Grand Canyon Education Files Q3 2024 10-Q

TL;DR

GCPE Q3 10-Q filed. Shows ongoing stock buybacks and capital changes. Keep an eye on cash flow.

AI Summary

Grand Canyon Education, Inc. filed its 10-Q for the period ending September 30, 2024. The company reported significant financial activities, including treasury stock transactions and changes in additional paid-in capital across multiple quarters in 2023 and 2024. Specific dollar amounts for these activities were not detailed in the provided snippet, but the filing indicates ongoing capital management.

Why It Matters

This filing provides insight into Grand Canyon Education's financial health and capital management strategies, which can influence investor decisions and stock performance.

Risk Assessment

Risk Level: medium — The filing details financial transactions and capital changes, which are crucial for understanding the company's financial stability and future prospects.

Key Numbers

• 250,000,000 — Operating Lease Lease Not Yet Commenced (Indicates future lease commitments)
• 100,000,000 — Common Stock Repurchase Authorization (Shows management's intention to buy back shares)

Key Players & Entities

• Grand Canyon Education, Inc. (company) — Filer of the 10-Q
• 2024-09-30 (date) — End of reporting period
• 2023-07-01 (date) — Start of a reporting quarter
• 2023-09-30 (date) — End of a reporting quarter
• 2024-07-01 (date) — Start of a reporting quarter
• 2024-04-01 (date) — Start of a reporting quarter
• 2024-01-01 (date) — Start of a reporting quarter
• 2023-04-01 (date) — Start of a reporting quarter
• 2023-01-01 (date) — Start of a reporting quarter

FAQ

Filing Documents

• lope-20240930x10q.htm (10-Q) — 1207KB
• lope-20240930xex31d1.htm (EX-31.1) — 11KB
• lope-20240930xex31d2.htm (EX-31.2) — 11KB
• lope-20240930xex32d1.htm (EX-32.1) — 8KB
• lope-20240930xex32d2.htm (EX-32.2) — 8KB
• 0001558370-24-014620.txt ( ) — 4986KB
• lope-20240930.xsd (EX-101.SCH) — 33KB
• lope-20240930_cal.xml (EX-101.CAL) — 53KB
• lope-20240930_def.xml (EX-101.DEF) — 142KB
• lope-20240930_lab.xml (EX-101.LAB) — 326KB
• lope-20240930_pre.xml (EX-101.PRE) — 261KB
• lope-20240930x10q_htm.xml (XML) — 627KB

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION 3

Financial Statements

Item 1 Financial Statements 3

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 22

Quantitative and Qualitative Disclosures About Market Risk

Item 3 Quantitative and Qualitative Disclosures About Market Risk 30

Controls and Procedures

Item 4 Controls and Procedures 30

– OTHER INFORMATION

PART II – OTHER INFORMATION 30

Legal Proceedings

Item 1 Legal Proceedings 30

Risk Factors

Item 1A Risk Factors 31

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 31

Defaults Upon Senior Securities

Item 3 Defaults Upon Senior Securities 31

Mine Safety Disclosures

Item 4 Mine Safety Disclosures 31

Other Information

Item 5 Other Information 31

Exhibits

Item 6 Exhibits 32

SIGNATURES

SIGNATURES 33 2 Table of Contents

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements GRAND CANYON EDUCATION, INC. Consolidated Income Statements (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, (In thousands, except per share data) 2024 2023 2024 2023 Service revenue $ 238,291 $ 221,913 $ 740,429 $ 682,615 Costs and expenses: Technology and academic services 41,955 39,174 122,081 115,643 Counseling services and support 77,166 73,824 238,157 219,565 Marketing and communication 54,526 53,097 162,774 156,797 General and administrative 14,364 12,175 35,730 32,838 Amortization of intangible assets 2,105 2,105 6,315 6,315 Total costs and expenses 190,116 180,375 565,057 531,158 Operating income 48,175 41,538 175,372 151,457 Interest expense — ( 1 ) ( 4 ) ( 27 ) Investment interest and other 4,154 2,739 11,995 7,482 Income before income taxes 52,329 44,276 187,363 158,912 Income tax expense 10,862 8,537 43,008 34,636 Net income $ 41,467 $ 35,739 $ 144,355 $ 124,276 Earnings per share: Basic income per share $ 1.43 $ 1.20 $ 4.94 $ 4.12 Diluted income per share $ 1.42 $ 1.19 $ 4.91 $ 4.10 Basic weighted average shares outstanding 29,003 29,776 29,248 30,138 Diluted weighted average shares outstanding 29,164 29,912 29,405 30,277 The accompanying notes are an integral part of these consolidated financial statements. 3 Table of Contents GRAND CANYON EDUCATION, INC. Consolidated Balance Sheets September 30, December 31, (In thousands, except par value) 2024 2023 (Unaudited) ASSETS: Current assets Cash and cash equivalents $ 263,584 $ 146,475 Investments — 98,031 Accounts receivable, net 116,388 78,811 Income tax receivable 1,818 1,316 Other current assets 11,585 12,889 Total current assets 393,375 337,522 Property and equipment, net 176,234 169,699

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (In thousands, except per share data) 1. Nature of Business Grand Canyon Education, Inc. (together with its subsidiaries, the "Company" or "GCE") is a publicly traded education services company dedicated to serving colleges and universities. 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"), an Arizona non-profit corporation, a comprehensive regionally accredited university that offers graduate and undergraduate degree programs, emphases and certificates across ten colleges both online, 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. In the healthcare field, we work in partnership with a number of top universities and healthcare networks, offering healthcare-related academic programs at off-campus classroom and laboratory sites located near healthcare providers and developing high-quality, career-ready graduates who enter the workforce ready to meet the demands of the healthcare industry. 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. 2. Summary of Significant Accounting Policies Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany transactions have been eliminated in consolidation. Unaudited Interim Financial Information The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles and pursuant to the

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (In thousands, except per share data) of GCU's tuition and fee revenue. Except for identified liabilities assumed by GCU, GCE retained responsibility for all liabilities of the business arising from pre-closing operations. Internally Developed Software The Company capitalizes certain costs related to internal-use software, primarily consisting of direct labor associated with creating the software. Software development projects generally include three stages: the preliminary project stage (all costs are expensed as incurred), the application development stage (certain costs are capitalized and certain costs are expensed as incurred) and the post-implementation or operation stage (all costs are expensed as incurred). Costs capitalized in the application development stage include costs of design, coding, integration, and testing of the software developed. Capitalization of costs requires judgment in determining when a project has reached the application development stage and the period over which we expect to benefit from the use of that software. Once the software is placed in service, these costs are amortized straight-line over the estimated useful life of the software, which is generally three years . These assets are a component of our property and equipment, net in our consolidated balance sheets. Capitalized Content Development The Company capitalizes certain costs to fulfill a contract related to the development and digital creation of content on a course-by-course basis for each university partner, many times in conjunction with faculty and subject matter experts. The Company is responsible for the conversion of instructional materials to an on-line format, including outlines, quizzes, lectures, and articles in accordance with the educational guidelines provided to us by our university partners, prior to the respective course commencing. We also capitalize the creation of learning objects which are digital

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (In thousands, except per share data) lease expense on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components, and the non-lease components are accounted for separately and not included in our ROU assets and lease liabilities. Leases primarily consist of off-campus classroom and laboratory site locations and office space. Goodwill and Amortizable Intangible Assets Goodwill represents the excess of the purchase price of an acquired business over the amount assigned to the tangible and intangible assets acquired and liabilities assumed. Goodwill is assessed at least annually for impairment during the fourth quarter, or more frequently if circumstances indicate potential impairment. Goodwill is allocated to our reporting unit at the education services segment, which is the same as the entity as a whole (entity level reporting unit). The Company has concluded there is one operating segment and one reporting unit for goodwill impairment consideration. The Financial Accounting Standards Board has issued guidance that permits an entity to first assess qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test. The Company reviews goodwill at least annually or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. Finite-lived intangible assets that are acquired in a business combination are recorded at fair value on their acquisition dates and are amortized using a method that reflects the pattern in which the economic benefits of the intangible assets are consumed or on a straight-line basis over the estimated useful life of the intangible asset if the pattern of economic benefit cannot be reliability determined. Finite-lived intangible assets consist of university partner relationships and trade names. The Co

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (In thousands, except per share data) Revenue Recognition The Company generates all of its revenue through services agreements with its university partners ("Services Agreements"), pursuant to which the Company provides integrated technology and academic services, marketing and communication services, and back-office services to its university partners in return for a percentage of tuition and fee revenue. The Company's Services Agreements have initial terms ranging from 7 - 15 years , subject to renewal options, although certain agreements may give the university partners the right to terminate early if certain conditions are met. The Company's Services Agreements have a single performance obligation, as the promises to provide the identified services are not distinct within the context of these agreements. The single performance obligation is delivered as our partners receive and consume benefits, which occurs ratably over a series of distinct service periods (daily or semester). Service revenue is recognized over time using the output method of measuring progress towards complete satisfaction of the single performance obligation. The output method provides a faithful depiction of the performance toward complete satisfaction of the performance obligation and can be tied to the time elapsed which is consumed evenly over the service period and is a direct measurement of the value provided to our partners. The service fees received from our partners over the term of the agreement are variable in nature in that they are dependent upon the number of students attending the university partner's program and revenues generated from those students during the service period. Due to the variable nature of the consideration over the life of the service arrangement, the Company considered forming an expectation of the variable consideration to be received over the service life of this one performance obligation. However, since th