Pearson Buys Certification Company Credly

Pearson (LON: PSON), an editorial group specializing in educational publishing based in London, UK, announced today the acquisition of Credly, a company creating digital credentials and certifications for the workforce. The combination of Credly and Pearson will create a powerful solution in the global workforce skills industry.

The acquisition of Credly, in which Pearson already had a 20% stake, expands its current presence in the fast-growing workforce skills sector. The purchase price for Credly, including Pearson’s existing stake, represents a total value of $200 million, which will be funded from Pearson’s existing cash and available cash.

Credly offers an easy-to-use platform for organizations, businesses, educational institutions, and learners to assign trusted digital IDs that verify an individual’s skills and help connect them with the right opportunities.

Over 2,000 organizations use Credly, and since its inception, the company has issued over 50 million credentials to 25 million people, making it the largest professional credentialing company in the world.

In the year ended December 2021, Credly grew revenue by 47% to $13.3 million and saw a CAGR revenue growth of 42% between 2019 and 2021.

The acquisition comes at a time of growing demand for digital credentials to recognize skills and certifications in a global talent market valued at around $400 billion.

Management Commentary

Pearson Chief Executive Andy Bird said: “The Credly acquisition is another important step in accelerating our strategy in the workforce skills market and in building connectivity across the entire Pearson portfolio. The growing skills gap is putting enormous pressure on the labor market, making verified credentials more essential than ever before.” 

Wall Street’s Take

Last week, Barclays analyst Nick Dempsey kept a Sell rating on PSON with a price target of 610p. This implies 1.3% downside potential.

Overall, PSON scores a Hold consensus rating based on two Buys, five Holds, and two Sells. The average Pearson price target of 708.25p implies 14.6% upside potential to current levels.

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