Carnival Q3 Earnings Call Highlights

Key Points

• Record third-quarter performance: Carnival reported record revenue, yields and net income, with stronger close-in bookings, onboard spending and cost controls helping offset higher fuel prices. Third-quarter yields rose nearly 2.5% year over year, and net income exceeded guidance by more than $100 million.
• Full-year outlook raised: Carnival increased its 2025 earnings-per-share guidance to $2.24, supported by better yields, lower nonfuel costs, improved fuel efficiency and share repurchases despite a projected $150 million fuel-price headwind.
• Demand and balance sheet remain strong: Carnival said bookings for 2027 and 2028 are starting at record occupancy and pricing levels, while customer deposits reached $7.6 billion. The company has repurchased nearly $1.2 billion of stock, reduced debt below $24 billion and received its second investment-grade credit rating.

Carnival NYSE: CCL reported record third-quarter revenue, yields and net income, with results exceeding its prior guidance as stronger close-in bookings, onboard spending and cost controls offset higher fuel prices.

Chief Executive Officer Josh Weinstein said the company generated approximately $2 billion “to the bottom line,” surpassing its June guidance by $100 million. Third-quarter yields rose nearly 2.5% year over year, more than one percentage point above expectations, while cruise costs excluding fuel came in one percentage point better than guidance.

Chief Financial Officer David Bernstein said third-quarter net income exceeded June guidance by more than $100 million, or $0.08 per share. Revenue contributed $0.05 per share of the outperformance, as yields came in 1.2 percentage points above guidance. Cost discipline added $0.02 per share, while improved fuel consumption and other items accounted for the remaining $0.01 per share.

Full-Year Outlook Raised Despite Fuel Headwind

Carnival raised its full-year earnings-per-share guidance to $2.24, up $0.02 from its prior outlook. The company expects more than $150 million of operational improvement compared with June guidance, driven by better yields, lower cruise costs excluding fuel and improved fuel consumption.

That improvement is expected to offset a $150 million impact from higher projected fuel prices. Bernstein said higher fuel prices represent a $0.11-per-share headwind relative to the company’s prior outlook, while operating improvements are expected to add $0.12 per share and stock repurchases are expected to add another $0.01 per share.

For the full year, Carnival now expects yield growth of about 2.3%, more than half a percentage point ahead of June guidance. Fourth-quarter yields are projected to rise about 1.7% year over year, or approximately 2.3% on a normalized basis after adjusting for accounting related to Carnival Cruise Line’s new loyalty program.

Cruise costs excluding fuel per available lower berth day are now forecast to increase about 2.2% for the full year. On a normalized basis, adjusted costs excluding fuel are expected to rise approximately 1.1%, reflecting timing of expenses, partial-year operating costs for exclusive destinations and elevated logistics expenses associated with disruption from the Middle East conflict.

Management highlighted fuel efficiency as a central part of its cost strategy. Bernstein said fuel consumption per available lower berth day has declined 26% since 2019, resulting in nearly $750 million of savings at the fuel prices used in the company’s September guidance. Weinstein said Carnival does not view fuel hedging as its preferred long-term answer to price volatility and instead remains focused on reducing consumption.

Bookings Build for 2027 and 2028

Weinstein said booking momentum improved beginning in June and accelerated through July and August. Carnival is already about half booked for 2027, with occupancy and pricing both at record levels, he said. The company expects capacity growth of 0.5% in 2027.

Management said the disruption in bookings experienced during the spring extended into the first quarter of 2027, particularly affecting long-haul flights, exotic itineraries and early-year sailings. However, first-quarter 2027 bookings have rebounded meaningfully over the past three months. Carnival expects the effects of the earlier disruption to be more concentrated in the first quarter, while it cited strong positioning for the remainder of the year.

Bookings for 2028 have also started at higher occupancy and higher prices compared with the prior year, according to Weinstein. Customer deposits reached a third-quarter record of approximately $7.6 billion, up about 7% despite flat capacity growth over the coming 12 months.

The company reported continued strength in onboard spending. Bernstein said third-quarter onboard and other revenue grew 7%, with broad-based gains across categories and brands on both sides of the Atlantic. More than half of revenue is now pre-booked through packages and bundled offerings, he said.

Europe Becomes a Larger Part of Deployment

Carnival plans to shift more of its capacity toward Europe, particularly Northern Europe, where it sees increasing interest in cooler-weather destinations, outdoor activities, fjords and northern lights itineraries. In 2027, Europe is expected to tie the Caribbean as Carnival’s largest deployment region, with each accounting for 34% of the company’s mix.

Weinstein said the shift reflects both guest demand and the company’s efforts to optimize revenue and returns. He noted that Carnival expects to maintain an important long-term position in the Caribbean despite industry capacity growth in the region. Princess Cruises is moving one ship from the Caribbean to Japan next year, a move management said should support the company’s broader deployment strategy.

The company also cited its Alaska land-and-sea operations as a differentiator, supported by hotel and lodge rooms, glass-domed rail cars and motor coaches.

Destinations, Fleet Investments and Capital Returns

Carnival said Celebration Key welcomed nearly 2.5 million guests in its first year. With a second pier now open, the destination is expected to host about 3.5 million guests next year, with 31 ships scheduled to call compared with 26 this year. Princess is set to begin calling next month, while AIDA and Costa are expected to add select visits late next year.

Expanded experiences at Relax Away, Half Moon Cay and Isla Tropicale Roatan have each welcomed about 250,000 guests, Weinstein said. Next year, 35% of Carnival Cruise Line’s Caribbean capacity is expected to include itineraries visiting both Celebration Key and Relax Away.

The company is also investing selectively in fleet upgrades. Carnival Festivale is scheduled to enter Caribbean service in May and begin contributing to results in the second half of the year. Additional modernization work is planned for AIDA and Holland America Line vessels, while Cunard’s Queen Mary 2 will receive a major upgrade.

On capital allocation, Carnival has repurchased nearly $1.2 billion of stock, or 45 million shares, through its share-repurchase program. Including its expected fiscal-year dividend payout, the company expects to return nearly $2 billion to shareholders. Total debt has fallen below $24 billion from a peak of $36 billion in 2023, Bernstein said, and Carnival used cash during the quarter to redeem $500 million of 7% notes.

S&P upgraded Carnival’s credit rating during the quarter, making it the second rating agency to assign the company an investment-grade rating. The company said it no longer has secured debt following the release of collateral tied to the upgrade.

About Carnival (NYSE:CCL)

Carnival Corporation & plc NYSE: CCL is a global leisure travel company that operates cruise lines and related vacation businesses. Its brands offer ocean cruises, onboard entertainment, dining, accommodation, excursions and other travel experiences to passengers across a range of price points and destinations.

The company's portfolio includes Carnival Cruise Line, Princess Cruises, Holland America Line, Seabourn, Cunard, P&O Cruises, P&O Cruises Australia, AIDA Cruises and Costa Cruises.

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