Royal Caribbean’s second quarter results were met with a negative market reaction, despite the company meeting revenue expectations and surpassing consensus non-GAAP profit estimates. Management attributed the quarter’s performance to robust close-in demand, continued strength in onboard spending, and a favorable shift in expense timing. CEO Jason Liberty described strong guest engagement and highlighted that half of all onboard purchases were booked before sailing, with 60% of guests being new to cruising or new to the brand. Management also cited a shift toward last-minute bookings and higher load factors as key contributors. CFO Naftali Holtz noted that expense timing benefited margins this quarter but will shift to the second half of the year.
Is now the time to buy RCL? Find out in our full research report (it’s free).
Royal Caribbean (RCL) Q2 CY2025 Highlights:
- Revenue: $4.54 billion vs analyst estimates of $4.55 billion (10.4% year-on-year growth, in line)
- Adjusted EPS: $4.38 vs analyst estimates of $4.08 (7.4% beat)
- Adjusted EBITDA: $1.77 billion vs analyst estimates of $1.74 billion (39.1% margin, 1.7% beat)
- Management raised its full-year Adjusted EPS guidance to $15.48 at the midpoint, a 2.9% increase
- Operating Margin: 29.3%, up from 26.7% in the same quarter last year
- Passenger Cruise Days: 14.28 million, up 1.05 million year on year
- Market Capitalization: $85.04 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Royal Caribbean’s Q2 Earnings Call
- Matthew Robert Boss (JPMorgan): Asked about the sustainability of close-in demand and how it informs guidance. CEO Jason Liberty said current trends could provide further upside but are not fully embedded in forecasts.
- Steven Moyer Wieczynski (Stifel): Questioned yield implications if recent demand patterns persist. Liberty replied that strong consumer demand is evident, but forecasting precision is limited due to booking variability.
- Conor T. Cunningham (Melius Research): Inquired about loyalty program integration with the co-branded credit card. Liberty confirmed enhancements are underway to better link credit card rewards and loyalty benefits.
- Robin Margaret Farley (UBS): Asked why the top end of the yield range narrowed despite strong performance. Liberty explained that earlier guidance was widened due to geopolitical uncertainty, but current ranges reflect typical forecasting practice.
- Brandt Antoine Montour (Barclays): Requested operational expectations for the Royal Beach Club launch. President Michael Bayley said ramp-up will be gradual, prioritizing flawless guest experience over immediate full utilization.
Catalysts in Upcoming Quarters
In the coming quarters, StockStory analysts will watch (1) the ramp-up and guest response to new ships and the Royal Beach Club Paradise Island, (2) continued growth in digital engagement and onboard spend, and (3) the operational and financial impacts of expanding private destinations and river cruising. Progress on loyalty program integration and execution of cost controls will also be important signposts.
Royal Caribbean currently trades at $313.09, down from $352 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).
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