Royal Caribbean Q3 2026 Earnings: Revenue Rises 9% as Adjusted EPS Reaches $6.57

Royal Caribbean Group (NYSE: RCL) reported Q3 2026 revenue of $5.59 billion, up 9% from $5.14 billion a year earlier, while diluted EPS rose to $6.45 from $5.74. Adjusted EPS reached $6.57 as higher capacity, close-in demand in Europe and the Caribbean, and the timing of expenses supported earnings, partly offset by higher fuel costs.

Core Earnings Results

Revenue growth translated into a roughly 10% increase in operating income and an 11% rise in adjusted EBITDA. Adjusted EBITDA margin expanded by 0.8 percentage points to 45.4%.

EPS grew faster than attributable net income, partly because diluted weighted-average shares declined to 268 million from 274 million. The company repurchased $1.04 billion of shares during the first nine months of 2026, although that figure is not a standalone Q3 amount.

Adjusted EPS and adjusted EBITDA are non-GAAP measures. Q3 adjustments included debt-extinguishment costs, restructuring expenses, and amortization related to the Silversea acquisition.

Business and Operating Performance

Capacity increased 8%, and Royal Caribbean carried approximately 2.7 million passengers, 9% more than a year earlier. Load factor reached 112.4%, compared with 112.1%; cruise occupancy can exceed 100% when more than two passengers occupy some cabins.

Passenger ticket revenue increased approximately 6.8% to $3.89 billion, while onboard and other revenue rose about 13.6% to $1.71 billion. The faster growth in onboard revenue was consistent with management’s statement that pre-cruise and onboard revenue rates remained ahead of the prior year.

Sandals Partnership Broadens the Vacation Platform

Royal Caribbean agreed in September to acquire a 50% interest in Sandals and Beaches Resorts. The portfolio includes 18 Caribbean resorts, three resorts under development, and more than 1,000 acres of undeveloped land.

The company said approximately 30% of its guests also take all-inclusive vacations, while a similar percentage of Sandals and Beaches guests also cruise. Royal Caribbean expects the investment to close in early 2027, subject to regulatory approvals and other conditions, and expects it to be immediately accretive. The size of the 2027 contribution will depend on closing timing, and results will be recognized under the equity method with a one-quarter reporting lag.

Capacity Drove Most Growth, While Cost Relief Was Partly Timing-Based

The 9% revenue increase was supported primarily by an 8% expansion in capacity, with reported net yields rising a more modest 0.9%. Constant-currency net yields increased 0.6%, driven by close-in demand in Europe and the Caribbean.

Net cruise costs excluding fuel per available passenger cruise day fell 1.9% as reported and 1.8% at constant currency. However, the company attributed the favorable result to expenses shifting into Q4, so the Q3 cost decline should not be viewed entirely as structural savings.

The profitability picture was also mixed across measures. Adjusted EBITDA margin expanded, but gross margin yield declined 0.8%. Fuel expense increased to $347 million from $297 million, while payroll and related expenses rose to $399 million from $342 million.

Profitability, Cash Flow, and Balance Sheet

Royal Caribbean provided cash flow figures for the first nine months rather than Q3 alone. Nine-month operating cash flow increased to $5.27 billion from $4.84 billion, while purchases of property and equipment rose to $3.88 billion from $3.72 billion.

As of September 30, cash and cash equivalents were $851 million, and total liquidity was $7.4 billion, including undrawn revolving credit capacity. Customer deposits stood at $6.03 billion, up from $5.74 billion at the end of 2025.

Current and long-term debt totaled approximately $22.36 billion. During Q3, Royal Caribbean issued $1.25 billion of 5.55% senior unsecured notes due in 2034 and used the proceeds to repay part of its floating-rate term loans and debt maturing in 2027. Scheduled maturities include $2.4 billion in 2027 and $3.2 billion in 2028.

Earnings Guidance

Royal Caribbean raised its full-year adjusted EPS range to $17.85-$17.95. The increase reflects the Q3 performance, partially offset by higher anticipated fuel costs and currency exchange rates.

For Q4, the company included $379 million of fuel expense based on current prices. Approximately 58% of forecast Q4 fuel consumption is hedged through swaps.

Full-year capital expenditures are expected to be approximately $4.6 billion, primarily for new ships and land-based destination projects. Capacity is expected to increase approximately 4.5% in 2027, 6.0% in 2028, and 6.5% in 2029.

Management’s View

Management said booking volumes had increased in the mid-teens across major channels since the previous earnings call, with bookings for 2027 sailings up in the high teens. It also said 2027 bookings were pacing ahead of historical levels at higher rates.

Royal Caribbean maintained its Perfecta goal of producing a 20% adjusted EPS compound annual growth rate from 2024 through 2027 and achieving an ROIC of at least 17% by the end of 2027. Management said the company was already above the ROIC target and remained on track for adjusted EPS in the “$20-handle” range in 2027. This remains a strategic target rather than formal 2027 guidance.

Recent Insider Transactions

Reported insider activity for the latest six-month period consisted mainly of stock awards rather than open-market purchases. Acquisitions and awards totaled 10,395 shares across 13 transactions, compared with one sale of 12,811 shares.

The single reported sale was by officer Michael Bayley on July 29, 2026. He sold 12,811 shares at $315.99 per share for approximately $4.05 million. Several directors received zero-price stock grants on May 28; these awards should not be treated as open-market purchases.

Risks Investors Should Monitor

• Fuel and currency exposure: Higher anticipated fuel costs and exchange rates already offset part of the increase in full-year earnings expectations. The company estimates that a 10% change in fuel prices would affect Q4 by $15 million.
• Expense timing: Q3’s decline in net cruise costs excluding fuel benefited from expenses shifting into Q4, making the quarterly cost result less representative of the underlying run rate.
• Capital and refinancing requirements: Expected 2026 capital expenditures of $4.6 billion and sizable debt maturities in 2027 and 2028 create continuing financing and capital-allocation demands, despite $7.4 billion of liquidity.
• Dependence on capacity and yields: Capacity expansion accounted for most of Q3 revenue growth. Royal Caribbean estimates that a 1% change in net yields would affect Q4 results by $37 million.
• Sandals transaction execution: The timing and 2027 earnings contribution depend on regulatory approval and the closing date, while the equity-method reporting lag will delay recognition of results.

Summary

Royal Caribbean’s Q3 2026 results reflected higher capacity, continued cruise demand, and faster growth in onboard revenue, while lower diluted shares helped EPS outpace net income growth. Cost timing supported the quarter but shifts some expenses into Q4, and higher fuel and currency costs remain offsets. The main items to monitor are Q4 yield performance, the durability of booking momentum, capital and debt requirements, and the timing of the Sandals partnership closing.