Executive Summary

Q4 2024 service revenue rose 5.1% YoY to $292.6M, with non-GAAP diluted EPS of $2.95; revenue and adjusted EPS were modest beats versus street expectations, while GAAP EPS was $2.84 . External reports indicate consensus revenue near $289.0M and adjusted EPS near $2.94, implying small beats; management also noted adjusted EPS was $0.02 above consensus .
Operating margin of 34.2% was down 90 bps YoY on impairment/other charges ($1.9M) and mix/timing, though underlying growth was supported by online enrollments (+7.1%) and hybrid ABSN strength (ex-closures +14.9%) .
2025 guidance introduced: FY service revenue $1.075B–$1.097B, operating margin 27.1%–27.9%, GAAP EPS $8.20–$8.59 (non-GAAP $8.43–$8.82); management flagged first-half margin pressure from investments with expansion in H2 if revenue trends at upper half of range .
Capital returns: board added $200M to the buyback authorization (now expiring Mar 1, 2026); $261.9M remained as of Feb 14, 2025, with 28.7M shares outstanding; Q4 repurchases were ~416K shares for ~$64.8M .

What Went Well and What Went Wrong

What Went Well

Enrollment-driven revenue growth and adjusted profitability: Service revenue +5.1% YoY; adjusted EBITDA +5.1% to $116.6M; non-GAAP diluted EPS $2.95 (top end/beat) .
Strong online and hybrid execution: Online enrollments +7.1% and off-campus ABSN enrollments +14.9% ex-closures, aided by newer ABSN models and prerequisite pathways; “we have an extremely efficient way to get students academically eligible and prepared…success rate…in the high 80s…first-time pass rate…~90%” .
Operational discipline and liquidity/capital returns: Cash and investments increased to $324.6M; buyback capacity increased $200M; management intends daily purchases in 2025 given perceived undervaluation on EV/Adj. EBITDA and FCF yield metrics .

What Went Wrong

Margin compression and one-time charges: Operating margin fell to 34.2% (−90 bps YoY) on $1.9M impairment/other and higher benefit costs/investments; GAAP EPS of $2.84 trailed adjusted figures and some street GAAP estimates .
Traditional ground softness and mix headwinds: GCU ground enrollments declined modestly YoY; revenue per student was pressured by contract modifications (lower revenue share in exchange for no longer reimbursing certain faculty costs) and the earlier semester start shifting ~$2.2M revenue into Q3 .
Tax rate drift higher: Effective tax rate rose to 21.2% in Q4 and 22.3% for FY on higher state taxes, with management expecting the trend to continue as site footprint expands beyond Arizona .

Financial Results

Quarterly trend (P&L and profitability)

Metric	Q2 2024	Q3 2024	Q4 2024
Service Revenue ($M)	$227.5	$238.3	$292.6
Operating Margin (%)	18.8%	20.2%	34.2%
GAAP Diluted EPS ($)	$1.19	$1.42	$2.84
Non-GAAP Diluted EPS ($)	$1.27	$1.48	$2.95
Adjusted EBITDA ($M)	$58.5	$66.3	$116.6

Q4 2024 actual vs consensus

Metric	Actual	Consensus	Variance
Service Revenue ($M)	$292.6	$289.0 (FactSet)	+$3.6
Adjusted EPS ($)	$2.95	$2.94 (FactSet)	+$0.01
GAAP EPS ($)	$2.84	~$2.87 (various)	−$0.03

Notes: Management stated non-GAAP diluted EPS was $0.02 above consensus; external coverage shows ~+$0.01–$0.02 beat and revenue beat .

KPIs and operating drivers

KPI	Q2 2024	Q3 2024	Q4 2024
Total Partner Enrollments	106,307 (6/30)	127,977 (9/30)	127,155 (12/31)
Off-campus classroom & lab enrollments	4,377 (6/30)	5,888 (9/30)	4,919 (12/31)
GCU Online Enrollments	95,279 (6/30)	98,345 (9/30)	98,597 (12/31)
GCU Ground Enrollments	7,397 (6/30)	24,657 (9/30)	24,552 (12/31)
Off-campus Sites (count)	43 (6/30)	46 (9/30)	45 (12/31)

Context: ABSN/prerequisite pathways continue to mix-shift revenue per student up vs core GCU, but contract modifications and timing effects partially offset; Q4 included a $2.2M revenue shift into Q3 due to semester timing .

Guidance Changes

Metric	Period	Previous Guidance	Current/Actual	Change
Service Revenue ($M)	Q4 2024	$289.0–$290.0	$292.6 actual	Beat prior guidance
Operating Margin (%)	Q4 2024	35.2%–35.4%	34.2% actual	Below prior guidance
GAAP Diluted EPS ($)	Q4 2024	$2.86–$2.89	$2.84 actual	Below prior guidance
Non-GAAP Diluted EPS ($)	Q4 2024	$2.92–$2.95	$2.95 actual	At top end
Service Revenue ($M)	FY 2024	$1,029.4–$1,030.4	$1,033.0 actual	Beat prior guidance
Operating Margin (%)	FY 2024	26.9%–27.0%	26.7% actual	Slightly below
Effective Tax Rate (%)	FY 2024	22.3%	22.3% actual	In line
GAAP Diluted EPS ($)	FY 2024	$7.76–$7.79	$7.73 actual	Slightly below
Non-GAAP Diluted EPS ($)	FY 2024	$8.02–$8.05	$8.04 actual	In range
Service Revenue ($M)	FY 2025	—	$1,074.5–$1,097.0	New
Operating Margin (%)	FY 2025	—	27.1%–27.9%	New
Effective Tax Rate (%)	FY 2025	—	23.8%	New
GAAP Diluted EPS ($)	FY 2025	—	$8.20–$8.59 (non-GAAP $8.43–$8.82)	New
Q1 2025 guide highlights	Q1 2025	—	Rev $286.5–$287.5M; OM 30.0%–30.2%; EPS $2.44–$2.46 (non-GAAP $2.50–$2.52); 28.6M diluted shares	New
Q2 2025 guide highlights	Q2 2025	—	Rev $236.5–$240.5M; OM 18.1%–19.0%; EPS $1.22–$1.30 (non-GAAP $1.28–$1.36); 28.4M shares	New
Q3 2025 guide highlights	Q3 2025	—	Rev $250.5–$257.5M; OM 22.0%–23.2%; EPS $1.55–$1.68 (non-GAAP $1.61–$1.74); 28.1M shares	New
Q4 2025 guide highlights	Q4 2025	—	Rev $301.0–$311.5M; OM 35.5%–36.3%; EPS $2.99–$3.16 (non-GAAP $3.05–$3.22); 27.9M shares	New

Earnings Call Themes & Trends

Topic	Previous Mentions (Q-2: Q2 2024; Q-1: Q3 2024)	Current Period (Q4 2024)	Trend
ABSN/hybrid scaling & outcomes	ABSN drives higher rev/student; off-campus enrollments +12.1%; site count to 43 (Q2). Timing/contract mix noted (Q3) .	Ex-closures hybrid enrollments +14.9%; ~12,412 students in prerequisite pathway; ABSN pass rate ~90%; success rate high 80s .	Positive; scaling with strong outcomes.
AI/technology initiatives	Noted tech investments historically (press) .	24/7 AI-enabled tutoring supporting prereq success for ABSN pathway .	Increasing operational use of AI.
FAFSA/macro headwinds	FAFSA issues referenced earlier in higher-ed context (implied sector-wide) .	DOE working on fixes; early signs positive; Spring 2025 new starts up YoY; Fall 2025 registrations ahead YoY .	Improving admissions backdrop.
Regulatory/capacity constraints	Some sites at capacity; regulatory caps discussed (implied) .	10 locations at/near capacity; seeking approvals (e.g., West Phoenix beyond 300); favorable dialogues in states like Florida .	Gradual easing expected; constructive dialogue.
Mix & pricing	Contract modifications reduce rev share; earlier semester start shifts revenue (Q2/Q3) .	Q4 rev/student impacted by timing; contract mods and 1 partner moving to cost-plus; online net tuition low increases since 2018 (~1%/yr) .	Mix shift persists; tuition restraint supports demand.
Legal backdrop	Ongoing litigation expenses in 2024 .	Ninth Circuit ruling favorable to GCU on nonprofit status; 2025 litigation fees to rise with cases moving to discovery/trial .	Legal risk moderating in one area; expenses near term up.

Management Commentary

Strategic growth pillars: “We will continue to grow at our stated goals…because we are addressing [tuition/debt/FAFSA] challenges in ways that work for students and employers.”
Online demand/resilience: “New starts were up in mid-single digits…total enrollment growth was 7.1%…We believe new start growth will remain in the mid- to high single-digit rates in the first quarter of 2025.”
Hybrid pathway and AI support: “We created the science courses…delivered online in 8 weeks…with…an artificial intelligence project which provides students 24/7 access to tutoring…we have already enrolled approximately 12,412 students.”
Profitability cadence: “We should see a slight decline in margins in the first half of 2025 due to…investments…[and] optimistic that margins will expand in the second half…full year margins will be up year-over-year.”
Capital allocation: “We…approved a $200 million increase under [the] stock repurchase program…We have $260.7 million remaining…we anticipate daily purchases to continue during 2025.”

Q&A Highlights

Ground campus recruitment: Tighter “Discover GCU” process (pre-visit transcript review and family Zoom meeting) improved conversion; registrations “fairly significantly ahead” YoY; targeting +15% new students .
ABSN economics and outcomes: Targeting students with partial credits and low debt; prereq courses priced low; 80% pass rate with B or better; ABSN success rates 88–89%; NCLEX first-time pass ~90%; pathway highly scalable .
Hybrid profitability: While GCE doesn’t segment report, site-level margins support expectation that hybrid will cross back to profitability in 2025 .
Contract status with GCU: No July expiration; early out begins then and was not exercised; 15-year MSA ~6.5 years in; discussions to extend early .
Regulatory outlook: Positive conversations for capacity increases (e.g., West Phoenix; Florida); focus on strong outcomes aiding approvals .

Estimates Context

Management stated Q4 non-GAAP diluted EPS was $0.02 above consensus; external coverage shows adjusted EPS $2.95 vs $2.94 and revenue $292.6M vs $289.0M (FactSet), implying modest beats; GAAP EPS ($2.84) was modestly below some GAAP estimates .
S&P Global consensus via our estimates tool was unavailable at the time of request due to API rate limits; we therefore benchmarked to FactSet-based reporting from Nasdaq/Yahoo Finance and management commentary on consensus .
Near-term estimate revisions: Guidance midpoints for FY25 revenue ($1.086B mid) and GAAP EPS ($8.40 mid) are slightly below some street midpoints, with CFO emphasizing prudence given visibility and first-half investments; upward revisions could follow if enrollment/revenue trends track to high end and H2 margin expansion materializes .

Key Takeaways for Investors

Solid quarter with operational beats: Revenue and adjusted EPS modestly exceeded consensus; drivers were online (+7.1%) and ABSN/hybrid momentum, despite timing and contract headwinds .
Mix/timing explain margin/EPS dynamics: Q4 operating margin softness reflects $1.9M impairment/other, benefit cost pressure, and earlier semester start shifting ~$2.2M to Q3; adjusted EPS execution remained strong .
2025 guide is conservative at the midpoint: Management framed midpoints slightly below consensus due to visibility and investment cadence, but expects H2 margin expansion and full-year margin improvement if revenues trend to the upper half .
ABSN moat strengthening with AI-enabled pathway: Scalable prereq pipeline and strong NCLEX outcomes support continued hybrid growth; regulatory capacity expansions (e.g., beyond 300 at West Phoenix) would be incremental catalysts .
Tax and legal costs rising near term: Effective tax rate stepping up on state mix; litigation/regulatory expenses expected to increase in 2025 as cases progress, though a recent Ninth Circuit ruling was favorable to GCU .
Capital return remains active: $200M buyback authorization increase and ample cash provide downside support; management targets continued daily repurchases in 2025 .
Trading setup: Modest beat/raise on adjusted metrics vs a cautious FY25 midpoint could create dispersion in reactions; upside skew if enrollments and approvals track to the high end and H2 leverage delivers margin upside .

Grand Canyon Education, Inc. (LOPE)·Q4 2024 Earnings Summary