Impressive Fourth Quarter Shows Growth and Optimism
Fourth quarter exceeds expectations, contributing to over 30% earnings growth.
Record start to WAVE season fostering momentum for 2026.
Projected Adjusted EPS between $17.70 and $18.10 for 2026.
Expansion into vacation portfolio includes the new Discovery Class ships for Royal Caribbean and 10 additional vessels for Celebrity River Cruises.
Royal Caribbean Group (NYSE: RCL) reported outstanding financial results for 2025, showcasing a remarkable Earnings per Share (EPS) of $15.61, with an Adjusted EPS of $15.64. These figures were bolstered by favorable revenue conditions and robust performance from partnered ventures. Looking forward, the company anticipates sustained demand and forecasts Adjusted EPS between $17.70 and $18.10 for 2026.
Chairman and CEO, Jason Liberty, remarked, "2025 was an exceptional year, and our momentum is set to continue into 2026. The WAVE season has kicked off successfully, reflecting strong consumer interest in our diverse brands and unique vacation experiences. We anticipate another year of financial growth, seeing both revenue and earnings expand by double digits. We are committed to meeting our Perfecta goals by 2027."
Further investment into innovative vacation experiences is paramount. Liberty noted, "Our new Discovery Class for Royal Caribbean, along with the expansion of Celebrity River Cruises and the introduction of five exclusive destinations by 2028, will enhance our long-term growth trajectory. We aim to create lasting value through connectivity of our innovative ships, distinctive destinations, loyalty programs, and leading technologies, ensuring we engage new guests and encourage repeat visitation, thus transforming vacations into lifelong experiences."
2025 Annual Financial Performance Overview
Highlights from 2025:
- Gross Margin Yields saw an increase of 8.5%, while Net Yields rose by 3.8% as-reported, and 3.7% when adjusted for Constant Currency.
- While Gross Cruise Costs per Available Passenger Cruise Day (APCD) decreased by 0.6% as-reported, Net Cruise Costs (NCC), excluding Fuel, per APCD increased by 0.1% as-reported, and remained flat in Constant Currency.
- Total revenues amounted to $17.9 billion, with Net Income of $4.3 billion, equating to $15.61 per share. Adjusted Net Income mirrored this at $4.3 billion or $15.64 per share, alongside an Adjusted EBITDA of $7.0 billion.
2026 Financial Outlook
Looking towards 2026:
- Anticipated Net Yields are projected to increase between 2.1% and 4.1% as-reported, and between 1.5% and 3.5% when adjusted for Constant Currency. This includes a slight reduction due to itinerary modifications in China.
- It's expected that NCC, excluding Fuel, per APCD will increase between 0.4% to 1.4% as-reported, and will remain stable or rise up to 1.0% in Constant Currency.
- Adjusted EPS is on track to fall within the range of $17.70 to $18.10, indicating a compound annual growth rate of 23% throughout the initial two years of the Perfecta initiative.
- Moreover, the company forecasts double-digit growth in both revenue and Adjusted EPS for 2026, sustained by a capacity boost of 6.7% and expected yield increases.
Fourth Quarter Highlights
In the fourth quarter of 2025, Net Income reached $0.8 billion or $2.76 per share, a notable increase compared to $0.6 billion or $2.02 per share from the same quarter in 2024. Adjusted Net Income for the quarter stood at $0.8 billion or $2.80 per share, up from $0.4 billion or $1.63 per share year-over-year. Revenues for this quarter totalled $4.3 billion, with Adjusted EBITDA amounting to $1.5 billion.
Additional statistics show Gross Margin Yields surging by 9.2% and Net Yields climbing by 3.1%, with a load factor of 108% for the period.
Overview of Future Bookings and Revenue Trends
Since the last earnings call, the company reported record-breaking booking activity fueled by successful Cyber Sales and the onset of the WAVE season. Currently, approximately two-thirds of the 2026 capacity is booked, aligning with historical patterns and record rates. Furthermore, there is an ongoing trend of increased close-in bookings. Passengers’ onboard expenditures and pre-cruise purchases have outstripped previous years, predominantly driven by higher participation and pricing. Notably, nearly 50% of onboard revenue for 2025 was booked prior to cruising, with 90% of these pre-cruise transactions completed through digital channels which highlights a transition in guest buying behavior as preparations for their cruises become increasingly digitized.
CFO, Naftali Holtz, expressed satisfaction with the portfolio's performance, remarking, "Consumers are prioritizing our offerings, reflecting a strong network across our brands. The Caribbean, in particular, continues to show growth in net yields as our investments enhance our competitive edge in the region."
Expanding Vacation Offerings
Royal Caribbean recently revealed key agreements with renowned shipyard Chantiers de l'Atlantique in France, aimed at constructing the anticipated Discovery Class ships that promise to redefine guest experiences on the high seas. The current arrangement entails two firm ship orders along with options for four additional vessels. The inaugural ship is expected to set sail in 2029, while the second is scheduled for delivery in 2032.
Furthermore, Celebrity Cruises has committed to adding ten new ships to its fleet, projecting an expansion of the river cruise offerings to twenty vessels by 2031. The introduction of Celebrity River Cruises marks Royal Caribbean Group's expansion into premium river cruising, set to begin in 2027, transporting guests to some of the world's most historic cities.
Liberty emphasized, "We are excited about the opportunities this expands within our vacation portfolio across both ocean and river. The Discovery Class initiative signifies a noteworthy advancement towards innovation and sustainability, while Celebrity River Cruises will allow us to reach iconic destinations and heritage-rich cities. With these developments, we aspire to present multiple incentives for our guests to choose us regularly and explore our brands throughout their journeys."
Fuel Expense Strategy and Financial Guidance
The fourth quarter saw bunker pricing settle at $667 per metric ton, while consumption reached 439,000 metric tons. Notably, the company does not forecast fuel costs, as pricing is contingent upon current market conditions. For the first quarter of 2026, it estimates a fuel expense of $275 million based on anticipated consumption of 436,000 metric tons, more than two-thirds of which is hedged via swaps. This hedging strategy extends to 60%, 47%, and 26% for the years 2026, 2027, and 2028, respectively.
The projected average annual cost per metric ton for the hedging portfolio is approximately $474 for 2026, while expectations for 2027 and 2028 converge around $393 and $416 respectively.
Looking Ahead to 2026
Royal Caribbean has set a conference call to discuss these results, offering an avenue for detailed insights into the company's strategies and future growth plans. The financial landscape and bookings trajectory indicate a robust trajectory for Royal Caribbean Group as it ventures into 2026 with elevated expectations for sustained growth and a commitment to introducing groundbreaking vacation experiences.
Frequently Asked Questions
What were the key financial highlights for Royal Caribbean in 2025?
Royal Caribbean reported an EPS of $15.61, with a strong revenue of $17.9 billion and a significant growth in net income.
What is the projected EPS for Royal Caribbean in 2026?
The company anticipates an Adjusted EPS to range between $17.70 to $18.10 for 2026.
How has the WAVE season affected bookings for Royal Caribbean?
The WAVE season has demonstrated remarkable booking activity, marking the strongest weeks in the company’s history thus far.
What new ships is Royal Caribbean planning to add?
Royal Caribbean plans to add its new Discovery Class ships, with the first set to debut in 2029 and an expansion of Celebrity River Cruises to 20 ships by 2031.
What insights were provided about fuel costs and hedging strategies?
The company mentioned ongoing hedging strategies, securing two-thirds of its fuel costs through swaps, thus mitigating volatility in fuel pricing into the upcoming years.
