Grand Canyon Education's Third-Quarter Revenue Growth Slows

The Tip Desk · November 10, 2026 · 4 min read

Service revenue rose 2.4% to $267.3 million as GCU's amended contract dropped ancillary fees and a $7.5 million ground-semester shift moved into the fourth quarter.

Grand Canyon Education, Inc. (LOPE), a Phoenix-based provider of post-secondary support services to 20 university partners, reported third-quarter service revenue of $267.3 million, up 2.4% from $261.1 million a year earlier. That pace was slower than the 6.7% year-over-year increases in both the first and second quarters of 2026.

University partner enrollments were 145,270 at September 30, 2026, up 5.2% from 138,073 a year earlier, after 7.6% growth at June 30 and 7.1% growth at March 31. GCU enrollments were 139,170, up 5.1% from a year earlier. GCU online enrollments were 115,520, up 7.1% from 107,815 a year earlier. GCU ground enrollments were 23,650, down 4.1% from 24,671 a year earlier.

The company said revenue from GCU, its largest partner, for the three months ended September 30, 2026 was earned under the Amended MSA on tuition and academic-related fees only, whereas the year-ago quarter was earned under the Original MSA and included an agreed percentage of ancillary fees for student housing, food service, athletic ticket sales, arena events, hotel, golf course and apparel operations. Six fewer days of ground-traditional revenue from the Fall semester start shifted $7.5 million of revenue from the third quarter to the fourth quarter of 2026. The company also cited a slight decline in revenue per student for online students from a mix shift toward a slightly lower net tuition rate.

Those per-student declines were offset, the company said, by service revenue per student for accelerated Bachelor of Science in Nursing students at off-campus classroom and laboratory sites, which generate a significantly higher revenue per student than the GCU agreement because of higher revenue-share percentages, higher partner tuition rates and more credits taken on average. Off-campus site enrollments were 7,780, up 12.6% from a year earlier; excluding sites that have been closed or are in teach out, growth was 14.1%. The company opened two new sites in the nine months ended September 30, 2026 and closed one site in which it stopped recruiting new students in 2025, leaving 48 sites at September 30, 2026.

Operating income was $51.5 million, up 185.6% from $18.0 million a year earlier, when the quarter included a $35.0 million litigation settlement. Operating margin was 19.3%, versus 6.9% a year earlier. Excluding amortization, non-recurring costs and fixed asset disposals, operating income was $54.7 million and the margin 20.5%. Net income was $43.0 million, or $1.67 a share, up 164.3% from $16.3 million, or $0.58 a share, a year earlier. Adjusted EBITDA decreased 3.2% to $73.5 million from $75.9 million a year earlier.

The effective tax rate was 20.0% in the third quarter of 2026, compared with 24.9% a year earlier, when the rate was higher because of the nondeductibility of penalties associated with the litigation settlement. Income tax expense was $10.7 million.

Unrestricted cash and cash equivalents and investments were $162.1 million at September 30, 2026, down from $300.1 million at December 31, 2025. The company said the $137.9 million decrease was largely attributable to cash expended for share repurchases and capital expenditures exceeding cash provided by operations during the nine months ended September 30, 2026.

On October 28, 2026, the board approved a $355.0 million increase under the existing stock repurchase program, bringing aggregate authorization since inception to $2.9 billion. As of November 2, 2026, $394.5 million remained available under the authorization, which expires March 1, 2028. Shares outstanding were 25,510,517 as of that date.

For the fourth quarter of 2026, the company guides to service revenue of $320.5 million to $321.5 million, operating margin of 36.0% to 36.2%, diluted EPS of $3.57 to $3.61 and 25.3 million diluted shares. Full-year 2026 guidance is service revenue of $1,160.7 million to $1,161.7 million, operating margin of 27.6% to 27.7% and diluted EPS of $9.81 to $9.85.