Executive Summary

Q3 2025 service revenue rose 9.6% to $261.1M on 7.9% partner enrollment growth; GAAP EPS fell to $0.58 due to a $35.0M litigation reserve, while non-GAAP EPS was $1.78, in line with consensus .
Adjusted EBITDA increased 14.4% to $75.9M; adjusted operating margin expanded to 22.3% from 21.1% YoY on contract modifications and mix, despite higher benefit costs impacting EPS by ~$0.06 .
Guidance: Q4 2025 ranges reaffirmed; full-year GAAP EPS lowered (litigation reserve), while adjusted EPS guided to $9.02–$9.13; management flagged potential ~$$3M Q4 revenue timing impact from the government shutdown’s military tuition assistance program .
Stock drivers: Strong hybrid ABSN momentum (+19.3% ex closed/teach-out), marketing pivot to social channels for younger online students, and continued buybacks ($39.5M in Q3), offset by one-time legal reserve and elevated benefit costs .

What Went Well and What Went Wrong

What Went Well

Online enrollment growth of 9.6% and hybrid enrollment growth of 19.3% (excluding closed/teach‑out sites) outperformed expectations; “momentum… will continue” per CEO Brian Mueller .
ABSN pipeline strengthened by prerequisite course innovation and AI tutoring; 19,410 students enrolled in the new eight-week online prereqs; ABSN graduation rates mid‑80% and first-time NCLEX pass ~90% .
Adjusted operating margin expanded to 22.3% (from 21.1% YoY) and adjusted EBITDA rose 14.4%, reflecting contract modifications reducing reimbursed faculty costs and positive mix effects .

What Went Wrong

GAAP operating margin compressed to 6.9% (from 20.2%) due to a $35.0M litigation settlement reserve and other charges, driving GAAP EPS down to $0.58 .
Higher-than-expected benefit costs (claims) reduced EPS by ~$0.06 in Q3 and are anticipated to persist in Q4, pressuring profitability .
Effective tax rate rose to 24.9% (from 20.8% YoY) largely due to the tax treatment of the qui tam settlement, partially offset by increased state tax credit contributions .

Financial Results

Metric	Q3 2024	Q2 2025	Q3 2025
Service revenue ($USD Millions)	$238.3	$247.5	$261.1
GAAP diluted EPS ($)	$1.42	$1.48	$0.58
Adjusted diluted EPS ($)	$1.48	$1.53	$1.78
Operating margin %	20.2%	20.9%	6.9%
Adjusted operating margin %	21.1%	—	22.3%
Net income ($USD Millions)	$41.5	$41.5	$16.3
Adjusted EBITDA ($USD Millions)	$66.3	$67.4	$75.9

Estimates vs Actual (Q3 2025)

Metric	Consensus	Actual
Revenue ($USD Millions)	$260.0*	$261.1
Adjusted EPS ($)	$1.78*	$1.78

Values retrieved from S&P Global.*

Segment/Enrollment Snapshot

Enrollment KPI	Q3 2024	Q3 2025
Total partner enrollments	127,977	138,073
GCU online enrollments	98,345	107,815
GCU ground enrollments	24,657	24,671
Off-campus classroom & lab enrollments	—	6,912

Additional KPIs

Off-campus sites: 47 as of Sep 30, 2025; five opened YTD, two closed/merged .
Cash & investments: $277.0M at Sep 30, 2025; down from $324.6M at Dec 31, 2024 .
Share repurchases: 219,369 shares in Q3 for ~$$39.5M; authorization remaining $136.4M .
Q3 CapEx: ~$9.7M (3.7% of service revenue) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Service revenue	Q4 2025	$305.0–$310.0M	$305.0–$310.0M	Maintained
Operating margin	Q4 2025	35.1%–35.8%	35.1%–35.8%	Maintained
Effective tax rate	Q4 2025	22.8%	22.8%	Maintained
Diluted EPS	Q4 2025	$3.07–$3.18	$3.07–$3.18	Maintained
Adjusted diluted EPS	Q4 2025	$3.13–$3.24	$3.13–$3.24	Maintained
Service revenue	FY 2025	$1,100.3–$1,107.3M	$1,103.0–$1,108.0M	Raised (midpoint)
Operating margin	FY 2025	27.5%–27.9%	24.0%–24.3%	Lowered
Effective tax rate	FY 2025	22.3%	22.9%	Raised
Diluted EPS	FY 2025	$8.75–$8.90	$7.66–$7.77	Lowered
Adjusted diluted EPS	FY 2025	$8.98–$9.14	$9.02–$9.13	Maintained (range adjusted)

Note: FY guidance explicitly includes impacts from $29.2M reserve for litigation, $1.9M lease termination/impairment, $0.2M severance, $0.4M asset disposal, and $6.6M amortization (non-cash), cumulatively reducing GAAP EPS by ~$1.36 .

Earnings Call Themes & Trends

Topic	Q1 2025 (prior)	Q2 2025 (prior)	Q3 2025 (current)	Trend
Online enrollment momentum	+7.9% YoY GCU online; program breadth emphasized	+10.1% YoY online; guidance raised	+9.6% YoY; younger cohort shifting online; marketing pivot	Sustained growth; mix shift to younger
Hybrid ABSN growth	Sites at 46; ABSN expansion	Off-campus enrollments +14%; sites 45	Off-campus +17.4% (+19.3% excl closed/teach-out); five sites opened YTD; efficient prereq pipeline (AI tutoring)	Accelerating
Pricing/contract mix	Leap year headwind noted	Contract modifications reduce reimbursements and OpEx	Continued mix shift lowers revenue per student; margins benefit from contract changes	Ongoing mix normalization
Regulatory/legal	—	—	$35.0M litigation settlement reserve; ETR impact	One-time charge
Tax rate	21.6% ETR	24.5% ETR	24.9% ETR; Q4 guided 22.8%	Elevated vs early year
Marketing strategy	—	—	Increased social media spend for traditional campus recruitment; registrations ahead YoY	Strategic pivot
Military tuition assistance	—	—	Potential ~$3M Q4 timing impact from shutdown	Temporary headwind

Management Commentary

“GCE had another strong quarter, producing online enrollment growth of 9.6% and hybrid growth… of 19.3%… Given the trends I just discussed, we believe the momentum that exists will continue.” — Brian Mueller, CEO .
“Adjusted operating income and adjusted operating margin… $58.2M and 22.3%… as compared to $50.3M and 21.1%… for the same period in 2024.” — Brian Mueller .
“The higher‑than‑expected benefit costs had a $0.06 impact on EPS in the third quarter… we’re currently anticipating this trend will continue in the fourth quarter.” — Dan Bachus, CFO .
“It is likely that revenue would have been in the top half of our previously provided fourth quarter guidance, but we anticipate slightly lower revenue from military tuition assistance students due to the government shutdown… impact… is $3 million.” — Dan Bachus .
“We repurchased 219,369 shares… at a cost of approximately $39.5 million… $136.4 million remaining… board… instructed us to be more aggressive in stock buybacks when the stock drops.” — Dan Bachus .

Q&A Highlights

Nursing program mix: Management clarified diversification across pre‑licensure (ground and ABSN), post‑licensure (RN‑BSN, MN, Doctorate), and prerequisite pipelines; healthcare ~30% of enrollments but diversified across levels and programs .
Younger online students: Marketing pivot to social media channels is delivering broader reach with lower cost; fall 2026 registrations ahead YoY, indicating early success .
Diversification beyond nursing: Strong traction in education (teacher pipelines with districts), business, counseling/social work, and technology/cybersecurity; competitive advantage due to administrative infrastructure enabling licensure programs at scale .
Employer partnerships: ~33% of starts come from direct work inside companies, districts, hospitals, agencies, reducing dependence on purchased leads and supporting consistent performance .
Guidance clarifications: Q4 ranges reaffirmed; noted ~$3M potential revenue timing impact from shutdown and continued benefit/tech cost inflation; buybacks to remain aggressive given valuation metrics (EV/Adj. EBITDA, FCF yield) .

Estimates Context

Q3 2025 adjusted EPS matched consensus at $1.78; revenue slightly beat consensus ($261.1M vs $260.0M). Full-year GAAP EPS guidance lowered due to one-time litigation reserve; adjusted EPS range $9.02–$9.13 implies stable to slightly higher non-GAAP trajectory despite temporary costs .
Expect modest upward revisions to hybrid-driven revenue assumptions; GAAP EPS estimates should reflect one-time charges and higher ETR, while non-GAAP EPS estimates may remain near guidance midpoint given margin offsets from contract changes .