Carnival Corporation (NYSE: CCL) Q2 2025 Earnings | 6/24/2025

Carnival Corporation PLC held its second-quarter 2025 earnings call, with CEO Josh Weinstein and CFO David Bernstein presenting "phenomenal results" and expressing optimism for future growth.

Key Highlights:

• Record Performance: Carnival achieved record revenues and yields for the eighth consecutive quarter, along with new second-quarter highs for EBITDA and operating income. Customer deposits also reached an all-time high.

• Strong Financials: Year-over-year, EBITDA increased by 26%, operating income by 67%, and net income more than tripled. Net income surpassed guidance by $185 million, with yields growing by nearly 6.5% (200 basis points above guidance) due to strong close-in demand for both ticket and onboard spending. Unit costs also came in 200 basis points better than expected.

• Margin Expansion: EBITDA margins were 200 basis points higher than 2019 levels, marking the highest margins in nearly 20 years.

• Accelerated 2026 Targets: Carnival met and exceeded its 2026 targets 18 months ahead of schedule, including a 52% increase in trailing 12-month EBITDA per ALBD (Above 2023 baseline) and an ROIC surpassing 12.5%. The company also achieved its goal of reducing carbon intensity by 20% compared to 2019. New targets are anticipated in early Q2 next year.

• Raised Full-Year Guidance: Full-year yield guidance has been raised to 5% based on strong Q2 results, with a projected 16% increase in yields across 2024 and 2025.

• Strategic Investments & Developments:

  • Celebration Key: The new exclusive Caribbean destination is set to open on July 19th and is already a highly searched cruise destination. It is expected to significantly enhance guest experience and generate revenue.

  • Relax Away, Half Moon Key & Isla Tropical: Significant expansions and enhancements are underway for these private island destinations, aiming to offer guests ultimate beach day experiences and drive consideration from land-based alternatives.

  • Fleet Modernization: AIDA DIVA's "AIDA evolution" upgrade has exceeded expectations, with six more AIDA vessels to undergo similar enhancements. Two new AIDA builds are on order for 2030 and 2032.

  • New Ship Features: Carnival Cruise Line's upcoming XL class ships (Carnival Festival and Carnival Tropical) will feature "Sensation Point," a family-friendly water park. Star Princess, a sister ship to the successful Sun Princess, will soon be welcomed.

• New Loyalty Program: Carnival Cruise Line will launch "Carnival Rewards" in June 2026, tying loyalty benefits to total spending and co-branded credit card usage, aiming to improve customer engagement and lifetime value. While initially impacting yields due to revenue deferral, it is expected to be accretive after approximately two years.

• Financial Deleveraging: Carnival prepaid $350 million of its 2026 notes, refinanced the remainder, and upsized its Euro-denominated floating rate loan, reducing interest expense and improving its financial position. The company aims for investment-grade leverage metrics in the near future.

• Q3 Cost Outlook: Third-quarter cruise costs are expected to be higher due to factors like the opening of Celebration Key, one-time benefits in 2024, higher advertising expenses, and lower Q3 capacity.

• Booking Trends: April saw some booking volatility, but May and the first two weeks of June showed nice improvements.

Management Commentary:

Josh Weinstein emphasized the company's focus on commercial execution and the strength of the consumer, stating that 2019 was never considered a ceiling for margins. David Bernstein detailed the financial outperformance, attributing it to revenue favorability, better-than-expected cruise costs, fuel efficiency, and favorable interest and currency impacts.