Grand Canyon Education Q3 Earnings Call Highlights

Key Points

• Q3 revenue grew 2.4% to $267.3 million, while adjusted diluted earnings were $1.77 per share versus $1.78 a year earlier. Total enrollment rose 5.2%, but new enrollments were flat.
• Weaker-than-expected new enrollment at GCU’s traditional campus and flat online new enrollment led Grand Canyon Education to lower its revenue outlook and projected operating margin. The company expects online enrollment growth of 6% to 7% in Q4.
• CEO Brian Mueller outlined initiatives intended to drive more than 10% ground-campus enrollment growth in fall 2027; the company also reported $306.4 million in year-to-date share repurchases and plans to open four hybrid campuses in 2027.

Grand Canyon Education NASDAQ: LOPE reported 2.4% revenue growth for the third quarter of 2026, but weaker-than-expected new enrollments at Grand Canyon University’s traditional campus prompted the company to lower its revenue outlook and projected operating margin.

Service revenue rose to $267.3 million from $261.1 million a year earlier. Total enrollments across the company’s three platforms increased 5.2%, while new enrollments were flat. Chairman and CEO Brian Mueller said $7.5 million in service revenue shifted from the third quarter to the fourth because of a later fall semester start.

Net income was $43 million, or $1.67 per diluted share. Adjusted diluted earnings were $1.77 per share, compared with $1.78 a year earlier. Operating income increased to $51.5 million from $18 million, and operating margin rose to 19.3% from 6.9%.

Enrollment trends and outlook

GCU’s online new enrollments were flat in the quarter, while total online enrollment increased 7.1%. Mueller attributed the total enrollment growth to high retention and said new online enrollments came in below expectations partly because leads took longer to convert.

The company expects online new enrollment growth in the mid-single digits in the fourth quarter and total online enrollment growth of 6% to 7%. Mueller said acquisition costs were holding steady as the company increased advertising spending and reduced spending on enrollment counselors.

At GCU’s traditional ground campus, fall new enrollments were flat from a year earlier, leaving total enrollment 3% below the company’s expectations. Mueller said the enrollment miss would affect fourth-quarter results.

Grand Canyon Education lowered its revenue range to reflect actual fall ground enrollments and flat third-quarter online new enrollments. It also reduced its projected operating margin because of the lower ground enrollment expectations, though it continues to anticipate flat margins for 2026. Mueller said the company expects online revenue per student to decline slightly year over year as enrollment shifts toward programs with somewhat lower net tuition rates.

Plans to revive ground campus growth

Mueller outlined four strategies that he said could lift ground campus enrollment by more than 10% in fall 2027. They include GCU’s addition to the Common App, a new College of Construction and Industrial Technologies, expansion of its Honors College and the planned opening of a law school.

GCU received more than 5,600 applications through the Common App in September and October. Mueller said the university expects the application platform to contribute more than 800 additional new enrollments for fall 2027. He also projected at least 1,500 new students in construction and industrial technology programs during 2027 and a net increase of 400 Honors College students in fall 2027.

The university expects to add at least 100 pre-law students, 100 law students and 100 master’s students in legal studies in fall 2027. Mueller said the planned law school had received Arizona Supreme Court approval and was pursuing American Bar Association accreditation.

For 2027, Mueller said the company expects GCU online enrollment to grow 5% to 6%, ground enrollment to rise more than 10% and hybrid enrollment to increase in the low double digits, bringing overall enrollment growth above 7%.

Hybrid expansion and share repurchases

Enrollment at hybrid campuses rose 14.1% in the third quarter from a year earlier, excluding closed sites and those in teach-out. The company had 48 locations at slightly more than 60% of total capacity and almost 8,000 hybrid students, Mueller said. It plans to open four sites in 2027: Reno, Nevada; Jacksonville, Florida; New Orleans, Louisiana; and Lake Havasu, Arizona.

Grand Canyon Education repurchased 504,708 shares for approximately $75.1 million during the third quarter and another 225,770 shares after September 30. Year-to-date repurchases totaled 1,926,375 shares for $306.4 million. Mueller said $393 million remained available under the company’s repurchase authorization, including a $355 million increase approved by the board in October.

The company also entered a five-year, $100 million revolving credit facility, which it intends to use primarily for share repurchases and other corporate purposes. Its guidance does not assume any borrowing under the facility in the fourth quarter.

About Grand Canyon Education (NASDAQ:LOPE)

Grand Canyon Education, Inc NASDAQ: LOPE is an education services company that provides technology, operational and support services to colleges and universities. Rather than operating primarily as a traditional university, the company partners with higher education institutions to help them deliver online, hybrid and campus-based academic programs.

Its services include learning technology, digital course development, data analytics, marketing, student enrollment and support, financial aid assistance, faculty support, and other administrative functions.

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