Grand Canyon Education(US:LOPE)2020-08-04 23:03Financial Data and Key Metrics Changes - Non-GAAP diluted income per share for Q2 2020 was $1.3, down from $1.9 in Q2 2019 [32] - Service revenue significantly exceeded expectations in Q2 2020 due to acceleration in GCU's online enrollment [32] - Revenue per student decreased year-over-year due to lower ancillary revenues at GCU, but grew when excluding COVID-19 impacts [35] Business Line Data and Key Metrics Changes - GCU online had 87,959 students as of June 30, 2020, with new students growing in the high-teens and total students up 8.2% year-over-year [7] - GCU traditional campus maintained profitability without raising tuition for 12 years and plans to exceed enrollment goals for the fall semester [12] - Orbis revenues grew 24.2% year-over-year for the three months ended June 30, 2020, with enrollments up 12.2% [22] Market Data and Key Metrics Changes - GCU's cash balance at June 30, 2020, was approximately $308 million, with net assets growing to almost $410 million [17] - Total unrestricted cash and short-term investments at June 30, 2020, were $187.2 million [38] - Ground campus applications for fall 2021 are running 81% ahead of last year's application rate [16] Company Strategy and Development Direction - GCE aims to address rising costs of university education and increasing student debt levels through innovative delivery models [5] - The company plans to open 11 new Orbis locations in the next 12 months, targeting a total of 70 locations in the next seven years [20][23] - GCE is focused on finding comprehensive partnerships with universities to improve online education quality and expand working adult programs [27][28] Management's Comments on Operating Environment and Future Outlook - Management anticipates new enrollment trends will normalize to mid to high single-digit growth in Q3 2020, which is still significant [10] - The pandemic has not negatively impacted GCU's financials due to the structure of the MSA with GCE [17] - Management expressed confidence in the ability to maintain high persistence rates among incoming students, which will support future growth [64] Other Important Information - The company repurchased 111,100 shares at a cost of approximately $8.3 million in Q2 2020, with an increased share repurchase authorization to $300 million [37] - GCU's nursing program has consistently achieved first-time pass rates on the NCLEX exam over 90% [21] - The effective tax rate for Q2 2020 was 24.6%, up from 21.7% in Q2 2019 [36] Q&A Session Summary Question: Can you provide more details on the growth of working adult students online? - Management noted that the percentage of graduate students has increased, with graduate students making up around 50% of the online enrollment [51] Question: What health and safety plans are in place for the fall semester? - Management outlined plans for social distancing, reduced classroom capacity, and outdoor activities to ensure safety [57] Question: Why is online new enrollment growth expected to normalize quickly? - Management explained that the pandemic created a unique demand situation that may not be sustainable as typical enrollment patterns resume [64] Question: How is the guidance accounting for students opting for online classes? - Guidance currently assumes around 3,500 students will take all classes online, with potential for that number to increase [71] Question: What impact does the mix of graduate students have on revenue per student? - Management indicated that revenue per student is similar between graduate and undergraduate students, with graduate students having higher persistence and graduation rates [75]