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Introduction & Market Context
Carnival Corporation (NYSE:CCL) delivered a record-breaking first quarter for fiscal 2025, significantly outperforming its December guidance across all key metrics and prompting management to raise its full-year outlook. The cruise operator’s stock rose 1.91% in premarket trading to $24.50 following the release, adding to its 1.14% gain from the previous session.
The strong performance comes as Carnival continues to benefit from robust travel demand and strategic initiatives to improve its financial position. The company has been focused on deleveraging while enhancing its cruise offerings and developing new destination assets to drive future growth.
Quarterly Performance Highlights
Carnival reported record-breaking first quarter results across multiple metrics, including revenues, net yields, adjusted EBITDA, and operating income. The company significantly outperformed its December guidance, delivering adjusted earnings per share of $0.13 compared to the breakeven guidance.
As shown in the following comparison of actual results versus guidance:
Net yields increased by 7.3% compared to the same period in 2024, substantially exceeding the guidance of approximately 4.6%. This strong yield performance is particularly impressive considering it builds on last year’s record first quarter levels, which were up 17%.
The company also demonstrated effective cost control, with adjusted cruise costs excluding fuel per ALBD (available lower berth day) increasing by just 1.0%, well below the guidance of approximately 3.4%. This contributed to a significant improvement in profitability, with adjusted EBITDA reaching $1.20 billion versus guidance of $1.04 billion.
Operating and adjusted EBITDA margins both improved by over 400 basis points compared to 2024 and surpassed 2019 levels, highlighting the company’s successful efforts to enhance operational efficiency.
Detailed Financial Analysis
Based on the strong first quarter performance, Carnival has raised its full-year 2025 guidance across key metrics. The company now expects net yields to increase by approximately 4.7% for the full year, up from the previous guidance of 4.2%.
The updated guidance reflects both the stronger-than-expected first quarter results and the positive impact of refinancing efforts:
The company’s financial position continues to strengthen, with customer deposits reaching a record $7.3 billion, up from $7.0 billion in the first quarter of 2024 and $4.9 billion in the first quarter of 2019. This represents a total growth of $2.4 billion since 2019, driven by the booked position at higher prices, optimization of the booking curve, increasing bundled fares with onboard amenities, and growing pre-cruise onboard sales.
Carnival has made significant progress in refinancing its debt, with $5.5 billion refinanced during the first quarter, representing 20% of its total debt. These refinancing efforts have resulted in interest savings of approximately $145 million and reduced the company’s average cash interest rate to 4.6%.
The company’s improved financial health has been recognized by all three major rating agencies, with multiple upgrades and positive outlooks:
Strategic Initiatives
Carnival is strategically managing its capacity growth, shifting from an average of 3-4 ship deliveries annually between 2018-2023 to an expected 1-2 ship deliveries from 2025 onwards. This approach supports yield improvements through controlled supply growth while providing headroom for deleveraging.
The company continues to invest in destination development, with Celebration Key on track for a July 2025 opening. This new destination is expected to be a game-changing asset for Carnival, enhancing the guest experience and driving revenue growth.
Additionally, Carnival is investing in its existing fleet through modernization programs like the AIDA Evolution, which is designed to deliver meaningful revenue uplift through new bar and dining venues, additional suites, and equipment upgrades to enhance fuel efficiency.
The company is also making progress toward its sustainability goals, with carbon intensity reduction trending toward the target of 20% by 2026 compared to 2019 levels. As of 2025, Carnival expects to achieve approximately 19.5% reduction.
Forward-Looking Statements
Carnival’s booked position for the remainder of 2025 remains strong, with historical high prices for each quarter and the vast majority of 2025 already on the books. Occupancy is in line with the prior year’s record levels, and the booking curve continues to be the furthest out on record.
The company expects to achieve its 2026 SEA Change Financial targets one year early, in 2025. These targets include a 50% increase in adjusted EBITDA per ALBD versus 2023 and a 12% adjusted return on invested capital.
Looking ahead, Carnival plans to continue focusing on increasing net yields, improving margins, and further deleveraging. The company is set to take delivery of one new ship in 2025, the Star Princess, while continuing to develop its destination assets including the expansion of Celebration Key and RelaxAway Half Moon Cay in 2026.
With strong demand alongside lower capacity growth, Carnival is well-positioned to deliver continued yield improvements and financial strengthening in the coming years, potentially achieving investment-grade leverage metrics by 2026 as mentioned in the earnings call.
Full presentation:
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