Hello and welcome to Pearson's 2024 nine-month trading update call with Omar Abbosh and Sally Johnson. To ask a question on the video bridge, please use the Raise Hand button in the React menu, which you can find at the bottom of your screen. If you're dialing in from a phone, please press star nine on your telephone keypad. Should you at any point have technical issues, please message one of the operators directly who will then speak with you in one of the breakout rooms. If you are joining via the virtual event, please type your questions into the Questions Tab at the top right of the screen. I would now like to hand over to Omar for opening remarks. Ladies and gentlemen, thank you for joining us today for our nine-month trading update. I'm Omar Abbosh, I'm here with our CFO, Sally Johnson. Many of you will already have seen our results announcement this morning, I'm just going to pick out a few key points and then we'll open it up for Q&A. I set out three priorities at the start of the year, I'm very pleased to report that we're on track with all of them. The first is to deliver on market expectations. Due to our continued focus on operational and financial performance, we've delivered another good quarter with underlying sales growth up 5%, taking us to 3% for the first nine months of the year. Each of our divisions is performing to plan and all contributed to growth for the quarter. A&Q has accelerated in the third quarter as anticipated, with all businesses contributing to growth. Virtual Schools delivered growth for the nine months with encouraging enrollment trends across our existing and new schools, albeit we still expect a modest revenue decline for the full year given the school losses in prior years. Higher Education has indeed returned to growth in the third quarter and is on track to grow for the full year, with the operational and business changes implemented over the past 18 months starting to bear fruit. English Language Learning continues to grow at high single digits for the first nine months and is performing well despite the well-known challenges in the wider English assessment market. Workforce Skills has delivered a solid performance across both vocational qualifications and workforce solutions. With this broad-based performance, we are on track to meet market expectations for the full year. I said we would sharpen our focus on the opportunities in the enterprise space and double down on Workforce Skills. As we told you at interims, Pearson already has many of the assets that enterprises need to address their problems in talent planning, talent sourcing, and talent development. We can go after those opportunities by bundling our existing products, unlocking synergies across the company. Example of that, we recently signed a meaningful multi-year deal with ServiceNow. For those of you that don't know ServiceNow, they're a leading AI platform for business transformation, and we've just concluded a deal with them covering many of the areas of scope that Pearson brings to market in the enterprise space. I see this as a great blueprint for the sorts of deals that you can expect Vishal and the team to continue working on, and a proof point that we're building momentum in our enterprise approach. Third, I said we would increase the intensity by which we infuse our products and services with AI capabilities, and we continue to have examples of this from across Pearson. In our English Language Learning division, we're developing Teaching Pal, an AI-powered tool that leverages our trusted IP to make educators' lives easier by creating customized lesson content and activities. In Higher Education, we continue to make good progress with our AI initiatives, rolling out our AI study tools to more than 90 titles for fall back to school. We've seen over 5 million student interactions with these new features this year. We're starting to see a positive commercial impact too, with double-digit year-over-year billings growth in products with those AI study tools. In Virtual Schools, we've also embedded AI study tools into our content, so that when high school students struggle with quizzes and practice tests, they can receive step-by-step help to walk them through tough material. At our interim results in July, I outlined our medium-term strategy. It's early days, but I'm pleased with the progress that the team and that we're making across the board. We're confident that we'll deliver value for our stakeholders going forward. We're moving at pace to transition the strategy into execution, with teams working to deliver high-priority projects for Pearson. As you'd expect, these teams are focused on material opportunities which can generate strong returns and are being led with clear lines of accountability. We continue to remain focused on driving performance in the core business, starting to realize synergy benefits and investing in adjacent market expansion. This includes a focus on our medium-term growth vectors of enterprise skilling and early careers, where, for example, we've decided to invest in a sales team dedicated to selling our leading Advanced Placement, dual enrollment, and career and technical education materials directly into states and school districts. This will expand and strengthen our customer relationships with school administrators in a space where the demand for college and career readiness programs is growing strongly. I look forward to providing a further update on our strategic progress with our full-year results next year. With that, let's go to Q&A. Thank you, Omar. Our first question comes from Nick Dempsey at Barclays Capital. Nick, please go ahead. Yeah. Good morning, guys. Morning. I've got three questions, please. First of all, can you give us an approximate indication for how the boost from the adoption cycle in your K-12 business inside Higher Education, benefited that good 4% organic growth in Q3 in Higher Education. Second question, National Student Clearinghouse enrollments pointed to 3% growth in undergraduate, two-year community colleges better than that, but freshman cohort worse than that. Just wonder if you can give a rough idea of what you think the enrollment growth in your footprint has been. Then on the tax rebate, that's good news, but can you give a rough indication of over how many years that GBP 109 million will flow into your cash flow? I think those might all be for me. Yeah. Nick, seriously, Nick, like, you're meant to ask us about how A&Q performed so beautifully in Q3, but anyway. Sally, why don't you do it? Your line crackled slightly on the third first question, I think you were asking about the K-12 element of Higher Education in Q3. Correct me if I got that wrong. I talked about K-12 particularly at the interim stage because it was material in the context of the interim result. It's not so material when you're getting into Q3 and the big fall back to school season. K-12, which is about 10% of the Higher Education business, to put it into context, grew at around about 7%. In terms of that 4%, it's not a meaningful part of it, but a decent growth in that part of the business. I think this point that we're making about bringing the K-12 sales team in-house is strategically important, particularly as we're talking about early careers. Then the NCS announcement of enrollments, the thing I would say about that data is it is early days. It's a kind of September 1st look, so it only has a proportion of schools. What I would say is that last year, actually the breakdown underneath in particular did change relatively materially between now and then. We should take it as a data point, but not the final data point. You're quite right that freshmen actually within that context went down by about 5%. The kind of non-freshman piece went up by about 4%, which is how you get to 3%. When you take into account the fact that the materials and things tend to be weighted to freshmen, that 3% becomes about 2% in a Pearson context. Then the tax, I'm not sure I'd necessarily call it a rebate, but the repayment that we'll get, obviously we're delighted that the appeal was successful. You'll have seen in our notes to our annual report, we had paid GBP 105 million relating to this case, which will now be repayable. We're in conversation with HMRC about how we make that happen. I would expect it to all come in in one go. I'm guessing it's going to be next year rather than this year. Thank you. Thanks, Nick. Thanks, Nick. Our next question comes from Luke Holbrook at Morgan Stanley. Luke, please unmute yourself and go ahead. You still on mute, Luke? He's come off mute, Luke. There we go. Okay. Hi. Hey, Luke. Hi. Hi, morning, everyone. Morning. My question is just on Workforce Skills. I've seen ServiceNow contract looks quite interesting here in the way that you're discussing bundling services across the organization. I'm just wondering, is this a change in approach from the more modular approach that you've indicated before? Is there a pipeline of other types of these contracts that could come through, or is this more one-off in nature? Then just changing tack a little bit on ELL, just love to hear your thoughts on that U.K. Home Office contract potential. It's a large, GBP 1.1 billion contract, I understand, coming up in the next few years. Just interested to hear on how we should think about that and what's going on behind the scenes. Thank you very much. With pleasure, Luke. So good to hear from you. On workforce, yeah, I mean, the reason I'm so happy about what Vishal and the team have done is indeed, this is one contract, but it's a proof point of the needs of any big enterprise that has a big workforce around help with how they do talent planning and how they do talent development in an era where more and more companies will deploy more automation and AI into their workforce. As you can imagine, the scope of the contract includes things like Faethm, but it also includes assessment and learning capabilities from other parts of Pearson as well. It all comes together as a bundle. Yes, you should absolutely expect us to be bringing more of these deals forward in the coming months and years, and you will hear about that from us. It is a very nice blueprint. It for me it does is it demonstrates the nice fit between the set of product services that Pearson has to the need that customers have as they develop their talent and their workforces going forward. On the Home Office topic, again, I think it is probably worth saying, like, the current contract has got two years to run still. That is in train. I mean... Till 2026. 2026. Yeah. Yeah, till 2026. I mean, Sally, I don't know if you wanna elaborate more on what the current process is, but we don't see a short-term change impacting us, but of course, it's clearly an interesting opportunity, and we're plugged into the conversation. I think the stage it is at at the moment is there has been one kind of, I guess you would call it consultation process with experts in the field, like Pearson, with the government about what they might propose to do. There is going to be another round of that, and I think then it is going to be opened up to further discussions in March next year. The current contract runs until 2026, and I think we will see whether the government goes with the construct it has suggested, which you are right, could be a really big opportunity, or whether it decides to tweak it at all. We will know more next year. Specific on your Workforce question and the modular versus bundled approach, I think they are the same approach. It's not a change that we're signaling there. Understood. Thank you very much. Thanks, Luke. The next question this morning comes from James Tate at Goldman Sachs International. Hey, James. James, please go ahead. Hi, good morning. James Tate from Goldman Sachs. I've got two questions, please. I think firstly, could you give some color on PTE revenues and volumes in Q3? I guess you sort of talked about institutional being down in the quarter, that implies PTE's return to growth. Do you expect that to continue into Q4? I guess secondly, Higher Education growth 4% in Q3 is probably a bit better than the market expected. Just interested how you think about that drop in pretax profit in H2, so given that you took some restructuring costs in H1 as well. Thank you. Thanks, James. On PTE, you'll remember that volumes were down when we disclosed those at the half year. Revenue was down very slightly. In Q3, it did return to growth, that indication I'd given that it was likely to be down for the full year, it could be flat to maybe even slightly up. I think it's fair to say that the market for PTE is a challenging one at the moment, and we anticipate that continuing. We are very confident in the English business and the opportunity there in the more medium term. You mentioned institutional in Q3. That is some very specific phasing that has moved from Q3 to Q4. You know, I, I understand what customer says it is, and therefore we've got good line of sight to the fact that that's gonna come through in Q4. Higher Education returning to growth, obviously, what we had indicated and very much in line with expectations, that will drop through at the normal operating leverage. The one thing I will point out is that K-12 piece where we've invested in that sales force ahead of taking that sales force in-house for that part of the business next year. As I said, strategically very important to us from an early careers perspective and building those direct relationships with customers who are getting increasingly interested in early years and CTE, so careers and technical product. Thank you. Thank you. The next question comes from Simon Baker at Bernstein. Simon, please go ahead. Hi, Simon. Morning, Simon. Simon, you're still muted. Please unmute yourself. I think Simon might be struggling. Technical problem there. Let's come back to him. Hello. Oh. Can you hear me? Hello. Hello. Yes, we can now, Simon. Hello. I'm sorry about that. Okay, thank you. It's all right. Happens to all of us. I've two questions, please. One, in terms of synergies, Omar, thanks for sharing a few more of the examples coming through. I was just wondering, you know, how that roadmap is playing out, because I guess when you sort of launch that as a new part of the strategy, it kind of opens the gates for lots of ideas coming forward. I'm wondering, you know, how's that materiality in your view? Is it exceeding expectation in terms of the queue of potential projects there? Is it proving a little bit more cumbersome in terms of infrastructure you have, et cetera? That's the first question. Secondly, I remember some time ago, and apologies if this is not a data point that you recognize, but we would We were told that 40% of the Higher Education classroom sort of would typically have the product as such, and the others would get it through other means. I wonder whether you can sort of update us on that theme and for us to gauge how much of this improvement coming through in the third quarter is that removal of the headwinds of the past. Thank you. Thank you, Simon, very much. On the synergies, as you know, we, like, talked about this at the end of July. We're now one quarter in, I don't want to make too much of a meal of it. I'll pick out two areas that I'm pleased with progress. Firstly, what I said before I said synergies is focus on the core business and drive performance in the core business in the five business units, that is 100% our number one focus. We're staying extremely focused on execution and basic performance disciplines in each of the business units. Having said that, I'll give you two. One is Sally and her team did some beautiful work on a sales incentive for our sellers across the company to allow them to get sales credit and retire quota if they sell products that a customer wants that happen to be from another business unit in Pearson. In other words, we're making it easier for buyers to buy our stuff and easier for our sellers to sell it. That's been received very well by our sales force and by the way, their management hierarchy as well, because we make sure we recognize the whole hierarchy if people are collaborating in pursuit of value for a customer. There are some early signals there that I, that I quite like. You know, the ServiceNow deal that we talked about is a classic example. That's actually, you know, a larger material deal, it'll happen, you know, in the tail of deals as well. There's a synergy there around sales. The second one is around product and common services. You know, our technical leaders in the company, so Mary Kay, Dave and Tony, have gone down and worked through what are all the common services that we have and that we can have for all of our products across the company. If, for example, we build APIs into AI study tools in Higher Education, how do we call those APIs and leverage them in the Connexus platform in virtual schools so that we don't rebuild something twice that we built once, and that we can use it twice. That kind of synergy we're also beginning to see happen in the company. It's early days, but I'm pleased with the direction of travel and where we're going there. On your second question on Higher Education, I mean, I think you're talking a bit about things like secondary market recapture and piracy and, you know, various things that we've seen before. You know, while some of those themes are still out there, it is diminishing over time. As you know, 86% of Pearson is now digital. That is very much true in the Higher Education space. So when you have more and more of the product being delivered in a digital format, you know, textbook piracy and all this kind of stuff becomes a bit less of an issue from the past. Also, the new learning experience is much more meaningful than simply serving up a text. People are engaging with the technology in a way which is much more interactive. You know, the AI is a part of it, but it's not the only part. You embed assessments in there and learning, you know, all in a package. I think that clearly is the direction of travel for the future of how learning experiences improve over time. Very clear. Thank you. As a reminder, if you would like to ask a question on the video bridge, please use the Raise Hand button. If you are dialing in from a phone, please press star nine on your telephone keypad. On the virtual event, please type your questions into the Questions tab. We now have a written question from Sami Kassab at BNP Paribas. Hi, Sami. Morning, Sami. Can you disclose how much revenues you generate from AP and related products? What financial impact will the change in distribution have on revenues and margins? Firstly, I'm gonna say, Sami, thank you for your nice note this morning. We appreciate it. That's a tricky question, so I'm gonna give it to Sally. I think, Sami, maybe you wrote that question in before I answered Nick's first question, 'cause I think you're talking about the same thing. AP, Advanced Placement is part of our K-12 business. I've, I said in answer to that question, it's about 10% of Higher Education's revenues. The financial impact of the distribution. We have been bringing on a sales team towards the end of this year so that they are ready to go as the next sales season for next year starts at the beginning of next year. I think it's fair to say that next year will be a transition year, but then we do see the opportunity for growth as part of that early career strategy, and in particular, talking to customers, who are ever increasingly interested in that career and technical part, of our product base. Thanks, Sami. The next question comes from Tom Singlehurst at Citigroup. Tom, please go ahead. Your line is now open. Hey, Tom. Morning, Tom. Perfect. Thank you. Thanks for the presentation. I've got three questions, if it's okay. The first one is you explicitly talk about, I think it's double-digit billings growth in AI-enabled products. I just wonder whether there's a pathway to additional, specific additional revenue for AI functionality, or whether this, you know, going forward will just be a question of driving value via AI to drive yield. That was the first question. Second question was on virtual schools. Obviously, very encouraging performance in the third quarter, and you're very clear that there is a sort of comp effect in funding. I suppose I'm just trying to work out what the underlying sort of expected growth is across the academic year. I presume it's gonna be in that sort of low -single -digit decline level, but just to be sort of explicit about that, and therefore, you know, for next year, the expectation of growth, I presume, is linked to the 2025-2026 academic year. The final question is on ELL. You've mentioned the sort of tough broader market, I would love some extra detail on whether you think you're taking share within the PTE. Sorry, I specifically talk about PTE, whether you're taking share within the sort of English language proficiency testing market. Okay. Tom, I'll pick up on the first and third question, Sally, maybe ask you to- Mm-hmm ... to dive into virtual schools. I think I said this at the interims, Tom. With the application of AI, we first want to make sure we build beautiful, really useful experiences that help learners learn and help educators educate. That's the number one job. The way in which I see the monetization working in the near term is just by building better products that make you more competitive and, like, and actually make our sellers' job easier when they go into a customer and say, "Let me show you what this thing does." The customer goes, "Wow, that's amazing." I've heard more and more of those examples, and I really want us to stay very focused on that. As you start to build that into the raft of products across the board, then we can do a little bit more of some of the A/B testing things to say, like, "Well, what experiences work better and which ones could monetize?" For example, if you think about what we do in the world of Channels, I mean, it's a very small base, but it's had fantastic growth and great feedback. I mean, as Sally jokes about it, even Sally can now notice it in the numbers, which is not a trivial thing to say. You can expect us to do more of those experiments going forward, but we're of course, sensitive to the wider market of how people purchase, how they monetize. Actually, when professors make adoption decisions, they're also looking to say, like, "Is this company being fair in terms of its overall pricing?" and these sorts of topics. We wanna do this in exactly the right way for the markets we're in, but we're building the capability first to build, you know, high, you know, products that have high win rates, and second, to build experimentation, A/B testing capability into the product set over time so that we can get in the direction of what you're talking about. I mean, Sally, do you wanna pick up the virtual schools comps topic? Yeah. There's quite a lot in that question, wasn't there? You're right, Tom. For the full year, we expect to be down the same amount as we were last year. Last year we were down 2%. That is driven by the loss of that school for the 2024/2025 academic year. You're right, that will be something that's a feature for the first half of next year, so around about that amount down for the first half would be in line with expectations. We're through that, and we are expecting good growth for the 2025/2026 academic year and growth for Virtual Schools for next year from an annual perspective. Two data points for that. If you do things on a, on a like for like school basis, we saw 4% growth in enrollments, that's what's happening in terms of interest in the Pearson Virtual Schools on an underlying basis. If you then include the new schools that we've got, that rises to 6%. We are anticipating good growth for Pearson Virtual Schools for next year. Thanks, Sally. On the PTE topic that you asked about, Tom, I mean, again, without naming names, if you go and look at some of the competitive players in the space, they will talk to you about meaningful late -teens, 20%, sorry, percentage reductions in PTE volumes, sorry, in testing volumes. That's what they're seeing in the market overall. The fact that actually, Gio and the team delivered growth in PTE in the quarter in that kind of a market context of course implies that we're taking share, and of course implies that we're executing in a very intense and focused way, which you can expect us to continue to do in the context of a market that is indeed subject to some of these policies, in different countries and, you know, we understand that market very well. We have another written question from Sami Kassab at BNP Paribas. Hey, Sami. Can you please remind us of the Q4 2023 movements around virtual schools funding? Was the funding increase related to ESSER funding receipts? If so, what impact do you expect from ESSER expiration in Q4 2024? Yeah. I mean, the short answer is not much, but go ahead, Sally. I'll give a bit more flavor than that. Q4 2023, last year, we talked about a funding improvement of, I think it was between GBP 10 million and GBP 15 million, half of which had related to previous periods, and that's why you won't see that repeating this year. Q4 will see a decline, which leads to the guidance for the full year that I've given you. Half of which was funding that was on a continual basis and therefore would be wrapped into this year as well. From an ESSER perspective, the amount of funding that we've received from that is really very small. It's not material in a Pearson context. Of course there are things that will replace ESSER that we will look to from a future-facing point of view so that we are getting funding for some of the additional, for the additional kind of products that we can give to learners in that market. I think career and technical is a, is a really good example of that and something that strategically is very interesting for us in that space as well. Thanks, Sally. That was the last question this morning, which concludes the Q&A session. I would now like to hand back to Omar for any closing remarks. Thanks, Vanessa. Well, all of you out there, thank you so much for joining us. Thank you for your interest in Pearson. As we'll continue to stay focused on executing what we've said all along and look forward to seeing you at our prelims in, early in the new year. Thank you very much. Perfect. Thank you, everybody. Bye-bye.