Grand Canyon Education (NASDAQ: LOPE) reported Q2 EPS of $0.95, $0.10 better than the analyst estimate of $0.85. Revenue for the quarter came in at $236.8 million versus the consensus estimate of $203.73 million.

• Net revenue increased 8.5% to $236.8 million for the second quarter of 2018, compared to $218.3 million for the second quarter of 2017.
• End-of-period enrollment increased 9.6% between June 30, 2018 and June 30, 2017, as online enrollment increased 10.1% and ground enrollment increased 3.9% over the prior year. Ground enrollment at June 30, 2018 only includes traditional-aged students that are taking Summer school classes, which is a small percentage of GCU\'s traditional-aged student body and professional studies students. As of March 31, 2018 ground enrollment had increased 9.6% year over year to 17,386 students and the majority of that increase between years was residential students at GCU\'s ground traditional campus in Phoenix, Arizona. The Spring semester for GCU\'s traditional-aged student body ends near the end of April each year.
• Operating income for the three months ended June 30, 2018 was $58.5 million, an increase of 6.2% as compared to $55.1 million for the same period in 2017. The operating margin for the three months ended June 30, 2018 was 24.7%, compared to 25.2% for the same period in 2017. The majority of our traditional ground students do not attend courses during the summer months (May through August), which affects our results for our second and third fiscal quarters. Since a significant amount of our campus costs are fixed, the lower revenue resulting from the decreased ground student enrollment has historically contributed to lower operating margins during those periods.
• The tax rate in the three months ended June 30, 2018 was 23.3% compared to 28.0% in the same period in 2017. The lower effective tax rate year over year is a result of the Tax Cuts and Jobs Act (the \"Act\") which was signed into law on December 22, 2017. The Act reduces the corporate federal tax rate from a maximum of 35% to a flat 21% rate effective January 1, 2018. Additionally, the Company continues to receive the benefit of our adoption of the share-based compensation standard. This standard requires us to recognize excess tax benefits from share-based compensation awards that vested or settled in the consolidated income statement. The favorable impact from excess tax benefits was $1.2 million and $5.2 million in the three months ended June 30, 2018 and 2017, respectively. The inclusion of excess tax benefits and deficiencies as a component of our income tax expense will increase 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 awards vest, our stock price on the date an option is exercised, and the quantity of options exercised.
• Net income increased 15.5% to $46.0 million for the second quarter of 2018, compared to $39.8 million for the same period in 2017.
• Diluted net income per share was $0.95 for the second quarter of 2018, compared to $0.83 for the same period in 2017.
• Adjusted EBITDA increased 7.2% to $77.3 million for the second quarter of 2018, compared to $72.1 million for the same period in 2017.

GUIDANCE:

Grand Canyon Education sees FY2018 EPS of $4.86, versus the consensus of $4.71. Grand Canyon Education sees FY2018 revenue of $840.5 million, versus the consensus of $837.74 million.

For earnings history and earnings-related data on Grand Canyon Education (LOPE) click here.