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Date
Tuesday, August 19, 2025 at 8 a.m. ET
Call participants
Chairman and Chief Executive Officer — Tor Hagen
Chief Financial Officer — Leah Talactac
Chief Commercial Officer — Linh Banh
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Takeaways
Net Yield-- Increased 8% year over year to $607 in the second quarter, driven by disciplined execution and elevated demand across core products.
Revenue-- Rose 18.5% year-over-year to $1.9 billion, reflecting both 8.8% capacity growth and higher occupancy rates.
Capacity Growth-- Capacity expanded 8.8%, supported by two river vessels and one ocean ship delivered in 2024, plus an additional river vessel in March 2025.
Booking Pace 2025-- 96% of core product capacity for 2025 already sold, indicating near-complete sell-out for the year.
Booking Pace 2026-- 55% of core product capacity for the 2026 season sold as of August 10, with rates higher than the prior year at this stage.
Adjusted Gross Margin-- Increased 19.2% year over year to $1.2 billion in the second quarter, attributed to capacity and yield improvements.
Vessel Expenses Excluding Fuel-- Rose 8.2% per capacity PCD in the second quarter, primarily because of itinerary mix and higher port charges.
Adjusted EBITDA-- Grew 28.5% year over year to $633 million in the second quarter, mainly from higher capacity, occupancy, and yields.
Net Income-- Net income reached $439 million. Net income was up nearly $280 million compared to the prior year, with prior-year figures affected by warrant revaluation and derivative losses.
Adjusted EPS-- Adjusted EPS was $0.99; currency hedging actions reduced exposure to euro volatility.
River Segment Performance-- Adjusted gross margin climbed 15.8% year over year; Net yield advanced 6.9% year over year, Occupancy was 95.6% for the period following new vessel deployment in Europe and Egypt.
Ocean Segment Performance-- Net yield increased 12% year over year to $551, Adjusted gross margin was up 24.9% year over year; Capacity PCDs were higher by 11.2% year over year due to fleet additions.
Deferred Revenue-- Stood at $4.4 billion as of June 30, underpinned by robust advance bookings and capacity expansion.
Net Debt and Leverage-- Net debt totaled $3.2 billion, with a net leverage ratio of 2.1 times as of June 30, 2025, and $2.6 billion in cash and cash equivalents, plus a $375 million undrawn revolver as of June 30, 2025.
Advanced Bookings 2025-- Advanced bookings of $5.6 billion, up 21% compared to the 2024 season at the same point, with capacity up 12% compared to the 2024 season at the same point; Ocean advanced bookings of $2.5 billion, 29% higher than last year at this point for the full year 2025, and River at $2.7 billion, 16% higher than last year at this point for the full year 2025.
Advanced Bookings 2026-- Booked $3.9 billion for core products, 13% ahead at this stage year-over-year; Ocean advanced bookings up 19% compared to the 2025 season at the same point, and River advanced bookings for the 2026 season are up 5% versus the 2025 season at the same point.
Segment Rate Trends 2026-- Ocean advanced booking rates at $780 (2025: $752), river at $940 (2025: $887), River segment capacity is expected to expand by 9% for the 2026 season.
Capacity Expansion Plans-- Delivery of Viking Mira and Viking Libra ocean vessels scheduled for 2026, with river expansion into India in 2027 and 2028.
Secondary Share Offering-- 30,500,000 ordinary shares were sold by TPG Capital and CPP Investments at $44.2 per share on May 29, 2025, boosting institutional float and ownership diversity.
Hedging Activities-- EUR 470 million hedged for 2025 and EUR 500 million for 2026 at a weighted rate of $1.1 per euro to manage foreign exchange risk on euro-denominated expenses.
Summary
Viking Holdings(VIK -1.03%) delivered sizable revenue growth and yield improvements amid high occupancy and disciplined cost management in fiscal Q2 2025 (period ended June 30, 2025). Management confirmed sustained booking momentum across both the 2025 and 2026 seasons as of August 2025, supported by higher advance booking rates and robust capacity expansion, including selective strategic entries into new river geographies. The balance sheet remains liquid with ample cash and managed leverage, while new vessel deployments and hedging strategies are actively deployed to mitigate identified expense and currency pressures.
Tor Hagen said, "96% of the 2025 capacity for our core products is already booked, effectively selling out this year," underscoring near-complete fill rates for the year.
Management addressed this with targeted currency hedges to limit future volatility.
Linh Banh remarked, "There will be quarterly fluctuations" in operating expenses, highlighting a cost structure that may vary with timing, deployment, and itinerary mix but is monitored on an annual basis.
Management stated that payback periods are five to six years for ocean vessels and four to five years for river ships, even before considering guest prepayments received up to eight months in advance.
Leah Talactac indicated ongoing review of capital returns, noting, "currently we're not contemplating a dividend or share buyback, but they are an option to return capital to shareholders in the longer term."
Management reaffirmed a mid single digit price increase goal for 2026, with both yield and capacity growth guiding expectations for continued long-term EBITDA growth.
Industry glossary
PCD (Passenger Cruise Day): A measure of guest volume based on the number of passengers carried for one day.
Net Yield: Revenue per PCD after deducting variable onboard and incentive costs.
Adjusted Gross Margin: Gross profit adjusted for specific items, reflecting operational profitability before nonrecurring or non-cash charges.
Full Conference Call Transcript
Tor and Leah will begin today's call with a strategic overview of the business, including a recap of our second quarter results and an update on the current booking environment. Following their remarks, we will open the call for your questions. To supplement today's discussion, an earnings presentation is available on our Investor Relations website. With that, I'm pleased to turn the call over to Tor.
Tor Hagen: Thank you, Carola, and good morning, everyone. We are pleased to have delivered another quarter of great results, which reaffirm once again the strength of our business model, our brand, and our guest demographic. As you can see on Slide three, in 2025, net yield increased 8%, which combined with an 8.8% capacity growth resulted in revenue increases of 18.5% year over year. I believe this is the result of disciplined execution and great demand for our cruises. In terms of the overall booking environment, we are seeing sustained strength in demand. 96% of the 2025 capacity for our core products is already booked, effectively selling out this year.
As such, our attention remains on 2026 bookings, where we're seeing a very strong start. As of August 10, 55% of the capacity of our core products for the 2026 season was already sold, which is in line with our booked position at the same point last year and at higher rates. If you look at the next slide, number four, you will see that since we last spoke, we have been quite busy both expanding our fleet and strengthening our global presence. First, the Viking Vesta joined our ocean fleet in June and is spending her inaugural season in the Mediterranean.
On the riverside, we continue to thoughtfully strengthen our presence with the additions of the Viking Ammun on the Nile. Also this past July, we announced our first river voyages in India starting in 2027. This region offers stunning scenery and rich cultural heritage. We look forward to taking our guests to exclusive itineraries delivered the Viking way, that is with a great level of comfort and cultural enrichment. The early response to this new product has been phenomenal, with all available itineraries already sold out. And earlier during the second quarter, we completed a secondary offering of 30,500,000 ordinary shares priced at $44.2 per share.
We will now look at how these developments shape the bigger picture for Viking Holdings Ltd, starting on slide five. When you consider that we started with just four river ships in 1997, our growth over the years has been a remarkable achievement and one we are very proud of. A key reason behind our sustained success is that our vision has remained consistent. Travel should focus on the destination. We are also fortunate to have very loyal guests, travelers who return to Viking time and time again. And most importantly, our continued growth is a result of the hard work and dedication of our teams around the world.
Today, our river fleet consists of 85 vessels operating on rivers across the globe, from the Rhine to the Nile and from the Danube to the Mekong. Through years of strategic investments and partnerships, we now control or have priority access to 110 docking locations, giving us logistical flexibility and the ability to deliver a consistent high-quality guest experience. On the oceans, we now operate 12 small modern ships, all with 100% balcony staterooms and designed to be nearly identical. This uniformity allows us to scale efficiently, deliver a consistent product, and maintain tight operational control. The same philosophy guides our two expedition vessels, which serve guests seeking deeper exploration in remote regions of the world.
Overall, our fleet is designed with both efficiency and purpose, offering superior guest comfort and compelling economics. These efficiencies apply both to our ship design, where we optimize space utilization and energy solutions, and our operations, enabling Viking to drive yields, enhance the guest experience, and build long-term growth. Now moving to slide six. The recent ship deliveries and new itinerary offerings in India are a testament to the fact that our river business remains fundamental to our identity and continues to be a key growth engine and brand differentiator. Overall, we now operate 21 rivers worldwide with an expanding footprint that reflects both demand from our loyal guests and the cultural richness of the regions we serve.
Our delivery strategy is built on selective expansion, focusing on destinations that align with the Viking brand and resonate with culturally curious travelers. This means going beyond our well-traveled European routes and deepening our presence in high-value, less explored regions like those shown on the slide. In Egypt, the Nile continues to be a strong performer. We now have seven ships in operation and plan to deliver five more by 2027, underscoring our confidence in the long-term demand for this iconic destination. On the Mekong River, through Vietnam and Cambodia, we currently operate one vessel with another scheduled for delivery later this year.
And our newest river offering in India will start with one vessel in 2027 and another one in 2028. These will be small vessels with a capacity of 80 guests each. We are regularly conducting extensive research to identify new itineraries that will fill gaps in the travel market for our core demographic, inspiring our past Viking guests to travel with us again while attracting new guests to the brand. India is one example of that. The India offering is not large in terms of immediate scale, but this addition is not about volume.
It's about providing our guests with culturally immersive, destination-focused travel that can enrich our portfolio and offer our loyal guests even more ways to explore the world we like. If we move to slide seven, I will provide a quick update on our ownership structure. On May 29, 2025, we completed a secondary offering. An aggregate of 30,500,000 ordinary shares were offered by TPG Capital and CPP Investments at the price of $44.2 per share. As you can see on the slide, this transaction adjusted our ownership composition, increasing our institutional float and further diversifying our shareholder base. We appreciate all who participated in the offering and are grateful for the continued interest and support in Viking Holdings Ltd.
With that, I'll turn to Leah to discuss our financials.
Leah Talactac: Thank you, Tor, and good morning, everyone. I will start by reviewing our very strong second quarter results. On a consolidated basis, total revenue for the quarter increased 18.5% year over year to $1.9 billion. The year-over-year increase was mainly driven by increased capacity, higher occupancy, and higher revenue per PCDs. Capacity increased 8.8% this quarter, driven by the delivery of two river vessels and one ocean ship in 2024, as well as an additional river vessel delivered in March 2025. Growth also reflects the Viking Yidun, which operates in China. As you might recall, at the end of last year, we celebrated our return to this region.
While our product in Asia and for Asia is still in its early stages of development, we are very pleased to have added an ocean ship with unique itineraries for our Asian guests. Adjusted gross margin increased 19.2% year over year to $1.2 billion, resulting in a net yield of $607, 8% higher than in 2024. Vessel expenses excluding fuel per capacity PCD increased 8.2% this quarter compared to the same period last year. This year-over-year increase was driven by several factors. These include changes in itinerary mix that resulted in both higher yields and some higher expenses such as port charges. We remain committed to optimizing our cost structure while continuously refining our deployment and itinerary planning.
Regarding SG&A, following the year-over-year step-up in expenses in the second quarter, we continue to invest in our teams as well as in sales and marketing to support future growth and drive demand generation. Adjusted EBITDA for the second quarter was $633 million, 28.5% higher than the same period last year. This significant year-over-year increase was mainly driven by higher capacity, occupancy, and net yields in both the ocean and river segments. As we have mentioned in the past, the combination of capacity growth and yield growth translates into healthy EBITDA growth. Net income was $439 million, an improvement of almost $280 million when compared to the same period in 2024.
I will note that the net income for 2024 includes a loss of $123 million from the revaluation of warrants issued by the company due to stock price appreciation, and it also includes a loss of $66 million from the net impact of the private placement derivative loss and interest expense related to the company's Series C preference shares. Adjusted net income attributable to Viking Holdings Ltd was $439 million, 25.8% higher than the same period in 2024. The net income is also impacted by fluctuation in currency. To this end, we have hedged a significant portion of our euro exposure for 2025 and 2026 operating expenses.
We have EUR 470 million hedged for 2025 and EUR 500 million hedged for 2026 at a weighted rate of $1.1 per euro. We also worked on opportunities to offset our currency exposure on the balance sheet, such as our euro-denominated loans. For example, we naturally hedge these loans by converting an equivalent amount of cash holdings into euros as of late Q2 2025. With this, on a go-forward basis, we have generally mitigated the unrealized currency fluctuations caused by the euro loans due to fluctuating euro rates. Adjusted EPS was $0.99 for the second quarter.
Before moving to our reportable segments, which are on slide 10, I would like to highlight that for the first half of the year, our consolidated adjusted gross margin increased 20.7% year over year to over $1.8 billion, and our net yield was $584, 7.6% higher than in the same period last year. Now I will briefly discuss our two reportable segments, river and ocean. Unless noted, I will be referring to year-to-date metrics or six months ended June 30, 2025. In the river segment, capacity PCDs increased 7.5% year over year, mainly driven by the addition of two new ships for Egypt delivered in 2024 and the Viking Nervous, which began operating on the Seine River in March 2025.
Occupancy for the period was 95.6%, an increase of almost 100 basis points compared to the same period last year. Adjusted gross margin grew 15.8% year over year, and net yield was $607, up 6.9% year over year, driven by strong demand for our European itineraries. As a reminder, the bulk of our river business begins in the second quarter. For Ocean, capacity PCDs increased 11.2% year over year, mainly due to the addition of the Viking Vella in December 2024. Occupancy for the period was 95.2%, about 25 basis points higher than last year. Adjusted gross margin increased 24.9% year over year to $888 million, while net yield increased 12% to $551.
The increase in net yield was primarily driven by a favorable mix in deployment. I will particularly highlight the positive impact of operating one world cruise this year compared to two in 2024. Excluding this impact, net yield for the period would have increased by high single digits compared to 2024. Now moving to the balance sheet on slide 11, you can see that as of June 30, 2025, we had total cash and cash equivalents of $2.6 billion, and we also have an undrawn revolver facility of $375 million. Our net debt was $3.2 billion, and our net leverage was 2.1 times. As of June 30, 2025, deferred revenue was $4.4 billion.
Also on slide 11, we show you our bond maturity outlook. As you can see, maturities are in 2027 and beyond. With this, I'd like to confirm our debt amortization for 2025 and 2026. As of June 30, 2025, scheduled principal payments for the remainder of 2025 were $142 million and $258 million for the full year 2026. From a committed capital expenditure perspective and for full year 2025, the total expected committed CapEx is about $990 million or $560 million net of financing. And for the full year 2026, the total expected committed CapEx is about $1.2 billion or $70 million net of financing.
The main drivers of the total committed ship CapEx for 2026 are two ocean ships, Viking Mira and Viking Libra, which are scheduled for delivery in 2026. With that, I'll turn it back to Tor to review our business outlook, including our booking curves.
Tor Hagen: Thank you, Leah. Let's move now into the booking curves, which are all as of August 2025. On Slide 13, we show our consolidated metrics for our core products. As you can see, we are in very good shape, both for the 2025 and the 2026 seasons. The 2025 season already has 96% of our capacity PCDs booked. Advanced bookings equal $5.6 billion, which is 21% higher than the 2024 season at the same point in time, while the capacity is increasing by 12%. And for 2026, we are already 55% booked with $3.9 billion of advanced bookings. These are 13% higher than the 2025 season at the same point in time in 2024.
Capacity for our core products is increasing by 9%. Let us now talk about the advanced booking curves for the segments. On the next slide, you will see the curves for ocean cruises. This is Slide 14. I will start with the blue line, which shows the bookings for 2025. Overall, we have sold 95% of our capacity PCDs for the year and up $2.5 billion of advanced bookings, which is 29% higher than last year at this point in time. Capacity is increasing by 18%, and rates have remained strong as we finish selling the last quarter of the year.
If you now look at the yellow line, you will see the booking trend for the 2026 season, which is in very good shape too. As of August 10, we have sold about 64% of the 2026 capacity erosion, which is increasing by 9%. Advanced bookings are 19% higher than last year, with rates equal to $780 compared to $752 for the 2025 season at the same point in time. Now if we move to Slide 15, you will see the curves for the river cruises. I will start with advanced bookings for 2025, which is the blue line.
As you can see, we are having a great year with 97% of the 2025 capacity already sold as of August 10. We have over $2.7 billion in advanced bookings, which is 16% higher than last year at this point in time. As you can tell, we have continued to book our remaining inventory at very attractive rates. Capacity for the River segment is expected to grow approximately 6%, a slight decrease from the 7% reported last quarter. The most notable update is related to two vessels previously scheduled for delivery in 2025, which are now expected in 2026.
The impact of these changes to the advanced booking curves and our metrics for 2025 and '26 for that matter, is immaterial. Now looking at the yellow line, these are the advanced bookings for the 2026 season. As you can see, we have sold about $1.6 billion in advanced bookings, which is 5% higher than the 2025 season at the same point in time. Our operating capacity for the river is up 9% year over year. This number is slightly higher than what we reported last year, driven by the changes in delivery dates previously mentioned. These are good trends for 2026, with rates equal to $940 compared to $887 in 2025.
So overall, advanced booking for our core products is doing very well. Moreover, rates for the 2026 season remain steady, currently 4% higher than the 2025 season at the same point in time, alongside with a 9% increase in capacity. To this end, we are very pleased with how the curves are now trending. Now Leah will add some color to our order book and capacity.
Leah Talactac: Thank you, Tor. Now turning to our order book on slide 16, the chart has been updated to reflect the ship deliveries mentioned by Tor. It also includes the two river vessels that we will operate in India with deliveries planned for 2027 and 2028. And lastly, the chart reflects a shift in the delivery timeline of two river vessels previously scheduled for 2025, which are now expected in 2026. As you can see, we remain committed to adding new capacity and expanding our itinerary offerings in exciting destinations. At Viking Holdings Ltd, we believe that if we remain focused on offering and delivering meaningful experiences, strong results will follow. With this, I conclude our prepared remarks.
I'll now turn it back to the operator to take questions.
Operator: Thank you. At this time, we will be conducting a question and answer session. In the interest of time, we ask that participants limit themselves to one question and one follow-up on today's call. And the first question today is coming from Steve Wieczynski from Stifel.
Steve Wieczynski: Congratulations on a solid quarter here. So Tor or Leah, I'm wondering if maybe you could just walk us through the last couple of months in terms of booking progress for '26. I guess what I'm trying to understand here or understand a little bit more here is obviously there was some slowdown in bookings if we go back and think about February, March around Liberation Day stuff and just general macro uneasiness. And then when we heard from you guys last April and May, it seemed like it improved.
I'm wondering then if you could just walk us through maybe what you kind of have seen in June, July and so far in August in terms of how bookings have trended across both River And Ocean and maybe if your core customer has become more selective with how and when they are booking? Thanks.
Leah Talactac: Hi, Steve. Good morning. Thanks for the question. It's a great question. Since we last spoke, we have continued to see really strong demand from our consumers. In fact, we had an outstanding June and July, and we continue to see that booking strength continue into August. And that's reflected in the fact that we're 55% sold for 2026. So from our perspective, the consumer behavior is pretty much consistent with what we have seen in the past. We've seen our guests start to really engage and start to book their holidays for the 2026 season. Tor, I don't know if you want to provide any color. You're in mute, Tor. Well, go ahead, Steve. Do you have another question?
Steve Wieczynski: Yeah. I'll move on. And then you guys you mentioned marketing spend, a little bit of uptick in terms of marketing spend. Just wondering maybe, is that broad based or are you guys having to market maybe more aggressively to certain itineraries or certain cabin classes and stuff like that? Just trying to understand that commentary there around the uplift in marketing spend. Thanks.
Leah Talactac: Yeah, sure. So in the past we have spoken to the fact that if we see a little bit of softening in demand that our first lever that we pull is marketing, not necessarily pricing. And you've spoken to this little bit of a softer demand around Liberation Day. And so that's where we turned on our marketing machine and just promoted more, not necessarily discount, but just got the word out and got the consumers focusing on Viking and stimulating that demand. So that's what you see there. And it's something that we do as part of our business strategy of consumer direct to consumer interface.
Steve Wieczynski: Okay. Got you. Understood. Thanks guys. Really appreciate it.
Operator: Thank you. The next question will be from Matthew Boss from JPMorgan. Matthew, your line is live.
Matthew Boss: Great. Thanks and congrats on a nice quarter.
Leah Talactac: Thanks, Mat.
Matthew Boss: So, Tor, with 2026 bookings off to a very strong start as you cited, how do you see the current 26 booked position at over 50% today, you to optimize pricing on capacity for 26 at this point?
Tor Hagen: Yeah, this is always a tricky game. We, you know, at the prices we get we have a reasonably good return, and we also want to make sure that our guests get good value for money. So we should be careful that we don't get overly excited also. But it's a balance we strike, and I think we are in a good spot now where we are. Might possibly, when you look at things backwards, might possibly have pushed the price a little bit higher, but I think we're quite satisfied with where we are.
Matthew Boss: Great. And for a follow-up, Leah, maybe could you provide some perspective on the 4% advanced bookings per PCD growth to date? Is mid single digit yield growth for '26 the right baseline? Or just any puts and takes to consider as we move further down the booking curve?
Leah Talactac: Sure. So I think we don't provide guidance, but we have that is our goal is to mid single digits price growth. And taking it to perspective, we talked a little bit about average price per day. We are averaging $800 to $900 per day and that's 4% on top of already 7% that we've achieved in 2025. So the pricing increase in addition to our capacity increase, we believe will lead to great revenue and EBITDA growth, not just in 2025, but also in 2026. And at the end of the day, we are building long term. We want our guests to repeat.
We want good value for money And our payback on our ships reflect that our pricing is also quite strong. Our payback for ocean vessels is five to six years. Payback for rivers is four to five years. And that's even before the negative working capital with the fact that our guests book and pay seven, eight months prior to departure. So overall, I would say that the consumer is showing signs that it's healthy. They're engaged. They're booking. And we are able to demonstrate that our goals of mid single digit price increases is achievable. Great color, Dan.
Tor Hagen: And if I may add, we are of course fortunate because we believe we are somewhat contrarian, so we have been able to contract ships at very good prices. We are also a good negotiator when it comes to shipyards. So you can say the ships that we now have on the books have been acquired at fairly attractive prices, which gives advantage relative to anybody who might want to expand their position or even enter this market. So I think we want to make sure that we give good values to our loyal guests.
Matthew Boss: It's really helpful color. Best of luck.
Operator: Thanks. Thank you. The next question will be from Robin Farley from UBS. Robin, your line is live.
Robin Farley: Great. Thank you. Just looking at your booked revenue per cruise day for 2026, about up 4%. It had sounded last quarter like you had maybe expected that would tick up over the course of this year. It sounds like maybe the expectation that won't tick up that it maybe will sort of stay at this level so maybe a little bit of a different view than you had last quarter or how should we think about the commentary that you're giving us today? Thanks.
Leah Talactac: Hi, Robin. Sorry, go ahead, Linh.
Linh Banh: No, please go ahead, Leah.
Leah Talactac: Yeah, I can start and then you can kind of give your perspective. But we have said mid single digits and we didn't give any guidance that we thought it would tick up. So I just wanted to clarify that. But go ahead, Linh.
Linh Banh: No, I agree with what Leah just said. I think in our last call we said if market conditions remain, we do feel that we would get to our mid single digit goal. And I'll just reiterate what Tor and Leah both just said that, you know, we feel our capacity increase plus our yield increase would lead to good healthy EBITDA growth. So as Tor said and we'll reiterate, we feel we're in a great position for 2026. We're 55% sold. Rates are higher. And, you know, given that our average revenue per day is $800 to $900, we feel we are in a good spot.
Robin Farley: Okay. Thank you. And, just as a follow-up question, on the expense side, you mentioned there were some things having to do with port charges, some more marketing, different things that were contributing to that, the higher expense uptick. Can you give us a sense of, how much of that do you think is, is this the new base for, in other words, should we expect this expense increase to continue or were there kind of one time items or non recurring factors in the quarter?
Because I'm just thinking about that rate of expense growth relative to next year's revenue growth if it stays at the 4% level just to get some comfort that expenses wouldn't be up, you know, that much more than revenue. So anything about but, you know, maybe sort of nonrecurring from this quarter? Thanks.
Linh Banh: Sure. So I mean, the end of the day, quarterly variances may occur due to a variety of things, the timing of repairs and maintenance, ship deliveries, itinerary mix. But like we noted in the past, we are long term and we do not manage our business quarterly. We do manage at most on an annual basis. We try to be prudent with expenses while not compromising quality. And so what we can say is for the 2025 compared to the same period in '24, operating expenses excluding fuel was up 3.9% and our capacity was up 11% for the same period and yields were up 7.6%. So overall revenue growth grew 20.5% and adjusted EBITDA grew 45%.
So I think for the first half of the year, even given the slight tick up in operating expenses, were able to yield really strong revenue growth and EBITDA growth.
Robin Farley: So the Q2 expenses, that's not the level that you're saying there are quarterly fluctuations in there. Is that the right way to think of Correct.
Linh Banh: There will be quarterly fluctuations. Agreed. There will be quarterly fluctuations.
Robin Farley: Okay. Thank you.
Operator: Thank you. The next question will be from Andrew Didora from Bank of America. Andrew, your line is live.
Andrew Didora: Hi, good morning everyone. Tor, Leah, just wanted to ask one more just on 2026 pricing. Obviously, the portfolio, it held steady from your last update. But just digging into the presentation, looked like river pricing did accelerate from your last update, while ocean was decelerated modestly. Can you maybe speak to some of the differences you're seeing in consumer behavior across the two segments, if any at all?
Leah Talactac: Yeah, sure. So hi, Andrew. We've talked a lot about how we operate as one brand and we feel that really differentiates us. And so from our perspective, whether our guests travel with us on rivers or oceans or expeditions, as long as they book and travel with Viking, that remains our goal. And year over year price changes will always be dependent on what is sold. And in the last call, Linh talked a little bit about how the river curve is slightly different in shape of when the curves develop because of the seasonality of the product itself.
And so you're starting to see that in the curves that we presented today where the river curves have picked up. And at the end of the day, we price to demand. And we feel again with the $800 to $900 per day in revenue achieved across all our products, feel we are well positioned in how our curves look for the 2026 year.
Andrew Didora: Got it. Thank you. And then look, I know you get this question a lot. But as one looks out to next year, net debt is likely headed below maybe a turn of net leverage. As what metrics in your mind do you have to get to in order to consider capital returns to shareholders? And I ask just because another cruise company started to return capital with net leverage above where you are today. So just curious how we should think about that. Thank you.
Leah Talactac: Yes, sure. So we're committed to a balanced capital allocation framework. At the end of the day, we have said that we feel that the large cash reserve we have on hand at the balance sheet provides a great buffer against unpredictability. We've seen it in years past and even in this year. So it gives us that stability and flexibility to be able to be contrarian. And we believe the strategy reflects our long-term perspective and readiness to deploy capital when market conditions are favorable or take advantage of when things arise. So currently we're not contemplating a dividend or share buyback, but they are an option to return capital to shareholders in the longer term.
But given that we're just past our one-year mark, I think there are better uses of our cash in terms of generating return to investors.
Andrew Didora: Thank you.
Operator: Thank you. The next question will be from James Hardiman from Citi. James, your line is live.
James Hardiman: Hey, good morning. So wanted to actually follow-up on that last question well, I guess, two questions ago. The idea that as we think about 2026 advanced bookings per PCB that river is accelerating a little bit and ocean is decelerating a little bit. Are those trends that we should anticipate moving forward? And maybe you can speak I'm curious how capacity growth impacts pricing growth. Obviously, the Ocean segment growing at a much faster pace. Does that put downward pressure on pricing relative to what we're seeing in River? Thanks.
Tor Hagen: I wouldn't say that the growth has much to do with the pricing on the ocean segment, quite frankly. I'd probably almost flip it around a little bit. The growth that we see in our ocean business is really a clear manifestation of the outstanding product that we have on the oceans. Now, I go from time to time on board our vessels and talk to our guests, and they are very enthusiastic about what they experience. So I think we see good, very good growth opportunities on the ocean. We see it on the rivers too, but I see no signs of a slowdown in the ocean.
Maybe we could have added a little bit higher price on the ocean in the last couple of quarters, but at these rates, you know, we get a reasonably good return to shareholders as it is, and it gives us a good chance to deliver a good product and good results. Some interesting things when we look what's going on is that the people in our travel on our ocean business are to a large extent people who have been on other ocean cruise lines before.
I'll not mention names of some of them, but we have it in some of our presentation material from earlier, where they've been on ocean cruises, I call them more floating theme parks, with their children, and then they grow up, I guess that is, they get into their 50s and say, we really want to have a different experience than this stuff where we go with our kids and do all the fun stuff. We want to have a quiet serene experience. And I think they don't have much choice, and they're so enthusiastic about what we have.
So I think our ocean product has very much demand coming, and we are very fortunate to have the large order book that we have at very attractive prices for the ships. So we can talk about the fine tuning of the fares. As I said, we might have could have done a little bit better. Looking backward is always easier, but I think the ocean business is in great shape. And I say the river business is also in very good shape. We have 50% of that market, 52%, I think, latest count. So I think we're in excellent position on both of the products.
James Hardiman: Got it. That's helpful. And I wanted to ask about mix a little bit. Obviously, the 4% for 2026 is getting a lot of focus this morning. It's the same number as last time around. And so one takeaway might just be that nothing's changed, right, since May, whatever, May 11. I guess, are there any mix offsets that we should be aware of? I don't know if there's this concept of sort of like for like. Has that gotten any better and maybe that's offset? We've talked a lot in the past about sort of the premium rooms, booking first. Obviously, there's a lot of different parts of the world. So curious about how mix impacts that 2026 number.
And then maybe a way too early question for 2027, but how do we think about mix there? It looks like your Egyptian capacity is almost doubling. I think you get some real good prices for those rooms. Should we be thinking about that as tailwind to pricing in 2027? Thanks.
Tor Hagen: Of course, Egypt, when you see how quickly it sold out, and similarly India, you know, sold out very shortly after we launched it, so you could say should we have pushed prices higher on that? But they're not such big components of our business, so they won't have a big impact on the average, as you can well realise. But I think it shows the great desire, our guests, how to go to new places, and how easy it is for us to introduce new products. Know, the way we introduced the Expedition product is another example. Our guests want to have more experiences.
I was on board, as I said, at one of our two of our ships this weekend, and there are people who quoted from my commercial, as in my commercial, right over time, time being the only truly scarce resource, as heck, we don't have so much time left. We have to do something useful and nice with our time. And what other thing is there to do than travel with Viking? They knew I was, of course, so that probably buttered me up. But I this is very, very key, how we can find new experiences for them. And we have had a long debate how much of a luxury product are we.
We are about, you know, other people define luxury one way or another. I don't think our guests necessarily like to have butlers roaming around their luggage, and whether it's dirty or clean laundry, but you know, we are really a very we are an understated, elegant product, peaceful, quiet. We give a product to people who have worked hard and who now deserve to spend some time doing interesting things. So the promise is we have no children, no casinos, no nickel and diming. I think that is hit right at the heart of who the people, what people want when they travel. We shouldn't almost call it cruise because we are so different from the others.
So I think we're in a good spot.
James Hardiman: Interesting color. Thanks, Tor.
Operator: Thank you. The next question will be from Steven Grambling from Morgan Stanley. Steven, your line is live.
Steven Grambling: Hi, thanks. I think I caught that you said that you were getting good pricing on ships. I guess I was wondering if you could double click on that comment. Is that relative to peers, history or both? And what do you think is driving some of the improved capital efficiency on the order book?
Tor Hagen: If I may, I think we have taken a lot of care when we first designed both the ocean ships and the river ships. We like to get it right in the first place. And then, as you know, we don't vary things much. So we don't have new designers come in and mess things around. So our ships are virtually identical. That makes it better for the yard, so we get a better price. As such, it costs them less to repeat. Also, daresay, we have the people on our side who negotiate are quite hard nosed when it comes to dealing with the art. We don't use brokers in between, which some of the other cruise lines do.
So we are quite efficient, I would say. So the comparison is really both with our prices of the past, because of course, with inflation, we have had to pay somewhat more. But certainly compared to anybody out there now contracting ships, we get much better prices than they, because we are quite efficient and we don't waste space or things on the ships. So that is a key tenet of what we're doing.
Steven Grambling: That's helpful. And maybe changing gears as a follow-up, could you just talk about some of the puts and takes to gross margins associated with thinking about the gross pricing you have in your advanced bookings versus what we're seeing in net yields, which look like they've been a little bit better, and how to think about that maybe into next year? Thank you.
Linh Banh: Sure. Hey, Steven. This is Linh. So what we provide in our booking curves are what generally a guest would book. So cruise, land, air, etcetera. In our net yields, you know, we do include costs, onboard spend, and ancillary revenue. So that's how you go from what we have in the curves to what is eventually presented in our financial statements. There will be a difference as you know, but, you know, we've done a good job of being able to keep rates up.
Steven Grambling: Got it. Thank you.
Operator: Thank you. The next question will be from Lizzie Dove from Goldman Sachs. Lizzie, your line is live.
Lizzie Dove: Hi there. Thanks for taking the question. I just wanted to go back bigger picture to the kind of capacity growth piece. Obviously, people mentioned, you have, you know, some of the best capacity growth in the industry. I suppose looking at long term, you know, even beyond '26 and '27, what gives you confidence in kind of filling that capacity at the right price? How do you kind of balance occupancy and price, and especially with some of the growing competition that you have in River over the longer term?
Tor Hagen: You said we have growing competition. I understand somebody is going to deliver two new ships in 2027, and that's a quarter a year's delivery from our normal fleet. So I don't worry too much about that. It's nice to get some attention to the sector, but we've been at it now for soon thirty years, and we're not worrying too much about that. As you know, the rivers we have a number of fairly protective things. We own or control 110 docking stations along the river, which I think is nice to have prime docking. That's on that side.
On the oceans, I would say that given we haven't seen any indication that it's going to be difficult to fill, and at some stage we may also need some of those, some more tonnage for our product in China, which we are developing for the Chinese source market, which we are developing and it seems to be coming along quite okay. But we are, at least sitting here today, we're not the least worried filling that capacity. We're more worried about making sure we have enough capacity. That's more of an issue.
Lizzie Dove: Great. That's super clear. And then just following up on one of the earlier questions about capital returns. I think you mentioned in your answer that you would see better uses of cash. I'm curious whether any kind of M and A would be on the cards and what kind of whether it's tuck in acquisitions that you might consider. Thanks.
Leah Talactac: Yeah sure Lizzie. You know we talk about our committed order book so you could see that we have our growth engine is ocean and well our strategy is to maintain our dominance in the river. So that you know that strong cash balance gives us the opportunity to continue to contract these vessels further out with options going out to 2032 and 2033. And when we think about M and A, our ROIC is a benchmark that we want to further improve. And we're ready for an acquisition if the right opportunity presents itself. And in the past, we've talked about our guiding principles, which is that it's scalable, it's margin accretive, and it's complementary to the brand.
And India is an example of that, where it is definitely complementary to the brand. Our guests have largely sold it out and have demonstrated that when we come to market with a new product, are very willing to book in this case two years, two to three years out. So we believe that making sure that these three guiding principles are met are really what drives our decisions in terms of acquisition and further expansion. So we remain watchful.
There are plenty of opportunities and plenty of companies that come up for sale every once in a while, and we do assess them, but at the end of the day we want to make sure that these three principles are met.
Tor Hagen: I would say that everybody in management, top management of Viking, I think we all, some of us are owners too, but I think we all have the owner's mentality rather than the manager's mentality. We want to we think about what we're doing for the shareholders, not what we're doing for the management egos. If an acquisition should take place, it has to be a good deal and it has to fit for those principles. So I wouldn't have too much fear.
Linh Banh: Thank you.
Operator: Thank you. The next question will be from Alex Brignow from Rothschild and Company, Redburn. Alex, your line is live.
Alex Brignow: Thank you very much. Good morning. Just asking a question on a couple of things, guess, both related to the product and new entrants. You talked about the position you have with the shipyards. When you think about where capacity would come from if others were going to want to build longboats, river ships, is that where the restrictions lie? I guess the large, the major cruise lines would talk about their relationship with existing shipyards. Can you just talk about, obviously you've done a phenomenal job of building a very consistent product to a very, very high standard. And so it's good for us to understand what the restrictions are on other shipyards that could build river ships.
We obviously know how it works in the ocean space a little bit better. Perhaps I'll ask my second one because it's very related. You have obviously a very consistent product on both sides and you obviously understand your customer very, very well. Other cruise lines have talked about the evolving demand habits and preferences that their consumers have. You seemingly have consumers that don't change what they like. Do you sort of continually assess that and think about ways that you could at the margin evolve the product? Should that happen or is it sort of this is the way it's going to be because that's the way that we run the business? Thank you so much.
Tor Hagen: Maybe I could take the second half of the question first. There's one word I don't like, and that's evolve. I think evolution, you know, sneaky evolution is very dangerous. So we have been very, very, very tough on anything that could change the product, the way it is generally delivered and perceived. I believe a little bit in revolutions, not evolutions, But I think we've gotten the model right. We have the documents, as I said, we also have some of the design elements that are very unique. We have these asymmetric corridors where we have a patent on that and a few things like that.
And of course, we feel we are the call, first, we are the employer of choice, I feel, that you don't have any guarantee for that, but we feel we are. The way we treated our staff during COVID, I think, has paid off in a manifold sense because we treated them like part of the family, so we had that lockdown. The experience that our team has, you know, it's not so true it's easier to operate an ocean ship than a river ship. You know, a river ship, you had to be awake twenty four hours a day on the ocean, you could put it on autopilot, and it normally goes well.
So I think we have captains and engineers with huge skills, and they like to work with Viking. We probably try to cement them even more to us, but I think we have all that, the relationships along the rivers. So I think it's fine. There are yards that can build river ships, but it's not so easy. And you could say you had to be very cost conscious. So, but you know, if you give it enough years, people can get a slice of the market. But I'm not too worried about it. Famous last words.
Alex Brignow: Brilliant, thank you so much for the detail.
Operator: Thank you. And our final question today will come from Connor Cunningham from Melius Research. Connor, your line is live.
Connor Cunningham: Hi, everyone. Thank you. Nice to see the 2026 River prices move up like it did. On new markets like Egypt and India, you talked about how you have seen a lot of demand already. I'm curious if those new markets or new markets in general are dilutive to the overall pricing strategy. And maybe if you could just talk about how you go about assessing new markets in general. And then just as my second question, during the IPO process, you mentioned a lot about moving point of sale away from or the opportunity set outside of the North American market. Tor, you talked a little bit about China.
I was just hoping you could level set a little bit on that strategy and where things sit today. Thank you.
Tor Hagen: Yeah, I think when we move to new destinations, it's quite, you know, typically we then go with smaller vessels and smaller vessels do need higher prices. So we have to make sure that they don't do anything stupid. But I think what we've done, for example, in Egypt is exceptional. Nobody comes near the vessels we are building there in quality, and I think similarly will be India. So I think we have to take care of that. The market research, I joked a bit about it, I said we do a lot of market research in the morning when I shave, and maybe that's a bit we do a lot of formal market research, too.
But I have the benefit that I know I feel I know what our guests want, quite frankly, and so do my colleagues. So we can really assess it quite well. But you know, it's clear that people want to go to interesting places. I mentioned to some guests on board that next world cruise we'll go to Lagos in Nigeria, and many people said, Oh, that's so dangerous. Of course people like to go to a new place where they haven't been before, and they say, We'd like to go with Viking because we know that we are safe. That's really the theme throughout. So I think we'll find some more places like that.
But you know, map, when you look at a map in our brochure, we are pretty much everywhere, quite frankly. But we have even now the business we have in The US and the Mississippi, we had some startup issues, but I think that has also come quite right in terms of the quality of the product. And as we all know, is a huge potential market. We currently have four river ships staffed by Chinese speakers, and we are marketing, And in the same fashion as we do in North America, we market directly to the Chinese consumer.
People said you must be nuts, and I said no, we don't want to go through tour operators where other people have brand over us. So I think we're seeing it's taken a long time, but I feel we're coming through that. So there will be hopefully some real things coming out of that. So there are these obvious expansion opportunities. China is the biggest one, of course. So I don't know if that answers your question. Leah, there was one point you should have made. Do you want to make the point before the last question is being asked? Or should I shut up?
Leah Talactac: No, we just wanted to point out that, you know, we talked a little bit about it during the scripted portion of the call, but you know, we do have €2 denominated loans. They're ocean loans. They're disclosed in the financial statements. And we did experience unrealized FX losses related to them. We calculated and it translated to $0.11 adjusted EPS impact to our adjusted EPS $0.99 And what we did was we converted U.S. Dollars to Euros to create a natural hedge. So we don't expect that unrealized loss to recur throughout the rest of the year.
So we did want to point that out as the Euro starts to strengthen, you know, the fact that we did that and also we are hedged for a portion of our '25 and '26 results, we feel we are able to manage through the currency exposure.
Tor Hagen: I think that's important because our philosophy has always been to finance our vessels in dollars. But on this occasion there was some issue, and we then said we had to do it in euro. And we're probably a little bit slow in converting or in having a matching euro deposit. So that has that negative impact both on Q1 and Q2 this year. But that should not be a recurring event for those who like to look to the future. I think that's important. We don't want to take unnecessary currency risks. There are enough other risks we can exploit.
Connor Cunningham: Appreciate all the detail to tack on.
Leah Talactac: Was exactly the point. Thanks, Tor.
Tor Hagen: Okay, sorry about that. I think it's important because, you know, somebody, I think some famous investor from OMA used to call EBITDA the result before expenses. And there are something below EBITA too, which one should look at, and we do look at the bottom line.
Operator: Thank you. And I will now turn the conference back over to Tor Hagen, Viking Holdings Ltd's Chairman and CEO, for closing remarks.
Tor Hagen: Yeah, so can I thank everybody for joining in today's call? And I thank you for the support and interest in Viking Holdings Ltd. And we'll see what the future brings. Thank you very much all.
Operator: Thank you. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.