Free cash flow remains highly seasonal, peaking at a 25% margin in 2025Q4 while supporting aggressive capital returns, including $200 million in share repurchases.
| Metric | Dec'25 | Dec'24 | Dec'23 | Dec'22 | Dec'21 | Dec'20 | Dec'19 | Dec'18 | Dec'17 | Dec'16 | Dec'15 | Dec'14 | Dec'13 | Dec'12 | Dec'11 | Dec'10 | Dec'09 | Dec'08 | Dec'07 | Dec'06 | Dec'05 | Dec'04 | Dec'03 | Dec'02 | Dec'01 | Dec'00 | Dec'99 | Dec'98 | Dec'97 | Dec'96 |
|---|
| Cash from Operations | 674.88M | 627M | 525M | 361M | 326M | 389M | 369M | 462M | 298M | 410M | 211M | 455M | 356M | 776M | 872M | 1.01B | 783M | 615M | 498M | 457M | 514M | 562M | 228.48M | 338.98M | 491.4M | 153.32M | 42M | 315M | 132.3M | 77.9M |
| Operating CF Margin % | 18.87% | 17.65% | 14.29% | 9.4% | 9.51% | 11.45% | 9.54% | 11.19% | 6.6% | 9.01% | 4.72% | 9.34% | 7.02% | 15.34% | 14.88% | 17.76% | 15.23% | 12.78% | 11.97% | 11.45% | 13.5% | 15.21% | 5.64% | 7.85% | 11.61% | 3.95% | 1.26% | 13.15% | 5.77% | 3.56% |
| Operating CF Growth % | 7.64% | 19.43% | 45.43% | 10.74% | -16.2% | 5.42% | -20.13% | 55.03% | -27.32% | 94.31% | -53.63% | 27.81% | -54.12% | -11.01% | -13.32% | 28.48% | 27.32% | 23.49% | 8.97% | -11.09% | -8.54% | 145.97% | -32.6% | -31.02% | 220.5% | 265.05% | -86.67% | 138.1% | 69.83% | 96.72% |
| Net Income | 457M | 510M | 378M | 242M | 160M | 310M | 266M | 590M | 408M | -2.33B | 823M | 470M | 539M | 329M | 956M | 1.3B | 756M | 729M | 525M | 522M | 516M | 404M | 226M | 143M | -56.43M | 210.9M | 318M | 437M | 38.3M | 181.3M |
| Depreciation & Amortization | 558.49M | 526M | 543M | 572M | 408M | 317M | 389M | 253M | 313M | 2.91B | 1.2B | 401M | 309M | 317M | 257M | 246M | 232M | 196M | 138M | 345M | 301M | 277M | 368M | 414M | 483.14M | 288.56M | 82M | 12M | 0 | 63.2M |
| Stock-Based Compensation | 39M | 44M | 40M | 38M | 28M | 29M | 25M | 37M | 33M | 22M | 26M | 32M | 37M | 32M | 40M | 39M | 37M | 33M | 30M | 25M | 23M | 25M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Deferred Taxes | 0 | 0 | 0 | 0 | -280M | -282M | -181M | 34M | -614M | -464M | -1.64B | 0 | -579M | 64M | 125M | -588M | -343M | -212M | -298M | -240M | -460M | -177M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Other Non-Cash Items | -298.43M | -400M | -340M | -540M | 8M | 18M | -12M | -428M | -5M | 41M | -28M | -457M | 10M | 79M | -543M | -50M | -17M | -111M | 26M | -173M | 101M | 26M | -173.52M | -164.02M | 69.51M | -178.76M | -454M | -54M | 168.8M | -252.9M |
| Working Capital Changes | -81.18M | -53M | -96M | 49M | 2M | -3M | -118M | 10M | 163M | 234M | -169M | 9M | 40M | -45M | 37M | 59M | 118M | -20M | 77M | -22M | 33M | 7M | -192M | -54M | -4.82M | -167.38M | 96M | -80M | -74.8M | 86.3M |
| Change in Receivables | -101.72M | 32M | -24M | 33M | -71M | -1M | 59M | -15M | 133M | 156M | -99M | -69M | -50M | -94M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Change in Inventory | 4.89M | 15M | 9M | -34M | 22M | 35M | -20M | -10M | 24M | 17M | 10M | 6M | 18M | 49M | 15M | 37M | 32M | -12M | -1M | -16M | -17M | -12M | -8M | 43M | -6.19M | -97.08M | -57M | 0 | 0 | 6.5M |
| Change in Payables | 34.23M | 0 | -20M | 0 | 37M | 0 | -157M | 35M | 6M | 61M | -80M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Cash from Investing | -270.93M | -131M | -301M | 13M | -80M | 591M | -325M | 211M | 651M | -41M | 1.33B | -148M | -330M | -883M | -395M | 71M | -326M | -369M | -108M | -446M | 107M | -286M | -185M | -180M | -172.06M | -2.12B | 285M | -2.09B | -186.9M | -132.7M |
| Capital Expenditures | -131.06M | -33M | -30M | -57M | -176M | -134M | -193M | -200M | -232M | -245M | -247M | -75M | -182M | -151M | -144M | -132M | -120M | -120M | -119M | -97M | -100M | -125M | -105M | -126M | -165.18M | -139.26M | -102M | -125M | -110.3M | -89.8M |
| CapEx % of Revenue | 3.66% | 0.93% | 0.82% | 1.48% | 5.13% | 3.94% | 4.99% | 4.84% | 5.14% | 5.38% | 5.53% | 1.54% | 3.59% | 2.98% | 2.46% | 2.33% | 2.33% | 2.49% | 2.86% | 2.43% | 2.63% | 3.38% | 2.59% | 2.92% | 3.9% | 3.59% | 3.06% | 5.22% | 4.81% | 4.11% |
| Acquisitions | -152.58M | -46M | -214M | -228M | 18M | 625M | -186M | 96M | 419M | -65M | 1.39B | -94M | -188M | -766M | -366M | 427M | -222M | -289M | -7M | -357M | 177M | -20M | -11M | 796M | -28.91M | -2.39B | -250M | -2.95B | -222.8M | -427.7M |
| Investments | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| Other Investing | 17.61M | -45M | -56M | 298M | 34M | 170M | 59M | 311M | 465M | 165M | 196M | 25M | 103M | 40M | 52M | -161M | 25M | 36M | 18M | 8M | -151.1M | -156.96M | -66M | -832M | 35.1M | 542.31M | 37M | 790M | 10.8M | 364.6M |
| Cash from Financing | -595.65M | -241M | -450M | -804M | -414M | -299M | -102M | -729M | -1.76B | -697M | -364M | -534M | -444M | -23M | -790M | -92M | -366M | -149M | -429M | -324M | -321M | -260M | 64M | -663M | -384.72M | 2.02B | -295M | 1.92B | 125M | 21.6M |
| Debt Issued (Net) | 43M | 344M | -84M | -264M | -167M | 24M | 91M | -441M | -1.29B | -248M | 72M | -134M | 86M | 327M | -326M | 225M | -49M | 177M | -121M | -64M | -81.94M | -52.66M | 21.84M | -686.04M | -17.89M | 336.1M | -312.79M | 0 | 0 | 8.6M |
| Equity Issued (Net) | -405.91M | -351M | -221M | -390M | -10M | -182M | -52M | -147M | -144M | -20M | -23M | 2M | -47M | 11M | -39M | -65M | -25M | -41M | -60.01M | -25.01M | -16.85M | -5.73M | 5.04M | 6.21M | 19.96M | 1.96B | 17.93M | 0 | 0 | 14.1M |
| Dividends Paid | -156.49M | -156M | -154M | -156M | -149M | -146M | -147M | -136M | -318M | -424M | -423M | -397M | -372M | -346M | -318M | -298M | -273M | -257M | -238M | -220M | -205M | -195M | -188M | -181M | -158.29M | -143.28M | 0 | -113M | -106.5M | 0 |
| Share Repurchases | -414.71M | -358M | -221M | -390M | -16M | -182M | -52M | -153M | -149M | -27M | -23M | -9M | -47M | 0 | -60M | -77M | -33M | -47M | -72M | -36M | -20.92M | -9.91M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Other Financing | -76.25M | -78M | 9M | 6M | -88M | 5M | 6M | -5M | -5M | -5M | 10M | -5M | -62M | -15M | -107M | 40M | -19M | 0 | -9.99M | -14.99M | -17.2M | -6.61M | -47.04M | -26.36M | -228.49M | -133.9M | 132.77M | 2.04B | 231.5M | -1.1M |
| Net Change in Cash | -80.27M | 234M | -234M | -394M | -176M | 679M | -91M | -105M | -794M | -247M | 1.16B | -229M | -397M | -154M | -373M | 984M | 91M | 97M | -39M | -313M | 300M | 16M | -741.72M | -353.4M | -66.07M | 58.25M | -18M | 146M | 70.4M | -15M |
| Free Cash Flow | 646.51M | 503M | 399M | 304M | 150M | 255M | 176M | 262M | 66M | 165M | -36M | 273M | 174M | 625M | 728M | 874M | 663M | 495M | 379M | 360M | 414M | 437M | 123.48M | 212.98M | 326.22M | 14.06M | -60M | 190M | 22M | -11.9M |
| FCF Margin % | 18.07% | 14.16% | 10.86% | 7.91% | 4.38% | 7.51% | 4.55% | 6.35% | 1.46% | 3.62% | -0.81% | 5.6% | 3.43% | 12.35% | 12.42% | 15.43% | 12.9% | 10.29% | 9.11% | 9.02% | 10.87% | 11.82% | 3.05% | 4.93% | 7.7% | 0.36% | -1.8% | 7.93% | 0.96% | -0.54% |
| FCF Growth % | 28.53% | 26.07% | 31.25% | 102.67% | -41.18% | 44.89% | -32.82% | 296.97% | -60% | 558.33% | -113.19% | 56.9% | -72.16% | -14.15% | -16.7% | 31.82% | 33.94% | 30.61% | 5.28% | -13.04% | -5.26% | 253.9% | -42.02% | -34.71% | 2220.22% | 123.43% | -131.58% | 763.64% | 284.87% | 80.36% |
| FCF per Share | 0.98 | 0.74 | 0.56 | 0.41 | 0.20 | 0.34 | 0.23 | 0.34 | 0.08 | 0.20 | -0.04 | 0.34 | 0.22 | 0.78 | 0.91 | 1.09 | 0.83 | 0.62 | 0.47 | 0.45 | 0.52 | 0.55 | 0.15 | 0.27 | 0.41 | 0.02 | -0.08 | 0.28 | 0.03 | -0.02 |
| FCF Conversion (FCF/Net Income) | 2.06x | 1.44x | 1.39x | 1.49x | 1.84x | 1.18x | 1.40x | 0.79x | 0.73x | -0.18x | 0.26x | 0.97x | 0.66x | 2.38x | 0.91x | 0.78x | 1.84x | 2.11x | 1.75x | 1.02x | 0.82x | 2.15x | 4.15x | -3.05x | -1.25x | 0.85x | 0.14x | 0.72x | 3.45x | 0.32x |
| Interest Paid | 0 | 0 | 0 | 57M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Taxes Paid | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Seasonal working capital volatility
Based on reported quarterly filings, Pearson exhibits significant divergence between net income and operating cash flow, with OCF/NI ratios fluctuating wildly from -4.24 in 2021Q2 to 4.28 in 2023Q4, indicating that accounting earnings are frequently decoupled from the actual cash generation of the underlying business.
The extreme variance in the OCF/NI ratio suggests that investors should exercise caution when using net income as a proxy for cash-generating ability. This disconnect appears driven by the timing of educational contract payments and the heavy seasonality inherent in the academic calendar, which often obscures the true cash conversion efficiency of the firm.
As reported in financial statements, Pearson's free cash flow trajectory remains highly cyclical, with FCF margins swinging from negative territory in mid-year periods to peaks exceeding 25% in the fourth quarter, reflecting the company's heavy reliance on the Northern Hemisphere's back-to-school and exam-heavy academic cycles.
The consistent pattern of negative FCF in the second quarter followed by strong fourth-quarter inflows suggests that the company's liquidity is highly sensitive to the timing of institutional billing. This seasonal profile warrants monitoring, as any disruption to the Q4 collection cycle could disproportionately impact the company's annual liquidity position.
According to recent SEC filings, Pearson's operating cash flow is heavily influenced by working capital movements, which saw a swing from a $261 million outflow in 2023Q2 to a $165 million inflow in 2023Q4, highlighting the critical role of timing in managing the company's cash conversion cycle.
The substantial shifts in working capital suggest that Pearson's cash flow is more a function of billing and collection timing than pure operational efficiency. Investors should monitor whether these swings are becoming more pronounced as the company shifts toward digital subscription models, which may alter historical payment patterns.
Based on the provided data, Pearson has consistently prioritized capital returns, with share repurchases totaling $200 million in 2025Q4 alone, even as the company continues to navigate a complex transition away from legacy assets and toward a digital-first service model through ongoing acquisitions.
The commitment to buybacks and dividends appears to be a core pillar of management's strategy, yet the simultaneous use of cash for acquisitions suggests a dual-track approach that may strain liquidity if organic growth fails to materialize. This capital allocation strategy warrants further investigation to ensure that share repurchases are not being prioritized at the expense of necessary R&D investment.
Quick answers to the most common questions about buying PSO stock.
Pearson plc (PSO) generated $674.9M in net cash from operating activities in 2025. This reflects the cash generated directly from core business operations.
Pearson plc (PSO) generated $646.5M in free cash flow in 2025. Free cash flow is the cash left over after capital expenditures, which can be used to pay dividends, repurchase shares, or pay down debt.
Pearson plc (PSO) spent $131.1M on capital expenditures in 2025. CapEx represents the cash invested in physical assets like property, plant, and equipment to maintain or grow the business.
In 2025, Pearson plc (PSO) returned $156.5M to shareholders via cash dividends and spent $414.7M on share repurchases. This shows the company's commitment to returning capital to its equity investors.