Royal Caribbean Raises 2026 Earnings Outlook After Q2 Beat

Royal Caribbean Group raised its 2026 adjusted earnings outlook to $17.73 to $17.87 per share after second-quarter results beat its guidance on close-in demand, lower-than-expected costs and joint venture performance. The company also set full-year revenue growth at about 9%, down from a previous target of about 10%, as prolonged geopolitical activity weighed on bookings for selected itineraries.

The revised earnings forecast is up from the company’s prior $17.10 to $17.50 range and implies about 14% year-over-year adjusted EPS growth. The increase came despite lower net income than a year earlier and higher fuel expense in the quarter.

Quarter beats guidance as revenue rises 6%

Royal Caribbean reported second-quarter net income attributable to the company of $1.13 billion, or $4.20 per diluted share, compared with $1.21 billion, or $4.41 per diluted share, in the same period of 2025. Adjusted EPS was $4.21, above the $3.98 analyst estimate compiled by LSEG and cited by Reuters.

Total revenue rose 6% year over year to $4.83 billion, narrowly above the $4.82 billion analyst estimate cited by Reuters. Adjusted EBITDA was $1.8 billion. Capacity increased 5% from the prior-year quarter, while the group carried 2.4 million guests, up 6%, and reported a 110% load factor.

Net yields increased 1.9% as reported and 1.2% in constant currency, exceeding the company’s guidance primarily because of stronger close-in demand. Gross margin yields declined 5.6% as reported. Gross cruise costs per available passenger cruise day increased 4.5%, while net cruise costs excluding fuel rose 4.4% as reported and 3.9% in constant currency.

Jason Liberty, chairman and CEO of Royal Caribbean Group, said “the strong second quarter performance demonstrates the continued strength of our brands.” He said Royal Caribbean expects “another year of approximately double-digit growth in revenue and earnings.”

Bookings stay ahead of last year, but geopolitical impact remains

Royal Caribbean said booking volumes are above last year’s levels and pricing remains at record levels across its vacation portfolio. Since its last earnings call, however, the company has seen a modest near-term booking impact on selected itineraries tied primarily to prolonged geopolitical activity.

Naftali Holtz, chief financial officer of Royal Caribbean Group, said guests “continue to demonstrate a desire to spend on memorable experiences with us.” Holtz added that early 2027 booking trends are ahead of historical levels, including for itineraries affected by geopolitical developments this year.

The company’s full-year outlook calls for net yields to increase 2.35% to 2.85% as reported and 1.75% to 2.25% in constant currency. Net cruise costs excluding fuel are expected to rise about 0.4% as reported and remain about flat in constant currency.

The new EPS outlook would represent a 23% compound annual growth rate over the first two years of Royal Caribbean’s Perfecta program. The program targets a 20% adjusted EPS compound annual growth rate from 2024 to 2027 and return on invested capital of 17% or higher by the end of 2027.

Fuel, liquidity and capacity investment shape the outlook

Royal Caribbean used 422,000 metric tons of fuel in the second quarter at an average bunker price, net of hedging, of $839 per metric ton. Quarterly fuel expense was $355 million, up 27% year over year, according to Reuters.

For the third quarter, the company included $362 million of fuel expense in its guidance, based on expected consumption of 441,000 metric tons. Royal Caribbean said 58% of its forecasted 2026 fuel consumption is hedged through swaps, with hedge coverage declining to 53% in 2027, 29% in 2028 and 14% in 2029.

Royal Caribbean ended June with $6.9 billion of liquidity, including cash, cash equivalents and unused revolving credit capacity. In July, it increased its revolving credit facility capacity by $250 million to $6.6 billion. During the second quarter, the company returned more than $600 million to shareholders through $199 million in share repurchases and $404 million in dividends, with $805 million remaining under its current repurchase authorization.

Capital expenditures for 2026 are expected to total about $4.7 billion, driven mainly by new ships and land-based destination projects. The company took delivery of Legend of the Seas, the third Icon-class ship, during the second quarter and in April announced orders for Icon VI and Icon VII with committed financing in place.

Across its 71-ship portfolio, including Royal Caribbean International, Celebrity Cruises, Silversea and its 50% joint venture interest in TUI Cruises, the group expects 2026 capacity to increase 6.6% from 2025. Capacity growth is projected at 4% in 2027, 6% in 2028 and 7% in 2029, excluding any ship sales or additions the company may later choose.

For the third quarter, Royal Caribbean expects adjusted EPS of $6.26 to $6.36 and total revenue growth of about 8%. Net yields are expected to be approximately flat year over year, while net cruise costs excluding fuel per APCD are projected to decline 1.2% to 1.7% as reported.