Royal Caribbean Group reported second-quarter results above its expectations and increased its full-year earnings guidance, supported by strong close-in demand, favorable joint venture performance and lower-than-anticipated costs.
The company generated approximately $1.1 billion in net income, or $4.20 per diluted share, compared with net income of approximately $1.2 billion, or $4.41 per diluted share, during the same quarter in 2025.
Adjusted net income was approximately $1.1 billion, or $4.21 per share, compared with $1.2 billion, or $4.38 per share, a year earlier.
Quarterly revenue increased 6% year over year to approximately $4.8 billion, while adjusted EBITDA reached $1.8 billion.
Royal Caribbean increased its passenger capacity by 5% and carried approximately 2.4 million guests during the quarter, representing a 6% increase from the prior-year period.
The company reported a load factor of 110%. Cruise lines can report load factors above 100% when cabins accommodate more than two passengers, causing occupied passenger berths to exceed the standard double-occupancy capacity measurement.
Net yields increased 1.9% on a reported basis and 1.2% in constant currency. The growth exceeded the company’s previous guidance, primarily because close-in demand was stronger than anticipated.
Close-in bookings are reservations made relatively near a ship’s departure date. Strong demand for the remaining inventory can support pricing and improve overall revenue performance.
Gross margin yields declined 5.6% on a reported basis. Gross cruise costs per available passenger cruise day increased 4.5%, while net cruise costs excluding fuel rose 4.4% as reported and 3.9% in constant currency.
Royal Caribbean said its costs were lower than expected, primarily because of the timing of certain expenses. Some of those costs may therefore occur during a later reporting period rather than representing permanent savings.
The company continues to report strong demand across its vacation portfolio, although extended geopolitical activity produced a modest near-term effect on bookings for selected itineraries.
Despite those disruptions, Royal Caribbean said it remains booked at record prices, with booking volumes above last year’s levels and strong load factors across its brands.
Demand for onboard purchases and destination experiences also remained healthy. Guests are increasingly buying dining packages, beverage plans, shore excursions, internet access and other experiences before their cruises begin.
Early booking trends for 2027 are ahead of historical levels, including for some itineraries affected by geopolitical developments during 2026.
Royal Caribbean raised its full-year adjusted earnings guidance to between $17.73 and $17.87 per share. The company previously expected adjusted earnings of $17.10 to $17.50 per share.
The revised outlook represents anticipated year-over-year adjusted earnings growth of approximately 14%.
Full-year revenue is expected to increase approximately 9%. Net yields are projected to rise between 2.35% and 2.85% on a reported basis and between 1.75% and 2.25% in constant currency.
Net cruise costs excluding fuel are expected to increase approximately 0.4% as reported and remain approximately flat in constant currency.
The earnings outlook implies a compound annual growth rate of approximately 23% during the first two years of Royal Caribbean’s Perfecta program.
Perfecta is the company’s multiyear financial initiative targeting a 20% earnings compound annual growth rate from 2024 through 2027 and a return on invested capital in the high teens by 2027.
For the third quarter, Royal Caribbean expects revenue to increase approximately 8% year over year, while net yields are projected to remain approximately flat on both a reported and constant-currency basis.
Adjusted earnings are expected to range from $6.26 to $6.36 per share. Net cruise costs excluding fuel are projected to decline between 1.2% and 1.7% as reported.
Royal Caribbean used 422,000 metric tons of fuel during the second quarter at an average bunker price, after hedging, of $839 per metric ton.
The company included $362 million of fuel expense in its third-quarter guidance based on expected consumption of 441,000 metric tons. Approximately 58% of its anticipated third-quarter consumption is hedged through swaps.
Full-year fuel expense is projected at approximately $1.34 billion on consumption of 1.76 million metric tons. Royal Caribbean said 58% of its remaining 2026 fuel requirements are hedged.
Fuel hedging can reduce exposure to sudden price increases by establishing prices for part of the company’s future consumption. However, hedging can also limit the benefit when market prices decline.
Royal Caribbean ended June with approximately $6.9 billion in liquidity, including cash, cash equivalents and unused revolving credit capacity.
In July, the company increased the capacity of its revolving credit facility by $250 million to $6.6 billion.
Royal Caribbean returned more than $600 million to shareholders during the second quarter, consisting of $199 million in share repurchases and $404 million in dividends.
Approximately $805 million remains available under its existing share repurchase authorization.
The company is also expanding its vacation portfolio through new ships, loyalty programs and digital capabilities.
Legend of the Seas, the third ship in Royal Caribbean’s Icon class, launched earlier in July. Management believes the Icon platform can help the company capture a larger share of the broader vacation market rather than competing only with other cruise operators.
KEY QUOTES:
“The strong second quarter performance demonstrates the continued strength of our brands, the appeal of our vacation experiences, and the momentum in our business.”
“We expect another year of approximately double-digit growth in revenue and earnings, driven by consumers’ preference for our leading brands and supported by our strong booked position, leading margin profile, and fortified balance sheet.”
“Legend of the Seas, which launched earlier this month as the third ship in our Icon class, is part of a platform that is reshaping the cruising experience and delivering exceptional returns.”
Jason Liberty, Chairman and CEO of Royal Caribbean Group
“Consumer demand for our vacation experiences is strong, and guests continue to demonstrate a desire to spend on memorable experiences with us.”
“While still very early, booking trends for 2027 are encouraging and pacing ahead of historical levels, including for itineraries where demand was impacted by geopolitical developments this year.”
Naftali Holtz, Chief Financial Officer of Royal Caribbean Group
