Royal Caribbean (NYSE: RCL) lifts full-year earnings guidance on a stronger third quarter

What happened

Royal Caribbean Cruises Ltd. (NYSE: RCL) raised its full-year 2026 Adjusted EPS forecast to $17.85 to $17.95 after third-quarter earnings beat its own guidance.

Third-quarter EPS was $6.45, up 12.4% from $5.74 a year earlier by OptimistFi's calculation. Adjusted EPS was $6.57 against $5.75, a 14.3% gain. Both beat company guidance. The company credited strong close-in demand and lower costs due to timing.

Revenue rose 9% to $5.6 billion and net income was $1.7 billion. Adjusted EBITDA reached $2.5 billion, up 10.7% from $2.29 billion in the third quarter of 2025. Its margin widened to 45.4% from 44.6%.

Key numbers

Metric	Latest	Change	Source
Third-quarter Adjusted EPS	$6.57	from $5.75, +14.3%	Calculated from SEC 8-K
Third-quarter diluted EPS	$6.45	from $5.74, +12.4%	Calculated from SEC 8-K
Third-quarter total revenue	$5.59 billion	from $5.14 billion, +9%	SEC 8-K
Third-quarter Adjusted EBITDA	$2.54 billion	from $2.29 billion, +10.7%	Calculated from SEC 8-K
Full-year 2026 Adjusted EPS guidance	$17.85 to $17.95		SEC 8-K
Liquidity at Sept. 30	$7.4 billion		SEC 8-K

Read more: Royal Caribbean Cruises (RCL) company research

Where the beat came from

Demand and capacity both helped. Capacity grew 8% and load factor was 112%. Net Yields, the company's pricing measure, rose 0.9% as reported and 0.6% in constant currency. The company pointed to better-than-expected close-in demand in Europe and the Caribbean.

Part of the beat was timing, not savings. Net Cruise Costs excluding fuel per available passenger cruise day fell 1.9% as reported because expenses shifted into the fourth quarter. For the full year, the company expects those costs to rise about 0.4% as reported.

Fuel pulled the other way. Fuel expense was $347 million in the quarter against $297 million a year earlier. The company said higher than anticipated fuel costs and currency exchange rates partly offset the guidance increase.

Over nine months, revenue rose 8.8% to $14.88 billion from $13.68 billion. Net income attributable to the company rose 8.1% to $3.80 billion from $3.51 billion, by OptimistFi's calculation.

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Why it matters

OptimistFi has argued that Royal Caribbean works if its brands turn demand into high-yield bookings and cash flow fast enough to fund ships and repair a levered balance sheet. This report strengthens the demand half of that view.

Since the last earnings call, booking volumes rose in the mid-teens across all major channels. Bookings for 2027 sailings are up in the high teens. Management said 2027 bookings are pacing ahead of historical levels at higher rates.

The company says it remains on track for its Perfecta goal of 20% Adjusted EPS compound annual growth from 2024 through 2027, or a $20-handle in 2027. It says it is already above its ROIC target.

The balance sheet is the open half. Total debt, current plus long-term, rose $1.01 billion between Dec. 31 and Sept. 30, by OptimistFi's sum. Scheduled maturities are $2.4 billion in 2027 and $3.2 billion in 2028.

The company expects 2026 capital expenditures of about $4.6 billion, mostly for new ships and land-based destinations.

Cash flow covers ship spending but not everything else. Operating cash flow of $5.27 billion over nine months left $1.39 billion after $3.88 billion of property and equipment purchases. Buybacks and dividends together came to $2.11 billion, more than that remainder.

Financing moves and the Sandals deal

During the quarter the company issued $1.25 billion of 5.550% senior unsecured notes due 2034. It used the proceeds to repay part of its floating-rate term loans and debt maturing in 2027.

In October it entered a $400 million delayed-draw term loan with Export Development Canada. It also raised its revolving credit facility by $50 million to a total of $6.65 billion. Liquidity was $7.4 billion on Sept. 30.

In September the company agreed to buy a 50% interest in Sandals and Beaches Resorts. The portfolio has 18 resorts across the Caribbean, three under development and over 1,000 acres of undeveloped land. About 30% of the company's guests also take all-inclusive vacations, and a similar share of Sandals and Beaches guests also cruise.

The company expects to account for the investment under the equity method, with results reported one quarter late. It expects its share of earnings to add to profit right away.

What's next

The Sandals and Beaches investment is expected to close in early 2027, once usual closing conditions and regulatory approvals are met. The company will add the expected contribution to its 2027 guidance at closing. That contribution depends on when the deal closes.

Fourth-quarter Adjusted EPS guidance is $3.48 to $3.58, in a quarter that also absorbs the expenses shifted from the third. A result inside or above that range with 2027 bookings still pacing ahead would support the case. Higher fuel costs or a later Sandals close would test it.

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