Skip to content
    CCL
    Earnings call· May 2025(Q2 FY25)

    Carnival Corp Q2 FY25 earnings call CCL

    Jun 24, 2025 Source

    Executive summary

    Carnival Q2 FY25 — Record Yields and Early Achievement of 2026 Targets

    Carnival delivered exceptional Q2 FY25 results, achieving record revenues and yields, and surpassing its 2026 EBITDA per ALBD, ROIC, and carbon intensity targets 18 months early. The company raised full-year guidance, driven by strong close-in demand and operational efficiency, despite geopolitical volatility. Strategic investments in private destinations and fleet enhancements are expected to drive future growth, while a new loyalty program aims to boost customer engagement.

    Highlights

    5

    • Achieved record revenues and yields for 8 consecutive quarters, with Q2 FY25 EBITDA up 26% YoY and operating income up 67% YoY.

    • Net income exceeded guidance by $185 million, driven by 6.4% yield growth (200 bps above guidance) and 200 bps better unit costs.

    • Met and exceeded 2026 targets for 50% EBITDA per ALBD growth and 12% ROIC 18 months ahead of schedule, reaching 52% and 12.5% respectively.

    • Reduced carbon intensity by 20% compared to 2019, also meeting the 2026 target ahead of schedule.

    • Customer deposits reached an all-time high, up over $250 million versus prior year.

    Concerns

    4

    • Escalation of Middle East conflict poses potential future business impact, actively monitoring the situation.

    • Full-year yield guidance tempered by 0.1 point due to seasonality and late opening of additional Q4 voyages.

    • Q3 FY25 cruise costs without fuel per ALBD expected to be up 7% YoY, driven by Celebration Key launch, one-time 2024 benefits, higher advertising, and lower capacity.

    • New Carnival Rewards loyalty program expected to impact yields by approximately 0.5 point in 2026 and slightly less in 2027 due to revenue deferral.

    Guidance & targets

    7
    CategoryTargetConfidence
    Full-year yield growth
    5%
    high materiality
    High
    Full-year cruise costs without fuel per ALBD growth
    3.6%
    medium materiality
    High
    Full-year Adjusted EBITDA
    $6.9 billion
    high materiality
    High
    Q3 cruise costs without fuel per ALBD growth
    7%
    medium materiality
    High
    Loyalty program yield impact
    approximately 0.5 point negative
    medium materiality
    High
    Loyalty program yield impact
    a bit less than 0.5 point negative
    medium materiality
    High
    Loyalty program yield impact
    neutral
    medium materiality
    High

    Operational metrics

    27
    Net income outperformance vs. guidance
    $185 millionbetter than guidance
    Q2 FY25

    as we outperformed across the board.

    Revenue outperformance vs. guidance
    $84 millionfavorability
    Q2 FY25

    as yields came in up over 6.4% compared to the prior year, and that was on top of last year's robust 12% increase. This was 200 basis points better than March guidance.

    Yield growth
    6.4%YoY
    Q2 FY25

    200 basis points better than March guidance, driven by close-in strength in ticket prices and continued strong onboard spending.

    Cruise costs without fuel per ALBD outperformance vs. guidance
    $56 millionfavorability
    Q2 FY25

    200 basis points better than March guidance, driven by the timing of expenses between the quarter.

    Fuel consumption and mix favorability
    $18 millionfavorability
    Q2 FY25

    as our efforts and investments to continuously improve the energy efficiency of our operations, leveraging technology and best practices paid off once again.

    Interest income and expense favorability
    $8 millionfavorability
    Q2 FY25

    driven by higher interest income and an opportunistic debt prepayment.

    Currency and fuel price net impact
    $15 millionfavorable
    Q2 FY25
    Customer deposits
    all-time highup over $250 million vs prior year
    Q2 FY25 end

    despite the impact from our third quarter capacity decline of 2.4%.

    EBITDA growth
    26%YoY
    Q2 FY25
    Operating income growth
    67%YoY
    Q2 FY25
    Net income growth
    more than tripledYoY
    Q2 FY25
    EBITDA margin vs 2019
    200 bps highervs 2019
    Q2 FY25

    Last quarter, EBITDA margins were 140 basis points above 2019.

    EBITDA per ALBD growth vs 2023 baseline
    52%above 2023 baseline
    TTM

    Met 2026 target 18 months ahead of schedule.

    Return on Invested Capital (ROIC)
    12.5%surpassed 12%
    TTM

    Met 2026 target 18 months ahead of schedule, more than doubling in less than 2 years.

    Carbon intensity reduction
    20%
    vs 2019

    Met 2026 target ahead of schedule.

    Full year revenue increase vs. March guidance
    over $100 millionincrease
    FY25

    included flow-through of Q2 favorability and additional Q4 voyages.

    Full year capacity growth
    1%YoY
    FY25
    Q3 cruise costs without fuel per ALBD increase drivers
    7%YoY
    Q3 FY25

    Four factors driving nearly half the year-over-year increase.

    Debt prepayment
    $350 millionprepaid
    Q2 FY25

    of $1.4 billion notes due 2026.

    Debt refinancing
    $1.05 billionrefinanced
    Q2 FY25

    remainder of $1.4 billion notes due 2026 with senior unsecured notes due 2031.

    Net interest expense reduction from refinancing
    over $20 millionreduction
    through early 2026
    Euro-denominated floating rate loan upsize
    EUR 300 millionupsized from EUR 200 million
    Q2 FY25

    extending maturity and amending margin at favorable rate, all-in interest rate less than 4%.

    Net debt-to-EBITDA ratio
    3.7xdown from 4.1x at Q1 FY25 end
    Q2 FY25 end
    Revolver capacity
    $4.5 billionupsized by 50%
    Q2 FY25

    on more favorable terms, meaningfully enhancing liquidity.

    AIDAdiva take-up for venues
    huge
    post-revamp

    for its many added bar and specialty dining venues and rave reviews for its ship-wide enhancements.

    RelaxAway output capacity
    double and morevs 900,000 visitors currently
    post-expansion

    will be able to berth 2 ships and still tender in existing location.

    Onboard prebooked percentage
    more or less the samevs ~35% a year ago
    current

    a little bit higher.

    Industry KPIs

    3
    MetricValueDetails
    Comparable sales comps6.4%%
    Booked position booking windowin line with last year's record levels
    Net unit growth development pipeline—

    Orderbook & backlog

    2
    Booked position for 202593%Q2 FY25
    Booked position for 2026in line with last year's record levelsQ2 FY25

    at historically high prices.

    Product announcements

    7
    ProductTypeDetails
    Celebration Keylaunch
    RelaxAway, Half Moon Cay expansionexpansion
    Isla Tropicale (Mahogany Bay, Roatan, Honduras)update
    AIDA newbuildslaunch
    Carnival Festivale and Carnival Tropicale (Excel class ships)launch
    Star Princesslaunch
    Carnival Rewards loyalty programlaunch

    Deals & partnerships

    1
    Other partiesSale of Costa Fortuna cruise shipnicely over book value

    part of normal course of fleet revitalization; does not impact Costa's capacity in main European markets as a slightly bigger ship will be moved back to Europe.

    Risks & headwinds

    3
    Middle East conflict escalationcoming days and weeks

    not yet had any discernible impact on our business

    Mitigation: actively monitor the situation to evaluate its potential effects; mitigation plans in place for potential itinerary impacts for ships based out of Dubai at end of year/early 2026.

    Macroeconomic and geopolitical turbulenceFY25

    tempered the full year positive yield impact by approximately 0.1 point

    Mitigation: well positioned and clearly we will do our best to meet or exceed guidance.

    Volatility in booking demandQ2 FY25

    saw more volatility in the month of April

    Mitigation: don't have to panic and we don't have to do silly things; teams are managing the curve and trying to do the right things and staying ahead of the game.

    What to watch in Q3 FY25

    5

    Middle East conflict impact on itineraries

    end of this year and for the winter few months into 2026
    Currentnot yet had any discernible impact
    Targetclarity on itinerary changes for ships based out of Dubai

    Why it matters

    Geopolitical events can significantly disrupt cruise operations and booking patterns, especially for specific regions.

    While we certainly hope for a quick and peaceful resolution and it has not yet had any discernible impact on our business, this is all unfolding too quickly in real time to try to project how it could impact our future business.

    Q&A highlights

    8

    How product/experience improvements drive pricing/onboard spend, and the potential from new initiatives like Celebration Key and loyalty.

    Management attributes current success to continuous, incremental improvements in onboard experience tailored to brands. Views new initiatives like Celebration Key and RelaxAway expansion as "early innings" opportunities, with Celebration Key already seeing a premium.

    “We're still in the early innings, right? Celebration Key doesn't exist yet. We have another month before that happens.”

    asked by Matthew Boss · answered by Josh Weinstein

    2 min read6 chapters

    Detailed Narrative

    01

    Q2 Outperformance Drivers

    Carnival's net income exceeded guidance by $185 million, primarily driven by $84 million favorability in revenue due to 6.4% yield growth (200 bps above guidance) and strong close-in demand. Additionally, cruise costs without fuel per ALBD were 200 bps better than guidance, contributing $56 million, alongside $18 million from fuel efficiency, $8 million from interest income/debt prepayment, and $15 million from currency/fuel price favorability.

    02

    Achievement of 2026 Targets

    The company met and exceeded its 2026 targets for 50% EBITDA per ALBD growth and 12% ROIC 18 months ahead of schedule, reaching 52% and 12.5% respectively. Furthermore, the target to reduce carbon intensity by 20% compared to 2019 was also achieved early. Management anticipates setting new, higher targets in early Q2 next year.

    03

    Strategic Destination Investments

    Carnival is enhancing its private destinations, with Celebration Key opening in July 2025, featuring the Caribbean's largest lagoons and swim-up bar. RelaxAway (Half Moon Cay) is undergoing a significant expansion for mid-2026, and Mahogany Bay (Roatan, Honduras) is being upgraded and renamed Isla Tropicale. These "Paradise Collection" gems are central to the destination strategy, aiming to monetize strategic assets and drive consumer consideration against land-based alternatives.

    04

    Fleet Modernization and Newbuilds

    The AIDAdiva recently reentered service after the AIDA Evolution upgrade, exceeding expectations. Two newbuilds for AIDA are ordered for 2030 and 2032, reinforcing the strategy to rebalance towards higher-returning brands. Carnival Cruise Line will introduce new features for its Excel class ships (2027, 2028), including a family-friendly water park. Star Princess, sister ship to Sun Princess, is also nearing delivery. The company emphasizes a moderate newbuild pipeline of 3 ships over the next 4 years, allowing for debt reduction and shareholder value return.

    05

    New Loyalty Program - Carnival Rewards

    Carnival Cruise Line will launch an improved loyalty program in June 2026, tying benefits to total spending on Carnival and co-branded credit card purchases, rather than just sea days. While expected to be cash flow positive from day one, it will initially impact yields due to revenue deferral, becoming accretive after approximately two years. The program aims to improve customer engagement and increase lifetime value.

    06

    Financial Fortress Rebuilding

    Carnival prepaid $350 million of 2026 notes and refinanced the remainder to 2031, reducing net interest expense by over $20 million. The company upsized its euro-denominated floating rate loan to EUR 300 million at a favorable rate. Net debt-to-EBITDA improved from 4.1x to 3.7x in Q2. Revolver capacity was extended and upsized by 50% to $4.5 billion, enhancing liquidity and supporting accelerated debt reduction efforts.

    AI-generated summary of the company’s earnings call. Not investment advice.