Financial Data and Key Metrics Changes - Grand Canyon Education reported service revenue of $289.3 million for Q1 2025, an increase of $14.6 million or 5.3% compared to $274.7 million in Q1 2024 [20] - Operating income for the three months ended March 31, 2025, was $88 million with an operating margin of 30.4%, compared to $84.5 million and 30.8% for the same period in 2024 [21] - Net income increased by 5.3% to $71.6 million for Q1 2025 compared to $68 million for Q1 2024 [21] Business Line Data and Key Metrics Changes - Online enrollment growth was 7.9% in Q1 2025, slightly exceeding long-term objectives, while hybrid enrollment growth, excluding closed sites, was 16.5% [3][10] - New starts from employer partnerships increased by 18.2% year over year, contributing to overall enrollment growth [6] - The hybrid campus saw a year-over-year enrollment increase of 12.1% in Q1 2025 [10] Market Data and Key Metrics Changes - The company continues to address workforce shortages in various industries, including education, healthcare, and technology, which has positively impacted enrollment [6][14] - The company anticipates that total online enrollments will remain in the mid to high single digits year over year throughout 2025, despite pressures from increasing graduation rates [26] Company Strategy and Development Direction - Grand Canyon Education aims to grow by addressing challenges in higher education, such as rising tuition and debt levels, while continuing to roll out new programs [4][5] - The company plans to expand its traditional campus to 50,000 students and is optimistic about growth due to its low tuition and debt levels [9] - The focus remains on building rather than acquiring, with an emphasis on workforce development and partnerships with various organizations [52][54] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that funding for higher education will remain stable, despite concerns about potential cuts from Washington [39][40] - The company is optimistic about enrollment trends and believes it is well-positioned to attract students due to its value proposition [48] - Management anticipates a slight decline in margins in the second quarter due to investments but expects margins to expand in the second half of the year [29] Other Important Information - The effective tax rate for Q1 2025 was 21.6%, a decrease from 22.9% in the previous year, primarily due to increased excess tax benefits [24] - The company repurchased 3,395,426 shares at a cost of approximately $68.4 million, with $209.4 million remaining under its share repurchase authorization [25] Q&A Session Summary Question: Where did the better-than-expected enrollment in Q1 come from? - Management attributed the increase to lead flow and interest in new programs, as well as contracts with school districts and military bases [34][36] Question: Are students worried about potential funding cuts from Washington? - Management believes funding for higher education will remain stable and does not expect it to impact the company [39][40] Question: What are the long-term enrollment targets for different pillars? - The long-term enrollment goal is 7%, with current performance slightly above that at 7.9% [45] Question: What are the expectations for enrollment this year? - Management confirmed that expectations for GCU online starts remain in the mid to high single digits for 2025 [50] Question: Thoughts on M&A? - Management prefers building over acquiring and sees more potential in developing programs directly with companies [52][54] Question: What is the process for converting students in prerequisite programs to ABSN programs? - Management explained that it takes time for students to complete prerequisite courses before entering ABSN programs, and they aim to have more students enrolled in prerequisites to fill slots [58][60]