Royal Caribbean Cruises NYSE: RCL reported second-quarter results that exceeded its expectations, citing stronger close-in demand, higher onboard spending and favorable costs, while raising its full-year adjusted earnings outlook despite a modest impact from geopolitical events on European itineraries.
Chairman and Chief Executive Officer Jason Liberty said second-quarter revenue rose 6% year over year, while adjusted earnings came in 8% above the company’s guidance. The company also returned more than $600 million to shareholders through dividends and share repurchases during the quarter.
“Demand for our vacation experiences continue to strengthen,” Liberty said, pointing to an experience-seeking consumer, technology and loyalty platforms, and net promoter scores averaging in the low- to mid-70s.
Second-Quarter Results Surpass Guidance
Executive Vice President and Chief Financial Officer Naftali Holtz said adjusted earnings per share reached $4.21, or $0.33 above the midpoint of the company’s prior guidance. The result was supported by higher revenue, lower costs and favorable performance below the operating line, including joint ventures.
- Capacity increased 5% year over year.
- Total revenue increased 6%.
- Net yields rose 1.2%, exceeding guidance by 100 basis points.
- Net cruise costs per available passenger cruise day, excluding fuel, increased 3.9%, about 90 basis points better than expected.
- Adjusted EBITDA was $1.8 billion, with an EBITDA margin of 38%.
- Operating cash flow totaled $1.9 billion.
Holtz said the yield outperformance was driven by stronger-than-anticipated and accelerated close-in bookings, particularly for Caribbean products. He added that cost performance benefited primarily from expenses shifting into the second half of the year.
Liberty said onboard revenue continued to rise as guests spent more on beverages and shore excursions. He attributed part of that growth to the company’s ability to help travelers identify and reserve activities before boarding. More than 90% of guests use the company’s app, he said, and more than half of onboard revenue is purchased before embarkation.
European Headwinds Temper Full-Year Yield Outlook
The company reaffirmed its full-year net yield growth outlook of 1.75% to 2.25% while expecting capacity to increase 6.6%. Revenue is expected to grow 9% for the year, according to Holtz.
Management said the prolonged conflict in the Middle East has affected consumer destination preferences and modestly weighed on bookings for some European sailings, particularly those in the third quarter. Liberty said Europe had started the year strongly, but geopolitical activity and fuel-related effects curtailed demand relative to the company’s earlier expectations. He emphasized that European yields remain positive, though below prior expectations.
“We would’ve raised the back half of the year, if not for those activities,” Liberty said in response to an analyst question.
The Caribbean represents 57% of the company’s annual capacity and 44% of third-quarter capacity, while Europe represents 14% of annual capacity and 28% of third-quarter capacity. Alaska is expected to account for 5% of annual capacity and 13% of third-quarter capacity.
For the third quarter, Royal Caribbean expects capacity to rise 8.5% year over year and net yields to be roughly flat. Holtz said deployment mix changes and global events are creating yield headwinds in the period. He expects fourth-quarter yield growth to reaccelerate, aided by more favorable comparisons, deployment mix and dry-dock timing.
Third-quarter adjusted earnings per share are forecast at $6.26 to $6.36, representing double-digit year-over-year growth. For the full year, adjusted earnings per share are expected to range from $17.73 to $17.87, a projected increase of 14%.
Bookings, Loyalty and Destination Investments
Management said its booked position for 2026 remains in line with prior years at record pricing. While executives stressed that it is still early in the booking cycle, they said 2027 bookings are pacing ahead of historical levels, with higher pricing and an elevated comparable booked load factor.
Liberty said booking patterns have shifted toward trips booked closer to departure as travelers seek flexibility and ease. Unlike prior years, he said, the company has been able to increase pricing on close-in demand rather than relying on discounts.
The company is also expanding loyalty and digital initiatives designed to connect its brands and vacation offerings. Liberty said the Royal ONE co-branded card, launched in April, has exceeded expectations on sign-ups and cardholder spending. Cardholders spend more on company vacation experiences than non-cardholders and are twice as likely to sail multiple times, he said.
Points Choice and Status Match have generated more than 500,000 new loyalty enrollments, according to Liberty. The company has also seen repeat-guest mix increase year over year while continuing to attract travelers new to cruising and to its brands.
Royal Caribbean International President and CEO Michael Bayley highlighted the Royal Beach Club in Paradise Island, saying it had become the company’s top-rated experience in Nassau. He also cited the company’s Perfect Day destination and the deployment of Icon-class ships as differentiators in the Caribbean market.
Capital Returns, Balance Sheet and Mahahual Update
Royal Caribbean ended the quarter with $6.9 billion in liquidity and leverage below three times, Holtz said. In July, the company increased its revolving credit facility capacity by $250 million to $6.6 billion.
During the second quarter, the company paid $404 million in dividends and repurchased 0.8 million shares. It had $805 million remaining under its current share repurchase authorization.
On its planned Mahahual, Mexico destination project, Liberty said the company remains in discussions with community leaders, public officials and other stakeholders. Mexican government engagement with local stakeholders is expected to take time and affect the company’s previously planned timeline. Royal Caribbean said it remains committed to pursuing sustainable tourism development that includes environmental, economic and social benefits for the region.
About Royal Caribbean Cruises (NYSE:RCL)
Royal Caribbean Cruises NYSE: RCL, operating as part of the Royal Caribbean Group, is a global cruise company that develops, markets and operates passenger cruise ships. The company operates multiple consumer-facing cruise brands that offer short- and long-duration itineraries and a range of onboard experiences. Its core activities include itineraries and voyage operations, guest services and hospitality, onboard food and beverage, entertainment and recreation programming, and the commercial activities needed to sell and support cruises through both direct and travel‑agent channels.
Royal Caribbean's ships serve a broad set of geographies worldwide, regularly deploying vessels in the Caribbean, North America (including Alaska), Europe, Asia, Australia and South America.
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