Grand Canyon Education delivered a first quarter that exceeded Wall Street’s expectations, with stronger-than-anticipated revenue and healthy profit margins. Management attributed this performance primarily to robust online enrollment growth and continued investments in new academic programs. CEO Brian Mueller emphasized that both new online starts and hybrid program enrollments outpaced internal targets, crediting the rollout of 20 new programs in the last year and direct partnerships with employers as key contributors. He stated, “Lead flow and the interest in what we’re doing here continues to grow,” citing increased contract signings with school districts and healthcare institutions.
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Grand Canyon Education (LOPE) Q1 CY2025 Highlights:
- Revenue: $289.3 million vs analyst estimates of $287.1 million (5.3% year-on-year growth, 0.8% beat)
- EPS (GAAP): $2.52 vs analyst estimates of $2.45 (2.9% beat)
- Adjusted EBITDA: $102 million vs analyst estimates of $101 million (35.2% margin, 0.9% beat)
- The company slightly lifted its revenue guidance for the full year to $1.09 billion at the midpoint from $1.09 billion
- EPS (GAAP) guidance for the full year is $8.53 at the midpoint, beating analyst estimates by 1.5%
- Operating Margin: 30.4%, in line with the same quarter last year
- Students: 127,779, up 6,991 year on year
- Market Capitalization: $5.23 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Grand Canyon Education’s Q1 Earnings Call
- Jeff Silber (BMO Capital Markets) asked what drove the better-than-expected first-quarter enrollment, to which CEO Brian Mueller cited new program launches and increased contracts with employers as primary factors.
- Jeff Silber (BMO Capital Markets) also inquired about the risk of federal funding cuts for students; Mueller responded that most aid flows should remain stable and Grand Canyon Education is less exposed to research grant volatility.
- Alex Paris (Barrington Research) requested updates on long-term and segment-specific enrollment targets. Mueller confirmed the overall long-term goal is 7% annual growth, with current online and hybrid enrollments running ahead of expectations.
- Alex Paris (Barrington Research) also asked about M&A appetite. Mueller stated the focus remains on building new programs and partnerships rather than acquisitions, citing more control and speed with organic growth.
- Steven Pawlak (Baird) questioned the conversion process from prerequisite courses to hybrid ABSN programs. Mueller explained the process involves students progressing over six to eighteen months, with ongoing efforts to scale both enrollment and program capacity.
Catalysts in Upcoming Quarters
In the coming quarters, our team will track (1) whether new student registrations for the fall semester sustain their current positive trajectory, (2) the scaling and financial impact of additional hybrid and non-nursing programs, and (3) any margin improvement as investments in partner initiatives and legal costs normalize. Execution on planned site openings and continued employer partnerships will also be critical to watch.
Grand Canyon Education currently trades at $186.81, in line with $185.45 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free).
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