Q3 2021 Grand Canyon Education Inc Earnings Call
[music].
This conference call at this time, all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone and if you require any further assistance. Please press star zero.
I would now like to hand, the conference over to your Speaker today, Dan Bachus, Chief Financial Officer. Please go ahead.
Yeah.
Joining me on today's call is our chairman and CEO, Brian Mueller. Please note that many of our comments today will contain forward looking statements that involve risks and uncertainties various factors could cause our actual results to be materially different from any future results expressed or implied by such statements. These factors are discussed in our SEC filings include.
Our annual report on Form 10-K quarterly reports on Form 10-Q, and current reports on form 8-K, we undertake no obligation to provide updates with regard to the forward looking statements made during this call and we recommend that all investors review. These reports thoroughly before taking a financial position in GCE and with that I'll turn the call over to <unk>.
Brian.
Thank you for joining Grand Canyon, Education's third quarter fiscal year 2021 conference call.
And again, the beginning again, but nothing major.
The challenges facing higher education, because so much of our strategy is meant to directly address those challenges I believe those issues continue to be.
One the RP program cost of a university educated from the early 1980 to the late 2010.
College increased eight times increase in wages amber to increasing student debt levels that will seriously undergrad versus the beginning there is all about.
Great.
Wishes almost fill up diversity on college campuses go down.
Bachelor's degrees should not pay 46 years.
Five programs and deliver models lack of creativity and flexibility necessary to address critical shortages in some very important industries. Since there are inadequate counseling and support services, especially for first generation students or those studying at a distance.
Seven three finished some college credits would change major shifting we saw anymore 30 set at 30% for better jobs.
And eight prior to the pandemic, 43% of contracts, which were under employed in their first year. Two thirds remained in jobs that don't require a college degree five years later.
In addition to these challenges that had been building up for decades, I want to read from our equity.
226 enrolling at U S colleges and universities is on track to fall by another nearly 500000 undergraduate students. This fall continuing historic brands to begin with as part of the coronavirus pandemic. According to new data Tuesday.
The decline of three 2% in undergraduate enrollment. This fall followed a similar drop of three 3% of previous year. The first call of the pandemic. The 42 the research from a national student Clearinghouse Research Center.
The numbers are from a preliminary datasets, representing eight 4 million undergrad and graduate students from about 50% of U S colleagues. The numbers that show that there are now 240000 fewer undergrads enrolled this fall compared with the same time last year and if that right of the slide holds out for the rest of the call.
I'll just have to translate equal to half a million fewer undergraduate students.
These preliminary numbers holding up Shapiro said.
Last two years of underground decline totaling more than 6% would be the largest two year, a decrease and at least half a century.
This is all the profit undergraduate enrollment is spread across all sectors, but numbers are worse at community colleges public four year College is in private for products. While schools are primarily online saw gains last year during the height of the pandemic those positives turned to negative this fall with enrollment broken by five.
4% for undergraduate program and 13, 6% for graduate programs.
In the context of these negative trends, we believe Grand Canyon education is doing well and is very well positioned going forward.
In the education business is comprised of the three pillars I wanted to review the performance of each color beginning with the GCU traditional cameras.
In spite of the significant obstacles presented by the COVID-19 pandemic and the challenges. We just reviewed gcu's traditional campus is having a remarkably successful parse all semester.
University's goal. This year was 8800, new students and they started to fall semester was $8900 up from 8400 <unk> two in the fall of 2020.
The average incoming GPA of this year's record breaking class was three six.
The prestigious honors college, the Gpus Brilinta of approximately 2800 students with average incoming gpas of $4 one.
A number of students.
<unk> has grown to 15570 <unk> up from 11441 in the prior year.
University built three additional residence halls, they can build one year out in advance.
All of those 100 beds are filled.
Total number of graduate students on campus is 23620 feet.
Gcu's traditional campus, which has not been raised in 13 years. The average GCU students take down less debt than they are heavily subsidized state University students.
Probably about 50% of the average parent loan amount at a three state universities in Arizona.
The traditional campus is becoming national institution.
35, 80% of the students are from Arizona, 22, 7% from California, and there is significant growth in the northeast northwest Midwest and southeastern parts of the country.
The diversity of the student body is very encouraging at 48% of our students are Hispanic 6% African American and 46% of our students of color.
To prepare for the students this year GCU invested almost $140 million.
To add three new residence halls, a huge parking garage, three new restaurants, and 55000 square feet.
Additional classroom and laboratory space.
<unk> made this investment with its own cash reserves, and additionally has accumulated $407 $4 million in cash.
University after the transaction continues to be in a very strong financial position.
Two additional residence halls, additional classroom and laboratory space to new restaurants are being added for next year as next year's incoming classes is expected to exceed 9600 students.
Kansas is completely.
With no vaccine or Mac mandates and active positive cases on cameras are now invested 15 total students.
Participation rates in Kansas activities are at an all time high.
I would also like to <unk> useful sports cumulatively percentage leads the nation with men's soccer 88 point.
85% women's soccer, a 76% and women's volleyball at 70, 978%.
We believe this momentum will take GCU to 40000 students on our Phoenix campus.
The demand for what is offered it's much higher than that.
Further building out the current campus to greater than 40000 students and in or adding additional campus locations continues to be evaluated.
We estimate that the service fees, we earn in this kind of it will be 25% of GCE Hope 2021 revenues and we estimate that they will grow to just under 30% of total revenues in the next four years are.
Our strategic advantages in this segment of the market are very significant.
The second GCE platform.
Good for us.
Dealing with the COVID-19 pandemic across many academic institutions geographies in hospital settings has not been easy we.
We have had to be extremely creative and flexible to keep this moving we.
We have developed technology solutions with our University partners include virtual simulation and virtual reality projects that have replicated.
Some of these clinical experiences.
Enrollment has grown to 5652 across all existing sites, which is a 12, 1% increase.
Nursing enrollments have actually grown 17%.
But we have had a reduction in occupational therapy enrollments due to our backlog.
Nickel placements directly related to the pandemic.
Year to date revenue from Orbis partners has grown over 17%.
That is not the 20% that we initially projected but given the significant COVID-19 challenges we are extremely happy with the performance.
The fall semester dilutive hold enrollment exceeded our expectation.
We have also exceeded our expectation at expectations in terms of the number of partners and a number of locations.
There are still regulatory bottlenecks in certain markets. We still plan to have approximately 40 locations opened by the end of 2022, and we will eventually grow to 80 locations.
We estimate that service fee revenues earned from Orbitz part of it will continue to grow in the mid to high teens year over year in 2022.
We estimate that the service fees will be 15% of <unk> total revenues and we estimate that it will grow to greater than 20% of total revenues in the next four years.
The third pillar Grand Canyon University online, it's a pillar being currently the hardest by the pandemic.
But working adult online space is very crowded and GCU has a very large student body.
GCU online at AE at 1838 students as of September 32021, which is flat year over year, but new enrollment declined in the low teens this past quarter.
To combat the various private space with most players using the same.
Advertising enrollment in programmatic strategies, we have created a very successful b to B model.
GCU has over 4000 partners with over 17000 locations in the healthcare education counseling business and technology industries and greater than 30% of the new starts were coming from those partnerships.
When the pandemic hit which shutdown or access to those partners. The new numbers eventually took a hit.
Opening up of this country, including schools businesses hospitals counseling centers et cetera has been an uneven process in our new start numbers have reflected that on a year over year basis.
New enrollments improved in August and September as schools reopen however comps are very difficult in October November and December and we anticipate new starts to continue to be down some year over year.
However meetings with many of the over 4000 partners are now being scheduled and historic pre COVID-19 rates in.
In addition to the B to B strategy GCU online is also well positioned.
It has done the difficult work of being able to provide academic programs that lead to professional life insurer and a toll like environment.
While working adult online enrollments are declining in generics programs, whose value is currently being questioned the licensure program that GCU offers and educate healthcare counseling social work et cetera.
<unk> to be in high demand.
To work in these professional areas academic degrees will always be required.
Currently 36167 the TCU.
Online students are in less mature programs and net number continues to grow as a percent of the total.
We expect momentum to return next year and eventually returned to mid single digit new and total enrollment growth at GCU online.
GCE is in a very strong position.
Long term, we are set up to be a mid to high single digit revenue growth company with margin expansion on a yearly basis.
The ground campus has considerable strategic advantages in the marketplace and we will grow revenues in the high single digits and will become larger as a percent of total revenues.
GCE Orbis is at a very high demand space.
Country will need an additional $1 3 million nurses in the next five years alone.
The path is clear to 80 locations and additional programs will be rolled out over time.
This pillar will produce mid to high teens revenue growth and will also become larger as a percent of total revenues.
GCE Longhorn continues to add a minimum of 20, new academic programs on an annual basis as the country continues to open up and our outside activity resumes to normal levels. We believe revenue will again grow in the mid single digits.
Having discrete differentiated platforms to grow with high quality students is important because we want to continue to produce quality outcomes.
Even in this pandemic induced transitional period, we've continued to produce good graduation rates.
Very low 5% cohort default rate.
69% 90 10 calculations.
Although the student debt amounts and very low parent loan events.
We are doing this while at the same time GCE continues to invest in Orbis infrastructure.
New online learning and technical administrative infrastructure and GCU continues to invest in building out the traditional canvassed all of which will create growth opportunities for students.
That I would like to turn it over to Dan Bachus, our CFO to give a little more color on our 2021 third quarter talk about changes in the income statement balance sheet and other items as opposed to provide 2021 guidance. Thanks, Brian include.
Included in our form 8-K filed with the SEC. We have included non-GAAP net income and non-GAAP diluted income per share for the three months ended September 32021, and 2020, the non-GAAP amounts exclude the tax affected amount of the amortization of intangible assets.
<unk> intangible assets acquired in the Orbis acquisition totaled $210 3 million and amortization expense in both the third quarters of 2021, and 2020 was $2 $1 million. We believe the non-GAAP financial information allows investors to develop a more meaningful understanding of the company's performance over time as adjusted.
Non-GAAP diluted income per share for the three months ended September 32021, and 2020 is $1 11, and $1 14, respectively.
We typically file our 10-Q alongside our 8-K, the first week of November each year.
Planned to file our 10-Q when it as it normally is filed so that will be next week.
Service revenue was slightly below our expectations in the third quarter of 2021 Asics.
As expected the GCU online enrollment growth rate slowed in the quarter due to the items, we have discussed previously brown.
Ground traditional summer and fall semester enrollments and Orbis enrollments were in line or exceeded our expectations revenue per student continues to grow on a year over year basis, primarily due to increased room and board and other ancillary revenues from GCU as compared to the prior year and the growth in enrollment for students at off campus classroom and laboratory sites.
Service revenue per student for off campus classroom and laboratory sites generate a significantly higher revenue per student than we earned under our agreement with GCU. As these agreements generally provide us with a higher revenue share percentage partners have higher tuition rates than GCU and the majority of their students take credits more credits on average per semester.
Is there an accelerated programs.
However revenue per student continues to be negatively impacted by a number of factors revenue per student associated with the GCU contract is being negatively impacted by a decline year over year and days in class for its online students as we have discussed previously we saw a significant increase in days in class during the last nine months of 2020 and the first few months of 2000.
21 students that far fewer breaks between courses than previous years, beginning at the tail end of the second quarter and continuing into the third quarter of 2021 days in class returned to pre COVID-19 levels of students decided to take breaks between classes.
Second GCU continues to see a mix shift to less accelerated programs that generate less revenue on a daily basis. Additionally.
Additionally, beginning with the summer 2021 semester and continuing into the fall 2021 semester Orbis partners have experienced a decline in revenue per student caused by some students delaying their scheduled clinical courses due primarily to vaccine mandates at hospital partners.
It is important to note that none of these items reduced the amount of revenue that will ultimately be earned from the students but extends the time it takes to complete the program.
Included in both our 8-K.
Included in our 8-K filed today is a detailed explanation of the actual and anticipated impact of COVID-19 on all of our University partners.
Our effective tax rate for the third quarter of 2021 was 23% compared to 22% in the third quarter of 2020, and our guidance of 27% we.
We did make $5 million of contributions in lieu of state income taxes in July 2021, which resulted in an increase in general and administrative expenses in the third quarter of 2021.
These contributions our adult.
One dollar reduction in our state income taxes, three quarters of which is recorded as a reduction in our effective tax rate in the third quarter. When the payment was made in a quarter in the fourth quarter.
A number of months ago, GPU engaged a firm to assist them in refinancing the secured notes today October 28, 2021, we were formally provided notice by Gpus that it will be repaying $500 million on the secured note.
And have also been informed that they are optimistic that they will be refinancing the rest of the secured note by the end of November based on the ultimate success of marking the new bonds. This will eliminate or reduce the interest income earned by our.
As a result of the refinancing our credit agreement, which consisted of a term loan facility and our revolving credit facility will be terminated and the remaining term loan amount of $83 7 million along with the 30 million that was astounding outstanding on our line of credit will be repaid.
As we discussed on last quarter's call in anticipation of a possible repayment. The board of directors increased the authorization under our stock repurchase plan by $970 million and approved a plan to repurchase stock using the expected net proceeds from the refinance.
We repurchased 2 million 324316 shares of our common stock in the third quarter of 2021 at a cost of approximately $202 5 million and another 978779 shares at a cost of $85 6 million subsequent to September 32021.
As of today, including the increased authorization, we have $778 4 million available under our share repurchase authorization we.
We plan to buy at a minimum an additional $250 million of our common stock with the proceeds to be received on the refinance and any additional funds received above the $500 million will also be used to repurchase our common stock with.
We've considered a number of different options to repurchase stock in the near term, we will continue to repurchase in the open market rather than through a tender or a large ASR.
As a result, we have slightly changed our weighted average share assumptions for the fourth quarter of 2021.
Turning to the balance sheet and cash flows.
Total unrestricted cash and short term investments at September 32021 were $61 million GCE Capex in the third quarter of 2021, including Capex for new off campus classroom and laboratory sites was approximately $5 6 million or two 7% of net revenue.
We continue to anticipate Capex for 2021 will be between 30% and $35 million.
Lastly, I would like to provide color on the guidance, we have provided for the fourth quarter of 2021.
The guidance that we have provided continues to be non-GAAP as adjusted net income and as adjusted diluted income per share as we exclude amortization of acquired intangible assets <unk>.
Consistent with last quarter due to the uncertainties discussed previously we have provided ranges for revenue operating margin and earnings per share for the fourth quarter of 2021.
We have tightened up the range as previously provided based on the current trends, which Brian spoke about a few minutes ago.
On the expense side, we have lowered expenses for the last three months of 2021 based on current expense trends and in addition, we will realize a $2 $5 million reduction in technology and academic services expenses related to the reduction in the seasonal reserve previously recorded on the secured debt.
We estimate interest expense will be $1 4 million in the fourth quarter as although interest expense paid will decline due to the repayment of our credit facility, we anticipate writing off $1 1 million of deferred loan costs.
We believe the effective tax rate for the fourth quarter will be 21, 2%, which is slightly lower than our previous guidance. We have adjusted the interest income estimate to $9 5 million for the fourth quarter based on the timing of the repayment of the $500 million on the secured note and as mentioned earlier have increased the weighted average shares outstanding slightly.
Due to the estimated timing of the repurchase of the additional $250 million of stock by the end of the year.
The University of refinances and additional amount by the end of the year, we will reduce the remaining $2 $5 million of seasonal reserve, while interest income will be lower than what is in current guidance weighted average shares will also most likely be lower but not materially as although we will further increase our buybacks the impact on the fourth quarter share weighted average share count will be.
No.
I will now turn the call over to the moderator so that we can answer questions.
And as a reminder to ask a question you will need to press star one on your telephone.
Again, if you have any questions. Please press star one.
First question is from Jeff Silber of BMO capital markets. Your line is open.
Thanks, So much wanted to first focus on GCU online I know you guys usually have pretty good visibility.
Things worsen since we last talked three months ago, and specifically what has changed if anything.
Yes, I think versus three months ago things are not as good currently today as they were three months ago.
And what's changed.
Even even opening of the country.
I'm thinking three months ago schools were opening in August and September.
Hospitals, we're a lot more accessible because of.
In some cases decreased.
This demands.
Hospitals.
Counting centers for those things.
And.
We've.
In certain cases.
Got heart.
September and October getting open as fast.
We were hoping.
And so.
That 30 plus percent that we'd get from that outside activity.
<unk> picked up as fast as we were hoping.
But it's important to note that the 70% to 65% 70%.
<unk> online new starts.
As a result of the traditional advertising mechanisms.
Strong, we're not seeing a deterioration of our investment in those advertising strategies.
But we do believe we've seen investment if we went above.
The current amount.
Bounce that we're spending and so.
The 30% to 35%.
Eventually in the <unk>.
<unk> online business is going to be 50%.
That stuff is coming back a little bit more slowly but it is.
Coming back and.
Next year.
We're going to be in a very strong position.
<unk>.
The.
Students that we get as a result of that activity are really weighted heavily in the graduate area.
And our decline in GCU online has been primarily a decline in graduate students.
And so not only do we get a significant amount of.
New student starts and enrollment from those activities have been very very high quality way to do this business we get.
Really good students.
And so as that thing comes back and as a graduate student number grows.
This thing will be I think it will be back to a.
We're not saying outline will be high single digits, we're saying mid single digits above are currently 90000 students.
But as the ground campus grows in the high single digits.
<unk>.
The.
Orbis campus grows in the mid double digits.
That overall, we're going to be back to an 8% enrollment growth.
And Bryan forgive me when you were talking about the traditional advertising channels, which still remains strong did you comment on the cost is getting more expensive to find those students.
No.
Maybe it's just a little bit, but it would be much worse.
We believe it would be worse, if we all of a sudden would would spend an additional 30%.
If we would expect an additional 30% and our advertising budget. We believe we would see a decline in the return on that both in the quality of the students and in the cost per lead and cost per start and so we anticipated that this was going to happen three or four years ago.
Not only because we now have a very large number of 90000 students, but because 90% of what's going on in this industry is not any different than the things that University of Phoenix did when we were there a lot of years ago.
Currently some of our advertising strategy is very similar enrollment strategies very sad when appropriate product mix.
It's the most inexpensive way to get into this business. When you don't have a lot of.
Capital to deploy.
And which is why we feel good too.
That's a big part of what we're doing in addition to heavily to licensure programs.
And I can't underestimate that because.
If youre going to prepare teachers at a distance you have to be envelope fingerprinting.
Fingerprinting.
Set up their observation about what you have to set up their students.
We can take care of all of that work.
Same is true in calculating the famous through in social work.
And.
In certain technical areas and.
So the investment in that infrastructure, we think thats going to pay really long term dividend because those are right now with so many jobs being available.
If you're a 28 year old and you've got your choice of jobs, but it really pays to go back and earn an undergraduate degree in business administration.
Seriously being quest.
But if people want to get in California.
They're not in our western capsule count provide accounting without a license.
<unk> seen a teacher indications upon payment savings in nursing and so those two things that we've pivoted to a number of months ago are going to allow us to recover from this pretty additional periods I think being a very strong position.
Got it.
And if I could just ask Dan a quick question I just wanted to make sure I understand what's embedded in your guidance in terms of the share repurchase. So I think he said in the third quarter and so far this quarter did they purchase I think about $288 million worth of stock and you're expecting a purpose at least another 250 million to five out.
Is that what's embedded in the guidance for this year.
Yeah Yeah.
But its pretty evenly over the rest of the calendar year and thus as you get out towards the end of the year. It has a pretty low effect on the weighted average shares outstanding but.
But yes, that's what I thought.
Sure.
It will carryover into next year, Okay, great just wanted to check the numbers. Thanks, so much I'll get back in the queue.
Thank you and our next question is from Jeff Mueller of Baird. Your line is open yes.
Just trying to connect the pieces on what you've given us and try to make sure I'm understanding the magnitude so the roughly 70% channel.
New enrollments from that channel are actually growing year over year end.
Decline from the 30% or so channel is causing the.
Well, I guess more than causing the.
Low teens total decline in terms of online starts for GCU.
Yes, yes.
And so again.
The return we're getting on the traditional investment is not in decline we're getting good return similar trend to what we've got but I also want to add I think if we had an increase.
Kind of spin.
Do you think we'd see a deterioration of export.
And then.
If you could just help me you gave us a statistic about like numbers of partners or a number of locations.
You were kind of giving us some month by month. So I guess, what I'm wondering is how much does this look delta waves drew.
Driven and I know, it's impossible to predict if there will be future waves. So maybe it'll remain uneven.
I don't know if you can tie it to that and it's since been getting better and then if you could just help us with what you were telling us with.
How many of the I think over 4000 partners are you back live with.
Just how broad was that.
Statement about.
The number of meetings that you're setting up.
Looking like pre pandemic levels like how broadly does that apply across the partner network.
It applies very broadly across our partner network I don't give a lot of details.
In terms of all of the work that we're doing it's extremely high quality work I'll give you. One example school.
Schools.
I just had a meeting with something superintendents locally yesterday.
In Arizona School.
Schools are really really impressive.
With teachers with finding counselors and with plenty of social workers.
And like a lot of industries when.
When you can come in.
With the strategy.
Two one for example to help them grow their AUM.
They are incredibly.
Receptive to that and grateful for that.
So there are school districts, where we will put together cohorts of apparent professionals.
And those are people usually associate degrees they are helping out in the classroom.
We'd like to become licensed teachers and.
Fantastic way for schools and school districts to grow their own employment base.
And it's scalable option.
That's an example.
How we work inside school districts in high school.
Together custom programs that help them satisfy meet Reese.
Sports fans.
We do the same and the consequent areas. There are a lot of people with bachelor's degrees in calculating that if you can get them involved in the massive free program that will lead to licensure also move they move from their current level of responsibility up significantly.
And so there's a huge amount of work to do in that area.
Military basis.
I have a very very difficult time.
With developing cyber security specialists, they can't get them from outside.
We have great programs at both the undergraduate and graduate level.
Our current military members grow into those positions and so that work is.
Really high quality work.
It leads to a real high quality students for GCU. It satisfies the human resource needs for the groups that we work with.
It's a trailing kind of an effort you first have to get back in and then you have to do the meetings and then you have to get the students in the revenue follows back and.
So the reason we didn't go away from that is because the momentum there.
The pandemic is just so strong in producing very high quality students the majority of Democrats rollout.
And so we didn't.
Got it.
In the middle of a pandemic.
And we took a hit as a result of that but the fact that we talked about last forever and we are duly just producing such high quality outcomes there.
We stayed with our strategy.
I feel extremely optimistic about how we're going to come out.
Okay and then.
On just expense planning and budgeting for 2022, especially with so.
The recovery sounds like it's been pretty uneven for a while now.
You, obviously have a unique model in terms of those provider model, but.
Just trying to understand.
Where do you need to preserve investment where you can flex spend just given that we've had a couple of quarters now of new enrollment declines and we're also in a high inflation environment generally so could you just help us a framework for how you think about managing expenses through an environment such as this.
Or where you can cut or how aggressively you would look to make adjustments.
Well I mean, I think thats.
There's part with the positive side, the fact that the.
The ground campus.
It's putting a growing high single digits.
And have a pathway to growth.
Four.
A significant nine years and theyre going to become increasingly at a higher percentage of the overall revenue and the revenue per student is growing there.
That is a very strong part of our strategy. The same is true for Orbis.
Orbis can grow in the high <unk>.
15 16, 17%.
And eventually more from a revenue perspective.
And the revenue per student numbers at Orbis are significant.
<unk> passed the AP, so that really helps negate the pressures of GCU online.
GCU Online's issue is.
Number 90000 students.
The crowded space.
And so we had to we do thank goodness, we've been differentiating our strategy.
Three or four years ago.
<unk>.
And so.
<unk>.
The I guess.
The FERC requested give.
Towards the middle of next year.
We believe the student numbers and GCU.
Number one the brown and mortgage will continue operating at a high level.
And the online campus will slowly get back towards the middle of the year to where we're operating on all cylinders I think capable of being back into a 4%, 5% revenue growth part of the business.
Gather by the end of the year, we're going to be back to 8%.
Hey.
It takes six to 12 months for that.
The other thing I would add is.
We can't forget what 2020 was at GCU online I mean that was basically a teens.
Total enrollment growth year, which given our size, we never dreamt that we would be there, but it was as we've talked about before the perfect storm from a new reentry drop in graduation percentage. This year. Unfortunately has been the perfect negative storm where.
New enrollments have been under pressure, but still have reentry drops granted so as we get into next year, we think.
Things will all start to normalize I think new enrollment.
We feel very good about our ability to start growing new enrollments again next year <unk>.
Especially once we get through the first quarter, which was also very inflated.
But starting in the second quarter, we feel very good about our ability to grow.
And then drops re entries in grad should normalize so I mean, that's been one of the problems with the total enrollment growth rate is that.
Total enrollment growth rate.
This quarter was basically flat, but graduate graduates were up almost 15% year over year in the quarter. So.
We have those challenges as well I think from an expense standpoint.
We're not planning on.
On changing anything materially.
We are we make this company makes a lot of money.
It does very well and we feel very good as Brian said about the long term.
Here and so we're not going to start cutting a bunch of things in fact, we're going to start we're going to continue to invest we're going to.
Travel expenses are going to take another step up next year as the world opens up more that's a big part of our strategy as Brian talked a lot about.
But we feel good about our ability long term to grow margin.
Add to that and say.
During the worst of the tender.
We didn't lay off any plan there were no layoffs there were no furloughs.
No pay reductions we continue to.
Sure.
We have less than one 5%, possibly from memory.
On a per gallon with full time faculty.
But we werent going to lay those people off furlough them to market and reduce their pay.
Same thing is through about those people that were outside and doing that outside work.
We've invested too much into that.
Aren't going to lay them off as we work on it.
I'm going to.
Do furloughs and pay reductions, we could've done those things.
But we have I believe a very strong strong culture.
Our people know that were extremely loyal to them and.
Payroll of course, where you could have done.
But.
Long term, we're going to benefit from the fact that we.
Kept people to deploy in the cat.
We had pay increases.
And so.
I think obviously there were a lot of companies.
In long run that would not have been the right thing for us to do we don't think.
We feel very good about the long term of the company. We're fortunate that this repayment of the secured note is coming at a time.
At this time.
We will continue to buyback our stock and so our earnings EPS will go up next year.
And we're hopeful that investors will appreciate that.
Even if revenue isn't growing in the near term as fast as we all would like and ink and operating income is not growing as fast as we'd like but we believe strongly that it will be back at our historical rates as Brian walked through in the in the in the call.
Soon we think this is a very temporary time, where the world is you all know is kind of upside down.
And so things are not going like clockwork like they did for us for 13 years, yet you had a year where things all accelerated really quick for GCU online now you have a year, where things are challenged for GCU online but.
We think once.
We all get through this this period.
Get back to Clockwork.
Nice mid single digit growth every year.
Got it I appreciate all the perspective, thanks guys.
Yes.
Yes.
We have reached the end of our third quarter Conference call. We appreciate your time and interest in Grand Canyon Education.
Still questions up it looks like we do have one more question operator.
It's Philip on the line.
Yeah, sorry, let's needs of bearing bread capital your line is open.
Hey, guys, sorry, I got disconnected a couple of times.
And with that maybe this was asked but.
Is there any chance you can break out kind of the performance of the.
The b to B partner moments in the traditional online AD driven.
Panels.
It would be great to have some more insight on that im sorry, Im sorry, if I missed that was disconnected for a bit.
No.
The partner relationships the custom.
Building programs.
About 30% of what we do now and growing.
So it's like a 30 70.
Okay.
And did you guys.
Just to confirm did you mentioned the orbis enrollment numbers.
Yes, yes, we provided I can provided again orbis.
Enrollment.
Yes.
5652.
Okay.
Yes.
Yes.
Okay, well again.
We appreciate your time and interest in Grand Canyon Education, If you still have questions. Please contact myself Dan Bachus. Thank you for your time.
Okay.
And this concludes today's conference call. Thank you for participating you may now disconnect.
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Yes.
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Yes.
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Thank you.
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