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July 31, 2025 • 3 min read
With the summer travel season in full swing, we're diving into the latest financial results from one of the giants of the sea, Royal Caribbean Cruises Ltd. (RCL). The company's recently released second-quarter 2025 report offers a detailed look at its financial health, and the numbers paint a picture of a business riding a powerful wave of consumer demand. Let's explore the key takeaways from their income statement.
Royal Caribbean's revenue surged to an impressive $4.54 billion for the quarter, a significant 10% increase from the $4.1 billion reported in the same period last year. This growth was fueled by strong performance in both of its main revenue streams: passenger ticket sales grew to $3.2 billion, while onboard spending—which includes everything from specialty dining to casino gaming—climbed to $1.34 billion.
To better understand how this revenue translates into profit, this flow chart breaks down the company's income and expenses for the quarter.
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A look at the key operational metrics reveals why revenues are so strong. It's not just about having more ships in the water; it's about filling them with passengers who are willing to pay more.
The company’s Occupancy rate, a critical measure of demand, reached a remarkable 110.3%. For those wondering how that's possible, rates over 100% indicate that more than two passengers are occupying some cabins—think families with children. This figure, up from 108.2% last year, shows that demand for cruises remains incredibly robust.
Even more telling is the growth in Net Yields, a metric that reflects the average revenue generated per passenger per day. Net Yields rose to $283.56, up from $269.38 a year prior. This tells us that Royal Caribbean is successfully commanding higher ticket prices and encouraging more onboard spending from each guest. This combination of full ships and higher per-passenger revenue is a powerful driver of profitability.
While revenue is booming, managing expenses is equally crucial. Total cruise operating expenses did rise to $2.28 billion. However, as a percentage of revenue, these costs actually decreased from 52.4% to 50.3%, signaling improved efficiency.
A key metric for this is Net Cruise Costs Excluding Fuel per APCD (Available Passenger Cruise Day), which isolates core operational spending on a per-passenger basis. This figure saw a modest increase to $126.76. The crucial insight here is that revenues are growing at a much faster pace than costs, widening the company's profit margins.
This operational leverage had a dramatic effect on the bottom line. Operating Income jumped 21% to $1.33 billion, and Net Income soared over 40% to an impressive $1.21 billion for the quarter.
In conclusion, Royal Caribbean's Q2 performance showcases a company firing on all cylinders. By capitalizing on strong consumer demand to fill its ships at higher prices while effectively managing its cost base, the company delivered stellar revenue growth and a significant expansion in profitability. The challenge ahead, for Royal Caribbean and its major competitors like Carnival and Norwegian Cruise Line, will be to sustain this momentum. But for now, the company is navigating the market with impressive financial skill.
Last updated: July 31, 2025