learning unit saw sales rise by 15%. International travel and visa testing recovered as the pandemic eased.

In August, the company agreed to pay $1 million to settle U.S. Securities and Exchange Commission charges that it misled investors about a 2018 hack that resulted in the theft of millions of student records.

The company did not admit nor deny the regulator's charges.

"Pearson opted not to disclose this breach to investors until it was contacted by the media, and even then Pearson understated the nature and scope of the incident, and overstated the company's data protections," said Kristina Littman, chief of the SEC enforcement division's cyber unit, according to Reuters.