Viking Holdings Ltd(VIK) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q2 2025, total revenue increased by 18.5% year over year to $1.9 billion, driven by an 8.8% capacity growth and higher occupancy [18][21] - Adjusted gross margin rose by 19.2% year over year to $1.2 billion, resulting in a net yield of $607, which is 7.8% higher than in 2024 [20][21] - Adjusted EBITDA for Q2 was $633 million, a 28.5% increase compared to the same period last year [20] Business Line Data and Key Metrics Changes - In the river segment, capacity PCDs increased by 7.5% year over year, with occupancy at 95.6% and adjusted gross margin growing by 15.8% [24] - For the ocean segment, capacity PCDs increased by 11.2% year over year, with occupancy at 95.2% and adjusted gross margin rising by 24.9% [25] Market Data and Key Metrics Changes - As of August 10, 2025, 96% of the 2025 capacity for core products was booked, with advanced bookings of $5.6 billion, 21% higher than the previous year [29][30] - For 2026, 55% of capacity was already booked, with advanced bookings at $3.9 billion, a 13% increase compared to the same point in 2025 [30] Company Strategy and Development Direction - The company is focused on expanding its fleet and strengthening its global presence, with new ships added to both river and ocean segments [8][9] - The strategy emphasizes selective expansion into culturally rich regions, such as India and Egypt, to enhance guest experiences [13][15] Management's Comments on Operating Environment and Future Outlook - Management noted sustained strength in demand, with a strong start for 2026 bookings, reflecting consumer engagement [41] - The company is committed to optimizing its cost structure while investing in teams and marketing to support future growth [20][43] Other Important Information - The company completed a secondary offering of 30.5 million shares at $44.2 per share, increasing institutional float and diversifying the shareholder base [10][16] - As of June 30, 2025, total cash and cash equivalents were $2.6 billion, with net debt at $3.2 billion and net leverage at 2.1 times [26] Q&A Session Summary Question: Can you walk us through booking progress for 2026? - Management reported strong demand with 55% of 2026 bookings sold, indicating consistent consumer behavior [40] Question: Is the increase in marketing spend broad-based? - The increase in marketing spend was a strategic response to softening demand, aimed at stimulating interest without discounting [43] Question: How do you see pricing optimization for 2026? - Management indicated a careful balance in pricing strategy, aiming for mid-single-digit yield growth while ensuring good value for guests [50][51] Question: What are the expectations for expense growth? - Management noted that quarterly variances in expenses are expected, but overall revenue growth has outpaced expense growth [67] Question: How does capacity growth impact pricing growth? - Management clarified that growth in ocean capacity does not negatively impact pricing, as demand remains strong [82] Question: What is the outlook for capital returns to shareholders? - Currently, the company is not contemplating dividends or share buybacks but remains open to capital returns in the long term [77][106]