Viking Holdings Ltd VIK

Viking reported strong Q2 FY25 results with total revenue increasing 18.5% year-over-year to $1.9 billion, driven by an 8.8% capacity growth and an 8% increase in net yield. Adjusted EBITDA rose 28.5% year-over-year to $633 million, and adjusted net income attributable to Viking Holdings Limited was up 25.8% to $439 million. For the first half of FY25, consolidated adjusted gross margin increased 20.7% to over $1.8 billion, and net yield was $584, up 7.6% year-over-year.

Demand remains strong, with 96% of 2025 core product capacity already booked, representing $5.6 billion in advanced bookings, a 21% increase year-over-year. For 2026, 55% of core product capacity is already sold, with $3.9 billion in advanced bookings, up 13% from 2025 at the same point. Rates for the 2026 season are currently 4% higher than 2025, alongside a 9% increase in capacity, positioning the company for continued healthy revenue and EBITDA growth.

Viking continues its fleet expansion with the Viking Vesta joining the ocean fleet and Viking Amun joining the Nile river fleet. The company announced new river voyages in India starting in 2027 with a second vessel in 2028, which have seen phenomenal early response with all available itineraries already sold out. This selective expansion into culturally rich regions like Egypt and India aligns with Viking's brand and caters to its loyal, culturally curious guests.

Viking's success is attributed to its consistent vision of destination-focused travel and its efficient fleet design. The ocean fleet consists of 12 nearly identical small ships, enabling scalable operations and a consistent guest experience. The river fleet of 85 vessels benefits from control or priority access to 110 docking locations, providing logistical flexibility and high-quality service. This uniformity and strategic infrastructure contribute to driving yields and enhancing guest satisfaction.

As of June 30, 2025, Viking held $2.6 billion in cash and cash equivalents, with a net debt of $3.2 billion, resulting in a net leverage of 2.1x. The company has hedged EUR 470 million for 2025 and EUR 500 million for 2026 operating expenses at a weighted rate of $1.10 per euro. Furthermore, it has mitigated unrealized currency fluctuations on euro-denominated loans by converting an equivalent amount of cash holdings into euros, preventing recurrence of the Q2 FY25 adjusted EPS impact of $0.11 from FX losses.

Viking benefits from efficient ship contracting, securing favorable prices for its vessels due to its consistent ship designs and direct negotiation with shipyards. This capital efficiency, combined with the strong demand for its product, results in attractive payback periods of 5-6 years for ocean vessels and 4-5 years for river vessels, even before considering the benefit of negative working capital from advanced bookings.