Royal Caribbean Cruises' Q1 Benefits From Strong Demand, Stock Surges

Royal Caribbean Cruises Ltd RCL shares are trading higher in premarket on Tuesday after the first-quarter fiscal 2025 earnings.

The cruise operator reported first-quarter sales growth of 7.2% year-on-year to $4 billion, marginally missing the analyst consensus estimate of $4.01 billion.

Passenger ticket revenues rose 7.9% Y/Y to $2.74 billion compared to last year. Total cruise operating expenses were $2.07 billion versus $2.05 billion a year ago.

Gross Cruise Costs per Available Passenger Cruise Days (APCD) decreased 1.1%. Gross margin yields increased 13.9% as-reported, and net yields increased 4.7% in constant currency.

Operating income for the quarter jumped 26% to $945 million, with an operating margin of 23.6%. The occupancy rate in the quarter was 108.8% versus 107% last year.

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Adjusted EBITDA for the quarter was $1.4 billion, with a margin of 35.1%. Adjusted EPS of $2.71 beat the consensus estimate of $2.54.

As of March 31, the group's customer deposit balance was $6.33 billion. Royal Caribbean held $386 million in cash and equivalents as of March-end.

Royal Caribbean CEO Jason Liberty said the company is navigating “the complexities of the current macroeconomic landscape” while also optimizing revenue and managing costs.

Outlook: Royal Caribbean expects FY25 net yields growth of 2.5%—4.5% in constant currency. RCL raises its FY25 adjusted EPS outlook from $14.35 – $14.65 to $14.55 – $16.55 versus an estimate of $14.94.

The company expects second-quarter adjusted EPS of $4.00 – $4.10, with an estimate of $3.96. Net yields for the first quarter are expected to increase 4.4% to 4.9% in constant currency.

Price Action: RCL shares traded higher by 4.48% at $226.00 in premarket at last check Tuesday.

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