[Management View]
OneSpaWorld Holdings Limited emphasized strategic expansion of higher-value services and new health and wellness centers, supporting record financial results. Management reported all operational and financial onboard metrics as "positive and remain positive," with no deterioration in consumer spend during the first half of the year. Cash generation enabled ongoing dividends and investment, while share repurchases are positioned to be opportunistic, and dividend growth is anticipated at the next anniversary.

[Outlook]
2025 Guidance: Full-year revenue projected at $950–$970 million; adjusted EBITDA guidance raised to $117–$127 million from $115–$125 million. AI initiatives are being piloted for yield improvement and operational efficiency, with measurable financial impact expected to begin in Q2 2026.

[Financial Performance]
Total Revenue: $240.7 million, up 7% from $224.9 million, setting a quarterly record.
Income from Operations: $22.1 million, up 17% from $18.8 million.
Net Income: $19.9 million, up 27% from $15.8 million.
Adjusted EBITDA: $30.5 million, up 13% from $27.1 million.
Adjusted Net Income: $25.8 million, or $0.25 per diluted share, up from $21.7 million, or $0.20 per diluted share.

[Q&A Highlights]
Question 1: So Leonard or Stephen, I want to dig in a little bit more around some of the strategies that sound like they are going to help you enhance your profitability, which sounds like it's very much AI-driven. You know, look. You know, to us, OneSpaWorld Holdings Limited, in terms of the story, was never really about margin enhancement given the revenue share agreements. But it sounds like that now might be changing. So what I'm trying to understand here is, you know, just maybe how material this could be over time in terms of improvement, you know, whether that's, you know, in flow through or margins, whatever you know, whichever way you want to think about it.

Answer: Yeah. Steve, good morning. Let me take that question because I think it's a really, really exciting initiative that we're working on and throughout the organization. There's tremendous optimism. So we break it down broadly into two categories. Right? On the one hand, there is a specific focus on yield improvement and driving revenue onboard through AI, machine learning, algorithmic recommendations, and optimization which we are currently piloting at this proprietary OneSpaWorld Holdings Limited Intellect property that has been built, and the initial results are optimistic, and we hope it will help us expand revenue opportunity onboard but in terms of margin, the opportunity primarily lies below the line in efficiency and automation. And that is where through a second set of initiatives, we're doing multiple things. We're using GenAI cross-platform automation, for example, email agents, calendar agents, presentation agents, to name a few. Which will drive productivity. They will help us scale our operations without having to add people, and we hope will ultimately lead to increased flow through. There's also GenAI enhanced knowledge work and documentation query some of which is already in place, for example. And so one quick example. Right? Instead of somebody having to call in and inquire about what their benefits might be or leave policy might be and having to take somebody's time to answer that, the system now will answer that for you literally in one minute. So it's all really good. It's really exciting. We've added five new employees to this project, people that are focused and specialized on this a director, a data scientist, a data architect, an AI business analyst, and a software integration engineer. So people that are super smart and we believe will ultimately help us take a really nice step forward overall in this entire arena.

Question 2: So will the brunt of this be kind of seen or, you know, more out into 2026? Is that kind of the way we should think about it?

Answer: Yes. That is the way you should think about it. Exactly.

Question 3: Okay. And then second question, just want to ask about the revenue guidance for the year in terms of maintaining that. It seems like spend rates, attachment rates, prebooking, I mean, all seem to be really strong. Through you know, it sounds like in terms of your commentary through July. So, you know, just trying to understand maybe, you know, what kind of keeps you from not raising that range now or at least, you know, even upping the low end of that range. And that's all for me. Thanks, guys.

Answer: Yeah. So we continue to remain very comfortable around where the consumer is at, demand onboard, and how we are progressing from a revenue optimization standpoint. Really, what it comes down to is the introduction of the timing of the new vessels, and the majority of those coming out in the fourth quarter and perhaps, you know, later in the fourth quarter. So that is all it comes down to, Steve. It's just timing of when we expect ships to be coming into service.

Question 4: Hey. Thanks a lot, guys, and congrats on a really nice second quarter. So my first question is just wanted to dig down a little bit more in terms of what you're seeing in the state of the consumer and the onboard spend. Any changes or leading indicators that you guys normally follow that help inform your view on the state of the consumer and just how that's impacting your outlook for the second half here.

Answer: So I think the way in which we look at it is through the metric lens, Max, and that's basically saying, are our operational metrics and financial metrics onboard continuing to indicate strength in the consumer, not only in terms of demand, but the actual spend itself. And all of those metrics were positive and remain positive, and a lot of the positive spend in the quarter contributed to the over-delivery. So we are not sitting on our laurels here saying that we have the best consumer, but we have a very, very strong consumer onboard. Through the summer season here into the third quarter, which is a transition quarter. But the quarter's got off to a good start or ending with a sort of a straddle cruise here, but so far, so good. We have not seen any deteriorations for the first six months in consumer spend. So we remain very optimistic about the health of the consumer.

Question 5: That's awesome. And then just on capital allocation, so a two-parter. First, how are you thinking about cash deployment on repurchase? And just a framework for us to consider given sort of what we saw in 1Q versus 2Q? And then separately, this is now the fourth quarter since you launched your dividend. So should we assume that it's a growth dividend and we'll see a step up next? Thanks a lot.

Answer: Capital allocation strategies, Max, have not changed. We remain focused in order of precedent on stock buyback, then dividend and debt repurchase. And reiterate that those do not have to be mutually exclusive. We did indeed not buy back any stock in the quarter. Obviously, you're aware of that. We have talked about the stock purchases being opportunistic and buying on weakness. The stock performed really, really well. Cash dropped off a little bit just in the last day or so, but recognizing, obviously, we're in a blackout period. So we will remain opportunistic and repurchase shares as we deem appropriate for the organization and perhaps when there's some softness in the stock. As it relates to the dividend, yes, you're correct. We have talked about, you know, next quarter would be the anniversary of when it was initiated, and so an increase at that time would be the most opportune timing for us.

Question 6: Hi. I just wanted to ask a question about the gross margin. It was flat year over year, and I just wanted to know any details on the push and pulls for gross margin for the rest of the year. Thanks.

Answer: Yes. So gross margin as you know, because of the variable cost of our business onboard, is something that slightly is something that we feel comfortable about. But as it relates to the current quarter, nothing really of interest, so to speak. The slight change was really due to a mix of products and services being sold. And then as it relates to the remainder of the year, we remain optimistic about consumer spend onboard, don't anticipate having to do incremental discounting and or promotions. Having said that, though, we don't historically guide specifically on gross margins. We would expect EBITDA margin, though, to improve a little bit as is reflected in some of the numbers. So see how it plays out, but I think the takeaway should be that we feel good about where things are at and what we foresee for the remainder of the year.

Question 7: Thanks. Good morning. I'd like to first ask about the thermal suites and if you could share some detail on latest trends and spend or behavior. Are you seeing any spend shifts more to the thermal suites of other parts of the wellness operation? Or is thermal suite spend pretty steady? And I'm thinking more from a same vessel comparison not from new vessels or expanded facilities on select ships.

Answer: The thermal suites are definitely continuing to be in high demand. I mean, some of the ships have much larger thermal suites. Clearly, the demand for those thermal suites will change geographically. So Alaska will see a very high utilization just because people like to hang out there and sort of watch the topography as they sit there. But it's also a great way for us to get people into the spa, begin to, you know, promote some services, and extend their time in the spa. So we would love to see thermal suites on some of the banners become a little larger because there's definitely multiuse purposes for the thermal suites. We can actually do IV therapy whilst they're relaxing. We can do a number of other things whilst they're getting prepared for a particular service. So I would say the demand is steady, but seasonally, you can see a slight shift upwards, particularly with itineraries such as Alaska.

Question 8: Thanks. And shifting to another region of the world, you've had a little more time with Arroya, and I'm curious if you could share any commentary on how that banner is starting to trend or any other expectations you have for either Arroya or as that comes online? In time.

Answer: Yeah. So these are both very early new brands adjusting to market trends and challenges. Arroya, I think, is starting to look at expanding where they're offering the cruises. I think it's been very much UAE focused. I think they need to and the same for Mitsui. I think they're going to go and do more outreach on a global basis and not just specifically within, say, Japan or the UAE. Load factors are still a little challenging, not quite where they need to be. And I think they'll get there. I think once they open the aperture and start selling cruises on a wider basis, I think so too will the load factors improve, but it's early days.

Question 9: Good morning, guys. Congratulations on a great quarter. I had a couple of questions. We're pretty much caught on occupancy post the industry restart, but yet we are seeing some increases at select brands. How important is occupancy to your revenue generation? I understand that most of those additional passengers may be kids. So probably less important than, you know, making sure that we're back to 100% plus levels of occupancy in general for the cabins. I don't know if that makes sense.

Answer: Yeah. So it does make sense. Your question is accurate. Your own answer is accurate, which means yes. During this time of the year, you do get a lot more kids onboard. So load factors are higher because the kids are all in those additional bunks in single cabins. So we typically have that every single year during the time of the year when people go on vacation. Normalized load factors. But during the third, fourth quarter, they settle back to their yeah, load factors continue to hold very nicely.

Question 10: And I think I heard you say that this might not be the best cruise passenger ever, but it's a strong passenger. At this point and no deterioration during the first half of the year. Is that correct?

Answer: No. Let me clarify. What I'm saying is we have a good passenger onboard. We certainly see across 200 ships. Clearly, that's a lot of different passengers. And on some ships, you know, it's not your best, but they're still good. So you gotta use your marketing toolkit a lot more and you gotta be a little bit more outward on your offerings. And so, yeah, on certain of the vessels, it's still a very, very good passenger, but there are stronger passengers on some of the ships, but that's normal. So I'm not saying anything other than the fact that there's a very good consumer onboard across all the ships.

Question 11: And the more challenging ones, would those be kind of further down market? Is there any sort of way to summarize where you're seeing the need for more marketing?

Answer: I think it, you know, it depends on the itinerary geography. It also depends on the age of the ship or the facilities, etcetera. So all of those typically are challenges. You know, your best passengers go into fewer ships and other ships are slightly more discounted, so they go on those. So I think, you know, a plethora of opportunity for a guest to pick where they want to be and, you know, how much they want to pay for their trip. So I don't think this is anything different to what we've seen historically. And it falls in line with, you know, new ships come out. They're going to the best itineraries. Best passengers, obviously. So you know, it's a domino effect where we see best ships coming out and they price the highest, but that's normal. Nothing changes.

Question 12: Great. And can I ask a second question? With regard to AI? So I understand it's a below the line help, if you will, on the cost side. And with some of the EBITDA margin expansion for the back half of the year, related to these efforts? Or it's too soon to see that? And as part of that, Okay. Thank you. No. No. No. So

Answer: AI will not impact either the revenue opportunities that Steven spoke about or cost efficiencies that he clarified as well. We expect that to probably have an or start having some kind of an impact that we can measure beginning, I would say, almost the second quarter of next year once we fully rolled out a couple of other initiatives. So we're really in a testing phase right now.

Question 13: Alright. Okay. This makes sense. Is there any logic to try to apply AI tools to the precruise to expanding the precruise portion of the business? Or is that more not an issue, but working with the cruise lines in terms of embedding the precruise booking opportunity within their own precruise engines.

Answer: Okay. I think there's always opportunity to improve precruise whether we utilize AI or we can get the cruise lines to focus more resources on it. It's a work in progress, I would say, right now. I think there's real opportunity on some of the banners where we're not perhaps quite up to the 23%. So I think our teams are working closely with them. To the extent we can get them to incorporate new thinking around AI, we'd love to do that. But the adoption rate's pretty slow. So we go to the meetings, on a quarterly basis, we show them where the opportunity is, and we follow through and see if some of them adopt and some of them don't. So it's one of the number one items. I think they're focused on it. Not only in terms of other prepaid opportunities onboard, but for us, it's super important to continue to try and get that metric a little higher over time.

Question 14: Sure. Yeah. Last question, could you remind us what sort of a multiple you get for every dollar spent precruise? I think for the industry to generally tune a half times more spend if they book precruise.

Answer: Houses generally the precruise passenger generally spends about 30% more than somebody who doesn't prebook.

[Sentiment Analysis]
The tone of the analysts was generally positive, with a focus on understanding the impact of AI initiatives and the state of consumer spending. Management was optimistic about the company's performance and future prospects, emphasizing strategic initiatives and financial health.

[Quarterly Comparison]
| Metric | Q2 2025 | Q2 2024 | Change |
|-------------------------|---------------|---------------|--------------|
| Total Revenue | $240.7 million| $224.9 million| +7% |
| Income from Operations | $22.1 million | $18.8 million | +17% |
| Net Income | $19.9 million | $15.8 million | +27% |
| Adjusted EBITDA | $30.5 million | $27.1 million | +13% |
| Adjusted Net Income | $25.8 million | $21.7 million | +19% |

[Risks and Concerns]
- Timing of new vessel introductions could impact revenue projections.
- Dependence on consumer spending trends and economic conditions.
- Integration and effectiveness of AI initiatives remain to be fully realized.

[Final Takeaway]
OneSpaWorld Holdings Limited delivered a strong Q2 2025 performance, setting a quarterly revenue record and demonstrating significant growth in key financial metrics. The company is strategically expanding its high-value services and integrating AI to drive future profitability and operational efficiency. Management remains optimistic about consumer spending and the overall health of the business, with a positive outlook for the remainder of the year. Investors should monitor the timing of new vessel introductions and the progress of AI initiatives as potential factors influencing future performance.