Carnival Cruises Past Expectations With Record Q2, Stock Sets Sail on 6% Rally

Carnival Corporation delivered a blockbuster second-quarter earnings report that exceeded expectations across nearly every key metric, as resilient demand and record onboard spending helped the cruise giant notch its highest net yields in nearly two decades. Adjusted net income more than tripled year-over-year, while revenue came in above expectations at $6.33 billion. Management noted that strong close-in demand and onboard spending drove results above prior guidance, prompting the company to raise its full-year outlook for both earnings and adjusted EBITDA. The stock broke out to the upside, gaining more than 6% following the news, as investors embraced Carnival's continued operational momentum and confident outlook.

For Q2 2025, Carnival reported net income of $565 million ($0.42 EPS) and adjusted net income of $470 million ($0.35 adjusted EPS), well ahead of consensus expectations for $0.24 per share. Adjusted EBITDA reached $1.51 billion, a 26% increase from the prior year and over $150 million above the company’s March guidance. Revenue climbed nearly $550 million year-over-year to a record $6.3 billion, reflecting gross margin yields up more than 25% from last year. Net yields (in constant currency) increased by 6.4% versus 2024, besting guidance by 200 basis points. These results were driven by higher ticket prices, strong onboard spending, and favorable timing of expenses.

Fuel consumption per ALBD declined 6.3% year-over-year, with operational efficiencies contributing to a 300-basis-point outperformance versus prior guidance. Cruise costs excluding fuel per ALBD (adjusted and in constant currency) rose 3.5% year-over-year due to increased dry-dock days, though this too came in better than guidance due to expense timing. Carnival also set an all-time high in customer deposits at $8.5 billion, reflecting continued confidence in forward demand.

CEO Josh Weinstein highlighted the company’s progress in hitting its 2026 SEA Change financial targets a full 18 months ahead of schedule, including achieving a 12.5% adjusted ROIC and a 52% increase in adjusted EBITDA per ALBD. Carnival also reaffirmed its long-term strategy of high-margin, same-ship revenue growth, noting a robust booking environment for 2026 that matches 2025's record levels. For the remainder of 2025, net yields are expected to rise 5% over 2024 levels, with adjusted EBITDA guidance raised to $6.9 billion and full-year adjusted EPS projected at $1.97.

Despite the upbeat results, management acknowledged ongoing macro risks. Middle East tensions remain a wildcard, although no material impact has been observed thus far. CEO Weinstein said it was too early to predict the long-term impact of the conflict, though the team continues to monitor developments closely. Additionally, fuel prices and currency fluctuations remain potential headwinds, but recent declines in oil prices have provided some short-term relief and contributed to the positive market reaction.

Investors cheered the report, with CCL shares jumping over 9% at one point intraday to $26.32. The strong results and raised guidance also lifted the broader cruise sector, with Royal Caribbean gaining 3% and Norwegian Cruise Line up over 6%. Analysts responded favorably as well, with Mizuho reiterating an Outperform rating and a $33 price target, calling the report “better than feared.”

Looking ahead, Carnival’s Q3 guidance calls for adjusted EPS of approximately $1.30, just shy of the $1.32 consensus. Net yields are expected to rise 3.5% versus Q3 2024, and cruise costs excluding fuel per ALBD are projected to increase by 7%, largely due to the ramp of Celebration Key and higher advertising investments. Management remains confident in continued demand strength and long-term margin expansion, reiterating that the company is on track to deliver even stronger results in 2026 and beyond.

With a streamlined capital structure, rising profitability, and favorable booking trends, Carnival appears to be regaining its sea legs after years of pandemic-related turbulence. The company’s debt reduction strategy and upgraded credit ratings from both S&P and Fitch have added to investor confidence. As the cruise industry moves further into recovery mode, Carnival's ability to outperform in a volatile macro environment could make it a standout performer in the travel and leisure space.