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RCL Q3 Earnings Beat Estimates on Strong Demand, Lower Costs

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Key Takeaways

  • RCL's Q3 adjusted EPS rose 14.3% to $6.57, beating estimates on strong demand and lower costs.
  • Booking volumes climbed in the mid-teens, while 2027 sailings bookings rose in the high teens.
  • Royal Caribbean raised 2026 adjusted EPS guidance to $17.85-$17.95 and expects revenue growth of 9%.

Royal Caribbean Cruises Ltd. (RCL - Free Report) reported third-quarter 2026 results, with adjusted earnings and revenues beating the Zacks Consensus Estimate. Both top and bottom lines increased year over year. Results benefited from strong close-in demand and lower-than-expected costs. Following the results, the company’s shares are up 4.4% in the pre-market trading session today.

The company reported adjusted earnings of $6.57 per share, surpassing the consensus estimate of $6.38 by 3%. Earnings increased 14.3% from $5.75 in the year-ago quarter. Revenues totaled $5.59 billion, beating the consensus mark of $5.58 billion by 0.1%. The top line increased 8.8% year over year. Occupancy remained strong at 112.4%.

RCL Benefits From Strong Booking Momentum

Royal Caribbean witnessed healthy demand across its vacation portfolio. Since the previous earnings call, booking volumes increased in the mid-teens across major channels. Bookings for 2027 sailings rose in the high teens, with booking levels pacing ahead of historical trends at higher rates.

Net yields increased 0.9% on an as-reported basis and 0.6% in constant currency. The metric exceeded management's guidance, primarily reflecting better-than-expected close-in demand in Europe and the Caribbean. Capacity increased 8.4% year over year, while passengers carried rose 8.5% to approximately 2.7 million.

Royal Caribbean Gains From Tickets and Onboard Spend

The third-quarter top line benefited from growth across both primary revenue streams. Passenger ticket revenues increased 6.8% year over year to $3.89 billion from $3.64 billion. The improvement coincided with higher capacity and continued demand for the company's differentiated vacation experiences.
Onboard and other revenues rose 13.6% to $1.71 billion from $1.50 billion in the prior-year quarter. Management highlighted strong guest engagement, with third-quarter pre-cruise and onboard revenue rates exceeding year-ago levels. Fourth-quarter pre-cruise revenue rates were also booked ahead of the prior year, supported by personalized offerings and technology-driven engagement.

RCL Reports Higher Profitability in Q3

Operating income increased 9.9% year over year to $1.87 billion from $1.70 billion. Net income attributable to Royal Caribbean rose 9.7% to $1.73 billion from $1.58 billion, reflecting improved operating performance.

Adjusted net income increased 11.6% to $1.76 billion from $1.58 billion. Adjusted EBITDA rose 10.7% to $2.54 billion from $2.29 billion. Adjusted EBITDA margin expanded to 45.4% from 44.6% in the prior-year quarter.

Royal Caribbean's Costs Reflect Mixed Trends

Total cruise operating expenses increased 9.4% year over year to $2.71 billion. Payroll and related expenses climbed 16.7% to $399 million, while fuel costs increased 16.8% to $347 million.

Food expenses rose 8.7% to $287 million, while other operating expenses increased 6.5% to $606 million. Marketing, selling and administrative expenses declined to $519 million from $522 million. Net cruise costs excluding fuel per available passenger cruise day decreased 1.9% as reported and 1.8% in constant currency, benefiting from the timing of expenses shifted into the fourth quarter.

RCL Maintains Strong Liquidity, Expands Vacation Platform

For the first nine months of 2026, net cash provided by operating activities increased 8.9% year over year to $5.27 billion. Cash and cash equivalents were $851 million as of Sept. 30, 2026, compared with $825 million at 2025-end. Total liquidity stood at $7.4 billion.
During the quarter, Royal Caribbean issued $1.25 billion of senior unsecured notes to refinance existing debt obligations. Separately, the company announced an agreement to acquire a 50% interest in Sandals and Beaches Resorts, expanding its presence into all-inclusive vacations. The transaction is expected to close in early 2027, subject to customary conditions and regulatory approvals.

Royal Caribbean Raises 2026 Earnings Outlook

For the fourth quarter of 2026, Royal Caribbean expects adjusted earnings of $3.48-$3.58 per share. Revenues are projected to increase 9%, while net yields are expected to rise 4.4-4.9% as reported and 4.2-4.7% in constant currency.

The company raised its full-year adjusted earnings guidance to $17.85-$17.95 per share, reflecting stronger third-quarter performance, partially offset by higher anticipated fuel costs and currency movements.

Royal Caribbean expects 2026 revenues to rise 9%. Net yields are projected to increase approximately 2.7% as reported and 2.1% in constant currency. Capacity is expected to grow 6.6%, while capital expenditures are anticipated to be approximately $4.6 billion.

RCL currently carries a Zacks Rank #3 (Hold).

Key Picks

Some better-ranked stocks from the Zacks Consumer-Discretionary sector are Cinemark Holdings, Inc. (CNK - Free Report) , AMC Entertainment Holdings, Inc. (AMC - Free Report) and Academy Sports and Outdoors, Inc. (ASO - Free Report) .

Cinemark presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

Cinemark delivered a trailing four-quarter earnings surprise of 10.9%, on average. The stock has surged 67.7% in the year-to-date period. The Zacks Consensus Estimate for CNK’s 2026 sales and EPS implies growth of 17.7% and 155.8%, respectively, from the year-ago levels.

AMC Entertainment presently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter earnings surprise of 321.7%, on average. The stock has rallied 85.3% in the year-to-date period.

The Zacks Consensus Estimate for AMC’s 2026 sales and EPS indicates an increase of 18.8% and 91.7%, respectively, from the year-ago levels.

Academy Sports currently carries a Zacks Rank #2. The company delivered a trailing four-quarter earnings beat of 4%, on average. The stock has gained 19.3% in the year-to-date period.

The Zacks Consensus Estimate for ASO’s 2027 sales and EPS indicates growth of 4.2% and 15.4%, respectively, from the year-ago period’s levels.

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