Royal Caribbean Group Q3 FY2025 earnings call

Strategic Overview

• Continues to see strong momentum across business, powered by accelerated demand, growing loyalty, and high guest satisfaction. Commercial flywheel with innovative ships, distinctive destinations, and world-class brands drives growth.
• Focus on building a vacation platform with innovative ships, exclusive destinations, technology, and AI to lead the leisure market.

Third Quarter Results

• Exceeded expectations driven by strong close-in demand and lower costs. Capacity increased 3%, delivered nearly 2.5 million vacations (+7% y-o-y) with high guest satisfaction. Net yields grew 2.4%, adjusted EPS $5.75 (11% higher y-o-y).

Outlook

• Fourth quarter capacity up 10%, expected revenue up ~13% y-o-y. Full year net yield 3.5%-4% (25 bps better than initial expectations), adjusted EPS $15.58-$15.63 (32% y-o-y growth), operating cash flow ~$6B.

New Initiatives

• Announced Royal Beach Club Santorini, expanding exclusive destination portfolio. Celebrity River received extraordinary response. Launched Points Choice loyalty program. Secured shipbuilding slots with Meyer Turku through next decade.

Digital Capabilities

• E-commerce visits and conversion rates increased double digits. App and digital channels drive revenue, improve operational efficiencies, and deepen guest engagement.

No specific breakdown of product segments by absolute revenue and revenue contribution % provided in the transcript.

Full Year 2025

• Net yield growth 3.5%-4%, adjusted EPS $15.58-$15.63, adjusted EBITDA ~$7B (+18% y-o-y), adjusted EBITDA margin growth 290 bps.

Fourth Quarter 2025

• Capacity up 10% y-o-y, net yield growth 2.2%-2.7%, adjusted EPS $2.74-$2.79.

2026

• Capacity up 6%, '26 EPS has $17 handle, moderate yield growth, anemic cost growth, considering fuel and global minimum tax impacts.

• Adverse weather and unplanned extension of Labadee closure impacted fourth quarter outlook.
• Global economic environment and consumer spending trends could affect demand.
• Fuel cost increases and global minimum tax changes could impact earnings.

Q: Steve Wieczynski asks about 2026 EPS starting with $17 handle and high-level outlook for 2026.

A: Jason Liberty says it's early in planning, moderate yield growth, anemic cost growth, considering fuel and global minimum tax impacts.

Q: Robin Farley asks about cost expectations for 2026 and bookings side of things.

A: Naftali Holtz says cost growth includes structural costs and AI leverage; Jason Liberty says bookings influenced by short product and optimal book position.

Q: Matthew Boss asks about global demand progression in Q3 and drivers of 2026 bookings.

A: Jason Liberty says new customer acquisition via brand evolution and AI tools, strong demand in various markets.

Q: Elizabeth Dove asks about Caribbean oversupply.

A: Jason Liberty says manageable supply increase, differentiated assets keep guests in ecosystem.

Q: Brandt Montour asks about cleansing fourth quarter yield growth.

A: Naftali Holtz says math is directionally correct considering new hardware and like-for-like.

Q: James Hardiman asks about 2026 puts and takes.

A: Jason Liberty says consumer strong but not immune to environment, moderate yield growth and anemic costs drive margin.

Q: Benjamin Chaiken asks about River opportunity and capital allocation.

A: Jason Liberty says product right, substantial player in River business, no balance sheet/construction limitations.

Q: Conor Cunningham asks about shorter-duration itineraries and 2026 earnings upside.

A: Jason Liberty says different product booking patterns, optimizing revenue, and booking environment strong.

Q: Sharon Zackfia asks about composition of revenue with owned destinations.

A: Michael Bayley says Beach Clubs slip into onboard revenue, Perfect Day drives ticket lift.

Q: Vince Ciepiel asks about yield decel in 2025.

A: Jason Liberty says ship delivery timing and event impacts, but yearly view shows formula-driven growth.

Q: Andrew Didora asks about bond deal for Celebrity Xcel.

A: Naftali Holtz says strong balance sheet allows evaluating financing options, unsecured market offers lower cost and longer tenure.