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ROYAL CARIBBEAN CRUISES LTD (RCL)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered adjusted EPS of $5.75, above guidance and consensus, driven by stronger close‑in demand and lower costs; total revenue was $5.139B and adjusted EBITDA $2.293B . Versus consensus, EPS beat while revenue and EBITDA were modest misses*.
  • Full‑year 2025 adjusted EPS guidance was raised to $15.58–$15.63 (≈32% YoY) and Q4 adjusted EPS guided to $2.74–$2.79; net yields +3.5%–4.0% FY and +2.2%–2.7% (constant currency) in Q4 .
  • Operational KPIs remained strong: load factor 112.1%, passengers carried 2.466M, net yields rose to $301.58 per APCD; ~50% of onboard revenue booked pre‑cruise and ~90% of pre‑cruise purchases via digital channels .
  • Strategic catalysts: launch of Royal Beach Club Santorini for summer 2026, bond issuance to finance Celebrity Xcel at lower cost, dividend raised to $1.00 and ongoing buybacks; ratings actions (Fitch upgrade to BBB, S&P outlook to Positive) enhance balance‑sheet narrative .

What Went Well and What Went Wrong

What Went Well

  • Stronger than expected close‑in demand and disciplined cost execution drove an EPS beat; NCC ex‑fuel growth was ~200 bps below Q3 guidance .
  • Digital and AI commercialization accelerated: ~50% of onboard revenue booked pre‑cruise, ~90% via digital channels; CEO highlighted technology and AI enhancing every step of the guest journey .
  • Strategic expansion: announced Royal Beach Club Santorini (opening 2026) and reiterated destination pipeline to extend land‑based offerings from two to eight by 2028 .

Quote: “Our commercial flywheel…continues to drive sustained growth…We expect 2026 earnings per share to have a $17 handle” — Jason Liberty (CEO) .

What Went Wrong

  • Minor Q4 headwinds from weather events and extended Labadee closure; Q4 yield growth trimmed by timing of new deliveries and fewer drydock days (~90 bps impact) .
  • Modest revenue and EBITDA misses versus consensus in Q3 despite EPS beat*.
  • Caribbean saw more promotional activity industry‑wide given supply increases; RCL mitigated via differentiated assets and destinations but acknowledged market dynamics .

Financial Results

Income Statement and Profitability (USD, periods oldest → newest)

MetricQ1 2025Q2 2025Q3 2025
Total Revenues ($B)$3.999 $4.538 $5.139
Passenger Ticket Revenues ($B)$2.744 $3.199 $3.637
Onboard & Other Revenues ($B)$1.255 $1.339 $1.502
Operating Income ($B)$0.945 $1.329 $1.702
Net Income attributable to RCL ($B)$0.730 $1.210 $1.575
Diluted EPS ($)$2.70 $4.41 $5.74
Adjusted Diluted EPS ($)$2.71 $4.38 $5.75
Adjusted EBITDA ($B)$1.402 $1.851 $2.293
Adjusted EBITDA Margin (%)35.1% 40.8% 44.6%

Yields, Costs and KPIs

MetricQ1 2025Q2 2025Q3 2025
Gross Margin Yield ($/APCD)$119.09 $142.00 $162.39
Net Yield ($/APCD)$258.83 $283.56 $301.58
Gross Cruise Costs per APCD ($)$208.68 $215.68 $219.09
NCC per APCD ($)$151.44 $148.34 $145.44
NCC ex‑Fuel per APCD ($)$129.54 $126.76 $123.75
Load Factor (Occupancy, %)108.8% 110.3% 112.1%
APCD (Millions)12.658 12.942 13.699
Passenger Cruise Days (Millions)13.768 14.278 15.356
Passengers Carried (Millions)2.242 2.254 2.466

Revenue Mix

MetricQ1 2025Q2 2025Q3 2025
Passenger Ticket (% of Revenue)68.6% 70.5% 70.8%
Onboard & Other (% of Revenue)31.4% 29.5% 29.2%

Actuals vs Wall Street Consensus (S&P Global)*

MetricQ1 2025 EstimateQ1 ActualQ2 2025 EstimateQ2 ActualQ3 2025 EstimateQ3 Actual
Revenue ($B)$4.016*$3.999 $4.549*$4.538 $5.168*$5.139
Primary EPS ($)$2.53*$2.71 $4.08*$4.38 $5.68*$5.75
EBITDA ($B)$1.332*$1.405 $1.744*$1.860 $2.200*$2.289

*Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EPSFY 2025$15.41–$15.55 (Q2 update) $15.58–$15.63 Raised
Adjusted EPSQ4 2025N/A$2.74–$2.79 New
Net Yields (as‑reported)FY 2025+3.5%–4.0% +3.5%–4.0% Maintained
NCC ex‑Fuel per APCD (as‑reported)FY 2025≈+0.5% ≈+0.1% (as‑reported); ≈(0.1%) CC Lowered (better)
Net Yields (as‑reported)Q4 2025N/A+2.6%–3.1% (as‑reported); +2.2%–2.7% CC New
NCC ex‑Fuel per APCDQ4 2025N/A(6.2%)–(5.7%) (as‑reported); (6.6%)–(6.1%) CC New
APCDsQ4 2025N/A14.0M New
Capacity Change vs 2024Q4 2025N/A+10.3% New
D&A ExpenseQ4 2025$425–$435M (Q3 guide for Q3) $445–$455M Raised
Net Interest (ex loss on extinguishment)FY 2025$930–$940M $945–$955M Raised modestly
Fuel ExpenseQ4 2025$298M (Q3 guide for Q3) $286M New for Q4
Fuel Hedging (forward consumption)FY 202566% 68% Increased

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
AI/Technology & Digital CommerceEmphasis on digital travel platform; strong pre‑cruise purchases; app adoption rising ~90% of pre‑cruise purchases via digital channels; Points Choice loyalty initiative; AI fueling commercial platforms Strengthening commercialization and loyalty integration
Demand/Close‑in Booking BehaviorRecord WAVE; acceleration in close‑in bookings in Q2 Close‑in demand drove Q3 beat; mix shifting with more short‑duration itineraries Persistent close‑in strength
Yield Cadence vs New Hardware & DrydockQ3/Q4 yield headwinds from Star/Xcel timing and drydocks quantified (150–90 bps) Q4 yields +2.2%–2.7% CC with ~90 bps drag reiterated Headwinds well‑telegraphed, managed
Caribbean Supply vs DifferentiationLeading position, Perfect Day/Beach Club pipeline highlighted in Q2 Caribbean more promotional marketwide; RCL leveraging destinations/ecosystem to defend pricing Competitive moat offsets supply
Balance Sheet & Capital ReturnsIG ratings by all 3 agencies; upsized RCF; buybacks; leverage targets $1.5B unsecured notes at 5.375% to finance Celebrity Xcel; dividend raised to $1.00; continued buybacks; Fitch BBB upgrade; S&P Positive outlook Improved cost of capital and shareholder returns
Regulatory/Cost HeadwindsNoted macro/geopolitical uncertainties EU ETS increases to 100% in 2026; global minimum tax adds “couple hundred bps” impact Emerging 2026 cost headwinds

Management Commentary

  • Strategy: “We are focused on building…through innovative ships, a growing portfolio of exclusive destinations, technology, and AI…positioning us to win more share of the fast‑growing $2 trillion vacation market” — Jason Liberty .
  • 2026 Outlook: “While it’s still early…we expect 2026 earnings per share to have a $17 handle” — Jason Liberty .
  • Cost Discipline: “NCC, excluding fuel, increased 4.3% in constant currency, 195 bps lower than our guidance…as we continue to find ways to better deliver the best vacations” — Naftali Holtz .
  • Destinations: Royal Beach Club Santorini announced for summer 2026; pipeline expands land‑based portfolio to eight by 2028 .
  • Financing: “We issued $1.5 billion of investment grade unsecured notes…to finance the delivery of Celebrity Xcel at a lower cost” — Naftali Holtz .

Q&A Highlights

  • 2026 Earnings “17 handle”: Management reiterated moderate yield growth, “anemic” cost growth even with structural costs and destinations ramp; clarified below‑the‑line items (fuel compliance, minimum tax) temper EPS vs >$18 scenarios .
  • Yield Exit Rate: Cleansed Q4 yield math suggests mid‑3% like‑for‑like exit when adjusting for delivery/drydock timing; helpful for 2026 modeling .
  • Caribbean Market: Acknowledged supply increase and more promotions marketwide; RCL’s differentiated ships/destinations sustain pricing power .
  • Financing Mix: Unsecured notes vs ECA trade‑offs: lower cost of capital, longer tenor, different covenants; opportunistic approach for ship deliveries .
  • Loyalty & Product Attach: Points Choice announced; Paradise Island attach rate framed at ~33% of RCL’s Nassau guests at scale; dynamic pricing and strong early demand .

Estimates Context

  • Q3 2025: EPS beat ($5.75 vs $5.68*), revenue slight miss ($5.139B vs $5.168B*), EBITDA beat ($2.289B vs $2.200B*). Q1 and Q2 also showed EPS beats with slight revenue misses*.
  • Implications: Consensus likely lifts FY EPS, with yield cadence and Q4 headwinds already embedded; modest top‑line conservatism may persist given timing effects and macro sensitivities*.

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Earnings quality improving: margin expansion (Adjusted EBITDA margin 44.6% in Q3) and disciplined costs underpin FY EPS raise .
  • Narrative catalysts: destination pipeline (Santorini, Paradise Island), technology/AI commercialization, and loyalty enhancements (Points Choice) support yield and onboard monetization .
  • 2026 setup: Booked APDs at the high end of historical ranges with expected “$17 handle” EPS; watch EU ETS and global minimum tax impacts in 2026 modeling .
  • Caribbean dynamics: Competitive but manageable; RCL’s private destinations and short‑duration itineraries broaden demand and defend pricing .
  • Capital allocation: Investment‑grade issuance at attractive rates, dividend raised to $1.00, continued buybacks; ratings actions support lower cost of capital .
  • Near‑term trading: Q4 guide implies continued profitability despite weather/Labadee impacts; consensus upside risk in EPS, tempered by top‑line timing effects* .
  • Medium‑term thesis: Structural moat via ships/destinations/tech should sustain moderate yield growth and robust cash flow, enabling both growth and shareholder returns .