RCL — Q2 2026 Financial Report Analysis

Q2 2026: revenue up, profit down as new-ship and fuel costs rose

Royal Caribbean Group's second quarter of fiscal 2026 (April 1 – June 30, 2026) brought in $4.83 billion of revenue, up 6.5%, from 2.4 million guests, 6% more than a year earlier. Profit went the other way. Net income fell 6.8% to $1.13 billion, and diluted earnings per share fell from $4.41 to $4.20. Costs grew faster than revenue: crew pay rose 23% as new ships joined the fleet, fuel cost 27% more, and income from the company's German joint venture dropped by more than a third.

The company still called the quarter better than expected and raised its full-year earnings guidance to $17.73–$17.87 of adjusted EPS. It credited late bookings, lower costs and a better result from the joint venture.

Key figures

A few cruise-industry terms:

• APCD (available passenger cruise days) measures capacity: two berths per cabin multiplied by days at sea.
• Net Yield is revenue per unit of capacity after subtracting the costs that rise and fall with each booking, such as travel-agent commissions and airfare. It is the industry's main measure of pricing.
• Net Cruise Costs ex-fuel per APCD is the cost of running the ships per unit of capacity, leaving out fuel.
• Occupancy above 100% means some cabins held 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.

What drove revenue

Capacity grew 4.9% after the arrival of Star of the Seas and Celebrity Xcel, which were not sailing in the year-earlier quarter. According to the 10-Q, that added capacity drove most of the $145 million (4.5%) increase in ticket revenue.

Onboard revenue grew faster. It rose $149 million, or 11%, to $1.49 billion. The 10-Q splits the increase into $65 million from the extra capacity and $83 million from guests spending more per person on extras bought on board and at destinations. With ships already about 110% full, onboard spending and price are the main ways to grow revenue per guest.

Pricing growth was modest. Net Yield rose 1.9% as reported and 1.2% in constant currency, meaning after removing the effect of exchange-rate changes. Management said yields beat its guidance "primarily driven by better than expected close-in demand," meaning bookings made shortly before sailing.

Why profit fell

Total cruise operating expenses rose $264 million, or 11.6%, almost twice as fast as revenue. The 10-Q breaks the increase down as:

• $111 million from the 4.9% larger fleet;
• $76 million more in crew payroll, "primarily driven by addition of new ships";
• $76 million more for fuel, "related to higher rates per metric ton." Fuel cost $839 per metric ton after hedging (fixed-price contracts that lock in part of the price in advance).

Depreciation, the accounting cost of wearing out ships, rose $47 million to $464 million as new ships entered service. Below operating income, equity investment income, mainly RCL's 50% share of TUI Cruises, fell from $107 million to $67 million. That accounts for about half of the $82 million drop in pre-tax income. The release says joint-venture performance was better than management expected, so the decline was already in its plan, but the filings do not explain the cause.

These cost pressures explain why the two yield measures move in opposite directions. Net Yield, which excludes crew, food, fuel and depreciation, rose 1.9%. Gross Margin Yield, the standard accounting version that subtracts those costs, fell 5.6% to $134.11. Pricing held up, but the extra cost of adding and running new ships used up more than all of that gain this quarter.

The per-share decline was smaller than the net income decline because the diluted share count fell from 275 million to 268 million after buybacks. In Q2 the company spent $199 million repurchasing 0.8 million shares and paid $404 million in dividends. It declared a $1.50 quarterly dividend, paid in July.

Takeaway: Price and demand held up: Net Yield rose, ships sailed 110% full, and onboard spending per guest increased. This quarter's profit decline came from costs, including new-ship crews, higher fuel prices and depreciation, plus a smaller joint-venture contribution. New ships bring their full crew and depreciation costs from their first sailing. The 2026 guidance depends on costs flattening: management expects third-quarter unit costs to fall, but the Q2 cost beat was "favorable timing of expenses," not savings.

Balance sheet and investment

• Spending on ships is rising. First-half capital spending was $3.24 billion, against $1.26 billion a year earlier. The third Icon-class ship, Legend of the Seas, was delivered in June, funded by a $1.9 billion loan 95% guaranteed by Finnvera, Finland's export-credit agency. Full-year capital spending is guided at about $4.7 billion.
• Debt (current plus long-term) was $22.8 billion on June 30, compared with $21.3 billion at year-end. Liquidity (cash plus undrawn credit lines) was $6.9 billion. Debt maturities are $0.9 billion for the rest of 2026 and $2.7 billion in 2027.
• Customer deposits, money guests have paid for future cruises, reached $6.74 billion, up from $5.74 billion at year-end. This is partly seasonal.
• After the quarter: on September 23, 2026, RCL filed an 8-K announcing an agreement to buy a 50% stake in Sandals and Beaches Resorts for about $3.0 billion in cash, funded by committed debt financing. The deal is expected to close in early 2027. It will add debt.

Outlook

Guidance from the July 28, 2026 earnings release:

Management expects full-year revenue growth of about 9%. It said guidance includes "a modest booking impact for select itineraries primarily due to prolonged geopolitical activity," and that early 2027 bookings are "pacing ahead of historical levels." Fuel is 58% hedged for the rest of 2026.

Our read: The second half depends on costs more than on prices. Q3 yields are guided flat, so any earnings growth has to come from 8.5% more capacity and falling unit costs. That is plausible because new ships spread fixed costs over more berths, but Q2's cost beat came from timing and could reverse. A flat Q3 yield also shows that the geopolitical hit to bookings is real, even if management calls it modest. The Sandals deal changes the longer-term picture: about $3 billion of new debt for a 50% stake in a resort business would sit alongside a $4.7 billion capital-spending year. The level of debt deserves close attention once the full deal terms are disclosed.