Our 2023 Annual Report

Opportunity

Our Clinical Assessment business represents one of the four sub-divisions within Assessment & Qualifications. We have been a longstanding leader in special education assessment, catering to the requirements of psychologists, educators, speech pathologists, and other professionals that support special learning needs of students. Meeting the growing mental-health and learning support needs of student populations has become increasingly complex, making resource planning for physical assessment products difficult. With our Digital Assessment Library for Schools (DALS) offering, we leverage our expertise and digital innovation to remove the guesswork from resource planning. Our blue-chip portfolio of intellectual property drives much of our competitive advantage as we offer hundreds of products to the market to support a broad array of needs.

Progress so far

In 2017 we launched DALS, a subscription offering that provides unlimited access to an industry-leading set of testing instruments. Our Special Education customers are no longer forced to commit to specific evaluation products and are freed from having to anticipate inventory and its cost implications. Plus, access to a broader set of instruments allows our professionals to tailor evaluations to the unique needs of individual students.

Since its inception, DALS has become the preferred model for Special Education which is outlined by its exceptional growth of 23% year-over-year and a five-year CAGR at nearly 80%.

Opportunity

We operate in a c. £6bn addressable market, which integrates three key market segments:

1. Institutional English Language Learning: an addressable market of approximately £3bn. We offer digital and blended courseware solutions to academic institutions, private language schools and enterprises across the globe.
2. Online self-study language learning, an addressable market of c. £2bn, which we have entered through our acquisition of Mondly.
3. High Stakes Assessments: an addressable market of c. £900m. Our flagship product PTE is a verified, secure certification of English proficiency for international migrants and students.

Progress so far

Our high-stakes assessment business saw strong growth of c.50% in 2023, driven by market share gains in key countries like India. The past year has also seen our PTE business earn key approval for the Student Direct Stream and Migration in Canada; these notable recognitions underscore the impact and extensive reach that our initiatives have had within the broader language learning sphere.

Our achievements in the broader high-stakes assessment space have been underpinned by a holistic comprehension of the challenges faced by test takers, coupled with a commitment to solving pain points for test takers. We continue to invest in advancing our technological capabilities, seamlessly integrating artificial intelligence and human intervention. This innovation has led to industry-leading score return times and has helped to remove bias in the assessment of language proficiency, setting us apart in the market. Strategic collaborations with local partners in key markets, and impactful hyper-local marketing campaigns, have proven instrumental in scaling our operations and driving sales.

Opportunity

We are a leader in the Higher Education courseware market, with millions of students enrolled in courses using Pearson eTextbooks. We want to leverage this market dynamic in two phases:

1. Shift eTextbook consumption for students directly to Pearson+, and improve monetisation.
2. Engage and retain students with relevant and valuable services beyond eTextbooks, to improve average revenue per user, and ultimately consumer lifetime value.

Pearson+ is currently monetised through paid access to eTextbooks by students where faculty adopt Pearson content in their courses. Our existing Higher Education business provides a large, efficient customer acquisition funnel for Pearson+. Study features, such as Pearson+ Channels, will encourage further use of the application beyond the eTextbook. Over time, Pearson+ users can be further monetised through cross-selling other relevant Pearson products and services, such as Mondly.

Progress so far

Over 2023, we added and enhanced what students want, including beta AI study features in three titles, improved search, simpler e-commerce, and an overall better user experience.

We developed Channels with further video content and practice questions this year. We also began building Pearson+ directly into Learning Management Systems (LMS) to grant students seamless access through Inclusive Access. To provide increased access, we also bundled together Pearson+ eTexbooks and Channels in an affordable “Study and Exam Prep Pack”.

For the first time, we saw Pearson+ reach 1 million paid subscriptions in a calendar year, with the total number of Pearson+ registered users reaching 5.1 million by end 2023, validating the platforms appeal and effectiveness in meeting the diverse needs of our audience.