Royal Caribbean Q1 Earnings Surpass Estimates, Revenues Miss

Core Viewpoint - Royal Caribbean Cruises Ltd. (RCL) reported mixed first-quarter 2025 results, with adjusted earnings exceeding expectations while revenues fell short, although both metrics showed year-over-year growth [1][3]. Financial Performance - Adjusted earnings per share (EPS) for Q1 2025 were $2.71, surpassing the Zacks Consensus Estimate of $2.53 by 7.1%, compared to $1.77 in the prior-year quarter [3]. - Quarterly revenues reached $4 billion, missing the consensus mark by 0.2%, but up 7.3% from $3.72 billion year-over-year [3]. - Passenger ticket revenues increased to $2.74 billion from $2.54 billion in the prior-year quarter, aligning with estimates [4]. - Onboard and other revenues rose to $1.26 billion from $1.19 billion year-over-year, exceeding estimates [4]. - Total cruise operating expenses were $2.08 billion, up 1.1% year-over-year, below estimates [4]. Cost and Yield Metrics - Net yields increased by 5.6% on a constant currency basis and 4.7% on a reported basis compared to Q1 2024 [5]. - Net cruise costs, excluding fuel, per Available Passenger Cruise Day (APCD) decreased by 0.1% on a constant currency basis and 0.3% on a reported basis year-over-year [5]. Balance Sheet and Cash Flow - As of March 31, 2025, cash and cash equivalents were $386 million, slightly down from $388 million at the end of 2024 [6]. - Long-term debt decreased to $17.99 billion from $18.47 billion at the end of 2024, with the current portion of long-term debt also declining [6]. Booking Trends - The company experienced strong booking trends during the WAVE season, with April bookings surpassing the same period last year [7]. - Customer deposits as of March 31, 2025, were $6.33 billion, up from $5.5 billion in the prior-year period [8]. Management Outlook - Management expressed optimism regarding ongoing consumer enthusiasm for new offerings, which is expected to drive yield growth throughout 2025 [9]. - For Q2 2025, the company anticipates adjusted EPS between $4 and $4.10, with net yields projected to increase by 4.4-4.9% on a reported basis [10][11]. - For the full year 2025, adjusted EPS is expected to be between $14.55 and $15.55, an increase from previous expectations [12].