Viking Holdings Ltd Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Tor highlighted that the third quarter was great with very good financial results, strong booking environment, and a significant operational milestone. Net yield increased 7.1% year-over-year to $617, the highest in Viking's history. The fleet grew to 103 ships, with modernization of river and ocean voyages, and focus on destination-focused products. Viking controls or has priority access to 113 coveted docking locations. The company was rated #1 for oceans and rivers by Conde Nast Traveler and World's Best by Travel + Leisure for the fifth consecutive year.
• Leah discussed financials: consolidated capacity grew 11% and net yields rose 7.1%, resulting in a 21.4% increase in adjusted gross margin year-over-year. Adjusted EBITDA was $704 million, up 26.9% year-over-year, with a margin of 52.8%. SG&A expenses remained flat as a percentage of adjusted gross margin. The balance sheet showed total cash and cash equivalents of $3 billion, net debt of $2.8 billion, and a net leverage ratio of 1.6x. The company also upsized its revolving credit facility to $1 billion and had Moody's upgrade its rating.

Segment Performance

• River Segment: Capacity PCDs increased 5.2% year-over-year. Occupancy for the period was 96%, adjusted gross margin increased 14.3% year-over-year to $1.4 billion, and net yield was $589, up 7.8% year-over-year. Revenue contribution from river segment is not explicitly stated as a percentage but is a key part of the consolidated performance.
• Ocean Segment: Capacity PCDs increased 15.3% year-over-year. Occupancy for the period was 95.4%, adjusted gross margin increased 28.5% year-over-year to $1.5 billion, and net yield increased 10.9% to $591. Revenue contribution from ocean segment is not explicitly stated as a percentage but is a key part of the consolidated performance.

Guidance

• Strong booking environment: As of November 2, 2025, 96% of 2025 core capacity was sold and 70% of 2026 core capacity was already booked. For 2025 core products, advanced bookings equaled $5.6 billion, 21% higher than the 2024 season at the same point in time with a 12% increase in capacity. For 2026 core products, ocean capacity is projected to increase by 9% and 77% of the capacity has been sold with advanced bookings of about $2.4 billion. River operating capacity is expected to grow 10% year-over-year, with 62% of 2026 capacity sold and advanced bookings of $2.2 billion.

Risks

• Management noted a cautionary statement regarding forward-looking information, mentioning known and unknown risks, uncertainties, and other factors that may cause actual results to differ from those expressed or implied. These risks are detailed in the press release and SEC filings.

Q: Just circling back to this nice uptick in booked revenue per passenger cruise day in the last 3 months...

A: Leah stated that the booking curves reflect the strength of the consumer, who appreciates and is loyal to Viking, and are willing to plan ahead and pay for travel with Viking.

Q: One of Norwegian is moving capacity out of Europe in '26. Is that a tailwind for you guys?

A: Tor stated that Norwegian's mass market big ships don't impact Viking, and Viking is in a unique position, so they don't worry too much about other companies' actions.

Q: I wanted to go back on the comments that you mentioned around inorganic growth. What type of things could be on the table?

A: Leah mentioned considering acquisitions or opportunities that are scalable, margin accretive, and complementary to the brand, including potential land-based products. Tor added that Viking is dipping its toes into the Chinese market, targeting the Chinese outbound market with river and ocean ships.

Q: I wanted to go back on the comments around inorganic growth. And just maybe if you could give us a refresh on what type of things high level could be on the table there...

A: Leah said they want acquisitions to be scalable, not distract from organic growth, margin accretive, and complementary to the brand. Tor mentioned Viking is targeting the Chinese market with river and ocean ships as a potential growth engine.

Q: You guys have laid out a really impressive, committed capacity growth book for the next 6 years, maybe 8 years in ocean. In terms of that new capacity coming online...

A: Tor and Leah discussed that the new capacity is for itineraries in Europe and other regions where larger ships can't go, with focus on destination-focused travel, and that Viking's product is different from the Caribbean market which they have little presence in.