Viking Holdings Ltd 2026 Q2 Earnings Call

Good morning, everyone, and welcome to Viking's second quarter 2026 earnings conference call. I am joined by Leah Talactac, President and Chief Executive Officer, and Linh Banh, Chief Financial Officer. Also available during the Q&A session is Tor Hagen, Executive Chairman. Before we get started, please note our cautionary statement regarding forward-looking information. During the call, management may discuss information that is forward-looking and involves known and unknown risks, uncertainties, and other factors which may cause the actual results to be different than those expressed or implied. Please evaluate the forward-looking information in the context of these factors, which are detailed in today's press release, as well as in our filings with the SEC. The forward-looking statements are as of today, and we assume no obligation to update or supplement these statements.

We may also refer to certain non-IFRS financial metrics, which are reconciled and described in our press release posted on our investor relations website at investor.viking.com. Leah and Linh will provide a strategic overview of the company, a recap of our second quarter results, and an update of the current booking environment. We will then open the call for your questions. To supplement today's call, we have prepared an earnings presentation that is available on our investor relations website. With that, I am pleased to turn the call over to Leah.

Thank you, Carola. Good morning, everyone, and thank you for joining us. We are very pleased to have delivered another quarter of strong year-over-year performance. As we reported this morning, during the second quarter, revenue increased 16.5%, driving an 18.2% growth in adjusted EBITDA. These results reflect the continued strong demand for our destination-focused travel experiences and the great execution of our teams across the organization. On slide 3, you can see that demand for Viking is strong. From an advanced booking perspective, our 2026 season is effectively sold out with 96% of the capacity for our core products already booked. Looking further ahead, our focus is on continuing to build our book position for 2027. As of August 9, 53% of the capacity for our core products for 2027 was booked, and this includes a 15% year-over-year increase in capacity.

Overall, we are very encouraged by the early booking trends for 2027. As you can tell from these trends, the visibility provided by our advanced bookings gives us confidence in the demand for our product, allows us to manage pricing dynamically, and supports our thoughtful approach to capacity growth. As you can see on slide 4, since our last earnings call, we have continued to expand our fleet, adding four new river vessels and one ocean ship, consistent with our long-term growth strategy. During 2026, we expect to take delivery of 12 ships in total, 10 for river and two for ocean. As we grow the Viking fleet, we remain committed to the characteristics that make our ships unique and support the distinctive earnings profile of our business.

First, we operate one of the youngest fleets in the industry, which contributes to lower maintenance costs, greater operational reliability, and long earnings power. Second, our ships have been thoughtfully designed to maximize operational efficiency while providing the consistent and great experience that our guests expect. Third, within each of our product categories, our ships are designed to be almost identical and indistinguishable to our guests. Guests choose Viking because of the destinations and itineraries we offer, not because of a particular ship. As a result, when ships are deployed on similar itineraries, they are generally able to achieve comparable yields regardless of when they entered service. We believe this is a significant competitive advantage and an important driver of the long-term returns generated by our fleet. Moreover, our almost identical ships also create significant operational advantages.

Because our ships are built to common specifications, we benefit from efficiencies across sales and marketing, operations, deployment, purchasing, and shipbuilding. This approach simplifies everything from crew training and maintenance to inventory management and fleet deployment. Taken together, we believe that these advantages reinforce the strength of our business model and the distinctive earnings power of the Viking fleet. While a thoughtful fleet expansion remains the engine of our growth, we are also focused on further enhancing the experiences we offer our guests. Moving to slide 5, you can see that we continue to increase our offering of land extensions and optional shore excursions, providing guests with more opportunities to explore the destinations they visit before, during, and after their voyage. One example is our new St. Moritz, Lombardy, and Alpine train extension, which takes guests through the Swiss Alps aboard the Bernina Express.

This four-night, fully guided trip can be added before or after the cruise. We have also expanded our shore excursion portfolio with experiences such as a Zeppelin flight over Cologne, which offers breathtaking aerial views of the city's most iconic landmarks. Additions such as these reinforce our commitment to providing meaningful and memorable ways for our guests to explore the world. We believe that they are an important differentiator for Viking. As our fleet continues to grow, so does the range of experiences available to our guests. Before turning the call over to Linh to discuss our financials, I would like to address the low water levels currently affecting some rivers in Europe. As we have discussed in the past, river cruising is inherently dependent on natural conditions, and no two seasons are alike.

This year, portions of several European rivers, particularly the Danube and the Rhine, have experienced historically low water levels, creating operational challenges across the industry. Generally, Viking's purpose-built river fleet, deployment flexibility, and well-established ship swap capabilities are significant competitive advantages that enable us to minimize disruptions as much as possible. That said, the historically low water levels this year, combined with conditions that have deteriorated week by week, have impacted guests on some of our itineraries this season. Delivering a great guest experience is one of our highest priorities, and our teams are working tirelessly to ensure that any necessary adjustments are handled as smoothly as possible. With our guests at the center of every decision we make, we are also enhancing our communication protocols to ensure they understand what to expect on disrupted itineraries. We are doing this through more proactive outreach and more frequent operational updates.

We are also issuing future cruise vouchers to certain affected guests. While we believe this is the right approach from both a guest satisfaction and loyalty perspective, these vouchers will have a financial impact extending beyond 2026 and into 2027 and 2028 as they are redeemed. We believe this investment reinforces the trust that our guests place in Viking and supports the long-term loyalty that has been fundamental to Viking's success. Our focus remains on taking care of our guests, operating our European river fleet through these challenges, and continuing to deliver the exceptional experiences for which Viking is known. With that, I'll turn it over to Linh to discuss our financials.

Thank you, Leah, 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 16.5% year-over-year to $2.2 billion. The year-over-year increase was mainly driven by increased capacity and higher revenue per PCD. During the second quarter of 2026, capacity PCDs increased 10.9% compared to the same period in 2025. This year-over-year growth was mainly driven by the expansion of our fleet, which included the addition of seven river vessels and two ocean ships. The growth also reflects additional capacity of the Viking Eden, an ocean ship dedicated to our guests from Asia. It is now sailing in Europe, and we are pleased to be expanding our European itinerary offerings to this important and growing customer base.

Adjusted gross margin increased 16.3% year-over-year to $1.4 billion, resulting in a Net Yield of $645, 6.2% higher than the second quarter of 2025. Vessel expenses, excluding fuel, per capacity PCD, increased 2.7% this quarter compared to the same period last year. Regarding SG&A, expenses were slightly lower as a percentage of adjusted gross margin when compared to the same time last year. As we have mentioned in the past, our priority is 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 $748 million, 18.2% higher than the same period last year. This significant year-over-year increase was mainly driven by higher capacity and higher Net Yields in both the ocean and river segments.

As we have shared before, capacity growth coupled with Net Yield growth translates into strong EBITDA improvement and margin expansion. Net income was $588 million, an improvement of $148 million when compared to the same period in 2025. Adjusted net income attributable to Viking Holdings Ltd was $587 million, 33.8% higher than the same period in 2025. Adjusted EPS was $1.31 for the second quarter, 33% higher than the same period in 2025. Before moving to our reportable segments, which are on slide 8, I would like to highlight that for the first half of the year, our consolidated adjusted gross margin increased 16.5% year-over-year to over $2.1 billion, and our adjusted EBITDA was $853 million, 20.9% higher than in the same period last year.

It is important to note that the prolonged low water conditions we are experiencing across some of our European rivers are not yet reflected in our financial results. As conditions evolve, we will see some impact in the periods ahead, although it is too early to determine the extent. I will briefly discuss our two reportable segments, River and Ocean. Unless noted, I will be referring to the year-to-date metrics for six months ended June 30, 2026. For the River segment, capacity PCDs increased 3.2% year-over-year, and occupancy for the period was 94.8%. Adjusted gross margin grew 11.3% year-over-year, and Net Yield was $660, up 8.8% year-over-year, driven by strong demand across all regions and favorable itinerary mix. For Ocean, capacity PCDs increased 11.4% year-over-year, mainly due to the addition of the Viking Vesta in July of 2025. Occupancy for the period was 95.4%.