Grand Canyon Education(US:LOPE)2025-08-06 20:11PART I – FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited consolidated financial statements for Grand Canyon Education, Inc. for the period ended June 30, 2025, providing a quantitative overview of the company's financial performance and position Consolidated Income Statements Service revenue grew to $247.5 million for the three months ended June 30, 2025, an 8.8% increase year-over-year, driven by higher partner enrollments, with net income rising 19.1% to $41.5 million Consolidated Income Statement Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | YoY Change | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Service Revenue | $247,499 | $227,463 | +8.8% | $536,809 | $502,138 | +6.9% | | Operating Income | $51,789 | $42,719 | +21.2% | $139,812 | $127,197 | +9.9% | | Net Income | $41,546 | $34,878 | +19.1% | $113,164 | $102,888 | +10.0% | | Diluted EPS | $1.48 | $1.19 | +24.4% | $4.00 | $3.48 | +14.9% | Consolidated Balance Sheets As of June 30, 2025, total assets stood at $1.021 billion, with cash and cash equivalents decreasing to $192.3 million, offset by a new investment balance of $181.6 million Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $192,278 | $324,623 | | Investments | $181,621 | $0 | | Total current assets | $422,481 | $419,976 | | Total assets | $1,021,007 | $1,018,425 | | Total current liabilities | $118,990 | $110,966 | | Total liabilities | $243,031 | $234,572 | | Total stockholders' equity | $777,976 | $783,853 | Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash from operating activities was $191.6 million, while investing activities used $198.7 million and financing activities used $125.2 million, resulting in a net decrease in cash of $132.3 million Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $191,639 | $183,526 | | Net cash used in investing activities | $(198,748) | $(19,989) | | Net cash used in financing activities | $(125,236) | $(68,695) | | Net (decrease) increase in cash | $(132,345) | $94,842 | Notes to Consolidated Financial Statements The notes detail the company's accounting policies and provide further information on financial statement items, including its business model, revenue recognition, investments, leases, legal contingencies, and share repurchase program - GCE provides education services to 20 university partners, with its most significant partner being Grand Canyon University (GCU)2324 - Revenue is generated through services agreements with university partners, where GCE receives a percentage of the partner's tuition and fee revenue, recognized over time as services are delivered4546 - GCU accounted for 89.4% of total service revenue for the six months ended June 30, 2025, indicating a significant concentration of credit risk59 - The company is involved in several legal proceedings, including a False Claims Act lawsuit and matters related to GCU graduate program disclosures, for which it cannot reasonably estimate a range of loss and has not accrued any liability858991 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the financial results for the three and six months ended June 30, 2025, highlighting revenue growth driven by increased partner enrollments, improved operating margins, liquidity, capital resources, and the ongoing share repurchase program Results of Operations For Q2 2025, revenue increased 8.8% to $247.5 million, driven by a 10.3% rise in partner enrollments, with all expense categories decreasing as a percentage of revenue, leading to a 19.1% increase in net income to $41.5 million Partner Enrollment Growth | Metric | June 30, 2025 | June 30, 2024 | YoY Change | | :--- | :--- | :--- | :--- | | Total Partner Enrollments | 117,283 | 106,307 | +10.3% | | GCU Enrollments | 113,435 | - | +10.5% | | Off-campus Site Enrollments | 4,990 | - | +14.0% | - For Q2 2025, revenue growth of 8.8% was primarily driven by the increase in partner enrollments, while revenue per student decreased slightly due to contract modifications and student mix shifts115 - Operating expenses as a percentage of revenue decreased in Q2 2025 compared to Q2 2024 across all categories, indicating improved operational efficiency and leverage114 Liquidity and Capital Resources The company's liquidity remains strong, with cash, cash equivalents, and investments totaling $373.9 million at June 30, 2025, with major uses of cash including investments and share repurchases Key Liquidity and Capital Metrics (Six Months Ended June 30, 2025) | Metric | Amount (in thousands) | | :--- | :--- | | Cash provided by operating activities | $191,639 | | Capital expenditures | $(17,561) | | Net purchases of investments | $(180,659) | | Repurchase of common shares | $(125,236) | | Cash, cash equivalents and investments (End of Period) | $373,899 | - The company repurchased 654,697 shares for $115.7 million in the first six months of 202599153155 - As of June 30, 2025, $183.9 million remained available under the share repurchase authorization99153155 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate risk associated with its investment portfolio, though management believes a 10% change in interest rates would not have a material impact on financial results - The company invests excess cash in money market instruments, corporate bonds, commercial paper, and other securities, exposing it to interest rate risk157158 - Management believes a hypothetical 10% change in interest rates would not materially impact the company's financial results158 Item 4. Controls and Procedures The CEO and CFO concluded that the company's disclosure controls and procedures are effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of the end of the period159 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls161 PART II – OTHER INFORMATION Item 1. Legal Proceedings This section refers to Note 8 of the consolidated financial statements for information regarding material pending legal proceedings, including a False Claims Act matter and cases related to GCU graduate program disclosures - Information on material legal proceedings is incorporated by reference from Note 8 – Commitments and Contingencies in the financial statements162 Item 1A. Risk Factors The company states that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - There were no material changes to the risk factors disclosed in the 2024 Form 10-K163 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities and provided details on its share repurchase activity for the second quarter of 2025, with $183.9 million remaining available under the current authorization Share Repurchases in Q2 2025 | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | April 2025 | 113,162 | $172.33 | | May 2025 | 71,417 | $193.20 | | June 2025 | 74,692 | $188.52 | | Total Q2 | 259,271 | $182.74 | - As of June 30, 2025, $183.9 million remained available for future repurchases under the program authorized until March 1, 2026165166 Item 3. Defaults Upon Senior Securities None reported - The company reported no defaults upon senior securities168 Item 4. Mine Safety Disclosures Not applicable - The company reported no mine safety disclosures169 Item 5. Other Information The company reported that no director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the second quarter of 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading plan during the three months ended June 30, 2025170 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and financial statements formatted in Inline XBRL - Exhibits filed include Sarbanes-Oxley Act certifications (31.1, 31.2, 32.1, 32.2) and financial data in Inline XBRL format (101, 104)171172