그랜드캐니언 에듀케이션(LOPE) 2026년 3분기 실적 발표 콘퍼런스 콜: 등록 학생 수 5.2% 증가

핵심 요약

• 2026년 3분기 서비스 매출은 전년 동기 대비 2.4% 증가한 2억 6,730만 달러를 기록했다. 3개 플랫폼 전체 등록 학생 수는 5.2% 증가한 반면, 총 신규 등록 학생 수는 전년과 동일한 수준을 유지했다.
• GAAP 영업이익은 1,800만 달러에서 5,150만 달러로 증가해 영업이익률이 6.9%에서 19.3%로 상승했다. GAAP 희석 주당순이익(EPS)은 1.67달러, 조정 희석 EPS는 1.77달러를 기록했다.
• GCU 온라인 등록 학생 수는 신규 등록이 정체되었음에도 학생 유지율 개선에 힘입어 7.1% 증가했다. 경영진은 2026년 4분기 온라인 신규 등록 학생 수가 한 자릿수 중반대 성장을 기록할 것으로 예상하고 있다.
• 전통 오프라인 캠퍼스의 가을학기 신규 등록 학생 수는 전년과 동일한 수준에 그쳐, 전체 등록 학생 수는 경영진의 예상치를 3% 밑돌았다. 회사는 4가지 추진 과제를 통해 2027년 가을학기 오프라인 캠퍼스 등록을 10% 이상 성장시킬 계획이다.
• 폐쇄 및 단계적 폐지(teach-out) 캠퍼스를 제외한 하이브리드 캠퍼스 등록 학생 수는 14.1% 증가했다. 이 플랫폼은 48개 캠퍼스에 걸쳐 약 8,000명의 학생을 보유하고 있으며, 전체 수용 능력의 60%를 소폭 웃도는 수준으로 운영되고 있다.
• 그랜드 캐니언 에듀케이션은 3분기 중 약 7,510만 달러에 자사주 50만 4,708주를 매입했다. 연초 이후 누적 자사주 매입 규모는 192만 6,375주, 3억 640만 달러에 달했다.

주요 재무 데이터

사업 및 운영 성과

GCU 온라인 캠퍼스

전체 온라인 등록 학생 수는 7.1% 증가한 반면, 기저효과가 높았던 전년 동기 대비 신규 등록 학생 수는 보합세를 보였다. 경영진은 높은 유지율과 학생 기반의 질적 수준 덕분에 전체 등록 학생 수가 성장했다고 설명했다. 온라인 학생의 70% 이상이 교육, 상담, 간호, 사회복지, 회계, 사이버 보안 등 자격증 취득 프로그램에 등록되어 있다.

회사는 9월, 10월, 11월에 입학 상담사 관련 비용을 줄이는 한편 광고 지출을 늘렸다. 경영진은 잠재 고객(리드) 발굴이 견조하게 유지되었으며 고객 획득 비용도 안정적인 수준을 유지하고 있다고 밝혔다.

순 수업료가 낮은 프로그램으로 비중이 이동하면서 학생당 온라인 매출은 전년 동기 대비 소폭 감소했다. 다만 캠퍼스 외 강의실 및 실습 현장에서 더 높은 매출을 창출하는 ABSN(학사 편입 간호학) 학생들 덕분에 이러한 감소분이 일부 상쇄되었다.

전통 오프라인 캠퍼스

가을학기 신규 등록 학생 수는 보합세를 보였으며, 전체 등록 학생 수는 경영진의 예상치를 3% 밑돌며 마감했다. 신입생의 평균 학점(GPA)은 3.6점이었고, 아너스 칼리지 신입생의 가중 평균 GPA는 4.1점이었다.

경영진은 2027년 가을학기를 위한 4대 추진 과제를 제시했다:

1. 공통 지원서(Common App): 9월과 10월에 해당 플랫폼을 통해 5,600건 이상의 지원서가 접수되었다. GCU는 이 채널을 통해 2027년 가을학기에 800명 이상의 신입생이 추가로 유입될 것으로 예상하고 있다.
2. 건설 및 산업기술 단과대학: 경영진은 2027년에 오프라인 캠퍼스 신입생이 최소 1,500명 늘어날 것으로 예상하고 있다.
3. 아너스 칼리지: 5만 5,000제곱피트 규모의 신규 시설이 문을 열었다. GCU는 2027년 가을학기에 아너스 칼리지 순 신입생이 400명 증가할 것으로 예상하고 있다.
4. 법과대학: GCU는 2027년 가을학기에 법학 예과(prelaw) 학생 최소 100명, 법학 학생 100명, 법학 석사 과정 학생 100명을 유치할 것으로 예상하고 있다. 애리조나주 대법원은 신설 법학대학원을 만장일치로 승인했으며, GCU는 미국변호사협회(ABA) 인증을 지속해서 추진하고 있다.

경영진은 이러한 과제들을 종합해 2027년 가을학기 오프라인 캠퍼스 등록 학생 수가 10% 이상 증가하고, 향후 5년간 성장의 발판이 마련될 것으로 기대하고 있다.

하이브리드 캠퍼스

폐쇄 및 단계적 폐지(teach-out) 캠퍼스를 제외한 하이브리드 캠퍼스 등록 학생 수는 14.1% 증가했다. GCE는 현재 수용 인원의 60%를 소폭 웃도는 수준에서 48개 캠퍼스를 운영하고 있으며, 장기적으로는 캠퍼스당 약 300명의 간호 학생과 300명의 기타 헬스케어 프로그램 학생을 확보해 80개 캠퍼스를 운영하는 것을 목표로 하고 있다.

회사는 2027년에 네바다주 리노, 플로리다주 잭슨빌, 루이지애나주 뉴올리언스, 애리조나주 레이크하바수 등 4곳에 캠퍼스를 개설할 계획이다. 경영진은 하이브리드 캠퍼스 학생 1인당 매출이 온라인 학생의 3배를 웃돈다고 밝혔다.

자본 배분

GCE는 3분기 중 약 7,510만 달러 규모의 자사주 50만 4,708주를 매입했으며, 9월 30일 이후에도 22만 5,770주를 추가 매입했다. 연초 이후 자사주 매입 규모는 총 192만 6,375주, 3억 640만 달러에 달했다. 2026년 10월 이사회가 승인한 3억 5,500만 달러 증액분을 포함해 잔여 자사주 매입 한도는 3억 9,450만 달러였다.

회사는 또한 주로 자사주 매입 및 기타 일반 기업 용도를 지원하기 위해 5년 만기, 1억 달러 규모의 회전신용공여 계약을 체결했다. 4분기 가이던스에는 해당 신용공여 한도를 통한 차입이 없는 것으로 가정되었다.

경영진 가이던스

경영진은 3분기 실적을 반영해 2026년 연간 가이던스를 수정했으며, 현재 추세를 바탕으로 4분기 전망치 범위를 좁혔다.

• GCU의 가을학기 등록 학생 수가 예상치를 밑돌았고 3분기 온라인 신규 등록 학생 수가 정체된 점을 반영해 매출 전망치 범위를 하향 조정했다.
• 경영진은 2026년 4분기 온라인 신규 등록 학생 수가 한 자릿수 중반대 성장률로 회복되어 전체 온라인 등록 학생 수가 6%~7% 성장하는 데 기여할 것으로 예상하고 있다.
• 프로그램 믹스 변화로 인해 학생당 온라인 매출은 전년 동기 대비 소폭 감소할 것으로 예상된다.
• 오프라인 캠퍼스 등록 예상치가 낮아짐에 따라 예상 영업이익률도 하향 조정되었다. 다만 경영진은 2026년 연간 영업이익률이 전년 수준을 유지할 것이라는 전망을 고수했다.
• 공격적인 자사주 매입으로 현금 잔고가 감소함에 따라 이자수익은 전년 동기 대비 감소할 것으로 예상된다.
• 경영진은 2027년에 온라인 등록 5%~6% 성장, 오프라인 캠퍼스 10% 이상 성장, 하이브리드 캠퍼스 두 자릿수 초반 성장을 바탕으로 전체 등록 학생 수가 7% 이상의 성장률을 기록할 것으로 전망했다.

리스크 및 주요 점검 사항

• 오프라인 캠퍼스 등록 학생 수는 지난 3년간 대체로 정체 상태였으며, 3분기 등록 학생 수 부족은 4분기 실적에도 영향을 미칠 것으로 예상된다.
• 온라인 등록 학생 수 증가는 광고 확대를 통해 유입된 잠재 고객(리드)의 전환에 부분적으로 달려 있다. 경영진은 전환 시점이 당초 예상보다 늦어졌다고 밝혔다.
• 졸업생 증가와 재등록생 감소가 온라인 등록에 부담으로 작용하고 있으나, 학생 유지율 개선으로 이러한 충격이 일부 상쇄되었다.
• 자격증 취득 목적의 온라인 프로그램은 서비스 제공 비용이 더 많이 들거나 순 수업료가 낮을 수 있어, 해당 프로그램의 빠른 성장이 영업이익률을 압박할 수 있다.
• 2027년 초로 예정된 신규 하이브리드 캠퍼스 개설로 추가 비용이 발생할 예정이나, 경영진은 등록 학생 수가 늘어남에 따라 캠퍼스별 수익성이 개선되고 있다고 밝혔다.
• 신설 법학대학원(로스쿨)에 대한 미국변호사협회(ABA) 인증은 첫 입학생 기수가 졸업하기 전까지는 승인될 수 없다.

애널리스트 Q&A 주요 내용

애널리스트들은 3분기 온라인 신규 등록 학생 수 성장률의 예상치와 실제치 간 격차에 주목했다. 경영진은 6월부터 8월까지 광고 지출을 늘렸으나 잠재 고객 전환이 예상보다 늦게 나타났다고 설명했다. 다만 10월, 11월, 12월 추세를 감안할 때 회사는 4분기 온라인 신규 등록 학생 수가 한 자릿수 중반대 성장을 기록할 것으로 예상하고 있다.

경영진은 또한 웹 기반 잠재 고객 유치가 감소세를 보인 후 안정화되었으며, 학군, 병원, 기업, 군부대와 직접 협력하는 외부 상담사들이 지속해서 등록 유치를 뒷받침하고 있다고 밝혔다. 광고 지출은 증가하고 있으나 입학 상담사 채용은 둔화되었고, 고객 획득 비용은 안정적으로 유지되고 있다고 덧붙였다.

오프라인 캠퍼스와 관련해 경영진은 공통 지원서(Common App) 접수, 건설 및 산업기술 프로그램, 아너스 칼리지 확장, 신설 로스쿨 설립 등이 일회성 조치가 아닌 추가적인 성장 동력이라고 강조했다. 또한 경영진은 초기 로스쿨 등록 예상치를 보수적으로 설정했다고 설명하면서도, 2027년 가을학기에 제시한 공식 목표치를 수정하지는 않았다.

실적 발표 콘퍼런스 콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Good day, and thank you for standing by. Welcome to the Q3 2026 Grand Canyon Education Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Sarah Collins, General Counsel. Please go ahead.

Sarah Collins

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, including 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.

With that, I'll turn the call over to Brian.

Brian Mueller

Good afternoon, and thank you for joining Grand Canyon Education's Third Quarter 2026 Conference Call. Total new enrollments for all 3 platforms were flat for the quarter, while total enrollments were up 5.2%. Total revenue was up 2.4%. As a reminder, the difference between the total enrollment growth rate and the revenue growth rate is largely a result of $7.5 million of service revenue moving from the third quarter to the fourth quarter due to the late fall semester start date.

Importantly, total online enrollments were up 7.1%. The quarter did not meet our expectations from a new enrollment perspective due mainly to the ground campus new enrollment miss, and that will impact our fourth quarter, which we will discuss later. However, we are still in a strong position, and I'm very confident about our long-term goals of 7% enrollment and revenue growth with slight margin expansion, partly because of 4 strategies that will reignite growth on the ground campus, which I will explain later in the call.

Now I'd like to provide details on each of our 3 platforms. Platform one, the GCU online campus. New enrollments were flat against very tough comps, while total enrollments were up 7.1%. Total enrollment was up because of very high retention rates. Retention rates are up because of the high quality of the student body across all 3 platforms. Over 70% of the students studying online are in licensure programs. Students pursuing degrees in education, counseling, nursing, social work, accounting, cyber, et cetera, are very clear about their career paths and as a result, performed well academically and have high retention rates.

An increasing percentage of these students are recruited by outside counselors working directly with school districts, hospitals, counseling centers, businesses, military bases, et cetera. This has helped us maintain growth while making adjustments in the changing advertising and lead generation environment. During the months of September, October and November, we continue to increase our advertising spend to generate leads and are seeing strong interest in the professional careers we are targeting. The increased spend is offset by a reduced enrollment counselor spend. We expect new online enrollments to return to a mid-single-digit growth rate in the fourth quarter. And given current retention rates, that will produce a 6% to 7% total enrollment growth rate in the fourth quarter.

Platform two, GCU's traditional ground campus. Fall new enrollments were flat compared to prior year, which caused total enrollment to be 3% below our expectations. The fall enrollment results were disappointing from a growth perspective, but very encouraging from a quality perspective. Average incoming GPAs were 3.6 for the incoming class and 4.1 weighted at the fast-growing Honors College. The energy around this college and the desire of Arizona companies to offer internships and eventually full-time employment to its graduates is at an all-time high.

We have 4 strategies we are implementing to grow the ground campus over 10% for the fall of 2027. All 4 strategies will produce growth over the next 5 years. Number one, Grand Canyon University is now on the Common App and has been since August. Over 1.5 million high school seniors in the country who apply to college use the Common App. So GCU has always been at a significant disadvantage not being on it. In September and October, applications from the Common App alone are over 5,600 and have boosted total applications for the fall of 2027 in the low double digits over prior year. GCU expects to be up in new enrollments by over 800 for fall 2027 from the Common App.

Number two, GCU expects the new College of Construction and Industrial Technologies to add a minimum of 1,500 new students to the ground campus in 2027. Careers in construction, manufacturing and industrial technologies are exploding throughout the country. GCU has 3 bachelor's programs and 12 certificate programs and will be adding students in significant numbers beginning in January. These are all students that they wouldn't have had in prior years.

Number three, GCU just opened a state-of-the-art 55,000-square-foot facility to house one of the fastest-growing Honors Colleges in the country. The fastest-growing area of applications coming from the Common App is for the Honors College. GCU started this fall with about 3,400 students in the college, but expects to add a net new 400 students for the fall of 2027. These students come from all over the country, have weighted incoming GPAs of 4.1 and are helping to build a growing academic brand strength of the university.

Number four, GCU is opening the Grand Canyon University Law School in the fall of 2027. The curriculum is written, the Dean has been hired and the construction of the space is moving rapidly. The University's new College of Law has received unanimous approval from the Arizona Supreme Court. This marks a historic milestone in Arizona legal education and establishes a pathway for GCU graduates to pursue licensure as attorneys in the state. The university is still pursuing ABA accreditation, which is not granted until after the first cohort of students has graduated.

So the Arizona Supreme Court approval is important to the first class of students. GCU expects to add a minimum of 100 additional prelaw students, 100 law students and 100 master's degree students in legal studies for the fall of 2027. These graduate students from a revenue perspective will be worth 3x what an online student is worth to Grand Canyon Education. To sum up, GCU expects the ground campus to be reignited by adding 800 additional new students because of the Common App, 1,500 additional new students in the College of Construction and Industrial Technologies, 400 in the Honors College and 300 in the new law school that would get us to 10% growth on the ground campus for fall of 2027. But all the strategies will provide growth for at least the next 5 years.

Platform three, the hybrid campuses. Grand Canyon Education's hybrid campuses had an increase in enrollment year-over-year of 14.1% in the third quarter, excluding the closed sites and those that are in teach-out, which exceeded our expectations. We have turned the corner with this platform and the future is bright. We currently have 48 locations that are slightly above 60% in total capacity. The goal is to have 80 locations with about 300 nursing students per location and an additional 300 students in other health care-related programs.

GCE opened 2 new sites in the 9 months that ended September 30, 2026, and closed 1 site. We plan to open 4 new sites in 2027, and they will be in Reno, Nevada; Jacksonville, Florida; New Orleans, Louisiana; and Lake Havasu, Arizona. Additional program offerings are being added, including the graduate nursing program with specializations at Northeastern University, which started this past fall, a hybrid occupational therapy bridge to master's program to the already successful St. Catherine's Occupational Therapy Assistant Hybrid Program beginning in the fall of 2026. An online science degree with Utica University and GCU launched a Bachelor's Science in Occupational Therapy Assistant Program and a special language pathology program at its West Valley location.

GCU is also adding a Bachelor's in Medical Laboratory Sciences Program in the fall of 2026. We currently have almost 8,000 students attending our hybrid campuses and the revenue per student is more than 3x that of an online student. To summarize this section, we expect GCU's online campus to grow in 2027 between 5% and 6%, the traditional ground campus to grow over 10% and the hybrid campuses to grow in the low double digits, bringing total enrollment growth to over 7%.

There are a couple of other items I'd like to mention regarding the third quarter. Service revenue was $267.3 million for the third quarter of 2026, an increase of $6.2 million or 2.4% as compared to $261.1 million for the third quarter of 2025. The increase year-over-year in service revenue was primarily due to an increase in university partner enrollments of 5.2%, including an increase in GCU online enrollments of 7.1% and university partner enrollments at the off-campus classroom and laboratory sites, excluding sites in teach-out or closed at 14.1%. This was partially offset by 6 days -- 6 less days of ground traditional revenue at GCU of $7.5 million in the third quarter of 2026 as a result of the shift of 6 days of revenue from the third quarter to the fourth quarter due to the later fall semester start date.

In addition, there was a slight decline year-over-year in revenue per student for online students due to the continued mix shift to students that have a slightly lower net tuition rate, partially offset by service revenue per student for ABSN students at off-campus classroom and laboratory sites, which generate significantly higher revenue per student. Operating income and operating margin for the 3 months ended September 30, 2026, was $51.5 million and 19.3%, respectively, as compared to $18 million and 6.9%, respectively, for the same period in 2025. Operating income and operating margin, excluding amortization, nonrecurring costs and fixed asset disposals was at $54.7 million and 20.5%, respectively, for the 3 months ended September 30, 2026.

Net income was $43 million for the third quarter of 2026. GAAP diluted income per share for the 3 months ended in September 30, 2026, is $1.67. 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 3 months ended September 30, 2026, and '25. 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 3 months ended September 30, 2026, and 2025 was $1.77 and $1.78, respectively, which is $0.01 above consensus estimates.

Last, I would like to provide color on the guidance we have provided in our 8-K filed today. As a reminder, the guidance that we have provided in the outlook section of our 8-K filed today is GAAP net income and diluted income per share with the components to adjust the GAAP amounts to non-GAAP as adjusted net income and non-GAAP as adjusted diluted income per share. We have updated full 2026 guidance to include the third quarter actual revenue and earnings metrics. We have narrowed the range in the fourth quarter to reflect current trends. The third quarter 2026 GCU online new start growth was lower than our expectations, but we expect new online enrollments to return to mid-single-digit growth in the fourth quarter of 2026.

Total online enrollment growth remains resilient due to continued retention improvements despite pressure from increasing graduations and a continued decline in reentries. We continue to anticipate online revenue per student will be slightly down year-over-year due to the mix shift to programs that have slightly lower net tuition rates. The revenue range has been lowered to reflect the actual GCU fall enrollments and the online flat new enrollments in the third quarter because of the tough comps. Online new enrollments will accelerate in the fourth quarter and total company enrollments will start to recover. A complete return to 7-plus percent enrollment increases will take place when the ground is reignited to a 10% increase in the fall of 2027.

On the expense side, we have lowered the projected operating margin due to the lower ground enrollment expectations. We continue to make investments to support university partners' growth goals and anticipate margins to be flat in 2026. As has been previously discussed, the online programs primarily that lead to licensure in which GCU is growing at an accelerated rate, either cost us more to service than the traditional online programs or at lower net tuition rates, which puts some pressure on margins. As it relates to the hybrid pillar, we will incur additional costs for the new hybrid locations that will open in early 2027, but we are experiencing increased site-level profitability due to increased enrollments.

We are estimating that interest income will decline year-over-year in 2026 due to the decline in cash balances due to more aggressive stock buybacks. Our guidance does not assume any drawing on the line of credit in quarter 4. As a reminder, effective July 1, 2026, we entered into an amended and restated master services agreement with GCU, which restructures the services fees such that going forward, service fees are calculated at 60% of tuition and academic-related fees only, ancillary fees and other revenue are for the sole benefit of GCU and a reimbursement payment that the company had been making to GCU in respect of certain academic-related costs is eliminated, and in lieu of the prior nonrenewal fee that was due if GCU did not renew the MSA at the end of the term, the company would continue to provide services to and receive service fees from GCU for an 18-month period following termination.

As previously disclosed, the company estimates that under the amended MSA, its operating income will decline by an immaterial amount due to the elimination of the academic reimbursement payment. In addition, we entered into a 5-year $100 million revolving credit facility agreement. The company intends to use borrowings under the revolving credit facility primarily to fund repurchases of its common stock under its Board-approved stock repurchase program as well as other general corporate purposes. Refer to our 8-K dated October 1, 2026, for additional details about the credit agreement.

In the third quarter of 2026, we continued to aggressively buy back our stock as we believe it remained undervalued. We repurchased 504,708 shares of our common stock at approximately $75.1 million and another 225,770 shares were repurchased since September 30, 2026, bringing the total repurchase year-to-date 1,926,375 shares for $306.4 million. This is a significant portion of the company's 2026 projected cash flow from operations and is greater than historical repurchases in each of the past 3 years.

We have $393 million (sic) [ $394.5 million ] remaining available as of today under our share repurchase authorization, which includes the increased authorization by the Board in October 2026 of $355 million. The company will evaluate if we believe our stock remains undervalued and determine the best use of our liquidity and cash flow.

I will now turn the call over to the moderator so we can answer questions. Thank you for attendance.

Operator

Our first question for today comes from the line of Jasper Bibb from Truist.

질의응답

Jasper Bibb

Just on the new enrollment online in the third quarter. I know you said it ended up being flat. I think you're kind of thinking more mid- to high single digits last quarter. Can you just frame kind of what the gap ended up being there and then why you're confident in getting back to mid-single-digit start growth in 4Q and 2027?

Brian Mueller

Yes. It was a little bit under what we thought, but the lead generation is very strong. We started spending more in June, July and August, and those leads are now starting to convert. And so we were a little bit behind what we thought in terms of converting those leads, but it looks very strong for October, November and December.

And so we're predicting based upon where we are right now, mid-single-digit new online growth in the fourth quarter, and that could get us -- that should get us back to 6% to 7% total online growth for the fourth quarter. And so a little bit late, but in terms of the overall quality and quantity of the leads and the conversion rates, it looks very good. It's not really off of what we originally projected. It's just a little bit later.

Jasper Bibb

Okay. That makes sense. I know GCU put out some of their own numbers in August. It just kind of seemed like the online enrollment you could back into from those was maybe a little bit stronger than things ended up being. I guess, I'm wondering if through the quarter, you had a little bit of a better July and August and September is a little bit weaker. I guess, I'm just kind of trying to understand if there was a difference in the month as you kind of work through the quarter.

Brian Mueller

No, it didn't come out exactly on a month-by-month basis as we originally predicted, but the overall number is going to be about the same as what we predicted. And so it's just a little bit later. I don't think the concern should not be about online enrollments. We're doing -- our outside counselors are really keeping things strong. We're making adjustments. We've kind of flattened out from a lead generation from a web leads perspective. Everybody has been talking about how that's dropping because people aren't going to your website to hear what you say about yourself. But that's flattened out now. That's bottomed out and it's pretty steady.

We know what to expect from a month-to-month basis. We're working really hard with Meta and with other AI companies. And we're starting to -- we're not going to talk a lot about exactly what we're doing because I think it's pretty creative. And we are starting to understand what the future is going to be. But the interest, especially in the programs we're advertising for, is very strong. And so where we're going to end up the year is pretty close to what we originally thought. It's just coming a little bit later, but we do expect a strong fourth quarter.

Jasper Bibb

Okay. No, that makes sense. Maybe last one for me. The marketing kind of expense growth outpaced revenue a little bit this quarter. Was that a timing thing? Could you maybe talk about what you're seeing in cost of acquisition and any color on how that's trending?

Brian Mueller

Yes. The cost per acquisition is holding real steady. We are putting more into advertising, understanding that the new world is taking time, but we feel like we're out in front of it as compared to most other people that are trying to make this adjustment, and we're starting to understand what the future is going to be. So we're excited, and we feel good about that. And we're doing more with less from an enrollment counselor standpoint. And so we're not hiring as rapidly as we would have in the past. And so we're saving money on the enrollment counselor salary side. We're spending more on the advertising side.

The lead generation is strong. And we think that we understand the future, and we're really excited about 2027. If we can do what we believe we can do from an online standpoint and have for 18 years, and we continue to do what we're doing from a hybrid perspective, which that's on a very strong path, it's the ground campus. And the ground campus is interesting because, yes, it's true. We've been basically flat for 3 years. But in this environment, if you're flat, you're good, especially if you don't go downmarket to get students, and we have not done that.

The average incoming GPAs of our ground campus students are actually continuing to go up. Our Honors college gets stronger. And so those 4 strategies that we talked about are strategies that are all additive. Not being on the Common App was -- we didn't understand how big a limitation that was, I don't think. Just in the September and October alone, we've got 5,600 -- over 5,600 applications that have come directly from the Common App. We have had no contact with over 4,000 of that 5,600. And so those are people that went out there to the Common App to apply to colleges and put in their qualifications. They took a look at Grand Canyon University, our tuition rate, got interested and applied.

And so that is a significant amount of activity. The greater amount of activity is going to happen in January and February. And so that combined with the construction school, which is all additive. And then the numbers I gave for the law school were very conservative. They were very conservative. The -- we're very excited about that for a lot of reasons. But the Arizona Supreme Court, that meeting was particularly surprising because they were -- they have been so impressed with what GCU has done in this marketplace the last 18 years, quality of what we've produced, that they took an unprecedented move by approving us and allowing our grads who passed the bar examination in Arizona to immediately begin practicing without completing the ABA approval process, which we will. That was a stamp of approval that really was encouraging and exciting for us.

I think we'll actually start more than 100 JD students in the fall. And we've got a pretty strict line from an admissions requirement perspective. We're not going to go under -- the data around law schools are really tested. You go below a certain pre-law examination score and the chances for success are very low. And first-time pass rates on that bar examination is something we're really gearing towards having 100% rate at that. And so I think we'll start more JD students than 100. The master's degrees in legal studies are really interesting. They are 30-credit programs. They're around $30,000 a program. They're about a year, but so many of our students are graduating in 3 years that a lot of students, for example, in our fast-growing real estate program at the baccalaureate level in our business school.

We have a 30-credit-hour master's in legal studies, real estate law program that a lot of students are interested in to round out their real estate education. And we think we can add a great deal more than the 100 students that we're projecting in that area. And then the pre-law program, that's probably a conservative estimate, too, because we're going to be offering a 3 plus 2 program and giving students a chance to complete their law degree in 5 years, starting from scratch. And so that thing could be bigger than we're projecting. And then the Honors College, the building is spectacular, and it's going to be a big draw.

And so if we can get 10% growth on our ground campus and do what we're saying in the other 2, it's going to complete -- it's going to very significantly change our financial outlook going forward. And all 4 of those strategies are not strategies that are onetime wonders. Those are all -- law school could grow to between 2,000 and 3,000 students. The Honors College is going to grow to 7,000-plus students. The construction school, I think, will grow to possibly 10,000 students over 6 or 7 years. And so those are -- the numbers we're quoting there for the ground campus are all beginning numbers with significant growth potential that would really change the financial outlook of GCE significantly. So I hope that helps in terms of 2027. Look, we'll be giving guidance, obviously, early in the year, official guidance, but I wanted to give a little bit of a look in terms of that 7% number.

It looks like we have reached the end of our third quarter conference call. We appreciate your time and interest in Grand Canyon Education. If you still have questions, please contact Jacob Lambert. Thank you very much for your attendance.

Operator

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.