Viking Holdings Ltd(VIK) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In 2025, total revenue reached a record of $6.5 billion, a 21.9% increase year-over-year [9] - Adjusted EBITDA was nearly $1.9 billion, up 38.8% year-over-year, reflecting higher revenues and operational efficiency [9] - Adjusted net income was $1.2 billion, representing a 43.9% increase compared to the previous year [9] - For Q4 2025, total revenue was $1.7 billion, a 27.8% increase year-over-year [15] - Adjusted EBITDA for Q4 totaled $463 million, an improvement of 51.3% over Q4 2024 [16] Business Line Data and Key Metrics Changes - River segment capacity PCDs increased by 6.5% year-over-year, with adjusted gross margin growing 16.2% to $1.9 billion [17] - Ocean segment capacity PCDs increased by 17.9% year-over-year, with adjusted gross margin rising 30.9% to nearly $2 billion [18] - Net yield for the river segment was $578, up 8.4% year-over-year, while ocean segment net yield was $572, up 9.7% [18] Market Data and Key Metrics Changes - Viking holds a 52% market share in the North American outbound river market and a 27% share in the luxury ocean market [11] - 54% of guests in 2025 were repeat travelers, indicating strong brand loyalty [11] - Advanced bookings for the 2026 season are $6 billion, 13% higher than the same point in 2025 [21] Company Strategy and Development Direction - The company aims to expand its fleet, with plans for two new ocean ships and additional expedition ships to meet strong demand [26] - Viking is committed to maintaining a focus on guest experience, employee treatment, and environmental responsibility [13][14] - The company is expanding into new destinations, including new river itineraries in India, enhancing brand awareness and guest experience [5] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand for core products, with 86% of bookings for the 2026 season already sold [21] - The company is monitoring geopolitical developments, particularly in the Middle East, but does not anticipate significant impacts on demand [38][66] - Management emphasized the importance of maintaining a strong balance sheet and liquidity position to support growth and operations [19] Other Important Information - The company ended 2025 with a net leverage ratio of 1.1 times and a return on invested capital of 45.8% [12] - Deferred revenue totaled $4.6 billion as of December 31, 2025, indicating strong future revenue visibility [20] Q&A Session Summary Question: Thoughts on yield growth for 2026 - Management noted that advanced bookings and curves indicate solid yield growth in the 5%-7% range for 2026 [32][33] Question: Impact of geopolitical uncertainty on demand - Management stated that past experiences show minimal impact on demand during geopolitical uncertainties, with guests being well-informed [35][38] Question: Consideration of dividends or share repurchases - Management indicated it is premature to consider dividends or share repurchases due to ongoing investments and a strong order book [41][42] Question: Strength in ocean pricing and demand trends - Management confirmed strong demand for ocean bookings, with advanced bookings per PCD showing positive momentum [50][55] Question: Impact of river ship delivery delays - Management assured that delivery delays would not significantly impact booking curves, as guests can be re-accommodated on identical vessels [61][75] Question: Initial demand trends for new Indian river itineraries - Management reported overwhelming support from past passengers for new Indian itineraries, yielding at higher rates [76][78]