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Image source: The Motley Fool. Thursday, July 30, 2026 at 4:30 p.m. ET Chief Financial Officer - Daniel E. Bachus Chairman and Chief Executive Officer - Brian E. Mueller Operator: Good day, and welcome to the Grand Canyon Education second-quarter 2026 earnings conference call. At this time, all participants are in listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, press *11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Daniel E. Bachus, Chief Financial Officer. Please go ahead. Daniel E. Bachus: Joining me on today's call is our chairman and CEO, Brian E. Mueller. Please note that many of our comments today will contain forward-looking statements that involve risks and uncertainties. Various factors could cause our actual results to be materially different from any future results expressed or implied by such statements. These factors are discussed in our SEC filings and including our annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. We undertake no obligation to provide updates with regard to the forward-looking statements made during this call and we recommend that all investors review these reports thoroughly before taking a financial position in GCE. And with that, I will turn the call over to Brian. Brian E. Mueller: Good afternoon, and thank you for joining Grand Canyon Education's second quarter 2026 conference call. There has been major concern from investors regarding Grand Canyon Education stock performance over the last 12 months. This is true in spite of the fact that GCE's financial performance continues to be remarkably consistent as it has been for 18 years. I am going to start this call with the reason I believe this is happening. The following quote from a recent Wall Street Journal article summarizes what I believe. Major industry shakeups occur when structural shifts such as technological breakthroughs, regulatory changes, or economic pressures allow agile, fast-moving companies to displace legacy incumbents and seize market leadership. In the current economic landscape, market leadership is transitioning at a record pace due to chaos fatigue and rapid AI adoption. Legacy corporations are frequently losing ground to leaner, technology-native competitors, close quote. I believe it is taking the investment community time to understand the new environment that emerges when major structural changes take place in what has been an industry that is very slow to change. This is true across industries like artificial intelligence, software, cybersecurity, energy, power, legal services, aerospace, defense, etcetera. But it is especially true in higher education. Small private universities have been closing for decades. But closures are going to happen at an increasing rate going forward. Last week, this momentum went to another level when WASC announced 4 prominent universities were put on warning status due to extreme financial instability. Grand Canyon Education and its largest partner, Grand Canyon University, as well as its 19 other partners represent a good example of an organization that has responded to technology breakthroughs, regulatory changes, and economic pressures. It is an agile, fast-moving company that is displacing legacy incumbents. With all the headwinds in the higher ed landscape, and the very difficult second quarter comps, GCE delivered another great quarter that included a $0.14 earnings beat over consensus estimates. But as you will see, the changes we continue to make to respond to the opportunities that exist in this volatile environment are going to come at an increasing rate and make it difficult for many legacy incumbents to keep pace. But we will continue and will allow us to continue to produce extremely positive results. I want to review the 3 major platforms at Grand Canyon Education. Platform 1, online campus at Grand Canyon University. New online enrollments grew in the low-single-digits in the second quarter against very tough comps. And total enrollment grew at just under 8%. GCU's long-term goals are to grow new enrollments in the mid-single-digits and grow total enrollments at 6% to 7% on an annual basis. There is a lot that goes into this, but I want to focus on 2 things that differentiate our strategy and continue to produce consistent results. Number 1 is our outside development team that works directly with over 6,000 organizations across the country to develop their talent from inside. From school districts to hospitals, counseling centers, social work organizations, military bases, etcetera, over 32% of GCU students are generated through this activity, and it continues to grow. Number 2, over 70% of GCU's online students are pursuing degrees in areas where a license is required. Believe that some students pursuing business or technology, for example, careers, will look for shorter, more direct path to get started. This is continuing to impact enrollments at many institutions. GCU will offer certificate programs as well as degree options for those students. However, the bulk of degree growth on our online campus is happening in healthcare, counseling, social work, etcetera, areas that require accredited degree programs that lead to licensure. These degree and licensure requirements are not going to change. There are huge shortages in those areas and very few options offered at a distance because of student teaching, observation hours, internships, clinicals, etcetera, that are required and difficult for universities to provide. We have developed a $300 million proprietary administrative system that allows us to serve those students at a distance. We have been moving in this direction for years, and have developed a strong brand with employers. And built tremendous momentum as a result. Platform 2, the traditional ground campus at Grand Canyon University. GCU started with under 1,000 students 18 years ago and now has just under 25,000 students. This is unprecedented growth. GCU now has more students living on campus in university-owned housing than any university in the country. The average incoming GPAs are over 3.5. GCU has invested over $2 billion in the campus. And it is currently ranked the 20th-best campus in the country. GCU has 22 advisory boards and over 800 organizations in Arizona that are represented. GCU has not raised tuition in 17 years, and the average student takes out less debt than the average state university student. As universities continue to raise tuition, and more universities close, our advantages will continue to grow. However, in addition to those advantages, GCU is adding 3 important new tracks. That will increase student enrollment opportunities to grow the ground campus to 50,000 students. Number 1, the Sheila and Mike Ingram Honors College. The Honors College will grow from 3,000 to 3,500 students this fall. The goal is to grow to 7,000 students by 2030. The average incoming GPAs are over 4.1 weighted, and the students come from all 50 states. GCU is building a 51,000-square-foot, three-story building. To house the college that will be a state-of-the-art facility. GCU was building an Honors College Council that will be a who's who of successful Arizonans and many others who will provide guidance to the college and its students. This will be one of the largest honors colleges in the country. GCU currently has some of the best high school students turning down Ivy League scholarships in order to attend the Ingram Honors College. The fact that the college sits in one of the fastest-growing cities and economies in the country will provide the graduates with incredible employment opportunities. Number 2, GCU is opening an 11th college that will be called the College of Construction and Industrial Technologies. It is opening with two bachelor's programs and 11 one-year certificate programs to grow America's manufacturing and construction labor force. There are huge shortages in these areas, and the first goal is to add thousands of students in this college in the first full year of operation, which starts in September. This will add significantly to the revenue performance of both GCU and GCE going forward. GCU now has 13 fully built-out programs: two baccalaureate programs and 11 certificate programs in advanced manufacturing, construction, and microchip technology. Currently, 20% of students studying in these areas live on campus. And some of the certificate students are going to stay and apply to GCU's engineering bachelor's program when they have completed the year. These programs have high retention rates and are very profitable. Number 3, GCU's 12th college. Is also starting in the upcoming year and will be a law school. GCU intends to make it one of the largest law schools in the country. There is a severe shortage of attorneys in Arizona and the Greater Southwest. GCU is working closely with the Arizona Supreme Court. They have been very encouraging, and we plan to open in the fall of 2027. GCU has written a curriculum for the program and is in the process of hiring a dean. GCU anticipates offering a 3+2 and a 3+3 program, which will boost our prelaw undergraduate enrollment numbers and supply admission-ready candidates for the law school. GCU students have been asking for this opportunity for years. GCU believes a majority of the students will live on campus. With the addition of these 3 new tracks, the path to 50,000 students on the ground campus is becoming clearer. Number 3, the hybrid campuses. Grand Canyon Education's hybrid campuses had an increase in enrollment year-over-year of 8.5%. In the second quarter, excluding the closed sites and those that are in teach-out. Which exceeded our expectation. We have turned the corner with this platform, and the future is very bright. We currently have 47 locations that are slightly above 60% capacity. The goal is to have 80 locations with about 300 nursing students per location, and an additional 300 students in other healthcare related programs. We opened a new site in the six months ended June 30, 2026 and closed one site, so the total number of sites remains at 47. We plan to open one new site in the fall 2026. And 3 to 5 new sites in 2027. Additional program offerings are being added including a graduate nursing program with specializations at Northeastern University. Which started this past fall. A hybrid occupational therapy bridge to master's program to the already successful Saint Catherine's occupational therapy assistant hybrid program beginning in fall 2026. An online health science degree with Utica University and GCU launched a bachelor of science in occupational therapy assistance program and a speech-language pathology program in February 2025 at its Phoenix West Valley location. GCU is also adding a bachelor of science in medical lab sciences program in the fall 2026. We currently have nearly 6,000 students attending our hybrid campuses. The revenue per student of these students is more than three times that of an online student. When we have 80 locations built out, with approximately 600 students per location, the capacity will be just under 50,000 students. The prerequisite business that supports this growth continues to take off. The general education science courses, that are designed to get students academically prepared for the ABSN program has enrolled more than 25,000 students to date and has tremendous room for additional growth. We believe the investment community is missing the major industry shakeup that occurs when structural shifts such as technology breakthroughs, regulatory changes, or economic pressures allow agile, fast-moving companies to displace legacy incumbents and seize market leadership. This is happening right now with Grand Canyon Education in the higher education industry. The online campus will continue to grow at 6% to 7%, The ground campus, which has been flat, is reignited with the future growth of the Honors College the huge potential of the College of Construction and Industrial Technologies, and the start of what will be a very large law school. We expect the hybrid campus business to continue to grow in the teens or greater in the future. Service revenue was $264 million for the second quarter of 2026, an increase of $16.5 million or 6.7% as compared to $247.5 million for the second quarter of 2025. The increase year-over-year in service revenue was primarily due to an increase in university partner enrollments of 7.6%, including an increase in GCU online enrollments of 7.8%. And university partner enrollments at the off-campus classroom and laboratory sites, excluding sites in teach-out or closed of 18.5%. Partially offset by one fewer day of ground traditional revenue at GCU of $1 million in the quarter as a result of the shift of one day of revenue from the second quarter to the first quarter as compared to last year's spring start date. And a slight decrease in revenue per student year-over-year partially due to the contract modifications with some of our university partners in which our revenue share percentage was reduced in exchange for us no longer reimbursing the partner for certain faculty costs which had the effect of reducing revenue per student and a slight decline year-over-year in revenue per student for online students due to the continued mix shift to students that have a slightly lower net tuition rate. And a slight decline year-over-year in ground students, which generate a higher revenue per student than online students. Operating income and operating margin for the three months ended June 30, 2026 was $58.2 million and 22% respectively as compared to $51.8 million and 20.9% respectively for the same period in 2025. Net income was $45.9 million for the second quarter of 2026. GAAP diluted income per share for the three months ended June 2026 is $1.75. As adjusted, non-GAAP diluted income per share for the three months ended June 30, 2026 is $1.81, which is $0.14 above consensus estimates. With that, I would like to turn it over to Daniel E. Bachus, our CFO, to give a little more color on our results, talk about changes in the income statements and balance sheet and other items as well to discuss 2026 guidance. Daniel E. Bachus: Thanks, Brian. Included in our Form 8-K filed with the SEC, we have included non-GAAP net income and non-GAAP diluted income per share for the three months ended June 30, 2026 and 2025. We believe the non-GAAP financial information allows investors to develop a more meaningful understanding of the company's performance over time. As adjusted, non-GAAP diluted income per share for the three months ended June 30, 2026 and 2025 is $1.81 and $1.53, respectively. In addition, included in our Form 10-Q filed today is the announcement that on July 29, 2026, we entered into an amended and restated master services agreement with GCU. Terms of the amended MSA are generally consistent with the letter of intent that was previously announced. The amended MSA is effective as of July 1, 2026, has an initial term of 15 years running through June 30, 2041, and unless notice of nonrenewal is given at least 18 months in advance of the end of the initial term or any renewal term, will automatically renew up to three additional five-year renewal terms. The amended MSA eliminates GCU's ability to terminate for convenience, while also eliminating any related early termination fees owed by GCU. Prior to the end of the term. Restructures the service fees such that going forward service fees are calculated as 60% of tuition and academic-related fees only. Ancillary fees and other revenue are for the sole benefit of GCU. And a reimbursement payment that the university had been making to GCU in respect of certain academic-related costs is eliminated. Last, in lieu of the prior nonrenewal fee, that was due if GCU did not renew the MSA at the end of the term, the company would continue to provide services to and receive service fees from GCU for an 18-month period following termination. As previously disclosed, the company estimates that under the amended MSA, its service revenue will be reduced by approximately $20 million annually, but its operating income will decline by an immaterial amount and should not exceed $1 million per quarter due to elimination of the academic reimbursement. Service revenue was higher than our expectations in the second quarter of 2026 primarily due to higher than expected hybrid and traditional campus summer school enrollments. Online enrollments approximated our expectations. In addition, approximately $1 million of revenue that we had planned to be recognized in the third quarter of 2026 was recognized in the second quarter. The second quarter operating margin was positively impacted on a year-over-year basis by the higher revenue the contract modifications, and lower general and administrative expenses partially offset by additional spend for 2026 partner initiatives. Effective tax rate for the second quarter of 2026 was 24.7% compared to 24.5% in the second quarter of 2025 and our guidance of 24.9%. The effective tax rate increased over the prior year primarily due to state income taxes. We did make contributions in lieu of state income taxes this month, that will increase general and administrative expenses in the third quarter while reducing income tax expense in an equal amount, three-quarters of which will be in the third quarter and one-quarter in the fourth quarter. Turning to the balance sheet and cash flows. Total unrestricted cash and cash equivalents and investments as of June 30, was $274.5 million. GCE CapEx in the second quarter of 2026 including CapEx for new off-campus classroom and laboratory sites, was approximately $10.7 million or 4.1% of service revenue. We anticipate CapEx for 2026 will be between $30 and $35 million. We repurchased 471,000 shares of our common stock in the second quarter of 2026 at a cost of approximately $75.3 million. And another 169,000 shares were repurchased since June 30, 2026. We have $124.1 million remaining available as of today under our share repurchase authorization. The board and the company intend to continue using its cash flow from operations to repurchase its shares. We are also currently working with our primary banking partner on a line of credit that we hope will be in place by the middle of August. That will allow us to continue buying back stock at current or higher levels. Given that the size of the line has not yet been finalized, the interest expense and the impact of any accelerated stock purchases are not included in the guidance below. Will file an 8-K with further details when it is finalized. Last, I would like to provide color on the guidance we have provided in our 8-K filed today. As a reminder, the guidance that we have provided in the outlook section of our 8-K filed today is GAAP net income and diluted income per share, with the components to adjust GAAP amounts to non-GAAP as adjusted net income and non-GAAP as adjusted diluted income per share. We have updated full year 2026 guidance to include the second quarter revenue and earnings beat. We have made adjustments to second half revenue and operating income guidance previously provided to reflect the impact of the amended MSA and the approximately $1 million in revenue that was recognized in Q2 that had been forecasted to be recognized in the third quarter of 2026. We have also narrowed the range in both the third and fourth quarters to reflect current trends. We have also reflected the $5 million in contributions made in lieu of state income taxes that will be paid in the third quarter in higher G&A expenses and lower income tax expense and decreased interest income and decreased the weighted average share count. As we have purchased and plan to continue to repurchase more stock than was originally forecasted. I realized that all of these changes need to be pushed through your model. But the result should be adjusted EPS that is $0.03 above consensus estimates in the second half of 2026 when the impact of the $1 million in revenue that was recognized in the second quarter instead of the third is considered. And $0.14 above consensus estimates for the full year of 2026. On a more detailed basis, including current trends, revenue is expected to decrease by $4 million and $6 million in the third and fourth quarters of 2026, respectively, due to the amended and restated MSA while instructional cost and services will be reduced by $3 million and $5 million in the third and fourth quarters of 2026, respectively. As we will no longer be making a certain academic reimbursement to GCU. $1 million of revenue was accelerated from the third quarter of 2026 to the second quarter, and recognized in the financials we reported today. The year-over-year changes in the start and end dates of the semesters for GCU's ground traditional campus will move $8.3 million of revenue from the third quarter to the fourth quarter in comparison to last year. The change between the third and fourth quarter is more significant this year than in past years as GCU's fall semester for its ground traditional campus begins and ends 6 days later this year than last year. We continue to anticipate that new online enrollments to be up year-over-year in the mid to high single digits during the second half of 2026. The second quarter 2026 new start growth rate was expected given that in the prior year, new starts were up in the mid-teens as the second quarter is not a traditional back-to-school time. Total online enrollment growth continues to be pressured by increasing graduations and a continued decline in reentries, students returning to school after a break, due to the high retention rates. We continue to anticipate online revenue per student will be slightly down year-over-year due to mix shift to programs that have slightly lower net tuition rates. The revenue range continues to assume that GCU's ground enrollment will be approximately 25,000 in the fall. The reported ground number continues to include GCU hybrid, which continues to grow and professional study students, which we expect to be slightly down on year-over-year basis. Total ground enrollment continues to be impacted by the lower fall 2024 new start and the growing number of graduates year-over-year as a significant number of ground traditional students continue to graduate in less than 4 years. We continue to expect total enrollment growth rate for the hybrid pillar to remain in the teens during the second half of 2026. As has been discussed previously, the hybrid growth rate is currently being impacted by the fact that we now have 14 locations that are at or near capacity, and thus we have little to no growth year-over-year in total enrollments at those locations. And from a new enrollment perspective, 22 locations will not have year-over-year growth in new enrollments on a year-over-year basis in the fall, as although 8 locations are not at state authorized capacity, we started the maximum number of students allowed during fall 2025. The higher than expected new starts in spring 2026 will also have an impact on new start growth rates at a few locations in the fall due to capacity constraints. But total enrollment should continue to meet or exceed our expectations. We remain hopeful that some of these locations will get local regulatory approval to grow in the future. As they currently have wait lists, and we still have a lot of opportunities at the other locations. On the expense side, we continue to make investments to support our university partners' growth. Continue to anticipate margin expansion in 2026. As has been previously discussed, the online programs primarily that lead to licensure in which GCU is growing at an accelerated rate either cost us more to service than the traditional online programs or are at lower net tuition rates which is putting some pressure on margins. We also continue to absorb significant increases in technology services and benefit costs. We have some pressure on margins in the third quarter, as the GCU traditional campus start and end dates move back this year but that reverses in the fourth quarter. As it relates to the hybrid pillar, we will incur additional cost for the new hybrid locations that have opened in the last year or will open in late 2026, early 2027. But we are experiencing increased site-level profitability due to the increasing enrollments. Projected general and administrative expenses have increased in our guidance in the third quarter of 2026 by $5 million for the contributions in lieu of state income taxes of $5 million. Approximately 75% of this is recognized as a reduction in income tax expense in the third quarter of 2026 with the remaining recognized as a reduction in income tax in the fourth quarter. This is consistent with the prior year. We are estimating the interest income will decline year-over-year in 2026 due to declining cash balances, due to more aggressive stock buybacks and a declining interest rate environment. The effective tax rates for the remaining two quarters of 2026 have been reduced due to the contributions in lieu of state income taxes to 20.8% and 23.2% in the third and fourth quarters respectively. With a full year tax rate of 23.2%. Had the contributions not been made, we estimate our effective tax rate would have been 24.7% and 24.4% in the third and fourth quarters, respectively. These effective tax rates continue to be impacted by higher state income taxes as we continue to add new sites in states outside of Arizona. Which have higher state tax rates and other factors including the decrease year-over-year in the excess tax benefit due to a decline in our stock price. Our weighted average shares guidance takes into account the significant amount of stock we have or plan to purchase. We anticipate continuing to use our excess cash to repurchase shares as the board believes the stock is materially undervalued based on the metrics it uses to evaluate this, including the ratio of enterprise value to adjusted EBITDA and free cash flow yield in comparison to the other S&P 500 companies. I will now turn the call over to the moderator so that we can answer questions. Operator: Thank you. As a reminder, to ask a question, please press *11 on your telephone and wait for your name to be announced. To withdraw your question, press *11 again. Our first question will come from the line of Jasper Bibb with Truist Securities. Your line is open. Jasper Bibb: Hey. Good afternoon, guys. Yeah. Really nice online enrollment figures today. I obviously, kind of one of the big topics around the space has been a potential impact of consumer adoption of GenAI on customer acquisition and enrollment just kind of curious, you know, hoping maybe you could share what your experience has been with inquiry volumes, this kind of AI theme, and how you are reacting to the kind of broader consumer shift? Brian E. Mueller: Yeah. We have listened to other calls, and so we have heard that too. The you know, the way we are getting over 30% of our starts, and I think it is gonna grow to 40% of our starts, has nothing to do with generating leads. It has to do with meeting, the need of organizations throughout the country. it is just such a high quality way for a university to serve the needs of the economy. And so we are shielded from some of the growth that causes a decline in the efficiency of marketing spend. That, you know, we are impacted the same way others are from the standpoint of web leads being down. But we are not as impacted because we do not have to get our growth from increased lead amounts like other people do. AI is absolutely the future. And positioning ourselves so that the best stories come out when people go to AI to check on Grand Canyon University is gonna be the future of this whole market. And we are working very hard to position the best things about GCU, especially, but other partners as well. So that they will come up when people, look for us. The Honors College. The opening of the law school, the tremendous contribution to what it has to be a rebuilding of the labor force in construction, industrial technologies, our relationship, our growing relationship with TSMC, which is the largest chip manufacturer in the world that sits 20 minutes from here, and we are doing we are we are opening incredible partnerships with that company, with Amkor, And so every everybody's impacted to some extent, by the shift away from searches to AI, we are not as impacted by it. And we expect our growth rates that we talked about today not to be impacted by any of that. And I think it will only get better for us as we go forward. cannot under emphasize, you know, the other structural changes that have taken place. And thank you for picking up coverage for us, but you know, for 4 or 5 years, we were just fighting the negative PR that came from the from the attack on that was on us by the Biden administration. that is all done. that is all gone. Now, people are not even talking about that. People are talking about our honors college. They are talking about our new law school. They are talking about those kinds of things, which has changed everything for us. And so that is kind of a long-winded answer to your question, but, we are not we are just not as impacted by those changes like people who are more dependent on those things are. Jasper Bibb: Right. No, that makes sense. And thanks for all the detail there. It sounds like a lot of exciting things going on. Maybe just last one for me. On the new student loan rules that took effect on July 1st, I know it is early, probably had a couple of weeks of experience with this. But could you just walk us through maybe how you are managing that transition? You know, there is some new processes, new borrowing caps for different programs. Just any detail on how that is going so far would be great. Brian E. Mueller: But I assume you are talking about the master's degree program limitations? On loans? Jasper Bibb: Yeah. And I think there is some just different operational processes of how that has to be handled on your end and things like that. So Brian E. Mueller: Yeah, I will talk about that one because I think that is the big one. We have been encouraging the Department of Ed to do that for years. You know, when the rules around loan amount for master's degree students, graduate level students were put in place, it was when most graduate students were students who graduated from a baccalaureate program and then entered a master's degree program and spent 2 years doing that. And sometimes they would be married with kids, and they needed living expense money. that is all changed in the last 30 years. 90%+ of students are now in graduate programs are doing it online. And they are mid career professionals, and they have salaries, and they have benefits. And they do not need that living expense money. But since they could get it, they would take it. And then when loans did not have to be paid back, they did not get paid back. And we told the Department of Ed for years, adjustments should be made to reflect who graduate students are today versus who they used to be. We have a thing called responsible borrowing. We have a thing called responsible borrowing. And we would show students if you are gonna borrow money to do your program and you borrow the amount to cover the direct cost, this would be your payment And then if you borrow the full amount, including living expense money, this will be your payments. And we were actually criticized for doing that by the previous administration because we were not being we were trying to keep people from over borrowing. And that was that was just bound to lead to the to loan defaults. And so that major change has taken place, we are fully behind it, and it has not impacted any of our programs. Our tuitions are way under the amount the students can borrow. And so we are not impacted by it at all. In fact, we think it is a really good thing. Jasper Bibb: Got it. Thank you for taking the questions. Brian E. Mueller: Yep. Thank you. Operator: Thank you. 1 moment for our next question. And that will come from the line of Jeffrey Silber with BMO Capital Markets. Your line is open. Ryan: Hey. Thank you so much. This is Ryan on for Jeffrey. I was just curious if you think your competitors are intentionally shifting their degree mix to more licensure programs in the wake of the perceived AI risk on some of those certain degrees. And do you think we could see a larger tuition differential between different majors and programs in coming years. Thank you. Brian E. Mueller: No. Good question. To the first question, it is just the opposite. I will not name names, but there are a number of what were pretty strong players in the counseling area. And there is a huge shortage of counselors in America. That because of CACREP accreditation requirements dropped their programs. They just did not have the technology and the resources to provide services to students at a distance that allowed them to successfully complete you know, clinical hours and observation hours and internship hours and all those things. And so it is just the opposite. We see more people dropping out of those programs that are getting into them. And so we think going forward, we will be the major player in providing teachers, counselors, social workers, nurses, other healthcare fields, accounting. where you got to sit for the CPA. We openly embrace and we are we are excited about the law school from that standpoint. Because of bar pass rates. We intend to inject the same kind of student support services around and the academic support services that we do with programs in education where there are content tests that are that are necessary. Nursing where the examination is necessary. We look forward to producing extremely high first-time board pass rates. Those things are challenges to us. It is more difficult, but the difficulty of it once you have made the investment in it, separates you from the rest of the pack. The people who just are not willing to do those things. And so the answer to your first question is it is no. We do not we do not expect to see that. In fact, we are seeing the opposite. Ryan: The second question Differentiated tuition rates by program. Brian E. Mueller: Yeah. I think we will see some of that. I think the thing that we are gonna see more than anything is what is been true for 4 or 5 years. Which is the way to grow margins in this business is to decrease the cost to acquire a student. And the stronger the brand that you have, the less amount of money it costs to acquire a student and the more you can freeze tuition, which we have done in our ground campus for 18 years and pretty much most online programs for over a decade. I do not see you know, a tremendous need to differentiate more than we already are other than the ABSN program is a premium price program. it is very expensive to operate, but the value that it offers to students in terms of the salaries that they make and the jobs that they can get more than make up for that premium price And the law school will be a premium price program as compared to others but the payout is the same thing. And so you know, we are we are we are excited about that from the standpoint of the number of students we think we can have. Revenues per student is gonna be very high. And the margins are gonna be significant as long as we can produce the results. Other thing that is gonna happen is that we think that we can really increase our ground enrollment in our prelaw program. Because students will be able to stay right here and hopefully do the whole thing in 5 years. So no, we do not I do not think other than the ABSN program, you know, maybe programs like occupational therapy law, certainly, there will be some differentiation there. But other than that, not more than there is today. Daniel E. Bachus: And just to add on that, GCU has always had differentiated tuition rates. If you look at for example, bachelor's programs, the not all bachelor's programs are the same rate and same at the master's level. So, I think GCU's been doing that for as long as I can remember, and so if others are doing that, probably makes sense. Ryan: I appreciate it. And then just on the hybrid programs, heard the commentary on the long-term growth. I was just curious if you can update us on where those programs stand from a profitability standpoint today. And then where do you think the margins could go as you really scale that up? Daniel E. Bachus: Yeah, they are profitable. This year, they will be profitable. How much? I would say you know, we do not really measure it on a standalone basis. But, it will be profitable. Those programs will be profitable. And where they could go, I mean, again, you know, we do not allocate costs or whatever, but I think on a site basis, if you just look at all those locations on a site basis, I think it could be 20 plus percent margins on a on a site basis. Ryan: Great. Thanks so much. Brian E. Mueller: Thank you. Daniel E. Bachus: We have reached the end of our second quarter conference call. We appreciate your time and interest in Grand Canyon Education, and if you still have questions, please contact myself, Daniel E. Bachus. Thank you for your time. Operator: This concludes today's program. Thank you all for participating. You may now disconnect. 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This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends Grand Canyon Education. The Motley Fool has a disclosure policy. Grand Canyon Education (LOPE) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in Grand Canyon Education, Inc.? Here are five stocks we like better. Strong Q2 performance: Service revenue rose 6.7% to $264 million, operating margin expanded to 22.0%, and adjusted EPS increased to $1.81, beating consensus by $0.14. Hybrid education is a key growth driver: Hybrid-campus enrollment grew 18.5% year over year, with the company targeting 80 locations and expecting the programs to become profitable in 2026. Amended GCU agreement changes revenue economics: The new 15-year agreement is expected to reduce annual service revenue by about $20 million, but management said the operating-income impact should be immaterial; the company also repurchased approximately $75.3 million of shares in Q2. 3 mid-caps with RSIs that scream oversold Grand Canyon Education (NASDAQ:LOPE) reported higher second-quarter revenue and earnings, while executives outlined plans to expand enrollment through its online, traditional campus and hybrid healthcare education platforms. Service revenue rose 6.7% year over year to $264 million in the second quarter of 2026, driven primarily by a 7.6% increase in university partner enrollments. Operating income increased to $58.2 million from $51.8 million a year earlier, and operating margin expanded to 22.0% from 20.9%. → Why SK hynix Could Be the Best AI Chip Stock to Buy Now GAAP diluted earnings per share were $1.75, while adjusted diluted EPS was $1.81, up from $1.53 in the prior-year period. Chairman and CEO Brian Mueller said adjusted EPS exceeded consensus estimates by $0.14. “With all the headwinds in the higher ed landscape and the very difficult second quarter comps, GCE delivered another great quarter,” Mueller said. → Microsoft Just Flipped the AI Spending Narrative Overnight Mueller highlighted Grand Canyon Education’s three principal growth platforms: Grand Canyon University’s online operations, its traditional ground campus and its hybrid campus network focused on nursing and other healthcare programs. New online enrollments increased by a low-single-digit percentage in the quarter against what Mueller described as difficult comparisons, while total online enrollment grew just under 8%. The company’s long-term targets call for mid-single-digit new online enrollment growth and annual total enrollment growth of 6% to 7%. → Carrier Earnings Could Send the Stock to a New All-Time High Mueller said more than 32% of GCU students are generated through an outside development team that works with more than 6,000 organizations, including school districts, hospitals, counseling centers and military bases. He also said more than 70% of online GCU students are pursuing degrees in licensure-related fields such as education, healthcare, counseling and social work. Chief Financial Officer Dan Bachus said the company expects new online enrollments to rise in the mid- to high-single-digit range during the second half of 2026. Total online enrollment growth continues to face pressure from higher graduation levels and fewer students reentering after breaks, he said. Online revenue per student is expected to decline slightly year over year because of a mix shift toward programs with lower net tuition rates, according to Bachus. At GCU’s traditional ground campus, enrollment is expected to be about 25,000 students in the fall. Mueller said GCU is pursuing a longer-term goal of reaching 50,000 ground-campus students, supported by the expansion of its honors college, a new College of Construction and Industrial Technologies, and a planned law school. The Sheila and Mike Ingram Honors College is expected to grow from 3,000 to 3,500 students this fall, with a target of 7,000 students by 2030. The College of Construction and Industrial Technologies will begin its first full year of operation in September with two bachelor’s programs and 11 one-year certificate programs. GCU plans to open a law school in fall 2027 and is hiring a dean after completing the program curriculum. Mueller said the construction and industrial technology programs include offerings in advanced manufacturing, construction and microchip technology. He also cited partnerships and opportunities related to companies including Taiwan Semiconductor Manufacturing Co. and Amkor. Enrollment at Grand Canyon Education’s hybrid campuses increased 18.5% year over year during the second quarter, excluding closed and teach-out sites. The company operates 47 locations, which were slightly above 60% capacity, and nearly 6,000 students attend hybrid campuses. The company’s objective is to operate 80 locations with roughly 300 nursing students and another 300 students in other healthcare-related programs at each site. Bachus said the company plans to open one location in fall 2026 and three to five additional sites in 2027. Mueller said hybrid-campus revenue per student is more than three times that of an online student. The prerequisite business supporting hybrid programs has enrolled more than 25,000 students to date, he said. Bachus said the hybrid programs are expected to be profitable in 2026. While the company does not allocate all costs to assess standalone profitability, he said site-level margins could reach about 20% as enrollment scales. Some hybrid locations are constrained by state-authorized capacity. The company has 14 locations at or near capacity, and Bachus said 22 locations will not show year-over-year new-enrollment growth in the fall because some started the maximum allowable number of students in fall 2025. Grand Canyon Education entered into an amended and restated master services agreement with GCU on July 29. The agreement took effect July 1, has an initial 15-year term through June 30, 2041, and can renew for up to three additional five-year periods unless either party provides notice of non-renewal at least 18 months before the end of a term. The revised agreement eliminates GCU’s ability to terminate the agreement for convenience and changes service fees to 60% of tuition and academic-related fees. Ancillary fees and other revenue will belong solely to GCU, while an academic-cost reimbursement payment previously made by Grand Canyon Education will be eliminated. The company estimates the amended agreement will reduce annual service revenue by about $20 million. However, Bachus said the operating-income impact should be immaterial and should not exceed $1 million per quarter because the academic reimbursement payment has been eliminated. For the second half of 2026, the company expects the amended agreement to reduce revenue by $4 million in the third quarter and $6 million in the fourth quarter. It expects costs and services to decline by $3 million and $5 million in those respective quarters. Bachus said the updated outlook implies adjusted EPS that is $0.03 above consensus expectations for the second half, after accounting for approximately $1 million of revenue recognized in the second quarter that had previously been expected in the third quarter. Full-year adjusted EPS is projected to be $0.14 above consensus, according to the company. Grand Canyon Education ended June with $274.5 million in unrestricted cash, cash equivalents and investments. Capital expenditures totaled about $10.7 million during the second quarter, and the company expects 2026 capital expenditures of $30 million to $35 million. The company repurchased 471,489 shares during the second quarter for approximately $75.3 million and bought another 169,106 shares after June 30. It had $124.1 million remaining under its repurchase authorization. Bachus said the company is working with its primary banking partner on a line of credit it hopes to have in place by mid-August, which could support continued share repurchases. Details, including the size of the facility, had not been finalized at the time of the call. 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. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "Grand Canyon Education Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for July 2026.

This article first appeared on GuruFocus. Service Revenue: $264 million in Q2 2026, up 6.7% year-over-year from $247.5 million in Q2 2025. Operating Income: $58.2 million for Q2 2026, compared to $51.8 million in the prior-year quarter. Operating Margin: 22% in Q2 2026, up from 20.9% in Q2 2025. Net Income: $45.9 million for the second quarter of 2026. GAAP Diluted EPS: $1.75 for Q2 2026. Non-GAAP Adjusted Diluted EPS: $1.81 for Q2 2026, a $0.14 beat over consensus estimates and up from $1.53 in Q2 2025. University Partner Enrollments: Increased 7.6% year-over-year, including a 7.8% rise in GCU online enrollments. Hybrid Campus Enrollments: Up 18.5% year-over-year in Q2 2026, excluding closed sites and those in teach-out. Cash and Investments: Total unrestricted cash and cash equivalents and investments were $274.5 million as of June 30, 2026. Capital Expenditures: Approximately $10.7 million in Q2 2026, or 4.1% of service revenue; full-year 2026 CapEx anticipated between $30 million and $35 million. Share Repurchases: Repurchased 471,489 shares in Q2 2026 at a cost of approximately $75.3 million, with an additional 169,106 shares repurchased after June 30, 2026. Effective Tax Rate: 24.7% in Q2 2026, compared to 24.5% in Q2 2025. Warning! GuruFocus has detected 2 Warning Signs with LOPE. Is LOPE fairly valued? Test your thesis with our free DCF calculator. Release Date: July 30, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Grand Canyon Education Inc (NASDAQ:LOPE) delivered a strong second quarter with a $0.14 earnings beat over consensus estimates, driven by higher-than-expected hybrid and traditional campus summer school enrollments. The company's online campus at Grand Canyon University saw total enrollment grow by just under 8%, with new enrollments growing in the low single digits against tough prior-year comparisons, and management expects mid-to-high single-digit new enrollment growth in the second half of 2026. The hybrid campus platform is gaining momentum, with enrollment up 18.5% year-over-year (excluding closed sites and teach-outs), and the company plans to expand from 47 to 80 locations, targeting nearly 50,000 students at full capacity. Grand Canyon Education Inc (NASDAQ:LOPE) is diversifying its growth drivers with new initiatives, including the expansion of the Honors College, the launch of a College of Construction and Industrial Technologies, and the planned opening of a law school in 2027, which could boost ground campus enrollment to 50,000 students. The company has a strong balance sheet with $274.5 million in cash and investments, and it continues to aggressively repurchase shares, with $124.1 million remaining under its authorization and plans to secure a line of credit to accelerate buybacks. Grand Canyon Education Inc (NASDAQ:LOPE) faces ongoing pressure on online revenue per student due to a mix shift toward programs with lower net tuition rates, which could impact future revenue growth. The amended master services agreement with GCU is expected to reduce service revenue by approximately $20 million annually, although operating income impact is expected to be immaterial. Total online enrollment growth is being pressured by increasing graduations and a decline in reentries, as high retention rates reduce the number of students returning after breaks. The hybrid campus growth rate is constrained by capacity issues, with 14 locations at or near capacity and 22 locations unable to grow new enrollments in the fall due to state authorized limits, limiting near-term expansion. The company is absorbing significant increases in technology services and benefit costs, and margins face pressure from higher costs associated with lead-to-licensure programs and new hybrid site openings, though management expects margin expansion for the full year. Q: How is Grand Canyon Education (GCE) navigating the potential impact of generative AI on customer acquisition and enrollment, and what is your experience with inquiry volumes?A: Brian Mueller (Chairman & CEO) explained that GCE is shielded from the decline in marketing efficiency caused by AI because over 30% of its starts come from its outside development team working directly with over 6,000 organizations, a figure expected to grow to 40%. While web leads are down industry-wide, GCE does not rely on increased lead volume for growth. The company is actively positioning its best storiessuch as the Honors College, the new law school, and partnerships with TSMCto ensure favorable results when prospective students use AI to research the university. Q: What is the impact of the new student loan rules that took effect on July 1, particularly regarding limitations on loans for master's degree programs?A: Brian Mueller (Chairman & CEO) stated that GCE fully supports the new rules, which limit living expense borrowing for graduate students. He noted that the vast majority of graduate students are now mid-career professionals with salaries who do not need living expense loans, and the previous system led to defaults. Since GCU's tuition is well below the borrowing caps, the change has not impacted any of its programs and is considered a positive development. Q: Are competitors intentionally shifting their degree mix toward licensure programs in response to AI risk, and could we see a larger tuition differential between majors in the coming years?A: Brian Mueller (Chairman & CEO) indicated the opposite is happening; competitors are dropping out of licensure programs like counseling due to the difficulty of providing required clinical hours at a distance. GCE is embracing these challenges and expects to be a major player in fields like teaching, nursing, and law. Regarding tuition, he expects some differentiation for premium programs like the ABSN and the new law school, but not a broad shift, as the key to margin growth is reducing student acquisition costs through a strong brand. Q: Can you provide an update on the profitability of the hybrid campus programs and where margins could go as they scale?A: Daniel Bachus (CFO) confirmed that the hybrid programs are profitable this year. While the company does not measure them on a fully allocated stand-alone basis, he estimated that on a site-level basis, the locations could achieve 20%-plus margins as they scale toward the goal of 80 locations with roughly 600 students each. Q: What were the key drivers behind the strong second-quarter results, and how does the new amended Master Services Agreement (MSA) with GCU affect future financials?A: Daniel Bachus (CFO) reported that service revenue was higher than expected due to strong hybrid and traditional campus summer school enrollments. The company beat consensus estimates by $0.14 per share. The new 15-year MSA, effective July 1, 2026, eliminates GCU's ability to terminate for convenience and restructures service fees to 60% of tuition and academic fees. This will reduce annual service revenue by approximately $20 million but will have an immaterial impact on operating income (less than $1 million per quarter) due to the elimination of a reimbursement payment. Q: What is the growth outlook for the online campus, and how are you addressing the pressure on total enrollment growth?A: Brian Mueller (Chairman & CEO) stated that new online enrollments grew in the low single digits against tough comps, with total enrollment up just under 8%. The long-term goal is mid-single-digit new enrollment growth and 6%-7% total enrollment growth. The strategy focuses on the outside development team and the fact that over 70% of online students are in licensure-required fields like education and healthcare, which are less susceptible to AI disruption and have significant shortages. Q: What are the key growth initiatives for the traditional ground campus, and how will they contribute to the goal of 50,000 students?A: Brian Mueller (Chairman & CEO) highlighted three new tracks: the Ingram Honors College, which is growing from 3,000 to 7,000 students by 2030; the new College of Construction and Industrial Technologies, which opens with 13 programs to address labor shortages; and a new law school planned for fall 2027. These initiatives, along with the existing campus advantages, are expected to reignite ground campus growth. Q: What is the current status and future outlook for the hybrid campus pillar?A: Brian Mueller (Chairman & CEO) reported that hybrid campus enrollment grew 18.5% year-over-year, excluding closed sites, exceeding expectations. The company has 47 locations at just over 60% capacity and plans to open one new site in fall 2026 and three to five in 2027. The long-term goal is 80 locations with approximately 600 students each, for a total capacity of nearly 50,000 students. Revenue per student at these sites is more than three times that of an online student. Q: Can you provide more detail on the company's capital allocation strategy, particularly regarding share repurchases?A: Daniel Bachus (CFO) stated that the company repurchased 471,489 shares in Q2 at a cost of $75.3 million and an additional 169,106 shares since June 30. The Board believes the stock is materially undervalued and intends to continue using cash flow for buybacks. The company is also working on a line of credit, expected by mid-August, to allow for continued repurchases at current or higher levels. Q: What are the key factors impacting the company's margin expansion and expense guidance for the remainder of 2026?A: Daniel Bachus (CFO) noted that the company continues to anticipate margin expansion in 2026. Investments are being made to support university partner growth, but the company is absorbing higher technology and benefit costs. The third quarter will see some margin pressure due to the shift in the traditional campus start date, but this reverses in the fourth quarter. The company also made $5 million in contributions in lieu of state income taxes, which will increase G&A expenses in Q3 but reduce income tax expense, lowering the effective tax rate for the second half of the year. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Image source: The Motley Fool. Thursday, July 30, 2026 at 4:30 p.m. ET Chief Financial Officer - Daniel E. Bachus Chairman and Chief Executive Officer - Brian E. Mueller Operator: Good day, and welcome to the Grand Canyon Education second-quarter 2026 earnings conference call. At this time, all participants are in listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press *11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, press *11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Daniel E. Bachus, Chief Financial Officer. Please go ahead. Daniel E. Bachus: Joining me on today's call is our chairman and CEO, Brian E. Mueller. Please note that many of our comments today will contain forward-looking statements that involve risks and uncertainties. Various factors could cause our actual results to be materially different from any future results expressed or implied by such statements. These factors are discussed in our SEC filings and including our annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. We undertake no obligation to provide updates with regard to the forward-looking statements made during this call and we recommend that all investors review these reports thoroughly before taking a financial position in GCE. And with that, I will turn the call over to Brian. Brian E. Mueller: Good afternoon, and thank you for joining Grand Canyon Education's second quarter 2026 conference call. There has been major concern from investors regarding Grand Canyon Education stock performance over the last 12 months. This is true in spite of the fact that GCE's financial performance continues to be remarkably consistent as it has been for 18 years. I am going to start this call with the reason I believe this is happening. The following quote from a recent Wall Street Journal article summarizes what I believe. Major industry shakeups occur when structural shifts such as technological breakthroughs, regulatory changes, or economic pressures allow agile, fast-moving companies to displace legacy incumbents and seize market leadership. In the current economic landscape, market leadership is transitioning at a record pace due to chaos fatigue and rapid AI adoption. Legacy corporations are frequently losing ground to leaner, technology-native competitors, close quote. I believe it is taking the investment community time to understand the new environment that emerges when major structural changes take place in what has been an industry that is very slow to change. This is true across industries like artificial intelligence, software, cybersecurity, energy, power, legal services, aerospace, defense, etcetera. But it is especially true in higher education. Small private universities have been closing for decades. But closures are going to happen at an increasing rate going forward. Last week, this momentum went to another level when WASC announced 4 prominent universities were put on warning status due to extreme financial instability. Grand Canyon Education and its largest partner, Grand Canyon University, as well as its 19 other partners represent a good example of an organization that has responded to technology breakthroughs, regulatory changes, and economic pressures. It is an agile, fast-moving company that is displacing legacy incumbents. With all the headwinds in the higher ed landscape, and the very difficult second quarter comps, GCE delivered another great quarter that included a $0.14 earnings beat over consensus estimates. But as you will see, the changes we continue to make to respond to the opportunities that exist in this volatile environment are going to come at an increasing rate and make it difficult for many legacy incumbents to keep pace. But we will continue and will allow us to continue to produce extremely positive results. I want to review the 3 major platforms at Grand Canyon Education. Platform 1, online campus at Grand Canyon University. New online enrollments grew in the low-single-digits in the second quarter against very tough comps. And total enrollment grew at just under 8%. GCU's long-term goals are to grow new enrollments in the mid-single-digits and grow total enrollments at 6% to 7% on an annual basis. There is a lot that goes into this, but I want to focus on 2 things that differentiate our strategy and continue to produce consistent results. Number 1 is our outside development team that works directly with over 6,000 organizations across the country to develop their talent from inside. From school districts to hospitals, counseling centers, social work organizations, military bases, etcetera, over 32% of GCU students are generated through this activity, and it continues to grow. Number 2, over 70% of GCU's online students are pursuing degrees in areas where a license is required. Believe that some students pursuing business or technology, for example, careers, will look for shorter, more direct path to get started. This is continuing to impact enrollments at many institutions. GCU will offer certificate programs as well as degree options for those students. However, the bulk of degree growth on our online campus is happening in healthcare, counseling, social work, etcetera, areas that require accredited degree programs that lead to licensure. These degree and licensure requirements are not going to change. There are huge shortages in those areas and very few options offered at a distance because of student teaching, observation hours, internships, clinicals, etcetera, that are required and difficult for universities to provide. We have developed a $300 million proprietary administrative system that allows us to serve those students at a distance. We have been moving in this direction for years, and have developed a strong brand with employers. And built tremendous momentum as a result. Platform 2, the traditional ground campus at Grand Canyon University. GCU started with under 1,000 students 18 years ago and now has just under 25,000 students. This is unprecedented growth. GCU now has more students living on campus in university-owned housing than any university in the country. The average incoming GPAs are over 3.5. GCU has invested over $2 billion in the campus. And it is currently ranked the 20th-best campus in the country. GCU has 22 advisory boards and over 800 organizations in Arizona that are represented. GCU has not raised tuition in 17 years, and the average student takes out less debt than the average state university student. As universities continue to raise tuition, and more universities close, our advantages will continue to grow. However, in addition to those advantages, GCU is adding 3 important new tracks. That will increase student enrollment opportunities to grow the ground campus to 50,000 students. Number 1, the Sheila and Mike Ingram Honors College. The Honors College will grow from 3,000 to 3,500 students this fall. The goal is to grow to 7,000 students by 2030. The average incoming GPAs are over 4.1 weighted, and the students come from all 50 states. GCU is building a 51,000-square-foot, three-story building. To house the college that will be a state-of-the-art facility. GCU was building an Honors College Council that will be a who's who of successful Arizonans and many others who will provide guidance to the college and its students. This will be one of the largest honors colleges in the country. GCU currently has some of the best high school students turning down Ivy League scholarships in order to attend the Ingram Honors College. The fact that the college sits in one of the fastest-growing cities and economies in the country will provide the graduates with incredible employment opportunities. Number 2, GCU is opening an 11th college that will be called the College of Construction and Industrial Technologies. It is opening with two bachelor's programs and 11 one-year certificate programs to grow America's manufacturing and construction labor force. There are huge shortages in these areas, and the first goal is to add thousands of students in this college in the first full year of operation, which starts in September. This will add significantly to the revenue performance of both GCU and GCE going forward. GCU now has 13 fully built-out programs: two baccalaureate programs and 11 certificate programs in advanced manufacturing, construction, and microchip technology. Currently, 20% of students studying in these areas live on campus. And some of the certificate students are going to stay and apply to GCU's engineering bachelor's program when they have completed the year. These programs have high retention rates and are very profitable. Number 3, GCU's 12th college. Is also starting in the upcoming year and will be a law school. GCU intends to make it one of the largest law schools in the country. There is a severe shortage of attorneys in Arizona and the Greater Southwest. GCU is working closely with the Arizona Supreme Court. They have been very encouraging, and we plan to open in the fall of 2027. GCU has written a curriculum for the program and is in the process of hiring a dean. GCU anticipates offering a 3+2 and a 3+3 program, which will boost our prelaw undergraduate enrollment numbers and supply admission-ready candidates for the law school. GCU students have been asking for this opportunity for years. GCU believes a majority of the students will live on campus. With the addition of these 3 new tracks, the path to 50,000 students on the ground campus is becoming clearer. Number 3, the hybrid campuses. Grand Canyon Education's hybrid campuses had an increase in enrollment year-over-year of 8.5%. In the second quarter, excluding the closed sites and those that are in teach-out. Which exceeded our expectation. We have turned the corner with this platform, and the future is very bright. We currently have 47 locations that are slightly above 60% capacity. The goal is to have 80 locations with about 300 nursing students per location, and an additional 300 students in other healthcare related programs. We opened a new site in the six months ended June 30, 2026 and closed one site, so the total number of sites remains at 47. We plan to open one new site in the fall 2026. And 3 to 5 new sites in 2027. Additional program offerings are being added including a graduate nursing program with specializations at Northeastern University. Which started this past fall. A hybrid occupational therapy bridge to master's program to the already successful Saint Catherine's occupational therapy assistant hybrid program beginning in fall 2026. An online health science degree with Utica University and GCU launched a bachelor of science in occupational therapy assistance program and a speech-language pathology program in February 2025 at its Phoenix West Valley location. GCU is also adding a bachelor of science in medical lab sciences program in the fall 2026. We currently have nearly 6,000 students attending our hybrid campuses. The revenue per student of these students is more than three times that of an online student. When we have 80 locations built out, with approximately 600 students per location, the capacity will be just under 50,000 students. The prerequisite business that supports this growth continues to take off. The general education science courses, that are designed to get students academically prepared for the ABSN program has enrolled more than 25,000 students to date and has tremendous room for additional growth. We believe the investment community is missing the major industry shakeup that occurs when structural shifts such as technology breakthroughs, regulatory changes, or economic pressures allow agile, fast-moving companies to displace legacy incumbents and seize market leadership. This is happening right now with Grand Canyon Education in the higher education industry. The online campus will continue to grow at 6% to 7%, The ground campus, which has been flat, is reignited with the future growth of the Honors College the huge potential of the College of Construction and Industrial Technologies, and the start of what will be a very large law school. We expect the hybrid campus business to continue to grow in the teens or greater in the future. Service revenue was $264 million for the second quarter of 2026, an increase of $16.5 million or 6.7% as compared to $247.5 million for the second quarter of 2025. The increase year-over-year in service revenue was primarily due to an increase in university partner enrollments of 7.6%, including an increase in GCU online enrollments of 7.8%. And university partner enrollments at the off-campus classroom and laboratory sites, excluding sites in teach-out or closed of 18.5%. Partially offset by one fewer day of ground traditional revenue at GCU of $1 million in the quarter as a result of the shift of one day of revenue from the second quarter to the first quarter as compared to last year's spring start date. And a slight decrease in revenue per student year-over-year partially due to the contract modifications with some of our university partners in which our revenue share percentage was reduced in exchange for us no longer reimbursing the partner for certain faculty costs which had the effect of reducing revenue per student and a slight decline year-over-year in revenue per student for online students due to the continued mix shift to students that have a slightly lower net tuition rate. And a slight decline year-over-year in ground students, which generate a higher revenue per student than online students. Operating income and operating margin for the three months ended June 30, 2026 was $58.2 million and 22% respectively as compared to $51.8 million and 20.9% respectively for the same period in 2025. Net income was $45.9 million for the second quarter of 2026. GAAP diluted income per share for the three months ended June 2026 is $1.75. As adjusted, non-GAAP diluted income per share for the three months ended June 30, 2026 is $1.81, which is $0.14 above consensus estimates. With that, I would like to turn it over to Daniel E. Bachus, our CFO, to give a little more color on our results, talk about changes in the income statements and balance sheet and other items as well to discuss 2026 guidance. Daniel E. Bachus: Thanks, Brian. Included in our Form 8-K filed with the SEC, we have included non-GAAP net income and non-GAAP diluted income per share for the three months ended June 30, 2026 and 2025. We believe the non-GAAP financial information allows investors to develop a more meaningful understanding of the company's performance over time. As adjusted, non-GAAP diluted income per share for the three months ended June 30, 2026 and 2025 is $1.81 and $1.53, respectively. In addition, included in our Form 10-Q filed today is the announcement that on July 29, 2026, we entered into an amended and restated master services agreement with GCU. Terms of the amended MSA are generally consistent with the letter of intent that was previously announced. The amended MSA is effective as of July 1, 2026, has an initial term of 15 years running through June 30, 2041, and unless notice of nonrenewal is given at least 18 months in advance of the end of the initial term or any renewal term, will automatically renew up to three additional five-year renewal terms. The amended MSA eliminates GCU's ability to terminate for convenience, while also eliminating any related early termination fees owed by GCU. Prior to the end of the term. Restructures the service fees such that going forward service fees are calculated as 60% of tuition and academic-related fees only. Ancillary fees and other revenue are for the sole benefit of GCU. And a reimbursement payment that the university had been making to GCU in respect of certain academic-related costs is eliminated. Last, in lieu of the prior nonrenewal fee, that was due if GCU did not renew the MSA at the end of the term, the company would continue to provide services to and receive service fees from GCU for an 18-month period following termination. As previously disclosed, the company estimates that under the amended MSA, its service revenue will be reduced by approximately $20 million annually, but its operating income will decline by an immaterial amount and should not exceed $1 million per quarter due to elimination of the academic reimbursement. Service revenue was higher than our expectations in the second quarter of 2026 primarily due to higher than expected hybrid and traditional campus summer school enrollments. Online enrollments approximated our expectations. In addition, approximately $1 million of revenue that we had planned to be recognized in the third quarter of 2026 was recognized in the second quarter. The second quarter operating margin was positively impacted on a year-over-year basis by the higher revenue the contract modifications, and lower general and administrative expenses partially offset by additional spend for 2026 partner initiatives. Effective tax rate for the second quarter of 2026 was 24.7% compared to 24.5% in the second quarter of 2025 and our guidance of 24.9%. The effective tax rate increased over the prior year primarily due to state income taxes. We did make contributions in lieu of state income taxes this month, that will increase general and administrative expenses in the third quarter while reducing income tax expense in an equal amount, three-quarters of which will be in the third quarter and one-quarter in the fourth quarter. Turning to the balance sheet and cash flows. Total unrestricted cash and cash equivalents and investments as of June 30, was $274.5 million. GCE CapEx in the second quarter of 2026 including CapEx for new off-campus classroom and laboratory sites, was approximately $10.7 million or 4.1% of service revenue. We anticipate CapEx for 2026 will be between $30 and $35 million. We repurchased 471,000 shares of our common stock in the second quarter of 2026 at a cost of approximately $75.3 million. And another 169,000 shares were repurchased since June 30, 2026. We have $124.1 million remaining available as of today under our share repurchase authorization. The board and the company intend to continue using its cash flow from operations to repurchase its shares. We are also currently working with our primary banking partner on a line of credit that we hope will be in place by the middle of August. That will allow us to continue buying back stock at current or higher levels. Given that the size of the line has not yet been finalized, the interest expense and the impact of any accelerated stock purchases are not included in the guidance below. Will file an 8-K with further details when it is finalized. Last, I would like to provide color on the guidance we have provided in our 8-K filed today. As a reminder, the guidance that we have provided in the outlook section of our 8-K filed today is GAAP net income and diluted income per share, with the components to adjust GAAP amounts to non-GAAP as adjusted net income and non-GAAP as adjusted diluted income per share. We have updated full year 2026 guidance to include the second quarter revenue and earnings beat. We have made adjustments to second half revenue and operating income guidance previously provided to reflect the impact of the amended MSA and the approximately $1 million in revenue that was recognized in Q2 that had been forecasted to be recognized in the third quarter of 2026. We have also narrowed the range in both the third and fourth quarters to reflect current trends. We have also reflected the $5 million in contributions made in lieu of state income taxes that will be paid in the third quarter in higher G&A expenses and lower income tax expense and decreased interest income and decreased the weighted average share count. As we have purchased and plan to continue to repurchase more stock than was originally forecasted. I realized that all of these changes need to be pushed through your model. But the result should be adjusted EPS that is $0.03 above consensus estimates in the second half of 2026 when the impact of the $1 million in revenue that was recognized in the second quarter instead of the third is considered. And $0.14 above consensus estimates for the full year of 2026. On a more detailed basis, including current trends, revenue is expected to decrease by $4 million and $6 million in the third and fourth quarters of 2026, respectively, due to the amended and restated MSA while instructional cost and services will be reduced by $3 million and $5 million in the third and fourth quarters of 2026, respectively. As we will no longer be making a certain academic reimbursement to GCU. $1 million of revenue was accelerated from the third quarter of 2026 to the second quarter, and recognized in the financials we reported today. The year-over-year changes in the start and end dates of the semesters for GCU's ground traditional campus will move $8.3 million of revenue from the third quarter to the fourth quarter in comparison to last year. The change between the third and fourth quarter is more significant this year than in past years as GCU's fall semester for its ground traditional campus begins and ends 6 days later this year than last year. We continue to anticipate that new online enrollments to be up year-over-year in the mid to high single digits during the second half of 2026. The second quarter 2026 new start growth rate was expected given that in the prior year, new starts were up in the mid-teens as the second quarter is not a traditional back-to-school time. Total online enrollment growth continues to be pressured by increasing graduations and a continued decline in reentries, students returning to school after a break, due to the high retention rates. We continue to anticipate online revenue per student will be slightly down year-over-year due to mix shift to programs that have slightly lower net tuition rates. The revenue range continues to assume that GCU's ground enrollment will be approximately 25,000 in the fall. The reported ground number continues to include GCU hybrid, which continues to grow and professional study students, which we expect to be slightly down on year-over-year basis. Total ground enrollment continues to be impacted by the lower fall 2024 new start and the growing number of graduates year-over-year as a significant number of ground traditional students continue to graduate in less than 4 years. We continue to expect total enrollment growth rate for the hybrid pillar to remain in the teens during the second half of 2026. As has been discussed previously, the hybrid growth rate is currently being impacted by the fact that we now have 14 locations that are at or near capacity, and thus we have little to no growth year-over-year in total enrollments at those locations. And from a new enrollment perspective, 22 locations will not have year-over-year growth in new enrollments on a year-over-year basis in the fall, as although 8 locations are not at state authorized capacity, we started the maximum number of students allowed during fall 2025. The higher than expected new starts in spring 2026 will also have an impact on new start growth rates at a few locations in the fall due to capacity constraints. But total enrollment should continue to meet or exceed our expectations. We remain hopeful that some of these locations will get local regulatory approval to grow in the future. As they currently have wait lists, and we still have a lot of opportunities at the other locations. On the expense side, we continue to make investments to support our university partners' growth. Continue to anticipate margin expansion in 2026. As has been previously discussed, the online programs primarily that lead to licensure in which GCU is growing at an accelerated rate either cost us more to service than the traditional online programs or are at lower net tuition rates which is putting some pressure on margins. We also continue to absorb significant increases in technology services and benefit costs. We have some pressure on margins in the third quarter, as the GCU traditional campus start and end dates move back this year but that reverses in the fourth quarter. As it relates to the hybrid pillar, we will incur additional cost for the new hybrid locations that have opened in the last year or will open in late 2026, early 2027. But we are experiencing increased site-level profitability due to the increasing enrollments. Projected general and administrative expenses have increased in our guidance in the third quarter of 2026 by $5 million for the contributions in lieu of state income taxes of $5 million. Approximately 75% of this is recognized as a reduction in income tax expense in the third quarter of 2026 with the remaining recognized as a reduction in income tax in the fourth quarter. This is consistent with the prior year. We are estimating the interest income will decline year-over-year in 2026 due to declining cash balances, due to more aggressive stock buybacks and a declining interest rate environment. The effective tax rates for the remaining two quarters of 2026 have been reduced due to the contributions in lieu of state income taxes to 20.8% and 23.2% in the third and fourth quarters respectively. With a full year tax rate of 23.2%. Had the contributions not been made, we estimate our effective tax rate would have been 24.7% and 24.4% in the third and fourth quarters, respectively. These effective tax rates continue to be impacted by higher state income taxes as we continue to add new sites in states outside of Arizona. Which have higher state tax rates and other factors including the decrease year-over-year in the excess tax benefit due to a decline in our stock price. Our weighted average shares guidance takes into account the significant amount of stock we have or plan to purchase. We anticipate continuing to use our excess cash to repurchase shares as the board believes the stock is materially undervalued based on the metrics it uses to evaluate this, including the ratio of enterprise value to adjusted EBITDA and free cash flow yield in comparison to the other S&P 500 companies. I will now turn the call over to the moderator so that we can answer questions. Operator: Thank you. As a reminder, to ask a question, please press *11 on your telephone and wait for your name to be announced. To withdraw your question, press *11 again. Our first question will come from the line of Jasper Bibb with Truist Securities. Your line is open. Jasper Bibb: Hey. Good afternoon, guys. Yeah. Really nice online enrollment figures today. I obviously, kind of one of the big topics around the space has been a potential impact of consumer adoption of GenAI on customer acquisition and enrollment just kind of curious, you know, hoping maybe you could share what your experience has been with inquiry volumes, this kind of AI theme, and how you are reacting to the kind of broader consumer shift? Brian E. Mueller: Yeah. We have listened to other calls, and so we have heard that too. The you know, the way we are getting over 30% of our starts, and I think it is gonna grow to 40% of our starts, has nothing to do with generating leads. It has to do with meeting, the need of organizations throughout the country. it is just such a high quality way for a university to serve the needs of the economy. And so we are shielded from some of the growth that causes a decline in the efficiency of marketing spend. That, you know, we are impacted the same way others are from the standpoint of web leads being down. But we are not as impacted because we do not have to get our growth from increased lead amounts like other people do. AI is absolutely the future. And positioning ourselves so that the best stories come out when people go to AI to check on Grand Canyon University is gonna be the future of this whole market. And we are working very hard to position the best things about GCU, especially, but other partners as well. So that they will come up when people, look for us. The Honors College. The opening of the law school, the tremendous contribution to what it has to be a rebuilding of the labor force in construction, industrial technologies, our relationship, our growing relationship with TSMC, which is the largest chip manufacturer in the world that sits 20 minutes from here, and we are doing we are we are opening incredible partnerships with that company, with Amkor, And so every everybody's impacted to some extent, by the shift away from searches to AI, we are not as impacted by it. And we expect our growth rates that we talked about today not to be impacted by any of that. And I think it will only get better for us as we go forward. cannot under emphasize, you know, the other structural changes that have taken place. And thank you for picking up coverage for us, but you know, for 4 or 5 years, we were just fighting the negative PR that came from the from the attack on that was on us by the Biden administration. that is all done. that is all gone. Now, people are not even talking about that. People are talking about our honors college. They are talking about our new law school. They are talking about those kinds of things, which has changed everything for us. And so that is kind of a long-winded answer to your question, but, we are not we are just not as impacted by those changes like people who are more dependent on those things are. Jasper Bibb: Right. No, that makes sense. And thanks for all the detail there. It sounds like a lot of exciting things going on. Maybe just last one for me. On the new student loan rules that took effect on July 1st, I know it is early, probably had a couple of weeks of experience with this. But could you just walk us through maybe how you are managing that transition? You know, there is some new processes, new borrowing caps for different programs. Just any detail on how that is going so far would be great. Brian E. Mueller: But I assume you are talking about the master's degree program limitations? On loans? Jasper Bibb: Yeah. And I think there is some just different operational processes of how that has to be handled on your end and things like that. So Brian E. Mueller: Yeah, I will talk about that one because I think that is the big one. We have been encouraging the Department of Ed to do that for years. You know, when the rules around loan amount for master's degree students, graduate level students were put in place, it was when most graduate students were students who graduated from a baccalaureate program and then entered a master's degree program and spent 2 years doing that. And sometimes they would be married with kids, and they needed living expense money. that is all changed in the last 30 years. 90%+ of students are now in graduate programs are doing it online. And they are mid career professionals, and they have salaries, and they have benefits. And they do not need that living expense money. But since they could get it, they would take it. And then when loans did not have to be paid back, they did not get paid back. And we told the Department of Ed for years, adjustments should be made to reflect who graduate students are today versus who they used to be. We have a thing called responsible borrowing. We have a thing called responsible borrowing. And we would show students if you are gonna borrow money to do your program and you borrow the amount to cover the direct cost, this would be your payment And then if you borrow the full amount, including living expense money, this will be your payments. And we were actually criticized for doing that by the previous administration because we were not being we were trying to keep people from over borrowing. And that was that was just bound to lead to the to loan defaults. And so that major change has taken place, we are fully behind it, and it has not impacted any of our programs. Our tuitions are way under the amount the students can borrow. And so we are not impacted by it at all. In fact, we think it is a really good thing. Jasper Bibb: Got it. Thank you for taking the questions. Brian E. Mueller: Yep. Thank you. Operator: Thank you. 1 moment for our next question. And that will come from the line of Jeffrey Silber with BMO Capital Markets. Your line is open. Ryan: Hey. Thank you so much. This is Ryan on for Jeffrey. I was just curious if you think your competitors are intentionally shifting their degree mix to more licensure programs in the wake of the perceived AI risk on some of those certain degrees. And do you think we could see a larger tuition differential between different majors and programs in coming years. Thank you. Brian E. Mueller: No. Good question. To the first question, it is just the opposite. I will not name names, but there are a number of what were pretty strong players in the counseling area. And there is a huge shortage of counselors in America. That because of CACREP accreditation requirements dropped their programs. They just did not have the technology and the resources to provide services to students at a distance that allowed them to successfully complete you know, clinical hours and observation hours and internship hours and all those things. And so it is just the opposite. We see more people dropping out of those programs that are getting into them. And so we think going forward, we will be the major player in providing teachers, counselors, social workers, nurses, other healthcare fields, accounting. where you got to sit for the CPA. We openly embrace and we are we are excited about the law school from that standpoint. Because of bar pass rates. We intend to inject the same kind of student support services around and the academic support services that we do with programs in education where there are content tests that are that are necessary. Nursing where the examination is necessary. We look forward to producing extremely high first-time board pass rates. Those things are challenges to us. It is more difficult, but the difficulty of it once you have made the investment in it, separates you from the rest of the pack. The people who just are not willing to do those things. And so the answer to your first question is it is no. We do not we do not expect to see that. In fact, we are seeing the opposite. Ryan: The second question Differentiated tuition rates by program. Brian E. Mueller: Yeah. I think we will see some of that. I think the thing that we are gonna see more than anything is what is been true for 4 or 5 years. Which is the way to grow margins in this business is to decrease the cost to acquire a student. And the stronger the brand that you have, the less amount of money it costs to acquire a student and the more you can freeze tuition, which we have done in our ground campus for 18 years and pretty much most online programs for over a decade. I do not see you know, a tremendous need to differentiate more than we already are other than the ABSN program is a premium price program. it is very expensive to operate, but the value that it offers to students in terms of the salaries that they make and the jobs that they can get more than make up for that premium price And the law school will be a premium price program as compared to others but the payout is the same thing. And so you know, we are we are we are excited about that from the standpoint of the number of students we think we can have. Revenues per student is gonna be very high. And the margins are gonna be significant as long as we can produce the results. Other thing that is gonna happen is that we think that we can really increase our ground enrollment in our prelaw program. Because students will be able to stay right here and hopefully do the whole thing in 5 years. So no, we do not I do not think other than the ABSN program, you know, maybe programs like occupational therapy law, certainly, there will be some differentiation there. But other than that, not more than there is today. Daniel E. Bachus: And just to add on that, GCU has always had differentiated tuition rates. If you look at for example, bachelor's programs, the not all bachelor's programs are the same rate and same at the master's level. So, I think GCU's been doing that for as long as I can remember, and so if others are doing that, probably makes sense. Ryan: I appreciate it. And then just on the hybrid programs, heard the commentary on the long-term growth. I was just curious if you can update us on where those programs stand from a profitability standpoint today. And then where do you think the margins could go as you really scale that up? Daniel E. Bachus: Yeah, they are profitable. This year, they will be profitable. How much? I would say you know, we do not really measure it on a standalone basis. But, it will be profitable. Those programs will be profitable. And where they could go, I mean, again, you know, we do not allocate costs or whatever, but I think on a site basis, if you just look at all those locations on a site basis, I think it could be 20 plus percent margins on a on a site basis. Ryan: Great. Thanks so much. Brian E. Mueller: Thank you. Daniel E. Bachus: We have reached the end of our second quarter conference call. We appreciate your time and interest in Grand Canyon Education, and if you still have questions, please contact myself, Daniel E. Bachus. Thank you for your time. Operator: This concludes today's program. Thank you all for participating. You may now disconnect. 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PHOENIX, July 30, 2026 /PRNewswire/ -- Grand Canyon Education, Inc. (NASDAQ: LOPE), ("GCE" or the "Company"), is a publicly traded education services company that currently provides services to 20 university partners. GCE provides a full array of support services in the post-secondary education sector and has developed significant technological solutions, infrastructure and operational processes to provide superior services in these areas on a large scale. GCE today announced financial results for the quarter ended June 30, 2026. Grand Canyon Education, Inc. Reports Second Quarter 2026 Results For the three months ended June 30, 2026: Service revenue for the three months ended June 30, 2026 was $264.0 million, an increase of $16.5 million, or 6.7%, as compared to service revenue of $247.5 million for the three months ended June 30, 2025. The increase year over year in service revenue was primarily due to an increase in university partner enrollments of 7.6% to 126,231 at June 30, 2026 as compared to 117,283 at June 30, 2025. Revenue per student decreased slightly between years primarily due to contract modifications with one of our university partners in which our revenue share percentage was reduced in exchange for us no longer reimbursing this partner for certain faculty costs which had the effect of reducing revenue per student and a slight decline year over year in revenue per student for online students due to the continued mix shift to students that have a slightly lower net tuition rate and a slight decline year over year in Spring semester ground traditional students which generate a higher revenue per student than online students. In addition there was one less day of revenue for the ground campus due to the start date shifting one day of revenue from the second quarter to the first quarter in 2026 which had a $1.0 million impact. These decreases were partially offset by the service revenue per student for accelerated Bachelor of Science in Nursing ("ABSN") students at off-campus classroom and laboratory sites generating a significantly higher revenue per student than we earn under our agreement with GCU, as these agreements generally provide us with a higher revenue share percentage, the partners have higher tuition rates than GCU and the majority of our partners' students take more credits on average per semester. GCU enrollments increased to 121,921 at June 30, 2026, an increase of 7.5% over enrollments at June 30, 2025. University partner enrollments at our off-campus classroom and laboratory sites were 5,829, an increase of 16.8% over enrollments at June 30, 2025, which includes 1,519 and 1,142 GCU students at June 30, 2026 and 2025, respectively. Excluding sites that have been closed or are in teach out, total enrollments at our off-campus classroom and laboratory sites increased 18.5% between years. We opened one new GCU site in the six months ended June 30, 2026 and closed one site in which we stopped recruiting new students in 2025, thus the total number of sites remains at 47 at June 30, 2026. We plan to open one additional site in the Fall of 2026. Enrollments for GCU ground students were 8,910 at June 30, 2026, up 3.9% from 8,579 at June 30, 2025. GCU ground enrollment declines between March 31 and June 30 of each year as ground traditional enrollment at GCU at June 30 of each year only includes traditional-aged students taking summer school classes, which is a small percentage of GCU's traditional-aged student body. The Spring semester for GCU's traditional-aged student body ends near the end of April each year. GCU online enrollments were 113,011 at June 30, 2026, up from 104,856 at June 30, 2025, an increase of 7.8% between years. Operating income for the three months ended June 30, 2026 was $58.2 million, an increase of $6.4 million, or 12.3%, as compared to $51.8 million for the same period in 2025. The operating margin for the three months ended June 30, 2026 and 2025 was 22.0% and 20.9%, respectively. Income tax expense for the three months ended June 30, 2026 was $15.0 million, an increase of $1.5 million, or 11.4%, as compared to income tax expense of $13.5 million for the three months ended June 30, 2025. Our effective tax rate was 24.7% during the three months ended June 30, 2026 compared to 24.5% during the three months ended June 30, 2025. The effective tax rate increased year over year due to higher state income taxes. Net income for the three months ended June 30, 2026 was $45.9 million, an increase of $4.4 million, or 10.4% as compared to $41.5 million for the same period in 2025. As adjusted net income was $47.5 million and $43.2 million for the second quarters of 2026 and 2025, respectively. Diluted net income per share was $1.75 and $1.48 for the second quarters of 2026 and 2025, respectively. As adjusted diluted net income per share was $1.81 and $1.53 for the second quarters of 2026 and 2025, respectively. Adjusted EBITDA increased 8.9% to $73.4 million for the second quarter of 2026, compared to $67.4 million for the same period in 2025. For the six months ended June 30, 2026: Service revenue for the six months ended June 30, 2026 was $572.8 million, an increase of $36.0 million, or 6.7%, as compared to service revenue of $536.8 million for the six months ended June 30, 2025. The increase year over year in service revenue was primarily due to an increase in university partner enrollments of 7.6% to 126,231 at June 30, 2026 as compared to 117,283 at June 30, 2025. Revenue per student decreased slightly between years primarily due to contract modifications with one of our university partners in which our revenue share percentage was reduced in exchange for us no longer reimbursing this partner for certain faculty costs which had the effect of reducing revenue per student and a slight decline year over year in revenue per student for online students due to the continued mix shift to students that have a slightly lower net tuition rate and a slight decline year over year in Spring semester ground traditional students which generate a higher revenue per student than online students. These decreases were partially offset by the service revenue per student for ABSN students at off-campus classroom and laboratory sites generating a significantly higher revenue per student than we earn under our agreement with GCU, as these agreements generally provide us with a higher revenue share percentage, the partners have higher tuition rates than GCU and the majority of our partners' students take more credits on average per semester. Operating income for the six months ended June 30, 2026 was $153.6 million, an increase of $13.8 million, or 9.9%, as compared to $139.8 million for the same period in 2025. The operating margin for the six months ended June 30, 2026 and 2025 was 26.8% and 26.0%, respectively. Income tax expense for the six months ended June 30, 2026 was $38.1 million, an increase of $4.8 million, or 14.7%, as compared to income tax expense of $33.3 million for the six months ended June 30, 2025. Our effective tax rate was 23.9% during the six months ended June 30, 2026 compared to 22.7% during the six months ended June 30, 2025. The effective tax rate increased year over year due to higher state income taxes and a decrease in excess tax benefits to $1.4 million for the six months ended June 30, 2026 due to the decline in our stock price as compared to $2.7 million in the six months ended June 30, 2025. The inclusion of excess tax benefits and deficiencies as a component of our income tax expense increases the volatility within our provision for income taxes as the amount of excess tax benefits or deficiencies from share-based compensation awards are dependent on our stock price at the date the restricted stock awards vest. Our restricted stock awards vest in March each year so any benefit or expense will primarily impact the first quarter each year. Net income for the six months ended June 30, 2026 was $121.2 million, an increase of $8.0 million, or 7.1% as compared to $113.2 million for the same period in 2025. As adjusted net income was $124.4 million and $116.5 million for the six months ended June 30, 2026 and 2025, respectively. Diluted net income per share was $4.57 and $4.00 for the six months ended June 30, 2026 and 2025, respectively. As adjusted diluted net income per share was $4.69 and $4.12 for the six months ended June 30, 2026 and 2025, respectively. Adjusted EBITDA increased 8.7% to $184.1 million for the six months ended June 30, 2026, compared to $169.4 million for the same period in 2025. Liquidity and Capital Resources Our liquidity position, as measured by cash and cash equivalents and investments decreased by $25.6 million between December 31, 2025 and June 30, 2026, which was largely attributable to cash expended for share repurchases and capital expenditures exceeding our cash provided by operations during the six months ended June 30, 2026. Our unrestricted cash and cash equivalents and investments were $274.5 million and $300.1 million at June 30, 2026 and December 31, 2025, respectively. Grand Canyon Education, Inc. Reports Second Quarter 2026 Results and Full Year Outlook 2026 2026 Outlook Q3 2026: Service revenue of between $268.5 million and $270.5 million; Operating margin of between 19.5% and 20.0%; Effective tax rate of 20.8%; Diluted EPS of between $1.68 and $1.72; and 25.8 million diluted shares. The diluted EPS guidance includes non-cash amortization of intangible assets net of taxes of $1.7 million, which equates to a $0.06 impact on diluted EPS. Thus, as adjusted, non-GAAP diluted income per share of between $1.74 and $1.78. Q4 2026: Service revenue of between $324.0 million and $329.0 million; Operating margin of between 36.9% and 37.4%; Effective tax rate of 23.2%; Diluted EPS of between $3.69 and $3.79; and 25.4 million diluted shares. The diluted EPS guidance includes non-cash amortization of intangible assets net of taxes of $1.6 million, which equates to a $0.06 impact on diluted EPS. Thus, as adjusted, non-GAAP diluted income per share of between $3.75 and $3.85. Full Year 2026: Service revenue of between $1,165.3 million and $1,172.3 million; Operating margin of between 28.0% and 28.2%; Effective tax rate of 23.2%; Diluted EPS between $9.93 and $10.07; and 26.1 million diluted shares. The diluted EPS guidance includes non-cash amortization of intangible assets net of taxes of $6.5 million, which equates to a $0.25 impact on diluted EPS. Thus, as adjusted, non-GAAP diluted income per share of between $10.18 and $10.32. Forward-Looking Statements This news release contains "forward-looking statements" within the meaning of federal securities laws including information relating to future events, future financial performance, strategies, expectations, competitive environment, regulation, and availability of resources. These forward-looking statements include, without limitation, statements regarding: proposed new programs; whether regulatory, economic, or business developments or other matters may or may not have a material adverse effect on our financial position, results of operations, or liquidity; projections, predictions, expectations, estimates, and forecasts as to our business, financial and operating results, and future economic performance; and management's goals and objectives and other similar expressions concerning matters that are not historical facts. Words such as "may," "should," "could," "would," "predicts," "potential," "continue," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar expressions, the negative of these expressions, as well as statements in future tense, identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made or management's good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause our actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements include, but are not limited to: (i) legal and regulatory actions taken against us related to our services business, or against our university partners that impact their businesses and that directly or indirectly reduce the service revenue we can earn under our master services agreements; (ii) the occurrence of any event, change or other circumstance that could give rise to the termination of any of the key university partner agreements; (iii) our ability to properly manage risks and challenges associated with strategic initiatives, including potential acquisitions or divestitures of, or investments in, new businesses, acquisitions of new properties and new university partners, and expansion of services provided to our existing university partners; (iv) our ability to comply with the extensive regulatory framework applicable to us either directly as a third-party service provider or indirectly through our university partners; (v) our ability to manage risks associated with epidemics, pandemics, or public health crises; (vi) our ability to manage risks resulting from system disruptions, interruptions, or outages associated with our technology platforms or those of third-party service providers; (vii) the ability of our university partners' students to obtain federal Title IV funds, state financial aid, and private financing; (viii) potential damage to our reputation or other adverse effects as a result of negative publicity in the media, in the industry or in connection with governmental reports or investigations or otherwise; (ix) risks associated with changes in applicable federal and state laws and regulations and accrediting commission standards; (x) competition from other education service companies in our geographic region and market sector; (xi) our ability to hire and train new, and develop and train existing employees; (xii) the pace of growth of our university partners' enrollment and its effect on the pace of our own growth; (xiii) fluctuations in our revenues due to seasonality; (xiv) our ability to, on behalf of our university partners, convert prospective students to enrolled students and to retain active students to graduation; and (xv) other risks and uncertainties identified from time to time in documents filed with the Securities and Exchange Commission (the "SEC") by us, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed on February 18, 2026. Forward-looking statements speak only as of the date the statements are made. You should not put undue reliance on any forward-looking statements. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions, or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements. This press release should be read in conjunction with the information included in our other press releases, reports and other filings with the SEC. Understanding the information contained in these filings is important in order to fully understand GCE's reported financial results and our business outlook for future periods. Grand Canyon Education, Inc. Reports Second Quarter 2026 Results Conference Call Grand Canyon Education, Inc. will discuss its second quarter 2026 results and full year 2026 outlook during a conference call scheduled for today, July 30, 2026 at 4:30 p.m. Eastern time (ET). Live Conference Dial-In: Those interested in participating in the question-and-answer session should follow the conference dial-in instructions below. Participants may register for the call here to receive the dial-in numbers and unique PIN to access the call seamlessly. Please dial in at least ten minutes prior to the start of the call. Journalists are invited to listen only. Webcast and Replay: Investors, journalists and the general public may access a live webcast of this event at: Q2 2026 Grand Canyon Education Inc. Earnings Conference Call. A webcast replay will be available approximately two hours following the conclusion of the call at the same link. About Grand Canyon Education, Inc. Grand Canyon Education, Inc. ("GCE"), incorporated in 2008, is a publicly traded education services company that currently provides services to 20 university partners. GCE is uniquely positioned in the education services industry in that its leadership has over 30 years of proven expertise in providing a full array of support services in the post-secondary education sector and has developed significant technological solutions, infrastructure and operational processes to provide superior services in these areas on a large scale. GCE provides services that support students, faculty and staff of partner institutions such as marketing, strategic enrollment management, counseling services, financial services, technology, technical support, compliance, human resources, classroom operations, content development, faculty recruitment and training, among others. For more information about GCE visit the Company's website at www.gce.com. Grand Canyon Education, Inc., 2600 W. Camelback Road, Phoenix, AZ 85017, www.gce.com. Grand Canyon Education, Inc. Reports Second Quarter 2026 Results Grand Canyon Education, Inc. Reports Second Quarter 2026 Results Grand Canyon Education, Inc. Reports Second Quarter 2026 Results Grand Canyon Education, Inc. Reports Second Quarter 2026 Results GRAND CANYON EDUCATION, INC. Adjusted EBITDA (Non-GAAP Financial Measure) Adjusted EBITDA is defined as net income plus interest expense, less interest income and other gain (loss) recognized on investments, plus income tax expense, and plus depreciation and amortization (EBITDA), as adjusted for (i) contributions to private Arizona school tuition organizations in lieu of the payment of state income taxes; (ii) share-based compensation; and (iii) unusual charges or gains, such as litigation and regulatory costs, impairment charges and asset write-offs, severance costs, and exit or lease termination costs. We present Adjusted EBITDA because we consider it to be an important supplemental measure of our operating performance. We also make certain compensation decisions based, in part, on our operating performance, as measured by Adjusted EBITDA. All of the adjustments made in our calculation of Adjusted EBITDA are adjustments to items that management does not consider to be reflective of our core operating performance. Management considers our core operating performance to be that which can be affected by our managers in any particular period through their management of the resources that affect our underlying revenue and profit generating operations during that period and does not consider the items for which we make adjustments (as listed above) to be reflective of our core performance. We believe Adjusted EBITDA allows us to compare our current operating results with corresponding historical periods and with the operational performance of other companies in our industry because it does not give effect to potential differences caused by variations in capital structures (affecting relative interest expense, including the impact of write-offs of deferred financing costs when companies refinance their indebtedness), tax positions (such as the impact on periods or companies of changes in effective tax rates or net operating losses), the book amortization of intangibles (affecting relative amortization expense), and other items that we do not consider reflective of underlying operating performance. We also present Adjusted EBITDA because we believe it is frequently used by securities analysts, investors, and other interested parties as a measure of performance. In evaluating Adjusted EBITDA, investors should be aware that in the future we may incur expenses similar to the adjustments described above. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by expenses that are unusual, non-routine, or non-recurring. Adjusted EBITDA has limitations as an analytical tool in that, among other things, it does not reflect: cash expenditures for capital expenditures or contractual commitments; changes in, or cash requirements for, our working capital requirements; interest expense, or the cash required to replace assets that are being depreciated or amortized; and the impact on our reported results of earnings or charges resulting from the items for which we make adjustments to our EBITDA, as described above and set forth in the table below. In addition, other companies, including other companies in our industry, may calculate these measures differently than we do, limiting the usefulness of Adjusted EBITDA as a comparative measure. Because of these limitations, Adjusted EBITDA should not be considered as a substitute for net income, operating income, or any other performance measure derived in accordance with and reported under GAAP, or as an alternative to cash flow from operating activities or as a measure of our liquidity. We compensate for these limitations by relying primarily on our GAAP results and only use Adjusted EBITDA as a supplemental performance measure. The following table provides a reconciliation of net income to Adjusted EBITDA, which is a non-GAAP measure for the periods indicated: Non-GAAP Net Income and Non-GAAP Diluted Income Per Share The Company believes the presentation of non-GAAP net income and non-GAAP diluted income per share information that excludes amortization of intangible assets and loss on disposal of fixed assets allows investors to develop a more meaningful understanding of the Company's performance over time. Accordingly, for the three and six months ended June 30, 2026 and 2025, the table below provides reconciliations of these non-GAAP items to GAAP net income and GAAP diluted income per share, respectively: Investor Relations Contact:Daniel E. BachusChief Financial OfficerGrand Canyon Education, [email protected] View original content to download multimedia:https://www.prnewswire.com/news-releases/grand-canyon-education-inc-reports-second-quarter-2026-results-302839347.html

Grand Canyon Education (LOPE) came out with quarterly earnings of $1.81 per share, beating the Zacks Consensus Estimate of $1.69 per share. This compares to earnings of $1.53 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of +7.10%. A quarter ago, it was expected that this for-profit education company would post earnings of $2.78 per share when it actually produced earnings of $2.86, delivering a surprise of +2.88%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. Grand Canyon Education, which belongs to the Zacks Schools industry, posted revenues of $264.05 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 0.78%. This compares to year-ago revenues of $247.5 million. The company has topped consensus revenue estimates four times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Grand Canyon Education shares have lost about 4.2% since the beginning of the year versus the S&P 500's gain of 6.9%. While Grand Canyon Education has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Grand Canyon Education was unfavorable. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #4 (Sell) for the stock. So, the shares are expected to underperform the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $1.85 on $271 million in revenues for the coming quarter and $10.04 on $1.17 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Schools is currently in the top 36% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the same industry, Universal Technical Institute (UTI), has yet to report results for the quarter ended June 2026. The results are expected to be released on August 5. This school for auto, motorcycle and marine technicians is expected to post quarterly earnings of $0.01 per share in its upcoming report, which represents a year-over-year change of -94.7%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Universal Technical Institute's revenues are expected to be $219.72 million, up 7.6% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Grand Canyon Education, Inc. (LOPE) : Free Stock Analysis Report Universal Technical Institute Inc (UTI) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

The market for Grand Canyon Education, Inc.'s (NASDAQ:LOPE) shares didn't move much after it posted weak earnings recently. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors. We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free. To properly understand Grand Canyon Education's profit results, we need to consider the US$37m expense attributed to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. We looked at thousands of listed companies and found that unusual items are very often one-off in nature. And that's hardly a surprise given these line items are considered unusual. Assuming those unusual expenses don't come up again, we'd therefore expect Grand Canyon Education to produce a higher profit next year, all else being equal. That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates. Unusual items (expenses) detracted from Grand Canyon Education's earnings over the last year, but we might see an improvement next year. Because of this, we think Grand Canyon Education's earnings potential is at least as good as it seems, and maybe even better! And on top of that, its earnings per share have grown at 33% per year over the last three years. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. While it's really important to consider how well a company's statutory earnings represent its true earnings power, it's also worth taking a look at what analysts are forecasting for the future. So feel free to check out our free graph representing analyst forecasts. Today we've zoomed in on a single data point to better understand the nature of Grand Canyon Education's profit. But there are plenty of other ways to inform your opinion of a company. For example, many people consider a high return on equity as an indication of favorable business economics, while others like to 'follow the money' and search out stocks that insiders are buying. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks with significant insider holdings to be useful. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Find winning stocks in any market cycle. Join 7 million investors using Simply Wall St's investing ideas for FREE. Grand Canyon Education (LOPE) stock is back in focus after Q1 2026 results showed higher service revenue, net income of US$75.35 million, and raised full year guidance anchored in online and hybrid enrollment growth. See our latest analysis for Grand Canyon Education. At a share price of US$169.25, Grand Canyon Education has a 1-day share price return of 1.76%, while its 1-year total shareholder return of an 8.74% decline contrasts with a much stronger 52.74% total shareholder return over three years. This suggests that recent momentum has cooled even as long term holders remain well ahead. If you are looking beyond education services, this could be a useful moment to see which other areas of the market show stronger trends with 19 top founder-led companies So with Q1 2026 bringing higher service revenue, firmer margins, and raised guidance, yet the stock still sitting below some intrinsic and analyst estimates, is there a genuine value gap here, or is the market already pricing in future growth? With Grand Canyon Education last closing at $169.25 against a narrative fair value of $213, the current price sits well below what this widely followed model suggests, putting the spotlight firmly on its growth and margin assumptions. Read the complete narrative. Want to see what is behind that confidence in long term earnings power? The narrative leans heavily on compounding revenue, firmer margins, and a future profit multiple that assumes investors keep paying up for this earnings profile. Result: Fair Value of $213 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, there are clear watchpoints, including declining revenue per student and ongoing legal and regulatory pressures that could challenge margins and the long term earnings story that investors are buying into. Find out about the key risks to this Grand Canyon Education narrative. The share price of $169.25 implies a P/E of 20.2x, which sits above both the US Consumer Services industry at 16.3x and the peer average at 17.7x. Yet the fair ratio for Grand Canyon Education is 22.4x, hinting that the market could still shift closer to that higher multiple. Is that extra valuation risk, or potential upside? To see how this pricing gap lines up with earnings quality and growth expectations, take a closer look at the detailed multiple workup with See what the numbers say about this price — find out in our valuation breakdown. With sentiment mixed across valuation and growth, it helps to look at the underlying data yourself and decide how compelling the story really is. A good place to start is the 2 key rewards Do not stop with a single stock when you can quickly compare other opportunities. Use focused screeners to spot ideas that fit your goals before others do. Target potential upside by zeroing in on companies that combine quality fundamentals with attractive pricing using the 51 high quality undervalued stocks. Prioritise resilience by reviewing stocks that pass strict financial health checks through the solid balance sheet and fundamentals stocks screener (45 results). Hunt for potential future standouts by scanning the screener containing 25 high quality undiscovered gems before they move onto everyone else's radar. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include LOPE. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

This article first appeared on GuruFocus. Service Revenue: $308.8 million for Q1 2026, up 6.7% from $289.3 million in Q1 2025. Operating Income: $95.5 million for Q1 2026, compared to $88 million in Q1 2025. Operating Margin: 30.9% for Q1 2026, up from 30.4% in Q1 2025. Net Income: $75.3 million for Q1 2026. GAAP Diluted Income Per Share: $2.80 for Q1 2026. Non-GAAP Diluted Income Per Share: $2.86 for Q1 2026, $0.08 above consensus estimates. Online Enrollment Growth: 8.8% for Q1 2026. Hybrid Campus Enrollment Growth: 18.3% for Q1 2026, 20.3% excluding closed sites and those in teach-out. Effective Tax Rate: 23.5% for Q1 2026, compared to 21.6% in Q1 2025. Share Repurchase: 724,408 shares repurchased in Q1 2026 at a cost of approximately $120.4 million. Total Cash and Investments: $251.7 million as of March 31, 2026. Capital Expenditures: Approximately $8.1 million for Q1 2026, 2.6% of service revenue. Warning! GuruFocus has detected 2 Warning Signs with LOPE. Is LOPE fairly valued? Test your thesis with our free DCF calculator. Release Date: April 30, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Grand Canyon Education Inc (NASDAQ:LOPE) reported strong online enrollment growth of 8.8% and hybrid growth of 20.3%, excluding closed sites. The company has successfully expanded its hybrid campuses to 47 locations, addressing shortages in healthcare and other fields. Grand Canyon University (GCU) has become the largest private university in America, with over 110,000 online students and 25,000 on-campus students. The company's AI initiatives are enhancing curriculum efficiency and student support, contributing to high exit and licensure exam scores. Service revenue increased by 6.7% year-over-year, driven by higher enrollments and a strategic focus on employer partnerships. Traditional campus enrollments were down slightly year-over-year in the spring of 2026, reflecting challenges in maintaining growth. Revenue per student saw a slight decline due to contract modifications and a shift towards programs with lower net tuition rates. The company faces pressure on margins due to increased costs in technology services and benefits, as well as investments in partner growth initiatives. Hybrid enrollment growth is expected to slow as more locations reach capacity, despite continued profitability improvements. The effective tax rate increased to 23.5% from 21.6% in the previous year, impacting net income. Q: Can you provide more details on the first quarter adjusted operating margin beat? Was there any expense shift timing between the quarters? A: No, there wasn't any expense shift timing. The revenue beat primarily drove the margin beat. We are managing expenses tightly and investing where necessary, but the main factor was the revenue and enrollment beat, along with effective expense management. - Daniel Bachus, CFO Q: How is AI impacting lead generation, and what measures are you taking to address this? A: AI is changing how people gather information, with a shift away from organizational websites to AI-driven insights. We are adapting by reallocating spending to other lead sources and focusing on direct partnerships with employers, which now account for 30% of our new starts. This strategy helps us maintain strong enrollment numbers despite changes in lead generation dynamics. - Brian Mueller, CEO Q: Can you update us on the changes in marketing strategy for GCU's traditional campus? A: We continue to invest in advertising strategies for our ground campus, with registrations and housing numbers up. The market is highly competitive, but we are optimistic about maintaining growth. Our focus is on increasing academic excellence and visibility through the Honors College, which is strategically positioned in a dynamic economy. - Brian Mueller, CEO Q: What is the outlook for GCU ground enrollment, given the recent decline? A: We expect modest growth in GCU ground enrollment for the summer and fall. Current trends are positive, and we are optimistic about the upcoming semesters. - Daniel Bachus, CFO Q: How is the post-licensure nursing program performing, and have there been any changes? A: We have seen a reacceleration in RN to BSN enrollments, with recent growth in this area. Adjustments in product, pricing, and placement have been made, and we expect continued success in the coming years. - Daniel Bachus, CFO and Brian Mueller, CEO For the complete transcript of the earnings call, please refer to the full earnings call transcript.