Royal Caribbean Cruises Q4 Earnings Call Highlights

Core Insights - Royal Caribbean Cruises reported strong financial results for 2025, with total revenue reaching nearly $18 billion and adjusted earnings per share (EPS) increasing by 33% to $15.64 [2][5]. - The company anticipates continued strength in 2026, projecting double-digit revenue growth and adjusted EPS between $17.70 and $18.10, representing approximately 14% growth year over year [5][8]. Financial Performance - In Q4, net yields grew by 2.5% on a constant-currency basis, with total revenue rising by 13% and net cruise costs excluding fuel decreasing by 6.3% [1]. - The company generated nearly $6.5 billion in operating cash flow and returned $2 billion to shareholders through dividends and share buybacks in 2025 [2][5]. Demand Trends - The company experienced a record start to the wave season, with the best seven booking weeks in its history, and is already about two-thirds booked for 2026 [6][7]. - Management noted that all commercial channels are producing strong demand, particularly direct-to-consumer performance [6]. Capacity and Expansion Plans - Royal Caribbean is investing in growth, committing to 10 additional Celebrity River ships, launching a new "Discovery Class" with two firm ships, and expanding private-destination offerings [4][12]. - Capacity is expected to rise by 6.7% year over year, reflecting the introduction of new ships and the annualized impact of existing ones [9]. Cost Management - Full-year net cruise costs excluding fuel are expected to be flat to up 1%, with fuel expenses projected at approximately $1.17 billion [10]. - The company anticipates about 200 basis points of cost headwinds mainly tied to the ramp-up of the private destinations portfolio [10]. Technology and Innovation - The company is embedding AI across commercial and operational functions, with a 25% year-over-year increase in active app users and a 10% rise in e-commerce traffic in 2025 [14]. - AI is being applied to various areas, including personalization, supply chain forecasting, and energy management [14].