Viking Holdings Ltd Q3 FY2025 Earnings Call

Good morning. My name is Tom, and I will be your conference operator today. I would like to welcome everyone to Viking's Third Quarter 2025 Earnings Conference Call. As a reminder, this call is being recorded. I would now like to turn the program over 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 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 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 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 was a great and memorable quarter with very good financial results, a strong booking environment, and highlighted by a significant operational milestone. Starting on Slide 3, you can see that in the third quarter, net yield increased 7.1% year-over-year. Leah will provide more detail shortly, but 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 products, 96% of our 2025 capacity was sold, with 70% of our 2026 capacity already booked as well. I believe 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 confidence 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 guests 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 you look at the next slide, #4, you can see how this strategy has brought us to a remarkable milestone. We started Viking 28 years ago with 4 river vessels, and today, we have a fleet of more than 100 ships, 103 to be exact. I believe this growth reflects both disciplined execution and an innovative approach. First, we have been modernizing river voyages. Additionally, 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 depth, and operational discipline. We have been modernizing river voyages by transforming what River Cruising can be. We have introduced new elegant and efficient ships with immersive itineraries that bring guests 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, offers 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 Voyage can be, introducing new small, elegant ships designed not for entertainment, but for enrichment. At Viking, we said that we are for those who think first. 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. Lastly, we have been perfecting the expedition experience. With purpose-built ships, we enable our guests to explore the most remote regions of the planet, from Antarctica to the Arctic, and also closer to home on North America's great lakes. These itineraries are designed with safety and comfort at the core, placing science, exploration, and sustainability at the heart of every journey. In doing so, we are creating a new category of travel, one 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 7 continents, all 5 oceans, 21 rivers, and 5 lakes, calling on over 500 ports. Looking ahead, we remain committed to setting the standard in experiential travel, offering opportunities to explore the world in ways that are comfortable, culturally 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 the docking locations. On Slide 6, you will see how these set Viking apart. Our river vessels dock in the hearts of cities and towns, near historical and cultural attractions. They provide our guests with more time ashore to enjoy the local culture. Today, we control or have priority access to 113 of the most coveted docking locations in various regions of the world. This includes premier locations in Paris, just 800 meters from the Eiffel Tower and in Luxor, close to the Karnak Temple. This unique access not only enhances the guest experience but also reinforces Viking's leadership position in River Cruising. To conclude this section, I will share some great news about how 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 Conde Nast Traveler, now for the fifth consecutive year in the 2025 Readers' Choice Awards. We were also honored as a World's Best by Travel + Leisure in the 2025 World's Best Awards. No other travel company has simultaneously received such honors across these product lines from both publications. What makes these awards especially meaningful is that they are voted on by the guests, 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 name. By staying true to our principles, small ships, destination-focused itineraries, and exceptional service, we have been able to lead without compromise. Looking ahead, we remain committed to maintaining the standards that have earned us recognition. With that, I will turn it 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 the 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's 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. 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 two 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 4 new ships, 2 for Egypt delivered in 2024 and 2 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, 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 2 ocean ships and 1 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. 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 a very good position there, too. The capacity for our core products is increasing by 9%, and we are already 70% booked with $4.9 billion of advanced bookings. These are 14% higher than the 2025 season at the same point in time in 2024. I'll talk about the advanced booking curves for the segments. On the next slide, you will see the curves for Ocean Cruises. This is Slide 14. I'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 equates 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 curves for the River Cruises. I will start with the blue line, which graphs 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 equaled $820 compared to $758 last year. Like oceans, we have very little to sell for the '25 season, and our teams are now focused on 2026 and beyond. Looking at the yellow line, these are the advanced bookings for the 2026 season. As you can see, we have sold $2.2 billion in advanced bookings, representing 62% of our capacity. The river 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 builds on top of a steep 2025 curve. The rates equal $920 compared to $853 in 2025. 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 a 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 4 river vessels and the addition of option agreements for 8 additional river vessels, which, if exercised, will result in 4 deliveries in 2031 and 4 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.

And the first question this morning is coming from Steve Wieczynski from Stifel.

Congratulations on a very solid quarter here. So Tor, Leah, 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 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 show 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. In the prior earnings calls, we had mentioned that based on what we can see from the remaining inventory available, 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 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. Our customers rave about the product that we have. They come up to me and said I have 3 more booked, I have 4 more booked. So they're really very much looking forward to experiencing more of the Viking product. They tell me how different we are 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 Viking's capital structure is 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. 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.

Congrats on a nice quarter. 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. I don't need to repeat that. Of course, we only have a tiny portion of our capacity in the Caribbean; I think it's 4% or something like that of the ocean capacity. So any kind of overcapacity that one may see there shall not impact us the slightest. 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 weakening in demand. It's strong. When you look at the demand curves, you could see 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're 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 it the way it is. I think we have hit a very, very good spot on the oceans. On the rivers, we are where we usually should be at this time of the year. We haven't seen we have read about competition, but we haven't seen much of it.

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. We are really agnostic as to whether our guests travel with us on ocean or 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. We 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. This reflects the consistency of the brand and loyalty of our guests worldwide. This is also 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 on the advanced booking comments for 2026. It seems you addressed my initial question regarding whether the acceleration was due to mix or other factors versus a stronger consumer, and it sounds like it's the latter. Could you elaborate on the difference in acceleration between ocean, which has remained stable over the past two quarters for 2026 advanced bookings per PCD, and river, which has seen growth from 4 to 6 to 8 recently? Does this suggest stronger and accelerating demand for river, while ocean maintains consistent demand for 2026? Or are there other elements influencing this?

I think what you mentioned is interesting. Please continue, Tor.

I thought I'll leave it to you. I think I started addressing the question in my comments that the efforts on the ocean side are, of course, a little bit influenced by the new building program that we have. So we'd like to be further ahead. 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. The capacity expansion on the rivers that we have is smaller than the capacity expansion on the oceans. And that's why we want to play 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 anything to add to that, or no?

No, Tor 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 have transpired.

Your next question is coming from Robin Farley from UBS.

I want to revisit the recent increase in booked revenue per passenger cruise day over the past three months. Since we didn’t see a rise from May to August, I'm wondering if there's anything specific in the comparable data that might not be immediately obvious, which has contributed to this increase. Do you believe this is due to an improved geopolitical situation or factors that are driving demand? I'm trying to understand if there were elements in the comparable data that created the appearance of an acceleration compared to the May to August period.

I think that the booking curves or the trends that you've seen since the last few updates really show and reflect 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. 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.

And just for a follow-up, actually, on the expense side, you talked about how 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 though broadly, one would expect, given the pretty significant capacity increase you have, that other things would scale outside of the kind of marketing and HR expenses that still would be an expectation that investors should have?

Sure. So you bring up a good point, which is that our SG&A for this year really is a reflection of what we are incurring today to support next year's growth. So that's also something to keep in mind. Having said that, we are committed to also making sure that our expenses are within reason. We have said before, we are not going to save our way to 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, thank you, Robin.

Your next question is coming from Brandt Montour from Barclays.

So, I understand that Norwegian is moving capacity out of Europe in '26. Is that going to be beneficial for you, or is it too different of a customer to make a difference?

Norwegian has, I would say, 2 product lines. They have the children's 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 position. So I don't worry too much about what other people are doing. I think for us; it's really a matter of continuing to deliver the outstanding product that we have to the guests that we have and who are such loyal followers of us. So I don't worry too much about it or think about it too much.

Following up on your point, Tor, I wanted to clarify your response to James' question regarding Royal Caribbean and Celebrity. You mentioned that you would focus on leveraging your strengths. Can you elaborate on what you mean by that? It seems their product will be somewhat different, allowing kids and featuring more amenities, and likely at a higher price point compared to yours. How do you define pressing your advantage, and how much do you think there is overlap between your offerings and what they're planning to sell?

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. We can take 190 guests on our river ships. I don't know where they will end up being on the end; there’s 160 or thereabouts, 170 maybe. But obviously, if we get 20 more guests on the ships and it costs pretty much the same to operate, then 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. I think a fundamentally 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 Viking philosophy.

And can I add to that also, the breadth of our itineraries; we currently have operations in 21 rivers, 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?

That's a great question, Stephen. Ultimately, if you examine our order book, we are experiencing growth year-on-year. While we have two ships scheduled for delivery in 2026 compared to one in 2027, it's important to highlight that by 2027, we will have three new ships in operation. This indicates that we are seeing continuous growth each year, which suggests that from an SG&A perspective, we will also keep growing. However, we believe there are opportunities to leverage SG&A for margin expansion. As reflected in our quarterly performance and year-to-date results, given our capacity and yields, we've managed to increase our adjusted EBITDA. This remains a key objective for us.

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, we definitely see opportunities both in marketing and revenue management with the technology we have available. These aspects are already in play. There is potential to use this same technology as we evaluate and manage the rest of the business. We have initiated several of these efforts, and some are already in use. When we consider efficiencies and how to leverage these tools, there is certainly room for future opportunities.

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?

I wanted to clarify our guiding principles when considering acquisitions or opportunities. We aim for scalability, ensuring it does not detract from our organic growth. Additionally, it should enhance our margins and align with our brand ethos, as the Viking brand holds significant strength. That said, we recognize that our guests engage in activities beyond cruising. In the past, we operated Viking Tours, which focused on land-based products. When we initiated that in around 2009, the timing wasn't ideal. However, it's certainly a possibility for the future. It's important to note that we are a very different company now than we were then, and we need to allocate our capital and human resources in ways that maximize shareholder value.

If I may add, we have also started exploring the Chinese outbound market. We operate four river ships in Europe for Chinese travelers and have an ocean ship that will also be used for this market. The Chinese market is vast and distinct from other travel operators; we market our product mostly directly to Chinese consumers, occasionally involving a travel agent. This process will take time to develop, so we should be cautious about boasting too much at this stage. However, I believe it could become a significant growth opportunity in the long run, and it's something we could allocate resources towards.

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, right? 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 new to brand and new to cruise? Any kind of color around that, I think, would be interesting.

Sure. Go ahead, Tor.

No, you start, and I finish. 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. As I mentioned, there are quite a few of them with more than 1 or 2 active bookings. We have seen that there are guests who may have 3 or 4 additional bookings in addition to the booking that they currently are on. 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 one. 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. We start to see that. 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 of experiential cruising with destination being the focus, not the ships. Once they're in the Viking ecosystem, then they continue to repeat.

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

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. We have seen from our booking curves that we are selling far ahead, and we are 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 oceans. On the rivers, we have been able to expand the geographic span a bit. For example, I feel we own the Nile; we are now in India and so forth. So there, we can add product. But on the ocean, we cover the whole globe. So it's really just more of the same. We have the demand there as we can see it.

So looking ahead.

No, no, go ahead.

Looking ahead a few years, based on the itineraries we've seen recently, we expect that Europe and Northern Europe will still dominate. You mentioned China, and I was wondering if we might see more Caribbean and Asia offerings in the future, especially given the prominent role you already play in river cruising as you expand your luxury business. Considering the strong interest from customers, like those you encountered in Malta, is there a possibility for you to introduce itineraries to destinations you haven't previously explored? With so many repeat customers, do you believe you can continue to grow in this area in the coming years?

Yes, I believe people have confidence in us. For instance, our itinerary that includes Malta, Tunisia, Algeria, Casablanca, and Cadiz is something we can easily offer. We have loyal Viking fans who support us. Additionally, we've designed a consistent type of vessel, which makes a significant difference. For example, the Viking Saturn, which is two years old, is nearly indistinguishable from the Viking Star, which is about ten or eleven years old. This uniformity across our ships allows for easy interchangeability. Southwest Airlines has successfully implemented a similar strategy, and it provides us with considerable advantages. This approach also results in favorable agreements with shipyards regarding capital costs since they prefer to build similar vessels. We avoid the need for reinventing the wheel or dealing with uncertainties. Overall, this has been a wise decision, and we should continue along this path.

One thing to keep in mind is that our guest demographic is quite different. They are ready and willing to travel year-round. In contrast, those who travel on larger public cruise lines have to consider holidays and school schedules, while our guests travel throughout the year. Currently, for the 2024 Viking luxury ocean market, we hold only 24% of the market share, whereas we exceed 50% in the river segment. When we assess potential dominance, we're already over 50% in river cruising. We see a significant opportunity where our guests appreciate the product. We have intentionally designed ships with itineraries in Europe that larger ships cannot access. We're already witnessing a shift as larger public cruise lines withdraw from Europe. This presents a clear opportunity for us. We prefer destinations that are not primarily in the Caribbean. We will continue to ensure that our guests can travel to the Mediterranean during the quieter season or to the Nordic countries. There are also more exotic locations that, as Tom mentioned, our guests are eager and prepared to explore. They feel a sense of comfort and security when traveling with Viking.

Like yesterday, the Mediterranean in the second half of November is a fantastic and nice place to be, with a nice temperature, not too crowded, and all of that. So I think Caribbean, we only have a tiny sliver there. Even the Caribbean product we have is different. It goes largely out from San Juan, and then it goes to each of the islands. So there's something to see; you 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. We have a very good product.

And 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 consistency of product kind of preclude you guys from ever adding in a non-organic basis cruise ship? 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 docking spaces. There may be some things we can do in that area, I would say, that's high value to create moats. But we shouldn't try to confuse them too much. Our guests like the brand we have, and we shouldn't try to confuse them too much. But I will never say never.

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 spectacular years behind us. I think we look very optimistically towards the future. However, we also like to be realistic, and it's nice to have a sound capital structure that we have. You never know what happens 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.