Norwegian Cruise Line signals 1% net yield uplift in 2027 as Great Stirrup Cay transformation advances

Earnings Call Insights: Norwegian Cruise Line Holdings Ltd. (NCLH) Q2 2025

Management View

CEO Harry J. Sommer reported, “I am pleased to report another record quarter where we met or exceeded guidance across all metrics, allowing us to reiterate our full year guidance on the back of solid customer demand that resulted in record bookings over the last 3 months.” Sommer highlighted the delivery of Oceania Cruises Allura, confirmation of two additional Sonata Class Ships for Oceania, and the announcement of the new Great Tides Waterpark at Great Stirrup Cay as significant milestones. He emphasized, “Net yield outperformed our expectations, growing 3.1% as a result of strong close-in demand and onboard spend. This, combined with the benefit from the timing of certain costs, drove adjusted EBITDA to $694 million, $24 million above guidance.”
Sommer also stated, “We now have 13 ships on order across the 3 brands through 2036, implying a 4% capacity CAGR.”
CFO Mark A. Kempa noted, “We delivered record results coming in at or ahead of guidance across all metrics. Occupancy was slightly above guidance at 103.9%. Net yields grew 3.1%, 60 basis points better than our guidance on strong pricing growth of 5.1%.”
Kempa added, “Adjusted EBITDA for the quarter was $694 million, higher than our guidance of $670 million. Adjusted net income came in at $257 million, net of $37 million of foreign currency losses related to the revaluation of our advanced ticket sales. Adjusted EPS was in line with guidance at $0.51, net of an $0.08 impact from foreign exchange losses.”

Outlook

Management reaffirmed, “We continue to expect net yield growth in the low to mid-single-digit range” for 2026. Sommer added, “The opening of the Great Tides Waterpark next summer is expected to be a positive demand driver. And with its summer launch, we expect to see a full benefit starting in Q4 of 2026 and throughout 2027. Our outlook includes a 25 basis point benefit in 2026 and a cumulative 1% uplift in 2027.”
Kempa guided, “We expect third quarter adjusted EBITDA to be just over $1 billion and adjusted EPS to be $1.14, an approximate 11% increase year-over-year.” Full year 2025 occupancy is expected to average 103.3%. “Looking ahead, we expect our 2025 margin to reach approximately 37% and I am confident that with continued top line growth and sub-inflationary unit cost growth, we are on track to achieve our 39% margin target by the end of 2026.”

Financial Results

The company reported Q2 occupancy of 103.9% and net yield growth of 3.1%. Adjusted EBITDA reached $694 million. Adjusted net income was $257 million, and adjusted EPS was $0.51. Kempa noted, “Adjusted net cruise cost ex fuel was flat at $163, coming in better than expected.”
Net leverage improved to 5.3x, with expectations to reduce to approximately 5.2x by year-end 2025. Kempa stated, “At quarter end, we expanded our revolving credit facility by almost 50% from $1.7 billion to nearly $2.5 billion, further strengthening our liquidity profile.”

Q&A

Steven Moyer Wieczynski, Stifel: Asked about 2026 European deployments and response to changes. Sommer responded, “We moved, especially on the Norwegian brand, but even on our luxury brands, Oceania and Regent to slightly shorter itineraries in Europe for next year. We’ve also reduced the deployment in Europe for next year.” Kempa clarified, “The fact that we’re redeploying our vessels in 2026, this was a decision that was made 2 to 3 years ago as part of our overall strategy change. It was not in response to softness we saw this year.”
Elizabeth Dove, Goldman Sachs: Asked about profit optimization for new Caribbean and Bermuda deployments. Sommer replied, “We don’t necessarily look to optimize yield. We look to optimize profitability… the profitability is — should be improved, and you’ll see that in our spread between revenue and cost for next year.”
Conor T. Cunningham, Melius Research: Inquired about close-in booking opportunity and revenue management. Sommer explained, “It is clearly true that a booking curve for 3- or 4-day cruise is far different from a 7- or 9-day cruise. We have sophisticated revenue management algorithms… we’re also having very good sales for 2026 as well.”
Matthew Robert Boss, JPMorgan: Asked about booking momentum and Great Stirrup Cay. Sommer said, “July will be a record July in the history of the company as an individual month… First couple of days, we saw a material increase in our website visits. Our leads… have doubled in these last 2 days.”
Brandt Antoine Montour, Barclays: Questioned promotional activity and brand strategy. Sommer: “I’d say the primary driver was the improvement in the macroeconomic environment… We are now shifting our focus to be more brand-oriented and top of the funnel in order to drive more real demand and love for the brand that isn’t necessarily as focused on price.”

Sentiment Analysis

Analysts focused on future deployment, yield management, cost discipline, and new product launches, with a neutral to slightly positive tone and an emphasis on long-term profitability and demand momentum.
Management maintained a confident and optimistic tone during both prepared remarks and Q&A. Sommer and Kempa repeatedly reaffirmed long-term targets and cost discipline, using phrases such as “we remain fully committed” and “we are confident.”
Compared to the previous quarter, both management and analysts displayed a more positive sentiment, reflecting improved booking momentum and greater confidence in meeting guidance.

Quarter-over-Quarter Comparison

Management reiterated full-year guidance in both quarters, but in Q2, reflected greater confidence, citing “record bookings over the last 3 months” and raised margin expansion projections. The Q2 call featured additional detail on product enhancements, such as the Great Tides Waterpark and new ship orders.
Analyst questions in Q2 were more focused on strategic deployment, yield optimization, and the impact of new amenities, shifting from Q1’s heavier focus on booking curve volatility and European itinerary concerns.
Key metrics such as occupancy, yield, and margin displayed improvement in Q2 versus Q1, and management’s tone reflected this progress.
Management’s confidence in achieving 2026 targets remained strong quarter-over-quarter, but Q2 included new forward-looking projections for net yield and margin uplift tied to product launches.

Risks and Concerns

Management cited foreign exchange headwinds, with an $0.08 impact on adjusted EPS in Q2, and noted that net income was net of $37 million of foreign currency losses.
The company acknowledged the impact of deployment decisions on European itineraries, emphasizing that “this was a decision that was made 2 to 3 years ago as part of our overall strategy change.”
Analysts probed about the potential impact of Caribbean and Bermuda mix on yields, with management focusing on profitability rather than yield alone.
Kempa reiterated, “our euro debt is subject to mark-to-market remeasurement, which may result in noncash gains or losses below the line due to FX movements.”

Final Takeaway

Norwegian Cruise Line Holdings delivered record Q2 results, exceeding guidance on key financial metrics and experiencing robust demand across all brands. The company reaffirmed its full-year outlook, outlined margin and net yield growth targets for 2026 and 2027, and highlighted significant strategic investments in new ships and amenities such as the Great Tides Waterpark. Management’s confidence in achieving long-term targets is supported by strong booking momentum, disciplined cost controls, measured capacity expansion, and a focus on improving both guest experience and financial returns.

Read the full Earnings Call Transcript