Skip to content
    RCL
    Earnings call· Dec 2025(Q4 FY25)

    ROYAL CARIBBEAN CRUISES LTD RCL

    Jan 29, 2026 Source

    Executive summary

    Royal Caribbean Group Q4 FY25 — Record Bookings and Strategic Expansion

    Royal Caribbean Group concluded an outstanding 2025 with robust financial performance and record demand, setting a strong foundation for 2026. The company is strategically expanding its vacation ecosystem through new ship classes, river cruises, and loyalty enhancements, while leveraging technology and AI to drive efficiency and guest satisfaction. Despite some Q1 yield headwinds from itinerary changes and deployment shifts, the outlook remains positive with double-digit revenue growth and significant margin expansion anticipated.

    Highlights

    5

    • Delivered record 9.4 million vacations, achieving nearly $18 billion in total revenue and 33% earnings growth in 2025.

    • Generated nearly $6.5 billion of operating cash flow and returned $2 billion to shareholders through dividends and share buybacks in 2025.

    • Q4 net yields grew 2.5% and adjusted EPS was $2.80, exceeding guidance.

    • 2026 wave season off to a record start, with 2/3 of inventory booked at record rates.

    • Announced expansion of Celebrity River Cruises with 10 additional ships by 2031 and new Royal Caribbean Discovery Class ships (2 firm orders, 4 options).

    Concerns

    3

    • Q1 FY26 net yields impacted by 30 basis points from China itinerary modifications and 50 basis points from deployment shifts.

    • Full year 2026 net cruise costs, excluding fuel, include 200 basis points of headwinds related to private destinations ramp-up.

    • Q2 FY26 yields will be hampered by higher dry dock activity, including premium hardware, compared to Q1.

    Guidance & targets

    11
    CategoryTargetConfidence
    Full year 2026 Net Yield Growth
    1.5% to 3.5%
    high materiality
    High
    Full year 2026 Adjusted EPS
    $17.70 to $18.10
    high materiality
    High
    Full year 2026 Operating Cash Flow
    over $7 billion
    medium materiality
    High
    Full year 2026 Adjusted EBITDA
    a little shy of $8 billion
    high materiality
    High
    Full year 2026 Adjusted EBITDA Margin
    just over 40%
    high materiality
    High
    Full year 2026 Capital Investments
    $5 billion
    medium materiality
    High
    Full year 2026 Net Cruise Costs Ex-Fuel
    flat to up 1%
    medium materiality
    High
    Full year 2026 Fuel Expense
    approximately $1.17 billion
    low materiality
    High
    Q1 FY26 Net Yields
    up 1% to 1.5%
    medium materiality
    High
    Q1 FY26 Net Cruise Costs Ex-Fuel
    up in the range of 0.9% to 1.4%
    medium materiality
    High
    Q1 FY26 Adjusted EPS
    $3.18 to $3.28
    high materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Caribbean
    Capacity growing 8% YoY, driven by full year impact of Star of the Seas and Celebrity Xcel. Expected continued yield growth in 2026 despite increasing regional capacity. Outperforming in NPS and profitability due to leading brands, best hardware (6 Oasis, 3 Icon class ships), and exclusive destinations. Over 70% of Royal Caribbean brand guests on these itineraries will visit a private destination this year, increasing to 90% by 2028.
    Capacity share: 57%Yield growth since 2019: 35%
    		—8%——
    Europe
    Capacity growing 5% YoY, including Legend of the Seas debut. Performing very well on both rate and volume with strong demand from American and European consumers. European capacity is down in H1 FY26, particularly Q2, due to dry dock timing.
    Capacity share: 15%
    		—5%——
    Alaska
    Capacity up 3% YoY. Features premium hardware including Celebrity Edge, 2 Quantum-class ships, and Silver Moon.
    Capacity share: 5%
    		—3%——
    Asia Pacific
    Q1 FY26 net yields impacted by 30 basis points due to recent itinerary modifications in China.
    Q1 FY26 Capacity share: 16%
    		————

    Operational metrics

    30
    Adjusted Earnings Per Share
    $2.80higher than guidance
    Q4 FY25

    Earnings outperformance driven by favorable revenue and better performance across joint ventures.

    Total Revenue Growth
    13%
    Q4 FY25
    Net Cruise Costs Ex-Fuel Decrease
    6.3%
    Q4 FY25

    In constant currency, in line with guidance.

    Total Revenue Growth
    8.8%
    FY25
    Adjusted EBITDA Growth
    17.6%
    FY25

    Adjusted EBITDA reached just over $7 billion.

    Adjusted EPS Growth
    33%
    FY25

    Adjusted EPS reached $15.64.

    Capital Returned to Shareholders
    $2 billion
    FY25

    Through dividends and share buybacks.

    Investments in Future
    more than $5 billion
    FY25
    Total Guests Increase
    45%
    since 2019
    Millennials and Younger Guests Increase
    nearly doubling
    since 2019
    Total Revenue Increase
    64%
    since 2019
    Adjusted EBITDA Surge
    94%
    since 2019
    Net Income Increase
    more than doubled
    since 2019
    Capacity Growth
    6.7%YoY
    FY26

    On the higher end of moderate capacity growth.

    APCDs Growth
    8.5%
    Q1 FY26 and Q3 FY26
    APCDs Growth
    5%
    Q2 FY26 and Q4 FY26
    Total Revenue Growth
    double digitYoY
    FY26

    With projected capacity increase of 6.7%.

    Cost Headwinds
    200 basis points
    FY26

    These headwinds come without APCD increase.

    Fuel Hedged
    60%
    FY26

    Of projected fuel consumption.

    LNG and Biofuel Blends
    10%up from 8% in 2025
    FY26

    Of fuel consumption.

    Fuel Efficiency Improvement
    4%compared to 2025
    FY26

    Driven by new hardware and deployment optimization.

    EU Emissions Trading System Coverage
    100%up from 70% in 2025
    FY26

    Scope will expand in 2026.

    Non-Ship Capital Investments
    $1.8 billion
    FY26

    Significant portion related to private destination portfolio (Santorini Beach Club, Cosmo Beach Club, Perfect Day Mexico) and fleet modernization program.

    Liquidity
    $7.2 billion
    Q4 FY25 end
    Leverage
    well below 3x
    Q4 FY25 end

    Consistent with goal of solid investment-grade metrics.

    Q1 FY26 Capacity Growth
    8.5%YoY
    Q1 FY26
    App Active Users Increase
    25%YoY
    Q4 FY25
    E-commerce Traffic Growth
    10%YoY
    FY25

    With conversions improving throughout the year.

    Royal Beach Club Paradise Island NPS
    0.81%behind Perfect Day
    current

    Already the #1 top-rated experience in Nassau for cruise guests within 4 weeks of opening.

    River Cruise Existing Customer Booking Rate
    roughly 80%
    current

    Of people who booked are existing customers but new to River cruising.

    Industry KPIs

    3
    MetricValueDetails
    Comparable sales comps2.5%%
    Booked position booking window2/3
    Net unit growth development pipeline6.7%%

    Orderbook & backlog

    1
    2026 Inventory Bookedapproximately 2/3January 2026

    Booked at record rates.

    Product announcements

    5
    ProductTypeDetails
    Celebrity River Cruisesexpansion
    Royal Caribbean Discovery Class shipslaunch
    Points Choice Loyalty Programupdate
    Royal Beach Club Paradise Islandlaunch
    Mein Schiff Relaxlaunch

    Deals & partnerships

    2
    ShipyardAgreement for new Royal Caribbean Discovery Class ships

    Includes 2 firm order ships and options for 4 additional ships.

    TUI CruisesDelivery of Mein Schiff Relax

    Mein Schiff Relax is the first vessel in its new class and the largest ship in TUI Cruises' fleet.

    Risks & headwinds

    4
    China itinerary modificationsQ1 FY26

    30 basis points impact on Q1 FY26 net yields

    Deployment shiftsQ1 FY26

    approximately 50 basis points of yield headwinds on Q1 FY26 net yields

    Dry dock timing and premium hardwareQ2 FY26

    Higher dry dock activity in Q2 FY26 compared to Q1 FY26, including more premium hardware, hurting yield comparisons.

    Mitigation: Management aims to run operations more efficiently and deliver guest experience better to maintain profitability.

    Private destinations portfolio ramp-up costsFY26

    200 basis points of cost headwinds

    Mitigation: These costs are associated with the ramp-up of new private destinations (Santorini, Cosmo, Perfect Day Mexico) and come without APCD increase, implying strategic investment for future yield.

    What to watch in Q1 FY26

    5

    Discovery Class Ship Details

    next couple of months
    CurrentAnnounced 2 firm orders, 4 options; size/capacity details inaccurate in social media.
    TargetRelease of official details on size, capacity, and features.

    Why it matters

    Understanding the new ship class's design and market positioning is crucial for assessing future capacity, yield potential, and competitive differentiation.

    We are really looking forward to sharing more details about Discovery with the marketplace, but we're not planning on saying much about it today or in the next couple of months. We have a promotional campaign that will be ready to go soon, and we'll be very excited to visit multiple cities and start talking about Discovery.

    Q&A highlights

    5

    Elaborate on the acceleration into 2026 and how the portfolio differentiates to capture more share from the $2 trillion total vacation market.

    Management noted strong demand acceleration, exceeding capacity growth, driven by strong consumer interest in their brands and experiences. Loyalty programs and personalization are key. They aim to capture share from the broader $2T leisure market by enhancing product offerings (new ships, modernizations), investing in destinations (Royal Beach Club, Santorini), and expanding into new segments like River cruises, which close the gap with higher-APV land-based vacations. They emphasize growing both capacity and yield, differentiating within the vacation market.

    “We think that we're able to increase our margins by putting a product in place that is really attracted to our guests.”

    asked by Matthew Boss · answered by Jason Liberty

    3 min read6 chapters

    Detailed Narrative

    01

    2025 Performance Highlights

    Royal Caribbean Group achieved an outstanding 2025, delivering a record 9.4 million vacations and nearly $18 billion in total revenue, marking a 33% increase in adjusted earnings per share. The company expanded margins, improved return on invested capital, and reduced leverage, generating $6.5 billion in operating cash flow and returning $2 billion to shareholders. Q4 net yields grew 2.5% and adjusted EPS reached $2.80, surpassing guidance, driven by strong demand and disciplined execution across commercial and cost priorities.

    02

    Strategic Investments & Ecosystem Expansion

    The company is broadening its vacation ecosystem with significant strategic investments. This includes expanding Celebrity River Cruises to 20 vessels by 2031 with 10 new ship commitments, and introducing the Royal Caribbean brand's new Discovery Class ships with 2 firm orders and options for 4 more. The new Points Choice loyalty program enhances guest flexibility, while exclusive destinations like the recently opened Royal Beach Club Paradise Island strengthen the integrated ecosystem, attracting new guests and deepening loyalty.

    03

    2026 Outlook & Booking Environment

    Momentum from 2025 continues into 2026, with the wave season experiencing its best 7 booking weeks in company history. The company is already about two-thirds booked for the year at record rates, positioning it to optimize pricing and yield growth. Full year 2026 capacity is expected to increase by 6.7%, with double-digit revenue growth and net yield growth projected between 1.5% and 3.5%. This growth is supported by strong consumer demand, particularly for new ships and the Caribbean region, despite elevated capacity growth there.

    04

    Caribbean Market Dynamics

    Despite market concerns about increased Caribbean capacity, Royal Caribbean Group reports strong demand and higher pricing in the region across all three brands. The Caribbean represents 57% of the company's capacity, growing 8% year-over-year, and has seen 35% yield growth since 2019. The company attributes this resilience to its differentiated offerings, including leading hardware (6 Oasis, 3 Icon class ships) and exclusive destinations, with over 70% of Royal Caribbean brand guests visiting a private destination this year, projected to reach 90% by 2028.

    05

    River Cruise Expansion

    Royal Caribbean Group is making a significant commitment to River cruising, expanding Celebrity River Cruises to 20 vessels by 2031. This expansion is driven by strong demand, particularly from existing loyal customers, with approximately 80% of current River cruise bookings coming from existing Royal Caribbean Group customers who are new to River cruising. The company views River cruising as an exciting growth opportunity that adds an incremental vacation choice and deepens loyalty across its family of brands, leveraging its extensive customer database.

    06

    Technology & AI Integration

    Disruptive technologies, including AI and GenAI, are becoming a foundational advantage, improving guest experience, strengthening the commercial engine, and enhancing operational efficiency. Digital channels are seeing increased engagement, with a 25% YoY increase in app active users in Q4 and 10% YoY e-commerce traffic growth in 2025. AI is being scaled through enterprise programs for revenue and margin improvement, and smaller use cases for productivity, from supply chain forecasting to energy management, building durable operating leverage.

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