Pearson profits soar as the educational resources group calms investor fears on AI revolution

Pearson posted healthy profits as it tried to reassure investors over the threat of artificial intelligence.

The educational resources group said profits surged 24 per cent to £236million, and sales increased 5 per cent to £1.8billion in the six months to the end of June.

Chief executive Andy Bird told shareholders that the group was making progress in its ‘long-standing AI capabilities’ – hoping to calm previous fears that the technology was a threat to its business model.

Almost £1billion was wiped off the stock market value of the FTSE 100 firm earlier this year after a US rival admitted that the rise of ChatGPT – which creates human-like content using generative AI – was hurting business.

California-based online learning service Chegg largely blamed the chat bot for its 5 per cent drop in subscribers in May – sending Pearson shares down as much as 15 per cent in one day as a result.

Top marks: Educational resources group said profits surged 24%, while sales were up 5% six months to the end of June

But in a bid to lift spirits, Bird said yesterday that several AI businesses had already expressed interest in using Pearson’s educational content to train their large language models. 

Pearson has been using AI-based features in their English Language Learning product for years but recently added a generative AI tool to Pearson+, a learning hub that offers online study tools.

There have been concerns among teachers and educators that AI could be used by students to cheat on exams or plagiarise essays.

But Pearson said AI was ‘embedded’ into its operations and that it would be exploring more ways to utilise the tech. 

Steve Clayton, analyst at Hargreaves Lansdown, said Pearson was one of the many firms jumping on the ‘AI bandwagon’.

‘Pearson at least has the advantage of being a knowledge-led business with a long history of deploying leading technologies in its field,’ he said.

The company has also been working on reframing itself as a technology firm, exploring how it can incorporate the so-called metaverse and virtual reality into its teaching. 

Pearson said it was on track to meet full-year targets, boosted by booming demand for English language learning in the first half of 2023. 

Assessment and qualifications were a bright spot, with sales up 7 per cent, alongside English language learning and tests sales, which were up 44 per cent on the same time last year.

Analysts at JP Morgan had previously backed Pearson’s ability to ride out the AI boom.

They said they did not regard ChatGPT as an alternative to Pearson’s resources, adding: ‘The difference is that Pearson provides the content and sets the questions whereas Chegg and ChatGPT provide answers to those questions.’

Earlier this year the group said demand for English language learning courses skyrocketed because of loosening travel restrictions enabling more people to take the company’s English tests.

But virtual learning sales fell by 15 per cent and higher education revenues dipped 2 per cent, a stark shift from their boom during the pandemic.

A spokesman said: ‘Our excellent performance in the first half of 2023 means we are confident of achieving our full year expectations.’

Pearson shares dropped 0.6 per cent yesterday and are down nearly 10 per cent in the year to date.

This post first appeared on Dailymail.co.uk