Royal Caribbean Q3 2026: EPS up 12% to $6.45, but only $0.10 of a $0.26 beat lifts the full year

Royal Caribbean Group's third quarter of 2026 (July 1 – September 30) brought in $5.59 billion of revenue, up 8.8%, from 2.68 million guests, 8.5% more than a year earlier. Net income to shareholders rose 9.7% to $1.73 billion and diluted earnings per share rose 12.4% to $6.45. Adjusted EPS, which excludes a few small items, was $6.57, above the company's own July guidance of $6.26–$6.36.

Almost all of that growth came from having more ships at sea, not from charging more. Capacity rose 8.4%, while Net Yield, the industry's main measure of pricing, rose only 0.9%. Profit kept pace with capacity because costs per berth fell, and management says part of that drop is expenses that slipped into the fourth quarter.

This analysis is based on the earnings release (8-K Exhibit 99.1) filed October 27, 2026. The full 10-Q has not been filed yet, so the management discussion that explains individual cost lines and the joint-venture results is not available. Where this report gives a reason, it is the one the release states.

Key figures

A few cruise-industry terms:

• APCD (available passenger cruise days) measures capacity: two berths per cabin multiplied by the days the ship sails.
• Net Yield is revenue per unit of capacity after removing costs that rise and fall with each booking, such as travel-agent commissions, airfare and onboard costs. It is the industry's main pricing measure.
• Net Cruise Costs ex-fuel per APCD is the cost of running the fleet per unit of capacity, leaving out fuel.
• Occupancy above 100% means some cabins carried a third or fourth guest, such as children in a family cabin.
• Operating margin is the share of revenue left after running the business, before interest and tax.

Where the revenue came from

Ticket revenue rose 6.8% to $3.89 billion. That is slower than the 8.4% capacity growth, so ticket revenue per berth-day fell about 1.4%. Onboard and other revenue (drinks, excursions, Wi-Fi, specialty dining and the like) rose 13.6% to $1.71 billion, about 5% more per berth-day. The release says third-quarter pre-cruise and onboard revenue rates were ahead of last year.

After variable costs, Net Yield rose 0.9% as reported and 0.6% in constant currency, meaning with exchange-rate changes removed. Management had guided it to be about flat. The release credits the beat to "better than expected close-in demand in Europe and the Caribbean," meaning bookings made shortly before sailing.

Where the costs went

Some cost lines that come with new ships grew faster than capacity:

Overhead offset those increases. Marketing, selling and administrative costs were flat while the fleet grew 8.4%. That is the main arithmetic reason Net Cruise Costs ex-fuel per berth-day fell 1.9%, slightly more than the -1.7% to -1.2% guided in July. The release says the better cost result was "due to the timing of expenses that shifted into the fourth quarter," so part of it is a deferral, not a saving. The release does not say which lines were deferred; the 10-Q should.

Fuel. The company paid $778 per metric ton after hedging (contracts that lock in part of the price in advance) and burned 446,000 tons. That was cheaper per ton than Q2's $839, but fuel cost per berth-day was still about 8% higher than a year ago. The Q4 guidance includes $379 million of fuel for 463,000 tons, about $819 a ton, and the release cites fuel as one reason it did not raise full-year guidance by the full Q3 beat.

Below operating income, interest expense rose 17% to $291 million, including a $21 million loss from repaying debt early; without that, it rose about 9%. Equity investment income, which includes the 50% stake in TUI Cruises, rose 11% to $176 million, after falling sharply in Q2.

Takeaway: Royal Caribbean is growing earnings by adding ships, not by raising prices. Capacity rose 8.4%, while price per berth rose 0.9% and ticket revenue per berth fell. Earnings grew because overhead stayed flat and buybacks cut the share count, and management says part of the cost saving was timing. The fourth quarter has to absorb those deferred costs and pricier fuel, so it will show whether Q3's unit-cost gain lasts.

What the headline numbers hide

• GAAP and adjusted are close. The $0.12 gap between $6.45 and $6.57 is $32 million of items: a $21 million loss on early debt repayment, $9 million of restructuring charges and $2 million of Silversea acquisition amortization. None of these changes the picture.
• Buybacks did part of the work. Operating income rose 9.9% and pre-tax income 9.3%, but EPS rose 12.4% because the diluted share count fell 2.2%, from 274 million to 268 million. A slightly lower tax bill ($27 million against $34 million) added a little more.
• Some of the cost beat is borrowed from Q4. The release says the cost beat came from expenses moving into Q4. Guidance confirms it. Before this quarter, the July guidance implied Q4 adjusted EPS of roughly $3.70 (the $17.80 full-year midpoint minus $7.79 for the first half and $6.31 for Q3). Q4 guidance is now $3.48–$3.58. So Q3 beat its guidance midpoint by $0.26, but full-year guidance rose by only $0.10. Fuel, exchange rates and the deferred costs absorb the rest.
• Cash is strong, but it does not cover both ships and payouts. Nine-month operating cash flow was $5.27 billion against $3.82 billion of net income. Customer deposits, money guests pay ahead for future cruises, rose $295 million. Ship and equipment spending took $3.88 billion. That left about $1.39 billion, against $1.04 billion of buybacks and $1.08 billion of dividends (nine-month figures; the release gives only year-to-date cash flows). Dividends paid nearly doubled from $552 million. Total debt rose from $21.3 billion at year-end to $22.4 billion.

On balance the quarter is clean. Operating income grew in line with revenue and the adjustments are small. Buybacks added about 2½ points to EPS growth, and the cost beat partly reflects timing, as management itself says.

Did last time's read hold up?

Our Q2 report said the second half "depends on costs more than on prices." It noted Q3 yields were guided flat and warned that Q2's cost beat was timing that "could reverse." Pricing came in better than guided (+0.9% against about flat). Costs fell again, but this quarter's beat was also timing, so the reversal we expected has moved to Q4 instead of disappearing. Joint-venture income, which had dropped by more than a third in Q2, grew again (+11%). Debt was $22.4 billion, down from $22.8 billion at June 30, but the Sandals deal we flagged has not closed yet.

Balance sheet and the Sandals deal

Liquidity (cash plus undrawn credit lines) was $7.4 billion on September 30, up from $6.9 billion at June 30. In the quarter the company issued $1.25 billion of 5.55% notes due 2034 to repay floating-rate term loans and 2027 maturities. In October it added a $400 million term loan from Export Development Canada. Scheduled debt maturities are $0.6 billion for the rest of 2026 and $2.4 billion in 2027.

The 50% stake in Sandals and Beaches Resorts (18 resorts, three more being developed) is expected to close in early 2027. It will be accounted for under the equity method with a one-quarter lag, meaning its profits will appear as one line, like TUI Cruises today. Management says it will be "immediately accretive," meaning it adds to EPS, and will fold it into 2027 guidance once the deal closes. Full-year 2026 capital spending is guided at about $4.6 billion.

Outlook

Management expects full-year revenue to grow 9%. It says bookings since the last call are up in the mid-teens across channels, bookings for 2027 sailings are up in the high teens, and 2027 is "pacing ahead of historical levels at higher rates." It still targets its "Perfecta" goal of 20% annual adjusted EPS growth from 2024 through 2027, which it describes as "a $20-handle in 2027."

Our read: Q4 should look better on price than Q3. Guided yields of +4.4% to +4.9% reflect an easier comparison, the mix of where ships sail and the timing of dry docks, according to the release. Capacity growth slows to 5%, and the release still guides unit costs down even after the costs moved from Q3. Two things to watch: whether Q4 unit costs land inside the -1.5% to -1.0% range once the deferred spending lands, and whether 2027 pricing is strong enough for a $20-plus EPS year with capacity growth slowing to about 4.5%. Fuel is the main outside risk. The company's sensitivity table puts a 10% move in fuel prices at about $15 million of Q4 earnings, and 2027 is only 53% hedged.