Norwegian Cruise Line Flags Weaker Holiday Demand Despite Record Revenue

Norwegian Cruise Line Holdings Ltd. (NYSE:NCLH) stock fell after the company reported its third-quarter results, reflecting investor caution despite a solid performance.

The company posted record third-quarter 2025 revenue of $2.9 billion, up 5% year-over-year, but below analysts’ $3.02 billion estimate.

GAAP net income was $419.3 million, or 86 cents per share. Adjusted net income rose to $596 million, and adjusted EPS of $1.20 beat both the $1.16 consensus and company guidance of $1.14.

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Adjusted EBITDA climbed 9% to $1.02 billion, exceeding forecast.

Revenue growth was driven by higher Capacity Days and robust demand, partly offset by lower participation in the air program. Gross margin per Capacity Day rose 1.9%, and Net Yield increased 1.6%, in line with guidance.

Costs improved, with Gross Cruise Costs per Capacity Day down to $302 from $314 last year. Adjusted Net Cruise Cost excluding Fuel per Capacity Day held steady at about $156. Occupancy reached 106.4%, topping guidance of 105.5%.

Fuel expense totaled $176 million, with an average price of $744 per metric ton, compared to $699 last year.

As of September 30, 2025, total debt stood at $14.5 billion, and net leverage was 5.4x. Liquidity was $1.8 billion, including $166.8 million in cash and $1.6 billion in credit availability.

In September, the company reduced shares outstanding by 7.5%, refinanced $2 billion in debt, and eliminated all secured notes, improving its maturity profile.

CEO Commentary

“We delivered another record-breaking quarter, with strong performance across all brands,” said CEO Harry Sommer.

“As we move into the fourth quarter, we are seeing the benefits of our strategic focus on Caribbean itineraries, which are attracting more families to the Norwegian brand, and we expect this to continue into 2026 with Load Factor exceeding 2024 levels. In addition, Oceania Cruises and Regent Seven Seas Cruises continue to capitalize on sustained demand for luxury travel, supported by our strategy to elevate both brands firmly within the luxury and ultra-luxury space,” he added.

Outlook

For the full year 2025, Norwegian reaffirmed its adjusted EBITDA guidance of $2.72 billion and adjusted net income of $1.05 billion. It raised adjusted EPS guidance to $2.10 from $2.05, topping the $2.07 analyst estimate.

Net Yield is expected to grow 2.4% to 2.5%, and adjusted cruise costs excluding fuel are seen up about 0.75%. Net leverage is projected to be approximately 5.3 times at year-end.

Full-year fuel consumption is forecast at 993,000 metric tons at $690 per ton, with 58% of needs hedged.

For the fourth quarter, the company guided to adjusted EPS of 27 cents, below the 30 cents estimate, and adjusted EBITDA of $555 million, with occupancy of 101.9% and 6.28 million Capacity Days.

Norwegian Cruise Line guided fourth-quarter profit below expectations as cost uncertainties and weakening consumer appetite weigh on demand, a Reuters report said on Tuesday.

The report added that persistent inflation, tariff-related uncertainty, and a U.S. government shutdown have made travelers more cautious about spending on cruises.

The outlook is further pressured by volatile fuel prices tied to geopolitical tensions, along with higher drydock, ship delivery and maintenance costs.

Price Action: NCLH shares were trading lower by 12.98% to $19.30 at last check Tuesday.

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