Viking Holdings Ltd(VIK) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q3 2025, net yield increased by 7.1% year over year, reaching $617, the highest in Viking's history [5][12] - Adjusted gross margin rose by 21.4% year over year [12] - Adjusted EBITDA reached $704 million, up 26.9% year over year, with an adjusted EBITDA margin of 52.8% [15] - Net income improved to $514 million, an increase of almost $135 million compared to Q3 2024 [15][16] Business Line Data and Key Metrics Changes - In the river segment, capacity per capacity day (PCD) increased by 5.2% year over year, with adjusted gross margin rising by 14.3% to $1.4 billion [17] - Ocean segment capacity PCD increased by 15.3% year over year, with adjusted gross margin up 28.5% to $1.5 billion [17] Market Data and Key Metrics Changes - As of November 2, 2025, 96% of 2025 capacity was sold, and 70% of 2026 capacity was already booked [5][21] - Advanced bookings for 2025 reached $5.6 billion, a 21% increase compared to the same point in 2024 [21] - For 2026, advanced bookings are at $4.9 billion, 14% higher than the same point in 2025 [21] Company Strategy and Development Direction - The company focuses on destination and cultural enrichment, aiming to create a new category of travel that emphasizes meaningful discovery [9][10] - Viking plans to continue expanding its fleet and enhancing its product offerings, with a commitment to maintaining high standards of service and customer experience [11][19] - The company is exploring both organic and inorganic growth opportunities, including potential expansion into the Chinese market [76][77] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong booking environment and the resilience of their target customers [5][21] - The company remains committed to disciplined cost management while investing in talent and capacity to support long-term growth [14][19] - Management noted that the current capital structure provides financial flexibility to pursue growth opportunities [34] Other Important Information - Viking has been recognized as the number one cruise line for oceans and rivers by Condé Nast Traveler for five consecutive years [10][11] - The company controls or has priority access to 113 coveted docking locations, enhancing guest experiences [10] Q&A Session Summary Question: What is driving the pricing increase for 2026? - Management indicated that strong demand and consumer resilience are key factors driving pricing increases, with a focus on engaging consumers rather than aggressive pricing actions [30] Question: What does pursuing long-term growth mean for Viking? - Long-term growth includes organic growth through new ship orders and potential inorganic growth opportunities that are scalable and margin accretive [34] Question: Can you elaborate on demand trends and loyalty? - Management noted that demand remains strong, with a significant portion of guests being repeat customers, reflecting loyalty to the Viking brand [39][41] Question: How does Viking plan to respond to new competitors in the river space? - Management emphasized their unique advantages in docking locations and ship design, focusing on delivering outstanding products rather than worrying about competitors [52][64] Question: What are the expectations for future itineraries and market expansion? - The company plans to maintain its current successful itineraries while exploring new markets, including potential growth in the Chinese market [77][88]