Grand Canyon Education (NASDAQ:LOPE) reported fourth-quarter 2025 results highlighted by continued enrollment growth across its online and hybrid platforms, margin expansion, and share repurchases, while also outlining 2026 guidance that management said is generally consistent with prior-year assumptions despite more challenging comparisons.
Enrollment trends: online growth outpaced long-term targets
Chairman and CEO Brian Mueller said Grand Canyon University’s online campus delivered total enrollment growth of 8.7% in the fourth quarter, which he described as “significantly” above the university’s long-term objectives. He said online new starts were up in the mid-single digits, in line with expectations.
Ground campus: mixed enrollment, increased marketing investment
On the traditional ground campus, Mueller said new traditional campus enrollments were up in the high single digits, while total traditional campus enrollments were down slightly year-over-year in fall 2025 and total ground enrollment was flat. He attributed the year-over-year decline in total traditional enrollments to the prior year’s drop in new enrollments, which he said was driven primarily by FAFSA site issues and higher-than-expected summer graduations. Spring new and total enrollments were described as in line with expectations.
During Q&A, management provided additional detail on increased spending to support ground-campus recruitment. CFO Dan Bachus said operating margin in the quarter, while within guidance, reflected “significant investments” primarily related to the ground campus. Mueller said the company tested increased social media advertising in September and October and saw strong engagement and improved conversion rates into registrations versus the prior year. He said the company expects to continue spending, but projected marketing as a percentage of revenue would be “fairly flat” year-over-year, describing the shift as moving dollars from high school representative salaries toward marketing channels.
Mueller said the company is also planning additional efforts tied to the growth of the honors college, which he said has reached about 3,000 students, with weighted average incoming GPAs above 4.0. He said the company is forming a council, rebuilding a building, and intends to make a broad recruiting effort for high-performing students nationally. He added that registrations for fall 2026 remained “significantly ahead” of last year, though he characterized the cycle as still early.
Mueller also addressed the effect of faster graduations on enrollment and revenue, noting a growing number of students finishing in under four years. He said the company believes it can offset lost fourth-year revenue in some cases by growing front-end enrollments.
Hybrid growth continued, but capacity constraints are emerging
Grand Canyon Education’s hybrid campus enrollment increased 16.6% year-over-year in the fourth quarter; excluding closed sites and those in teach-out, enrollment increased 18.7%. Mueller said there were no hybrid new starts in the fourth quarter, but the company saw a higher-than-expected number of new students starting in the fall.
He attributed hybrid growth partly to partners admitting more advanced-standing students into ABSN programs, supported by GCU-developed online prerequisite science and general education courses delivered in eight-week formats. Mueller said that since implementing the prerequisite courses, the company has enrolled 20,536 students, and in the summer 2025 term, 66% of matriculated hybrid students at non-GCU sites took at least one of the courses, averaging five courses each. He also cited outcomes for students who enter ABSN programs, including graduation rates in the mid-80% range and an approximately 90% first-time NCLEX pass rate.
Mueller reiterated a long-term goal of 80 locations across partners, with 40 being GCU locations. He said five sites were opened in 2025, including additional partner sites in Boston and New York City, plus three GCU sites (Albuquerque; Lake Mary, Florida; and Englewood, Colorado), bringing GCU’s ABSN location total to 11. He said the company likely will open only one additional site in 2026 in the Miami area, with some openings previously planned for fall 2026 now expected in early 2027, reflecting more selectivity and a focus on market scalability.
Fourth-quarter financial results and capital allocation
Service revenue was $308.1 million, up 5.3% year-over-year, driven primarily by a 7.1% increase in partner enrollments, including 8.7% growth in GCU online enrollments and 16.6% growth at off-campus classroom and laboratory sites. The company said revenue per student declined year-over-year, largely due to contract modifications that reduced revenue share percentages in exchange for no longer reimbursing certain faculty costs, as well as a mix shift to online students with slightly lower net tuition rates.
Operating income was $108.1 million with an operating margin of 35.1%, compared with $100.0 million and 34.2% in the prior-year period. Net income was $86.7 million. GAAP diluted EPS was $3.14, while adjusted (non-GAAP) diluted EPS was $3.21, which management said was $0.02 above consensus estimates.
Bachus said revenue was higher than expected, citing higher enrollments and revenue per student, partially offset by the impact of a government shutdown. In response to an analyst question, management estimated the shutdown impact on military tuition assistance at roughly $2.5 million to $3.0 million.
The company repurchased 605,730 shares in the quarter for approximately $100 million, and another 352,051 shares after year-end. Bachus said $284.6 million remained under the authorization, and the company intends to continue deploying a significant portion of operating cash flow toward buybacks.
2026 outlook: contract changes, timing shifts, and expected margin expansion
For 2026, Bachus said the midpoint of EPS guidance was above consensus primarily due to a lower projected share count, while revenue and operating income guidance midpoints were generally in line with consensus. He said revenue will be slightly impacted by a contract modification effective Jan. 1, 2026 (ending faculty cost reimbursements for one partner) and the teach-out of one partner’s three locations. He estimated these changes would reduce 2026 revenue by $4.2 million but improve operating income because the locations being taught out were incurring significant losses.
Management also highlighted year-over-year shifts in GCU’s ground semester calendar that are expected to move $1.0 million of revenue from the second quarter into the first quarter, and $8.3 million from the third quarter into the fourth quarter.
Operationally, the company expects 2026 online new enrollments to rise in the mid- to high-single digits. Bachus said total online enrollment growth may be pressured by increasing graduations and fewer re-entries, which he attributed to high retention rates. For hybrid, the company guided to high-single-digit to mid-teens growth by quarter, while noting that capacity constraints at certain locations will limit growth and that regulatory approvals could affect expansion at waitlisted sites.
On profitability, Bachus said the company expects margin pressure in the first half of 2026, including from ground enrollment dynamics and calendar timing, but anticipates margin expansion in the second half and for the full year, particularly if revenue lands in the top half of the guidance range.
Management also discussed the regulatory environment during Q&A. Mueller and Bachus said they expect “little to no impact” from upcoming loan cap changes, arguing GCU’s tuition levels are generally below the caps and that changes mainly affect master’s-level borrowing. They also addressed preliminary data related to the earnings premium accountability calculation, stating that one category—master’s in counseling—appeared to fail across many institutions serving working adults, and that the company is analyzing the issue further.
About Grand Canyon Education (NASDAQ:LOPE)
Grand Canyon Education, Inc provides a suite of higher‐education services through a long-term agreement with Grand Canyon University (GCU), one of the nation’s largest private Christian universities. The company’s offerings encompass a full range of academic and operational support functions, including enrollment management, student recruitment, curriculum development, instructional delivery, and technology infrastructure. Through its online program management capabilities, Grand Canyon Education helps design, market and deliver undergraduate, graduate and certificate programs to meet the needs of both traditional and non‐traditional learners.
Core services include digital marketing, admissions support, student success coaching, learning management systems and faculty recruitment.
