Norwegian Cruise Line Holdings Ltd (NYSE:NCLH) shares plummeted Thursday after the company reported worse-than-expected first-quarter 2025 results.

The company reported a first-quarter revenue decline of 2.9% year over year to $2.127 billion, missing the analyst consensus estimate of $2.14 billion.

This reflects a 2% drop in Capacity Days due to more berths for larger ships in dry dock and a strategic reduction in passenger air participation rates.

Passenger ticket revenues fell 2.8% YoY to $1.418 billion, and Onboard revenue declined 3.1% to $708.87 million. Total cruise operating expenses decreased 6% to $1.303 billion.

Adjusted EBITDA for the quarter stood at $453.07 million, down 2.3% YoY, and the margin gained 12 bps to 21.3%. Adjusted EPS of 7 cents below the consensus estimate of 9 cents.

Operating income fell 8% to $200.9 million, and the operating margin of 9.4% contracted 52 basis points.

The company's 12-month forward bookings softened but remained within the optimal range. Q1 2025 occupancy was 101.5%, down year-over-year due to dry-dock capacity. Advance ticket sales rose 2.6% to $3.9 billion.

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As of March 31, 2025, the company had a total debt of $14.0 billion and a Net Debt of $13.8 billion. Liquidity at quarter-end was $1.4 billion, including $184.4 million in cash and $1.0 billion available under the Revolving Loan Facility.

Operating cash flow for the quarter totaled $679.221 million, down 15.8% YoY.

Gross margin per Capacity Day rose 5% as reported and 7% in Constant Currency. Net Yield grew 0.6%, as reported, and 1.2% in Constant Currency, exceeding guidance.

Gross Cruise Costs per Capacity Day were $297, down from $300, while Adjusted Net Cruise Cost excluding Fuel increased 2.9%, better than the 3.9% guidance.

"Looking ahead, our proven track record of long-term Net Yield growth, strong cost control, continued record guest satisfaction scores and guest repeat rates give us confidence about our future. Thus, as we remain mindful of the evolving macroeconomic environment and despite recent volatility, we are maintaining our full year 2025 Adjusted EBITDA and Adjusted EPS guidance," said Harry Sommer, president and chief executive officer of Norwegian Cruise Line Holdings Ltd.

“While we recognize there may be potential pressures on the top line, we believe these can be effectively offset by the continued execution of our cost savings initiatives. Our focus remains on managing the business for the long term – balancing disciplined pricing and cost control with guest experience and strategic investments for the future,” Sommer added.

2025 Outlook: Norwegian Cruise Line expects FY25 net yield on a constant currency basis to increase 2.0%-3.0% and occupancy of 102.5%.

Reaffirmed Adjusted EBITDA guidance of $2.72 billion and adjusted EPS of $2.05, with a consensus of $2.07.

Q2 Outlook: Norwegian Cruise Line sees net Yield of 2.5%. Adjusted EPS of ~$0.51 versus an estimate of $0.51.

NCLH for the second quarter Occupancy is expected to be ~103.2%. Sees Adj. EBITDA of ~$670 million.

Price Action: NCLH shares are trading lower by 8.4% at $15.92 at last check Wednesday.

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