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Earnings call · Aug 2026 (Q3 FY26)

Carnival Corp Q3 FY26 earnings call CCL

Sep 29, 2026 Source

Executive summary

Carnival Q3 FY26 — Record Revenue, Yields, and Customer Deposits Drive Earnings Beat

Carnival delivered a strong Q3 FY26, surpassing earnings guidance with record revenues, yields, and customer deposits, driven by robust demand and operational efficiencies. The company is strategically shifting deployment towards high-opportunity markets like Northern Europe, while continuing to invest in differentiated destinations and fleet modernization. Despite some near-term booking volatility for Q1 FY27 and persistent fuel price headwinds, management remains confident in its PROPEL targets and ability to drive long-term earnings growth and shareholder returns.

Highlights

5

  • Q3 revenues, yields, and reported net income reached new highs, with net income exceeding guidance by over $100 million or $0.08 per share.

  • Customer deposits set a new Q3 record of approximately $7.6 billion, up 7% year-over-year despite flat capacity growth.

  • Yields increased nearly 2.5% year-over-year, 1.2 percentage points better than June guidance, driven by strong close-in demand and robust onboard spending.

  • Fuel consumption came in 3 points better than expected, contributing to a 26% reduction per ALBD since 2019, saving nearly $750 million.

  • Full-year EPS guidance raised to $2.24, up $0.02 from previous guidance, reflecting $150 million operational improvement offsetting higher fuel prices.

Concerns

3

  • Booking disruption experienced in spring extended into Q1 2027, leading to expected accounting-driven yield headwinds of 0.4 points for FY27 due to the new loyalty program.

  • Higher-than-expected inflation continued to pressure unit costs, though partially offset by efficiency gains.

  • Fuel prices remained volatile, with a $0.11 per share headwind for full-year EPS, despite significant consumption reductions.

Guidance & targets

CategoryTargetConfidence
Q4 FY26 Yields
up approximately 1.7%
high materiality
High
Q4 FY26 Normalized Yields
up approximately 2.3%
high materiality
High
FY26 Cruise costs, excluding fuel per ALBD
up approximately 2.2%
high materiality
High
FY26 Normalized adjusted cruise costs, excluding fuel per ALBD
up approximately 1.1%
high materiality
High
FY26 EPS
$2.24
high materiality
High
FY27 Capacity Increase
0.5%
medium materiality
High
FY27 Booked Position
half booked with higher occupancy and pricing at record levels
high materiality
High
FY27 Loyalty Program Yield Headwind
additional 0.4 point impact
medium materiality
High
FY28 Booked Position
off to an excellent start at higher occupancy and even higher prices year-over-year
high materiality
High
FY29 EPS Target (PROPEL)
$3.50 per share
high materiality
High
FY26 Non-new build CapEx
$2.4 billion
medium materiality
High
FY27 Non-new build CapEx
step-up
medium materiality
Medium

Orderbook & backlog

Customer deposits $7.6 billion Q3 FY26 end

up 7% YoY

Reached a third quarter record.

Booked position for FY27 half booked Q3 FY26 end

occupancy and pricing at record levels (higher YoY)

Weighted to Q2-Q4 FY27, as Q1 FY27 reflects residual impacts from booking disruption.

Booked position for FY28 off to an excellent start Q3 FY26 end

higher occupancy and even higher prices YoY

Booking curve is further out than ever before at this point in the year.

Product announcements

ProductTypeDetails
Celebration Keyexpansion
Carnival Rewardslaunch
Carnival Festivalelaunch
Mid-life modernization programsupdate
Queen Mary 2 upgradeupdate
RelaxAway, Half Moon Cay, Isla Tropicaleexpansion

Risks & headwinds

Fuel price volatility FY26

$0.11 per share headwind for FY26 EPS

Mitigation:Focus on reducing fuel consumption (down 26% per ALBD since 2019) rather than hedging.

Higher-than-expected inflation Q3 FY26 and ongoing

continued pressure

Mitigation:Teams continued to find opportunities to operate more efficiently, improving full year expectations by more than 1 point.

Booking disruption impacting Q1 FY27 Q1 FY27

residual impacts

Mitigation:Booking trends for Q1 FY27 have improved meaningfully over the past 3 months; teams are working hard to increase demand.

Elevated logistics costs from Middle East conflict FY26

impact of certain elevated logistics costs

Mitigation:Reflected in normalized adjusted cruise costs ex-fuel per ALBD.

Loyalty program accounting-driven yield headwinds Q4 FY26, FY27

0.2 point impact for FY26 (all in Q4), additional 0.4 point impact for FY27

Mitigation:Expected to be cash flow positive from launch, with positive yield impact from FY28 as redemptions exceed new deferrals.

Caribbean capacity growth pressure 2027

37% growth over a 3-year period (2027)

Mitigation:Company is committed to the Caribbean, making investments in Paradise collection, and has seen yields up nicely despite past pressure.

What to watch in Q4 FY26

Q1 FY27 Booking Performance

Q1 FY27
Current Expected to reflect residual impacts from spring disruption
Target Meaningful improvement in demand and yield gains

Why it matters

Q1 FY27 is noted as having a 'different profile' due to past booking volatility; its recovery is key to the overall FY27 trajectory.

While booking trends for the first quarter of 2027 have improved meaningfully over the past 3 months, we still expect the first quarter to reflect residual impacts from that disruption.

Q&A highlights

Inquired about Carnival's interest in acquiring land-based resort chains, given a recent market transaction.

Josh Weinstein stated Carnival is laser-focused on improving its cruise business and enhancing the cruise experience. While they have land-based assets (Celebration Key, RelaxAway, Half Moon Cay, Alaska operations), these are ancillary bolt-ons to the cruise product and high-returning. The company remains focused on its core cruise business.

“we are just laser-focused on improving our cruise business. We are very proudly a cruise company, and everything we do is to enhance the cruise experience for our guests.”

asked by Robin Farley · answered by Josh Weinstein

2 min read 6 chapters

Detailed narrative

Q3 Performance & Outperformance

Carnival delivered strong Q3 FY26 results, with revenues, yields, and net income reaching new highs. Net income exceeded June guidance by over $100 million, or $0.08 per share, primarily driven by better-than-expected revenue performance and continued cost discipline. Yields increased nearly 2.5% year-over-year, 1.2 percentage points above guidance, while unit costs ex-fuel were 100 basis points better than expected.

Booking Momentum & Future Outlook

The positive booking trends observed in Q2 continued, leading to higher revenues and improved yield expectations for Q4. For FY27, the company is already half booked with record occupancy and pricing, and FY28 is also off to an excellent start. Customer deposits reached a Q3 record of approximately $7.6 billion, up 7% year-over-year, reinforcing strong demand despite flat near-term capacity growth.

Strategic Deployment & Destination Development

Carnival is actively optimizing its deployment mix, with Europe set to tie the Caribbean as the largest deployment region in FY27, each representing 34% of the mix. This shift leverages growing guest interest in Northern European destinations. The company is also expanding its differentiated destination portfolio, with Celebration Key expected to welcome 3.5 million guests next year, up from 2.5 million in its first year, and expanded experiences at RelaxAway and Isla Tropicale.

Operational Efficiency & Technology Adoption

Management highlighted ongoing efforts to improve operational efficiency, including a 26% reduction in fuel consumption per ALBD since 2019, saving nearly $750 million. The company is leveraging AI across commercial systems for better decision-making and personalized guest experiences, automating shoreside operations, and identifying new efficiencies in vessel management, contributing to the PROPEL targets.

Capital Allocation & Balance Sheet Strength

Carnival continues to invest in high-return opportunities, strengthen its balance sheet, and return capital to shareholders. The company has repurchased nearly $1.2 billion of stock (45 million shares) within six months of its program and redeemed $500 million of high-cost debt. Following an S&P credit rating upgrade to investment grade, Carnival now has no remaining secured debt, and expects to return nearly $2 billion to shareholders through buybacks and dividends.

Loyalty Program Launch & Accounting Impact

Carnival Cruise Line successfully launched its new loyalty program, Carnival Rewards, on September 1, leading to a significant acceleration in co-branded credit card issuances. While expected to be cash flow positive, the program creates a temporary accounting-driven yield headwind of 0.2 points for FY26 (all in Q4) and an additional 0.4 points for FY27 due to revenue deferral, with a positive impact expected from FY28.

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