Carnival Corporation & plc Q3 FY2025 earnings call

• Record results: Delivered record revenues, yields, operating income, EBITDA, and customer deposits. Net income hit $2 billion, a 10% increase over pre-pause benchmarks.
• Same ship yield improvement: Yields increased 4.6% on a same ship basis, outperforming guidance due to strong close-in demand and onboard spending.
• Celebration Key: Opened in July 2025 to rave reviews, with nearly half a million guests visiting by late July. Expectations for 2026 include 2.8 million guests visiting via 20 Carnival ships from 12 home ports.
• Brand initiatives: Aida's evolution program modernizing its fleet, Carnival's new marketing campaign and enhanced loyalty program, and continued investment in Caribbean destinations like Celebration Key and Relax Away Hastings Quay.
• Diversified portfolio: Strong performance in Alaska, Europe, and The Caribbean, with the portfolio being the largest and most diverse in the industry.

Carnival Corporation & plc had a stellar Q3 2025 with record revenues, yields, operating income, EBITDA, and customer deposits. Net income reached an all-time high of $2 billion, surpassing pre-pause benchmarks by nearly 10%. Yields increased 4.6% on a same ship basis, and cruise costs without fuel per available lower berth date (ALBD) were up 5.5% but beat guidance by 1.5 points. ROIC for the trailing twelve months was 13%, and net debt to EBITDA decreased to 3.6 times. Revenue contribution wasn't broken down by specific product segments in detail, but overall, the business performed exceptionally with strong same ship yield improvement and cost discipline.

• Full-year net income guidance improved: Net income guidance raised to approximately $2.9 billion or $2.14 per share, a $235 million or $0.17 per share improvement over June guidance.
• 2026 outlook: Capacity increase of 0.8% compared to 2025; Carnival Rewards loyalty program launching in June 2026 impacting yields by about half a point; destination expenses in 2026 expected to impact cost comparisons by ~0.5 points; potential additional dry dock expenses up to 1 percentage point.
• Refinancing and deleveraging: Reduced secured debt by nearly $2.5 billion, with net debt to EBITDA expected to be 3.6 times at year-end 2025, targeting under 3 times long-term.

Q: Robin Farley asked about historic price levels and the impact of Celebration Key on forward bookings and yields.

A: Josh Weinstein stated both North America and Europe are at historical record high pricing, and Celebration Key is meeting expectations with a premium on ticket prices for itineraries involving it.

Q: Brent Montour inquired about consumer behavioral shifts within the loyalty set.

A: Josh Weinstein noted strong booking trends with Carnival booking 8% more in Q3 2025 than Q3 2024, and emphasized the business's strong execution across brands.

Q: Steve Wieczynski asked about 2026 vs. prior and 2027 bookings.

A: Josh Weinstein said 2027 bookings had an unprecedented start, and on 2026, while not giving guidance, highlighted positive booking trends and brand initiatives.

Q: James Hardiman clarified forward booking and connected brand initiatives to pricing.

A: Josh Weinstein discussed Aida's evolution program, Celebration Key's impact, and ongoing brand initiatives driving pricing.

Q: Ben Chaiken asked about capital return and near-term yield expectations.

A: Josh Weinstein mentioned close to being able to return capital to shareholders, and David Bernstein noted Q3 yield strength due to close-in demand and onboard spending.

Q: Matthew Boss asked about net yields, margins, and returns.

A: Josh Weinstein said returns can continue to improve, and David Bernstein noted expecting yields to grow faster than costs over time.

Q: Connor Cunningham asked about laggard brands and dry docks in 2027.

A: Josh Weinstein said laggard brands have room for improvement, and David Bernstein noted dry dock plans for 2027 with fewer days than 2026 potentially.

Q: Lizzie Dove asked about Aida's evolution program and Galveston competitiveness.

A: Josh Weinstein said more midlife ship refurbishments are in store, and Carnival will continue to enhance the guest experience in Galveston.

Q: David Katz asked about capital allocation and leverage.

A: David Bernstein said it's a Board decision, and Josh Weinstein noted progress towards returning capital once leverage targets are met.

Q: Sharon Zackfia asked about Celebration Key learnings and loyalty program impact.

A: Josh Weinstein mentioned tweaks to Celebration Key operations, and David Bernstein clarified loyalty program impact is second half 2026.

Q: Chris Stathopoulos asked about protecting pricing power in The Caribbean.

A: Josh Weinstein discussed Carnival's investments, destination strategy, and long-term commitment to The Caribbean.

Q: Vince Cibile asked about multiyear occupancy and yield opportunities.

A: Josh Weinstein stated the business focuses on optimizing price and occupancy trade-offs across brands.