Royal Caribbean (RCL) Q4 2025 Earnings Transcript

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Date

Thursday, Jan. 29, 2026 at 10 a.m. ET

Call participants

• President and Chief Executive Officer — Jason Liberty
• Chief Financial Officer — Naftali Holtz
• President and Chief Executive Officer, Royal Caribbean International — Michael Bayley

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Takeaways

• Full-Year Revenue -- Nearly $18 billion, representing 8.8% growth, led by strong brand demand and execution.
• Adjusted EPS -- $15.64 for the year, reflecting 33% year-over-year growth, and $2.80 for the fourth quarter, above guidance.
• Operating Cash Flow -- Nearly $6.5 billion generated in 2025, supporting $2 billion in shareholder returns via dividends and share buybacks.
• Fourth Quarter Net Yields -- Increased 2.5% in constant currency on 10% capacity growth, driven by demand across all key products.
• Net Cruise Costs (Excluding Fuel) -- Decreased 6.3% in constant currency, aligned with guidance as operational efficiencies improved.
• Bookings -- Company is about two-thirds booked for 2026 at record rates within historical load factors, positioning for optimized pricing and yield growth.
• 2026 Revenue Outlook -- Revenue projected to increase at a double-digit rate, with net yield growth guided to 1.5%-3.5% and capacity set to rise 6.7%.
• Caribbean Performance -- Caribbean yields have grown 35% since 2019, with regional capacity to rise 8% and continued expected yield growth despite industry supply increases.
• Digital Engagement -- Active users on the company app rose 25% year over year in fourth quarter; e-commerce traffic grew 10% in 2025 with improved conversion rates.
• Capital Investments -- $5 billion planned for strategic initiatives in 2026, including delivery of Legend of the Seas and expansion of exclusive destinations such as Santorini Beach Club, Cozumel Beach Club, and Perfect Day Mexico.
• Fleet Expansion -- Commitment for 10 additional Celebrity River Cruises ships, bringing the fleet to 20 vessels by 2031, and launch of the Royal Caribbean Discovery class with two firm orders and four options.
• Adjusted EBITDA Guidance -- For 2026, expected to be just under $8 billion, a 13% increase, with margins just above 40%.
• Liquidity -- Quarter-end liquidity was $7.2 billion with leverage well below 3x, supporting investment-grade metrics.
• Loyalty Program Innovation -- Launch of Points Choice enables guests to earn and redeem points across all three major vacation brands, aimed at deepening customer engagement and retention.
• AI and Technology Deployment -- Broad adoption of AI and disruptive technologies to support commercial and operational improvements, including margin enhancement and guest personalization.

Summary

Royal Caribbean Cruises (NYSE:RCL) reported a record-setting year in 2025, highlighting significant earnings growth, margin expansion, and expanded capital returns. The company announced major fleet initiatives, including 10 new Celebrity River Cruises vessels and the innovative Discovery class for Royal Caribbean, to accelerate long-term growth and strengthen its competitive positioning in the global vacation market. App engagement and e-commerce conversion rates demonstrated continued digital traction, while the new Points Choice loyalty program aims to drive cross-brand engagement. Shareholder returns, strategic investments in exclusive destinations, and expanded deployment in high-demand regions form a central part of RCL’s 2026 value proposition and differentiated guest experience.

• Jason Liberty stated, "We experienced the best seven booking weeks in the company's history since the last earnings call," underscoring sustained demand momentum entering 2026.
• Naftali Holtz said, "roughly 80% of the people that booked are actually existing customers, but they've never RiverCruise before," indicating river initiatives are expanding wallet share from the existing base.
• New ships and hardware are expected to drive approximately half of guided yield growth, with the balance coming from like-for-like improvements across itineraries.
• Digital direct-to-consumer channels and travel partner networks are both contributing meaningfully to increased bookings at higher rates.
• RCL noted its differentiated Caribbean market strategy, citing "Over 70% of guests on these itineraries sailing on the Royal Caribbean brand will visit a private destination this year."
• The company highlighted continued efficiency advances from enterprise AI applications in yield management, supply chain, and marine operations to support margin goals.

Industry glossary

• Adjusted EPS: Net income per share excluding certain non-recurring, non-cash, or exceptional items, reflecting normalized profitability.
• APCD: Available passenger cruise days, a capacity metric calculated as the total number of passenger days available based on ship deployment and size.
• Net Yield: Revenue per APCD, net of commissions, transportation, and other direct expenses, used as a key profitability and pricing measure.
• Perfect Day: RCL’s exclusive private island destination experiences, central to its premium Caribbean product strategy.
• Discovery Class: New class of ships announced by Royal Caribbean, designed to introduce innovative guest experiences and support future brand growth.
• Points Choice: RCL’s next-generation loyalty program allowing customers to earn and redeem points interchangeably across its three main brands.
• Legend of the Seas: The company’s newest Icon class ship, debuting in Europe with a focus on broadened guest experiences and higher yields.
• Royal Beach Club: A collection of exclusive beach resort destinations owned and operated by RCL, enhancing differentiated itineraries and product offerings.
• LNG: Liquefied natural gas, a lower-emissions marine fuel increasingly adopted by RCL for environmentally efficient fleet operations.
• Dry Dock: Periodic ship maintenance involving removal from service for upgrades or repairs, impacting capacity availability and yield comparisons.

Full Conference Call Transcript

Jason will begin the call by providing a strategic overview and on the business. Naftali will follow with a recap of our fourth quarter, the current booking environment, and our outlook for 2026. We will then open the call for your questions. With that, I am pleased to turn the call over to Jason.

Jason Liberty: Thank you, Blake, and good morning, everyone. I am very pleased to share our fourth quarter and full year 2025 results, our outlook for 2026, and our exciting strategic investments that will continue to shape and accelerate Royal Caribbean Group's future success. 2025 was an outstanding year, defined by strong demand for our brands and vacation experiences, disciplined execution of our strategies, strong balance sheet management, and robust financial performance. We delivered a record 9.4 million memorable vacations and a very high customer satisfaction score. Achieved nearly $18 billion of total revenue and 33% earnings growth, all while expanding our margins, increasing return on invested capital, and reducing leverage.

We generated nearly $6.5 billion of operating cash flow and returned $2 billion to shareholders through dividends and share buybacks. Meanwhile, our scale and profitability enable continued investments in the differentiated experiences and innovations that delight guests and fuel the next chapter of long-term growth. I want to thank our team members worldwide for their passion and unwavering dedication to providing outstanding vacation experiences every day. Their efforts made our guest vacations memorable and contributed to a successful year for our shareholders. As a global vacation leader, we continue to broaden our vacation ecosystem across ocean, river, and land with unique experiences giving guests more ways to experience the world with our family of brands.

Today, we are announcing a further expansion of Celebrity River Cruises with a commitment for 10 additional ships. This will expand Celebrity's River Cruise fleet to 20 vessels by 2031. The expansion will make Celebrity River Cruises one of the largest European river cruise operators, offering more itineraries and destinations than ever before. We are also announcing the launch of the Royal Caribbean brand's new Discovery class ships that will redefine how Royal's guests experience the world. The agreement with the shipyard includes two firm order ships and options for four additional ships.

And we recently shared the next evolution of our loyalty program with Points Choice, which gives consumers the freedom to earn points on any of our three vacation brands and apply them where they matter most, regardless of the ship they're sailing. The expansion of our ocean and river fleets, loyalty enhancements, and our growing exclusive destination portfolio strengthens the integrated ecosystem we are building. These investments broaden our appeal to new guests while deepening the connection with those who already vacation with us. Supported by technology and AI that make the experience more seamless and more personal. This approach expands the way guests can vacation with our family of brands and reinforces our vacation of a lifetime strategy.

Now turning to our results. I am very proud of what we have accomplished in 2025. Flawless execution by our incredible teams propelled our strong performance in 2025, elevating demand across our brands and driving durable margin expansion. This resulted in a 33% year-over-year increase in adjusted earnings per share and ROIC in the high teens. We also invested in key strategic priorities while strengthening the balance sheet and returning capital to shareholders. The year ended on a great note. Fourth quarter net yields grew 2.5%, and adjusted EPS was $2.80, higher than our guidance. We also generated strong profitability and margin expansion as we continue to execute on both commercial and cost priorities.

With this strong performance, we are on track to achieve our perfected financial targets in 2027. As we said before, perfect is an important milestone on our growth journey, but our ambitions go well beyond it. 2025 was another year of remarkable milestones on our journey to expand the way our guests can experience our brands across ship and shore. We welcomed Royal Caribbean Star of the Seas, took delivery of Celebrity XL, launched Celebrity River Cruises, and finally, in late December, opened the Royal Beach Club Paradise Island. Our joint venture with Tuohy Cruises also added to this momentum with the delivery of MindShift Relax, the first vessel in its new class and the largest ship in its fleet.

We also continue to invest in technology and innovation that makes our vacations easier to discover, easier to plan, and more personalized while making our business smarter and more efficient. Over the past year, we further embedded disruptive technologies like AI across all commercial and operational areas. Provide more detail on our tech investments later in the call. 2025 demonstrated the power of our model and the strength of our platform, and it sets us up well for 2026 and future years. Our momentum continues into 2026. The wave is off to a record start. We experienced the best seven booking weeks in the company's history since the last earnings call.

As a result, we are already about two-thirds booked for the year with book load factors well within historical ranges at record rates. This sets us up to optimize pricing and yield growth as we continue to build the book of business for the balance of the year. All commercial channels are delivering quality demand with direct-to-consumer performing particularly well. Last year, we added hundreds of new digital capabilities as consumers' preference for digital engagement continues to grow. Our increasingly connected ecosystem aims to make vacation planning straightforward and seamless. Travel partners are also delivering meaningfully more bookings than last year and at higher rates. Our spectacular new ships continue to generate strong quality demand.

Star of the Seas and Celebrity XL are exceeding expectations, and Legend of the Seas, our first icon class ship debuting in Europe later this year, is experiencing very strong booking trends. Our latest research shows that our consumers feel financially secure and continue to prioritize experiences, with 40% planning to increase leisure travel spending in the next year. The cruise value proposition continues to resonate due to quality amenities, value, and convenience. Looking ahead for 2026, our proven formula will continue to generate strong financial results. Moderate capacity growth, although 2026 will be a bit higher, at mid-single digits, moderate yield growth, and strong cost control.

The combination of those three things creates meaningful margin expansion, increased cash flow, and drives a stronger balance sheet. That's the model we planned for, and it's the model we're executing today while also funding future growth and expanding capital return to shareholders. Revenue is expected to increase double-digit year-over-year, resulting in full-year net yield growth in the range of 1.5% to 3.5%. We expect positive yield growth for our key products, including the Caribbean, as our investments continue to differentiate us and strengthen our leadership position even in a period of elevated capacity growth in the region. Full-year adjusted earnings per share is expected to be in the range of $17.70 to $18.10, a 14% year-over-year increase.

We also expect to deliver over $7 billion of operating cash flow this year, and we continue to prioritize strategic investments into our future while enhancing capital returns to shareholders through competitive dividends and opportunistic share repurchase programs. At Royal Caribbean Group, our strategy is centered on creating a lifetime of vacations for our guests by continually strengthening the ecosystem that makes those experiences possible. We are extending our competitive moat through differentiated experiences, world-class brands, exclusive destinations, and industry-leading loyalty program and technological investments that remove friction and make every interaction more personalized. Together, these elements reinforce our lifetime of vacation ecosystem, attracting new guests, driving more frequency, and long-term loyalty that translates into sustainable growth and shareholder value.

A cornerstone of that strategy is our exclusive destination portfolio. We're especially excited about Royal Beach Club Paradise Island, which opened in December and is off to an incredible start. Guest response has been exceptionally positive, reinforcing our confidence in the role these experiences play as we continue to expand our destination platform. Innovation on the ship side remains a key differentiator. New ships do more than add capacity; they expand the experience, broaden the guest base, and raise guest satisfaction, all while driving and enabling better financial results.

And today's announcement of a new discovery class of ships on our Royal Caribbean brand is the next step in our innovation roadmap designed to continue to raise the bar for our guest experience and to extend our leadership in the vacation space. We'll share more details as we go, but it will follow our disciplined approach, investing in product leadership and high-return growth that compounds over time. As I shared at the beginning of the call, we are expanding our 10 additional ships that will expand the Celebrity River cruise fleet to 20 vessels by 2031.

We see river cruising as an exciting growth opportunity that adds an incremental vacation choice and expands the moments and occasions guests can experience with us, all while deepening loyalty across our family of brands. Finally, AI and disruptive technology are becoming a foundational advantage for us, representing a core capability that improves the guest experience, strengthens our commercial engine, and helps us run the business more intelligently. Our digital channels are increasingly the gateway to long-term guest value, highlighted by a 25% year-over-year increase in active users on the app in the fourth quarter. E-commerce traffic was up 10% year-over-year in 2025, with conversions improving throughout the year.

As it relates to disruptive technology, including AI and GenAI, we're scaling in two complementary ways. First, we're investing in enterprise programs that deliver better guest satisfaction and experience while improving revenue and margin, helping us to fundamentally change how we run the business. And second, we're infusing these technologies across the organization through smaller practical use cases that create momentum, productivity, and confidence at the individual and team level. We are improving our ability to curate and personalize what guests see while increasing pre-cruise engagement. Because a vacation is better when it's easier to plan and easier to personalize. The goal is to reduce friction, improve the experience, and present relevant options that add value to the guest.

We're also using AI to improve efficiency and execution from supply chain forecasting to energy management and marine operations. These are the types of capabilities that build durable, operating leverage over time and reinforce our focus on margin expansion and returns. Disruptive technology is not just a tool; it's a capability that we have been building for more than five years. It helps us deliver a better experience, run a smarter operation, and strengthen the ecosystem we're building for long-term growth. In closing, 2025 was an exceptional year, and we enter 2026 from a position of strength, a differentiated vacation platform, a strong balance sheet, and a disciplined approach to growth and returns.

And with that, I will turn it over to Naftali.

Naftali Holtz: Thank you, Jason, and good morning, everyone. I will start by reviewing fourth quarter results. Net yields grew 2.5% in constant currency, five basis points above the midpoint of our guidance. Yields grew across all key products, on 10% capacity growth, and were driven by both new and existing hardware. Total revenue growth in the fourth quarter was 13%. Net cruise costs, excluding fuel, decreased 6.3% in constant currency, in line with our guidance, as we remain focused on identifying sustainable efficiencies in our operations while further enhancing our vacation offerings. Adjusted earnings per share were $2.80. Earnings outperformance compared to guidance was driven by favorable revenue and better performance across our joint ventures.

The fourth quarter capped an incredible year for us. As strong demand for our vacation experiences, coupled with strong execution by our teams, resulted in happy guests and robust financial results. Guest satisfaction continues to outpace industry standards and remains exceptionally strong. We consistently achieve significant improvements in financial performance. For the full year, total revenue grew 8.8%, adjusted EBITDA grew by 17.6% to just over $7 billion, and adjusted EPS grew 33% to $15.64. At the same time, we generated $6.4 billion of operating cash flow, achieved an investment-grade balance sheet, and returned $2 billion of capital to shareholders, all while investing more than $5 billion in our future.

Since 2019, we have transformed the Royal Caribbean Group into a stronger, more profitable, and more resilient vacation platform, solidifying our strong financial foundation. Total guests increased 45% since 2019, with millennials and younger nearly doubling. At the same time, we saw strong growth from both new and repeat guests. Total revenue has increased by 64%, and adjusted EBITDA has surged 94% since 2019. Net income more than doubled, and operating cash flow grew 75%, supporting continued growth and long-term shareholder return. Moving to our 2026 outlook. I will start with capacity and deployment for the year.

With the introduction of Legend, and the annualized impact of Star and Excel, capacity is expected to be up 6.7% year-over-year, on the higher end of our moderate capacity growth. While the amount of dry docks is modestly higher than 2025, the cadence and its impact on the quarterly capacity is different. We have less capacity in dry dock in the first quarter and more in the second quarter. It is also worth noting that on average, we have more premium hardware in dry docks this year when compared to last year, hurting yield comparisons. And this is most pronounced in the second quarter.

We expect APCDs to grow 8.5% in the first and third quarters, and 5% in the second and fourth quarters. As Jason mentioned, the year is off to a very strong start. Book load factors remain within historical ranges at record rates, with approximately two-thirds of 2026 inventory having already been booked at higher rates. Our deployment mix is consistent with last year. The Caribbean represents 57% of our capacity, growing 8% compared to last year, with a full-year impact of Star of the Seas and Celebrity XL. Caribbean yields have grown 35% since 2019, and we expect continued yield growth in 2026, even as capacity in the region is increasing.

The Caribbean continues to be the most desired cruise destination by consumers, and the best way to experience the Caribbean is with the Royal Caribbean Group. The combination of leading brands, the best hardware, and exclusive destinations results in the region outperforming in both NPS and profitability. We continue to differentiate in the Caribbean market. We have the best hardware in the market, with six Oasis class ships and three Icon class ships. Over 70% of guests on these itineraries sailing on the Royal Caribbean brand will visit a private destination this year, and that percentage will increase to 90% in 2028 with the opening of the beach club in Cozumel and Perfect Day Mexico.

Europe will account for 15% of capacity and is growing 5% versus last year, including Legend of the Seas, debuting in Europe this summer. European sailings continue to perform very well on both rate and volume, with strong demand from both American and European consumers. It is worth noting that while European capacity, which is high-yielding, is up for the year, it is down in the first half of the year, driven by a decrease in the second quarter due to dry dock timing. Alaska is expected to account for 5% of total and is up 3% versus last year. We have some of the best hardware in the region, including Celebrity Edge, two Quantum class ships, and Silver Moon.

Turning to our 2026 guidance. We expect yield growth of 1.5% to 3.5%, from both new and like-for-like hardware. With a projected capacity increase of 6.7%, revenue for 2026 is expected to achieve a double-digit growth rate. Our leading vacation platform, anchored by an attractive value proposition and supported by strategic investments, enables us to grow both capacity and rate, setting us apart within the vacation market. We do expect net yield growth to be higher in the second half of the year compared to the first half, given the impact of dry dock timing, the ramp-up of Royal Beach Club Paradise Island, timing of new ship deliveries, and deployment mix changes.

Full-year net cruise costs, excluding fuel, are expected to be flat to up 1%, following a 10 basis points decrease in 2025. There are also about 200 basis points of cost headwinds mainly related to our private destinations portfolio ramp-up that come without APCD increase. The cadence of our cost growth varies throughout the year, with first-half cost growth expected to be higher than second half, driven mainly by timing of dry docks and year-over-year quarterly comps compared to 2025. We anticipate full-year fuel expense of approximately $1.17 billion, with 60% of our projected fuel consumption hedged. Approximately 10% of our fuel consumption is expected to be from LNG and biofuel blends, compared to 8% in 2025.

Fuel efficiency continues to improve, with fuel consumption per APCD reducing by approximately 4% compared to 2025, driven by new hardware and deployment optimization. As a reminder, the scope of the European Union emissions trading system, or EU ETS, will expand in 2026 to cover 100% of emissions associated with our European itineraries, up from 70% in 2025. Based on current fuel prices, currency exchange rates, and interest expense, we expect adjusted earnings per share between $17.70 and $18.10, a 14% year-over-year growth at the midpoint. This also represents a 23% CAGR over the first two years of Perfecta, which sets us up well to achieve our targets by 2027.

We expect adjusted EBITDA to be a little shy of $8 billion, a 13% year-over-year growth, and adjusted EBITDA margin that is just over 40%. Strong growth and improved profitability enable us to enhance cash flow, invest in key initiatives, maintain investment-grade metrics, and increase capital returns to shareholders. We expect to invest $5 billion of capital into our key strategic growth initiatives, as well as ensuring our assets are well maintained. We are set to deliver Legend of the Seas in the second quarter, with committed financing in place.

Non-ship capital is expected to be $1.8 billion, with a significant portion related to our private destination portfolio, Santorini Beach Club, the Cozumel Beach Club, and Perfect Day Mexico, as well as our fleet modernization program that ensures we keep elevating the guest experience and enhancing financial performance. Now I will discuss our first quarter guidance. In the first quarter, capacity will be up 8.5% year-over-year. More than 70% of our capacity will be in the Caribbean, 16% in Asia Pacific, and the remaining capacity is spread across several other itineraries. Net yields are expected to be up 1% to 1.5% in constant currency.

This includes an impact of 30 basis points from recent itinerary modifications in China, and approximately 50 basis points of yield headwinds due to deployment shift. Net cruise costs, excluding fuel, are expected to be up in the range of 0.9% to 1.4% in constant currency. Taking all this into account, we expect adjusted earnings per share for the quarter to be $3.18 to $3.28. Turning to our balance sheet. We ended the quarter with $7.2 billion in liquidity, and leverage well below 3x, consistent with our goal of solid investment-grade metrics. With strong expected cash flow generation, we will continue to manage maturities, find opportunities to reduce cost of capital, and opportunistically buy back shares.

In closing, we remain committed and focused on our mission to deliver the best vacation experiences responsibly as we work to deliver another year of great results. With that, I will ask our operator to open the call for a question and answer session.

Operator: At this time, we will conduct the question and answer session. To ask a question, please press star, then the number one, on your telephone keypad. We do ask that you limit your questions to one per analyst. Once again, to ask a question at this time, please press star then the number one, on your telephone keypad. Your first question comes from Matthew Boss with JPMorgan. Your line is open.

Matthew Boss: Great. Thanks, and congrats on another really nice quarter. Thank you. So Jason, maybe to kick off, could you elaborate on the further acceleration and momentum into 2026 that you cited? And just larger picture, how do you see your portfolio differentiated today relative to that $2 trillion total vacation market with the opportunity to capture additional market share from here?

Jason Liberty: Well, thanks, Matt. I hope you're doing well. One, I think that, obviously, our business is growing. Our capacity is growing 6.7% this year. One of the things that we just see coming into this year, and we saw this even during the Black Friday and cyber sale activities, is that we've seen an acceleration in demand, which, of course, more than matches the capacity that we have coming on. So we continue to see a very strong consumer who is really attracted to our incredible brands and the experiences that they're delivering.

Also seeing additional tailwind, and you can see that in our, you know, just in terms of on the loyalty side, you know, we're seeing an increase in the percentage of our guests that are loyalists. So our loyalty programs and now with that coming with Point Choice, yeah, we're seeing more and more high-quality demand for our guests. And, of course, you know, with loyalty, you're able to personalize more and put a very effective package in front of them in terms of what they're looking to achieve with their friends and family that they're sailing with.

As we look at the business, you know, and you've heard me say this in the past, we really do look at that $2 trillion plus. I mean, it's growing now. It's even over $2 trillion leisure space for us to grab more share of. And when you get into why are we so focused on obviously, there's many reasons to do that, to close that gap. And focus less on our cruise competitors is that we think that we're able to increase our margins by putting a product in place that is really attractive to our guests.

And so what you're seeing us do commercially, first is, you know, we're making sure that we are personalizing, putting things in front of our guests, that they're attracted to and taking friction out of how they book their activities each and every day. On the product standpoint, listen very closely to what our guests are looking for, and so you're seeing us on the new ships that we deliver. You're seeing it on the modernization activities we're doing. And also the changes we're making on the ship to how do we close the gap to what our guests are looking to, not just for a cruise vacation, but for a broader vacation experience.

And then on the destination side, you're seeing us invest in enhancing the guest experience. And when you look at, for example, think Santorini is a great example of this, we're not looking to take guests out of the key cities of Santorini. What we're looking to do is help them maximize their day. And spend time in our private destination, the Royal Beach Club that will be there, as well as in the key cities in Santorini. So all this is really focused on how do we enhance the experience. And when we find when we're doing that, we're building more trust and we're also enhancing the overall guest experience.

And we see that just through the change in the Net Promoter Score. Then when you get into the ecosystem, we think about what are our guests doing when they're not with us. And so when will you grab share of that $2 trillion marketplace is you expand your offering. And so that's one of the things that, you know, historically, we would expand our offering by adding more destinations. Here, we see that when our guests are not with us, some of our guests when they're not with us, they're taking an additional vacation on a river. And that's why we feel so passionate about getting deeper and deeper into that business.

And what we see is we're closing gaps to Orlando. We're closing gaps to Vegas. We're closing gaps to other vacation all-inclusive experiences. Which get higher APDs than us. By so at least 15% higher on APDs. And so we're trying to close that gap. We think we deliver a higher value proposition than what happens on land. And that collectively, by you tie that together with great loyalty, personalization, is resulting in I think what you see is outperformance.

Naftali Holtz: Just to add, one more thing to what Jason said. All these things that we're doing, as you can see this year, we're growing both capacity and yield. And as we look at it, we feel that this is a differentiation within the vacation marketplace. And that leads really to winning more share from the consumer in that $2 trillion market. So feel very passionate that, you know, we'll continue to innovate. And that's just us so continue to innovate and add more experiences like River and that sets us very well to continue to win that share from that $2 trillion, which is, obviously a very big market.

Operator: Your next question comes from Steve Wieczynski with Stifel. Your line is open.

Steve Wieczynski: Congrats on a strong 2025. So they want me to ask one question. I'm gonna do that, but it's gonna two different parts. So I'm gonna, you know, try to do it. So, Jason, obviously, there's, you know, there's a lot of concern on the market, you know, about Caribbean capacity and what that means in terms of taking price action, especially on the, you know, the close-end side of things. So, you know, if you could, could you walk us through maybe what you're seeing today in the Caribbean, maybe more so, you know, whether it's by brand, whether it's by itinerary, whether it's by specific product.

And I guess what I'm trying to understand is, you know, what is doing well in the Caribbean? What might be lagging? And then I would assume that you guys are probably taking a conservative approach to what close-in pricing is going to look like in the Caribbean given the industry capacity increases? And then second part of my question would be, Jason, if you think about your 2026 yield guidance, 2.5% at the midpoint, just wondering if that 2.5% fits with your company tagline, meaning you guys talk about moderate yield growth.

And I'm just wondering if 2.5% fits that profile or is this a year where yield growth might be, you know, more hampered given what's happening in the Caribbean? That's it.

Jason Liberty: Well, thanks, Steve. I'm sorry. Yeah. Yeah. I think there were more than two questions in that, but I'll I think I think first off, just talking about the Caribbean and so my colleagues here can chime in as well. You know, I, of course, we read what everybody else is putting out there in terms of points of view on the Caribbean.

I think first, what I think we need to point out is I think when you have the best ships and you have the best destinations, and you have brands that have incredible loyalty and trust with their guests, that equates to, which is what we're seeing, is very similar demand trends for the Caribbean as we're seeing in other parts of the world. Now, you know, there is a significant level of demand for Europe, which is great. But it's also not a place where we have, you know, over half of our capacity. But you're seeing very good trends in the Caribbean across all three brands.

So if you wanna get into, you know, we're concerned about K shapes or too much supply, we're seeing it whether it's on the Royal Caribbean brand or Celebrity or Silversea. We're seeing high demand, wanting to go to the Caribbean. And so as Nav commented, we're not only seeing good volume, but our pricing is higher in the Caribbean than it was last year. And I know that may not feed into what maybe some groups wanna hear, but that is a reality that we continue to see strong demand for the Caribbean, and we continue to see strong demand for our broader organization.

And that leads us when we think about 2026, yeah, I mean, there are a few things that we did not expect. For example, with some of the redeployments we've had to make around China. And, you know, that also resulted, you know, a little bit more of our deployment in locations that are a little bit lower yielding doesn't mean they're less margin or less profit. They just may not have the same price point as something else. And that's why, you know, we're seeing strong, you know, earnings growth coming out of all this. But when you think about a company that, you know, our capacity is growing 6.7% this year. Our total revenue is up double digits.

I think it's up almost 88% versus 19 total revenue. So we're growing our business. We're gonna continue to grow our business moderately. And the yield, I mean, typically, think about moderate yield growth somewhere between 2% to 4%. We're in that 2% to 4%. Probably be a little bit better if it wasn't for China. But besides that, you know, we're seeing people are willing to pay more money than they did last year. They're willing to spend more money on the ships than they did last year. We're getting the volumes that are more than what our capacity increases.

And we're benefiting from a lot of the investments that we've made around, you know, AI and loyalty and so forth. The last comment I just wanna make about, you know, the comment I just made about that our total revenue is growing double digits in 2026. The Caribbean total revenue is growing by double digits in 2026.

Operator: Your next question comes from James Hardiman with Citi. Your line is open.

James Hardiman: Hey, good morning. I actually just wanted to continue down that same line of thinking. Maybe if you could help us think about your business sort of organic versus inorganic. Obviously, you've got another icon class ship coming on. You've got some calendar benefits from last year's icon and celebrity ships. And then you've got, you know, the Royal Beach Club coming on. I don't think you're gonna get any benefit from the second one in Cozumel. But at least that first one feels like you could get. So when I just think about the inorganic stuff, it sort of maybe north of 2% on that alone. So how should I think about the organic business?

And then maybe specifically, the organic business in the Caribbean just given the idea that seems to be if there's gonna be more capacity coming to the Caribbean, you know, those older ships, the older tonnage probably is taking on the brunt of that, you know, the competitive environment that you're seeing from one of your peers. Thanks.

Jason Liberty: Thanks, James, for the question. And I think first, as we look at our yield profile for this year, about half of it's going to come from new hardware. By the way, as we add new hardware into our environment, just because the denominator is bigger, it has less of an effect on our yield improvement. So half of it's gonna come from new hardware or new, and the other half is coming from like-for-like. I'll have Michael talk for a second here in a minute on the Royal Beach Club. But historically, if you look at when we launched Perfect Day, you know, we started very slow in the buildup of that business.

And we do that very intently to make sure that we have mastered the experience. And Michael and his team are masters at doing that before we kinda ramp up to more significant levels. But when you think about our business, like, that's typically the tailwinds that we see. We see like-for-like yield growth, by the way. That also includes the Caribbean. And you're also seeing, you know, the benefits of the new hardware as it comes on. Sometimes in quarters, it's a little bit, you know, when some of the new ships are coming in, some of the deployment changes, especially even when, like, new ships come in. Like, a ship might have been in on a Saturday.

Now it goes out on a Friday. That can sometimes play a little bit of a mix in.

Michael Bayley: Hi, James. Just to comment on Jason's commentary regarding the Royal Beach Club and the opening. You know, we typically start all of these new products slowly. We have capacity restraints when we open up just to make sure that we've got the product absolutely perfect, and that's exactly what we've done with the Royal Beach Club. The great news is that within four weeks, the Royal Beach Club has already become the number one top-rated experience in Nassau for our cruise guests. And it's already outperformed all other products that are available in the market. That's exactly where we want to be. So we're pushing it now to get to exactly the same level of satisfaction as Perfect Day.

Latest results show at about 0.8 of 1% behind Perfect Day for a satisfaction delivery, which means that the NPS is really stunning. So we're moving towards that goal of making sure that we've got the perfect product and the demand now is really starting to ramp up. And we feel like we're gonna have a huge success with the product.

Naftali Holtz: Just wanted to think about the yields and the like-for-like. You know, obviously, the yield is just one part of the equation. Also look at the profitability of the ships. So if you kinda look at the way we are expecting margins to grow this year and, of course, earnings, there is also the ability to not only benefit from new ships' efficiency and scale and just better margins, but we also make even if we make those deployment changes, we find ways to also run them more efficiently and deliver the guest experience in a better way. So the profitability is growing on both, not just the yield.

Operator: Your next question comes from Lizzie Dove with Goldman Sachs. Your line is open.

Lizzie Dove: Hey, thanks for taking the question and congrats on a great year. I guess thinking more, you gave a lot of great color in terms of some of the cadence for the year and the factors, like, on the dry dock side of things and deployment, islands, etcetera. Could you maybe share a little more in terms of how you're thinking about that net yield cadence for the year, I guess, in terms of the ramp of what's factored into your guidance? And I suppose specifically for 2Q given you kind of called that out on the dry dock side. Thanks.

Naftali Holtz: Yes. We're not I'm not going to comment specifically about Q2, more about the first half and the second half. But as I said in the prepared remarks, there are really a couple of things that are driving that cadence. One is dry dock timing. So we do have more dry docks than last year. And, you know, I talked about them being more in the second quarter versus the first quarter. And, of course, towards the end of the year. One thing that is a little unique in this year is that we have also larger ships going into modernization or dry docks, and so those come obviously with higher yields. So the year-over-year comparison is different.

And then we have also more Silversea ships significantly in the last year. And so those are, of course, also highly yielding. So this is more about, you know, how the comps work and year-over-year cadence. The second one is the ramp-up of the Royal Beach Club. Michael talked about. We wanna get the experience right. We're doing great, and we'll just make it better. So there's a little bit of impact there. And then some of the deployment and mixes, and the timing of new ships that we have every year. And so that's really the main impact of the cadence throughout the year.

Operator: Your next question comes from Robin Farley with UBS Financial. Your line is open.

Robin Farley: Great. Thank you. Wanted to ask about the new ship order, the discovery class. There's not a ton of detail, but an industry chatter is that it's gonna be much smaller than the, you know, ICON Oasis, a lot of other ships you've done. And so I wonder if you could talk a little bit about I assume that means you can put them in higher yielding guest destinations or just kind of what's the trade-off between maybe those ships not paying as much capacity growth versus pricing. And then I'm just gonna squeeze in a part two.

I won't make it but just on our next cruise cost, just, you know, this is, like, year two here of just incredibly low net cruise cost. Is this due to just the timing of, you know, two years in a row of dry dock days something related, or is this actually, like, a sustainable rate of net cruise cost growth that we would think about longer term? Thanks.

Michael Bayley: Hi, Robin. It's Michael. I'll talk a little bit about Discovery. Actually, I'm really not gonna talk about Discovery. We've been working on Discovery for the last couple of years. And from the business perspective, we are really excited with the innovation, creativity, and the kind of product that we've now created with Discovery. It really is going to be a game changer. Just as ICON was introduced, and kind of changed the game, Discovery is going to do exactly the same thing. We are really looking forward to sharing more details about Discovery with the marketplace, but we're not planning on saying much about it today or in the next couple of months.

We have a promotional campaign that'll be ready to go soon, and we'll be very excited to visit multiple cities and start talking about Discovery. I can tell you that it really is gonna be a game changer. The many of the assumptions that are currently out there in social media, etcetera, in terms of size, capacity, etcetera, etcetera. Are probably, it's fair to say, inaccurate. So looking forward to introducing it. It's gonna be a big deal, and we'll make sure that you get an invitation.

Naftali Holtz: Okay. And, Robin, I'll cover the cost. So I think for, you know, our formula, and we do subscribe to it. And that's the way we run the business. And so we wanna always have that spread between yield growth and cost growth. And we believe that's the right way to do that. And so that's going to follow our formula. Right? And this year, it follows that formula. I think the first thing to really this is really important. We're very proud of how our teams, not only growing the commercial aspects of it and revenue, but how they are also delivering the experience and the cost management that we do that.

And what's very, very important to us is we are not compromising on the product. Because for us, it's really important that we continue to deliver the best vacation experiences, and Jason talked a lot about how that will carry us and allow us to grow sustainably into the future and win share. The other thing that is, the two other things that are kind of helping us in terms of how we manage costs. First, our capacity growth this year is 6.7%. And so you should expect from us, and we expect from ourselves that we can leverage the scale of this business. We're now going to be an $8 billion company.

That as we continue to grow, the capacity, right, there comes some economies of scale on the cost side as well. That's one. And the second one is that we're finding more and more ways and Jason talked about it in his prepared remarks, about how do we more sustainably and smartly run the business utilizing all the disruptive technologies that's out there, including AI and GenAI. And we talked a little bit about how we're doing that on large commercial activities, but it's really infused in what we do day to day, and the teams are really working through that and utilizing it to find better ways to run the business.

Jason Liberty: Yeah. And I just wanna just to add on the AI side because I think a lot of times, it's attributed to people, like you're gonna have less people. I think we look at AI as really allowing us to do more higher purpose activities to enhance the experience for our guests. And our business, because of the scale of our business, you can think about supply chain. You can think about how our ships get from point A to point B. You can think about how we yield manage, or just being able to get people to start, you know, kind of further up the chain in the activities that they do.

That yields not only a better experience for our guests, a better experience for our employees, but also then provides cost opportunities for us. And so we see it as a huge commercial enhancer. It's a significant guest experience enhancer. We see it as really tooling our employees to make their experience better and for them to provide higher value. And it's less about what I think sometimes we think that there's just, like, less people. We actually see it as more as a, you know, it creates a lot of new things that we could be doing that's gonna drive higher margins into our business.

Operator: Your next question comes from Brandt Montour with Barclays. Your line is open.

Brandt Montour: Great. Thanks for everybody. Thanks for taking the question. So we spent a lot of time on the supply situation in the Caribbean. My question is more about how maybe industry participants away from you have reacted to that. Does it feel I mean, Jason, you've been watching this industry for a long time. Does it feel like, you know, a little bit more or less rational than maybe what this type of environment would have engendered in the past? And sitting here, you know, halfway through WAVE, with industry volumes so far seemingly pretty strong across the board, are we at a point now where maybe things can improve or sort of still wait and see?

Jason Liberty: Well, yeah, it I, you know, it's only been twenty years. So but I've a lot, and Michael, for sure, has seen a lot over the twenty years in terms of all the kind of promotional activities. For sure, this industry is so much more rational, so much more about price integrity. And there's always promotions in the market. And but those promotions in the market are we would say, very similar to what we saw last year or two years ago. And similar to what we saw in 2018/19, etcetera. Now there's a, you know, if you go back probably a decade ago, you saw some, you know, some irrational activity.

But I think overall, we would say that it's rational. There's a lot of price integrity. You know, our travel partners are doing such an exceptional job in generating high-quality demand, as well as our other channels as we're for sure, a channel of choice. And so I think collectively, what I can see, there's a lot of rational activities. And that, by the way, also expands into really have a look at our true competitive set which includes our land-based vacations. And when we, you know, we, you know, and I think somewhat the cruise side of this a little bit insulated because of the price gap to land base.

But we're certainly chasing to see how we can go about and close that.

Operator: Your next question comes from Conor Cunningham with Melius Research. Your line is open.

Conor Cunningham: Hi, everyone. Thank you. Just maybe a comment around the close-in booking strength. I was just hoping you could talk about your skewed itineraries that are moving more towards three to four days versus, you know, seven plus. You know, it's not in the context of, like, you having less visibility. It's more in the idea of, you know, closing demand, you know, has the opportunity to move yields a lot more. So just can you talk a little bit about that and how the I think it was 20% in 2025. So if you could just maybe correct that number, but also give your thought process around '26 and beyond. Thank you.

Jason Liberty: Yeah. Well, first, Conor, I think that, you know, coming in, you know, I would say over the past, you know, call it three or four years, certainly have made it a priority to bring more short product to the market. And that is to really match how guests or certain segments wanna go out on vacation. They want more vacation experiences. They want them more often. They want them shorter duration. That's not everybody, but there's certain segments that want that great weekend getaway. And so we've, you know, we've certainly have added that into this, but we haven't, you know, we're now kind of in a more mature state with those short products.

As you pointed out, it is closer in business. But the reason why I wanna combine those two thoughts about it's closer in business and we've kind of, you know, we've reached a good level of scale. Not that there's not more growth. It's just that it's not going from, you know, single digits into something that's more material into our business. The reason why those thoughts are important to bring together is that our yield management models, right? I mean, you know, they are AI-based. They do learn.

And so when we think about close-in, you could see this in the fourth quarter, you we did see better demand, but it's not, you know, it doesn't necessarily mean that better demand gonna result in what we saw in previous quarters with close-in booking. I think we have a pretty good handle now on close-in demand, how we market it, how we price it, how it comes in. And our yield management and our forecasting is informed by all of that. I think the other point I wanna say on the short product side that I think Michael and Laura have really, on the celebrity side, done an exceptional job is they have really elevated the experience.

Our guests walk away with having the best vacation weekend, certainly, of the year. And, of course, we want it to be of the lifetime, but certainly of the year. And I think that when you're delivering that experience, you're building that trust. It's an incredible feeder for our broader part of our business, especially new to cruise because now they're hooked on the vacation experience. And that's also yielding more reps for getting out of our guests. And that's resulting in achieving that goal of delivering a lifetime of vacations.

Michael Bayley: And, Conor, just to add to Jason's comments. I mean, for Royal, we've got, you know, now we've got two Oasis class ships, one out of Port Canaveral, one out of Miami. Moving twice a week carrying around 12,000 people per ship per week. So that's 24,000 a week. Going to Perfect Day in CocoCay. And now, of course, with the Royal Beach Club, and they're also going to the Royal Beach Club.

So when you think about the proposition in the marketplace to the customer, the fact that you can get on these incredible ships just packed full of activities and entertainment features, multiple restaurants, then wake up in the morning and take the kids to Perfect Day CocoCay and then have a great show in the evening, and the next day get to the Royal Beach Club and be back in work on Monday morning. It's really a fantastic proposition. And we've seen the demand for those products really accelerating. And of course, the kind of the margins that we generate on those products are really quite significant.

The other comment is the simplicity of booking, the ease of being able to get on board these ships. It's become increasingly easier. And then with all of the investment that we've made over time in the pre-cruise planning and the ability to start communicating with our guests about opportunities to book and buy products before they come on board. All of that is really combined to make this a very seamless, easy product to buy, and that's exactly what we're seeing. And so in many ways, it does encourage people to wait a little longer before they book because they know how simple it is, and they also know what a great time they're gonna have.

Operator: Your next question comes from David Katz with Jefferies. Your line is open.

David Katz: Good morning, everybody. Congrats, and thanks for taking my question. Can you just talk about what information or inputs you have with respect to River? That, you know, are driving the increased commitment there? And, you know, the degree to which you believe you can induce trial of your current customer base versus, you know, taking share from existing river cruise companies? An update there would be great. Thank you.

Jason Liberty: Sure. Well, obviously, we are very excited about River. Of course, when we announced River and we announced the first 10 ships, also, at the same time, I said this was not gonna be a hobby. And so we are, you know, this is another, I think, point of evidence that this is not a hobby for us. And we feel, well, obviously, we've done a lot of research even, you know, announcing this or getting into this. About the trust that we've built with our customers, how loyalty affects them, and that really their desire for an elevated river experience.

And so we, you know, we felt very strongly just based off of, you know, we have nine and a half million guests a year. This year, we'll have over 10 million guests sailing with us. We have a massive database of loyalists that our ability to generate high-quality demand is, I mean, very strong. That really availed itself when we began to tease it and build waiting lists and so forth that you immediately saw, but specifically from our loyalty guests, not just with the celebrity brand, but across our three brands, a strong desire to take a vacation on River with us.

And, of course, that, you know, we see that every day in terms of the demand from the trade and from our customers for any open spot that they could possibly get. So we feel very good about it. And, you know, I think we always just need to remember that these are not 20 seventy-five hundred passenger ships. These are, you know, these are, you know, sub-200 passenger ships. And we're very excited. And we think that, you know, Europe is just one area of the world where our guests wanna go on a river.

Naftali Holtz: Yeah. Just one two other things to add is as we were opening for sale, obviously, the demand actually exceeded our expectations, so that gave us a lot of confidence also as well. And that's both on the volume, but also on the price. And then one other maybe data point that really was encouraging to us because this is what we thought it's gonna happen is that, you know, roughly 80% of the people that booked are actually existing customers, but they've never RiverCruise before. And so they're very excited because they trust the celebrity brand to actually experience another different vacation with the celebrity brand.

And that's so that tells you that we can have an opportunity not only to attract other river cruisers, but also expand the market.

Operator: This concludes the Q&A period. I'd like to turn the call back to Naftali Holtz, CFO, for any concluding remarks.

Naftali Holtz: We thank you all for your participation and interest in the company. Blake will be available for any follow-ups. We wish you all a great day.

Operator: Ladies and gentlemen, this concludes today's call. Thank you for your participation. You may now disconnect.

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