Grand Canyon Education, Inc. — Third Quarter 2026 Earnings Summary

Financial Performance

• Service revenue for the three months ended September 30, 2026, was $267.3 million, an increase of 2.4% year-over-year compared to $261.1 million in 2025.
• Service revenue for the nine months ended September 30, 2026, was $840.2 million, an increase of 5.3% year-over-year compared to $798.0 million in 2025.
• Operating income for the three months ended September 30, 2026, was $51.5 million, a 185.6% increase from $18.0 million in 2025; operating margin was 19.3% versus 6.9% in 2025.
• Operating income for the nine months ended September 30, 2026, was $205.1 million, a 29.9% increase from $157.8 million in 2025; operating margin was 24.4% versus 19.8% in 2025.
• Net income for the three months ended September 30, 2026, was $43.0 million, a 164.3% increase from $16.3 million in 2025.
• Net income for the nine months ended September 30, 2026, was $164.2 million, a 26.9% increase from $129.4 million in 2025.
• Diluted net income per share was $1.67 for the three months ended September 30, 2026, compared to $0.58 in 2025; for the nine months, it was $6.25 compared to $4.60 in 2025.
• Adjusted EBITDA for the three months ended September 30, 2026, was $73.5 million, a 3.2% decrease from $75.9 million in 2025.
• Adjusted EBITDA for the nine months ended September 30, 2026, was $257.5 million, a 5.0% increase from $245.3 million in 2025.
• Income tax expense for the three months ended September 30, 2026, was $10.7 million (20.0% effective rate) compared to $5.4 million (24.9% effective rate) in 2025.
• Income tax expense for the nine months ended September 30, 2026, was $48.9 million (22.9% effective rate) compared to $38.6 million (23.0% effective rate) in 2025.
• Unrestricted cash and cash equivalents and investments decreased to $162.1 million at September 30, 2026, from $300.1 million at December 31, 2025.
• Deferred revenue was $6.9 million at September 30, 2026, compared to $0 at December 31, 2025.
• Total liabilities were $255.1 million at September 30, 2026, compared to $245.4 million at December 31, 2025.

Guidance and Future Outlook

• Q4 2026 service revenue is guided to be between $320.5 million and $321.5 million.
• Q4 2026 operating margin is guided to be between 36.0% and 36.2%.
• Q4 2026 effective tax rate is guided to be 23.0%.
• Q4 2026 diluted EPS is guided to be between $3.57 and $3.61, with as-adjusted diluted income per share between $3.63 and $3.67.
• Full Year 2026 service revenue is guided to be between $1,160.7 million and $1,161.7 million.
• Full Year 2026 operating margin is guided to be between 27.6% and 27.7%.
• Full Year 2026 effective tax rate is guided to be 23.0%.
• Full Year 2026 diluted EPS is guided to be between $9.81 and $9.85, with as-adjusted diluted income per share between $10.09 and $10.13.
• Full Year 2026 diluted shares are expected to be 26.0 million.

Business Segments and Product Lines

• University partner enrollments increased 5.2% to 145,270 at September 30, 2026, from 138,073 at September 30, 2025.
• GCU enrollments increased 5.1% to 139,170 at September 30, 2026, from 2025 levels.
• Off-campus classroom and laboratory site enrollments were 7,780 at September 30, 2026, an increase of 12.6% year-over-year; excluding closed or teach-out sites, enrollments increased 14.1%.
• The company opened two new off-campus sites in the nine months ended September 30, 2026, and closed one site, totaling 48 sites at September 30, 2026.
• GCU ground student enrollments decreased 4.1% to 23,650 at September 30, 2026, from 24,671 in 2025.
• GCU online enrollments increased 7.1% to 115,520 at September 30, 2026, from 107,815 in 2025.
• Revenue per student decreased slightly in Q3 2026 due to six fewer days of revenue for ground traditional students shifting revenue to Q4 and a mix shift to online students with lower net tuition rates.
• Revenue per student for ABSN students at off-campus sites remains significantly higher due to higher revenue share percentages and tuition rates.
• Revenue from GCU in Q3 2026 was earned under the Amended MSA (tuition and academic fees only), whereas Q3 2025 revenue included ancillary fees under the Original MSA.

Market and Competitive Landscape

• The company provides services to 20 university partners.
• Management notes competition from other education service companies in the geographic region and market sector as a risk factor.

Risks and Challenges

• Risks include legal and regulatory actions against the company or university partners that could reduce service revenue.
• Risks include potential termination of key university partner agreements.
• Risks include the ability to comply with extensive regulatory frameworks and accrediting commission standards.
• Risks include the ability of students to obtain federal Title IV funds, state financial aid, and private financing.
• Risks include fluctuations in revenues due to seasonality and the pace of university partner enrollment growth.
• Risks include system disruptions, epidemics, pandemics, and negative publicity.
• A litigation settlement of $35.0 million occurred in Q3 2025, which impacted the 2025 effective tax rate due to non-deductible penalties.

Management Commentary and Tone

• Management highlighted that the increase in operating income and margin was driven by enrollment growth and the absence of the 2025 litigation settlement.
• Management noted that the shift in revenue from Q3 to Q4 2026 for ground traditional students had a $7.5 million impact.
• Management indicated that the effective tax rate was favorably impacted by contributions in lieu of state income taxes of $5.0 million in both Q3 2026 and 2025.

Other Key Points

• On October 28, 2026, the Board of Directors approved a $355.0 million increase to the stock repurchase program, bringing the aggregate authorization to $2.9 billion.
• As of November 2, 2026, $394.5 million remained available under the share repurchase authorization, which expires on March 1, 2028.
• As of November 2, 2026, there were 25,510,517 shares of common stock outstanding.
• Cash expended for share repurchases and capital expenditures exceeded cash provided by operations during the nine months ended September 30, 2026, contributing to a $137.9 million decrease in liquidity.
• Share repurchases and shares withheld in lieu of income taxes totaled $278.3 million for the nine months ended September 30, 2026.
• Capital expenditures were $29.6 million for the nine months ended September 30, 2026.
• Net cash provided by operating activities was $171.6 million for the nine months ended September 30, 2026.