Royal Caribbean (RCL) - Q4 2025 Earnings Call
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Call Details
Call Title: Royal Caribbean Group Q4 2025 Earnings Call
Date Held: January 29, 2026
Management Team Members Present:
Jason Liberty, Chairman and Chief Executive Officer
Naftali Holtz, Chief Financial Officer
Michael Bailey, President and CEO of Royal Caribbean Brands
Blake Vanier, Vice President of Investor Relations
Call Summary
Financial Performance
Royal Caribbean reported “record 9.4 million memorable vacations” in 2025, achieving “nearly $18 billion of total revenue” and a remarkable “33% earnings growth” year-over-year.
The company generated “nearly $6.5 billion of operating cash flow,” illustrating robust cash generation capabilities.
For the fourth quarter, net yields increased by “2.5%,” while adjusted earnings per share (EPS) reached $2.80, exceeding initial guidance.
Total revenue for Q4 grew by “13%,” and full-year adjusted EBITDA reached “just over $7 billion,” signifying a year of strong profitability.
The company emphasized achieving an investment-grade balance sheet alongside returning $2 billion to shareholders through dividends and share buybacks.
Compared to pre-pandemic 2019, total guests increased by “45%,” with significant growth in millennials and younger demographics nearly doubling.
“Adjusted EPS grew 33% to $15.64” for the full year, noticeable against heightened operational efficiency and improved customer satisfaction metrics.
Guidance
For 2026, Royal Caribbean anticipates a “double-digit growth rate” in revenue alongside net yield growth in the range of “1.5% to 3.5%.”
The company expects adjusted EPS between “$17.70 and $18.10,” representing approximately “14% year-over-year increase.”
“Operating cash flow” is projected to exceed “$7 billion” in 2026, further affirming strong financial health.
The guidance includes a capacity increase of “6.7%,” with the Caribbean representing over “57% of total capacity.”
The majority of bookings for 2026 are noted to be “well within historical ranges” at record rates, suggesting optimistic consumer demand.
Overall, the company aims for continued investments in strategic growth initiatives amid a focus on enhancing shareholder returns through competitive dividends and share repurchases.
The first quarter adjusted EPS is expected to be between “$3.18 and $3.28.”
Capital Allocation
Royal Caribbean plans to invest approximately “$5 billion” in strategic growth initiatives in 2026, which includes enhancements to their fleet and private destination portfolio.
The significant investment targets improving customer experiences, establishing a competitive edge and maintaining operational efficiency.
The company aims to manage existing capital prudently, maintaining liquidity of “$7.2 billion” and keeping leverage below three times.
Innovations in the fleet and destinations like the Royal Beach Club are expected to enhance profitability while extending market reach.
Naftali Holtz noted that the company will remain focused on capital returns to shareholders while simultaneously funding future growth opportunities.
Operational enhancements are driven by integrating technology and innovative practices, suggesting a disciplined approach to investment in the company’s future.
Share buybacks and shareholder dividends remain high priorities as part of their capital return strategy.
Macro & Demand Trends
Jason Liberty mentioned that “the wave is off to a record start” for bookings in 2026, referring to the best booking weeks in the company’s history observed since the last earnings call.
The management highlighted that “40% plan to increase leisure travel spending” in the next year, indicating a resilient consumer sentiment amid economic uncertainties.
Demand for the Caribbean continues to be strong, with yields in the region up “35% since 2019,” reaffirming the appeal of cruise vacations.
The onset of the wave season has seen all commercial channels delivering high-quality demand, particularly through direct-to-consumer initiatives.
Growing emphasis on digital capabilities and consumer engagement reflects adaptability to changing consumer preferences for cruise vacations.
Management overall noted a pattern of high demand across all brands and destination types, seeing consistent demand trends akin to pre-pandemic levels.
AI & Technology Trends
Royal Caribbean has been actively integrating “disruptive technologies like AI across all commercial and operational areas” to enhance guest experiences.
There was a noted “25% year-over-year increase in active users” on their app in Q4, reflecting the successful implementation of user-friendly technology.
The application of AI aims to improve guest interactions, streamline operations, and enhance personalized planning experiences for guests.
Management highlighted that “AI represents a core capability” for driving operational efficiencies and guest satisfaction, reinforcing its role in achieving financial outcomes.
Technology investments are expected to optimize yield management and operational forecasting, thus creating further revenue opportunities.
The emphasis placed on AI is aimed at maximizing operational leverage without reducing manpower, positioning the company for sustained growth.
Product Updates
The company announced plans for “10 additional Celebrity River Cruises ships” which will boost capacity and offerings in that segment.
Launching the new Discovery-class ship is expected to significantly enhance how Royal Caribbean guests experience vacations, with two firm-order ships and options for four more.
The successful open of the “Royal Beach Club Paradise Island” has already produced a positive response and is beneficial for future revenue generation.
Michael Bailey disclosed that the new Royal Beach Club is now the “top-rated experience in Nassau” for cruise guests, highlighting its immediate popularity.
The emphasis on expanding private destinations is anticipated to further enrich guest experiences and loyalty within the brand ecosystem.
Ongoing modernization of existing ships and fleet enhancements highlights executive commitment to maintaining the highest guest satisfaction levels.
New ships and enhanced offerings are recognized not just for capacity increases, but also for expansions in guest experience, thus generating improved financial performance.
NOTABLE QUOTES
“We delivered a record 9.4 million memorable vacations at a very high customer satisfaction score.”
“2025 was an outstanding year… defined by strong demand for our brands.”
“We are also announcing the launch of the Royal Caribbean brand’s new Discovery-class ship.”
“We have a massive database of loyalists that enhances our ability to generate high-quality demand.”
“Guest response [to Royal Beach Club] has been exceptionally positive.”
“We expect revenue for 2026 to achieve a double-digit growth rate.”
“AI… helps us deliver a better experience and run a smarter operation.”
“The wave is off to a record start” for bookings in 2026.
“The company remains committed and focused on our mission to deliver the best vacation experiences responsibly.”
“Our strategy is centered on creating a lifetime of vacations for our guests.”
Q&A SUMMARY
Q: Matthew Voss (J.P. Morgan), [summarized question about the acceleration of momentum into 2026 and market differentiation]
A: Jason Liberty emphasized that Royal Caribbean is growing both capacity and demand, noting “6.7% capacity growth” and a rise in loyal customers. He highlighted the “strong consumer who is attracted to our incredible brands” and the demand for experiences that “enhance the overall guest experience.”
Q: Steve Wisinski (Stiefel), [summarized question about Caribbean demand and conservative pricing approach]
A: Jason Liberty noted that demand for the Caribbean remains strong, with pricing “higher than it was last year.” He pointed out that their loyalty program is successfully attracting repeat customers, which is resulting in “strong demand” across all brand offerings.
Q: James Hardiman (Citi), [summarized question about organic vs. inorganic growth driven by new ships and Royal Beach Club]
A: Jason Liberty stated that half of the yield growth will come from “new hardware” and the other half from like-for-like operations. Michael Bailey added that the Royal Beach Club is receiving “huge success” as it ramps up to full capacity, driving customer satisfaction.
Q: Lizzie Dove (Goldman Sachs), [summarized question on yield cadence and dry dock impacts]
A: Naftali Holtz explained that while dry dock timing influences yield comparisons, the integration of larger ships into the fleet may also impact future pricing. He emphasized focusing on profitability and guest satisfaction during these adjustments.
Q: Robin Farley (UBS), [summarized question regarding the Discovery class ship’s capacity and yields]
A: Michael Bailey stated that while the Discovery-class ships may be smaller than others, they will still enhance Royal Caribbean’s competitive edge. He said the company is excited to introduce details soon, suggesting significant innovation that will change the cruise experience.
Q: Grant Montour (Barclays), [summarized question regarding supply vs. industry participants’ responses]
A: Jason Liberty described current industry dynamics as “more rational” now, explaining that price integrity has improved. He stated that “there’s a lot of price integrity” and coordinated promotional efforts, enhancing collaboration among industry players.
Q: Connor Cunningham (Mellius Research), [summarized question regarding short itineraries and their impact on pricing]
A: Jason Liberty explained that shorter duration cruises have become a priority in response to customer demand for frequent getaways. The company’s yield management practices have adapted to effectively capitalize on this trend while ensuring the best experiences for guests.
Q: David Katz (Jefferies), [summarized question about the increased commitment to River Cruises]
A: Jason Liberty conveyed excitement around River Cruises, noting strong initial demand and significant interest from existing customers. Naftali Holtz added that “80% of those booking are existing customers,” showcasing trust in the Celebrity brand and promising potential for market share growth.
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