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    RCL
    Earnings call· Sep 2025(Q3 FY25)

    ROYAL CARIBBEAN CRUISES Q3 FY25 earnings call RCL

    Oct 28, 2025 Source

    Executive summary

    Royal Caribbean Group Q3 FY25 — Strong Demand and Record Bookings Drive EPS Beat

    Royal Caribbean Group delivered strong Q3 FY25 results, exceeding expectations due to robust close-in demand and lower costs. The company raised its full-year EPS guidance, driven by sustained demand across its brands and strategic investments in innovative ships and exclusive destinations. Management anticipates continued earnings growth and margin expansion into 2026, supported by moderate capacity and yield growth, and disciplined cost control, despite some below-the-line headwinds.

    Highlights

    5

    • Adjusted EPS of $5.75 for Q3 FY25, 11% higher than last year and 3% higher than midpoint of guidance.

    • Net yields grew 2.4% in Q3 FY25, driven by strong close-in demand across all key itineraries.

    • Full-year 2025 adjusted EPS guidance raised to $15.58-$15.63, representing 32% year-over-year growth.

    • Booked load factors for 2025 and 2026 remain within historical ranges at record rates, with 2026 booked APD growth at the high end of historical ranges.

    • Secured shipbuilding slots through the next decade, including an order for Icon 5 for delivery in 2028 and an option for a seventh Icon class ship.

    Concerns

    3

    • Q4 FY25 outlook trivially impacted by adverse weather and unplanned extended closure of Labadee, resulting in a $0.05 EPS impact.

    • Expected increase in EU ETS from 70% this year to 100% in 2026 will weigh on energy efficiency gains.

    • Global minimum tax policy updates starting January 1, 2026, expected to impact EPS by an incremental couple of hundred basis points.

    Guidance & targets

    13
    CategoryTargetConfidence
    Full-year Net Yield Growth
    3.5% to 4%
    high materiality
    High
    Full-year Adjusted EPS
    $15.58 to $15.63
    high materiality
    High
    Operating Cash Flow
    nearly $6 billion
    medium materiality
    High
    Adjusted EBITDA
    just above $7 billion
    medium materiality
    High
    Adjusted EBITDA Margin Growth
    290 basis points
    medium materiality
    High
    Q4 Net Yield Growth
    2.2% to 2.7%
    high materiality
    High
    Q4 Net Cruise Costs (NCC) excluding fuel
    decline between 6.6% and 6.1%
    medium materiality
    High
    Q4 Adjusted EPS
    $2.74 to $2.79
    high materiality
    High
    Full-year Capacity Growth
    up 6%
    high materiality
    High
    Full-year Adjusted EPS
    have a $17 handle on it
    high materiality
    Medium
    Net Cruise Costs (NCC) excluding fuel growth
    anemic cost growth
    medium materiality
    Medium
    EU ETS coverage
    increase from 70% this year to 100%
    low materiality
    High
    Global minimum tax policy impact
    incremental couple of hundred basis points
    low materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Caribbean
    Region where Royal Caribbean holds a strong position and is advancing strategic initiatives including industry-leading hardware, shorter/longer itineraries, Royal Beach Club Paradise Island, and Perfect Day Mexico. Despite capacity growth, continued yield growth is expected.
    Capacity: 57% of deployment (FY25)Capacity: 63% of capacity (Q4 FY25)Capacity growth: 6% (FY25)Capacity growth: 10% (Q4 FY25)Yield growth: 37% vs Q4 2019 (Q4 FY25 expected)Capacity: 57% of deployment (FY26)
    		————
    Europe
    In a strong booked position as European season wraps up. Demand from Europe for 2026 is stronger due to limited 2025 inventory.
    Capacity: 15% of capacity (FY25)Capacity: 9% of capacity (Q4 FY25)Capacity: 14% of capacity (FY26)
    		————
    Asia Pacific
    Impacted by a typhoon in Q4 FY25, affecting land-based experience and requiring compensation.
    Capacity: 11% of capacity (FY25)Capacity: 13% of capacity (Q4 FY25)Capacity: 10% of capacity (FY26)
    		————

    Operational metrics

    22
    Adjusted EPS
    $5.7511% higher YoY; 3% higher than midpoint of guidance
    Q3 FY25

    Driven by strong close-in demand and lower costs.

    Net Yield Growth
    2.4%YoY
    Q3 FY25

    Driven by strong demand across all key itineraries, mainly existing hardware.

    Net Cruise Costs (NCC) excluding fuel growth
    4.3%YoY
    Q3 FY25

    Lower than guidance due to finding ways to better deliver vacations without compromising guest experience.

    Adjusted Gross EBITDA Margin
    44.6%60 bps better YoY
    Q3 FY25
    Capacity Growth
    3%YoY
    Q3 FY25
    Guests Carried
    nearly 2.5 million7% increase YoY
    Q3 FY25
    Onboard Revenue Booked Pre-Cruise
    record share
    Q3 FY25

    Digital channels, especially the app, are the fastest-growing drivers of engagement and conversion.

    E-commerce Visits Growth
    double digitsYoY
    Q3 FY25
    E-commerce Conversion Rates Growth
    double digitsYoY
    Q3 FY25
    Capacity Growth
    5.5%YoY
    FY25
    Net Cruise Costs (NCC) excluding fuel decline
    approximately 0.1%YoY
    FY25

    Reflects focus on better execution, leveraging scale, and utilizing technology/AI.

    Fuel Expense
    $1.14 billion
    FY25
    Capacity Growth
    10%YoY
    Q4 FY25
    Net Yield Growth vs 2019
    31%vs 2019
    FY25

    Industry-leading growth, highlighting business transformation and brand strength.

    Adjusted Leverage
    below 3x
    LTM as of Q3 FY25

    Maintained commitment to keep leverage below 3x.

    Liquidity
    $6.8 billion
    Q3 FY25 end
    TUI Cruises Cash Dividend
    $258 million
    September 2025

    Received from joint venture, expected to continue given strong performance.

    Share Repurchases
    approximately 1.3 million shares
    Q3 FY25

    Part of current authorization.

    Quarterly Dividend
    $1.0030% increase
    Quarterly

    Authorized by Board of Directors in September.

    Capital Returned to Shareholders
    $1.6 billion
    July 2024 - Q3 FY25

    Intend to utilize strong financial position to return capital going forward.

    Adjusted EPS CAGR
    20%
    CAGR to 2027

    On track to achieve Perfecta targets.

    Return on Invested Capital (ROIC)
    high teens
    by 2027

    On track to achieve Perfecta targets.

    Orderbook & backlog

    2
    Booked Load Factorswithin historical rangesQ3 FY25

    at record rates

    For 2025 and 2026

    Booked APD Growthhigh end of historical rangesQ3 FY25

    nicely higher than prior year

    For 2026

    Product announcements

    4
    ProductTypeDetails
    Royal Beach Club Santorinilaunch
    Celebrity Riverlaunch
    Icon 5milestone
    Points Choicelaunch

    Deals & partnerships

    2
    Meyer TurkuLong-term agreement securing shipbuilding slots through the next decade.through the next decade

    Agreement to continue both companies' tradition of innovation and redefine the future of vacations.

    TUI CruisesJoint venture with TUI Cruises.

    Joint venture continues to pay regular cash dividends given its strong financial performance and balance sheet.

    Risks & headwinds

    5
    Adverse weather events and unplanned extended closure of LabadeeQ4 FY25

    $0.05 EPS impact

    Increase in EU Emissions Trading System (ETS) coverageFY26

    From 70% in 2025 to 100% in 2026

    Mitigation: Weighing on energy efficiency gains

    Global minimum tax policy updatesBeginning January 1, 2026

    Incremental couple of hundred basis points impact

    Increase in fuel costs due to compliance componentFY26

    Increase

    Mitigation: Hedging rate exposure

    Increase in supply in the CaribbeanOngoing

    A little bit more promotional

    Mitigation: Differentiated assets (ships, destinations), ability to keep guests in ecosystem, drawing from other ecosystems.

    What to watch in Q4 FY25

    5

    2026 Adjusted EPS Guidance

    Q4 FY25 earnings call
    Currenthave a $17 handle on it
    TargetSpecific range for FY26 Adjusted EPS

    Why it matters

    Provides detailed financial outlook for the next fiscal year, crucial for investor models and valuation.

    Taking all this into account, we expect adjusted EPS to have a $17 handle, and we will provide more details during our fourth quarter earnings call.

    Q&A highlights

    6

    Clarification on the "moderate yield growth" and "anemic cost growth" for 2026, and if these include structural costs and below-the-line impacts.

    Jason Liberty confirmed that the "anemic" cost growth includes structural costs like the Royal Beach Club in the Bahamas and benefits from AI/scale. He clarified that the "moderate yield growth" is similar to 2025's, and the main reconciliation points for analyst models are below-the-line items like increased fuel costs due to compliance and global minimum tax, as well as depreciation from new investments. He also emphasized that "$17 handle" does not mean $17.01.

    “I think where there's probably a little bit of noise is below the line and probably in fuel. And so there are an increase in our fuel costs that have a compliance component to it. And then also, as we're managing global minimum tax, there is a slight increase in the taxes that we're anticipating to play. And that's probably where there's a little bit of a disconnect.”

    asked by Steven Wieczynski · answered by Jason Liberty

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Investments and Growth Platform

    Royal Caribbean Group is focused on building a leading vacation platform through innovative ships, a growing portfolio of exclusive destinations, and advanced technology including AI. These high-return investments aim to strengthen guest loyalty, attract new travelers, and capture a larger share of the $2 trillion vacation market, positioning the company for sustained growth and competitive advantage.

    02

    Exclusive Destinations Expansion

    The company announced the Royal Beach Club Santorini, expanding its exclusive destination portfolio. This initiative, along with Royal Beach Club Paradise Island, Perfect Day Mexico, and others, is expected to increase the number of exclusive land-based destinations from 2 to 8 by 2028, significantly enhancing the guest experience and brand reach.

    03

    Strong Demand Environment and Consumer Behavior

    Consumers continue to prioritize experiences and allocate budgets for meaningful vacations, with approximately 75% intending to spend the same or more on vacations over the next 12 months. Cruising offers superior value, and demand for Royal Caribbean's offerings remains strong across all key itineraries and customer segments, including new-to-cruise and first-to-brand guests.

    04

    Digital Transformation and Loyalty Evolution

    Royal Caribbean continues to enhance its digital capabilities, with e-commerce visits and conversion rates increasing double digits year-over-year in Q3. A record share of onboard revenue was booked pre-cruise, with nearly 90% through digital channels. The new "Points Choice" program, starting in early 2026, will allow guests to apply loyalty points to the Royal Caribbean Group brand they prefer, regardless of which brand they are sailing with.

    05

    Shipbuilding and Future Fleet

    The company secured a long-term agreement with Meyer Turku, confirming an order for Icon 5 for delivery in 2028 and an option for a seventh Icon class ship. This strategy ensures a steady stream of game-changing ships, positioning Royal Caribbean Group to redefine the future of vacations and drive long-term shareholder value.

    06

    Celebrity River Launch Success

    The introduction of Celebrity River received an "extraordinary response," with all initially available deployment selling out almost immediately. The majority of booked guests are Royal Caribbean Group loyalty members new to river cruising, validating the strategy to expand the vacation ecosystem and deepen engagement with existing customers.

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