Luxury cruise line operator Carnival Corporation (CCL) is set to release its financial results for the third quarter of fiscal year 2025 before the U.S. stock market opens on September 29. According to analysts' expectations compiled by Bloomberg, Carnival is projected to report Q3 revenue of $8.091 billion, adjusted net income of $1.827 billion, and adjusted earnings per share (EPS) of $1.31.
Review of the Previous Quarter's Performance
Carnival's earnings report for the second quarter showed that its adjusted EPS reached $0.35, significantly outperforming analysts' expected $0.24. Adjusted revenue also hit a record high of $6.3 billion, exceeding the market expectation of $6.2 billion.
The scale of customer advance payments surged to a record $8.5 billion.
The company revealed that, at constant exchange rates, cumulative advance bookings for 2026 have matched the record levels seen for 2025, while pricing has remained at historically high levels.
Net income soared to $565 million, representing a leap from the $92 million recorded in the same period of the previous year.
Outlook for the Current Quarter's Performance
Revenue Projections
1. Passenger Ticket Revenue
Based on forecasts from 17 analysts using S&P data, Carnival's Q3 2025 revenue is expected to reach $8.092 billion. As a core revenue segment, passenger ticket revenue is projected to grow significantly, driven by the following factors:
Strong booking momentum: The company's booking rate for 2025 stands at a high of 93%, reflecting robust market demand for its cruise products.
Peak summer travel season: Concentrated demand for family trips and vacation travel has boosted cruise ticket sales.
Optimized route layout: The launch of exclusive destinations such as "Celebration Key" in the Caribbean has provided passengers with differentiated travel experiences, attracting more customers and driving ticket revenue growth.
Passenger ticket revenue for the quarter is expected to reach approximately $5.23 billion, a year-on-year increase of about 15.1%.
2. Onboard and Other Revenue
Onboard spending is a key revenue driver for Carnival. With continuous upgrades to cruise ship facilities, onboard entertainment options, catering services, and shopping experiences have become increasingly diverse, stimulating passengers' willingness to spend. Examples include the addition of high-end SPA services, specialty theme restaurants, and limited-edition souvenir shops to meet the consumption needs of different passengers.
Data from previous quarters shows that onboard and other revenue has maintained a steady growth trend. For Q3 2025, this segment is expected to generate approximately $2.53 billion in revenue, up about 9.8% year-on-year.
3. Tourism and Other Related Revenue
Carnival also generates revenue by partnering with tourism providers to offer value-added services such as shore excursions and hotel bookings. Leveraging its large customer base and brand influence, the company has integrated the tourism industry chain to expand its revenue streams.
Tourism and other related revenue for the quarter is expected to be approximately $184.35 million, representing a year-on-year growth of 7.2%.
Cost Analysis
1. Operating Costs
Looking ahead to Q3 2025, Carnival expects its net yield at constant exchange rates to increase by approximately 3.5% year-on-year, building on the nearly 9% growth achieved in the same period of 2024. However, the company faces certain pressures in terms of operating costs:
Adjusted cruise costs per available lower berth day (ALBD), excluding fuel, are projected to rise by approximately 7%.
Key factors contributing to the cost increase include:
New operating expenses from the opening of Celebration Key, such as venue maintenance and staffing costs.
Increased advertising and promotion investments to market new routes, new destinations, and cruise products.
Reduced shipping capacity in 2025, which spreads fixed costs over fewer available lower berth days, leading to higher unit costs.
The expiration of certain one-time discounts compared to 2024, resulting in increased costs.
2. Fuel Costs
Fuel costs are highly susceptible to fluctuations in international oil prices. While the global crude oil market is relatively stable currently, uncertainties such as geopolitical risks remain. If oil prices remain at current levels, fuel costs for the quarter are expected to stay relatively stable. However, significant fluctuations in international oil prices would directly impact Carnival's fuel procurement costs, thereby affecting its profit margins.
Profit Forecast
Combining revenue and cost projections, Carnival is expected to achieve profit growth in Q3 2025. Analysts have a consensus forecast for the company's EPS of $1.304 for the quarter.
Revenue growth, particularly in passenger ticket sales and onboard spending, will to some extent offset the pressure from rising costs.
The company's ongoing cost optimization measures, such as improving operational efficiency and rationalizing fleet operations, will help enhance profitability.
Adjusted EBITDA for the quarter is expected to reach approximately $2.66 billion, a year-on-year increase of around 20%, indicating a further enhancement in the company's profitability.
Other Key Metrics
1. Occupancy Rate
Occupancy rate is a crucial indicator of cruise operational efficiency. For Q3 2025, Carnival's occupancy rate is expected to remain at a high level, reaching approximately 111.2%—above the 109% recorded in the same period last year. The high occupancy rate is attributed to strong booking demand, effective marketing initiatives, and high-quality products and services that attract repeat customers.
2. Liquidity and Debt Levels
Liquidity: As of the end of the second quarter, Carnival held $4.6 billion in cash reserves. In June, the company expanded its revolving credit facility by 50% to $4.5 billion, significantly enhancing its financial flexibility.
Debt management: The company plans to continue repaying debt in the second half of 2025. Although the net debt-to-EBITDA ratio is expected to remain at the same level as the second quarter by the end of the year (due to the delivery of the "Star Princess" cruise ship and related export credits), the leverage ratio is expected to improve gradually in the long term as EBITDA continues to grow, strengthening the company's financial health.
Conclusion
Overall, Carnival Corporation is expected to maintain its strong growth momentum in the third quarter of fiscal year 2025, with increases in key metrics such as revenue and profit. Backed by robust booking demand, the launch of new destinations, and cost control measures, the company has a solid foundation to drive performance growth.
This content is generated based on Tiger AI and Bloomberg data, for reference only.