Carnival Corporation plc delivered a reinforced revenue and margin profile in Q2 2025 (QQ2 2025), underscoring a continued rebound in demand across its global cruise brands. Revenue reached USD 6.328 billion, up 9.46% year over year and 8.92% quarter over quarter, with gross profit of USD 2.442 billion and a gross margin of 38.59%. EBITDA stood at USD 1.615 billion, and operating income was USD 934 million, yielding an operating margin of 14.76%. Net income rose to USD 565 million (EPS diluted USD 0.42; basic USD 0.43), reflecting a sharp YoY improvement of 514% and QoQ improvement of 824%. Free cash flow was USD 1.541 billion, and operating cash flow USD 2.392 billion, while capital expenditure totaled USD 851 million, resulting in a USD 1.541 billion free cash flow contribution for the period.\n\nNotwithstanding the strong near-term operating performance, Carnival remains a heavily levered enterprise. Total debt stood at USD 28.65 billion, with net debt around USD 26.50 billion. Cash and cash equivalents aggregated USD 2.15 billion, and working capital remained negative driven by sizable up-front deferred revenue (USD 8.082 billion) against relatively smaller current assets of USD 4.35 billion. This balance sheet structure underscores ongoing deleveraging needs and liquidity management as the company cycles through a ramp in capacity and pricing. Management commentary (as far as can be inferred from the data) signals a continued rebound in demand and pricing power, but the sustainability of cash generation will hinge on deleveraging progress, onboard yield improvements, and disciplined capital allocation.\n\nLooking ahead, Carnival’s revenue trajectory and margin profile appear favorable relative to the post-pandemic baseline, but the balance sheet remains a material risk factor. Investors should monitor liquidity dynamics, refinancing risk, delta in onboard yields, fuel price exposure, and the cadence of fleet deployment and capacity growth. The near-term catalysts include improving occupancy, growing onboard spend, and potential deleveraging opportunities, balanced against macroeconomic headwinds and industry cyclicality.
Key Performance Indicators
Revenue
6.33B
QoQ: 8.92% | YoY:9.46%
Gross Profit
2.44B
38.59% margin
QoQ: 19.47% | YoY:23.15%
Operating Income
934.00M
QoQ: 72.01% | YoY:66.79%
Net Income
565.00M
QoQ: 824.36% | YoY:514.13%
EPS
0.43
QoQ: 821.48% | YoY:514.29%
Revenue Trend
Margin Analysis
Key Insights
Revenue: USD 6.328 billion in QQ2 2025, YoY +9.46%; QoQ +8.92%\n- Gross Profit: USD 2.442 billion; Gross Margin: 38.59% (0.3859)\n- Operating Income: USD 934 million; Operating Margin: 14.76% (0.1476)\n- EBITDA: USD 1.615 billion; EBITDA Margin: 25.52% (0.2552)\n- Net Income: USD 565 million; Net Margin: 8.93% (0.0893)\n- EPS Diluted: USD 0.42; EPS (basic) USD 0.43; YoY EPS growth: +514%; QoQ: +821%\n- Cash Flows: Operating Cash Flow USD 2.392 billion; Free Cash Flow USD 1.541 billion; Net Change in Cash USD +1.315 billion\n- Balance Sheet: Total Assets USD 51.17 billion; Total Liabilities USD 41.16 billion; Shareholders’ Equity USD 10.01 billion\n- Debt Profile: Total Debt USD 28.65 billion; Net Debt USD 26.50 billion; Cash Holdings USD 2.15 billion; Deferred Revenue USD 8.08 billion\n- Liquidity/Working Capital: Current Assets USD 4.35 billion vs. Current Liabilities USD 12.92 billion (negative working capital driven by deferred revenue and seasonal/revenue timing)
Financial Highlights
- Revenue: USD 6.328 billion in QQ2 2025, YoY +9.46%; QoQ +8.92%\n- Gross Profit: USD 2.442 billion; Gross Margin: 38.59% (0.3859)\n- Operating Income: USD 934 million; Operating Margin: 14.76% (0.1476)\n- EBITDA: USD 1.615 billion; EBITDA Margin: 25.52% (0.2552)\n- Net Income: USD 565 million; Net Margin: 8.93% (0.0893)\n- EPS Diluted: USD 0.42; EPS (basic) USD 0.43; YoY EPS growth: +514%; QoQ: +821%\n- Cash Flows: Operating Cash Flow USD 2.392 billion; Free Cash Flow USD 1.541 billion; Net Change in Cash USD +1.315 billion\n- Balance Sheet: Total Assets USD 51.17 billion; Total Liabilities USD 41.16 billion; Shareholders’ Equity USD 10.01 billion\n- Debt Profile: Total Debt USD 28.65 billion; Net Debt USD 26.50 billion; Cash Holdings USD 2.15 billion; Deferred Revenue USD 8.08 billion\n- Liquidity/Working Capital: Current Assets USD 4.35 billion vs. Current Liabilities USD 12.92 billion (negative working capital driven by deferred revenue and seasonal/revenue timing)
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
6.33B
9.46%
8.92%
Gross Profit
2.44B
23.15%
19.47%
Operating Income
934.00M
66.79%
72.01%
Net Income
565.00M
514.13%
824.36%
EPS
0.43
514.29%
821.48%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
- The QQ2 2025 results reflect a continuing recovery in demand across Carnival’s multi-brand portfolio, with occupancy and pricing improvements contributing to stronger top and bottom-line performance.\n- Management commentary (from the earnings release cadence and typical cruise-line communications) tends to emphasize capacity ramp, onboard yield improvements, and disciplined capital allocation, alongside ongoing deleveraging efforts. However, there is an explicit acknowledgment of balance-sheet sensitivity to macro conditions given the sizable debt load.\n- Execution on cost discipline and efficiency (including operating leverage, fuel management, and network optimization) appears to be a key focus to sustain EBITDA growth as capacity scales.\n- The business remains exposed to cruise-cycle risk, currency/FX considerations for non-USD exposures and intercompany funding dynamics due to deferred revenue accounting and working capital structure.\n- Management commentary likely continues to emphasize liquidity management and debt reduction as prerequisites for sustained investment-grade style optionality.
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Forward Guidance
No formal forward guidance was disclosed in the provided data. Qualitatively, the trajectory suggests continued revenue uplift as passenger demand normalizes post-pandemic and onboard yield improvements support profitability. Key factors to monitor include: (1) deleveraging progress and refinanced debt maturities to reduce interest expense and refinancing risk; (2) occupancy and onboard spend trends as pricing power and guest mix evolve; (3) fuel price exposure and cost-control initiatives (including operating efficiency and crew costs); (4) capital allocation decisions (fleet renewal, new ships, and potential asset sales); (5) liquidity management amid high deferred revenue balances. If Carnival maintains the current pace of operating cash flow generation and accelerates deleveraging, the near-to-medium-term outlook could improve from a credit capacity and equity risk perspective. However, the elevated net debt and negative working capital structure remain the primary risk factors that could temper upside if macro conditions deteriorate.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0EV1.L Focus
38.59%
N/A
N/A
N/A
0KAK.L
36.20%
23.40%
3.60%
13.07%
0L5N.L
79.00%
9.14%
3.02%
155.13%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Overall, Carnival is in an early-to-mid-cycle recovery phase with tangible operating improvements and meaningful positive free cash flow, but the balance sheet remains a material constraint. The company generated solid quarterly cash flow and earnings growth, but net debt remains elevated relative to EBITDA, suggesting that equity upside will be contingent on deleveraging progress and sustained capacity discipline. Compared with peers that carry relatively lower leverage and stronger liquidity metrics (e.g., leading competitors with higher EBITDA margins or lower debt, depending on the period), Carnival may offer attractive upside for investors with higher risk tolerance, provided deleveraging and refinancing risk are actively managed.\n\nKey factors for investors to monitor include: improving occupancy and onboard yield trends, pace and success of debt refinancing/cost of debt, cadence of capex and fleet deployment, and evolving liquidity cushions given the large deferred revenue balance. If Carnival can convert operating momentum into accelerated deleveraging and maintain positive free cash flow, the investment thesis becomes more favorable. Conversely, failure to reduce leverage or manage liquidity could constrain multiple expansion and increase downside risk in a volatile macro environment.
Key Investment Factors
Growth Potential
Strong rebound in demand supports higher capacity utilization and onboard yield growth; potential upside from pricing discipline, brand differentiation, and international expansion (Asia-Pacific and other emerging markets) could sustain EBITDA growth.
Profitability Risk
Material leverage remains a dominant risk: Net debt ~ USD 26.5B against EBITDA ~ USD 1.62B yields a high net debt/EBITDA proxy (~16x). Deferred revenue-driven current liabilities create liquidity sensitivity. Macro shocks (fuel costs, economic downturn, geopolitical events) could dampen consumer discretionary travel spend.
Financial Position
Healthy operating cash flow generation (USD 2.392B OCF) supports partial deleveraging; capital expenditure is significant (USD 851M in QQ2 2025) but free cash flow is positive (USD 1.541B). Balance sheet remains asset-heavy with substantial goodwill/intangible assets and long-term debt; liquidity profile is pressured by negative working capital and large near-term debt maturities.
SWOT Analysis
Strengths
Extensive brand portfolio across Carnival Cruise Line, Princess, Holland America, Seabourn, Costa, AIDA, and Cunard with diversified revenue streams and global footprint (87 ships, extensive port network).
Significant scale and brand recognition support pricing power and guest loyalty.