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    VIK
    Earnings call· Dec 2024(Q4 FY24)

    Viking Holdings Ltd VIK

    Mar 11, 2025 Source

    Executive summary

    Viking Q4 FY24 — Record Financials and Strong 2025 Bookings

    Viking delivered record financial results in Q4 and full-year 2024, driven by robust demand and strategic capacity growth. The company enters 2025 with strong advanced bookings and a significant order book for new vessels, while actively managing booking curves to optimize pricing amidst current market uncertainties. The focus remains on organic growth and maintaining a strong financial position.

    Highlights

    5

    • Full-year 2024 Adjusted EBITDA reached $1.3 billion, a 23.7% increase year-over-year.

    • Full-year 2024 Adjusted gross margin grew 14% year-over-year to over $3.5 billion.

    • Full-year 2024 net yield increased by 7.4%.

    • Advanced bookings for 2025 totaled $5.3 billion as of February 23, 2025, 26% higher than the prior year at the same point.

    • Ended 2024 with a net leverage ratio of 2.4x.

    Concerns

    2

    • February bookings experienced a slowdown following a record January, attributed to market uncertainties.

    • Management noted that 2025 booking curves are 'a little bit too steep,' indicating a potential need to slow pace to optimize pricing.

    Guidance & targets

    8
    CategoryTargetConfidence
    Core capacity growth
    12%
    high materiality
    High
    River ship deliveries
    10 ships
    medium materiality
    High
    Ocean ship deliveries
    1 ship (Viking Vesta)
    medium materiality
    High
    New River long ship contracts
    8 ships
    high materiality
    High
    Option agreements for River vessels
    8 additional vessels
    medium materiality
    High
    New River vessels for Egypt
    2 vessels
    medium materiality
    High
    Committed ship CapEx
    $870 million total / $450 million net of financing
    high materiality
    High
    Total berths increase
    53.3%
    high materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    River
    Adjusted gross margin grew 15.8% year-over-year, driven by strong demand for European itineraries and increased capacity from ships delivered in 2023 and 2024, and winter sailings.
    Capacity PCDs: +3.7% YoYNet yield: $533Net yield growth: +11.7% YoYOccupancy: 95.4%
    		———$1.6 billion
    Ocean
    Adjusted gross margin increased 12.1% year-over-year, driven by capacity growth from the delivery of Viking Saturn (April 2023), Viking Yi Dun (September 2024), and Viking Vela (December 2024).
    Capacity PCDs: +6.2% YoYNet yield: $522Net yield growth: +5% YoYOccupancy: 93.9%
    		———$1.5 billion

    Operational metrics

    28
    Adjusted gross margin
    $3.5 billion+14% YoY
    FY24

    Reflects strong top-line results.

    Adjusted EBITDA
    $1.3 billion+23.7% YoY
    FY24

    Achieved through strong top-line and disciplined expense management.

    Return on invested capital
    40.8%
    FY24

    Indicates efficient capital management.

    Net leverage
    2.4x
    FY24

    Ended the year with a well-managed balance sheet.

    Total revenue
    $1.4 billion+20.5% YoY
    Q4 FY24

    Mainly driven by higher capacity and higher revenue per PCD.

    Adjusted gross margin
    $870 million+19.5% YoY
    Q4 FY24

    Resulted in a net yield of $507.

    Vessel expenses excluding fuel per capacity PCD
    +0.4%YoY
    Q4 FY24

    Capacity increase of 10.9% helped bring down some fixed costs.

    Adjusted EBITDA
    $306 million+39.7% YoY
    Q4 FY24

    Improving $87 million from Q4 2023.

    Net income
    $104 millionvs. -$594 million in Q4 2023
    Q4 FY24

    Includes a $96 million loss from revaluation of warrants due to stock price appreciation.

    Adjusted net income attributable to Viking Holdings Limited
    $200 million
    Q4 FY24

    Non-IFRS financial metric.

    Adjusted EPS
    $1.86
    FY24

    Non-IFRS financial metric.

    Adjusted EPS
    $0.45
    Q4 FY24

    Non-IFRS financial metric.

    Cash and cash equivalents
    $2.5 billion
    as of Dec 31, 2024

    Provides a strong financial safety net.

    Undrawn revolver
    $375 million
    as of Dec 31, 2024

    Adds to liquidity and flexibility.

    Net debt
    $3.2 billion
    as of Dec 31, 2024

    Reflects the company's debt position.

    Deferred revenue
    $4.1 billion
    as of Dec 31, 2024

    Indicates strong advanced bookings.

    Scheduled principal payments
    $490 million
    FY25

    Debt amortization for the upcoming year.

    Repeat guest rate
    53%
    FY24

    Highlights customer loyalty.

    Direct bookings
    North of 50%
    FY24

    Demonstrates strong direct marketing power.

    Market share (Rivers)
    52%
    FY24

    Leading position in the River segment.

    Market share (Ocean)
    24%
    FY24

    Significant position in the Ocean segment.

    Capacity PCDs growth
    6.3%YoY
    FY24

    Overall capacity growth for the full year.

    Capacity PCDs growth
    10.9%YoY
    Q4 FY24

    Capacity growth for the fourth quarter.

    Operating capacity growth (Ocean)
    18%YoY
    2025

    Growth in operating capacity for the Ocean segment in 2025.

    Operating capacity growth (River)
    7%YoY
    2025

    Growth in operating capacity for the River segment in 2025.

    Occupancy
    95.4%
    FY24

    High occupancy rate for the River segment.

    Occupancy
    93.9%
    FY24

    High occupancy rate for the Ocean segment.

    Moody's corporate rating
    BA3Upgraded from B1
    as of Dec 31, 2024

    Aligned with S&P's rating, reflecting continuous improvement in credit metrics.

    Industry KPIs

    4
    MetricValueDetails
    Comparable sales comps7.4%%
    Booked position booking window88%%
    Gross bookings value room nights$5.3 billionUSD
    Net unit growth development pipeline53.3%%

    Orderbook & backlog

    6
    Advanced bookings$5.3 billionFebruary 23, 2025

    +26% YoY (at same point)

    Represents bookings for the 2025 season.

    Ocean advanced bookings$2.4 billionFebruary 23, 2025

    +30% YoY (at same point)

    Represents bookings for the 2025 Ocean season.

    River advanced bookings$2.6 billionFebruary 23, 2025

    +24% YoY (at same point)

    Represents bookings for the 2025 River season.

    2025 capacity sold88%February 23, 2025

    Overall capacity sold for the 2025 season.

    2025 Ocean capacity sold87%February 23, 2025

    Ocean segment capacity sold for the 2025 season.

    2025 River capacity sold89%February 23, 2025

    River segment capacity sold for the 2025 season.

    Product announcements

    6
    ProductTypeDetails
    Viking Velalaunch
    Viking Vestalaunch
    New River vessels (2025 deliveries)launch
    New River long shipsroadmap
    Additional River vessels (options)roadmap
    River vessels for Egyptroadmap

    Risks & headwinds

    4
    Market uncertainties impacting booking paceNear-term (February 2025)

    February bookings slowed down after a record January.

    Mitigation: Leveraging strong advanced bookings, marketing capabilities, and resilient customer demographic; management has time to monitor and react.

    Potential for 2025 booking curves to be too steepFY25

    2025 booking curves are 'a little bit too steep'.

    Mitigation: Management may slow the booking pace to optimize pricing and overall revenue.

    Impact of macro environment on customer demandOngoing

    Potential impact from declines in customer portfolios.

    Mitigation: Viking's high-end, well-off customer demographic is considered resilient; company has strong financial position and ability to generate demand from its database.

    New competition in the river cruise marketLong-term

    Royal Caribbean entering the river market.

    Mitigation: Viking highlights its 52% market share, large order book, customer satisfaction, unique small ship operations, wide destination portfolio, direct marketing power, and 72 premier docking rights as barriers to entry and competitive advantages.

    What to watch in Q1 FY25

    5

    2026 Booking Update

    next quarter
    CurrentAhead of 2025 at same point (rate and volume)
    TargetMore fulsome update on 2026 bookings

    Why it matters

    Provides insight into future demand and pricing power beyond the current year.

    We anticipate we will be able to give a more fulsome update for '26 in the next call.

    Q&A highlights

    5

    Why aren't 2026 booking curves included, and how are 2026 bookings looking? Also, how will Viking respond to new competition in the river market, specifically Royal Caribbean?

    Leah stated that 2026 bookings are ahead of 2025 at the same point in time, both in rate and volume, but the focus remains on 2025. Tor welcomed competition, highlighting Viking's 52% market share, large order book (108 vessels by 2028), strong customer satisfaction, unique small ship operations, wide destination portfolio, and direct marketing power, including 72 premier docking rights.

    “I think we'll have 108 derivatives by 2028. So 10 more or less from somebody else. It is certainly something, which will not make an impact on us.”

    asked by Steven Wieczynski · answered by Torstein Hagen

    2 min read6 chapters

    Detailed Narrative

    01

    2024 Performance Highlights

    Viking achieved remarkable 2024 results, driven by 6.3% capacity growth and a 7.4% net yield increase. This led to a 14% rise in adjusted gross margin to over $3.5 billion and adjusted EBITDA of $1.3 billion, up 23.7% year-over-year. The company also maintained a 53% repeat guest rate and over 50% direct bookings, reflecting strong customer satisfaction and operational efficiency.

    02

    Strategic Differentiators and Market Position

    Viking attributes its success to its focus on core guest demographics, the 'One Viking' brand, a well-defined product, and an efficient fleet. The company holds a 52% market share in Rivers and 24% in Oceans. Key advantages include owning or controlling 72 premier docking locations, extensive in-house operations, and unique ship designs that simplify sales and optimize revenue, such as exclusive docking rights in Paris and Egypt.

    03

    Fleet Modernity and Design Advantages

    Viking boasts one of the youngest fleets in the industry, which allows for more efficient operations, lower fuel consumption, and reduced maintenance. The unique design of River long ships, featuring a Square Bow and three full decks, maximizes usable space and accommodates more guests, enhancing profitability. Ocean ships are designed without casinos or children's entertainment, focusing on core demographics and a broader range of onboard amenities.

    04

    Capacity Expansion and Order Book

    The company is committed to its leadership position, with 10 river ships and 1 ocean ship scheduled for delivery in 2025, contributing to a 12% core capacity growth. Viking also signed contracts for 8 new River long ships for 2027/2028 delivery and secured options for 8 additional River vessels for 2029/2030, projecting a 53.3% increase in total berths by 2030.

    05

    Booking Environment and Outlook

    As of February 23, 2025, Viking was 88% booked for 2025 with $5.3 billion in advanced bookings, a 26% increase from the prior year. While January was a record booking month, February saw a slight slowdown due to market uncertainties. Management noted that 2026 bookings are pacing ahead of 2025 at the same point, both in terms of rate and volume.

    06

    Capital Allocation and Financial Strength

    Viking ended 2024 with $2.5 billion in cash and an undrawn revolver of $375 million, achieving a net leverage of 2.4x. The company's capital allocation prioritizes supporting its strong order book and reinvesting in the business for organic growth. A large cash reserve provides financial safety and flexibility for potential M&A opportunities that align with Viking's 'one brand' philosophy.

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