Carnival Q3 2026 Earnings: Record Revenue Faces Fuel-Cost Pressure

Carnival Corporation (NYSE: CCL) reported fiscal Q3 2026 results on September 29 for the quarter ended August 31, with revenue rising about 3.5% year over year to $8.435 billion and diluted EPS increasing to $1.40 from $1.33. Attributable net income reached a record $1.920 billion, but adjusted EPS and adjusted EBITDA were flat as higher fuel costs offset growth in net yields and revenue.

Core Financial Results

Revenue and GAAP net income set company records, supported by higher passenger-ticket and onboard revenue. However, operating income declined as cruise operating expenses increased faster than revenue, primarily because of higher fuel prices.

The difference between GAAP and adjusted results was notable. Lower interest expense and debt-extinguishment costs helped GAAP net income increase, while adjusted net income slipped about 1% and adjusted EBITDA remained unchanged at $2.993 billion.

Adjusted net income, adjusted EPS and adjusted EBITDA are non-GAAP measures. Adjusted EBITDA was also $110 million above Carnival’s June guidance for the quarter.

Business and Segment Performance

Passenger-ticket revenue increased about 1.8% to $5.529 billion, while onboard and other revenue rose about 6.7% to $2.906 billion. Onboard and other revenue therefore contributed the larger share of Carnival’s $282 million total revenue increase.

Capacity, measured in available lower berth days, increased about 1.2% to 24.9 million. Occupancy was largely unchanged at 111.8%, compared with 111.7% a year earlier, while passengers carried increased to 3.9 million from 3.8 million.

Constant-currency net yields rose 2.4% to a record level, more than one percentage point above June guidance. This indicates that pricing and onboard revenue growth, rather than capacity expansion, were the main operating drivers during the quarter.

Demand indicators also extended beyond the reported quarter. Customer deposits reached a third-quarter record of $7.6 billion, up $0.5 billion, or nearly 7%, despite flat planned capacity growth over the following 12 months. Carnival said 2027 booked occupancy and constant-currency pricing were both at record levels.

Profitability, Cash Flow, and the Balance Sheet

Cruise and tour operating expenses increased about 5.5% to $4.628 billion, outpacing revenue growth. Fuel expense rose by $164 million to $615 million, while selling and administrative expense increased to $834 million from $779 million. As a result, operating margin declined to approximately 26.3% from 27.9%.

Lower financing-related expenses provided an offset below the operating-income line. Interest expense declined to $285 million from $317 million, while debt-extinguishment and modification costs fell to $23 million from $111 million. These changes helped attributable GAAP net income increase even though operating income and adjusted net income declined.

Operating cash flow rose modestly to $1.410 billion. After $698 million of capital expenditures, Carnival generated approximately $712 million of cash after capital spending, compared with about $735 million in the prior-year quarter.

Total debt declined to $23.912 billion at August 31 from $26.640 billion at the end of fiscal 2025. Carnival also redeemed $500 million of 7% notes during the quarter. S&P upgraded its credit rating, becoming the second agency to assign Carnival an investment-grade rating, and the company said it no longer had secured debt.

Carnival paid $204 million of dividends during the quarter and $618 million during the first nine months. It had also completed approximately $1.2 billion of share repurchases year to date, including nearly $800 million since the beginning of the third quarter.

Higher Yields Could Not Fully Offset Fuel-Cost Pressure

The quarter’s central operating issue was the divergence between revenue growth and profitability. Constant-currency net yields rose 2.4%, but gross-margin yields declined 1.3% because of higher fuel prices. Adjusted EBITDA remained flat despite the increase in revenue, reducing adjusted EBITDA margin to approximately 35.5% from 36.7%.

Carnival reduced fuel consumption per available lower berth day by 3.8%, showing continued efficiency improvement. However, fuel cost per metric ton climbed to $826 from $607, an increase of about 36%, overwhelming the benefit from lower consumption. Fuel prices and currency rates together had a $131 million, or $0.10 per share, unfavorable effect on quarterly adjusted results.

Nonfuel cost control was comparatively better. Adjusted cruise costs excluding fuel per available lower berth day increased 1.8% in constant currency, one percentage point better than Carnival’s June guidance.

2026 Guidance

Carnival improved its operating assumptions relative to June, citing better net yields, nonfuel costs and fuel efficiency. Management said these items provided more than $150 million of operational improvement, although an approximately $150 million increase in expected fuel costs offset that benefit.

The latest outlook calls for full-year adjusted EBITDA of approximately $7.14 billion and adjusted net income of about $3.08 billion. Prior guidance was not quantified for several measures in the supplied release.

Carnival expects fourth-quarter capacity to decline 0.1% year over year and full-year capacity to increase 1.0%. Planned fourth-quarter capital expenditures total $1.2 billion, comprising $0.3 billion for new ships and $0.9 billion for other projects.

Management’s View

CEO Josh Weinstein attributed the quarter to sustained demand, measured capacity growth and tighter cost discipline. Management views the extended booking curve as evidence of durable demand: 2027 occupancy and pricing were at record levels, while 2028 bookings had started at higher occupancy and prices than at the comparable point a year earlier.

Management also emphasized the use of operating cash flow for debt reduction, business investment and shareholder distributions. The balance among these uses remains important given Carnival’s capital requirements and outstanding debt.

Recent Insider Transactions

According to the supplied insider-transaction data, insiders reported acquiring 7,059,770 shares across 153 transactions and selling 11,907,862 shares across 33 transactions during the preceding six months. That represented a net disposition of 4,848,091 shares, or 4.70% of the reported 97.34 million shares held by insiders.

Among the 10 latest reported transactions, two were sales and eight were zero-price stock awards. The table preserves the transaction values as reported by the source and does not imply a view about Carnival’s prospects.

Risks Investors Should Watch

• Fuel-price exposure: Higher fuel prices were the main reason operating profit failed to follow revenue higher. Carnival estimated that a 10% change in fuel cost per metric ton would affect fourth-quarter adjusted net income by $59 million.
• Dependence on yield growth: Record bookings support the outlook, but future results still depend on converting booked occupancy and pricing into realized revenue. A 1% change in fourth-quarter net yields would affect adjusted net income by approximately $49 million.
• Nonfuel cost and disruption risk: Full-year adjusted cruise costs excluding fuel per ALBD are expected to rise about 2.2% in constant currency. Carnival also identified elevated logistics costs associated with disruption from the Middle East conflict.
• Debt and capital requirements: Total debt has declined but remains $23.912 billion. The company must balance debt service with ship and destination investments, including $1.2 billion of planned fourth-quarter capital expenditures, as well as dividends and repurchases.

Summary

Carnival’s fiscal Q3 2026 produced record revenue and GAAP net income as higher net yields and onboard spending supported growth with limited capacity expansion. Higher fuel prices prevented that revenue growth from translating into higher operating income or adjusted EBITDA, although lower financing costs and continued debt reduction strengthened the broader financial picture. The main issues to monitor are whether record forward bookings sustain yield growth, whether fuel costs moderate, and whether Carnival can continue improving leverage while funding capital expenditures and shareholder distributions.