GRAND CANYON EDUCATION, INC. REPORTS FIRST QUARTER 2025 RESULTS
- Service revenue increased 5.3% YoY to $289.3 million
- Partner enrollments grew 5.8% to 127,779 students
- Net income rose 5.3% to $71.6 million
- Off-campus classroom sites enrollment increased 12.1%
- GCU online enrollments grew 7.9% to 101,443 students
- Strong liquidity position with $304.7 million in cash and investments
- Operating margin slightly decreased to 30.4% from 30.8% YoY
- Ground student enrollments declined to 22,330 from 22,965
- Revenue per student decreased due to contract modifications
- Cash and investments decreased by $20.0 million from December 2024
Insights
GCE delivers strong Q1 results with 5.3% revenue growth, rising profitability, and expanding higher-margin enrollment segments.
Grand Canyon Education delivered solid Q1 2025 financial results, with service revenue increasing
Operating income rose
Net income grew
The company's focus on expanding higher-margin offerings is clear in their site development strategy. They've opened six new sites in 2024 and one in Q1 2025, bringing the total to 46 off-campus locations. This expansion matters because these programs generate significantly higher revenue per student than traditional programs.
Cash position decreased slightly to
Looking ahead, GCE's full-year 2025 guidance projects service revenue between
Grand Canyon Education, Inc. Reports First Quarter 2025 Results
For the three months ended March 31, 2025:
- Service revenue for the three months ended March 31, 2025 was
, an increase of$289.3 million , or$14.6 million 5.3% , as compared to service revenue of for the three months ended March 31, 2024. The increase year over year in service revenue was primarily due to an increase in partner enrollments of$274.7 million 5.8% to 127,779 at March 31, 2025 as compared to 120,788 at March 31, 2024. Revenue per student decreased slightly between years primarily due to the additional day for leap year in 2024 which added additional service revenue of as compared to the current year and contract modifications for some of our university partners in which the revenue share percentage was reduced in exchange for us no longer reimbursing the partner for certain faculty costs both of which had the effect of reducing revenue per student partially offset by the service revenue per student for accelerated Bachelor of Science in Nursing ("ABSN") students at off-campus classroom and laboratory sites generating a significantly higher revenue per student than we earn under our agreement with GCU, as these agreements generally provide us with a higher revenue share percentage, the partners have higher tuition rates than GCU and the majority of our partners' students take more credits on average per semester.$1.5 million - GCU enrollments increased to 123,773 at March 31, 2025, an increase of
5.8% over enrollments at March 31, 2024. University partner enrollments at our off-campus classroom and laboratory sites were 5,027, an increase of12.1% over enrollments at March 31, 2024, which includes 1,021 and 650 GCU students at March 31, 2025 and 2024, respectively. Excluding sites closing in 2024 to new enrollments, total enrollments at our off-campus classroom and laboratory sites increased16.5% between years. We opened six sites in the year ended December 31, 2024 and opened one site in the three months ended March 31, 2025 increasing the total number of these sites to 46 at March 31, 2025, which has also positively impacted the enrollment growth. Enrollments for GCU ground students were 22,330 at March 31, 2025 down from 22,965 at March 31, 2024 due to a small decline in traditional ground students year over year and the continued decline in professional studies students (working adults attending the university's traditional campus at night), partially offset by an increase in ABSN students between years. GCU online enrollments were 101,443 at March 31, 2025, up from 93,987 at December 31, 2024, an increase of7.9% between years. - Operating income for the three months ended March 31, 2025 was
, an increase of$88.0 million , or$3.5 million 4.2% , as compared to for the same period in 2024. The operating margin for the three months ended March 31, 2025 and 2024 was$84.5 million 30.4% and30.8% , respectively. The first quarter operating income and operating margin were negatively impacted on a year over year basis by the additional day for leap year in 2024 which added additional service revenue of as compared to the current year partially offset by contract modifications for some of our university partners in which the revenue share percentage was reduced in exchange for us no longer reimbursing the partner for certain faculty costs both of which had the effect of reducing revenue per student.$1.5 million - Income tax expense for the three months ended March 31, 2025 was
, a decrease of$19.8 million , or$0.4 million 2.0% , as compared to income tax expense of for the three months ended March 31, 2024. Our effective tax rate was$20.2 million 21.6% during the first quarter of 2025 compared to22.9% during the first quarter of 2024. The effective tax rate decreased year over year primarily due to an increase in excess tax benefits to as compared to$2.7 million in the three months ended March 31, 2025 and 2024, respectively, partially offset by higher state income taxes.$1.5 million - Net income for the three months ended March 31, 2025 was
, an increase of$71.6 million , or$3.6 million 5.3% as compared to for the same period in 2024. As adjusted net income was$68.0 million and$73.3 million for the first quarters of 2025 and 2024, respectively.$69.6 million - Diluted net income per share was
and$2.52 for the first quarters of 2025 and 2024, respectively. As adjusted diluted net income per share was$2.29 and$2.57 for the first quarters of 2025 and 2024, respectively.$2.35 - Adjusted EBITDA increased
3.4% to for the first quarter of 2025, compared to$102.0 million for the same period in 2024.$98.6 million
Liquidity and Capital Resources
Our liquidity position, as measured by cash and cash equivalents and investments decreased by
Grand Canyon Education, Inc. Reports First Quarter 2025 Results and Full Year Outlook 2025
2025 Outlook
Q2 2025:
- Service revenue of between
and$239.0 million ;$241.5 million - Operating margin of between
18.8% and19.4% ; - Effective tax rate of
24.9% ; - Diluted EPS of between
and$1.28 ; and$1.33 - 28.2 million diluted shares.
The diluted EPS guidance includes non-cash amortization of intangible assets net of taxes of
Q3 2025:
- Service revenue of between
and$250.5 million ;$257.5 million - Operating margin of between
22.0% and23.2% ; - Effective tax rate of
24.9% ; - Diluted EPS of between
and$1.56 ; and$1.68 - 28.0 million diluted shares.
The diluted EPS guidance includes non-cash amortization of intangible assets net of taxes of
Q4 2025:
- Service revenue of between
and$301.0 million ;$311.5 million - Operating margin of between
35.5% and36.3% ; - Effective tax rate of
24.1% ; - Diluted EPS of between
and$3.00 ; and$3.17 - 27.8 million diluted shares.
The diluted EPS guidance includes non-cash amortization of intangible assets net of taxes of
Full Year 2025:
- Service revenue of between
and$1,079.8 million ;$1,099.8 million - Operating margin of between
27.3% and28.0% ; - Effective tax rate of
23.7% ; - Diluted EPS between
and$8.36 ; and$8.70 - 28.1 million diluted shares.
The diluted EPS guidance includes non-cash amortization of intangible assets net of taxes of
Forward-Looking Statements
This news release contains "forward-looking statements" within the meaning of Federal securities laws which include information relating to future events, future financial performance, strategies expectations, competitive environment, regulation, and availability of resources. These forward-looking statements include, without limitation, statements regarding: proposed new programs; whether regulatory, economic, or business developments or other matters may or may not have a material adverse effect on our financial position, results of operations, or liquidity; projections, predictions, expectations, estimates, and forecasts as to our business, financial and operating results, and future economic performance; and management's goals and objectives and other similar expressions concerning matters that are not historical facts. Words such as "may," "should," "could," "would," "predicts," "potential," "continue," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar expressions, the negative of these expressions, as well as statements in future tense, identify forward-looking statements.
Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made or management's good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause our actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements include, but are not limited to: (i) legal and regulatory actions taken against us related to our services business, or against our university partners that impact their businesses and that directly or indirectly reduce the service revenue we can earn under our master services agreements; (ii) the occurrence of any event, change or other circumstance that could give rise to the termination of any of the key university partner agreements; (iii) our ability to properly manage risks and challenges associated with strategic initiatives, including potential acquisitions or divestitures of, or investments in, new businesses, acquisitions of new properties and new university partners, and expansion of services provided to our existing university partners; (iv) our ability to comply with the extensive regulatory framework applicable to us either directly as a third-party service provider or indirectly through our university partners; (v) our ability to manage risks associated with epidemics, pandemics, or public health crises; (vi) our ability to manage risks resulting from system disruptions, interruptions, or outages associated with our technology platforms or those of third-party service providers; (vii) the ability of our university partners' students to obtain federal Title IV funds, state financial aid, and private financing; (viii) potential damage to our reputation or other adverse effects as a result of negative publicity in the media, in the industry or in connection with governmental reports or investigations or otherwise; (ix) risks associated with changes in applicable federal and state laws and regulations and accrediting commission standards; (x) competition from other education service companies in our geographic region and market sector; (xi) our ability to hire and train new, and develop and train existing employees; (xii) the pace of growth of our university partners' enrollment and its effect on the pace of our own growth; (xiii) fluctuations in our revenues due to seasonality; (xiv) our ability to, on behalf of our university partners, convert prospective students to enrolled students and to retain active students to graduation; and (xv) other risks and uncertainties identified from time to time in documents filed with the Securities and Exchange Commission (the "SEC") by us.
Forward-looking statements speak only as of the date the statements are made. You should not put undue reliance on any forward-looking statements. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions, or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. This press release should be read in conjunction with the information included in our other press releases, reports and other filings with the SEC. Understanding the information contained in these filings is important in order to fully understand GCE's reported financial results and our business outlook for future periods.
Grand Canyon Education, Inc. Reports First Quarter 2025 Results
Conference Call
Grand Canyon Education, Inc. will discuss its first quarter 2025 results and full year 2025 outlook during a conference call scheduled for today, May 6, 2025 at 4:30 p.m. Eastern time (ET).
Live Conference Dial-In:
Those interested in participating in the question-and-answer session should follow the conference dial-in instructions below. Participants may register for the call here to receive the dial-in numbers and unique PIN to access the call seamlessly. Please dial in at least ten minutes prior to the start of the call. Journalists are invited to listen only.
Webcast and Replay:
Investors, journalists and the general public may access a live webcast of this event at: Q1 2025 Grand Canyon Education Inc. Earnings Conference Call. A webcast replay will be available approximately two hours following the conclusion of the call at the same link.
About Grand Canyon Education, Inc.
Grand Canyon Education, Inc. ("GCE"), incorporated in 2008, is a publicly traded education services company that currently provides services to 22 university partners. GCE is uniquely positioned in the education services industry in that its leadership has over 30 years of proven expertise in providing a full array of support services in the post-secondary education sector and has developed significant technological solutions, infrastructure and operational processes to provide superior services in these areas on a large scale. GCE provides services that support students, faculty and staff of partner institutions such as marketing, strategic enrollment management, counseling services, financial services, technology, technical support, compliance, human resources, classroom operations, content development, faculty recruitment and training, among others. For more information about GCE visit the Company's website at www.gce.com.
Grand Canyon Education, Inc., 2600 W. Camelback Road,
Grand Canyon Education, Inc. Reports First Quarter 2025 Results
GRAND CANYON EDUCATION, INC. Consolidated Income Statements (Unaudited) | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2025 | 2024 | ||||||
(In thousands, except per share data) | |||||||
Service revenue | $ | 289,310 | $ | 274,675 | |||
Costs and expenses: | |||||||
Technology and academic services | 41,664 | 39,125 | |||||
Counseling services and support | 86,822 | 82,884 | |||||
Marketing and communication | 60,330 | 55,353 | |||||
General and administrative | 10,366 | 10,730 | |||||
Amortization of intangible assets | 2,105 | 2,105 | |||||
Total costs and expenses | 201,287 | 190,197 | |||||
Operating income | 88,023 | 84,478 | |||||
Interest expense | — | (2) | |||||
Investment interest and other | 3,381 | 3,729 | |||||
Income before income taxes | 91,404 | 88,205 | |||||
Income tax expense | 19,786 | 20,195 | |||||
Net income | $ | 71,618 | $ | 68,010 | |||
Earnings per share: | |||||||
Basic income per share | $ | 2.53 | $ | 2.31 | |||
Diluted income per share | $ | 2.52 | $ | 2.29 | |||
Basic weighted average shares outstanding | 28,277 | 29,459 | |||||
Diluted weighted average shares outstanding | 28,469 | 29,639 |
GRAND CANYON EDUCATION, INC. Consolidated Balance Sheets
| ||||||
As of March 31, | As of December 31, | |||||
(In thousands, except par value) | 2025 | 2024 | ||||
ASSETS: | (Unaudited) | |||||
Current assets | ||||||
Cash and cash equivalents | $ | 144,509 | $ | 324,623 | ||
Investments | 160,144 | — | ||||
Accounts receivable, net | 115,696 | 82,948 | ||||
Income taxes receivable | — | 490 | ||||
Other current assets | 16,087 | 11,915 | ||||
Total current assets | 436,436 | 419,976 | ||||
Property and equipment, net | 177,758 | 176,823 | ||||
Right-of-use assets | 96,059 | 99,541 | ||||
Amortizable intangible assets, net | 157,857 | 159,962 | ||||
Goodwill | 160,766 | 160,766 | ||||
Other assets | 2,572 | 1,357 | ||||
Total assets | $ | 1,031,448 | $ | 1,018,425 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY: | ||||||
Current liabilities | ||||||
Accounts payable | $ | 24,077 | $ | 26,721 | ||
Accrued compensation and benefits | 23,251 | 33,183 | ||||
Accrued liabilities | 34,573 | 29,620 | ||||
Income taxes payable | 24,076 | 8,559 | ||||
Deferred revenue | 9,081 | — | ||||
Current portion of lease liability | 13,146 | 12,883 | ||||
Total current liabilities | 128,204 | 110,966 | ||||
Deferred income taxes, noncurrent | 28,974 | 26,527 | ||||
Other long-term liabilities | 1,398 | 1,444 | ||||
Lease liability, less current portion | 92,168 | 95,635 | ||||
Total liabilities | 250,744 | 234,572 | ||||
Commitments and contingencies | ||||||
Stockholders' equity | ||||||
Preferred stock, | — | — | ||||
Common stock, | 542 | 541 | ||||
Treasury stock, at cost, 25,680 and 25,232 shares of common stock at March 31, 2025 and | (2,102,760) | (2,024,370) | ||||
Additional paid-in capital | 340,365 | 336,736 | ||||
Accumulated other comprehensive loss | (7) | — | ||||
Retained earnings | 2,542,564 | 2,470,946 | ||||
Total stockholders' equity | 780,704 | 783,853 | ||||
Total liabilities and stockholders' equity | $ | 1,031,448 | $ | 1,018,425 |
GRAND CANYON EDUCATION, INC. Consolidated Statements of Cash Flows (Unaudited)
| ||||||
Three Months Ended | ||||||
March 31, | ||||||
(In thousands) | 2025 | 2024 | ||||
Cash flows provided by operating activities: | ||||||
Net income | $ | 71,618 | $ | 68,010 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Share-based compensation | 3,630 | 3,483 | ||||
Depreciation and amortization | 7,451 | 6,653 | ||||
Amortization of intangible assets | 2,105 | 2,105 | ||||
Deferred income taxes | 2,446 | 1,724 | ||||
Other, including fixed asset disposals | (207) | (208) | ||||
Changes in assets and liabilities: | ||||||
Accounts receivable from university partners | (32,748) | (32,899) | ||||
Other assets | (4,449) | (3,757) | ||||
Right-of-use assets and lease liabilities | 278 | 335 | ||||
Accounts payable | (2,023) | 11,970 | ||||
Accrued liabilities | (5,558) | (51) | ||||
Income taxes receivable/payable | 16,007 | 17,328 | ||||
Deferred revenue | 9,081 | 10,270 | ||||
Net cash provided by operating activities | 67,631 | 84,963 | ||||
Cash flows used in investing activities: | ||||||
Capital expenditures | (8,948) | (8,979) | ||||
Additions of amortizable content | (20) | (72) | ||||
Purchase of equity investment | (1,000) | — | ||||
Purchases of investments | (159,920) | (19,381) | ||||
Proceeds from sale or maturity of investments | — | 23,172 | ||||
Net cash used in investing activities | (169,888) | (5,260) | ||||
Cash flows used in financing activities: | ||||||
Repurchase of common shares and shares withheld in lieu of income taxes | (77,857) | (29,970) | ||||
Net cash used in financing activities | (77,857) | (29,970) | ||||
Net (decrease) increase in cash and cash equivalents and restricted cash | (180,114) | 49,733 | ||||
Cash and cash equivalents and restricted cash, beginning of period | 324,623 | 146,475 | ||||
Cash and cash equivalents and restricted cash, end of period | $ | 144,509 | $ | 196,208 | ||
Supplemental disclosure of cash flow information | ||||||
Cash paid for interest | $ | — | $ | 2 | ||
Cash paid for income taxes | $ | 333 | $ | 295 | ||
Supplemental disclosure of non-cash investing and financing activities | ||||||
Purchases of property and equipment included in accounts payable | $ | 444 | $ | 2,091 | ||
ROU Asset and Liability recognition | $ | — | $ | 25,500 | ||
Excise tax on treasury stock repurchases | $ | 533 | $ | 34 |
Grand Canyon Education, Inc. Reports First Quarter 2025 Results
GRAND CANYON EDUCATION, INC.
Adjusted EBITDA (Non-GAAP Financial Measure)
Adjusted EBITDA is defined as net income plus interest expense, less interest income and other gain (loss) recognized on investments, plus income tax expense, and plus depreciation and amortization (EBITDA), as adjusted for (i) contributions to private
We believe Adjusted EBITDA allows us to compare our current operating results with corresponding historical periods and with the operational performance of other companies in our industry because it does not give effect to potential differences caused by variations in capital structures (affecting relative interest expense, including the impact of write-offs of deferred financing costs when companies refinance their indebtedness), tax positions (such as the impact on periods or companies of changes in effective tax rates or net operating losses), the book amortization of intangibles (affecting relative amortization expense), and other items that we do not consider reflective of underlying operating performance. We also present Adjusted EBITDA because we believe it is frequently used by securities analysts, investors, and other interested parties as a measure of performance.
In evaluating Adjusted EBITDA, investors should be aware that in the future we may incur expenses similar to the adjustments described above. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by expenses that are unusual, non-routine, or non-recurring. Adjusted EBITDA has limitations as an analytical tool in that, among other things it does not reflect:
- cash expenditures for capital expenditures or contractual commitments;
- changes in, or cash requirements for, our working capital requirements;
- interest expense, or the cash required to replace assets that are being depreciated or amortized; and
- the impact on our reported results of earnings or charges resulting from the items for which we make adjustments to our EBITDA, as described above and set forth in the table below.
In addition, other companies, including other companies in our industry, may calculate these measures differently than we do, limiting the usefulness of Adjusted EBITDA as a comparative measure. Because of these limitations, Adjusted EBITDA should not be considered as a substitute for net income, operating income, or any other performance measure derived in accordance with and reported under GAAP, or as an alternative to cash flow from operating activities or as a measure of our liquidity. We compensate for these limitations by relying primarily on our GAAP results and only use Adjusted EBITDA as a supplemental performance measure.
The following table provides a reconciliation of net income to Adjusted EBITDA, which is a non-GAAP measure for the periods indicated:
Three Months Ended | |||||||
March 31, | |||||||
2025 | 2024 | ||||||
(Unaudited, in thousands) | |||||||
Net income | $ | 71,618 | $ | 68,010 | |||
Plus: interest expense | — | 2 | |||||
Less: investment interest and other | (3,381) | (3,729) | |||||
Plus: income tax expense | 19,786 | 20,195 | |||||
Plus: amortization of intangible assets | 2,105 | 2,105 | |||||
Plus: depreciation and amortization | 7,451 | 6,653 | |||||
EBITDA | 97,579 | 93,236 | |||||
Plus: share-based compensation | 3,630 | 3,483 | |||||
Plus: litigation and regulatory costs | 743 | 1,870 | |||||
Plus: loss on fixed asset disposal | 16 | — | |||||
Adjusted EBITDA | $ | 101,968 | $ | 98,589 |
Non-GAAP Net Income and Non-GAAP Diluted Income Per Share
The Company believes the presentation of non-GAAP net income and non-GAAP diluted income per share information that excludes amortization of intangible assets and loss on disposal of fixed assets allows investors to develop a more meaningful understanding of the Company's performance over time. Accordingly, for the three months ended March 31, 2025 and 2024, the table below provides reconciliations of these non-GAAP items to GAAP net income and GAAP diluted income per share, respectively:
Three Months Ended | |||||||
March 31, | |||||||
2025 | 2024 | ||||||
(Unaudited, in thousands except per share data) | |||||||
GAAP Net income | $ 71,618 | $ 68,010 | |||||
Amortization of intangible assets | 2,105 | 2,105 | |||||
Loss on disposal of fixed assets | 16 | — | |||||
Income tax effects of adjustments (1) | (459) | (482) | |||||
As Adjusted, Non-GAAP Net income | $ 73,280 | $ 69,633 | |||||
GAAP Diluted income per share | $ 2.52 | $ 2.29 | |||||
Amortization of intangible assets (2) | 0.05 | 0.06 | |||||
Loss on disposal of fixed assets (3) | 0.00 | — | |||||
As Adjusted, Non-GAAP Diluted income per share | $ 2.57 | $ 2.35 |
(1) | The income tax effects of adjustments are based on the effective income tax rate applicable to adjusted (non-GAAP) results. |
(2) | The amortization of acquired intangible assets per diluted share is net of an income tax benefit of |
(3) | The loss on disposal of fixed assets per diluted share is net of an income tax benefit of nil for the three months ended March 31, 2025. |
Investor Relations Contact:
Daniel E. Bachus
Chief Financial Officer
Grand Canyon Education, Inc.
602-639-6648
Dan.bachus@gce.com
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SOURCE Grand Canyon Education