Grand Canyon Education (LOPE 14.18%), a leading provider of educational services for universities and colleges, released its earnings for the second quarter of fiscal 2025 on August 6, 2025. The company topped expectations, delivering non-GAAP earnings per share (EPS) of $1.53 versus analyst projections of $1.38, and GAAP revenue of $247.5 million compared to expectations of $240.91 million. Both top-line and bottom-line figures grew year over year, driven by strong enrollment gains and improved margins. The quarter highlighted continued growth, careful cost management, and robust performance from both traditional and online academic service offerings.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $1.53 | $1.38 | $1.27 | 20.5% |
| Revenue (GAAP) | $247.5 million | $240.91 million | $227.5 million | 8.8% |
| Adjusted EBITDA | $67.4 million | $58.5 million | 15.2% | |
| Operating Margin | 20.9% | 18.8% | 2.1 pp | |
| Net Income | $41.5 million | $34.9 million | 18.9% |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Focus Areas
Grand Canyon Education provides education services, including technology, academic, and administrative support, mainly serving Grand Canyon University (GCU) and a network of other university partners. It delivers these services through a mix of traditional, online, and hybrid programs, allowing schools to scale operations and offer more accessible education to diverse student populations. GCU remains the core focus, generating the bulk of enrollments and revenue for the company.
The company’s recent business strategy centers on expanding partner enrollments, strengthening its technological platform, and growing its off-campus accelerated Bachelor of Science in Nursing (ABSN, a nursing degree program) sites. It also emphasizes effective cost control and investment in infrastructure. Success relies heavily on sustaining robust partnerships (especially with GCU), executing technology investments, maintaining regulatory compliance, and exploring new university partnerships to lessen dependence on any single institution.
Quarter Highlights: Growth, Margins, and Key Drivers
Company-wide partner enrollments rose to 117,283, a jump of 10.3% over the prior year. Enrollments at GCU climbed to 113,435, up 10.5% year over year as of June 30, 2025. The fastest growth came from off-campus ABSN programs, which enrolled 4,990 students, an increase of 14.0% as of June 30, 2025. Excluding sites closing or being phased out, ABSN enrollments grew 15.4% year over year as of June 30, 2025. Notably, GCU’s online segment saw enrollment rise 10.1% to 104,856, while its traditional ground campus had 8,579 enrolled students as of June 30, 2025. This ground campus figure reflects only traditional-aged students taking summer school classes.
While these figures reflect healthy demand for the company’s services, revenue per student saw slight declines in Q2 2025. The decreases resulted from contract changes that reduced revenue sharing in exchange for no longer reimbursing partner faculty salaries, as well as a continuing shift toward online programs where students tend to pay lower net tuition, as seen in Q2 2025. However, growth in ABSN enrollments provided an offset, since these programs generate higher revenue per student due to higher tuition rates and more course credits taken per semester.
Grand Canyon Education also reported notable improvement in operating performance, with operating margin increasing to 20.9% in Q2 2025. Net income (GAAP) increased 19.1% year-over-year in Q2 2025, outpacing revenue growth. Adjusted EBITDA rose 15.2% in Q2 2025 compared with Q2 2024. The boost in margins in Q2 2025 reflected reduced operating expenses from contract modifications and higher profitability at new and existing ABSN sites.
Liquidity remained strong, with unrestricted cash and investments totaling $373.9 million at June 30, 2025, up from $324.6 million at December 31, 2024. The company continued to repurchase shares, buying back $125.2 million in stock during the first six months of 2025, which lowered the weighted average shares outstanding.
Program Offerings and Technology: Initiative Updates
Grand Canyon Education’s business split is dominated by GCU, but growth in service offerings remains a stated goal. The company runs three main models: partner-supplied campus programs, online education driven by its proprietary Learning Management System (Halo), and hybrid healthcare programs such as the ABSN sites. The Learning Management System is a central software solution that manages course delivery, student progress, and academic support. The ABSN program, a key non-GCU pillar, provides accelerated nursing degrees through off-campus locations in partnership with universities. These locations enable faster degree completion, attracting both career changers and those with prior college credits.
Recent expansions included opening two new off-campus ABSN sites in the first half of 2025 and six in 2024, bringing the total to 45 ABSN sites as of June 30, 2025. These sites boost both enrollment and average revenue per student, compared with mainline GCU agreements. Management indicated that these program types will continue to drive growth in 2025, with additional site openings expected and expanded offerings with non-GCU partners.
The company’s continued investment in technology supports the scale and efficiency of these educational models. The company has devoted more than $345 million over the last 16 years to building its technology stack, including the Learning Management System and new tools such as AI-powered tutoring. These investments underpin efficient program delivery and support improved student outcomes, such as the strong nursing exam pass rates seen in the ABSN pipeline.
The company continues to face significant competition in the education services market from organizations such as Pearson Online Learning Services and 2U, Inc, with differentiation relying on service quality, program diversity, and technological infrastructure. Regulatory compliance remains a crucial factor, with the company operating as a third-party servicer under the Higher Education Act. Its ability to maintain compliance is key, as federal aid and student flow depend heavily on meeting Department of Education standards. The effective tax rate in Q2 2025 was 24.5%.
Outlook and What’s Ahead
Looking ahead, Grand Canyon Education provided detailed guidance for Q3 2025, Q4 2025, and FY2025. Management expects Q3 2025 service revenue between $258.5 million and $260.5 million, operating margin of 21.8% to 22.2%, and diluted EPS (non-GAAP) between $1.75 and $1.80. For Q4 2025, guidance calls for service revenue of $305.0 million to $310.0 million, operating margin of 35.1% to 35.8%, and diluted EPS (non-GAAP) between $3.13 and $3.24. Full-year FY2025 targets include service revenue of $1.10 billion to $1.11 billion, operating margin up to 27.9%, and adjusted (non-GAAP) diluted EPS between $8.98 and $9.14.
Areas to watch will be the company’s progress expanding partnerships outside GCU, sustaining growth in the high-value ABSN and hybrid programs, and maintaining regulatory compliance amid changing federal and state standards. Grand Canyon Education does not currently pay a dividend.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
