LOPE

LOPE is a high-quality, capital-light services business hiding behind a complex GCU relationship. FY2025 delivered $1.11B revenue (+7.1%) on the back of 7.1% partner enrollment growth to 136,239 students, with GCU online enrollments — the core engine — up 8.7% to 107,148. Operating margins held at 24.0% and ROE printed 28.9% on a near-debt-free balance sheet (liabilities/equity 0.33x). Net income dipped 4.4% to $216M, but the MD&A reveals a benign explanation: contract modifications reduced revenue share in exchange for shedding faculty cost reimbursements (margin-neutral to slightly accretive long-term), plus the 2024 leap-day comp ($1.5M) and a slight mix shift to lower-tuition online students. Underlying unit economics remain intact.

Capital allocation is the standout. The company bought back $265M of stock in FY2025 (+52.9% YoY) — roughly 6.7% of the current $3.93B market cap in a single year — shrinking the share count 5.5% to 27.1M. Diluted EPS held essentially flat (-0.3%) despite the net income decline, evidence the buyback is doing real work. Operating cash flow of $273M against just $34.8M capex yields ~$238M of free cash flow, comfortably funding the repurchase program. Cash fell 65.6% to $112M precisely because management is choosing aggressive repurchases over a hoarded balance sheet — a shareholder-friendly choice at 18.8x earnings.