Grand Canyon Expands Margin as Enrollment Growth Accelerates
Second-quarter service revenue rose 6.7% to $264.0 million.
Grand Canyon Education (LOPE), an education-services provider, increased second-quarter operating income 12.3% as enrollment growth accelerated and operating margin widened.
University-partner enrollment rose 7.6% from a year earlier, up from 7.1% growth in the first quarter and fourth quarter of 2024. Revenue growth held at the first quarter’s 6.7% pace after accelerating from 5.3% in the fourth quarter.
Service revenue increased from $247.5 million a year earlier, while diluted earnings rose 18.2% to $1.75 a share. Net income climbed 10.4% to $45.9 million, with the faster per-share gain reflecting a decline in diluted weighted-average shares to 26.2 million from 28.1 million.
Revenue growth trailed enrollment growth as revenue per student declined slightly. This was due to a reduced revenue-share percentage for one partner, a shift toward lower-net-tuition online students and fewer higher-revenue ground students, partly offset by growth in higher-revenue accelerated nursing enrollment.
GCU online enrollment increased 7.8% to 113,011, easing from 8.8% growth in the first quarter. Ground enrollment rose 3.9% to 8,910, reversing the slight decline reported a quarter earlier, while off-campus classroom and laboratory enrollment grew 16.8% to 5,829.
Operating income reached $58.2 million, and operating margin expanded 1.1 percentage points to 22.0%. Adjusted EBITDA rose 8.9% to $73.4 million as litigation and regulatory costs declined to $1.0 million from $2.2 million.
For the third quarter, Grand Canyon projects service revenue of $268.5 million to $270.5 million and an operating margin of 19.5% to 20.0%. Its fourth-quarter forecast calls for revenue of $324.0 million to $329.0 million and a margin of 36.9% to 37.4%.
First-half share repurchases and tax-withholding payments rose to $203.2 million from $125.2 million a year earlier. Those outlays contributed to a decline in unrestricted cash and investments to $274.5 million from $300.1 million at the end of 2024, while the lower share count helped earnings per share outpace net-income growth.