Higher education company Grand Canyon Education (NASDAQ: LOPE) reported Q2 CY2025 results topping the market’s revenue expectations, with sales up 8.8% year on year to $247.5 million. Guidance for next quarter’s revenue was optimistic at $259.5 million at the midpoint, 2.1% above analysts’ estimates. Its GAAP profit of $1.48 per share was 13.8% above analysts’ consensus estimates.
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Grand Canyon Education (LOPE) Q2 CY2025 Highlights:
- Revenue: $247.5 million vs analyst estimates of $240.8 million (8.8% year-on-year growth, 2.8% beat)
- EPS (GAAP): $1.48 vs analyst estimates of $1.30 (13.8% beat)
- Adjusted EBITDA: $67.41 million vs analyst estimates of $60 million (27.2% margin, 12.4% beat)
- The company lifted its revenue guidance for the full year to $1.10 billion at the midpoint from $1.09 billion, a 1.3% increase
- EPS (GAAP) guidance for the full year is $8.83 at the midpoint, beating analyst estimates by 3.2%
- Operating Margin: 20.9%, up from 18.8% in the same quarter last year
- Free Cash Flow Margin: 46.6%, up from 39.4% in the same quarter last year
- Students: 117,283, up 10,976 year on year
- Market Capitalization: $4.69 billion
Company Overview
Founded in 1949, Grand Canyon Education (NASDAQ: LOPE) is an educational services provider known for its operation at Grand Canyon University.
Revenue Growth
A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Regrettably, Grand Canyon Education’s sales grew at a sluggish 5.6% compounded annual growth rate over the last five years. This wasn’t a great result compared to the rest of the consumer discretionary sector, but there are still things to like about Grand Canyon Education.
We at StockStory place the most emphasis on long-term growth, but within consumer discretionary, a stretched historical view may miss a company riding a successful new product or trend. Grand Canyon Education’s annualized revenue growth of 7.3% over the last two years is above its five-year trend, but we were still disappointed by the results. 
We can dig further into the company’s revenue dynamics by analyzing its number of students, which reached 117,283 in the latest quarter. Over the last two years, Grand Canyon Education’s students averaged 6.5% year-on-year growth. Because this number aligns with its revenue growth during the same period, we can see the company’s monetization was fairly consistent. 
This quarter, Grand Canyon Education reported year-on-year revenue growth of 8.8%, and its $247.5 million of revenue exceeded Wall Street’s estimates by 2.8%. Company management is currently guiding for a 8.9% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 5.7% over the next 12 months, a slight deceleration versus the last two years. This projection is underwhelming and implies its products and services will see some demand headwinds. At least the company is tracking well in other measures of financial health.
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Operating Margin
Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.
Grand Canyon Education’s operating margin might fluctuated slightly over the last 12 months but has remained more or less the same, averaging 26.8% over the last two years. This profitability was elite for a consumer discretionary business thanks to its efficient cost structure and economies of scale.
This quarter, Grand Canyon Education generated an operating margin profit margin of 20.9%, up 2.1 percentage points year on year. This increase was a welcome development and shows it was more efficient.
Earnings Per Share
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Grand Canyon Education’s EPS grew at an unimpressive 9.3% compounded annual growth rate over the last five years. This performance was better than its flat revenue but doesn’t tell us much about its business quality because its operating margin didn’t improve.
In Q2, Grand Canyon Education reported EPS at $1.48, up from $1.19 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Grand Canyon Education’s full-year EPS of $8.26 to grow 6.7%.
Key Takeaways from Grand Canyon Education’s Q2 Results
It was great to see Grand Canyon Education’s EPS guidance for next quarter top analysts’ expectations. We were also happy its EBITDA outperformed Wall Street’s estimates. Overall, we think this was a solid quarter with some key areas of upside. The stock traded up 1.5% to $175 immediately after reporting.
Grand Canyon Education may have had a good quarter, but does that mean you should invest right now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.
