Carnival Corporation (CCL) Earnings & Analysis

Latest quarter

Carnival reported Q3 FY2026 revenue of $8.4 billion, up 3.46% from $8.2 billion a year earlier. Revenue as the consensus counts it was $8.4 billion, compared with the $8.4 billion consensus estimate, while the company’s adjusted EPS of $1.43 was above the $1.36 consensus estimate.

The company reported diluted EPS of $1.41, compared with $1.33 in Q3 FY2025. The filing shows passenger ticket revenue rose 1.8% to $5.5 billion, while onboard and other revenue increased 6.7% to $2.9 billion. Carnival attributed North American ticket-revenue growth to higher capacity, partly offset by lower ticket prices, while Europe ticket revenue increased on higher ticket prices.

Carnival’s gross margin was 45.1%, versus 46.2% a year earlier, and its operating margin was 26.3%, versus 27.9%. The filing said operating expenses increased 5.5% to $4.6 billion and consolidated operating income decreased to $2.2 billion from $2.3 billion. Free cash flow was $712.0 million, compared with $736.0 million a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

Josh Weinstein said booking volumes and pricing for 2027 and later sailings had continued to run ahead of prior-year levels since the start of the second quarter. He said European bookings for the following year were up by mid-teens percentages year over year at higher prices. Weinstein also said Carnival began the third quarter with 93% of its business booked and less inventory available for sale than a year earlier.

Weinstein said the Middle East conflict had affected European deployments, though recent booking trends suggested the headwinds were beginning to reverse. In response to analyst questions about European demand, he said Carnival had reduced third-quarter European occupancy expectations by a couple of points to prioritize pricing, and said the company still expected positive yields from European deployments. He said Carnival was not providing 2027 guidance yet, and Bernstein said it was premature because many 2027 decisions had yet to be made.

On costs, Bernstein said the company had identified initiatives that reduced its cost base and were expected to benefit earnings through the remainder of the year and beyond. He cited changes across the business, including supplier and vendor-rate discussions, as sources of what he described as permanent future cost savings.

Weinstein said fleet investment would remain measured, with no plan to depart from a cadence of one to two new ships a year. He said Carnival had ordered three Princess Cruises ships for delivery in 2035, 2038 and 2039, and that refurbishment programs would target guest-facing areas, new cabins and operational improvements. On capital allocation, Weinstein said Carnival did not expect to spend the full $2.5 billion share-repurchase authorization during 2026, while Bernstein said the company had repurchased more than 17 million shares for more than $450 million.

Guidance

Carnival raised its FY2026 EPS guidance to $2.22, which Bernstein said was one cent above the previous guidance because of EPS accretion from second-quarter share repurchases. The company expects FY2026 net yields in constant currency to increase approximately 2.3%, 0.5 percentage points above June guidance. Carnival expects adjusted cruise costs excluding fuel per ALBD in constant currency to increase approximately 2.2%, better than June guidance, and expects more than $150 million of operational improvement in adjusted net income compared with June guidance.