Norwegian Cruise Line sets a revenue record, but Wall Street wanted even more

By Tomi Kilgore and James Rogers

It's now a trend, as revenue from passenger tickets and onboard spending has missed expectations for three straight quarters

Norwegian Cruise Line's stock fell after revenue rose to a record but missed expectations for a third straight quarter.

Shares of Norwegian Cruise Line Holdings Ltd. dropped toward a four-month low in early trading Tuesday after the cruise operator reported third-quarter revenue that rose to a record but missed expectations for a third straight quarter.

The company also disappointed Wall Street by lowering its full-year guidance for net yield - a measure of profitability per available capacity - to between 2.3% and 2.4% from 2.5% when including the negative effect of currency moves. Excluding currency moves, the outlook was trimmed to between 2.4% and 2.5% from 2.5%.

Speaking during a conference call to discuss the results, Norwegian Chief Financial Officer Mark Kempa said that growing demand from families affected the company's yield. "As we attract more families, we are seeing more third and fourth guests in a cabin, and naturally those guests come in at a lower price point, which has a modest impact on overall pricing," he said, according to a FactSet transcript.

In the fourth quarter, Norwegian expects net yields to grow approximately 3.5% to 4%. This, Kempa said, reflects the company's deliberate decision to welcome more families while taking a slight trade off on price, which "remains healthy" at nearly 3% growth.

The company's chief executive, Harry Sommer, said that load factor, or occupancy, was 106.4%, above the company's guidance of about 105.5%, driven by stronger-than-anticipated demand from families. In particular, Norwegian is seeing more families on its Caribbean sailings, according to the CEO.

The stock (NCLH) was down 14.2% at 11:45 a.m. after opening at $20.10, its lowest level since July 1, Dow Jones Market Data show. Norwegian shares are also on pace for their biggest daily decline since April 3, when they fell 16.4%.

Revenue for the quarter to Sept. 30 grew 4.7% to $2.94 billion, but analysts were expecting more, with an average estimate compiled by FactSet of $3.02 billion. The record results were driven by strong demand, which helped fill increased capacity.

Passenger-ticket and onboard-spending revenue also missed Wall Street's high expectations, which come as the company touts strong demand and record bookings for future cruises.

Meanwhile, onboard and other revenue rose 3.1% to $888.2 million, missing expectations of $915.9 million.

"The company continues to experience healthy consumer demand across its portfolio of three brands for the balance of 2025 and into 2026, with record bookings made in the third quarter, including strong demand for its Caribbean sailings," Norwegian said in a statement. "As a result, the company remains well positioned within its optimal range for its forward 12-month booked position."

Norwegian Cruise Line echoed recent comments from Royal Caribbean Group (RCL), which saw higher-than-expected close-in demand during the third quarter, indicating that consumers waited till the last minute to make bookings.

"The demand we're seeing from close-in, up until week of sailing, even, has been unprecedented from at least recent history," Sommer said. "We're very, very pleased with the strength of the consumer and their ability to book across the entire length of the booking curve, including up to the day before cruise."

Total income for the latest quarter was up 1.6% to $428.2 million, and adjusted earnings per share, which excludes nonrecurring items, of $1.20 were above the FactSet consensus of $1.16.

Looking ahead, the company raised its 2025 guidance for adjusted EPS to about $2.10 from $2.05 and for occupancy to 103.5% from 103%.

The stock has shed 13.8% in 2025 through Monday, while shares of larger rival Royal Caribbean Group (RCL) have rallied 20.4% and the S&P 500 index SPX has advanced 16.5%.

-Tomi Kilgore -James Rogers

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11-04-25 1207ET