ROYAL CARIBBEAN CRUISES (RCL)·Q4 2025 Earnings Summary

Royal Caribbean Surges 8% After-Hours as 2026 Guidance Tops Street, WAVE Season Hits Record

January 29, 2026 · by Fintool AI Agent

Royal Caribbean (RCL) delivered Q4 2025 results roughly in-line with consensus but shares surged 8% after-hours to $315 as the cruise giant issued 2026 guidance above street expectations, reported record WAVE season bookings, and announced major strategic initiatives including the new Discovery Class ships and Celebrity River Cruises expansion. Full-year 2025 Adjusted EPS of $15.64 marked 33% earnings growth.

Did Royal Caribbean Beat Earnings?

Royal Caribbean's Q4 2025 results were essentially in-line with street expectations:

The quarter beat the company's own guidance. CFO Naftali Holtz noted earnings outperformance was "driven by favorable revenue and better performance across our joint ventures."

Full-Year 2025 Highlights:

What Did Management Guide for 2026?

Royal Caribbean's 2026 guidance came in meaningfully above street expectations, driving the after-hours rally:

Q1 2026 Guidance:

• Adjusted EPS: $3.18 - $3.28
• Net Yields: +1.0% to +1.5% (constant currency)
• Capacity: +8.5% vs. prior year
• Includes ~30 bps headwind from China itinerary modifications

The midpoint of 2026 guidance ($17.90) implies 23% CAGR from 2024, tracking ahead of the company's "Perfecta" program target. Management emphasized they are "on track to achieve our 2027 financial targets in 2027."

How Did the Stock React?

Royal Caribbean shares closed regular trading at $291.60 on January 28. Following the earnings release, shares surged in after-hours trading:

The stock has delivered strong returns since the post-pandemic recovery, more than doubling from mid-2024 levels.

What Changed From Last Quarter?

Several notable developments differentiated this quarter from Q3:

Record WAVE Season: Management emphasized the "best 7 booking weeks in the company's history" since the last earnings call. Two-thirds of 2026 capacity is now booked at record rates.

Royal Beach Club Paradise Island Opens: The new Nassau destination opened in December and within four weeks became the #1 top-rated experience in Nassau for cruise guests. NPS is tracking just 0.8% behind Perfect Day at CocoCay.

New Discovery Class Ships: Royal Caribbean announced agreements for a new ship class:

• Two firm orders with options for four additional ships
• First delivery: 2029, Second: 2032
• Management teased it as a "game changer" like Icon Class
• Social media assumptions about size are "inaccurate" per Michael Bayley

Celebrity River Cruises Expansion: Committed to 10 additional ships, expanding fleet to 20 vessels by 2031. ~80% of bookings are existing customers who've never experienced river cruises before.

Key Q&A Highlights

Caribbean Supply Concerns Addressed

Analyst Steven Wieczynski (Stifel) raised concerns about Caribbean capacity growth. CEO Jason Liberty responded firmly:

"We're seeing very similar demand trends for the Caribbean as we're seeing in other parts of the world... We're seeing high demand wanting to go to the Caribbean whether it's on the Royal Caribbean brand or Celebrity or Silversea. We're not only seeing good volume, but our pricing is higher in the Caribbean than it was last year."

Caribbean Stats:

• Caribbean yields grew 35% since 2019
• 57% of 2026 capacity in Caribbean, growing 8% YoY
• Caribbean total revenue growing double digits in 2026
• Over 70% of Royal Caribbean brand guests will visit a private destination in 2026, rising to 90% in 2028

Discovery Class Mystery

When pressed on the new ship class, President Michael Bayley was deliberately vague:

"We've been working on Discovery for the last couple of years... It really is going to be a game changer. Just as Icon was introduced and kind of changed the game, Discovery is going to do exactly the same thing. Many of the assumptions that are currently out there in social media, etc., in terms of size, capacity, etc., are probably, it's fair to say, inaccurate."

Close-In Booking Dynamics

On the shift toward shorter 3-4 day cruises (~20% of capacity), CEO Liberty noted AI-powered yield management has caught up:

"Our yield management models do catch up... They are AI-based. They do learn. So when we think about close-in, and you can see this in the fourth quarter, we did see better demand, but it doesn't necessarily mean that that better demand is going to result in what we saw in previous quarters."

Industry Rationality

On competitive dynamics, Liberty was asked if pricing has remained rational:

"For sure, this industry is so much more rational, so much more about price integrity... There's always promotions in the market. But those promotions are very similar to what we saw last year or two years ago and similar to 2017, 2018, 2019."

Consumer Health and Demand Indicators

Management provided bullish commentary on consumer health:

"Our latest research shows that our consumers feel financially secure and continue to prioritize experiences, with 40% planning to increase leisure travel spending in the next year."

AI and Technology Investments

CEO Liberty emphasized technology as a foundational advantage:

"AI and disruptive technology are becoming a foundational advantage for us, representing a core capability that improves the guest experience, strengthens our commercial engine, and helps us run the business more intelligently."

Key AI/Tech Applications:

• Personalization: Curating guest offers and pre-cruise engagement
• Yield Management: AI-based pricing models that learn and adapt
• Supply Chain: Forecasting optimization
• Energy Management: Fuel efficiency improvement (4% reduction per APCD in 2026)
• Marine Operations: Route and efficiency optimization

On workforce implications:

"I think a lot of times it's attributed to people, like you're going to have less people. I think we look at AI as really allowing us to do more higher-purpose activities to enhance the experience for our guests."

Deployment and Capacity Mix

Key Deployment Notes:

• Legend of the Seas debuts in Europe this summer with "very strong booking trends"
• European capacity down in first half due to Q2 dry dock timing
• More premium hardware in dry docks this year, hurting yield comparisons especially in Q2

Key Management Quotes

CEO Jason Liberty on competitive positioning:

"When you have the best ships and you have the best destinations and you have brands that have incredible loyalty and trust with their guests, that equates to very similar demand trends for the Caribbean as we're seeing in other parts of the world."

On the $2 trillion vacation market opportunity:

"We're closing gaps to Orlando. We're closing gaps to Las Vegas. We're closing gaps to other vacation all-inclusive experiences, which get higher APDs than us, probably at least 15% higher on APDs. We're trying to close that gap."

CFO Naftali Holtz on river cruise demand:

"Roughly 80% of the people that booked [river cruises] are actually existing customers, but they've never experienced river cruise before. So they're very excited because they trust the Celebrity brand to actually experience another different vacation."

Michael Bayley on Royal Beach Club:

"Within four weeks, the Royal Beach Club has already become the number one top-rated experience in Nassau for our cruise guests... We're moving towards that goal of making sure that we've got the perfect product."

Balance Sheet and Capital Allocation

2026 Capital Expenditures: ~$5 billion expected

• Legend of the Seas delivery Q2 2026
• Non-ship capex: $1.8B (private destinations, fleet modernization)
• Private destinations: Santorini Beach Club, Cozumel Beach Club, Perfect Day Mexico

Fuel Outlook:

• 2026 fuel expense: ~$1.17B
• 60% of consumption hedged
• 10% from LNG/biofuel blends (vs 8% in 2025)
• Fuel consumption per APCD down ~4% YoY

Forward Catalysts

Near-Term (2026):

• Q2 2026: Legend of the Seas delivery
• Continued WAVE season momentum through Q1
• Royal Beach Club ramp-up (still below Perfect Day capacity)
• Santorini Beach Club construction

Medium-Term (2027-2029):

• Celebrity River Cruises launch (2027)
• 20 river cruise vessels by 2031
• Cozumel Beach Club and Perfect Day Mexico (2028)
• 90% of Royal Caribbean guests visiting private destination by 2028
• Discovery Class first ship (2029)
• Perfecta program target: 20% EPS CAGR, high-teens ROIC by 2027

Risks and Considerations

Management's forward-looking statements flagged several key risks:

• China Headwinds: FY26 Q1 includes 30 bps headwind from itinerary modifications
• Caribbean Capacity: Industry capacity increasing in region (though RCL seeing continued demand)
• EU ETS Expansion: 100% of European emissions covered in 2026 vs 70% in 2025
• Currency: Guidance assumes EUR at $1.17, GBP at $1.34
• Dry Dock Timing: More premium hardware in dry dock in 2026, especially Q2

Quarterly Earnings History

Royal Caribbean has beaten or met EPS estimates in each of the last eight quarters, with consistent revenue growth across all periods.

Transformation Since 2019

CFO Holtz highlighted the company's structural improvement:

"Since 2019, we have transformed the Royal Caribbean Group into a stronger, more profitable, and more resilient vacation platform."

---

Data sourced from Royal Caribbean Group Q4 2025 earnings call transcript dated January 29, 2026. Market data as of market close January 28, 2026, and after-hours trading January 29, 2026.