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01/10 16:34
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals strong financial performance with a 9.6% increase in service revenue and improved operating margins. Enrollment growth across various programs and a robust share repurchase plan further bolster sentiment. Despite minor challenges like revenue per student decline, the overall outlook is positive, supported by strategic program expansions and effective marketing strategies. The market cap of $4 billion suggests moderate volatility, leading to a likely stock price increase in the 2% to 8% range over the next two weeks.
Service Revenue $261.1 million for Q3 2025, an increase of $22.8 million or 9.6% compared to $238.3 million in Q3 2024. The increase was primarily due to a 7.9% increase in partner enrollments, including a 9.6% increase in GCU online enrollments, 17.4% increase in university partner enrollments at off-campus sites, and an additional $0.9 million from an earlier fall start date. This was partially offset by a decrease in revenue per student due to contract modifications and a mix shift to students with slightly lower net tuition rates.
Operating Income and Margin Operating income for Q3 2025 was $18 million with an operating margin of 6.9%. Adjusted operating income was $58.2 million with an adjusted operating margin of 22.3%, compared to $50.3 million and 21.1% in Q3 2024. The increase was due to higher revenue and contract modifications, partially offset by higher benefit costs and additional spending for 2026 partner initiatives.
Net Income $16.3 million for Q3 2025. Adjusted non-GAAP diluted income per share was $1.78, up from $1.48 in Q3 2024. The increase was attributed to higher revenue and improved operating margins.
Enrollment Growth Online enrollment grew by 9.6%, hybrid enrollment increased by 17.4% (19.3% excluding closed sites and teach-outs), and new ground traditional enrollment grew in the high single digits year-over-year. The growth was driven by new program rollouts, employer partnerships, strong retention, competitive pricing, and increased interest in online education among younger students.
Capital Expenditures (CapEx) Approximately $9.7 million in Q3 2025, representing 3.7% of service revenue. Full-year 2025 CapEx is expected to be between $30 million and $35 million.
Online Enrollment Growth: Online enrollment grew by 9.6% in the third quarter of 2025, driven by the addition of 20+ new programs annually, partnerships with over 5,500 employers, strong retention levels, and competitive tuition pricing.
Hybrid Campus Enrollment: Enrollment increased by 19.3% year-over-year, excluding closed sites and those in teach-out. This growth was supported by the introduction of online prerequisite courses and the opening of new ABSN sites.
New Program Launches: GCU launched several new programs, including a BS in Occupational Therapy Assistance, Speech Language Pathology, and a hybrid occupational therapy bridge to master's program.
Expansion of ABSN Locations: GCU opened 5 new ABSN sites in 2025, including locations in Boston, New York City, Albuquerque, Lake Mary, and Englewood, bringing the total to 11 GCU ABSN locations.
Workforce Development Programs: GCU expanded its workforce development programs, including electricians pre-apprenticeship, CNC machinists pathway, and manufacturing specialist pathways, with plans to launch a manufacturing general pathway in 2026.
Service Revenue Growth: Service revenue increased by 9.6% year-over-year to $261.1 million in Q3 2025, driven by higher partner enrollments and online enrollments.
Operational Efficiency in Hybrid Programs: The introduction of online prerequisite courses for ABSN programs improved efficiency, with 19,410 students enrolled and a graduation rate in the mid-80s.
Shift in Marketing and Recruitment Strategy: Changes in marketing and recruitment strategies for GCU's traditional campus accelerated spending into 2025, resulting in positive early results for fall 2026 registrations.
Focus on Pre-Licensure Nursing Programs: GCU emphasized growth in pre-licensure nursing programs, leveraging online prerequisite courses and hybrid ABSN programs to meet demand for healthcare professionals.
Decline in High School Graduates: The number of high school graduates is declining annually, which could impact traditional college enrollments.
Shift in Education Preferences: More high school graduates are opting for shorter certificate or trade programs instead of 4- or 5-year baccalaureate paths, potentially reducing demand for traditional college programs.
Government Shutdown Impact: The government shutdown is expected to impact military tuition assistance students, potentially causing a $3 million revenue loss in the fourth quarter.
Higher Benefit Costs: Significantly higher-than-expected benefit costs are impacting operating margins and are expected to continue in the fourth quarter.
Increased State Tax Rates: Adding new sites in states with higher tax rates is increasing the company's effective tax rate.
Competitive Pressures in Post-Licensure Nursing Programs: Post-licensure nursing programs are facing increased competition, leading to slower growth compared to other programs.
Revenue Per Student Decline: Revenue per student has slightly declined year-over-year due to contract modifications and a mix shift to students with lower net tuition rates.
Retention and Reentry Challenges: High retention rates are leading to increased graduations, while reentry rates for students returning after a break are declining, pressuring total online enrollments.
Online Enrollment Growth: Momentum in online enrollment growth is expected to continue, driven by trends such as high school graduates opting for fully online programs and the flexibility of switching between on-campus and online learning.
Traditional Campus Enrollment: New traditional campus enrollments are expected to grow due to competitive pricing, low debt levels, and relevant academic programs. However, challenges include a declining number of high school graduates and a shift towards shorter certificate or trade programs.
Hybrid Campus Enrollment: Hybrid campus enrollments are projected to grow, supported by the introduction of advanced standing students and efficient prerequisite courses. The company aims to expand to 80 locations, with 40 being GCU sites.
New Program Launches: Plans to roll out new programs, including a graduate nursing program with seven specializations, a hybrid occupational therapy bridge to master's program, and a manufacturing general pathway program in 2026.
Capital Expenditures: CapEx for 2025 is estimated to be between $30 million and $35 million, focusing on new off-campus classroom and laboratory sites.
Military Tuition Assistance Impact: A potential $3 million revenue impact in Q4 2025 due to the government shutdown affecting military tuition assistance students.
Stock Buybacks: The company plans to continue aggressive stock buybacks, with $136.4 million remaining under the current authorization.
Share Repurchase: We repurchased 219,369 shares of our common stock in the third quarter of 2025 at a cost of approximately $39.5 million and another 38,745 shares were repurchased since September 30, 2025. We have $136.4 million remaining available as of today under our share repurchase authorization. The Board and the company intends to continue using a significant portion of its cash flows from operations to repurchase its shares.
The earnings call reveals strong financial performance with a 9.6% increase in service revenue and improved operating margins. Enrollment growth across various programs and a robust share repurchase plan further bolster sentiment. Despite minor challenges like revenue per student decline, the overall outlook is positive, supported by strategic program expansions and effective marketing strategies. The market cap of $4 billion suggests moderate volatility, leading to a likely stock price increase in the 2% to 8% range over the next two weeks.
The earnings call reveals strong financial performance with increased revenue, operating income, and net income, along with a positive outlook for enrollment growth. Despite concerns over benefit costs and legal fees, the company is executing aggressive share buybacks and has a robust cash position. The Q&A section highlights continued enrollment growth and minimal impact from regulatory changes. The overall sentiment is positive, with a market cap of $4 billion suggesting moderate sensitivity to these developments. Hence, a positive stock price movement of 2% to 8% is expected over the next two weeks.
The earnings call reveals strong financial performance with revenue and net income growth, surpassing EPS estimates. Despite slight margin declines, the company is investing in growth areas, with robust online enrollment and new programs. The share repurchase program boosts shareholder value. Q&A insights suggest confidence in enrollment growth and minimal impact from potential funding cuts. Although there are competitive and operational risks, the proactive strategies and positive financial outlook, along with the market cap, suggest a positive stock price movement of 2% to 8%.
The earnings call highlights positive enrollment growth, new program offerings, and strong financial performance with increased revenue and net income. The share repurchase program is a positive catalyst for stock price. However, there are concerns about potential enrollment declines and increased costs, which are mitigated by management's strategies. The Q&A session shows confidence in enrollment targets and funding stability. Despite some uncertainties, the overall sentiment is positive, suggesting a likely stock price increase of 2% to 8% over the next two weeks, considering the mid-cap market cap.
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