Grand Canyon's Q3 2025: Contradictions Emerge on Enrollment Growth Drivers, GCU Online Marketing, and Program Growth and Enrollment Efficiency

Business Commentary:

* Online Enrollment Growth:
- Grand Canyon Education reported 9.6% online enrollment growth for Q3 2025, significantly exceeding GCU’s long-term objectives.
- The growth was driven by factors such as rolling out new programs, working with employers, strong retention levels, maintaining competitive pricing, and increasing online preference among recent high school graduates.

• Hybrid Enrollment Increase:
• The Grand Canyon Education hybrid campus showed an enrollment increase of 17.4% year-over-year in Q3 2025, or 19.3% excluding closed sites and teach-outs.

• This growth was the result of new students starting in the fall and the introduction of affordable prerequisite courses for entry into ABSN programs, addressing high demand for nursing careers.

• Nursing Program Expansion:

• The nursing program at GCU accounts for approximately 30% of its total enrollments, with a diverse range of pre- and post-licensure programs.

• Growth in this area is attributed to addressing shortages in nursing and healthcare professions by offering efficient, affordable prerequisite courses and expanding programmatic offerings.

• Ground Campus Traditional Enrollments:

• New traditional campus enrollments at GCU were up in the high single digits year-over-year in Q3 2025.
• The growth is expected to continue due to the campus’s low price point, low average debt levels, high completion rates, and relevant academic programs, despite declining high school graduate numbers.
  

Contradiction Point 1

Enrollment Growth Drivers

It involves changes in the explanation of enrollment growth drivers, which are critical metrics for the company's financial performance and investor expectations.

Can you describe the size, differences between pre-licensure and post-licensure nursing programs, and their growth trends? - Jeff Silber (BMO Capital Markets)

2025Q3: The acceleration in enrollment growth is driven by three key factors: significant increase in the number of contracts with public schools for producing teachers, particularly involving paraprofessionals; enhanced interest in prerequisites courses for traditional college students; and strong performance from our on-ground business. - Brian E. Mueller(CEO)

What caused the acceleration in enrollment growth between Q1 and Q2? - Jeffrey Marc Silber (BMO Capital Markets)

2025Q2: The acceleration in enrollment growth is driven by three key factors: significant increase in the number of contracts with public schools for producing teachers, particularly involving paraprofessionals; enhanced interest in prerequisites courses for traditional college students; and the strong performance of our enrollment management team. - Brian E. Mueller(CEO)

Contradiction Point 2

Marketing Strategy for GCU Online

It highlights potential changes in the company's marketing approach, which could impact student acquisition and enrollment growth.

Are you using a different marketing approach for younger students in GCU Online, and if so, what channels are being used? - Jeff Silber (BMO Capital Markets)

2025Q3: No significant changes in marketing strategies for GCU Online to younger students. However, more focus on social media advertising for broader reach and lower cost compared to traditional high school partnerships. Initial registrations for fall 2026 are significantly ahead of last year. - Brian E. Mueller(CEO)

How are lead generation costs trending compared to the plan year-to-date? - Andrew Karp (Bernstein)

2025Q2: We're seeing an increase in the number of students that are starting online as freshmen. And we've also seen a significant increase in the number of students that are starting GCU Online after attending another institution, and they're transferring in. Again, this is fairly consistent with the market response and the things that we've been seeing in our industry, which is that there's a shift towards working adults, and so we're seeing those numbers increase. - Brian E. Mueller(CEO)

Contradiction Point 3

Marketing Strategies for Younger Students

It involves changes in marketing approaches for GCU Online towards younger students, which could impact enrollment and growth strategies.

Are you using different marketing strategies for younger students at GCU Online? If so, which channels are used? - Jeff Silber (BMO Capital Markets)

2025Q3: No significant changes in marketing strategies for GCU Online to younger students. However, more focus on social media advertising for broader reach and lower cost compared to traditional high school partnerships. Initial registrations for fall 2026 are significantly ahead of last year. - Brian E. Mueller(CEO)

Can you elaborate on being ahead of last year’s new student registrations for the full run campus intake, given your growth goals and the current depressed level? Additionally, could you share insights on demand inquiries, Discovery GCU visits, and conversion initiatives that support the growth goals? - Jeffrey Silber (Baird)

2024Q4: We made an adjustment to our Discover GCU process to increase the conversion rate, with registrations ahead of last year. We have strategies for Pell-eligible students which are working well, showing positive early indications. - Brian E. Mueller(CEO)

Contradiction Point 4

Growth in Specific Programs and Enrollment Efficiency

It involves statements regarding the growth in specific programs and the efficiency of enrollment advisors, which are crucial for company growth and operational effectiveness.

What other programs are growing faster than nursing programs? What is the competitive landscape in those programs? - Stephen Pollock (Robert W. Baird)

2025Q3: Strong growth in education, particularly in teacher preparation, by signing contracts with school districts to license professionals for classroom roles. Fast-growing business programs and opportunities in counseling, social work, and technology engineering. These areas offer uncompetitive opportunities due to licensing requirements and high demand. - Brian E. Mueller(CEO)

You mentioned being ahead of last year's full-run campus new student registrations. Can you provide more details on demand inquiries, Discovery GCU visits, and conversion initiatives to support your ambitious growth goals given the current low baseline? - Jeffrey Silber (Baird)

2024Q4: We feel very good about our aggressive growth goals of a 15% increase in new students over last year. - Brian E. Mueller(CEO)