PART I – FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited consolidated financial statements for Q1 2025, including income statements, balance sheets, and cash flows, along with detailed notes on accounting policies and financial figures Consolidated Financial Statements This section presents the unaudited consolidated financial statements for Q1 2025 and 2024, summarizing the company's financial performance, position, and cash flows | Financial Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :--- | :--- | :--- | | Service Revenue | $289,310 | $274,675 | | Operating Income | $88,023 | $84,478 | | Net Income | $71,618 | $68,010 | | Diluted EPS | $2.52 | $2.29 | | Balance Sheet Item | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total Assets | $1,031,448 | $1,018,425 | | Total Liabilities | $250,744 | $234,572 | | Total Stockholders' Equity | $780,704 | $783,853 | | Cash Flow Activity | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :--- | :--- | :--- | | Net Cash from Operations | $67,631 | $84,963 | | Net Cash used in Investing | ($169,888) | ($5,260) | | Net Cash used in Financing | ($77,857) | ($29,970) | Notes to Consolidated Financial Statements These notes detail the company's business model, accounting policies, and specific financial items, including the significant service agreement with Grand Canyon University and intangible assets - GCE is an education services company serving 22 university partners, with Grand Canyon University (GCU) being its most significant partner2324 - Under a long-term master services agreement, GCE provides a suite of services to GCU in exchange for 60% of GCU's tuition and fee revenue28 - Revenue from GCU represents a significant concentration of credit risk, accounting for 90.4% of total service revenue in Q1 2025, up from 89.7% in Q1 202457 - Amortizable intangible assets of $157.9 million as of March 31, 2025, primarily consist of university partner relationships acquired in the Orbis Education acquisition in 2019, which are being amortized over 25 years74 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes Q1 2025 financial results, detailing revenue and expense drivers, segment performance, liquidity, and capital expenditure plans Results of Operations Q1 2025 service revenue grew 5.3% to $289.3 million driven by enrollment growth, while expenses increased across categories, leading to a 5.3% rise in net income | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Service Revenue | $289.3M | $274.7M | +5.3% | | Partner Enrollments | 127,779 | 120,788 | +5.8% | | GCU Enrollments | 123,773 | 117,000 (approx) | +5.8% | | Off-campus Enrollments | 5,027 | 4,484 (approx) | +12.1% | - Marketing and communication expenses increased by 9.0% to $60.3 million due to higher advertising costs to support enrollment growth goals116 - Technology and academic services expenses rose 6.5% to $41.7 million, driven by costs associated with an increased number of off-campus classroom and laboratory sites114 - The effective tax rate decreased to 21.6% in Q1 2025 from 22.9% in Q1 2024, primarily due to higher excess tax benefits from share-based compensation121 Liquidity and Capital Resources Total liquidity decreased to $304.7 million in Q1 2025, primarily due to significant share repurchases and investment activities, partially offset by operating cash flow | (In thousands) | As of March 31, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | Cash, cash equivalents and investments | $304,653 | $324,623 | - Net cash from operating activities decreased to $67.6 million in Q1 2025 from $85.0 million in Q1 2024, mainly due to changes in working capital balances like accounts payable127 - Cash used in financing activities increased significantly to $77.9 million in Q1 2025 from $30.0 million in Q1 2024, driven by a higher volume of share repurchases ($68.4 million in Q1 2025 vs. $22.6 million in Q1 2024)131132 - Capital expenditures were $8.9 million in Q1 2025, consistent with the prior year, and are expected to be $30.0 to $40.0 million annually130 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's market risk exposure is primarily interest rate risk from its investment portfolio, with no material impact expected from a 10% interest rate change - The company's primary market risk is interest rate risk from its investment portfolio139 - GCE manages credit risk by investing in instruments rated BBB or higher and does not hold any derivative instruments138139 Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures are effective as of the end of the quarter140 - There were no material changes in the company's internal control over financial reporting during the first quarter of 2025141 PART II – OTHER INFORMATION Item 1. Legal Proceedings The company is involved in material legal proceedings, including a False Claims Act lawsuit and FTC actions regarding GCU's programs, for which no liability has been accrued - The company is defending a qui tam lawsuit under the False Claims Act concerning its enrollment counselor compensation practices, with a trial set for October 20258285 - GCE is a party to several legal matters, including a lawsuit from the Federal Trade Commission (FTC) and multiple class actions, alleging misleading representations regarding GCU's graduate programs, non-profit status, and telemarketing activities8789 Item 1A. Risk Factors No material changes to the risk factors previously disclosed in the 2024 Annual Report on Form 10-K have been reported - There have been no material changes to the risk factors disclosed in the 2024 Form 10-K143 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During Q1 2025, the company repurchased 395,426 shares at an average price of $172.96, with $231.3 million remaining under the repurchase authorization | Period (2025) | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | January | 150,517 | $167.74 | | February | 117,590 | $181.76 | | March | 127,319 | $171.01 | | Total Q1 | 395,426 | $172.96 | - As of March 31, 2025, $231.3 million remained available for future purchases under the company's share repurchase program146 Other Items (3, 4, 5, 6) This section confirms no defaults on senior securities, no mine safety disclosures, and no new or terminated 10b5-1 trading plans by insiders during the quarter - The company reported no defaults upon senior securities, no mine safety disclosures, and no new or terminated 10b5-1 trading arrangements by insiders during the quarter147148149
Grand Canyon Education(LOPE) - 2025 Q1 - Quarterly Report