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 PCDs increased by 5.2% year-over-year, with adjusted gross margin up 14.3% to $1.4 billion and net yield at $589, up 7.8% [17] - In the ocean segment, capacity PCDs increased by 15.3% year-over-year, adjusted gross margin rose by 28.5% to $1.5 billion, and net yield increased by 10.9% to $591 [17] Market Data and Key Metrics Changes - As of November 2, 2025, 96% of 2025 capacity was sold, with advanced bookings of $5.6 billion, a 21% increase from 2024 [5][21] - For 2026, 70% of capacity is already booked, with advanced bookings of $4.9 billion, 14% higher than the same point in 2025 [21][24] 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 has expanded its fleet to over 100 ships, with a commitment to modernizing river and ocean voyages [7][8] - The company aims to maintain its leadership position in river cruising by controlling or having priority access to 113 docking locations [10][11] 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][6] - The company remains committed to disciplined cost management while investing in talent and supporting expanding capacity [14][19] - Management highlighted the importance of maintaining high standards to continue receiving industry recognitions [11] Other Important Information - Viking's capital structure has improved, allowing for financial flexibility to pursue long-term growth opportunities [19][34] - The company has received a credit rating upgrade from Moody's to Ba2 [19] Q&A Session Summary Question: What is driving the pricing increase for 2026? - Management indicated that strong consumer demand and a resilient customer base 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 is focused on organic growth through new ship orders and potential market share expansion in the luxury ocean segment, with an eye on scalable and margin-accretive opportunities [34] Question: Can you elaborate on demand trends and customer loyalty? - Management noted that demand remains strong, with a significant portion of customers being repeat visitors, and emphasized the brand's appeal to those seeking a quieter, more enriching travel experience [39][81] Question: How does Viking plan to respond to new competitors in the river space? - Management expressed confidence in their unique positioning and plans to continue focusing on delivering outstanding products rather than worrying about competitors [52] Question: What are the expectations for future itineraries and capacity growth? - Management indicated that while ocean itineraries will remain consistent, there is potential for geographic expansion in river offerings, particularly in emerging markets like China [87][77]