Royal Caribbean Reports Strong Growth, Surpasses Expectations

Royal Caribbean Group has released its Q2 2023 earnings report, surpassing forecasted profit expectations for its second quarter thanks to strong bookings from multiple cruise regions and increased onboard revenue through passenger spending. This bodes very well for continued performance through the remainder of the fiscal year.

Royal Caribbean Group’s Impressive Q2 2023 Earnings

On July 27, 2023, Royal Caribbean Group announced its second-quarter results for 2023, which came in much higher than the company’s prior expectations thanks to robust pricing in response to increased demand and increased onboard revenue.

For Q2 2023, the company boasted $1.70 in earnings per share and $1.82 for adjusted earnings. 

Due to growth in demand for Royal Caribbean Group’s holiday offerings, the multinational corporation is now raising its 2023 adjusted EPS by 33%, with the new range falling between $6.00 to $6.20.

Comparing Results: 2022 to 2023 

It’s been a good year, financially speaking, for the Royal Caribbean Group. During Q2 2023, the company earned $458.8 million or $1.70 per share, which is a significant improvement over the prior year’s loss of $(0.5) billion or ($2.05) per share. While the first quarter in 2023 came in at a loss, the rest of the year’s financials look bright for the company.

*Numbers shown in parentheses are typically used to represent losses or decreases in financial metrics, whereas positive values are normally presented without parentheses.

Additionally, adjusted net income for the same period was $491.7 million or $1.82 per share, contrasting with an adjusted net loss of $(0.5) billion or ($2.08) per share for the same period in 2022.

“Our brands continue to fire on all cylinders, resulting in record yields and second quarter earnings significantly exceeding our expectations,” company CEO Jason Liberty touted regarding the positive Q2 2023 results.

“Demand for cruising and our brands is exceptionally strong and we have seen another step change in booking volumes and pricing, leading us to now expect double-digit net yield growth for the full year.”

During the second quarter of 2023, the company’s revenue significantly outperformed expectations, fueled by elevated pricing and augmented shipboard revenue on important cruise ship routes in the Caribbean and Europe. 

Notably, the load factor for the quarter hit an impressive 105%. Furthermore, Royal Caribbean Group anticipates a historic high in adjusted EBITDA per APCD (available passenger cruise day) and return on invested capital for the current year.

Strong Financial Performance Expectations for Q3 and Fiscal Year 2023 

It seems Royal Caribbean Group can expect more positive financial news for the rest of 2023 as well, offsetting some of the losses experienced during 2022.

For Q3 2023, net yields are projected to surge by 13.5% to 14.0% when compared to the third quarter of 2019. Additionally, adjusted EPS for the same period are estimated to fall within the $3.38 to $3.48 per share range.

Looking at the full-year 2023 outlook, net yields are estimated to experience a similar upswing of 13.5% to 14.0% in constant currency. Moreover, adjusted EPS for the entire year should land somewhere in the $6.00 to $6.20 per share range.

An Uptick in 2023 Bookings 

Booking volumes during the second quarter of 2023 continued to soar, surpassing the figures from the same period in 2019. 

North American consumer demand has been impressively robust all year long. A notable surge in booking volumes from European consumers for European cruises during summer 2023 has helped the company out as well.

Royal Caribbean Group also reported that onboard spending and pre-cruise purchases have surpassed 2019 levels thanks to increased engagement and a willingness to invest in higher-priced offerings on the part of cruise travelers.

Another figure worth noting is that, as of June 30, 2023, Royal Caribbean Group’s customer deposit balance reached an all-time high of $5.7 billion.

Potential investors should note that Royal Caribbean Group is a publicly-traded international cruise company, which also happens to be one of the largest cruise operators on the planet. The company operates a fleet of cruise ships under several well-known brands, including Royal Caribbean International, Celebrity Cruises, and Silversea Cruises, among others.