Royal Caribbean delivered impressive first-quarter results, exceeding profit projections even as the cruise giant endured a challenging April alongside broader market volatility.
The cruise operator reported net income of $950 million, translating to $3.48 per share, representing growth from $730 million, or $2.70 per share, during the comparable quarter last year.
When adjusted for one-time items, earnings reached $3.60 per share. Wall Street analysts had projected $3.20, making the upside surprise significant.
Royal Caribbean Cruises Ltd., RCL
Revenue rose 11% from the prior-year period to $4.45 billion, narrowly missing the $4.46 billion consensus estimate from analysts.
Shares surged 8% during premarket trading Thursday — marking a sharp reversal for the stock, which had fallen 8% throughout April while sitting out the S&P 500’s strongest monthly performance since November 2020.
The cruise line did reduce its full-year adjusted earnings outlook. Management now expects $17.10 to $17.50 per share, compared to previous guidance of $17.70 to $18.10.
Two primary factors drove the revision: elevated fuel expenses and diminished revenue from Middle Eastern routes amid the ongoing Iran conflict.
Following hedging activities, the fuel cost increase amounts to approximately $0.62 per share beyond prior projections — totaling around $1.3 billion. While substantial, the impact proved less severe than market participants had anticipated.
Despite the adjustment, the midpoint of Royal Caribbean’s updated annual EPS guidance exceeds the $17.09 consensus among analysts. This positioning likely explains the positive market reaction.
For the second quarter, management projected net yield expansion of 0.9% and adjusted earnings between $3.83 and $3.93 per share. Analysts had anticipated $4.02, meaning the Q2 outlook came in moderately below expectations.
For the complete fiscal year, net yield growth is anticipated between 2.3% and 3.3%.
CEO Jason Liberty highlighted robust consumer appetite for the company’s cruise offerings and emphasized the firm’s “fortified balance sheet” as catalysts for sustained double-digit revenue and profit expansion through 2026.
Booking volumes experienced softness during March and early April. The company attributed weakened demand for Mediterranean and West Coast Mexico voyages to evolving geopolitical circumstances.
However, Royal Caribbean reported that reservations have subsequently rebounded and currently exceed levels from the corresponding period last year.
This represents an important indicator considering the broader anxieties surrounding the cruise industry this year.
Escalating oil prices connected to Middle Eastern instability have elevated operational costs industrywide, impacting Royal Caribbean, Carnival, and Norwegian Cruise Lines alike.
Certain analysts had expressed concern that consumers facing higher gasoline prices might reduce discretionary spending on experiences like cruise vacations.
Currently, Royal Caribbean’s booking trends suggest otherwise — consumer demand remains resilient.
The company’s 8% premarket jump Thursday signals investor confidence that the guidance adjustment proved less dramatic than feared, and that fundamental demand strength persists entering the critical summer travel period.
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