Carnival's record summer quarter beat its own pricing and cost guidance, with net yields up 2.4%, but a 36% jump in fuel prices kept adjusted EPS flat at $1.43; GAAP EPS rose 5% to $1.40 on lower interest and refinancing costs.
Revenue
$8.4B
+3.5% YoY
Net income
$1.9B
+3.7% YoY
Diluted EPS
$1.40
+5.3% YoY
Operating margin
26.3%
This period vs a year ago
Same period last year
This period
Revenue▲+3.5%
≈$8.1B
$8.4B
Net income▲+3.7%
≈$1.9B
$1.9B
Diluted EPS▲+5.3%
≈$1.33
$1.40
Year-ago figures (≈) are worked out from the growth rate the company reported. Each row has its own scale.
How CCL compares with Consumer Discretionary peers
CCL
Peer median
Each peer (hover for name)
Revenue growth (YoY)+3.5% · median +6.0% · 30th of 43
Overview
Carnival's fiscal third quarter of 2026 covers June 1 to August 31, 2026 (its fiscal year ends November 30). It is the peak summer season and the quarter in which the company earns most of its annual profit. Revenue reached a record $8.44 billion, up 3.5%, and GAAP net income rose 3.7% to $1.92 billion, or $1.40 per diluted share against $1.33 a year ago.
Two things are true at once. The cruise business did better than management expected in June: prices and onboard spending rose faster, and costs other than fuel rose more slowly. But fuel cost $826 per metric ton, 36% more than last year's $607, and that took away all of the gain. Operating income (profit from running the ships and the company, before interest and tax) actually fell 2.2% to $2.22 billion. Net income rose only because Carnival paid less interest and booked a much smaller charge for refinancing debt than a year earlier.
At a glance
Adjusted EPS $1.43, the same as last year and $0.08 above June guidance of $1.35. Management puts the drag from fuel and currency at $0.10 a share ($131 million), so without it adjusted EPS would have grown.
Net yields up 2.4% in constant currency, double the ~1.2% guided in June. Carnival earned more per available berth, mainly because guests spent more on board.
Fuel expense up $164 million (36%) to $615 million, which is larger than the whole $51 million drop in operating income. Fuel is now the main swing factor in Carnival's earnings.
Rank 1 = fastest revenue growth, highest operating margin, fastest EPS growth. Peers are the other Consumer Discretionary companies with a 2026 report on this site, each at its latest period we've analyzed; fiscal calendars differ, so periods are not always the same months.
Operating income
$2,220M
$2,271M
-2.2%
Operating margin
26.3%
27.9%
-1.5 pts
Net income (attributable)
$1,920M
$1,852M
+3.7%
Diluted EPS
$1.40
$1.33
+5.3%
Adjusted net income (non-GAAP)
$1,963M
$1,982M
-1.0%
Adjusted diluted EPS (non-GAAP)
$1.43
$1.43
flat
Adjusted EBITDA (non-GAAP)
$2,993M
$2,993M
flat
Net yield per berth-day, constant currency
$255.09
$249.11
+2.4%
Occupancy
111.8%
111.7%
+0.1 pts
Fuel cost per metric ton
$826
$607
+36.1%
Capacity (ALBDs)
24.9M
24.6M
+1.5%
Operating margin is the share of revenue left after running the ships and the company, before interest and tax. Net yield is Carnival's main pricing gauge: cruise revenue per available lower berth-day (one bed for one day, called an ALBD) after taking out commissions, air travel and other direct selling costs. Constant currency applies last year's exchange rates so the figure shows real price change rather than currency swings. Occupancy above 100% is normal in cruising because the industry counts two guests per cabin and some cabins hold three or four. Adjusted EBITDA is earnings before interest, tax, depreciation and amortization, excluding items management considers one-off.
What drove revenue
Onboard spending grew much faster than ticket prices. According to the 10-Q, ticket revenue rose $99 million (1.8%) to $5.5 billion: $80 million came from 1.5% more capacity and only $36 million from higher ticket prices. Onboard and other revenue (drinks, excursions, specialty dining, casino and similar) rose $183 million (6.7%) to $2.9 billion, of which $104 million came from guests spending more per trip and $47 million from added capacity. Onboard now makes up 34% of revenue.
The two regions moved in opposite directions on price.
North America (revenue $5.54 billion, up 3.6%): ticket revenue rose $57 million (1.6%) because capacity grew 2.7% ($92 million), but ticket prices were lower, subtracting $40 million. Onboard revenue rose $138 million (7.3%), including $79 million from higher guest spending. The 10-Q does not explain the lower North American ticket prices.
Europe (revenue $2.61 billion, up 2.2%): ticket revenue rose $39 million (2.0%), driven by $75 million of higher ticket prices. Onboard revenue rose a smaller $16 million (2.7%).
Occupancy was essentially unchanged at 111.8%, so the growth came from capacity, European pricing and onboard spending, not from filling more cabins.
What drove costs
Cruise and tour operating expenses rose $243 million (5.5%) to $4.63 billion. The 10-Q breaks this down:
$149 million from higher fuel prices. Fuel expense went from $451 million to $615 million. Carnival burned 26.9 metric tons of fuel per thousand berth-days, down from 28.0, which softened the blow but did not come close to offsetting the price increase. Management's "Known Trends" section links higher fuel prices to geopolitical tensions.
$70 million from the 1.5% increase in capacity.
$26 million of higher EU emissions-trading costs. 2026 is the first year in which all of Carnival's in-scope emissions fall under the EU Emissions Trading System, and the company expects the full-year cost to be about $160 million, up from $91 million in 2025.
Selling and administrative expenses rose $55 million (7.1%) to $834 million, and depreciation rose $36 million (5.0%) to $754 million.
Stripping out fuel and one-off items, adjusted cruise costs per berth-day rose 1.8% in constant currency, a point below the 2.8% guided in June. By segment, adjusted operating income fell to $1.48 billion from $1.52 billion in North America (where fuel cost rose to $403 million from $295 million) and to $788 million from $810 million in Europe.
Takeaway: Carnival's summer went better than it planned: net yields rose 2.4% against about 1.2% guided, and non-fuel unit costs rose 1.8% against about 2.8% guided. But a 36% jump in fuel prices absorbed all of that, leaving adjusted EPS flat at $1.43 and operating income down 2.2%. The 3.7% rise in GAAP net income came from lower interest and refinancing charges, not from the ships earning more. With fourth-quarter fuel assumed at $896 per ton, fuel prices are the thing to watch.
What the headline numbers hide
GAAP growth came from below the operating line. Pre-tax income rose $79 million while operating income fell $51 million. The difference: interest expense fell $31 million (9.9%) to $285 million because Carnival has less debt, and debt extinguishment and modification costs (charges for paying off or refinancing debt early) fell to $23 million from $111 million. That second item is one-off in nature, so about $88 million of the year-on-year improvement will not repeat as a source of growth.
The GAAP vs adjusted gap is small this quarter. Adjusted net income of $1,963 million excludes $43 million: $23 million of debt extinguishment costs, $8 million of restructuring, $2 million of ship-sale losses/impairments and $10 million of other items. A year ago the gap was larger ($130 million) because of a $111 million refinancing charge, which is why GAAP net income grew while adjusted net income fell 1.0%.
EPS grew faster than net income because the share count fell. Diluted EPS rose 5.3% against 3.7% for net income. Diluted weighted shares fell to 1,368 million from 1,402 million: last year's count included 84 million shares from convertible notes (settled in December 2025 with 69.1 million new shares plus $500 million in cash), and Carnival bought back 20.3 million shares in the quarter at an average of $27.03 (about $549 million). Taxes were not a factor: income tax expense was only $16 million, against $6 million a year ago.
Cash conversion is strong. Over the first nine months, operating cash flow was $5.30 billion against net income of $2.73 billion. The gap is mainly $2.17 billion of depreciation (a non-cash charge) and $318 million more in customer deposits, the cash guests pay in advance. After $2.14 billion of capital spending, that left about $3.2 billion, which paid for $929 million of buybacks, $618 million of dividends and part of $2.19 billion of debt repayments; cash fell $708 million to $1.22 billion.
Working capital looks normal. Trade receivables were $670 million against $678 million at year-end, and inventories rose only modestly to $528 million from $505 million.
Guidance went up, but not by much. Full-year adjusted EPS guidance rose to about $2.24 from $2.22 in June, and adjusted EBITDA to about $7.14 billion from $7.11 billion. Management says the business improved by more than $150 million of adjusted net income versus June, but about $150 million of higher fuel costs cancelled most of that out.
Did last time's read hold up?
Our Q2 report said the two things to watch were fuel and Mediterranean demand, and that Q3 would show whether summer pricing held up against guidance of about +1.2% constant-currency yields. Pricing held up better than feared: yields rose 2.4%, and in Europe (where the Middle East conflict was expected to weigh on Mediterranean bookings) ticket prices contributed $75 million of growth. Fuel was the right worry: the price came in at $826 a ton, above the ~$812 assumed in June guidance, and it was the main reason operating income fell.
Balance sheet and shareholder returns
Total debt fell to $24.6 billion at August 31, 2026 from $27.4 billion at November 30, 2025. Per the earnings release, Carnival used cash to redeem $500 million of 7% notes in the quarter, and S&P raised its credit rating to investment grade, the second agency to do so; the company says it no longer has any secured debt. Liquidity was $5.7 billion ($1.2 billion of cash plus $4.5 billion of undrawn revolving credit), plus $10.7 billion of undrawn export-credit facilities for future ship deliveries.
Shareholder payouts are now a regular use of cash: $204 million of dividends in the quarter ($0.15 a share) and about $1.2 billion of buybacks so far this year by the release date, with $1.56 billion left under the $2.5 billion program at the end of August. Customer deposits reached a third-quarter record of $7.6 billion, about $0.5 billion above last year.
Outlook
Management's September 29 guidance for fiscal Q4 (September–November 2026): net yields up about 1.7% in constant currency, with capacity down 0.1%, adjusted cruise costs excluding fuel per berth-day up about 1.7%, fuel at about $896 per metric ton, and adjusted EPS of about $0.20 (adjusted net income of about $274 million). For full-year 2026: net yields up about 2.3% in constant currency (0.5 points better than June), adjusted EBITDA of about $7.14 billion and adjusted EPS of about $2.24. Management also says both booked occupancy and prices for 2027 are at record levels.
Our read: the Q4 guide assumes fuel even more expensive than Q3's, and Q4 is a seasonally small quarter, so the fuel sensitivity matters a lot: by the company's own table, a 10% change in fuel price moves Q4 adjusted net income by about $59 million, a fifth of the $274 million guided. The operating trends that beat plan in Q3 (onboard spending, cost control, lower fuel burn per berth) are within management's control and have now held for several quarters; fuel prices are not. Lower interest costs and a shrinking share count will keep helping EPS, but the one-off benefit from smaller refinancing charges this quarter will not repeat. The full 10-K for fiscal 2026, due early next year, will show whether flat capacity in 2027 translates into the yield growth management is pointing to.
Adjusted figures, net yields and guidance are from Carnival's September 29, 2026 earnings release (Exhibit 99.1); GAAP figures, segment and MD&A detail are from the 10-Q.