Skip to content
    RCL
    Earnings call· Mar 2026(Q1 FY26)

    ROYAL CARIBBEAN CRUISES Q1 FY26 earnings call RCL

    Apr 30, 2026 Source

    Executive summary

    Royal Caribbean Group Q1 FY26 — Record Wave Season and Strong Demand

    Royal Caribbean Group reported strong Q1 results, exceeding expectations driven by a record WAVE season and robust consumer demand for vacation experiences. Despite geopolitical headwinds impacting Mediterranean and West Coast Mexico itineraries, the company maintains its double-digit revenue and earnings growth outlook for the year. Strategic investments in technology, loyalty programs, and destination expansion are enhancing guest engagement and driving future growth, supported by a fortified balance sheet and strong cash flow generation.

    Highlights

    5

    • Adjusted earnings per share was $3.60, $0.37 higher than guidance and 33% higher compared to last year.

    • Revenue grew 11% year-over-year and net yields grew 2%.

    • Experienced another record WAVE season, reinforcing strong demand and booking volumes at record prices.

    • Operating cash was $1.8 billion, an increase of 13% year-over-year.

    • Returned $1.1 billion of capital through dividends and share buybacks during the quarter.

    Concerns

    4

    • Fuel costs are expected to increase costs by roughly $0.62 per share this year due to the Middle East conflict.

    • Short-term moderation in demand trends for 2026 high-yielding Mediterranean sailings, impacting Q2 and Q3 outlook.

    • Experienced some disruption in demand for select West Coast of Mexico itineraries during the quarter.

    • Lower income from joint ventures is expected to result in a $0.12 per share headwind for the full year.

    Guidance & targets

    9
    CategoryTargetConfidence
    Full year adjusted earnings per share
    $17.10 to $17.50
    high materiality
    High
    Full year revenue growth
    roughly double digits year-over-year
    high materiality
    Medium
    Full year net yield growth
    1.5% to 2.5%
    high materiality
    High
    Full year net cruise costs, excluding fuel
    approximately flat, or 50 basis points better than our prior guidance
    medium materiality
    High
    Q2 adjusted earnings per share
    $3.83 to $3.93
    high materiality
    High
    Q2 net yield growth
    approximately 0.2% in constant currency
    high materiality
    High
    Q2 net cruise costs, excluding fuel
    up in the range of 4.6% to 5.1% in constant currency
    medium materiality
    High
    Perfecta performance program adjusted EPS CAGR
    20% compound annual growth rate
    high materiality
    High
    Perfecta performance program ROIC
    high teens
    high materiality
    High

    Operational metrics

    37
    Capital returned
    $1.1 billion
    Q1 FY26

    through dividends and share buybacks

    Fuel costs increase
    $0.62increase
    FY26

    expected due to Middle East conflict, based on current spot levels

    Fuel costs headwind
    $0.74headwind
    FY26

    total for the year, including $0.62 for the remaining year

    Q2 earnings impact from headwinds
    $1impact
    Q2 FY26

    from dry dock days, geopolitical events, and lower TUI contribution

    Adjusted EBITDA
    $1.7 billion
    Q1 FY26

    representing an EBITDA margin of 38%

    EBITDA margin
    38%increase of more than 300 basis points year-over-year
    Q1 FY26

    adjusted

    Operating cash
    $1.8 billionincrease of 13%
    Q1 FY26

    generated

    Capacity growth
    6.7%
    FY26

    expected for the year

    Capacity growth
    4.9%year-over-year
    Q2 FY26

    expected

    Fuel expense
    $1.35 billion
    FY26

    expected for the year

    Fuel hedge coverage
    59%
    FY26

    for the remainder of 2026 consumption

    Fuel hedge coverage
    less than 50%
    FY27

    already at pre-conflict prices

    Fuel hedge coverage
    25%
    FY28

    approximately

    Liquidity
    $6.9 billion
    Q1 FY26 end

    total

    Leverage
    below 3x
    Q1 FY26 end

    consistent with goal of solid investment-grade metrics

    Investment grade bond offering
    $2.5 billion
    Q1 FY26

    net proceeds used to refinance existing indebtedness

    Shares repurchased
    2.9 million shares
    Q1 FY26

    for a total of $836 million

    Share buyback amount
    $836 million
    Q1 FY26

    executed

    Remaining share buyback authorization
    $1 billion
    Q1 FY26 end

    under current program

    Repeat customers
    40%increased from 1/3 historically
    current

    coming from our current customer base

    Repeat customer spend
    25% more
    current

    than new-to-cruise or first to brand

    Digital penetration of bookings
    more than doubled
    since 2019

    with most growth through the app

    Monthly active users for app
    5x higherthan 2019 levels
    current

    with adoption over 90%

    App adoption
    over 90%
    current

    confirming mobile as a way guests increasingly plan and manage their vacation

    Onboard revenue booked pre-cruise
    more than half
    current

    with the vast majority of those purchases made digitally

    Pre-cruise booking engine penetration
    over 70%
    current

    with over 5 items purchased per booking

    Items purchased per booking (pre-cruise)
    over 5 itemsyear-over-year increase in spend per night
    current

    through pre-cruise booking engines

    Cardholder accounts (co-branded credit card)
    more than doubled
    since 2019

    opportunity to double it again

    Caribbean deployment
    57%
    FY26

    of total deployment this year

    Caribbean deployment
    50%
    Q2 FY26

    of capacity

    Europe deployment
    14%
    FY26

    of total capacity for the year

    Europe deployment
    18%
    Q2 FY26

    of capacity

    West Coast of Mexico deployment
    5%
    FY26

    of total capacity

    Alaska deployment
    5%
    FY26

    of total capacity

    Alaska deployment
    9%
    Q2 FY26

    of capacity

    Q2/Q3 yield headwind from geopolitical events
    almost 200 basis point
    Q2 and Q3 FY26

    from increased dry dock days and geopolitical events

    Q2 cost headwinds
    almost 400 basis points
    Q2 FY26

    related to additional dry dock days, year-over-year comparisons, and increased crew travel costs

    Industry KPIs

    5
    MetricValueDetails
    Comparable sales comps2%%
    Input cost inflation hedging$0.62per share
    Value affordability positioning15%+%
    Loyalty program members tier mix40%%
    Net unit growth development pipeline6.7%%

    Orderbook & backlog

    4
    Booked load factorwithin optimal prior year rangesQ1 FY26 end

    at record APDs, reflecting strong demand

    Book position for Q4very strongcurrent

    at very strong rates, with less Mediterranean product

    Book position for Legend of the Seasvery strongcurrent

    with prices higher than those for Icon and Star

    Bookings for next yearstrongcurrent

    no impact from current geopolitical issues

    Product announcements

    6
    ProductTypeDetails
    Icon VI and Icon VIIlaunch
    Royal Beach Club Santorinilaunch
    Royal Beach Club in Cozumellaunch
    Perfect Day Mexico and Costa Mayalaunch
    Legend of the Seaslaunch
    Royal ONE co-branded credit cardslaunch

    Risks & headwinds

    5
    Increased fuel costs due to Middle East conflict2026

    expected to increase costs by roughly $0.62 per share this year

    Mitigation: approximately 60% hedged for 2026

    Short-term moderation in demand for high-yielding Mediterranean sailingsQ2 and Q3 sailings

    modestly impacted our outlook for the upcoming summer season

    Mitigation: now turned a corner and are experiencing improved demand for the limited inventory we have remaining

    Disruption in demand for select West Coast of Mexico itinerariesQ1 FY26

    moderated during the quarter

    Mitigation: generally think that is also a onetime situation, which provides for great tailwinds into 2027

    Lower income from joint venturesFY26

    $0.12 headwind from lower expected earnings contribution from TUI Cruises

    Mitigation: diversified portfolio and disciplined operating model position us well to manage through these dynamics

    Increased air travel costs and disruptions impacting European bookingslate Q1, mainly affecting Q2 and Q3

    airfares went up by almost -- more than 40%. It's now moderated down to like 15%.

    Mitigation: bookings from Mediterranean itineraries have been rebounding; global infrastructure allows for increased European customer bookings when U.S. demand moderates

    Q&A highlights

    7

    Given Q2/Q3 yield headwinds from Europe, what gives confidence in Q4 yield growth, and would full-year yield guidance have been raised without these headwinds?

    Jason Liberty confirmed the 'smiley face' yield trajectory, with Q2/Q3 impacted by Mediterranean/Mexico moderation. Q4 has less Mediterranean product, a strong book position at high rates, and easier comparisons, providing confidence. He stated that the moderation has 'turned the corner,' but limited inventory remains for Q2/Q3, preventing further price increases.

    “I think that's exactly the way to think about it. So the year is a little bit of a smiley face in terms of yield, and that's really impacted, as we said, by our commentary on the Mediterranean, and to a lesser extent, the deployment to the West Coast of Mexico.”

    asked by Steven Wieczynski · answered by Jason Liberty

    2 min read6 chapters

    Detailed Narrative

    01

    Q1 Performance Exceeds Expectations

    Royal Caribbean Group reported first quarter results that surpassed expectations, with adjusted earnings per share reaching $3.60, which was $0.37 higher than the midpoint of guidance and a 33% increase year-over-year. This strong performance was attributed to better-than-expected revenue, lower costs, and favorable contributions from joint ventures. The company delivered 12% more vacations compared to the previous year, observing an increase in younger demographics and repeat guests.

    02

    Robust Consumer Demand and Booking Environment

    The company experienced a record WAVE season, characterized by a strong book position within optimal historical ranges and record average daily rates (APDs). Consumer behavior continues to show a healthy backdrop, with a strong preference for experiences over goods, and travel ranking as the top leisure category for increased spending. Onboard spending remains significantly above prior years, reflecting sustained guest engagement and willingness to spend.

    03

    Geopolitical Impacts and Mitigation Strategies

    Recent geopolitical developments, particularly in the Middle East, led to temporary operational pauses for two TUI Cruise ships and an anticipated $0.62 per share increase in fuel costs for 2026. Demand for high-yielding Mediterranean and West Coast Mexico itineraries saw a short-term moderation, impacting the Q2 and Q3 outlook. However, booking trends for these affected regions have since rebounded, and the company's diversified portfolio and disciplined operating model are positioned to manage these dynamics.

    04

    Advancements in Technology and Loyalty Programs

    Royal Caribbean is leveraging disruptive technology and AI to enhance operations and guest experiences, particularly in complex real-time decision-making. Digital penetration of bookings has more than doubled since 2019, with app adoption exceeding 90%. Loyalty initiatives, including cross-brand status match and the newly launched Royal ONE co-branded credit cards, are designed to increase repeat travel and customer lifetime value by incentivizing guests to stay within the ecosystem.

    05

    Strategic Destination and Fleet Expansion

    The company continues to expand its unique destination offerings, with the Royal Beach Club Santorini recently opened and the Royal Beach Club Cozumel expected in early 2028. Perfect Day Mexico and Costa Maya are actively progressing, with a soft opening anticipated in late 2027 and full ramp-up in early 2028, aiming to significantly boost performance in the Texas market. Orders for Icon VI and Icon VII, alongside the upcoming delivery of Legend of the Seas, underscore confidence in the Icon platform's ability to deliver industry-leading guest experiences and returns.

    06

    Financial Strength and Capital Allocation

    Royal Caribbean maintains a strong financial position, ending the quarter with $6.9 billion in liquidity and leverage below 3x, consistent with investment-grade metrics. The company successfully completed a $2.5 billion investment-grade bond offering to refinance existing debt. Additionally, it repurchased 2.9 million shares for $836 million, with $1 billion remaining under authorization, demonstrating a commitment to capital return while investing in strategic growth initiatives.

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