By Kate Holton
LONDON (Reuters) -Global education group Pearson said COVID-19 and a tight labour market had hit enrolments at U.S. community colleges but growth in online learning and testing meant it remained on track for its full-year targets.
The British company said revenue from its Virtual Learning division had grown by 14% in the first nine months of the year and English Language Learning sales rose by 15% as international travel and visa testing resumed.
Its new Pearson+ app was being used by more than two million people. "That's pretty good going for 12 weeks," CEO Andy Bird told Reuters.
Solid demand for its services helped offset ongoing pressures in Pearson's U.S. Higher Education courseware division, where sales fell 9%, partly due to lower enrolments at community colleges.
Although shares in the group were down 2%, analysts at Citi said the overall picture was positive.
"We are left with a slight sense of ‘what might have been': had enrolments been more robust, we would surely have been talking about consensus upgrades," they said. "Nevertheless, we think this is solid enough and rate Pearson 'Buy'."
Having been buffeted by rental markets and second-hand options for once-expensive textbooks, Pearson has embarked on a direct-to-consumer strategy offering unlimited access to content to provide more reliable subscription revenues.
It hopes that the new app, which launched in the United States in July, will also deter students from buying second-hand books that had eaten into its profit.
Trying to broaden its appeal, it is also pitching itself as a consumer-facing group offering training and skills for life beyond its core schools and college remit. Its assessment and qualifications revenue rose 24%.
Overall, group underlying revenue rose by 10% for the nine-months, down from 17% in the first six months, due to tough comparatives for the third quarter.
(Reporting by Kate Holton, Editing by Paul Sandle and Alexander Smith)