Q1 2025 Earnings Summary
- Strong booking momentum and onboard spending: Carnival reported record bookings for future years during wave season, entering with historic occupancy and pricing levels, and maintained strong yield guidance for the rest of the year over 4%. The first quarter yielded exceptional results, driven by both close-in demand and tremendous onboard spending, which saw a 10% year-over-year growth, an acceleration from the previous quarter. This strong consumer demand potentially leads to upside in future earnings if current trends continue. , ,
- Outperformance of European brands and diversified global portfolio: The company's European brands are outperforming, continuing a trend over the past six quarters, and contributing significantly to overall growth. This demonstrates the effectiveness of Carnival's diversified portfolio approach and indicates strength across multiple markets. , ,
- Advantageous position with limited capacity growth and strong pricing power: Carnival is in an enviable position with no capacity growth, having only one ship coming this year, none in 2026, and one in 2027. This allows the company to focus on optimizing existing assets, resulting in being better booked than ever before and having the ability to capitalize on demand with enhanced visibility. ,
- Some of Carnival's brands have not yet recovered to 2019 performance levels, indicating potential weaknesses in parts of their portfolio. Josh Weinstein stated that "Our brands are on a spectrum from having recovered past '19 levels to not yet there."
- Carnival's performance is heavily reliant on European markets outperforming North America, which poses a risk if European demand weakens. Josh Weinstein mentioned that "our European brands are outperforming the outperformance we got on this side."
- Management acknowledges that they are not immune to macroeconomic and geopolitical volatility, suggesting potential risks to future performance. Josh Weinstein noted, "I just want to recognize that there's just a lot of volatility in the backdrop, right? And with news cycles comes volatility."
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Net Income | FY 2025 | $2.3B | $2.5B | raised |
Yield Growth | FY 2025 | 4.2% | 4.7% | raised |
Cruise Costs (Excluding Fuel) | FY 2025 | Increase of 3.7% ($0.28 per share) | Increase of 3.8% | raised |
EBITDA (Full-year) | FY 2025 | no prior guidance | $6.7 billion | no prior guidance |
Interest Expense | FY 2025 | no prior guidance | Reduced by $100 million | no prior guidance |
Capacity | FY 2025 | no prior guidance | Expected to remain flat | no prior guidance |
Debt Reduction | FY 2025 | no prior guidance | Reduce debt by nearly $5 billion over 2025 and 2026; $0.5 billion reduction in Q1 2025 | no prior guidance |
EBITDA (Q1) | Q1 2025 | no prior guidance | $1.2 billion, 40% YoY increase | no prior guidance |
Yield Improvement (Q1) | Q1 2025 | no prior guidance | 7.3%, exceeding guidance by 2.7 percentage points | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Strong demand trends | Across Q2, Q3, and Q4 2024, Carnival consistently emphasized record booking levels, advanced booking windows, and robust consumer demand—with mentions of record volumes, higher occupancy, and pricing advantages. | In Q1 2025, the call highlighted record booking levels, historic occupancy and pricing, and exceptionally strong close‐in demand described as “off the charts”. | Continued strength in demand with an added focus on immediate, close‐in bookings and further pricing strength. |
Onboard spending and per diem growth | Q2–Q4 2024 calls consistently referenced onboard spending improvements (6.7–12% increases) and mid-single-digit to double-digit per diem growth, underscoring broad-based enhancements across all categories. | Q1 2025 emphasized a 10% year-over-year onboard spending growth, noting broad-based spending improvements that contributed to yield increases and reinforced full-year guidance. | Consistent improvement with Q1 2025 showing an accelerated spending growth trend, reinforcing robust consumer engagement. |
Yield improvement and pricing power | In Q2–Q4 2024, yield enhancements were highlighted through improvements in ticket prices, occupancy and pricing power, with detailed discussion of yield uplifts ranging from 8.7% in Q3 2024 to full-year improvements and refined pricing strategies. | Q1 2025 reported a 7.3% yield increase driven equally by higher ticket prices and onboard spending, with notable emphasis on record high prices across core programs and strong close-in pricing. | Steady emphasis on yield and pricing, with Q1 2025 reaffirming and deepening the focus on price strength through strong close-in demand. |
Operational improvements and cost efficiencies | Q2–Q4 2024 discussions repeatedly mentioned cost savings from various efficiency initiatives—from identified savings and improved cost structures (up to $100 million in savings) to structural cost reductions and enhanced operational execution. | Q1 2025 noted $65 million in cost favorability, refinancing moves, and stable cruise costs (only 1% increase year-over-year), underscoring the ability to lock in permanent savings despite higher dry dock costs. | Ongoing focus on efficiency with continuous execution of cost-management initiatives, now with more emphasis on refinancing and permanent savings in Q1 2025. |
Debt management and leverage concerns | Q2–Q4 2024 calls detailed active debt reduction, refinancing activities, and improvements in leverage metrics, including significant prepayments and lower interest costs that steadily reduced total debt and improved net debt-to-EBITDA ratios. | In Q1 2025, Carnival refinanced $5.5 billion of debt, reduced total debt further to $27 billion, and highlighted additional annualized interest expense savings, reinforcing their deleveraging focus. | Maintained and intensified focus on deleveraging, with Q1 2025 showcasing continued debt reduction efforts and refinancing successes. |
Investment in new destinations | Q2–Q4 2024 earnings calls detailed the strategic investment in Celebration Key, highlighting development costs, expected ROIC, phased openings, and its role in enhancing guest experiences and generating incremental revenue. | Q1 2025 reiterated that Celebration Key is on track to open in July 2025, emphasized heavy marketing efforts, premium pricing benefits, and projected growth in guest visits by the end of the decade. | Consistent strategic focus with Q1 2025 further emphasizing operational timelines and premium pricing impacts as Celebration Key becomes integral to growth. |
Brand performance and portfolio optimization | In Q2–Q4 2024, Carnival discussed portfolio adjustments, such as folding P&O Australia, brand refurbishment initiatives, and optimization of the brand mix to improve ROIC and drive pricing—along with improvements in onboard spending and record bookings. | Q1 2025 highlighted that European brands are outperforming North American ones and noted an increase in first-time cruisers, underscoring positive portfolio performance and optimized guest mix. | Ongoing portfolio optimization with Q1 2025 placing clearer emphasis on regional performance differences and growing first-time customer rates. |
Competitive pressures | Q2 and Q3 2024 included comments on competitive dynamics—mentioning competitor discounting and small-market challengers—while noting Carnival’s strong brand differentiation and market positioning. | There was no specific mention of competitive pressures or market share challenges in Q1 2025 [Current documents]. | Topic no longer mentioned, suggesting reduced immediate concern or a shift in focus away from competitive pressures. |
Macroeconomic, geopolitical, and inflation risks | In Q3 2024, Carnival addressed these risks by noting global macro conditions, minimal geopolitical impacts (e.g. from Middle East conflicts), and the effects of inflation—with steps taken to offset cost pressures. | In Q1 2025, Carnival acknowledged macroeconomic, geopolitical, and inflation risks but emphasized robust booking pace, resilient consumer behavior, and effective cost management as key buffers. | Stable outlook: The tone remains cautious yet confident, with Q1 2025 reinforcing the ability to manage these risks amidst continued robust performance. |
Limited capacity growth and asset optimization | Throughout Q2–Q4 2024, Carnival underscored flat or limited capacity growth, emphasizing the benefit of focusing on existing assets, organic booking improvements, and portfolio reallocation (e.g. transitioning P&O Australia). | Q1 2025 reiterated an enviable position with flat capacity growth and focused asset optimization, highlighting enhanced revenue growth from same-store performance and an optimal mix of guest types. | Consistent strategy: Maintaining a focus on leveraging existing capacity to drive higher yields, with Q1 2025 further underlining the benefits of flat capacity for pricing power. |
Regional performance differences | In Q2 and Q3 2024, both European and North American markets were analyzed—with European yields, occupancy, and booking curves showing strong recovery; European brands were acknowledged for outpacing their North American counterparts. | Q1 2025 emphasized that European brands are outperforming North American brands, reinforcing the trend of Europe being a primary growth driver with higher yields and occupancy improvements. | Reinforced focus on regional differences: The European market continues to be a standout driver, with Q1 2025 reaffirming its outperformance and strategic significance. |
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Earnings Guidance and Potential Upside
Q: Is there potential upside to your back half guidance?
A: If our onboard spending remains strong and close-in demand continues, there is potential upside to our guidance. The first quarter beat on yields was significant, and we've maintained yield guidance for the rest of the year over 4%. -
Yield Growth and Onboard Spending Trends
Q: How are onboard spending trends impacting your results?
A: Onboard spending grew by 10% year-over-year in the first quarter, an acceleration from the fourth quarter. The onboard spend in the first weeks of March hasn't slowed down, contributing to our strong performance. -
Cost Management and ROIC Targets
Q: What is your outlook on cost savings and ROIC improvements?
A: About one-third of the $65 million cost in the first quarter was permanent cost savings. We're always seeking ongoing savings and feel good about progress on returns, targeting mid-teens ROIC through revenue improvements and strategic investments like Celebration Key and AIDA Evolution. -
Booking Trends and Future Outlook
Q: How are bookings for 2026 and the booking curve shaping up?
A: We have a record book position for 2026 at higher prices, with no major issues across brands. We're about 80% booked for the remainder of this year, exceeding historical ranges, indicating strong demand and visibility into future performance. -
Impact of Macroeconomic Volatility
Q: Has macro volatility impacted booking pace or consumer demand?
A: We've seen ups and downs, but overall bookings are strong. Last week, close-in bookings for the second quarter were off the charts, and onboard spend remains robust. We're not immune to macro factors but feel confident in our guidance. -
Capital Allocation and Debt Reduction
Q: What are your capital allocation priorities beyond debt paydown?
A: Our immediate priority is debt reduction, targeting an additional $5 billion paydown. As we achieve investment-grade metrics by 2026, we'll consider other priorities, including further investments and shareholder returns. -
Sale of Seabourn Ship
Q: What drove the sale of the Seabourn ship at a gain?
A: We received an unsolicited cash offer that was in the best interest of shareholders. While we don't have assets for sale, we'll consider offers that make strategic sense. Seabourn remains a phenomenal brand with a young fleet and strong performance. -
Advertising Spend and Revenue Growth
Q: How is increased marketing spend affecting revenue quality?
A: Our strategic increase in advertising investment is yielding results, with yields up 24% over the last two years. This approach is driving demand without relying on new builds, showing that our brands can generate growth through effective marketing.