What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-06 compared with 2024-11-06 · 73 added, 129 removed, 104 unchanged (66% of the section changed)

24 unchanged sentences

● our expected tax payments and tax rate;

● our ability to hire and train new, and develop and train existing employees;

● our ability to hire and train new employees, and develop and train existing employees;

● the pace of growth of our university partners’ enrollment and its effect on the pace of our own growth;

● fluctuations in our revenues due to seasonality;

● our ability to, on behalf of our university partners, convert prospective students to enrolled students and to retain active students to graduation;

● our ability, on behalf of our university partners, convert prospective students to enrolled students and to retain active students to graduation;

● our success in updating and expanding the content of existing programs and developing new programs in a cost-effective manner or on a timely basis for our university partners;

9 unchanged sentences

If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

Explanatory Note

Executive Overview

Grand Canyon Education, Inc.

1 unchanged sentence

GCE has developed significant technological solutions, infrastructure and operational processes to provide services to these institutions on a large scale.

GCE’s most significant university partner is Grand Canyon University (“GCU”), a comprehensive regionally accredited university that offers graduate and undergraduate degree programs, emphases and certificates across ten colleges both online and on ground at its campus in Phoenix, Arizona, and at eight off-campus classroom and laboratory sites.

We also provide education services to numerous university partners across the United States.

1 unchanged sentence

In addition, we have provided certain services to a university partner to assist them in expanding their online graduate programs.

As of September 30, 2024, GCE provides education services to 22 university partners across the United States.

As of March 31, 2025, GCE provides education services to 22 university partners across the United States.

We plan to continue to add additional university partners and to introduce additional programs with both our existing partners and with new partners.

4 unchanged sentences

Our critical accounting policies are disclosed in the 2024 Form 10-K for the fiscal year ended December 31, 2024.

During the nine months ended September 30, 2024, there were no significant changes in our critical accounting policies.

During the three months ended March 31, 2025, there were no significant changes in our critical accounting policies.

Results of Operations

2 unchanged sentences

Three Months Ended

Nine Months Ended

September 30,

Costs and expenses

3 unchanged sentences

General and administrative

Three Months Ended September 30, 2024 Compared to Three Months Ended September 30, 2023

Service revenue .

Our service revenue for the three months ended September 30, 2024 was $238.3 million, an increase of $16.4 million, or 7.4%, as compared to service revenue of $221.9 million for the three months ended September 30, 2023.

The increase year over year in service revenue was primarily due to an increase in GCU enrollments to 123,002 at September 30, 2024, an increase of 4.0% over enrollments at September 30, 2023, an increase in university partner enrollments at our off-campus classroom and laboratory sites to 5,888 at September 30, 2024, an increase of 8.1% over enrollments at September 30, 2023, which includes 913 and 510 GCU students at September 30, 2024 and 2023, respectively, and an increase in revenue per student year over year.

The increase in revenue per student between years is primarily due to s ervice revenue per student for Accelerated Bachelor of Science in Nursing (“ABSN”) students at off-campus classroom and laboratory sites generating a significantly higher revenue per student than we earn under our agreement with GCU, as these agreements generally provide us with a higher revenue share percentage, the partners have higher tuition rates than GCU and the majority of their students take more credits on average per semester.

The increase in revenue per student in the three months ended September 30, 2024 was also due to the timing of the Fall semester for the ground traditional campus.

The Fall semester started two days earlier in 2024 than in 2023, which had the effect of shifting $2.2 million in service revenue from the fourth quarter of 2024 to the third quarter of 2024 in comparison to the prior year.

Contract modifications for some of our university partners in which the revenue share percentage was reduced in exchange for us no longer reimbursing the partner for certain faculty costs and the termination of one university partner contract at the end of the Spring 2024 semester had the effect of reducing revenue per student.

Partner enrollments totaled 127,977 at September 30, 2024 as compared to 123,165 at September 30, 2023.

Although partner enrollments at our off-campus classroom and laboratory sites returned to year over year growth in 2024, some existing partners continue to experience reduced incoming cohort sizes which has slowed the growth.

We believe the growth in the number of ABSN students is being negatively impacted by the strong job market as these students have historically been individuals with already completed bachelor’s degrees choosing to re-career into one of these health professions.

To address this challenge, we have been working with a number of our university partners to adjust their programs to allow students with the required education experience but without a completed bachelor’s degree to enter their programs.

The majority of those partners that have made the adjustment to admit students without a completed bachelor’s degree had new enrollment growth on a year over year basis in the Summer and Fall 2024 semesters.

We opened five sites in the year ended December 31, 2023, seven sites in the nine months ended September 30, 2024 and closed one site increasing the total number of these sites to 46 at September 30, 2024, which has also positively impacted the enrollment growth.

Enrollments for GCU ground students were 24,657 at September 30, 2024 down from

25,232 at September 30, 2023 due to a small decline in traditional ground students year over year and the continued decline in professional studies students, working adults attending the university’s traditional campus at night, partially offset by an increase in ABSN students between years.

GCU online enrollments were 98,345 at September 30, 2024, up from 92,995 at September 30, 2023, an increase of 5.8% between years.

Technology and academic services .

Our technology and academic services expenses for the three months ended September 30, 2024 were $42.0 million, an increase of $2.8 million, or 7.1%, as compared to technology and academic services expenses of $39.2 million for the three months ended September 30, 2023.

This increase was primarily due to increases in other technology and academic costs and in occupancy and depreciation of $2.4 million and $1.2 million, respectively, partially offset by a decrease in employee compensation and related expenses, including share-based compensation of $0.8 million.

The increases in other technology and academic costs and in occupancy and depreciation were primarily due to the costs associated with the increased number of off-campus classroom and laboratory sites to support our 22 university partners and their increased enrollment growth.

The decrease in employee compensation and related expenses is primarily due to decreased faculty reimbursements due to changes in our agreements with certain university partners whereby we no longer reimburse these partners for their faculty costs, partially offset by increased headcount to support our 22 university partners, and their increased enrollment growth, tenure-based salary adjustments and the increased number of off-campus classroom and laboratory sites year over year.

Our technology and academic services expenses as a percentage of revenue decreased by 0.1% to 17.6% for the three months ended September 30, 2024, from 17.7% for the three months ended September 30, 2023.

This decrease was primarily due to the decreased faculty reimbursements between years.

We anticipate that technology and academic services expenses as a percentage of revenue will increase in the future as we open more off-site classroom and laboratory sites although these increases might be offset by lower faculty reimbursements if more partners choose to adjust their contracts.

Counseling services and support .

Our counseling services and support expenses for the three months ended September 30, 2024 were $77.2 million, an increase of $3.4 million, or 4.5%, as compared to counseling services and support expenses of $73.8 million for the three months ended September 30, 2023.

This increase was primarily attributable to increases in employee compensation and related expenses including share-based compensation and benefits and in occupancy and depreciation costs of $2.9 million and $0.7 million, respectively, partially offset by a decrease in other counseling services and support expenses of $0.2 million.

The increases in employee compensation and related expenses including benefits were primarily due to increased headcount to support our university partners and their planned increases in enrollment, tenure-based salary adjustments and the increased number of off-campus classroom and laboratory sites open year over year.

The increase in occupancy and depreciation is primarily related to higher depreciation expense associated with our continued enhancements to IT infrastructure and internal-use software development.

Our counseling services and support expenses as a percentage of revenue decreased by 0.9% to 32.4% for the three months ended September 30, 2024, from 33.3% for the three months ended September 30, 2023 primarily due our ability to leverage our counseling services and support expenses across an increasing revenue base.

We anticipate that counseling services and support expense will increase in the future as we continue to invest to meet our partners’ needs.

Marketing and communication .

Our marketing and communication expenses for the three months ended September 30, 2024 were $54.5 million, an increase of $1.4 million, or 2.7%, as compared to marketing and communication expenses of $53.1 million for the three months ended September 30, 2023.

This increase was primarily attributable to the increased cost to market our university partners’ programs and to the marketing of new university partners and new locations which resulted in increased advertising of $0.9 million, increased employee compensation, including share-based compensation and benefits of $0.3 million, an increase in occupancy and depreciation of $0.1 million and an increase in other marketing and communication expenses of $0.1 million.

Our marketing and communication expenses as a percentage of revenue decreased by 1.0% to 22.9% for the three months ended September 30, 2024, from 23.9% for the three months ended September 30, 2023, primarily due to our ability to leverage our marketing and communication expenses across an increasing revenue base.

We anticipate that marketing and communication expense will increase in the future as we continue to meet our partners’ needs.

General and administrative .

Our general and administrative expenses for the three months ended September 30, 2024 were $14.4 million, an increase of $2.2 million, or 18.0%, as compared to general and administrative expenses of $12.2 million for the three months ended September 30, 2023.

This increase was primarily attributable to an increase in professional fees, primarily higher legal costs, an increase in contribution made in lieu of state income taxes and an increase in occupancy and depreciation costs of $1.1 million, $1.0 million and $0.1 million, respectively.

and administrative expenses as a percentage of revenue increased by 0.5% to 6.0% for the three months ended September 30, 2024, from 5.5% for the three months ended September 30, 2023, primarily due to our increase in contributions made in lieu of state income taxes and the higher professional fees partially offset by our ability to leverage our general and administrative expenses across an increasing revenue base.

General and administrative expenses as a percentage of revenue could continue to increase if legal costs continue to rise.

Amortization of intangible assets .

Amortization of intangible assets for the three months ended September 30, 2024 and 2023 were $2.1 million for both periods.

As a result of the acquisition of our wholly owned subsidiary, Orbis Education, certain identifiable intangible assets were created (primarily customer relationships) that will be amortized over their expected lives.

Investment interest and other .

Investment interest and other for the three months ended September 30, 2024 was $4.2 million, as compared to investment interest and other for the three months ended September 30, 2023 of $2.7 million due to higher investment balances and higher returns on those balances.

Income tax expense .

Income tax expense for the three months ended September 30, 2024 was $10.9 million, an increase of $2.4 million, or 27.2%, as compared to income tax expense of $8.5 million for the three months ended September 30, 2023.

Our effective tax rate was 20.8% during the third quarter of 2024 compared to 19.3% during the third quarter of 2023.

The effective tax rate increased year over year due to higher state income taxes.

Our net income for the three months ended September 30, 2024 was $41.5 million, an increase of $5.8 million, or 16.0%, as compared to $35.7 million for the three months ended September 30, 2023, due to the factors discussed above.

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024

Service revenue .

Our service revenue for the nine months ended September 30, 2024 was $740.4 million, an increase of $57.8 million, or 8.5%, as compared to service revenue of $682.6 million for the nine months ended September 30, 2023.

The increase in revenue per student between years is primarily due to the s ervice revenue per student for ABSN students at off-campus classroom and laboratory sites generating a significantly higher revenue per student than we earn under our agreement with GCU, as these agreements generally provide us with a higher revenue share percentage, the partners have higher tuition rates than GCU and the majority of their students take more credits on average per semester.

The increase in revenue per student in the nine months ended September 30, 2024 was also due to the timing of the Fall semester for the ground traditional campus.

The additional day for leap year in 2024 added additional service revenue of $1.5 million as compared to the prior year.

Partner enrollments totaled 127,977 at September 30, 2024 as compared to 123,165 at September 30, 2023.

Our service revenue for the three months ended March 31, 2025 was $289.3 million, an increase of $14.6 million, or 5.3%, as compared to service revenue of $274.7 million for the three months ended March 31, 2024.

The increase year over year in service revenue was primarily due to an increase in partner enrollments of 5.8% to 127,779 at March 31, 2025 as compared to 120,788 at March 31, 2024.

GCU enrollments increased to 123,773 at March 31, 2025, an increase of 5.8% over enrollments at March 31, 2024.

University partner enrollments at our off-campus classroom and laboratory sites were 5,027, an increase of 12.1% over enrollments at March 31, 2024, which includes 1,021 and 650 GCU students at March 31, 2025 and 2024, respectively.

Excluding sites closing in 2024 to new enrollments, total enrollments at our off-campus classroom and laboratory sites increased 16.5% between years.

Revenue per student decreased slightly between years primarily due to the additional day for leap year in 2024 which added additional service revenue of $1.5 million as compared to the current year and contract modifications for some of our university partners in which the revenue share percentage was reduced in exchange for us no longer reimbursing the partner for certain faculty costs both of which had the effect of reducing revenue per student partially offset by the service revenue per student for accelerated Bachelor of Science in Nursing (“ ABSN”) students at off-campus classroom and laboratory sites generating a significantly higher revenue per student than we earn under our agreement with GCU, as these agreements generally provide us with a higher revenue share percentage, the partners have higher tuition rates than GCU and the majority of our partners’ students take more credits on average per semester.

impacted the enrollment growth.

Enrollments for GCU ground students were 24,657 at September 30, 2024 down from 25,232 at September 30, 2023 due to a small decline in traditional ground students year over year and the continued decline in professional studies students, working adults attending the university’s traditional campus at night, partially offset by an increase in ABSN students between years.

GCU online enrollments were 98,345 at September 30, 2024, up from 92,995 at September 30, 2023, an increase of 5.8% between years.

We believe the growth in the number of ABSN students continues to be negatively impacted by the strong job market as these students have historically been individuals with already completed bachelor’s degrees choosing to re-career into one of these health professions.

To address this challenge, we have been working with our university partners to adjust their programs to allow students with the required education experience but without a completed bachelor’s degree to enter their programs.

The majority of those partners that have made the adjustment to admit students without a completed bachelor’s degree had new enrollment growth on a year over year basis in the Spring 2025 semester.

We opened six sites in the year ended December 31, 2024 and opened one site in the three months ended March 31, 2025 increasing the total number of these sites to 46 at March 31, 2025, which has also positively impacted the enrollment growth.

Enrollments for GCU ground students were 22,330 at March 31, 2025 down from 22,965 at March 31, 2024 due to a small decline in traditional ground students year over year and the continued decline in professional studies students (working adults attending the university’s traditional campus at night), partially offset by an increase in

ABSN students between years.

GCU online enrollments were 101,443 at March 31, 2025, up from 93,987 at December 31, 2024, an increase of 7.9% between years.

Technology and academic services .

Our technology and academic services expenses for the nine months ended September 30, 2024 were $122.1 million, an increase of $6.5 million, or 5.6%, as compared to technology and academic services expenses of $115.6 million for the nine months ended September 30, 2023.

Our technology and academic services expenses for the three months ended March 31, 2025 were $41.7 million, an increase of $2.6 million, or 6.5%, as compared to technology and academic services expenses of $39.1 million for the three months ended March 31, 2024.

This increase was primarily due to increases in other technology and academic costs and in occupancy and depreciation of $2.0 million and $0.7 million, respectively, partially offset by a decrease in employee compensation and related expenses, including share-based compensation, of $0.1 million.

The increases in other technology and academic costs and occupancy and depreciation were primarily due to the costs associated with the increased number of off-campus classroom and laboratory sites to support our 22 university partners and their increased enrollment growth.

The decrease in employee compensation and related expenses is primarily due to decreased faculty reimbursements due to changes in our agreements with certain university partners whereby we no longer reimburse these partners for their faculty costs, partially offset by increased headcount to support our 22 university partners and their increased enrollment growth, tenure-based salary adjustments and the increased number of off-campus classroom and laboratory sites year over year.

Our technology and academic services expenses as a percentage of revenue decreased by 0.4% to 16.5% for the nine months ended September 30, 2024, from 16.9% for the nine months ended September 30, 2023.

This decrease was primarily due to the decreased faculty reimbursements between years.

The decrease in employee compensation and related expenses is primarily due to decreased faculty reimbursements due to changes in our agreements with certain university partners whereby we no longer reimburse these partners for their faculty costs, partially offset by increased headcount to support our 22 university partners and their increased enrollment growth, tenure-based salary adjustments, a significant year over year increase in benefit costs and the increased number of off-campus classroom and laboratory sites year over year.

Our technology and academic services expenses as a percentage of revenue increased by 0.2% to 14.4% for the three months ended March 31, 2025, from 14.2% for the three months ended March 31, 2024.

This increase was primarily due to the growing curriculum cost reimbursement partially offset by decreased faculty reimbursements between years.

We anticipate that technology and academic services expenses as a percentage of revenue will increase in the future as we open more off-site classroom and laboratory sites and the growing curriculum cost reimbursements.

Counseling services and support .

Our counseling services and support expenses for the nine months ended September 30, 2024 were $238.2 million, an increase of $18.6 million, or 8.5%, as compared to counseling services and support expenses of $219.6 million for the nine months ended September 30, 2023.

This increase was primarily attributable to increases in employee compensation and related expenses including share-based compensation and benefits, in occupancy and depreciation costs and in other counseling services and support expenses of $14.4 million, $2.4 million and $1.8 million, respectively.

The increases in employee compensation including share-based compensation and benefits were primarily due to increased headcount to support our university partners, and their planned increases in enrollment, tenure-based salary adjustments and the increased number of off-campus classroom and laboratory sites open year over year.

The increase in occupancy and depreciation is primarily related to higher depreciation expense associated with our continued enhancements to IT infrastructure and internal-use software development.

The increase in other counseling services and support expenses is primarily the result of increased travel costs for our 22 university partners.

Our counseling services and support expenses as a percentage of revenue stayed flat at 32.2% for the nine months ended September 30, 2024 and 2023.

We anticipate that counseling services and support expense will increase in the future as we continue to invest to meet our partners’ needs.

Our counseling services and support expenses for the three months ended March 31, 2025 were $86.8 million, an increase of $3.9 million, or 4.8%, as compared to counseling services and support expenses of $82.9 million for the three months ended March 31, 2024.

This increase was primarily attributable to increases in employee compensation and related expenses including share-based compensation and benefits, and in occupancy and depreciation costs of $4.5 million, $0.4 million, respectively, partially offset by decreases in other counseling services and support expenses of $1.0 million.

The increases in employee compensation including share-based compensation and benefits were primarily due to increased headcount to support our university partners, and their planned increases in enrollment, tenure-based salary adjustments, a significant year over year increase in benefit costs and the increased number of off-campus classroom and laboratory sites open year over year.

The increase in occupancy and depreciation is primarily related to higher depreciation expense associated with our continued enhancements to technology infrastructure and internal-use software development.

The decrease in other counseling services and support expenses is primarily the result of lower travel costs for our 22 university partners.

Our counseling services and support expenses as a percentage of revenue decreased 0.2% to 30.0% for the three months ended March 31, 2025, from 30.2% for the three months ended March 31, 2024 primarily due to our ability to leverage our counseling services and support expenses across an increasing revenue base.

We anticipate that counseling services and support expense will increase in the future as we continue to invest to meet our partners’ needs although we might continue to have a decline in these costs as a percentage of revenue.

Marketing and communication .

Our marketing and communication expenses for the nine months ended September 30, 2024 were $162.8 million, an increase of $6.0 million, or 3.8%, as compared to marketing and communication expenses of $156.8 million for the nine months ended September 30, 2023.

This increase was primarily attributable to the increased cost to market our university partners’ programs and to the marketing of new university partners and new locations which resulted in increased advertising of $4.8 million, increased employee compensation, including share-based compensation and benefits of $0.6 million, an increase in other marketing and communication expenses of $0.4 million and an increase in occupancy and depreciation costs of $0.2 million.

Our marketing and communication expenses as a percentage of revenue decreased by 1.0% to 22.0% for the nine months ended September 30, 2024, from 23.0% for the nine months ended September 30, 2023, primarily due to our ability to leverage our marketing and communication expenses across an increasing revenue base.

We anticipate that marketing and communication expenses will increase in the future as we continue to invest to meet our partners’ needs.

Our marketing and communication expenses for the three months ended March 31, 2025 were $60.3 million, an increase of $4.9 million, or 9.0%, as compared to marketing and communication expenses of $55.4 million for the three months ended March 31, 2024.

This increase was primarily attributable to the increased cost to market our university partners’ programs and to the marketing of new university partners and new locations which resulted in increased advertising of $4.5 million and increased employee compensation, including share-based compensation and benefits of $0.4 million.

Our marketing and communication expenses as a percentage of revenue increased by 0.7% to 20.9% for the three months ended March 31, 2025, from 20.2% for the three months ended March 31, 2024, primarily due to our enrollment growth goals at our university partners’ programs and increased advertising to achieve those goals and a timing difference between years and our planned spend.

We anticipate that marketing and communication expenses will increase in the future as we continue to invest to meet our partners’ needs although we anticipate a decline in these costs as a percentage of revenue in the second half of 2025.

General and administrative .

Our general and administrative expenses for the nine months ended September 30, 2024 were $35.7 million, an increase of $2.9 million, or 8.8%, as compared to general and administrative expenses of $32.8 million for the nine months ended September 30, 2023.

This increase was primarily attributable to an increase in employee compensation, including share-based compensation and benefits of $1.5 million, which includes $1.1 million in severance costs recorded for an executive that resigned June 30, 2024, professional fees of $1.0 million, an increase in

contributions in lieu of state income taxes of $1.0 million and increases in occupancy and depreciation costs of $0.2 million.

These increases were partially offset by a decrease in other administrative expenses of $0.8 million primarily due to lower travel costs.

Our general and administrative expenses as a percentage of revenue stayed flat at 4.8% for the nine months ended September 30, 2024 and 2023 due to our ability to leverage our general and administrative expenses across an increasing revenue base partially offset by the severance costs.

General and administrative expenses could increase if legal costs continue to rise.

Our general and administrative expenses for the three months ended March 31, 2025 were $10.4 million, a decrease of $0.3 million, or 3.4%, as compared to general and administrative expenses of $10.7 million for the three months ended March 31, 2024.

This decrease was primarily attributable to a decrease in professional fees, including legal costs of $0.4 million, partially offset by an increase in employee compensation,

including share-based compensation and benefits of $0.1 million.

The decreases in professional fees were due to lower spend on non-litigation services.

Our general and administrative expenses as a percentage of revenue decreased by 0.3% to 3.6% for the three months ended March 31, 2025, from 3.9% for the three months ended March 31, 2024 primarily due to our ability to leverage our general and administrative expenses across an increasing revenue base.

We anticipate that general and administrative expenses will increase in the future and these costs as a percentage of revenue might increase if legal costs rise faster than our revenue growth rate.

Amortization of intangible assets .

Amortization of intangible assets for the nine months ended September 30, 2024 and 2023 were $6.3 million for both periods.

Amortization of intangible assets for the three months ended March 31, 2025 and 2024 were $2.1 million for both periods.

As a result of the Orbis Education acquisition in 2019, certain identifiable intangible assets were created (primarily customer relationships) that will be amortized over their expected lives.

Investment interest and other .

Investment interest and other for the nine months ended September 30, 2024 was $12.0 million, as compared to investment interest and other for the nine months ended September 30, 2023 of $7.5 million due to higher investment balances and higher returns on those balances.

Investment interest and other for the three months ended March 31, 2025 was $3.4 million, a decrease of $0.3 million, as compared to $3.7 million for the three months ended March 31, 2024 due to lower returns on our investment balances.

Income tax expense .

Income tax expense for the nine months ended September 30, 2024 was $43.0 million, an increase of $8.4 million, or 24.2%, as compared to income tax expense of $34.6 million for the nine months ended September 30, 2023.

Our effective tax rate was 23.0% during the nine months ended September 30, 2024 compared to 21.8% during the nine months ended September 30, 2023.

In the nine months ended September 30, 2024, the effective tax rate was favorably impacted by excess tax benefits of $1.5 million as compared to $0.9 million in the nine months ended September 30, 2023.

The effective tax rate increased year over year due to higher state income taxes.

Our net income for the nine months ended September 30, 2024 was $144.4 million, an increase of $20.1 million, or 17.9%, as compared to $124.3 million for the nine months ended September 30, 2023, due to the factors discussed above.

Income tax expense for the three months ended March 31, 2025 was $19.8 million, a decrease of $0.4 million, or 2.0%, as compared to income tax expense of $20.2 million for the three months ended March 31, 2024.

Our effective tax rate was 21.6% during the three months ended March 31, 2025 compared to 22.9% during the three months ended March 31, 2024.

The effective tax rate decreased year over year primarily due to an increase in excess tax benefits of $2.7 million as compared to $1.5 million in the three months ended March 31, 2025 and 2024, respectively, partially offset by higher state income taxes.

The inclusion of excess tax benefits and deficiencies as a component of our income tax expense increases the volatility within our provision for income taxes as the amount of excess tax benefits or deficiencies from share-based compensation awards are dependent on our stock price at the date the restricted stock awards vest.

Our restricted stock awards vest in March each year so any benefit or expense will primarily impact the first quarter each year.

Our net income for the three months ended March 31, 2025 was $71.6 million, an increase of $3.6 million, or 5.3% as compared to $68.0 million for the three months ended March 31, 2024, due to the factors discussed above.

Our net revenue and operating results normally fluctuate as a result of seasonal variations in our business, principally due to changes in our university partners’ enrollment.

8 unchanged sentences

Liquidity and Capital Resources

As of September 30,

As of March 31,

As of December 31,

1 unchanged sentence

Cash, cash equivalents and investments

Our liquidity position, as measured by cash and cash equivalents and investments increased by $19.1 million between December 31, 2023 and September 30, 2024, which was largely attributable to cash flows from operations during the nine months ended September 30, 2024 exceeding share repurchases, changes in our investment balances and capital expenditures.

See Note 11 for subsequent event relating to our cash and cash equivalents.

Our liquidity position, as measured by cash and cash equivalents and investments decreased by $20.0 million between December 31, 2024 and March 31, 2025, which was largely attributable to share repurchases, changes in our investment balance and capital expenditures exceeding our cash provided by operations during the three months ended March 31, 2025.

Based on our current level of operations and anticipated growth, we believe that our cash flow from operations and other sources of liquidity, including cash and cash equivalents and investments, will provide adequate funds for ongoing operations, planned capital expenditures, and working capital requirements for at least the next 24 months.

Cash Flows from Operating Activities

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

Net cash provided by operating activities

The increase in cash generated from operating activities between the nine months ended September 30, 2023 and the nine months ended September 30, 2024 was primarily due to increased income and changes in working capital balances, primarily accounts payable and accounts receivable.

Accrued payable increased between December 31, 2023 and September 30, 2024 by $6.8 million more than it did between December 31, 2022 and September 30, 2023 due to the timing of check runs.

These increases were partially offset by accounts receivable from GCU increasing by $10.5 million more than it did between December 31, 2022 and September 30, 2023 due primarily to timing of the collections of our other university partners.

The decrease in cash generated from operating activities between the three months ended March 31, 2024 and the three months ended March 31, 2025 was primarily due to changes in working capital balances, primarily accounts payable and accrued liabilities, partially offset by increased income.

Accounts payable increased between December 31, 2023 and March 31, 2024 by $12.0 million compared to the decrease of $2.0 million between December 31, 2024 and March 31, 2025 due to the timing of vendor payments.

Accrued liabilities decreased by $5.5 million between December 31, 2024 and March 31, 2025 whereas it was flat between December 31, 2023 and March 31, 2024 due to timing differences between the last pay period at the end of each fiscal quarter.

We define working capital as the assets and liabilities, other than cash, generated through the Company’s primary operating activities.

1 unchanged sentence

Cash Flows from Investing Activities

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

Net cash provided by (used in) investing activities

Investing activities provided $71.3 million of cash in the nine months ended September 30, 2024 compared to consuming $70.5 million in the nine months ended September 30, 2023.

Cash provided by or used in investing activities includes net investment activity.

In the nine months ended September 30, 2024, proceeds from the sale of investments, net of purchases of available-for-sale securities were $99.0 million.

In the nine months ended September 30, 2023, the purchase of available-for-sale securities, net of proceeds from the sale of investments were $35.5 million.

In the first nine months of 2024 and 2023 cash used in investing activities also included capital expenditures totaling $27.5 million and $34.2 million, respectively.

Net cash used in investing activities

Investing activities consumed $169.9 million of cash in the three months ended March 31, 2025 compared to $5.3 million in the three months ended March 31, 2024.

Cash used in investing activities includes net investment activity.

In the three months ended March 31, 2024, proceeds from the sale of investments, net of purchases of available-for-sale securities were $3.8 million.

In the three months ended March 31, 2025, the purchase of available-for-sale securities, net of proceeds from the sale of investments were $159.9 million.

In the first three months of 2025 and 2024 cash used in investing activities also included capital expenditures totaling $8.9 million and $9.0 million, respectively.

Capital expenditures for both periods primarily consisted of leasehold improvements and equipment for new off-campus classroom and laboratory sites, as well as purchases of computer equipment, internal use software projects and furniture and equipment to support our increasing employee headcount.

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Cash Flows from Financing Activities

Nine Months Ended September 30,

Three Months Ended March 31,

(In thousands)

Net cash used in financing activities

Financing activities consumed $108.3 million of cash in the nine months ended September 30, 2024 compared to $120.3 million in the nine months ended September 30, 2023.

During the nine months ended September 30, 2024 and 2023, $100.5 million and $114.0 million, respectively was used to purchase treasury stock in accordance with GCE’s share repurchase program.

Financing activities consumed $77.9 million of cash in the three months ended March 31, 2025 compared to $30.0 million in the three months ended March 31, 2024.

During the three months ended March 31, 2025 and 2024, $68.4 million and $22.6 million, respectively was used to purchase treasury stock in accordance with GCE’s share repurchase program.

In 2025 and 2024, $9.5 million and $7.4 million, respectively, of cash was utilized to purchase common shares withheld in lieu of income taxes resulting from the vesting of restricted share awards.

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Share Repurchase Program

The Board of Directors has authorized share repurchases of up to $2,045,000 since the initiation of the Company’s stock repurchase program.

The expiration date on the current repurchase authorization by our Board of Directors is March 1, 2025.

The Board of Directors has authorized share repurchases of up to $2,245.0 million since the initiation of the Company’s stock repurchase program.

The expiration date on the current repurchase authorization by our Board of

Directors is March 1, 2026.

Repurchases occur at the Company’s discretion and the Company may modify, suspend or discontinue the repurchase authorization at any time.

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The amount and timing of future share repurchases, if any, will be made as market and business conditions warrant.

We repurchased 725,181 shares of common stock in the nine months ended September 30, 2024.

At September 30, 2024, there remains $164.5 million available under our share repurchase authorization .

We repurchased 395,426 shares of common stock in the three months ended March 31, 2025.

At March 31, 2025, there remains $231.3 million available under our share repurchase authorization .

Off-Balance Sheet Arrangements

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis