Viking Holdings Aktie

Good morning. My name is Matthew, and I'll be your conference operator today. At this time, I'd like to welcome everyone to Viking's Second Quarter 2026 Earnings Conference Call. As a reminder, this call is being recorded. [Operator Instructions] Thank you.

I would now like to turn the program to your host for today's conference, Vice President of Investor Relations, Carola Mengolini.

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 Torstein 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 ir.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'm 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 and since our last earnings call, we have continued to expand our fleet, adding 4 new river vessels and 1 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 2 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 constant and great experience that our guests expect; and 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.

Now 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. And 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.

Now 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 Ryan, 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 7 River vessels and 2 ocean ships. Their growth also reflects additional capacity of the Viking Eaton and Ocean ship dedicated to our guests from Asia. It is now selling 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 Limited 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.

Now I will briefly discuss our two reportable segments, River and Ocean. Unless noted, I will be referring to the year-to-date metrics or 6 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 Investa in July of 2025. Occupancy for the period was 95.4%. Adjusted gross margin increased 20.3% year-over-year to $1.1 billion, while net yield increased 7.7% to $593. Similar to River, the year-over-year increase was driven by strong demand and favorable itinerary mix.

Now moving to the balance sheet. On Slide 9, you can see that as of June 30, 2026, we had total cash and cash equivalents of $4 billion, and we also have an undrawn revolver facility of $1 billion. Our net debt was $2.4 billion and our net leverage was 1.2x. As of June 30, 2026, deferred revenue was $5 billion. Also on Slide 9, we show our bond maturity outlook. As you can see, maturities are in 2028 and beyond.

With this, I'd like to confirm our debt amortization for 2026 and 2027. As of June 30, 2026, the scheduled principal payments for the remainder of 2026 were $117 million and $234 million for the full year 2027. From a committed capital expenditure perspective and for the full year 2026, the total committed ship CapEx is about $1.9 billion or $650 million net of financing. And for the full year 2027, the total expected committed ship CapEx is about $1.0 billion or $260 million net of financing.

We will now dive into the booking curves, which are all as of August 9, 2026. On Slide 11, we show our consolidated metrics for our core products. As you can see, we are in very good shape for both the 2026 and the 2027 seasons. The 2026 season already has 96% of the capacity PCDs booked. Advanced bookings equal $6.4 billion, which is 13% higher than the 2025 season at the same point in time, while capacity is increasing by 7%. And for 2027, we are already 53% booked with capacity increasing by 15% year-over-year. We have $4.7 billion of advanced bookings which are 21% higher than the 2026 season at the same point of time in 2025.

I will now talk about the advanced bookings curves for the segments. On the next slide, you will see our curves for ocean cruises. This is Slide 12. I will start with the yellow line, which shows the bookings for 2026. Overall, we have sold 96% of our capacity PCDs for the year and have $2.9 billion of advanced bookings, which is 17% higher than last year at this point in time. Capacity is increasing by 9%. Our rates have remained strong as we finished selling the year.

If you look at the gray line, you will see the booking trend for the 2027 season, which is in very good shape, too. As of August 9, we had sold about 62% of the 2027 capacity for Ocean, which is quite notable since the capacity is increasing by 18% year-over-year. Advanced bookings are 29% higher than last year, with rates equal to $877 compared to $781 for the 2026 season at the same point in time.

Now we move to Slide 13, you will see the curves for the River segment. I will start with advanced bookings for 2026, which is the yellow line. As you can see, we are having a very good year with 96% of the 2026 capacity already sold. We have over $3 billion in advanced bookings which is 11% higher than last year at this point in time. Similarly to Ocean, we have continued to book our remaining inventory at very attractive rates. Capacity for the River segment is growing approximately 6% during 2026.

Now looking at the gray line, these are the advanced bookings for the 2027 season. As you can see, we have sold about $1.8 billion in advanced bookings, which is 11% higher than the 2026 season at the same point in time. Our operating capacity for River is up 13% year-over-year, and we are already 42% booked. These are good trends for 2027 with relatively high rates equal to $1,029 compared to $942 in 2026. Keep in mind that the river operation is seasonal as our core European product starts in March. Given this, the booking curve builds through the year.

So recapping. Demand for our product is strong and we are very pleased with how the booking curves are developing. Now Leah will add some color to our order book and capacity.

Thank you, Linh. As we reported this morning and since our last earnings call, we took delivery of four river vessels and one ocean ship and exercised our options for two additional ocean ships scheduled for delivery in 2032. We are very pleased with our performance year-to-date and our ongoing fleet expansion underscores confidence in the business, the resilience of demand and the long-term growth opportunity before us. We look forward to updating you on our progress in the quarters to come.

With that, operator, we are ready to open the line for questions.

[Operator Instructions] Your first question is coming from Steven Wieczynski from Stifel.

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Your next question is coming from Xian Siew from BNP Paribas.

Maybe on the low water levels, are you seeing kind of any near-term indicators that suggest consumers might be kind of avoiding river cruising at all? Just given the low water levels? Are you seeing any near-term impact on demand? And then maybe longer term, how do you think about how low water levels might impact guest experience and brand loyalty? I know in the past instances -- I think it was in 2022, low water levels in the Rhine, guest ratings were similar for change with ship swaps and to those without, and maybe it's a little bit more difficult this year, but anything you could kind of share in terms of brand loyalty over time and guest satisfaction?

So for nearly 30 years, Viking has successfully operated on Europe's Rivers through a wide range of water conditions. So river levels, they naturally fluctuate from year to year. Some seasons, we experienced high water. Other seasons, we experienced low water. So that's really the reason why our River fleet was designed with these realities in mind. And we have, over the course of 30 years have really worked on our operational expertise that allows us to minimize disruptions through proven solutions, including ship swaps when necessary, so that our guests continue to enjoy the itineraries that we offer.

This year was exceptionally low water. We understand that it was not ideal conditions. But nevertheless, we continue to operate without any cancellations. I think our booking curves for the River segment speak for themselves. You have not seen any particular impact in terms of booking cadence, but I'll let Linh expand on that.

Thanks, Leah. I mean, I think I completely agree with what Leah said. If you look at our 27 curves as of August 9, we are already over 40% booked for Rivers, and that is a great position to be in. So based on that, we don't believe low water is impacting our bookings, and we're pleased with how the curve is tracking.

Maybe I could add a point. It's Tor here, I'm in Europe. I mean, also as a matter of fact, and my daughter, Karina, was on board of Vitera here in Oslo and guests there, I mean, 100 guests there have been on river cruises -- on the combined river cruise down the Rhine and then on to the And of course, we all are a little bit concerned of how I guess, reactions. As you know, we try to go a bit of a board to treat, I guess, well. She said that the people she has spoke to said that they were very pleased with the way Viking handled the whole situation. And worse, we have the benefits that we can do the ship swaps and all that. So of course, it's not ideal, but I think we've been able to hand it very well. We were a little bit slow initially, but I think we have handled it very well.

Your next question is coming from Matthew Boss from JPMorgan.

Congrats on another nice quarter. So Leah, with your 27 advanced bookings for PCD, up 10%, more or less unchanged relative to a quarter ago. Can you touch on recent pricing trends across River relative to cruises? Or just any constraints to delivering at least the mid-single-digit historical yields in 2027 despite the impact that you cited from vouchers? And Linh, on expenses, any transitory impact to expect in costs, excluding fuel for this year? Or just any constraints to your ability to manage costs below yields for this year and next year as we think about the impact from the water levels?

Matt, so I think our booking curves show that our rates are actually pretty good. And also the pacing is also good with 40% of the River capacity and more than 60% of Ocean capacity for 2027 already being booked as of this point in time. We don't see an impact on demand and in what the bookings that are coming in based on recent events, we've seen our guests kind of proved to be resilient and are continuing to book 2027 in future seasons.

Linh, do you want to add additional color?

Sure. Thanks, Leah. So for 2027, as Leah noted, our net yields are quite nice, about 10% higher compared to the same point in time prior season. And so I think this goes to the same -- our curve reflects some favorable product mix. And so we see that 10%. I think our goal remains mid-single-digit yield growth for 2027.

As it relates to expenses, as you know, we don't guide. But the first half has shown where expenses have been. Cadence of expenses may differ from one period to the next. It's not always like-for-like. So we wouldn't say we should extrapolate, but our goal is always obviously to be prudent and diligent with cost management. We noted earlier that there may be some impact from low water. We will possibly see that in the third quarter and then also from the voucher issuances. So as vouchers are issued and utilized for future periods, those future periods will reflect the voucher value.

Your next question is coming from Robin Farley from UBS.

Great. If you could help us quantify a little bit the vouchers issued. It's interesting that you're saying you've done that even though you haven't had any cancellations. Just thinking about assuming if all those vouchers were to be used in '27 kind of what the total impact would be. I would assume it's relatively small across the base of your fleet. But if you could help us quantify the value that you've issued.

And then also on that 10% increase in '27 booked revenue per day. You mentioned there's favorable product mix in there. Is it fair to assume there's also some benefit that's gross revenue number that airfares are may be higher in '27 versus '26? And any color you could give us on how the cruise ticket price itself is trending if you didn't have that higher airfare in there, just even in whatever way you can help us quantify that?

Robin, this is Leah. So yes, we did proactively issue future cruise vouchers, as Tor mentioned earlier during the call. We want to be -- we want to make sure that the guests feel that we understand that the -- nobody wants disrupted cruise. We understand that this was not what they had hoped for when they first initially booked. And so really that future cruise voucher generates the goodwill and in the hopes that they will return for future seasons, so that they can experience the experience that Viking is known for.

Based on conditions, they continue to evolve week to week. So at this stage, our focus is on the direct impact to our third quarter. So as of mid-August, more than 50% of the River capacity cruise days reflected with about 10% to 12% ultimately canceling. So we have proactively started to issue vouchers for these guests to acknowledge that we understand what's going on. We understand that this is not what they had purchased. And hopefully, to Linh's point, these vouchers would encourage them to really come back to Viking and experience the what we are known for, the experiences that we're known for. And with that, I'll turn it over to Linh for you had some cost questions about airfare.

Thanks, Leah. So as it relates to 2027 and net yields, our curves show advanced bookings per PCD, which is revenue that we generate from our guests that have booked thus far. So it is favorable product mix. We price to demand is the reality, keeping in mind that we want to ensure that our pricing is -- we have good pricing for our guests to ensure that they come back.

What we would point to is net yields, if you want to look at airfare. So net yields will reflect costs and as many of us know, airfare is something that most companies are seeing pressure with. That being said, our goal remains mid-single-digit yield growth year-over-year. That remains the same for '26 and the same for 2027.

Your question from Trey Bowers from Wells Fargo.

Just want to confirm when we look at the booking curves. Is there any impact of that from the issued vouchers? Or is that a totally clean number? And then I guess as well, kind of unrelated. The sales and marketing spend was really solid this quarter. It was down year-over-year. If you guys could just talk about any efficiencies you're seeing in kind of your marketing spend and where you see that heading over time?

Sure. So the second quarter results do not include any impact for the low water. The low water really started in mid-July. The future cruise voucher is a credit that can be applied toward new future bookings, and they're used towards the cruise fare. So they're effectively providing a discount on the price of the future crews. These can be applied for cruises later in '26 and into 27 and '28 in future years.

Your next question is coming from James Hardiman from Citi.

I wanted to circle back to sort of the discussion about mix and ultimately, how that seems to benefit your advanced bookings per PCB number. We spent a lot of time on the last call sort of talking about that outsized 11% number and how it wasn't likely to stay where it is. Maybe speak to sort of how much of that mix being sort of released, so to speak, is responsible for going from the 11% to 10%. And how much as we think about what's left to be booked should impact that number or how much that 10% is likely to stay closer to where it is. And maybe as part of that, we did see River in particular, decelerate a couple of points versus the last advanced booking per PCB number, I think it went from about 12% to closer to 9%, whereas Ocean was pretty consistent. What's the narrative there? Is that really just about mix? Or did River in fact, sort of slow more so than Ocean. Just help us understand those pieces.

Sure. So we did speak about this in the last quarter call, which is that we do have a product mix benefit here for the year-to-date curves for 2027. So as we sell more, for example, Egypt, Vietnam, that does heavily weight the price so that year-over-year, it looks much stronger. I think as we continue to sell our bread and butter, which is Europe as most of you are aware, the average price will start to come to more a reasonable or natural number, and our goal remains mid-single-digit yields for both rivers and oceans.

As it relates to oceans, the price year-over-year for 2027 did stay around that 12% range. And while there may be upside, I think we need to let the booking season develop before we extrapolate trends as we noted, mid-single-digit is our goal for net yields, which includes costs such as transportation and air. And we still do have a good chunk of inventory left to sell. And so overall, I mean the current strength is driven by higher pricing and itinerary mix, but our goal remains mid-single-digit yield growth.

Your next question is coming from Lizzie Dove from Goldman Sachs.

You talked a bit more about the offering of more land extensions, our extensions and things like that. Could you maybe share how you're thinking about that longer term? And whether from an acquisition perspective, that's something that might kind of fit into the overall portfolio? And especially within the context of I think you still got about $4 billion of cash, how do you think about the relative priorities of capital returns or just -- yes, capital allocation over time?

Lizzie, so yes, so -- we have been quite clear from the start that our focus is really about the destination and the experiences. So our teams have -- with that top of mind, when we think about our future itinerary planning as well as what offerings we have available for either optional shore excursions or pre and post excursions when they are in our app. Having said that, I think this one, I'll invite Tor into the call because he actually was quite keen on the Zeppelin that we announced. I think he went on it a couple of times. So Tor, do you kind of want to just give a little bit of color on that and also on how we see extensions and other experiences kind of enhancing our core products.

Your next question is coming from Conor Cunningham from Melius Research.

I didn't know if Tor wanted to on there or not.

Yes. Tor, I think you might be on mute. Do you want to respond on the experiences. Anyway, so -- unmute. Well, Conor, hang on with -- let me just finish the second portion. So on the capital allocation question, so we do have a healthy cash balance of $4 billion. Our priority, as you can see from our order book, is really to reinvest the cash in the business to generate strong returns. This we do have the framework in which we look at all acquisitions. So first, it has to be scalable. So it has to be able to move -- when we think about acquisitions, it's like you have to compare it to our organic growth. So it has to be able to generate the same, if not more, returns than our ships. So it has to be scalable, it has to be margin accretive and then, of course, complementary to the brand and fits within the brand ethos.

So sorry to interrupt but go ahead in with your question.

Okay. Sorry. So maybe just a point of clarification and then piggyback and just on the excursion stuff. But can you -- so occupancy in the second quarter for River decelerated year-over-year, and you're saying there was no impact. So if you could just talk about that. I think it may just be in the context of the supply growth. So that's one maybe easy one. And then just on the excursion and shore product, can you just talk about what's actually resonating and where attach rates are today and where you see the opportunity for attach rates 5 years from now or so something like that.

Your next question is coming from David Katz from Jefferies.

Sorry, I need to answer the question. Thank you. Apologies for that. For the second quarter of 2026, as we can see from the numbers, we performed quite well in the second quarter for River occupancy. Occupancy was slightly lower than Q2 2025. There was some impact as it related to our Egypt crudes, but that itinerary sells very well for us, well priced and has done quite well and is doing quite well.

As it relates to excursions, we've mentioned this in the past, I think it was slightly a little lower than 40% of our guests up to take a pre or post land extension. And obviously, that helps from a margin perspective. But in addition to that, what we found is our guests take a pre or post or optional shore excursions with us, they tend to rate their experience better. And so from that perspective, that's really what we want. We want our guests to have a great time. And by adding additional different experiences that our guests can opt to purchase what we've seen as quality scores for those guests are actually higher. Apologies for some of this disconnect. But please go ahead with your question.

No, we're going to -- Leah, we're going to take the cadence back right now, okay? I appreciate you taking my question. What I wanted to ask is, within some perspective on the portion of bookings that are repeat customers. And the reason I asked the question is the degree to which these customers have been on multiple Viking cruises in the past and are having a challenged experience at this time. And it may be quite a bit easier to take given that they've been a repeat customer. So any qualitative sense around what the current book is of repeat customers that have been with you multiple times before would be helpful.

Sure. So as of last year, so as of 2025 -- I'm going off memory now, also Linh, correct me if I'm wrong, but I believe 52% of the guests who traveled with us in the 2025 season were repeat guests. So that's a number that we publish every year. And that number is quite important to us as well as new to brand, of course. As you grow the fleet, a healthy mix of making sure that you're addressing your addressable market as well as making sure that your guests repeat like that mix is important to continue to grow the capacity.

So when we think about our product offerings, what would allow guests to repeat. So it's new itinerary. So it's itinerary mixes, new destinations, such as India. Egypt has proven very well for us in terms of repeat brand. And then also these excursions, some of our guests have already been on the itineraries and they already have the included excursions. And so when we have optional excursions that they can augment in their cruise, then that gives them something new to experience even though the itinerary is the same. And I think a combination of that, when we think about the 520 unique destinations to go to, when we think about the 21 major rivers were in 7 continents. We're in all oceans, that really that portfolio breadth really allows guests to go with us wherever they want to go in the world to travel with Viking wherever in the world they want to travel to. And that's also where we keep our focus on when we think about operationally, what other areas would it be difficult for an individual traveler to go to that our guests 55 with lots of time, they have -- they have the time, they have the opportunity and they have the means to travel. Where else can we reduce the travel friction so that they can essentially travel the world in comfort. So that's what we think about when we think about our destinations and our expanded product offerings.

Your next question is coming from Andrew Didora from Bank of America.

Maybe just going back to the European Rivers, again, a question for Linh. As when you look back historically at times like this, maybe 2022 or before that, what kind of impact did you see in future bookings? Just trying to frame your commentary about. We will be seeing an impact in '27 and '28. Just trying to get a sense of what that's looked like historically? And then is the impact that you -- I think that you said that 50% of cruises are impacted. Is that a 3Q cruises? And just curious on how that compared to other times of low water levels. Is this the worst that you've seen? Just trying to put it all into perspective.

Sure. Andrew, so as of mid-August, more than 50% of our River capacity PCDs during the third quarter. So July -- this really started in July and then into mid-August. So more than 50% of that has been impacted. And so for those impacted cruises, we have -- Leah mentioned, we want our guests to we understand where our guests are coming from. We understand that this is not the experience that they initially purchased. And so there were some disruptions to their cruise experience, so we are giving vouchers. And that voucher will impact the next booking that they choose to book. So whatever is available or open for sale, which is later in '26 and really mainly '27, '28. What we would say is this low water that's occurring right now is probably historically, I would say, compared to other seasons, this is probably more low water than what we've seen in the past. And so we want to be proactive. We want to ensure our guests feel good, and we want to at least try to deliver the best experience we can with these conditions. And so there will be some impact to the third quarter of 2026 and some impact into future years.

That being said, as you can see from our curves, pricing to date has been quite healthy. And with this in mind, we still will try to achieve our goal of mid-single-digit yield growth.

Your next question is coming from Richard Clarke from Bernstein.

I guess just quickly on the booking curve. Obviously, you cut at the ninth of August. Would you expect that to look meaningfully different if you cut it today or yesterday? And as you're sort of planning going forward, are you happy to treat 2026 as a one-off year? Or are you going to sort of operationally change anything ship capacity ship in the in destinations going to more land-based excursions possible to mitigate if these conditions do repeat more often?

So I'll address the operational and I think, as I mentioned, river levels naturally fluctuate from year to year. So some seasons, there are high water, some seasons, there are low water. And for the 30 years that we've operated in this rivers, we know this. And so our fleet is specifically designed to navigate through these seasonal variations of water flow. That's where having nearly identical ships actually makes for a better experience in times of whether it's high or low water because the ships are able to meet in the middle and then the guests can then ship swap on a normal variation in terms of water levels.

Now this year has been particularly low. We've also seen this, I believe, in 2018 and 2022. We also did not cancel cruises during those times. This is just a part of operating in the rivers. We know that this happens. This is a reality of operating in the rivers. So -- because of that, our team has been really -- they have it down to a science of having a combination of operational flexibility, contingency planning and itinerary adjustments to minimize disruption for our guests.

And maybe if I can add, I'm finely back online. Of course, we have seen this before. And I think as long as we inform our guess what they can expect then I think that solves most of the problem. And of course, we are in a unique position, as Leah said, by having our identical chips so that we can hopefully get away with only one ship swap. So I think we're in a very, very unique position. I see no reason whatsoever for lowering ambitions in terms of what volume on the river should be. As a matter of fact, one is a little contrarian, maybe such a situation as now can create some opportunity to do things that otherwise would have been difficult because of was we are in a very strong financial position. So we might be able to be contrarians too. But that may be wishful thinking.

Your next question is coming from Stephen Grambling from Morgan Stanley.

Maybe two follow-ups. The first one is quick, which is just -- so that comment on the cancellations in 3Q, I think you said 10% to 12% cancellations. Was that on just the 50% impacted or of the total River? And then second on another follow-up on excursions and extensions. Just -- any sense for how the economics and operations of these extensions work as we try to think about incremental margins? And then just strategically, as we think about the opportunity to expand further that you mentioned, how do you balance that with staying true to the all-inclusive and no upsell associated with the brand?

Thanks for the question. So the clarifying point, the cancellation of 10% to 12% is on the affected 50% of River capacity PCDs. And when we think about the all-inclusive nature of our products, it's still all inclusive. It's -- it is the guests discretion whether or not they want to augment their cruises, but if they don't want to open their wallet again when they come on board and they don't have to. So that -- we believe that, that still is a balance between the all-inclusive nature which it is with all of the amenities that we have and all of the included beer/wine included excursions, but it was also a balance of making sure that guests are able to experience what they want to experience beyond what is included. And as Linh mentioned, when we do have these additional things that guests can choose from, it does increase the quality scores. So we also see that the guests also want to have a choice. And then I'll turn it over to Linh on your question about extensions.

Sure. So I mean I think as mentioned earlier, plus or minus 40% of our guests do you opt to purchase our pre or post extension and a good amount of our guests do add an optional shore excursion. So that's already reflected in our net yields that you see today. I think over time, it will contribute, and we will continue to provide different options for our guests. But as you mentioned, we are all-inclusive. So this is up to the guests, whether or not they would like to opt in for more. We're constantly looking at whether it's our deployment or itineraries and what it provides versus what we can also add incrementally. So overall, at the end of the day, what we want is our guests to have a great experience with Viking.

Your next question is coming from Meredith Jensen from HSBC.

I was hoping you might speak a little bit more about the other portion of revenues, which is obviously also performing very well. But maybe if you could just sort of unpack some of the drivers there. And including how the U.S. product, Mississippi and Ohio River are performing as well given everything going on in the world. It would be great to hear about that as well.

Meredith, I hope you're well. So in our other segment is a mix of a few things. As you noted, it is the Mississippi. It is our expedition product, and it is our China outbound efforts. So taking our Chinese-speaking guests to Europe. And so in the second quarter, we did bring on the Eden. And the Eden will start operating for our Chinese guests. And over the summer, we did take that ship to Europe. And so we are quite excited about that opportunity. So the growth that you see really is reflective of that. We have currently today four long ships operating in Europe for our Chinese-speaking guests and now the Eden for our ocean going itineraries. I

don't know, Tor, if you would like to add anything on that effort.

Sure. I've been spending a fair amount of time on our China outbound business, which, of course, we operate very differently from anybody else. We have the benefit that we can start with our Chinese -- our river ships in Europe, where we have a Chinese staff and the same mobile as we did when we started American rivers, they then come and feel at home on the Chinese speaking and Chinese food ships in Europe. Ratings are very, very high. It has turned out, we took the Viking Eden and now deploy that in Europe, too. So we fly the Chinese across there and then now see Europe. I think it's -- the reactions have been very positive. And I think that could be this ought to be a real opportunity for us in the medium term, I would say.

Your next question is coming from Alex Brignall from Rothschild & Company.

Maybe I'll try my luck into a follow on to the previous question and then one original one. So -- on China, also there was an opportunity for sort of domestic China business. Could you talk about any progress you've made on that, the opportunity? And then in terms of cruising domestic as to how the India itineraries have started, obviously, not for -- no domestic business, but how the demand for those is going and how the booking cabs -- looking for those?

And then just in terms of Q3, it's obviously very hard to model, but it feels like we can do a job on occupancy because we just take the 10% to 12% of the 50% of the proportion, which is River. But could you just help us to understand what happens with actual costs? Obviously, you've built an incredibly resilient business for ship swaps. But are there other costs that we should think about within just Q3 specifically outside of just the lower amount of people that would be on board if there's been a composition?

Could I take the China follow-up first?

Sure.

Again, we did operate in China for Chinese were in Chinese water for Chinese. But unfortunately is that the people who operate there locally, not much in name, but it's a fiercely price competitive market. And they, to a large extent, have been selling the American style product to Chinese customers through wholesalers -- for the wholesalers or the price setters and the cruise lines really have to take whatever is left over. Our strategy has been very different and following what we did in the U.S. But what we do in China, it may not be new to. We market directly to the Chinese consumer. And that means that we own them, and we set the price and we're not subject to any of the tenants that tour operators implement.

It means it takes us a bit longer time to get there. But if we get -- I'd say if -- when we get there, then I think it will be a much more profitable business than competing and local waters with the big U.S. guys or for that matter, Chinese guys. So we'll be the European cruise line for Chinese tourists, I think that could be very, very interesting.

All right. And the other questions were India. So how is India itinerary tracking. So -- we announced India for the first time in 2025 to start sailing in 2027. So we are pleased to report that for the 2027 and 2028 seasons, the India itinerary is completely sold out, so they're full.

Yes. No, this sounds like summer to trying to get into the river cruise business. How quick they sold out their stuff. So...

It's per for the course for us for not for a press release on it.

Okay, sorry.

And then 2029, well, we haven't received any figures on that. 2029 is also selling quite well. And as far as the expenses for low water, the situation is ongoing. So we are -- it started in mid-July, it's now mid-August. So I am happy to say and to verified it that it is raining in Europe, -- so we are optimistic that people turn the corner. But having said that, it is a bit premature to provide any figures. So we will see some incremental expenses from transportation, impacting adjusted gross margin. And then some operational expenses impacting vessel expenses, but we'll have an update for that in Q3.

I'll now turn the conference back over to Leah Talactac, Viking's President and CEO, for closing remarks.

Maybe, Leah, I could make a couple of comments before you close the books, because...

Sure.

If you look in that presentation, we see -- or your presentation, rather, we see the phenomenal order book we have on Slide 14, I think it is. And I think it's -- when we talk about water levels and all that, it's sometimes counterintuitive to talk about the value of having such an order book. But I'm so sure that this order book will be very good for us. And as long as we make sure we spend enough for marketing, treat our guests well, and we have very good contract prices with the arts, so I think this will be one of the main assets of working, if I may say so.

Yes. Thank you, Tor -- that sums up our position. And again, these are historically low water levels, but this is something that we are experts at dealing with, it's something that we deal with from time to time, whether it's low or high water. And fortunately, our operations team is quite excellent at handling it.

Having said that, thank you, everyone, for joining us today. We apologize for the various hiccups we've had throughout this call. We appreciate you bearing with us. And thank you, and we will speak to you next quarter. Thanks, and have a great day.

Thank you.

Good morning. My name is Paul, and I will be your conference operator today. At this time, I would like to welcome everyone to Viking's First Quarter 2026 Earnings Conference Call. As a reminder, this call is being recorded. [Operator Instructions]

I would now like to turn the program to your host for today's conference, Vice President of Investor Relations, Carola Mengolini.

Good morning, everyone, and welcome to Viking's First Quarter 2026 Earnings Conference Call. I am joined by Tor Hagen, Executive Chairman; Leah Talactac, President and Chief Executive Officer; and Linh Banh, Chief Financial Officer.

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 ir.viking.com.

Tor, Leah and Linh will provide a strategic overview of the company, a recap of our first 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 Tor.

Thank you, Carola, and good morning, everyone. Today, I'm pleased to share an important leadership update with you. I will start by saying that it has been 2 years since Viking became a public company and almost 30 since we began operations. Whether it was perfecting ship designs or pushing through difficult moments, the Viking executive team always brought determination, drive and discipline to every challenge. Their leadership, institutional knowledge and day-to-day execution have been critical to our performance and our success.

As you can tell, I'm very proud of what we have accomplished together. After thoughtful consideration, I will be stepping into the role of Executive Chairman; and Leah Talactac, our current President and CFO, will assume the role of CEO.

You all know Leah. Her appointment as CEO is a natural next step. Leah has worked for the company for almost 20 years and has been instrumental to Viking's growth and success. The Board and I have full confidence in her ability to lead Viking with the same continuity, discipline and vision on which the company was founded. Leah brings deep experience, a strong understanding of our culture and steady leadership that Viking needs as we enter our next phase of growth. I'm also pleased to share that Linh Banh will serve as Chief Financial Officer. Linh is a trusted leader within Viking, and her financial stewardship will ensure a smooth transition. As Executive Chairman, I will focus on our long-term vision by supporting Leah in her new role. I will continue to serve as Chairman of the Board.

I believe that this planned leadership transition shows the strength and depth of our executive team. It also reflects the succession planning that we've built over the years. It is designed to ensure continuity and stability for our guests, our people and our shareholders.

And with that, I will hand things over to Leah.

Thank you, Tor. I am honored by the appointment and deeply grateful for the trust placed in me by the Board and by you. That trust is meaningful because you, together with our executive team, have built a phenomenal company over the past 3 decades. I am very fortunate to work alongside a team that is highly experienced and deeply committed to Viking's future.

Turning to our business. As you can see from our first quarter results, 2026 is off to a strong start. The metrics reflect great demand for our products and disciplined execution across the business. As you can see on Slide 4, we are already 92% booked for 2026, which positions us very well for the remainder of the year. With 2026 mostly booked, our sales and marketing focus has shifted towards 2027, which has great momentum. The season is already 38% booked with the capacity for our core product increasing by 15% over 2026.

As we think about demand more broadly, I will take a moment to address the current macroeconomic environment. Historically, when geopolitical events occur, we have seen a short-term softening in bookings as our guests take time to process the new developments. After the last earnings call, we experienced a temporary slowdown, mostly in River bookings, for the 2026 season.

Demand has since rebounded, reflecting that travel remains a priority for our customers. With this context, I will highlight two of our core strengths that are especially relevant and position us well in this environment. First, our advanced booking curves and a long booking window provide exceptional visibility. With 2026 mostly sold out and 2027 already off to a strong start, we have a high degree of confidence in our forward outlook. This is supported by low cancellation rates within historical averages, reflecting the sticky nature of our bookings.

Second, our direct marketing engine and well-defined loyal customer base allows us to proactively generate demand while maintaining pricing discipline. As a result, while we remain mindful of the broader macroeconomic backdrop, we are confident in the resilience of our business model. Our guests continue to prioritize travel supporting sustained demand.

From an operational standpoint, recent developments have implications for fuel costs. Higher fuel prices did not impact our first quarter results due to timing, but we expect some effect as the year progresses. Having said that, our River operation benefits from fixed price contracts for a significant portion of the 2026 season contracted for in 2025. On the other hand, our Ocean operation has greater sensitivity to market movements. Importantly, we are able to mitigate some of the impact of fuel cost volatility because our Ocean fleet has been designed with fuel efficiency in mind. Fuel represented approximately 4% of our adjusted gross margin in 2025, providing helpful context for the overall exposure.

Now moving to Slide 5, I will highlight several updates related to our fleet, where we continue to expand and support the growth of our global operation. In March, the Viking Eldir joined our growing number of longships sailing the European rivers, and we acquired the Viking Yidun, further strengthening our ocean lineup.

As part of our strategy to grow Chinese demand, we are increasing our itinerary offerings. For example, this year, we introduced new ocean voyages in Europe tailored for the Chinese travelers aboard the Viking Yidun. We are expanding our offerings to include ocean voyages, enabling cross-selling, optimizing the use of our ships and increasing our ability to deliver the Viking experience to more guests worldwide.

We also made meaningful progress across our new-build program for Egypt. This quarter, we celebrated the float-out of 2 River vessels bound for the Nile and to be delivered later this year. We also announced 2 additional vessels now on order for 2028. The itineraries in Egypt consistently generate some of the highest yields in our River portfolio and deliver great guest satisfaction scores. This continued investment reinforces our position in one of the most iconic River destinations in the world.

Another important milestone this quarter was the float-out of the Viking Libra. It will be the world's first hydrogen-powered ocean cruise ship capable of operating with 0 emissions. This ship will be our most environmentally advanced to date and a clear reflection of Viking's commitment to innovation and sustainability.

And finally, I would like to highlight a meaningful recognition of our business. This past April, Viking was named among TIME's Most Influential Companies. The company was recognized in the disruptors category and was also highlighted as one of the 10 most influential companies shaping the travel and tourism sector in 2026. We are proud that our contrarian approach continues to resonate as we stay true to what makes Viking different.

Now before we turn to our financials for the quarter, I want to take a moment to congratulate Linh Banh on her appointment as CFO. Linh is a trusted colleague and a great friend. Many of you are already familiar with her as she has joined us in previous earnings calls. Since joining Viking almost 20 years ago, she has held multiple positions within the accounting and finance department and is very well versed on Viking's financial responsibilities.

With that, I will turn it over to Linh.

Thank you, Leah. I am very grateful for the opportunity to serve as CFO and for the trust placed in me. With that, good morning, everyone. I will begin by reviewing our first quarter consolidated results, and I'll walk you through some of the drivers behind our performance.

Overall, we are very pleased to have reported another great first quarter. On a consolidated basis, Total revenue for the quarter increased 17.5% year-over-year to over $1 billion, driven by increased capacity and higher revenue per PCD. Capacity was up 6.6% this quarter, driven primarily by the delivery of 1 Ocean ship in 2025. Overall, this revenue performance reflects healthy pricing, a favorable itinerary mix and solid demand.

Adjusted gross margin increased 16.9% year-over-year to $717 million, resulting in a net yield of $596, 9.5% higher than the first quarter of 2025. As expected, vessel expenses, excluding fuel per capacity PCD, increased 10.6% this quarter compared to the same time last year. This was mainly driven by repair and maintenance costs across the fleet. As we have mentioned in the past, these expenses can vary between quarters depending on maintenance schedules and other operational factors. It is important to emphasize that our repair and maintenance work is incurred against specific projects rather than being quarterly managed.

Now turning to SG&A. We continue to invest in our people, in our sales and marketing capabilities to support growth and drive high-quality demand. At this point in the year, we are already marketing for 2027 when capacity for our core products is expected to increase by 15%. As always, we scale marketing in line with demand, capacity growth and our strategic priorities.

Adjusted EBITDA for the quarter was $105 million, 43.9% higher than the same period last year. This significant year-over-year increase was mainly driven by higher revenues across all segments. Net loss was $54.2 million, which is an improvement of more than $51 million from the first quarter of 2025. As a reminder, the first quarter of the fiscal year has typically been negative due to the seasonality of our business.

I will now briefly discuss our 2 reportable segments, River and Ocean. These are on Slide 8. For the River segment, capacity PCDs decreased 8.4% year-over-year and occupancy for the period was 93.7%, in line with last year. Adjusted gross margin increased 17.2% and net yield was $761, up 28.3% year-over-year. Please note that for River, our core season runs from April through October. To this end, metrics from the first quarter aren't indicative of the full year performance. With that, I will share a few drivers of the year-over-year changes in capacity and net yields.

This quarter, we added capacity through new-builds in Egypt and Vietnam, both regions with high yield and strong pricing power. At the same time, we intentionally removed lower-yielding winter capacity in Europe during January and February. This shift toward higher-yielding itineraries, combined with continued pricing strength drove a materially favorable increase in net yield, while the overall capacity was lower than last year.

With respect to Ocean, capacity PCDs increased 10% year-over-year due to the addition of the Viking Vesta, which began operating in July of 2025. Occupancy for the period was 95%, slightly higher than last year. Adjusted gross margin increased 16.9% year-over-year and net yield was $527, up 5.6% compared to the previous year driven by higher pricing amongst most itineraries.

Now moving to the balance sheet and our liquidity position. On Slide 9, you can see that as of March 31, 2026, we had total cash and cash equivalents of $4 billion and an undrawn revolver of $1 billion. Our net debt was $1.9 billion. And to this end, our net leverage improved from 1.1x as of December 31, 2025, to 1x as of March 31, 2026. As of March 31, 2026, deferred revenue was $5.4 billion. Also on Slide 9, you can see our bond maturity outlook with all maturities falling in 2028 and beyond.

I will now confirm our debt amortization for 2026 and 2027. As of March 31, 2026, the scheduled principal payments for the remainder of 2026 were $174.4 million and $197.4 million for full year 2027.

From a committed capital expenditure perspective, and for the full year 2026, the total expected committed ship CapEx is about $1.9 billion or $650 million net of financing. And for the full year 2027, the total expected committed ship CapEx is about $1 billion or $260 million net of financing.

With that, I will turn it back to Tor to review our business outlook, including our booking curves.

Thank you, Linh. As you can tell, I will continue to present the booking curves. I find them very insightful and relevant for the business. These are all as of May 3, 2026.

On Slide 11, we show our consolidated metrics for our core products. As you can see, we are in great shape, both for 2026 and the 2027 seasons. The 2026 season is already 92% booked, so we're mostly done selling the current season. Advanced bookings equaled $6.2 billion, which is 13% higher year-over-year and the capacity is increasing 7%. So we're in a very good position for 2026.

And 2027 is shaping up very well, too. Capacity will increase 15% in 2027, and we're already 38% booked. Advanced bookings equaled $3.4 billion and are 31% higher than the 2026 season at the same point of time in 2025. I will note that the 2027 curve reflects some timing and product mix that at this stage are positively impacting both volume and rate.

Regarding volume, I mentioned that capacity for the core products will increase by 15% in 2027. The drivers of this increase are the full year impact of ships being introduced in 2026, plus additional 1 Ocean ship and 8 River vessels in 2027. Because of the timing of these deliveries, capacity growth will be slightly higher in the first half of '27 than in the second half. Regarding rates, and besides strong pricing, there are some high-yield itineraries that are being sold earlier in the cycle due to reasons such as seasonality.

Looking ahead, how the booking curve develops for the remainder of 2027 season will depend on the inventory we have available to sell and how we dynamically price the rest of the season. As we have previously communicated, if macro conditions are stable, our long-term targets remains mid-single-digit yield growth across our core products.

Let's now talk about the advanced booking curves for the segments. On the next slide, you will see our curves for Ocean cruises. This is Slide 12. I will start with the yellow line, which shows the bookings for 2026. Overall, we have sold 92% of the capacity PCDs for the year and have $2.8 billion of advanced bookings, which is 17% higher than last year at the same point in time. Capacity will increase 9%. So you can tell that we have been booking at attractive rates. They equaled $777 compared to $737 in 2025.

If you now look at the gray line, you will see the booking trends for 2027. As of May 3, we had sold about 46% of the 2027 capacity for Ocean, which is increasing by 18%. Advanced bookings are 38% higher than the 2026 season at the same point in time in 2025. Please note that the capacity is increasing due to the delivery of 2 ships in 2026 and 1 ship in 2027. Regarding the rates, they equal $882 compared to $786 for the 2026 season at the same point in time in 2025.

Let's move to Slide 13, where you see the curves for the River cruises. I will start with advanced bookings for 2026, which is the yellow line. As you can see, 93% of the capacity was already sold as of May 3. We have almost $3 billion in advanced bookings, which is 10% higher than last year at the same point in time. The operating capacity for River will increase 6% year-over-year, and rates are equal to $878 compared to $828 in 2025. Like Ocean, we have had very little to sell for 2026, and our sales and marketing teams are now mostly focused on 2027 and beyond.

Now the gray line shows advanced bookings for the 2027 season. As of May 3, we have sold about $1.2 billion, which is 21% higher than the 2026 season at the same point in time in 2025. Operating capacity for the River will increase 13% year-over-year, driven by the growth in the fleet with 10 vessels being delivered during 2026, and 8 more scheduled for 2027. 26% of this capacity is already sold.

And regarding rates, these averaged $1,108 for 2027, up from $992 for 2026. As stated earlier, and like the Ocean curve, rates at this stage are driven by strong pricing as well as the mix of what is being sold. In the case of River, there is a larger mix of itineraries in Egypt and India, which command higher-than-average yields. So overall trends for 2027 are very good, a strong book position, increased capacity and very good rates, which gives us confidence that our consumer demographic remains financially resilient, prioritizing traveling and choosing Viking.

At this point, Leah will add some color to our order book and capacity.

Thank you, Tor. Now turning to our order book and capacity. I will recap the update since our last earnings call. As noted in the opening remarks, we took delivery of the Viking Eldir, a longship for Europe; we acquired the Viking Yidun, an ocean ship dedicated to Chinese guests; and we announced plans to build 2 additional River vessels for Egypt scheduled for delivery in 2028.

As we close today's call, I want to thank our teams, guests, partners and shareholders for their continued support. We are encouraged to have started the 2026 fiscal year with strong financial results and a solid book position for both the 2026 and 2027 seasons. I am very proud to lead Viking as we continue to deliver great travel experiences that reinforce our brand, drive repeat business and create long-term value for our shareholders.

With this, I conclude our prepared remarks. I will now turn it back to the operator to take questions.

[Operator Instructions] And the first question today is coming from Steve Wieczynski from Stifel.

First of all, congratulations, Leah and Linh on your appointments. So my first question is around the '27 booking curves, which, I mean, look incredibly strong with PCDs, I would say, running well ahead of what I think anybody was expecting at this point. So look, I assume a lot of that strength is just the booking curves going back to a more normalized pattern, meaning higher demand itineraries, cabin classes. Those are being sold first, which is probably somewhat backwards versus this time last year.

So wondering how we should think about those '27 booking curves moving forward and how you guys think they eventually settle? I know Tor said you guys kind of still think mid-single-digit range is still fair. But just maybe wondering if they could eventually settle a little bit higher than that versus what you're seeing right now from a demand standpoint.

Steve, thank you for your kind words. As it relates to 2027, I mean I think at the end of the day, our booking curves are the best indicator of consumer health and where we are is very good.

To your point and what Tor mentioned earlier, the '27 curve does reflect some timing and product mix, which is reflecting positively on both rate and volume. How the curve develops for the remainder of the '27 season, that will really depend on the inventory we have available to sell and how we dynamically price the rest of the season. As we previously stated, if macro conditions are stable, our target remains mid-single-digit yield growth across our core products.

Okay. Got you. And then the second question, I want to ask about the cadence of bookings that you've seen recently. And Leah, you noted you guys witnessed a short-term softening in bookings, which was mostly for the '26 season. I guess wondering if you could walk us through maybe a little more detail about how long that lasted? Maybe what you've seen more recently in terms of any material changes for certain itineraries or lack of demand for certain itineraries? And also, if you could touch on cancellations, which I think you noted that are in your normal expected range, but any other color there would be super helpful.

Steve, so thanks for the kind words, as Linh said. As far as the demand from the consumer since the conflict began, we saw a slight softening. But we did find that our consumers are highly resilient. They responded quite well to tactical promotional marketing pieces that we sent out, which is as -- the first thing we do to generate demand is to really get the Viking message across through our direct mail campaign. So we did find that once we were able to generate demand, the consumer responded quite appropriately, and you can see that in our booking curves where we are largely sold for 2026 and quite off to a good start for 2027.

And as far as cancellations are concerned, they are in line with historical trends. We don't see any significant increases in cancellation rates related to the current macroeconomic events.

The next question will be from Matthew Boss from JPMorgan.

Congrats on a nice quarter, and congrats, both Leah and Linh, on the promotions. So Leah, maybe with -- if we take a step back, double-digit capacity growth, mid-single-digit yields, you're making the point is a clear baseline for the business. And that's despite macro backdrops if we think about from the multiyear. So could you speak to the market share opportunity that you're taking across both River and Ocean and how you see your product relative to peers as differentiated?

Sure. So as you're aware, we are the market leader in the River, North American passenger outbound and our strategy for the River is really to maintain our dominance and that's reflected in our order book, where we have 24 committed ship orders through 2028, with an additional 16 between '29 and 2032.

When we think about where our opportunities are for gaining market share, we're really focusing on the Ocean luxury segment, where we have 10 committed ships between 2026 and 2031 with an additional 6 to be delivered in 2032 and 2034. And we feel that with being 24% of the luxury Ocean market, with our current capacity, taking into account the -- what we perceive or what we see as additional tonnage and births entering that market as we also continue our building growth, we really see ourselves taking up to 30% market share in that very attractive segment.

And I think what really sets us apart is what defines us, such as we are one brand. The guests know what to expect when they come on board our ships. It's understated luxury, we are immersive in terms of our experiences and in delivering a product that is really about the destination and not about the ship itself. It's more like a floating hotel that you can use to explore the world in comfort. It's about the fantastic service that our guests experience with our phenomenal crew. And really that is what sets Viking apart and which enables us to continue the growth trajectory that we have outlined.

That's great. And then maybe, Linh, just to elaborate on 2027. So as we think about the advanced bookings to start the year and some timing dynamics as you cited, should we look back to 2024's curve as a comparison to how to think about the progression throughout the year? It sounds like we should bridge at least to mid-single digits. But just what would be some of the puts and takes to consider as the year progresses for '27?

Matthew, thank you again for the congrats as well. I think as we look to 2027 and how it plays out, honestly, each season, each curve will develop differently, it really is dependent on what's sold to date and product mix and what's left to sell. I think we feel good about 2027. It's off to a wonderful start. And as we said if macro conditions kind of remain stable, our goal remains mid-single digit. And as you can see from historical, that's where we've landed pretty well. So I wouldn't necessarily say compared to prior seasons, given every season does develop differently.

The next question will be from Brandt Montour from Barclays.

Congratulations again to Leah and Linh. I have a question on marketing. Obviously, the -- it sounds like the -- pulling the marketing lever a month or 2 ago, worked pretty well. Is that something that has to sort of remain? Like do you feel like you're still keeping your foot on the pedal with marketing right now? And what are the implications for SG&A unit cost this year from what you're kind of having to do now for '27 bookings?

Thank you. As far as marketing, it does remain one of our levers in terms of generating demand. And we -- even despite the current macroeconomic conditions, that is a tool that we use in order to fill the capacity of our growth. And we feel that that's really what separates us apart from others in the industry. Our ability to interact with our consumers on a consistent basis to generate demand. So I think what you'll see is that we will manage it dynamically according to what we see both in the marketplace and according to how bookings come in, but marketing will always be our lever.

Having said that, we do anticipate having some efficiencies in SG&A related to marketing, especially as we start to leverage some of the tools that we've invested in that would allow us to optimize, for example, human and LLM searches, tools that we may have put into place to increase conversions when we're able to personalize guest experiences on our website and able to really interact with that consumer and tighten the sales funnel.

So there's certainly opportunity there. You must keep in mind that we are generally marketing today for tomorrow. So we are expensing today expenses that are supporting the growth for next year. So for example, next year, we have a 15% capacity growth.

Okay. That's great color. I appreciate that. And then another question would be on flights and that sort of the ratio to which you kind of book flights in coordination with when you're selling tickets. And really, the question is we don't really -- we're not really concerned that your customer can't afford an increase in flight prices, but you guys -- I don't think you book the flights out for your customers at the exact same time as they book tickets. So how much is left to book this year relative to how much you are booked on tickets? And is there any sort of plans to -- maybe for next year to book that closer to 1:1 just to sort of reduce any chance of volatility between those -- between that gross and net line?

Yes. So given our customer demographic, as you can imagine, many of our guests do or want Viking to deliver an end-to-end experience. So historically, a significant portion of our guests do purchase air with Viking.

That being said, Viking maintains agreements with the major airline alliances to secure inventory for our guests. So when a guest does elect to book air with Viking, we try to book tickets promptly. However, final routings and schedules are determined by carriers, and they may affect availability and pricing. But that being said, we do try to book the air for our guests as promptly as possible.

Super helpful. Congrats again.

The next question will be from Robin Farley from UBS.

Great. Congrats to Leah and Linh. Wanted to ask -- sort of going back to the 2027 curve, if we look at the last 3 years, you basically ended up with net yield within about 2 percentage points of where you first give us this change in booked revenue per day, and definitely understand every year that product mix and timing is different because sometimes it's been 2 points higher, sometimes it's been 2 points lower.

I guess would you say that what your -- what you have with product timing and mix this year is much more unusual than those normal fluctuations? I guess I'm just trying to understand whether there's something that would cause you to end up with an outcome that's wider than that sort of 2 points that we've seen from your initial booked revenue.

Robin, thank you for the congrats. I think as it relates to 2027, it's off to a great start. Pricing looks good. We are 38% booked for the '27 season sitting here in May. I think we can all agree the curves look -- are in a good position.

As it relates to pricing, I think pricing will always be dependent on inventory mix, what's sold and what's left to sell and obviously, macro conditions. Our goal is generally mid-single digits. I think as Matthew asked earlier, each season is different, it will behave differently. We are sitting here 38% booked, great position, but we still do have a little bit more than 60% of capacity left for 2027. So I think we just reiterate that our goal is generally mid-single-digit yield growth, especially with our double-digit capacity growth in our order book.

Okay. Great. And maybe just as a follow-up, it was interesting that the change for sort of remaining 2026 bookings. So it was really kind of River that maybe the growth rate ticked down more than Ocean. I think given other commentary out in the market about kind of Eastern Med being the issue, maybe we would have expected to see that in your Ocean business more than your River business.

So I wonder if you could just kind of characterize for us in Q3 and Q4, what kind of exposure you have to the Eastern Med or -- and in the River business, is that mostly a delta in Egypt bookings? Or if we can just sort of understand a little bit more about where the variability -- kind of which itineraries where you were seeing it? Was it Egypt that down-ticked that River business and kind of what's happening in Eastern Med in Ocean?

Sure. So I mean I think at the end of the day, our overall booked position for 2026 is great. We're 92% booked. Overall, pricing is 5.5% ahead of the same point in time prior year. So this is well in line with our expectations. And I think we've said all along, we -- our goal is still mid-single-digit yield growth for each year.

As it relates to the itineraries, so we are 92% booked, which is a reflection of all of our itineraries at the end of the day, we mainly operate in Europe. So we are seeing both Eastern Europe and the Med booking similar to our other itineraries as well.

As it relates to the 2026 Rivers, some of this is really just deployment mix. Egypt did impact it slightly. As we said in the last call, we did cancel a couple of weeks. But Egypt is a great itinerary. It is a high-yielding itinerary that does very well for us. And we still see strong occupancy and yields this year and next year for Egypt. So I think at the end of the day, we are pretty pleased with where we are for '26.

The next question will be from Trey Bowers from Wells Fargo.

Congrats to everyone. I guess I'll ask Brandt's air question in a slightly different way. When we see a pretty significant increase in transatlantic pricing like we've seen of late, when and how does that impact you guys? Are -- is this when you re-up your deals with the different carriers, maybe there's a new price dynamic to that? Or is it, to some extent, you're just passing some of that on to your customers when you're ultimately buying that air for them. So just would love to get a better feel for how this might impact numbers going forward.

So I think at the end of the day, we have agreements with our -- all the major airline alliances. When a guest does book with Viking and they choose to purchase air from Viking, we try to book that ticket as promptly as possible. So I think when you look to our financials, AGM, our adjusted gross margin reflects the air purchased and the air cost. So you can see how yield moves through AGM. And historically speaking, yields have increased, and the team that we have has managed through air cost fluctuations very well.

So will it be a headwind to us? I think we would anticipate that there is some of that for the year given the current conditions. That being said, we have long-term veterans in our air department, and they've done a good job managing through costs in the past.

And am I right in assuming that the air cost for your crew rolls through payroll? Is that separate?

Yes. So all crew-related costs will roll through operating expenses.

Perfect. And if I could just sneak one in. The Q1 yields in River were just an incredibly impressive number. But is there any chance you could give us more of a kind of like-for-like yield number that maybe you were seeing just in, say, European itineraries, just to get a feel for how strong the pricing is exiting the quarter on more of an apples-to-apples basis. Congrats to all.

So I think first quarter for Rivers, there's seasonality. Our River business really doesn't start until March, April in Europe, and it ends around October, November, December. So the first quarter yields for Rivers aren't really indicative of the full year, which is why we provide the booking curves.

From a booking curve perspective, you can see how pricing is trending for Rivers for all of '26 year-to-date. That being said, I think we mentioned this in our earlier remarks, for the first quarter for Rivers, a majority of that is Egypt, Vietnam and those itineraries are high-yielding itineraries for us.

[Operator Instructions] The next question is coming from Lizzie Dove from Goldman Sachs.

Congrats to Leah and Linh and also Tor for an incredible 30 years as CEO. As we think about the next chapter of Viking under this -- under new leadership, and I appreciate you've both been here 20-plus years, the answer might just be no. But should investors expect any evolution in terms of strategy or capital allocation here under this new management team?

Lizzie, thanks for that. Tor was wondering when someone was going to congratulate him. As far as the strategy, I think this leadership transition is really about stability and continuity. As you know, we are -- our long-term plan is pretty well laid out in our order book. And really, it's -- I have been fortunate to have worked side-by-side with Tor for 20 years and also the executive committee who I am a part of. And I think together, we will continue to execute on the strategy that we've laid out for ourselves. And it's really to ensure not just the investor community, but more importantly, our guests that Viking will remain committed and true to who we are as a company and to the guest experience.

Makes sense. Got it. And then to ask Trey's question, for 2027, just on the like-for-like. I appreciate all the comments and color you've given so far in terms of the '27 booking curve. And I appreciate the mix considerations, I think more India, more Egypt. Is there a way to just think about on a like-for-like basis, whether that's Egypt versus Egypt a year prior, Europe versus Europe? Just how kind of that like-for-like pricing is tracking so far for 2027 specifically to normalize for that mix, I suppose?

I think for 2027 at the end of the day, our -- what we have sold to date is some of our higher-yielding itineraries. And so to your point, Egypt has sold well for '27. So that is skewing our pricing up, but I don't think we can provide the like-for-like information at this time. We're a 38% sold. So it's not really something that we should provide today. We have, like I said, 60-plus percent of capacity left that we still need to sell for 2027. We are in a great position. I think not many can say that for the '27 season sitting here in May, that you're already 38% sold with pricing ahead year-over-year.

So we are quite pleased. But overall, we maintain that our goal is mid-single-digit yield growth and that will be a combination of pricing increases, ancillary revenue, deployment mix. So we will approach each season with all 3 in mind and not more to try to get -- or try to reach our goal.

The next question will be from David Katz from Jefferies.

Congrats all around and yes, Tor, for building a strong team over a long period of time. I wanted to just double-click on the capital allocation question. We obviously all eye $4 billion and our imaginations run in all different directions. How are you thinking about that philosophically? Do you look at circumstances where the world's visibility may be a little bit lower as an opportunity? Or do you take a more conservative approach to that? And any boundaries you can give us or color you can give us on the kinds of things you'd like to add would be helpful.

Sure. The -- one of the benefits of having been an executive team together for 20 years is we've seen things go up and things go down, particularly in the travel industry. And this cash really allows us to continue our growth plans with a measure of stability for Viking and gives us an ability to make these long-term plans through 2032 or 2034. So our top priority is to reinvest cash in the business to generate strong returns. And this, of course, includes our strong order book.

Our guiding principles when we think about how else we can deploy cash or really based on 3 things. Is it scalable? Is it margin accretive? And then is it also -- will it add to the brand? Is it complementary to the brand and within the brand ethos? And we've also said that we -- to the extent that we are able to, we -- our preference is to own and operate because then you can control the experience from beginning to end, which is so important to us.

As far as the cash, I think today, given what we're experiencing from the macroeconomic environment, this cash allows us to behave responsibly with our guests. And I think that's all we can say about capital allocation.

Okay. Fair enough. And just going back to the initial commentary, Leah, around fuel. Any color you can provide on how we should think about your purchasing for 2027? And when that -- when and how that occurs, just so that we can sort of mark you to market as we go.

Sure. So from a fuel perspective, as Linh mentioned, we are -- we enter into fixed price contracts for River. So the 2026 is largely fixed price set in 2025. And from an Ocean perspective, we do have fuel-efficient vessels. Our operations team are highly experienced in managing through times where fuel prices may go up and down. Our Ocean fleet is entirely equipped with closed-loop scrubbers, which allow us to operate using heavy fuel oil. And then we are also able to avail ourselves of shore power.

I think at this stage, with fuel prices where they are, we are -- we don't feel this is the right time to either enter into fuel contracts or into hedges. We can assess that as the year progresses. But to level set what the exposure is because of our -- the fuel-efficient designs of our ships, fuel as a percentage of adjusted gross margin is only 4%. So our fuel expense exposure is quite manageable.

The next question will be from Conor Cunningham from Melius Research.

Congrats to everyone. It's great to hear. Just on Egypt. So last quarter, you talked a little bit about the headwinds that you were facing there, and I know that you're back to sailing within that market. And can you just talk about like how that's trended from -- I assume the operational -- or the disruptions you talked about on the booking curve were there. But it seems like it snapped back even better on the demand and pricing side. So if you could just talk about that a little bit, that would be helpful.

I think for Egypt. It is a great itinerary, high yielding, a wonderful experience.

One second. Linh, I think your mic is -- here you go.

Sorry. Thank you, Conor. So as it relates to Egypt, I think for Egypt, it is a great itinerary. It's a wonderful experience. Viking does it well. It's high yielding. But as a reminder, it is a small percentage of our capacity. It's 8 ships we're operating this year. Guest count is about 80 guests per ship on average. So as it relates to how it's progressing, obviously, for 2026, we did cancel a couple of weeks. It is selling well for 2027. I think we believe in the product. We believe in the experience, and we have a strong order book for Egypt.

Okay. And then maybe just following up on David's question around capital allocation. So you've historically taken a shakier macro environment as an opportunity to be pretty aggressive. And I don't think that there's another travel company out there that has current bookings for '27 like you guys do. So is it just the fact -- like ignoring the shareholder returns and all that stuff, but is it just the fact that there isn't you haven't seen an opportunity to really scale like the shore side of the business? Is it just the assets aren't available or the price points are different? Just if you could talk a little bit about that a little bit more, I think that would be helpful.

I'm being pointed out. I feel I should earn my [ keep ] today too. I think we have looked at a couple of things, but we have been very, very disciplined. It has to be really the Viking brand, and it's not many that fit the bill. So I think it will take a rare opportunity for us to look at anything else than what we're doing. So I think the opportunities we have for organic growth are significant, and we'll just make sure we do that. If something dramatic comes along, we'll have a look at it, but it has to fit the brand. And I think that's one of the key strengths of us as a company that we don't -- we are not conglomerate of anything, least of all brands. So that's what I can say.

And we have good returns on our investments in the existing business. And that is largely related to the way we design our ships and all that kind of stuff, when you look at the return on invested capital and so forth. So as long as we can have good returns there, I think that should be the priority. But I'll look at this more from higher up now in the future. But I think we're in good hands.

The next question will be from Meredith Jensen from HSBC.

Excited to watch the next few decades of the progression of Viking. And quickly on China, I was really interested to hear about the reflagging of Viking Yidun and I was hoping you could speak a little bit more about the brand building among Chinese travelers, early learnings from the experience center and sort of a road map there, both for sort of coastal river and maybe Yangtze, that would be great.

Maybe I can make a couple of comments on that. Our -- we started our China business, I think it was 2003, '04 or thereabout where we had ships on the Yangtze. They were then owned by Chinese operators and the hotel management services and we marketed that to Western people. But then came [indiscernible] and we said let's do it differently.

So we then said maybe our focus ought to be in the same way as we have the current business where we focus on English speaking people, let's make a product for the Mandarin speaking, for the Chinese. So I think it's taken us a few years to develop the business we have. We now have 4 River vessels, as you might know, on the rivers in Europe with the Chinese customers and the Chinese crew. And we had the joint venture with China Merchants with Viking Yidun.

Again, that was initially operating in domestic China waters. But it's not so easy to do that, and the price competition is fantastic and difficult to differentiate ourselves. So I think what we are more aiming to be that when Chinese want to go to Europe, either by a river or by ocean, there should be go -- think Viking. And I think we have really -- we are in process of establishing a potentially well recognizable brand.

It will take time, but we are patient. And I think that's one of the areas where I'd like to do a little bit more thinking in the coming years. It's a big opportunity, as we all know. But we -- now we'll operate that ship in the European waters. And as a matter of fact, even under Norwegian flag.

Thanks for the visibility on that, Tor. That's super helpful. And just finally, I know Viking has been very focused on minimizing environmental impact. And I know that Libra is launching later this year. And I was hoping you might speak a little bit more about the accessibility of propulsion technology, sort of unit economics there and how you and Fincantieri might scale further as Astrea comes and other ships come along?

The whole regulatory environment also in shipping is quite strange. And unfortunately, it is not always a science that wins. But we have looked very carefully at this. So we said if we're going to be a true zero-emission product, then that is hydrogen. So we have hydrogen fuel cells, which will cover Norwegian Fjords. About 1/3 of the capacity of the propulsion.

Well, of course, hydrogen is a very expensive fuel, too. So we have to trade one off against the other, and it's not easy to -- easily available. But at least we feel that we are setting a direction of travel for the future of shipping. And some of you know that I personally have not a very high affinity for liquefied natural gas, which is a worse from a global warming point of view. It's clean products, don't get me wrong from -- in terms of [indiscernible] and so forth, but global warming is bad. But it seems that people, ignore that. So it may be okay. But we -- for the time being, we stand by what we have said, and we continue.

The vessels we have, have diesel propulsion with scrubbers and our scrubbers are, of course, of the advanced sort. We do not -- we have closed-loop scrubbers. So we don't send stuff back into the oceans. We are looking at other methodologies too. But that's -- in addition to China, that's going to be my other pet project to keep me out of the hair of the executives of Viking.

Well, I'm sure Viking will continue to be as contrarian as it has been in the past.

Thank you. That concludes today's Q&A session. I will now turn the conference back over to Leah Talactac, Viking's President and CEO, for closing remarks.

I wish to thank everyone for joining on today's call. For additional context on our recent leadership transition, we encourage you to view a video which was beautifully narrated by Karine Hagen in the Investor Relations section of our website at ir.viking.com. Have a great day, and see you next quarter.

Thank you. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.

Good morning. My name is Paul, and I will be your conference operator today. At this time, I would like to welcome everyone to Viking's Fourth Quarter 2025 Earnings Conference Call. As a reminder, this call is being recorded. [Operator Instructions] I would now like to turn the program to your host for today's conference, Vice President of Investor Relations, Carola Mengolini.

Good morning, everyone, and welcome to Viking's Fourth Quarter and Full Year 2025 Earnings Conference Call. I am joined by Tor Hagen, Chairman and Chief Executive Officer; and Leah Talactac, President and Chief Financial Officer. Also available during the Q&A session is Linh Banh, Executive Vice President of Finance.

Before we get started, please note our cautionary statements 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 ir.viking.com.

Tor and Leah will provide a strategic overview of the company, a recap of our fourth quarter and full year 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 also available on our Investor Relations website.

With that, I am pleased to turn the call over to Tor.

Thank you, Carola. Good morning, everyone, and thank you for joining us today. In our first full year as a public company, we've delivered very strong financial results, and I think we accomplished a great deal as our business continues to grow.

If you turn to Slide 3, a I'll begin by highlighting our fleet, which remains at the center of our strategy. 2025 was marked by significant milestone, surpassing 100 ships. I believe that this accomplishment reflects our innovative approach and decades of thoughtful growth. From our humble beginnings in 1997 with just 4 river ships and 2 cell phones, we have steadily built a global business that now operates on all 7 continents, spanning river, ocean and Expedition cruising.

Today, our fleet consists of 89 river vessels, 12 ocean ships and 2 expedition ships, all share the unique Scandinavian design and deliver the consistency and quality that our guests expect from Viking. As part of our ongoing fleet expansion, we will soon operate the world's first hydrogen powered cruise ship, capable of operating part of the time with 0 emissions, something I'm particularly proud of. We believe that innovation should be practical and thoughtfully implemented.

Also during the year, we continued to expand into new and exciting destinations. A highlight was the announcement of our new river in India, a region rich in history and cultural depth. At the same time, we increased our role on the Nile and on the Mekong Rivers. In parallel to all this, we strengthened and expanded partnerships across the arts, culture and scientific institutions. These partnerships support brand awareness and local engagement among our target demographic. Moreover, in many cases, they also introduce opportunities to enhance the guest experience via unique privileged access unavailable through other travel providers.

As you can see, we pursue growth with an intention, expanding access, increasing choice and enriching the cultural experiences that set Viking product apart. I'm very pleased that the milestones we achieved in 2025 supported an exceptional fleet and with it an exceptional financial performance.

Regarding our fleet, you can see on the next 2 slides, some of the features that make our ships such as a strong driver of our results. I will start with Ocean on Slide 4. As it pertains to our ocean fleet, we have one of the youngest fleets in the cruise industry. Our state-of-the-art efficient design eliminates wasted space and extra wide on board, while maximizing gas comfort and uprising fuel consumption. Moreover, our ocean ships with a sleek hole design and closed-loop scrubbers allow us to use more cost-efficient fuel.

These attributes help us manage fuel costs and times of adversity. The layout and onboard offering of our ocean ship also allow us to operate with fewer crew without diminishing our high level of service. All these elements improved ship profitability.

If we now focus on the River on Slide 5, most of our river vessels are long ships, a unique type of ship designed for European rivers. These ships include design features such as patented asymmetrical corridors and a square bowl that allows for 3 full decks. With this design, we can accommodate up to 190 guests which is more than the average European River vessel, improving their long-term profitability.

As it pertains to fuel cost, the River operation has fixed price contract for a significant portion of the 2026 season. Within each product, our ships are indistinguishable to our guests. Potential guests swap by itinerary rather than a specific ship or age of ship and it allows older ships to achieve similar yields even when introducing new ships. On average and based on contribution to operations, the payback here for an ocean ship is about 5 to 6 years, and the payback period for a long ship is about 4 to 5 years.

Taken together, these characteristics show how the design, efficiency and consistency of our ships translate directly into a very good financial performance, which was particularly strong in 2025.

Now turning to Slide 6. You can see that we increased the capacity by 12% year-over-year. This reflects both the expansion of our fleet and the continued demand for our product. At the same time, our net yields grew 7.4% demonstrating our ability to attract high-quality demand and to maintain pricing power. Together, these factors drove a 21.9% increase in total revenue which reached a record of $6.5 billion in 2025. This strong top line momentum translated into a meaningful profitability.

Our adjusted EBITDA reached almost $1.9 billion, an increase of 38.8% year-over-year, reflecting not only higher revenues, but also the benefits of scale, operational efficiency and disciplined cost management. And lastly, our adjusted net income was $1.2 billion, 43.9% higher than last year. We are very proud of this performance, given the continued investments we are making to support our long-term growth.

Now our 2025 performance is best understood and appreciated in the context of our long-standing track record of strong consistent results. As you can see on Slide 7, for 2025, every major financial metric outperformed the compound annual growth rates shown on the slide, which are all very good. I believe that these trends reinforce that our 2025 results were not driven by a single good year, but by sustained demand, long-term planning, disciplined execution and a strong business model.

Additionally, on the next slide, #8, you can see in a measurable way, the strength of our demand. Viking has consistently increased capacity while increasing yields and maintaining high occupancy levels. Together, these trends reflected long-term resilience of our business and our ability to execute consistently. In this context, a strong financial performance is part of the story. It's also important to review additional metrics that validate our growth trajectory.

These are on Slide 9 and highlight the depth of our guest loyalty, our market position and our strength of our balance sheet. In 2025, 54% of our guests sailed with Viking as repeat travelers, a number that continues to grow and that is a clear sign of the trust they've placed in our brand. Moreover, more than half our bookings were made directly through Viking. This provides a meaningful long-term advantage in how we manage demand and engage with our guests.

On top of this, we continue to hold a leading market share position with a 52% share of the North American outbound river market and a 27% share of the luxury ocean market. In addition to all this, we managed our balance sheet well. We ended the year with 45.8% return on invested capital and a net leverage ratio of 1.1x. Overall, these results reflect our ability to achieve profitable growth while staying true to our principles of financial discipline and long-term value creation. Beyond the financial results, this consistency is also reflected in the recognition we continue to receive from our guests and the industry.

On the next slide, #10, we have highlighted some of the many accolades we have received during the year. These awards are particularly meaningful because they're based on guest feedback reinforcing that our differentiated approach continues to resonate with our core demographic.

In closing, I would like to highlight that even as business continues to evolve, the principles that define Viking and guide every decision we make are unchanged. And these principles are shown on Slide 11. First, we remain unwavering in our commitment to obsess over our guests, making sure that we deliver an excellent travel experience at good value. Second, we continue to treat our employees as part of our extended family, recognize that their dedication and care are central to everything we do.

Third, we will continue to take a contrarian approach when we believe it serves the long-term interest of the business. And finally, we continue to do what we believe is right for the environment.

With that, I will return to Leah to discuss our financials.

Thank you, Tor, and good morning, everyone. We are very pleased to report a strong fourth quarter, capping a year of exceptional financial performance.

On Slide 13, you can see our key financial metrics. On a consolidated basis and for the fourth quarter, total revenue was $1.7 billion, increasing 27.8% year-over-year driven by higher capacity, higher occupancy and higher revenue per PCD. Adjusted gross margin was $1.1 billion, up 27.3% year-over-year resulting in a net yield of $546, 7.7% higher than the fourth quarter of 2024. Vessel operating expenses, excluding fuel per capacity PCD increased 2.6% this quarter compared to the same time last year.

Adjusted EBITDA totaled $463 million, an improvement of $157 million or 51.3% over the fourth quarter of 2024. I will highlight that our adjusted EBITDA margin reached 41.8% this quarter, representing an increase of 663 basis points compared to the same period last year. Net income for the fourth quarter of 2025 was $300 million compared to $104 million for the same period in 2024. The net income for the fourth quarter of 2024 includes a loss of $96 million from the revaluation of warrants issued by the company due to stock price appreciation. The fourth quarter of 2024 was the final quarter impacted by the warrant revaluation.

And lastly, adjusted net income attributable to Viking Holdings Limited was $298 million and adjusted EPS was $0.67, 48.3% higher than the fourth quarter of 2024. Overall, we are very pleased and proud to close the year with a great fourth quarter delivering strong revenue growth and meaningful margin expansion.

Now I will briefly discuss our two reportable segments, River and Ocean, which are on Slide 14. Unless noted, I will be referring to metrics for the full year ending December 31. For the River segment, our capacity PCDs increased 6.5% year-over-year. The increase was driven by the addition of 2 vessels delivered in 2024 and 6 vessels delivered in 2025. During the 2025 season, these vessels operated across multiple regions of the world, including Europe, Egypt, Vietnam and Cambodia. Adjusted gross margin grew 16.2% year-over-year to $1.9 billion, and net yield was $57, up 8.4% year-over-year. Occupancy was 96% for the year.

For Ocean capacity PCDs increased 17.9% year-over-year, driven by the delivery of the Viking Vella in December of 2024 and the addition of the Viking Vesta in July of 2025. Adjusted gross margin increased 30.9% year-over-year to almost $2 billion, and net yield was $572, up 9.7% compared to the previous year. Occupancy for the period was 95%.

As Tor mentioned, these great results reflect the strong demand from our core consumer, the loyalty of our guests, the value of our premium products and the dedication of our employees to deliver exceptional experiences across all 7 continents.

I will now shift our focus to some metrics related to the balance sheet. On Slide 15, you can see that we have a strong liquidity position. As of December 31, 2025, we had total cash and cash equivalents of $3.8 billion and an undrawn revolver of $1 billion. Our net debt was $2.1 billion, and we finished the year with a net leverage ratio of 1.1x. Also on Slide 15, you will see our current bond maturity profile with all maturities falling in 2028 and beyond. In addition, as of December 31, 2025, deferred revenue totaled $4.6 billion. Taking these factors together, we believe that our liquidity position remains a clear source of strength, supported by ample balance sheet flexibility and a long-dated bond maturity profile. This position gives us the confidence in our ability to support operations, invest in our growth, and pursue strategic opportunities as they arise.

With this, I'd like to confirm our debt amortization for 2026. As of December 31, 2025, the scheduled principal payments were $397 million. From a committed capital expenditure perspective and for the full year 2026, the total expected committed ship CapEx is about $1.4 billion or $500 million net of financing.

With that, I will hand it back to Tor to discuss our business outlook, including our booking curves.

Thanks, Leah. If we move to Slide 17, you will see that 2026 is shaping up to be another great year, as the demand for our core products continues to be very strong. As of February 15, we were already 86% booked for the 2026 season. This is in line with the same time last year while our capacity is increasing by 7%. We have $6 billion of advanced bookings, which is 13% higher than the 2025 season at the same point in time. Let's now review the booking curves, which are all as of February 15, 2026.

On the next slide, you will see our curves for Ocean Cruises. This is Slide 18. The yellow line shows the bookings for 2026. As you can see, we have sold $2.7 billion of advanced bookings, which is 16% higher than last year at the same point in time. Our operating capacity is up 9% in 2026. And we have shown 87% of this capacity at very good rates. As of February 15, advanced bookings per PCD were $787 compared to $746 at the same point in 2025. Our fleet expansion for ocean continues to advance in a prudent and strategic manner. This year, we expect 2 new ocean ships to join the fleet. The Viking Mira during the second quarter and Viking Libra in the fourth quarter.

It is important to note that this year's capacity growth comes on top of an 18% capacity increase in 2025. Taken together, the momentum underscores another strong year of demand for our ocean business.

If we move to Slide 19, a you will see the current river cruises. Now before we move on, I'd like to provide an update regarding our River newbuild program. One of our shipyards informed us that they experienced temporary technological disruptions and resource availability issues, which affected certain production lines. As a result of delivery timelines for 8 of our long ships have been adjusted. The 2 vessels originally scheduled for December 2025 will now be delivered in 2026. Additionally, as the yard works through the impact of workflow sequence, 6 ships originally scheduled for delivery in the first half of '26 will now be delivered later in that year.

As a result, we have adjusted our 2026 capacity for River, which is now 6% higher than 2025, last quarter, we reported a 10% increase. Importantly, the yard has assured us that these disruptions are temporary and they've already implemented corrective measures. Their teams are working to restore full technological functionality and are allocating resources to return to their regular scheduling cadence. We are in continuous communication with them, and we remain confident in their ability to deliver the vessels within the updated timeline.

We believe that the impact of these changes to the advanced booking curves and our financial metrics for '26 are immaterial. Moreover, while these adjustments shift certain delivery dates, they do not affect our long-term growth plans. We will now turn again attention to the booking curves. Advanced bookings for 2026 are shown by the yellow line, which follows a great trajectory. For Rivers, we have already sold $2.8 billion, which is a very good number, 10% higher than last year. Overall, we have sold 85% of our operating capacity at very strong rates, averaging $906 per day compared with $841 last year.

These are very good trends for 2026, and they offer a clear illustration of the strength of our demand. Our focus at this time is on selling the remaining capacity for the 2026 season while preparing for the start of the primary river cruising season, which begins in April. We will not be sharing information on future season yet. However, please note that both the 2027 and the '28 seasons are open for sale.

Now Leah will add some color to our order book and capacity.

Thank you, Tor. Moving to Slide 20. Since our last earnings release, we entered into option agreements for 2 additional Ocean ships to be delivered in 2034 and bringing our total planned additions, including the options to 16 new Ocean ships over the next 9 years. And we also entered into shipbuilding commitments for 2 additional expedition ships scheduled to be delivered in 2030 and 2031. We are very pleased to add these ships to our order book as demand for the Viking expedition product remains very strong. This is a product that truly resonates with our loyal guests who are eager to explore new destinations with Viking. By adding 2 more ships, we can thoughtfully scale a category where our brand has been recognized for delivering exceptional travel experiences.

As it pertains to our 2026 capacity, similar to past seasons, more than 70% of the capacity from our core products in 2026 will be in Europe. Before we close our prepared remarks and move into the questions, I want to bring you up to date on the current developments in the Middle East. We are monitoring developments closely, particularly as they relate to our operations in Egypt, which represent roughly 2% of our overall capacity. We are prepared to make adjustments in operations if this should become necessary from the point of view of the safety and comfort of our guests and crew.

I will also highlight, as Tor already mentioned that as it pertains to fuel, our River operation has fixed price contracts for a significant portion of the 2026 season, and our ocean fleet is designed with fuel efficiency in mind. While we continue to monitor these developments and their potential implications for our business, our thoughts are with all those impacted, and we hope for a swift deescalation and the path towards lasting piece.

With this, I conclude our prepared remarks. I'll now turn it back to the operator to take questions.

[Operator Instructions] And the first question today is coming from Steve Wieczynski from Stifel.

Sorry about that. Can you hear me now? All good?

Yes, go ahead.

So Tor or Leah, if we think about 2026, we can clearly see the curves, and we can see that the curves have essentially normalized versus where we were at this point last year. You're now coming off, I think it's 4 straight years of yield growth north of 7%. So I guess my question is, if we think about '26 and look, I fully understand you don't give firm guidance. But based on the curves and advanced bookings and the fact you're almost 90% sold, it seems like yield growth will still be very solid this year, somewhere in that 5% to, let's call it, 7% range. Am I kind of thinking about it the right way?

Steve, I think we will point you back to the curves, which is what you've referenced. So as of what we see today, we do have 86% of our bookings currently sold with a 13% advance booking growth with a 7% capacity PCD increase. And what you can also see is that we have been able to maintain that cadence from 2017 to 2025. So I think the curves speak for themselves. And I don't know that we can say much more than that, but I think that your extrapolation makes sense from our point of view today.

Okay. Got you. And then second question, I want to go back to the current -- the uncertain geopolitical backdrop. Obviously, a lot going on around the world, especially in the Middle East, which Leah, you touched on in your prepared remarks. But maybe for Tor, wondering if you could give us a reminder of how your business, especially on the River side has performed when there has been uncertainty in that region.

Trying to understand if we should be expecting any material change in demand in the near term until there is more clarity around what's going on in the Middle East.

Maybe I could give a long-term perspective on this. But as you know, I've been in this business for a long time. And many, many years ago, events like this would have been creating tremors in many Board rooms but I think American customers and particularly the type of customers that we have are well educated in the world and then nowhere are different places. So I think what we've seen in the past is that we haven't really been significantly impacted. You have a little blip when things happen and then they go back to normal. And you can say here, things happen very rapidly in the Middle East situation, of course. But I can have -- for example, we had a group in Jordan earlier in the week and there were 107 people, and we said there's anyone who want to go home. And two of them said we would like to go home.

So people are very fairly relaxed about all this. Of course, the travel warning that came out last night after this was recorded, changes things a bit. Hopefully, that goes away, too. But of course, it's a very limited part of our inventory, which is related to Egypt and Egypt is far away from where the troubles are. So of course, travel warnings are never nice and maybe they're basically something real. But people are not -- I think our guests are really quite well versed and where the bad things happen. We don't minimize it, but I think things come and things go, and we will deal with it. Of course, always taking care of our guests.

So Steve, I'd also like to add that as Tor mentioned, our guests are fairly well educated. They know where areas of conflict are in relative to where they will be traveling to. But also, we are 86% sold for the 2026 season, and that's another benefit of the curves that we have the ability to kind of wait out or wait for consumer reaction to catch up. And so for '26, we're still solidly booked and then we have time to address any reactions that the booking curve may have to current geopolitical events.

The next question will be from Robin Farley from UBS.

Just looking at your -- what low leverage you have ending the year, can you talk a little bit about whether at this point you might think about a dividend or something that one could argue is not the most efficient capital structure given how low your leverage is?

Yes, so I think events that are happening currently remind us why the company likes to have strong cash balances and why we like to be prudent with our balance sheet. But having said that, I think it's still a little bit premature for us to think about share repurchases or dividends. It's not something that we would necessarily rule out, but we do have a strong order book and we do have options that are quite far out. And so I think for the time being, that's not something that we would entertain, but not to be ruled out for the future.

Okay. And then for my follow-up, just on the addition of two more expedition ship orders. I feel like in the past, I maybe remember Tor saying that expedition while it is much higher priced than a lot of the other River and Ocean product you have that maybe there wasn't as much growth in demand there just because there's a lot of expedition capacity that's out there. So I'm just wondering if these two expedition ship orders kind of signal that maybe there's been an increase in demand on the expedition side that you're seeing over the long term? Or maybe these ships are going somewhere that are different than where your current expedition ships are?

I think we plan to deploy these vessels pretty much in the same alternatives as the current vessels. Of course, it has been a while since the first two were built. And when we look at booking curves, which we have also for expedition, we don't share it with you at this time. But you'll see that a relatively the bookings they are very strong, of course, since our supply has been limited, so you can almost read out that something needs to be done, and that's why we placed the order.

The next question will be from Matthew Boss from JPMorgan.

Congrats on another nice quarter. So could you elaborate on the acceleration in advanced bookings per PCD to 6% growth relative to 5.5%, 3 months back? Maybe just within that, what are you seeing from repeat guests relative to new-to-brand customers?

Matt, hope you're doing well. I think obviously, the price going from 5.5% to 6% is a good indication of how demand is looking for us. We are 86% sold, so we have a little bit more to go. And our goal is always to balance both price and our guest experience, feeling like they got good value for the experience they received. So I think we still aim for that mid-single-digit yield growth. That's something that is still a focus for us for 2026.

As it relates to new to brand and passengers, we do have a slide in the deck, our past guest repeat rate for 2025 season, slightly ticked up. It was about 1%. So we're still seeing a good balance between the two. So we're pleased with that.

Great. And then maybe, Leah, could you speak to the strength in Ocean pricing that you're seeing advanced bookings per PCD accelerated by 100 basis points versus 3 months ago? And just any change in demand momentum at all that you're seeing for your European sailings today?

Sure. So for the Ocean bookings, I think we do have dynamic pricing, we react to what the demand and the consumer interest is. So what you see there is in response to that. But it remains the same answer, which is that we want to be thoughtful about pricing increases. Our goal is the mid-single-digit increases in yields year-over-year. And really, it's about having the value proposition for our guests because of that repeat. The importance for us to make sure that the guests don't see this as a one-off travel experience for them, rather it's something that they want to continue to do as they think about their future journeys.

The next question will be from Connor Cunningham from Melius Research.

Maybe to keep along that line of questioning. I was hoping to get your perspective on occupancy versus pricing going forward. I mean, your occupancy is basically at all-time highs, I think, now. So just -- how do you approach the strategy going forward in general? And do you still see upside to occupancy overall? Or I mean I think 100% is pretty difficult. Just any thoughts there would be helpful.

Yes. That's exactly right. So unlike the other Ocean cruises where they have triples or more than two people, we only have two people per cabin. So our occupancy will never be more than 100%. And with single supplements or people who travel singly that kind of brings down our occupancy 1 to 2 percentage points. So I think with our goal, where you see 95% occupancy, that's essentially sold out. So our strategy is to sell out the ships and manage the price increases as we've discussed, which is really creating value for guests, making sure that they find the value proposition attractive.

Okay. Helpful. And then I just want to ring fence the two issues that you flagged a little bit here. Just on the delivery delays from -- on the River ships, is there any re-accommodation expenses associated with that, that we need to be aware of? And just on the 2% Egypt exposure that you talked about, is that a good proxy for its overall contribution from -- to profitability as well?

Yes. On the -- I'm not sure I understand your question on the river ships, but let me try. Of course, it's a delay. So the revenue will be impacted this year, not so much, but it will be impacted and the operating cost to offset that. There may be some other offsets we can have. It shouldn't have happened, but things happen. And I think we are very pleased to say that from what we can see, it's now entirely under control, and the ships should be delivered as now indicated and the 2027 deliveries should not be impacted at all. I don't know whether that is your question at all or not?

Can I also say that -- and then I'll turn it back over to you, Tor, on Egypt.. But on the delay of -- that's one of the benefits of our identical vessels, particularly in River. So our guest book based on itinerary, not necessarily what's new and coming online. And so we were able to accommodate some of them to other ships that are traveling in the same itinerary that they had originally booked. So there are minimal if any, reaccommodation expenses. And then Tor, I'll turn it back to you for Egypt's commentary.

No, you handled it so well. Why don't you continue?

Okay. So with respect to Egypt, in the prepared remarks, we did say that we were ready to make any adjustments in case there were things like this updated travel advisory. So with respect to Egypt, we're in the process of notifying guests that we are temporarily pausing Egypt itineraries through March 31, 2026. It's really important for us that our guests feel safe and our crew feel safe. And I think that's the basis from which the brand loyalty really -- that's the foundation of it.

This represents about 40 voyages with less than 3,000 guests impacted. So as a reminder, Egypt is only 3% of our total capacity, so we do not see this as a material impact to the business.

The next question will be from James Hardiman from Citi.

Just as a clarification, I think you already answered this effectively, but the River yard issues, it doesn't seem like that's impacting the booking curves at all. If so, let me know. But then anything that you'd be willing to share in terms of the monthly booking trends past '25, right, past the end of the quarter? I think it was a year ago where you first spoke to some softness in February, we've now lapped that. Maybe any update there would be great.

Okay. So as far as the booking curves that you -- I think we pointed back to the curves, we had a strong first couple of months of the wave season and you see that with the 86% sold and also the pricing increases that we've presented today. And sorry, there was a second part to your question that I think I might have missed. Can you repeat it?

Just the River yard delays if that impacted that curve in any meaningful way?

Yes, yes. And so I point back to the answer, which is it does not really affect the curves in the sense that because the ships are identical, we were able to reaccommodate most of the guests who were impacted to continue sailing in the itineraries they had originally booked. So they're not really -- they're swapping based on itinerary and not necessarily vintage of ship.

Got it. And then obviously, it's too early to have any quantification on 2027. But I just wanted to hear any color on those Indian River itineraries just given that they are what's going to be new for next year. Any thoughts on initial demand trends there? How should we be thinking about that market? How does that pricing compare? I know when you got into Egypt, that was a nice -- I think it was a nice pricing sort of benefit that showed up in some of these curves. But any thoughts on India as we look to next year?

Sure. So India, it was first open to our past passengers, and it was overwhelmingly supported by them. So we were sold out a few weeks, a couple of weeks, 3 weeks as soon as it opened. And it is yielding at higher rates similar to how Egypt's pricing, also is higher. Linh, do you have any additional color you'd like to share?

No, I agree. I mean I think our past guest support and loyalty is great. It's reflected in new itineraries when we open for sale, and that was no different with India.

The next question will be from Andrew Didora from Bank of America.

So the 86% book for this year, obviously, very strong, seems fairly consistent with where you've been in the last several years. Maybe if I pick maybe ask about the 14% that is not sold. Just curious of what's not sold? What's the type of product or type of itinerary that is left to sell? Just kind of want to get a sense of what makes up that remaining 14%? Is that typically come at a premium at a discount kind of yield neutral? Just curious what's left out there.

Sure. Andrew, I think given we're sitting here in early March or the cursor as of mid-February, what is generally remaining to sell is the fourth quarter. So that is our low season. Those guests do book closer in. I mean we do have probably some remaining cabins in the third quarter, et cetera, but a majority of that 14% is the fourth quarter, and that's similar year-over-year.

Got it. And then I appreciate the commentary on fuel. I know it's a small part of your cost structure. But I guess, Brent is up 35% or so this year. Just your fuel cost in '25 versus '24 were pretty flattish. I think that I would expect that to change this year. Anything -- any color you can give just in terms of that $20-plus move in crude, what kind of the like-for-like EBITDA impact could be on the business? I just want to hone in on that a little bit more.

Sure. So I mean, I think at the end of the day, we took a lot of time to design our ships to be fuel efficient. And so for oceans, we do use heavy fuel. Obviously, right now, the market is where it is. But I think the team has done a really good job of managing through times like this. We are monitoring where fuel prices are, and we will act accordingly. For River, we have entered into fixed price contracts for a significant portion of the '26 season.

The next question will be from David Katz from Jefferies.

Congrats on the quarter and appreciate all the details so far. What I wanted to ask is that you obviously continue to put up outsized growth and project outside growth with further capacity, how do you think about the depth of the market that you are growing into, right? Are there new to cruise customers that you're getting to explore? Are your existing customers sailing more? How do you think about a, say, total addressable market, I suppose, is the essence of the question?

Yes. I think maybe -- Tor, I can handle that here. I think maybe even we were -- have been a bit surprised by the fantastic demand we have had for our product, both the Rivers and the Ocean. But I think when we analyze it and look at where our guests come from, we see that many of our new-to-brand guests, both on the Rivers and on the Oceans come from the established ocean cruise lines. And they are really a guest who are not so happy with being on huge ships with lots of screaming kids, our policy on kids and casinos and the like.

So they've graduated from being on noise entertainment places to being on more calm peaceful places, but they can enjoy their books and themselves. So I think we really found -- I know what we knew what we did when we designed it, but I think we underestimated people's reluctance to being on these other ships. Of course, they're great for kids, and they'll be great for moneymaking and so forth, don't get me wrong. But I think it's a good source of business for us. And of course, you have seen that some of the other people have started to come in our slipstream to see what they can do in the same field, too.

So I think we haven't tried to quantify the total addressable market, but we have all confidence that the order book will be relatively easy to fill. So that's all I can say.

Yes. And I'd like to add to that. Yes, and we have a huge brand awareness when it comes to river cruising, and that is also another avenue through which we expand into the total addressable market of people who would not oridinarily contemplate a cruise. And when they join Viking River Cruise, then they see that there is a different way to travel and that then creates a feeder into that addressable market for the other products that we have in our portfolio. So it's a combination of our thoughtfully planned Ocean Expedition, but also this enormous brand value that we have by being over half the market share in River.

Understood. And if I may just follow up quickly, and I am past it, but I appreciate the screaming kid comment. With respect to other entries into the river cruising market? Are you comfortable? And how should we be comfortable that there's enough room in that marketplace for some new entrants to add some ships and that, that's not going to have an impact on you?

I suspect all entrants into markets will have some impact, but the question will it be a negative impact or a positive impact. The negatives, we all know about. But positively, it creates even more buzz around their whole river cuirse concept. So I look forward to seeing the advertising when they say are you tired of being on our big ocean going ships, try one of river ships. That's a wonderful. I'll see what their advertising will sell. So I think we are -- and we have a year 29-year head start on them. So we shouldn't really be unduly worried about it, I would say.

And I think it's similar on the disposal side, where you see that others are starting to copy us there, too. They've been in the business for 50 years. So I think we've done something right. But it means we shouldn't rest on our laurels, but we should build on them, for sure.

The next question will be from Stephen Grambling from Morgan Stanley.

Over the past 3 years, you've had gross margin expansion. Would love to just get your thoughts on some of the drivers of that and any considerations on how that may evolve not only in 2026, but beyond?

Sure. I mean I think we have approached the business with the guests first and what all Tor has mentioned even in his earlier remarks. And with that, we've been able to build our brand, deliver an excellent product, which has led to capacity increases, yield increases and then we've been prudent with operating expense. So all those things combined have led to the margin expansion you see today. I mean, of course, our hope is that we continue that into the future. The management team has done a great job -- and so the goal is to continue that.

And sorry, I just want to make sure I zoom in on specifically gross margin rate, so thinking about the difference between net yield and gross pricing, right, your net yield or your net pricing has been above gross pricing. Normally, we think of that as being things like commissions, transportation, other. Anything in there that's permanent that should be driving it and any impact from fuel prices going up, that could influence how that flow through could look in the year ahead?

Sure. I mean, I think, obviously, we try to be balanced when we approach pricing and cost. And so as the team works through those things, we do our best to ensure there is margin expansion. Obviously, historical performance and no promise for the future, but that's something that we focus on. I think at the end of the day, we are getting the benefit of both price and being prudent with cost.

The next question will be from Brandt Montour from Barclays.

So a question on -- another question on costs. The marketing and sales line, you guys did get a lot of leverage on that line in '25. You didn't get a lot of leverage on that line in '24. Another year of substantial capacity growth, and you guys are now going to be spending, I assume, well over $1 billion on marketing and sales. Maybe you could take us a bit under the hood here and just sort of talk through the leverage that you think you can get, if you can get that this year and what channels you might be expanding to sort of scale with this growing business?

I'm going -- I think I understood the question, but I'll give it a try. So we do feel that we can leverage and scale SG&A. We have -- we are -- we see ourselves not just a cruise operator but also as a marketing company. And as we think about the tools available in the market now with respect to AI and machine learning, there are certainly multiple areas of the business that we can have a broader digital transformation strategy that would help with the cost. So we feel that there could be some scaling or leverage off of our SG&A as capacity increases.

Could I make a comment, please? Maybe I can make another comment in that regard. The way the accounting work, the marketing expenses are expense as incurred. But of course, we are booking so far in advance. So as we grow, it means I know some -- a large portion of our marketing expense this year is related to 2027 operations. So as we grow, you can say, a disproportionate amount of the expenses are charged to the current year rather than to the next year, but to which I really are attributed. So that is something one should take into account when one evaluates these expenses too. This is so common.

No, that's great color. I think what I was trying to get to is the G&A per capacity unit that's the line that I think a lot of us focused on that was down year-over-year in '25, which is great. And so the question is, can you keep that line -- that metric muted were sort of well below yield growth for the next year or 2 years?

We don't guide, but that is something that is certainly in our consideration set, and we will try to leverage SG&A.

And the final question today will be from Patrick Scholes from Truist Securities.

You talked about 86% sold for this year. My question around that is how much of that is, we would say, lock tight nonrefundable at this point?

Generally speaking, our guests not only book in advance, but they also pay in advance. And what we found is that once they are booked and paid, there is generally very low cancellation rates. And we also encourage that by the fact that we engaged them prior to their trip. So we will send them language lessons, things to look forward to, to really make sure that they're looking forward to the trip. So I would say that and you could see this in prior bookings as well and how it developed into results that once they are booked and paid, the booking becomes generally verysticky. And that is why we feel that showing these booking curves are the best factual indication of what the current season looks like.

Okay. My follow-up on that. would be let's just hypothetically and hope it doesn't happen, that things did really continue to escalate. There would be hypothetically fear of travel, but your ships were or your vessels were still sailing, could those who have booked still -- or what percent could still cancel with refund at this point down the road?

Sure. So our cancellation policy is -- generally starts to kick in around 90 days prior to sailing. But having said that, the -- what we've seen in historical patterns is that our guests are quite first in reading a map. And so they can see where the areas of conflicts are and where they're planning to travel. And they also trust the brand, meaning that we will not operate if we feel that it would be unsafe for our guests and our crew. And we've seen that in prior where they will either hold and wait for Viking to make announcements or they will maybe just push it out a little bit later. But generally speaking, the booking curves are pretty sticky. And so -- another part of the equation here also is that with being 86% sold, any cancellations, we still have time to resell that inventory at.

This does conclude today's Q&A session. I will now turn the conference back over to Tor Hagen, Viking's Chairman and CEO for closing remarks.

Well, I want to thank everyone for joining us today on this call. I also thank you for your support and interest in Viking. And I wish you a great day. Have a nice one.

Thank you. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.

Good morning. My name is Tom, and I will be your conference operator today. At this time, I would like to welcome everyone to Viking's Third Quarter 2025 Earnings Conference Call. As a reminder, this call is being recorded. [Operator Instructions] I would now like to turn the program to your host for today's conference, Vice President of Investor Relations, Carola Mengolini.

Good morning, everyone, and welcome to Viking's Third Quarter 2025 Earnings Conference Call. I am joined by Tor Hagen, Chairman and Chief Executive Officer; and Leo Talactac, President and Chief Financial Officer. Also available during the Q&A session is Linh Banh, Executive Vice President of Finance. .

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 risk non ISRS financial metrics, which are reconciled and described in our press release posted on our Investor Relations website at ir.viking.com.

Tor and Leah will begin today's call with a strategic overview of the business, including a recap of our third quarter results and an update of 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.

Thank you, Carola, and good morning, everyone. This is a great and memorable quarter with very good financial results, a strong booking environment and highlighted by a significant operational milestones.

Starting on Slide 3. You can see that in the third quarter, net yields increased 7.1% year-over-year. Leah will provide more detail shortly, and I want to highlight that our consolidated net yield this quarter was $617 the highest in Viking's history.

Turning to the overall booking environment. We continue to see strong momentum. As of November 2, 2025, and for our core product, 96% of our 2025 capacity was sold, and 70% of our 2026 capacity was already booked to. I believe that this reflects the strength of the Viking brand, the resilience of our target customers and the appeal of our destination-focused products. As we continue to grow our fleet, this forward visibility gives us confident in our trajectory and in our ability to deliver long-term value to all stakeholders.

I also believe that our well-defined product and clear focus on our customer base have enabled us to build a robust travel platform and support a steady fleet expansion. This has also allowed us to extend the brand into new destinations that further strengthen our guest loyalty. Our guest value and understand Viking, we do not try to be everything to everyone. We focus on the destination and on cultural enrichment while providing an intimate elegant atmosphere on board.

Now if we look at the next slide, #4, you can see how this strategy out a remarkable milestone. We started Viking 28 years ago with four river vessels. And today, we have a fleet of more than 100 ships, 103 to be exact. I believe that this growth reflects both disciplined execution and an innovative approach. First, we have been modernizing river voyages. In addition, we have been reinventing ocean voyages and perfecting the expedition experience. Each of these products is approached with the same philosophy of thoughtful design, cultural debt and operational discipline. We have been modernizing River voyagers by transforming what river cruising can be. We have introduced new elegant and efficient ships with immersive tenders that bring guest closer to the art, history and culture of every destination.

Today, River cruising has become a globally recognized way of travel and Viking with a fleet of 89 river vessels, offer the most extensive and enriching collection of river itineraries across the world. We have also been reinventing ocean by bringing the same vision that is modernizing the River Cruising. We are redefining what an ocean works can be introducing new small elegant ships designed not for entertainment, but for enrichment.

At Viking, we said that we are for the thinking person. True to that promise, our ocean itineraries with a fleet of 12 ships focus on cultural discovery and meaningful experiences, bringing our guests closer to the world's most inspiring destinations.

And lastly, we have been perfecting the expedition experience. With purpose-built ships, we enable our guests to explore the most remote regions of the parent from Antarctica to the Artic and also closer to on North America's great Lakes. These itineraries are designed with safety and comfort at the core by placing science, exploration and sustainability at the heart of every journey. In doing so, we are creating a new category of travel on that feels less like tourism and more like meaningful discovery.

This innovative approach is also reflected in the extraordinary breadth of our offerings. As shown on Slide 5, we are currently providing itineraries that cumulatively span more than 85 countries across all seven continents, all five oceans, 21 Rivers and five lakes, calling on over 500 ports. Look now, we remain committed to setting the standard and experiential travel, offering opportunities to explore the world and ways that are comfortable, cultural enriching and environmentally responsible.

As we reflect on this milestone, achieving a fleet of 100 vessels, let me turn to one of our key advantages that have helped fuel the growth in the River segment, which is in docking locations. On Slide 6, you will see how these set Viking apart. Our River vessel dock in the hearts of citizen towns near historical and cultural attractions. They provide our guests with more time onshore to enjoy the local culture. Today, we control our priority access to 113 of the most coveted document locations in various regions of the world. This includes premier locations in Paris, just 800 meters from Leo Power and in Luxor, close to the [ Karar ] temple. This unique access not only enhances the guest experience, but also reinforces Viking's leadership position in River.

Now to conclude this section, I will share some great news about our product is being recognized across the industry. On Slide 7, you can see that Viking has once again been rated #1 for oceans and #1 for rivers by continent traveler. Now for the fifth consecutive year in the 2025 Readers Choice Awards. We were also honored as a world's best by Travel and Leisure in the 2025 World Best Awards. No other travel company has simultaneously received such owners across these product lines from both obligations. What makes these awards, especially meaningful is that they voted on by the guest reinforcing that our distinct approach resonates with those who value meaningful travel. They also reflect the dedication of our entire team whose commitment ensures that every voyage lives up to the Viking's. By saying crude drive principles, small ships, destination-focused attendees and exceptional service, we have been able to leave without compromise. And as we look ahead, we remain committed to maintaining the standards that are on these certain conditions. With that, I will turn to Leah to discuss our financials.

Thank you, Tor, and good morning, everyone. I will start by reviewing our third quarter results, which were very good and will also mention a few records worth highlighting. On a consolidated basis, capacity grew 11% and net yields rose 7.1%, resulting in a 21.4% increase in adjusted gross margin year-over-year. As Tor noted, net yields were $617 this quarter, the highest in Viking's history. As expected, vessel expenses, excluding fuel per capacity PCD increased 9.6% year-over-year.

Consistent with what we shared last quarter, the year-over-year increase was driven by several factors. These included changes in our itinerary mix, which led to higher expenses such as port charges, as well as slightly higher repair and maintenance costs compared to the prior years. Repairs and maintenance costs occur when specific work is required on our vessels and the timing can shift depending on operational needs. As a result, the cadence of these expenses may differ from one period to the next and is not always a like-for-like comparison. I will note that with a larger fleet and a different mix of itineraries, both capacity and net yields increased more than offsetting expected cost increases.

Regarding SG&A, expenses remained flat as a percentage of adjusted gross margin when compared to same time last year. Following the year-over-year step-up in expenses during the second quarter, we continue to invest in our teams, including through stock-based compensation to support long-term growth. As it relates to overall expenses, we remain firmly committed to disciplined cost management, while at the same time, retaining our talent, supporting our expanding capacity and stimulating demand. We believe that this balanced approach ensures we are not only managing today's environment responsibly, but also laying the foundation for Viking sustained growth and long-term success.

Having said this, we are proud to report the highest quarterly adjusted EBITDA in our company's history at $704 million, up 26.9% year-over-year. while also reaching one of the highest adjusted EBITDA margins at 52.8%. As we have shared before, capacity growth, coupled with yield growth translates into strong EBITDA improvement and margin expansion.

In summary, you can see that this quarter, we achieved the highest net yield in Viking's history and the highest adjusted EBITDA. We believe that these great results underscore the strength of our business model, the resilience of the demand across our portfolio and the discipline of our execution as we continue to deliver profitable growth.

Now moving to net income. This was $514 million, an improvement of almost $135 million when compared to the same period in 2024. We I will note that the net income for the third quarter of 2024 includes a loss of $18.6 million from the revaluation of warrants issued by the company due to stock price appreciation. While this quarter in 2025, we recorded nonrecurring charges of $19.7 million in connection with debt refinancing, which are included in interest expense. Adjusted EPS was $1.20 for the third quarter, up 33.2% year-over-year.

Now before moving to our reportable segments, which are on Slide 10, I would like to highlight that year-to-date, our consolidated adjusted gross margin increased 21% year-over-year to $3.2 billion, and our net yield is 7.4% higher than in the same period last year.

Now I will briefly discuss our to reportable segments, River and Ocean. Unless noted, I will be referring to year-to-date metrics or 9 months ended September 30, 2025. In the River segment, capacity PCDs increased 5.2% year-over-year, mainly driven by the addition of four new ships, two for Egypt delivered in 2024 and two for Europe delivered this year. Occupancy for the period was 96%, and adjusted gross margin increased 14.3% year-over-year to $1.4 billion. As a result, net yield was $589, up 7.8% year-over-year, driven by strong demand for both our Egypt and European itineraries.

For ocean capacity PCDs increased 15.3% year-over-year, mainly due to the addition of the Viking Vela in December of 2024 and the Viking Vesta in June of 2025. Occupancy for the period was 95.4%. Adjusted gross margin increased 28.5% year-over-year to $1.5 billion, while net yield increased 10.9% to $591.

Now moving to the balance sheet. On Slide 11, you can see that as of September 30, 2025, we had total cash and cash equivalents of $3 billion. Our net debt was $2.8 billion and our net leverage ratio was 1.6x and an improvement compared to the 2.1x shared last quarter. Also on Slide 11, we show our bond maturity outlook. In October of 2025, we issued $1.7 billion of senior unsecured notes due 2033. The net proceeds were used to fully redeem all outstanding senior unsecured notes due 2027 and to repay finance leases on two ocean ships and one expedition ship, with the balance designed to repay the finance lease on an additional ocean ship. To this end, bond maturities are now due 2028 and beyond.

Since our last earnings release, we have also realized additional financial achievements. Moody's upgraded Viking to Ba2 from Ba3, and we upsized our revolving credit facility to $1 billion. We believe that all these actions underscore our consistent performance, strengthen Viking's capital structure and enhance our financial flexibility to pursue long-term growth.

From a committed capital expenditure perspective and for the full year 2025, the total expected committed ship CapEx is about $910 million or $480 million net of financing. And for the full year 2026, the total expected committed ship CapEx is about $1.2 billion or $320 million net of financing. With that, I'll turn it back to Tor to review our business outlook, including our booking curves.

Thanks, Leah. Let's now talk about the booking curves, which are all as of November 2, 2025. On Slide 13, we show our consolidated metrics for our core products. As you can see, we continue to be in very good shape for both 2025 and the 2026 seasons. For 2025, 96% of our capacity PCDs for our core products is already booked. Advanced bookings equaled $5.6 billion which is 21% higher than the 2024 season at the same point in time, while the capacity has increased by 12%. Because our 2025 capacity is mostly sold out, these metrics are very similar to what we shared last quarter. I will note that as we approach the end of the calendar year, we might experience a few cancellations, which is normal.

Now moving to 2026. We are in very good position there too. The capacity for our core products is increasing by 9%, and we over 70% booked with $4.9 billion of advanced bookings. These are 14% higher than the 2025 season at the same point in time for 2024.

Now we'll talk about the advanced booking curves for the segments. On the next slide, you will see the curves for ocean business. This is Slide 14. I'll begin with the blue line, which represents bookings for 2025. Overall, we have sold 95% of the capacity PCDs for the year which is an increase of 18%. Advanced bookings are 29% higher than they were at the same point last year, and rates have remained very strong, equal to $717 compared to $661 last year.

Now if you look at the yellow line, you will see the booking trend for the 2026 season. As you can see, we are in very good shape, ocean capacity is projected to increase by 9% in 2026, and approximately 77% of the capacity has already been sold. This equals to about $2.4 billion in advanced bookings at average rates of $783 compared to $749 at the same point for the 2025 season.

If we move to Slide 15, you will see the current for the diverse I will start with the blue line, which drafts the advanced bookings for 2025. Like oceans, we are also having a great year in River. 96% of the 2025 capacity is already sold, which is an increase of 6% year-over-year. Advanced bookings are 16% higher than last year at this point in time and rates equal $820 compared to $758 last year. Like ocean, we are very at the call for the 2025 season, and our teams are now focused on 2026 and beyond.

Now looking at the yellow line, these are the advanced broken for the 2026. As you can see, we have sold $2.2 billion in advanced bookings, representing 62% of our capacity. Deliver operating capacity is expected to grow 10% year-over-year a figure slightly higher than the last quarter due to some tender adjustments. These are good trends for the 2026 river, which built on top of a steep 2025 curve. The rates equal to $928 compared to $853 in 2025.

So overall, advanced bookings for our core products are doing very well. They are either in line with or exceeding some of our expectations. Moreover, average rates for the 2026 season have increased. These are currently 5.5% higher than the 2025 season at the same point in time. Alongside the 9% increase in capacity. To this end, we are very pleased with how the curves are trending. Now Leah will add some color to our order book and capacity.

Thank you, Tor. Our order book chart, which is on Slide 16, has been updated to reflect the following: the successful delivery of four river vessels and the addition of option agreements for eight additional river vessels, which have exercised will result in four deliveries in 2031 and four more in 2032. You can see that we continue to prioritize expanding capacity to meet growing demand.

At Viking, we believe that by staying focused on delivering meaningful experiences, we will continue to drive strong earnings growth expand margins and sustain long-term financial performance. With this, I conclude our prepared remarks. I'll now turn it back to the operator to take questions.

[Operator Instructions] And the first question this morning is coming from Steven Wieczynski from Stifel.

Congratulations on a very solid quarter here. So totally, if we look at 2026 pricing across river and ocean, both improved not only from your August update, but it also improved relative to the update you gave when you did your debt deal in late September. So I guess what I'm wondering is maybe Help us think about what is driving that pricing increase right now? Meaning is as demand so strong that you're able to take price action? Or is it something out there where you still have more desirable itineraries cabin classes, whatever you want to think about it out there, that are now being kind of bought at this point for next year? And then maybe help us think about what type of promotional work or marketing you're doing currently in order to drive that demand into '26?

Steve, I think the key indicators that we're seeing with respect to our yield, really shows the health of our consumer. I think we've always said from the beginning that our consumers are different. They're more resilient. They have time. They want to travel, and they have the funds to do so. And in the prior earnings calls, we had mentioned that based on what we can see from the remaining inventory available that we would be able to achieve this mid-single-digit growth in price. So we see that come to bear this quarter, our marketing strategy has been to engage with consumers rather than take pricing actions, and this continues towards the future. I think we've said also in the past that we would like to be in a comfortable spot ending the year, but also still have enough inventory for next year's wave.

So you'll start to see that in our marketing spend, but we also are cognizant that people are also booking forward seasons. So it remains -- the cadence is similar to prior years with respect to marketing. However, we are quite pleased to see that our consumers are willing to travel and are willing to pay to travel with Viking.

And maybe I can add, Leah, I just came back from a day on a ship in Malta on the ocean ship and our customers rave about the product that we have. And there's some options. I have three more booked. I have four more books. So they're really very much looking forward to experiencing more of the Viking product, and that help me how different from everybody else.

Okay. Got you. And then second question, Leah, in the release, you made a remark that I thought was kind of interesting. You basically said Vikings capital structures in such a good spot at this point that it's giving you guys the financial flexibility to pursue long-term growth. And I guess the question is, maybe what does the pursue long-term growth mean to you guys? I'm wondering if you could maybe expand upon a little bit more what that means.

Sure. Long-term growth is really organic growth you saw that we ordered or have options for more river ships. We still feel that there is potential for us to expand our market share in the luxury ocean segment. And we also remain we remain optimistic that there could be inorganic growth as well. We are watchful again. We want to make sure that it's scalable, margin accretive and complementary to the brand. But with our capital structure the way it is, and we're structuring it with now we have the $1 billion revolver, we feel confident that we could be opportunistic when the opportunity comes.

Your next question is coming from Matthew Boss from JPMorgan. Matthew?

And congrats on a nice quarter. So with the acceleration on advanced bookings across both river and ocean, maybe to your point, could you elaborate on demand trends that you continue to see globally? Maybe more so what sets your experience apart from a loyalty perspective. And with that, how you plan to optimize pricing on the remaining capacity?

Okay. We have said many times, we are different, then need to repeat that. Of course, we only have a tiny portion of our capacity when the Caribbean, I think is 4% or something like that of the ocean capacity. So any kind of overcapacity that one may see there shall not impact us the liters. We have seen that people want to go from huge ships to smaller ships, and we are there to capitalize on that, I would say. We haven't seen any weak in demand. It's strong.

When you look at the demand curve, you could see -- when you look at them, of course, you say that we are very far ahead on the oceans. But that's a bit deliberate because we have new buildings coming on stream next year. And we'd rather make sure that we are in good shape as we start that year. So we were about to end that year now when you look at 70% being booked already. So I think you could argue maybe we could have been a little bit greedier on the price. But I think when you see the margins we have, we are fine with the way it is. And I think we've hit a very, very good spot on the oceans.

On the rivers, we are -- where we usually should be at this summer the year, and we haven't seen we have read about competition, but we haven't seen much of this.

Great. And then as a follow-up, Leah, could you speak to the cadence of recent booking trends over the last 3 months, maybe what you're seeing today as we think about the continued momentum just any differences in customer demand for your ocean relative to river experiences.

I would say that the demand is in line with expectation with Ocean being more booked than River, you can see that we are starting to focus on our river. But our book percentage complete on a consolidated basis is about the same as last year. And we are really agnostic as to whether our guests travel with us in Ocean, River, being that we are one brand. So I think we are quite happy with where things stand as far as how the pricing has developed. You don't really see much bifurcation with how our consumer is looking towards their experiences. There's no bifurcation between geographies or routes. Both our Ocean and River segments contribute to the uplift. So this reflects the consistency of the brand and loyalty of our guests worldwide. And this also is a strong indicator of our sustained pricing power going forward.

Your next question is coming from James Hardiman from Citi.

I wanted to follow up a little bit on the advanced booking commentary for 2026. I think you answered my first question, which is whether or not the acceleration was a function of sort of mix or other items versus just a stronger consumer. It sounds like it's the latter. But maybe speak to whether or not the relative acceleration between Ocean, which has been pretty consistent with where it started out 2 quarters ago in terms of 2026 advanced booking -- bookings for PCD relative to River, which has gone four to six to eight, right, the last couple of quarters. Is that an indication of stronger demand, accelerating demand in river and more consistent demand for 2026 in Ocean? Or are there other factors at play there?

I think I thought I started addressing the question in my comments that the efforts on the ocean side is, of course, a little bit influenced by the new building program that we have. So we'd like to be further out. On the rivers, if I read the chart on Page 15, you can see the prices that we get there now are some 8% higher than it was last year at the same time. So there's no weakness to be spotted there at all. Of course, the capacity expansion on the -- that we have on the Rivers is smaller than the capacity expansion on the Oceans. And that's why we want to be a little bit safe and make sure we are really well ahead on the Oceans.

That makes sense. I didn't know if, Leah, you had to add to that or no?

No. tour sums it up pretty well. I think that with Ocean being a year-round product, and River really having a shorter season with the shoulder seasons in the first and fourth quarters. I think the booking pattern reflects a little bit of how the seasons operate. But again, as Tor mentioned, Ocean is our growth engine. And so we are quite pleased that we are further ahead from a capacity percentage, but we are also quite pleased with how the river bookings and their price increases has transpired. .

Got it. That's really helpful. And then as a follow-up, obviously, since the last time we spoke, one of your main competitors or, I guess, I should say a new competitor we've sort of gotten a peak at what they're going to be bringing to the table in terms of a river offering. Any initial thoughts there compare and contrast? And then I forget what slide it was, but you spoke to the fact that you guys have control or priority access to 113 of the world's most coveted destinations, thoughts on that as a moat, are there any ways in which you can ultimately play defense as you think about a major competitor getting into that River space?

Well, I feel that we are so far ahead as we are. So I just want your football match between Italy and Norway. Norway beat it Italy 4-1 and the reason we beat them is that we stop playing defense, we have continued on playing offense. And I think that's what we plan to do also on the River business. We have a great position, and we want to exploit that fully.

Your next question is coming from Robin Farley from UBS.

Great. Just circling back to this nice uptick in booked revenue per passenger cruise day in the last 3 months. And when we hadn't necessarily seen it move up from May to August. I'm just curious if there is anything you would call out that was sort of in the comparable base that we may not see as easily as you can that has made this uptick? Or would you say that you are actually seeing an improved -- I don't know whether -- I don't know if you'd attribute it to like geopolitical situation being better or things that are actually accelerating the demand? Or just trying to get a sense of if there were things in the comparable base that made it look like an acceleration versus that sort of May to August.

Rob, I think that the booking curves or the trends that you have seen since the last few updates really shows and reflects the strength of our consumer. We did market more earlier in the year, but we saw the consumer respond even beyond what we had expected them to respond, both in volume and price. And so I think this goes back to our guests appreciate and know the Viking value and the product. They're very loyal. They would like to travel, and they're willing to plan ahead. And so I think all of that is coming to bear as the booking curves develop.

Okay. Great. And just for a follow-up, actually, on the expense side, you talked about how it's your marketing cadence will be similar and that's been successful for you and that you're investing more in the team and SG&A. I know some of the expense in the quarter, you talked about the timing of repair and things like that, that's just a timing issue. Would you say that the broadly, one would expect given the pretty significant capacity increase you have.

[Audio Gap] that's also something to keep in mind. Having said that, we are committed to also making sure that our expenses are -- they are within reason. So we make sure that we have said before, we're not going to save our greatness. However, we are very cognizant of how costs could increase. We would never compromise the quality of the product for that, but our operators on our ships are very well versed in how to navigate through price or through inflation and through cost pressures. And as well as in the corporate side where we have SG&A, we are also seeing some efficiencies as technology plays a larger part in how we do business. But with the growth that we have, there are going to be increases because what we are spending today really is to support next year and as it goes on. So very good observation.

Your next question is coming from Brandt Montour from Barclays.

So one of the -- I say Norwegian is moving capacity out of Europe in '26. Is that a tailwind for you guys? Or is it just sort of too different of a customer to actually matter for you?

Now I would say two product lines. they have the children entertainment business. I mean the mass market, big ships. And whatever they do there doesn't impact us at all. Of course, they have other products which are more related to our ocean business. And I haven't quite followed to the extent they move any of that out. Of course, it means there's less capacity to compete with.

But again, I feel we are in such a unique positions. So I don't worry too much about what other people are doing. I think for us, it's really macro continuing to deliver the outstanding product that we have to the guests that we have and such loyal followers of us. So I don't worry too much about it or think about it too much.

Okay. Okay. That's helpful. And then just a follow-up, maybe to that point, Tor. I guess reading into your answer to James' question about Royal Caribbean and Celebrity and just essentially you said you were going to press your advantage. I want to understand kind of maybe what you mean by that. It seems like their product is going to be a little different, right? There's going to be kids allowed. There's going to be more bells and whistles. It's going to be a little bit -- we think more -- a little bit more expensive than perhaps your product, what do you mean by pressing your advantage? And do you think that there is -- how much overlap do you really think you have here with they're going to -- the tool they're going to try and sell to? .

Well, we have some huge advantages in the docking sites we have. It's also the design we have of our River ships, which is quite unique because we can take 190 guests on our river ships I don't know where they will end up being in the end, there's 60 or thereabouts made it. But obviously, if we get 20 more guests on the ship, and it cost pretty much the same to operate, that I'd tell you we have a huge advantage either in terms of making a better offer to our guests or making more returns to our shareholders. So I think the design we have on our ships is really very, very, very unique.

And I think the fundamental sound design where we design for cost and efficiency rather than for bells and whistles is a much healthier way of doing business, at least that's the icing philosophy.

And can I add to that also the breadth of our itineraries. We currently have operations in 21 Rivers and so I think we will continue to make sure that we remain dominant in that market, the North American market that travels to Europe and other rivers worldwide.

Your next question is coming from Stephen Grambling from Morgan Stanley.

Just wanted to follow up on some of your comments around SG&A and just margins more broadly. I guess, I know you don't guide, but are there any other puts and takes to consider as we look at the year ahead or even longer term, I know that your order book, I think, is actually lower in '27 right now for ocean relative to 2026. So is that potentially, I guess, in some ways, a tailwind in some ways for SG&A next year as you're investing for the year ahead? Or do you already have to build for 2028? And then any other color you have on kind of gross margin puts and takes.

Stephen, your well. That's a great question. I think at the end of the day, if you look at our order book, we have growth year-on-year. I note that, yes, we do take two ships Ocean ships for delivery in '26 versus one in '27. But I think the one thing to note is that in 2027, then we have three new ships operating.

So we're seeing continuous growth year-over-year, which means from an SG&A perspective, we will continue to also at the end of the day, grow that. But is an area where we do believe we can leverage for margin expansion. And as you can see from the quarter's performance and our year-to-date performance with the capacity we have and the yields we have -- we've been able to grow adjusted EBITDA as well. So that's obviously a goal we still maintain.

And maybe one other follow-up on that. One of the, I guess, the hallmarks of the business has been the marketing engine. How do you think about utilizing AI or other technology to further bolster that? And are there other opportunities to leverage AI in the broader business?

Yes, sure. So we do see -- certainly see opportunity both from a marketing perspective and also from a revenue management perspective. With the new technology or the technology that we have available. So those are at play now. Could there also be opportunity to use that same technology as we think about how we look at and operate the rest of the business, certainly. So these are certainly initiatives that we have already begun and some of it is also already being used. So there -- and I think when we think about efficiencies and leveraging some of that, there's certainly opportunity in the future.

Your next question is coming from Lizzie Dove from Goldman Sachs.

I wanted to go back on the comments that you mentioned around inorganic growth. And just maybe if you could give us a refresh on what type of things high level could be on the table there? And you've really built up a very, very strong balance sheet, great cash balance. Like to what extent that kind of precludes you from capital returns in other forms over the medium term?

Lizzie. Sure. So I just wanted to level set on what our guiding principles when we think about acquisitions or opportunities. So we want to make sure that it's scalable that it doesn't distract from our organic growth. We want to make sure that it's margin accretive. And we also want to make sure that it is complementary to the brand and within the brand ethos because the One Viking brand really is so powerful.

So having said that, there are others we know that our guests travel and do other things outside of cruising. And we had, in the past, we had in the past operated something that we called the Viking Tours, which was more geared towards land-based products. At the time that we started it, it was not the right time. I think it was like back in 2000 and in 2009 or something like that, but it was not the right time, but could that be something that could do in the future certainly. But we are a much different company now than back then. And so we have to make sure that we deploy not just our capital but also our human resources where it would make -- generate the most shareholder value.

On, if I may add, Leah, we have also been -- we are dipping our toes into the Chinese market, the Chinese outbound market. So as you probably know, we operate four river ships in Europe, for the Chinese, and we have an Ocean ship which also will be deployed in some fashion for the Chinese. Of course, the Chinese market is huge and different from other operators of travel. We market our product directly to the Chinese consumer, sometimes with the travel agent in between, but largely directed to the Chinese consumer. This will take time to develop, so we shouldn't push too much about it now. But I think this could be a significant growth engine in the longer term. So that's something we could reserve funds for.

That's helpful. And then just on the customer side. I mean you clearly operate in this great demographic, a lot of demand and a growing customer demographic growth. Maybe you could share like in terms of the customer demand you're seeing, like how much is kind of repeat visitation or cross-sell between River and Ocean and also like how much you're seeing in terms of out-brand new to cruise. Any kind of color around that I think would be interesting.

Okay. So from a repeat guest percentage, we are seeing quite a few of our guests repeat. So for the 2024 season, 53% of our guests had traveled with us before. And as Tor mentioned, there are quite a few of them with more than one or two active bookings. We have seen that there are guests who may have three or four additional bookings in addition to the booking that they currently are on. And in fact, we have a very good take rate. When we think about guests who are currently on an Ocean ship they will book their next journey with us while they are on their current ones. So I think that is also a testament to how well the product presents itself. It's not just about marketing. We also operate an outstanding product that guests truly enjoy.

As far as new to brand is concerned, we continue as obviously, when we're growing the way that we're growing, you want to make sure that your repeat guest percentage remains high, but also that you attract new to brand. And we start to see that and when we ask them who they mostly come from we start to see that quite a few of our guests had started with the larger cruise operators. But once they hear about the Viking way of travel, they are drawn towards that way of travel. Well of experiential cruising with destination...

[Audio Gap] the role we have in the Oceans. And when we look at -- we are some who have we traveled with before. And I will not do free advertising for people we shall not do [Audio Gap] and so forth. And it really means that as [Audio Gap] this is the fact that we don't have children board is a quiet serine atmosphere at boarder ships, really makes it very easy for us to convert people who have been having enjoyable times on Ocean ship because they hear something totally different. So that's really a very important part of the mission we are on.

Your next question is coming from Trey Bowers from Wells Fargo.

Good to talk to you all. You guys have laid out a really impressive committed capacity growth book for the next 6 years, maybe 8 years in Ocean. In terms of that new capacity coming online, is that there's so much untapped itineraries out there at different regions that as you introduce these ships, the itinerary mix should look significantly different in the years to come? Or do you feel like in the kind of current regional mix that you're servicing today that there's so much demand out there that you guys are not able to meet that. So just a little bit kind of under incremental information around kind of how this ocean business is going to continue to develop would be great.

Yes. I'd say it's more the latter. You have seen from our booking curves that we are selling far ahead, and we have sold out of many of the itineraries. So I think it's really more of the same. And to more customers, which is a fairly simple message to get across. So that's really what it is on the options. On the rivers we have been able to expand the geographic spend a bit.

So for example, I feel we own the Nile, and we're now in India and so forth. So there, we can add product Ocean we cover the whole globe. So it's really just more of the same and we have the demand there as we can see it.

So looking ahead a few years, if we were to look at what itineraries have looked like for the last few years, the expectation would be it's still predominantly Europe and Northern Europe. You mentioned China. Just curious, that was my thought is what we see maybe a little more Caribbean from you guys in the years to come a little more Asia in the years to come, especially just given what a leadership role you already laid out that you guys already represent River as you kind of build this luxury business and represent such a large share of it. Do you feel like there's -- your customers, as you mentioned, in Malta, would love for you guys to introduce I don't even know, an itinerary where you've never even been there before. And given all the repeat customers, do you feel like that's something that you guys can continue to grow in the years to come.

Yes. I think people trust us. So for example, now this itinerary we had in Malta. From Malta to Tunisia to Algeria, Casa Blanca and can you dare do that?

No problem, you'll be Viking, you're say fans. So I think that we can do fairly readily. But I'd also like to add, we have a couple of benefits. First of all, we started our -- we have been able to design a type of vessel that is a standard. So you can come on board.

I think yesterday it was a -- I don't what ship it was, it was a Viking Saturn, I think. We're just 2 years old. You can't really tell the difference between it and Viking Star, which is 10 years old or 11 or whatever. So the fact that we have been able to have consistent clear standard from one ship to other to. It really makes it very easy. It's all interchangeable. So Southwest is it, has done this quite well. So I think it's a major, major benefit here what that means that we have good we have good contracts for the shipyards in terms of the capital costs because they like to build more of the same too ,so that we don't have to reinvent and have uncertainties. So it's been a fair smart thing, I would say. So we should stick to that and just continue on the path we have.

One thing to keep in mind also is that our guest demographic is quite different. They are ready and willing to travel year-round. So when we think about the people who travel on the larger public cruise lines, they have to worry about holidays and when children are in school or out of school, whereas our guests travel year round. And so right now, for the 2024, Viking from a luxury Ocean market perspective, we were only 24% of market share, whereas in River, we're over 50%. And so when we look at what is the -- what could we dominate in, we're already over 50% in River. And we see really this white space where people enjoy the product. We have purposefully built ships to have itineraries in Europe where larger ships cannot go. And as -- and we're already seeing that when the larger public cruise lines are pulling out of Europe. And so there's certainly opportunity for us there. We don't really -- we want to go where the destination is the focus, and that's not really the Caribbean.

So we will continue to make sure that our guests have the ability to travel Mediterranean in the quiet season. Or in the Nordic countries. And then certainly, there are other more exotic locations that, as Tor mentioned, our guests are really willing and able to travel to and they want to, and then they do feel that comfort and sense of safety when traveling with Viking.

Yes, it entraining in the second half of November. It's a fantastic nice place to be. nice temperature, not too crowded and all of that. So I think Caribbean, we only have tiniest River there. And even the little Caribbean product we have is different goes largely out on San Juan and then it goes to each of the items. So there's something to see. You're not only go to either open sea or even worse. I've heard you go to islands where you can then rent cabanas, which is not really genuine and so forth. I think we are about real life experiences not fake. So I think we have a very, very good product.

Great. And then if I could just sneak one quick one in. I think it was Lizzie asked about the nonorganic growth and you went to non-cruise, does the -- just that consistency of product kind of preclude you guys remember adding in an inorganic basis cruise ships. Is that something you've just decided we're going to only build? Or are there potential other luxury river or ocean brands out there that you could kind of easily make them meet the Viking standard if they came up for sale? .

You should never say never, but not far from it, I would say. Not far from never. It would take a hell of a special situation to convince us otherwise. Of course, it's been important for us to be able to secure document spaces. So there may be some things we can do in that area, I would say, that's high value to create great moats. But it's not -- we our guests like the brand we have and we shouldn't try to confuse them too much. So -- but I will never say never.

Thank you. That is all the time we have questions for this morning, and this does conclude our Q&A session for today. I will now turn the conference back over to Tor Hagen, Viking's Chairman and CEO, for closing remarks.

Well, thank you all for listening to us. I hope you share our optimism. It's been a spectacular year, after 27 spectaculars or behind us. So I think we look very optimistically towards the future. But we also like to be a realist, and it's nice to have a sound capital structure that you never know what happens and either in terms of problems or opportunities. So thank you very much.

Thank you. This does conclude today's conference call. You may disconnect at this time, and have a wonderful day. Thank you once again for your participation.