Carnival Corporation plc delivered a meaningful sequential improvement in Q3 2025 (calendar Q3), supported by a robust revenue rebound and favorable cost dynamics. Revenue reached $8.153 billion, up 28.84% QoQ and 3.25% YoY, with gross profit of $3.768 billion and a gross margin of 46.22%. EBITDA was $2.87 billion, yielding an EBITDA margin of 35.20% and operating income of $2.271 billion (margin ~27.85%). Net income totaled $1.852 billion, translating to a net margin of 22.72% and earnings per diluted share of $1.33. Cash flow metrics remained solid for a leisure travel operator, with net cash provided by operating activities of $1.383 billion and free cash flow of $736 million, leaving cash and cash equivalents of approximately $1.792 billion at quarter end.
Despite the strong quarterly execution, Carnival's balance sheet remains highly levered. Total debt stood at $27.86 billion with net debt around $26.10 billion, and net debt to EBITDA is approximately 9x based on the quarter's EBITDA. The company ended the period with limited near-term liquidity headroom, as current liabilities far exceed current assets (current ratio ≈ 0.34). The near-term narrative centers on deleveraging and sustaining cash generation to reduce leverage, while continuing to benefit from a recovering demand environment for leisure travel and stronger onboard revenue contribution. Management’s emphasis appears to be on improving booking trends, yield discipline, and operating efficiency to support debt repayment and capital allocation ambitions.
Overall, Carnival's Q3 2025 results reflect a startup-to-recovery phase execution: a higher utilization of capacity, improving yields, and disciplined cash flow generation, but with a steep debt burden that necessitates continued deleveraging and prudent balance sheet management. Investors should monitor debt maturities, refinancing risk, fuel costs, occupancy trends, onboard spend per guest, and any added capital expenditure plans that could influence future FCF trajectories.