Viking Holdings Ltd (VIK) (Q2 2026) Earnings Call Highlights: Record Revenue and Strong ...

Negative Points

• Historically low water levels on European rivers (Danube and Rhine) have disrupted itineraries, impacting guest experience and requiring future cruise vouchers.

• Financial impact of low water and vouchers will extend into 2027 and 2028, affecting future revenue and yields.

• More than 50% of River capacity PCDs in Q3 2026 have been impacted, with 10-12% of those cruises canceled, leading to incremental costs and revenue loss.

• River occupancy in Q2 2026 was slightly lower year-over-year, partly due to Egypt itinerary impacts.

• Airfare cost pressures are expected to impact net yields, with management maintaining a conservative mid-single-digit yield growth goal for 2027.

• The company faces uncertainty in quantifying the full financial impact of low water conditions, with costs expected to hit Q3 results.

• Vouchers issued to affected guests will create a discount on future cruises, potentially reducing pricing power in 2027 and 2028.

• SG&A expenses, while lower as a percentage of gross margin, still reflect ongoing investment in sales and marketing to support growth.

• The low water situation has required enhanced communication protocols and proactive outreach, adding operational complexity.

• Despite strong bookings, the company acknowledges that the 10% increase in 2027 advanced bookings per PCD may not be sustainable due to product mix, with a goal of only mid-single-digit yield growth.

Q & A Highlights

Q: Can you help us quantify the vouchers issued due to low water levels and the impact on 2027 bookings? Also, is the 10% increase in 2027 booked revenue per day partly due to higher airfares, and how is the cruise ticket price itself trending? A: Leah Talactac (CEO) explained that Viking proactively issued future cruise vouchers to affected guests to generate goodwill and encourage them to return. As of mid-August, more than 50% of River capacity cruise days were impacted, with 10% to 12% ultimately canceling. Linh Banh (CFO) added that the 2027 net yield curve shows a 10% increase, which reflects favorable product mix. She noted that airfare costs are pressuring many companies, but Viking's goal remains mid-single-digit yield growth year-over-year for both 2026 and 2027.

Q: Are you seeing any near-term indicators that consumers might be avoiding river cruising due to low water levels, and how might this impact guest experience and brand loyalty long-term? A: Leah Talactac (CEO) stated that Viking has operated on Europe's rivers for nearly 30 years through various water conditions, and the fleet was designed with these realities in mind. She noted that despite historically low water levels, Viking continued to operate without cancellations, and the booking curves show no particular impact on booking cadence. Linh Banh (CFO) added that 2027 River bookings are already over 40% booked, indicating low water is not impacting demand. Torstein Hagen (Executive Chairman) shared anecdotal feedback from guests who were pleased with how Viking handled the situation.

Q: With 2027 advanced bookings for PCD up 10%, can you touch on recent pricing trends across River and Ocean, and any constraints to delivering mid-single-digit historical yields in 2027 despite the voucher impact? A: Leah Talactac (CEO) noted that booking curves show strong rates and pacing, with 40% of River and over 60% of Ocean capacity for 2027 already booked. Linh Banh (CFO) confirmed that 2027 net yields are about 10% higher compared to the same point in the prior season, reflecting favorable product mix. She reiterated that the goal remains mid-single-digit yield growth for 2027, while noting that expenses may have some transitory impacts from low water conditions and voucher issuances in the third quarter and future periods.

Q: Can you confirm whether the booking curves include any impact from the issued vouchers, and can you discuss the efficiencies seen in sales and marketing spend? A: Leah Talactac (CEO) clarified that second-quarter results do not include any impact from low water, which started in mid-July. Future cruise vouchers are credits applied toward future cruise fares, effectively providing a discount, and can be used for cruises later in 2026 and into 2027 and 2028. Regarding sales and marketing, she noted that expenses were slightly lower as a percentage of adjusted gross margin, reflecting ongoing efficiencies while continuing to invest in teams and demand generation.

Q: How much of the 10% increase in 2027 advanced bookings per PCD is due to product mix, and why did River decelerate more than Ocean? A: Leah Talactac (CEO) explained that the product mix benefit, particularly from higher-priced itineraries like Egypt and Vietnam, heavily weights the year-over-year comparison. As more core European product is sold, the average price will normalize, and the goal remains mid-single-digit yields for both River and Ocean. For Ocean, the price year-over-year for 2027 stayed around 12%, while River decelerated slightly due to mix. Linh Banh (CFO) added that the current strength is driven by higher pricing and itinerary mix, but the goal remains mid-single-digit yield growth.

Q: How are you thinking about expanding land extensions and shore excursions long-term, and what are the capital allocation priorities given the $4 billion cash balance? A: Leah Talactac (CEO) emphasized that the focus is on destination and experiences, with teams planning itineraries and offerings accordingly. Torstein Hagen (Executive Chairman) highlighted the new Zeppelin flight over Cologne as an example of unique experiences. On capital allocation, Talactac stated that the priority is reinvesting cash in the business to generate strong returns, with an acquisition framework requiring scalability, margin accretion, and brand complementarity.

Q: Can you provide perspective on the portion of bookings from repeat customers, especially given the challenged experience from low water levels? A: Leah Talactac (CEO) shared that approximately 52% of guests who traveled in 2025 were repeat guests. She emphasized the importance of a healthy mix of repeat and new-to-brand guests as the fleet grows. New itineraries, destinations like India, and optional excursions help drive repeat bookings. The breadth of 520 unique destinations across 7 continents allows guests to travel with Viking wherever they want to go.

Q: Historically, what impact have low water events had on future bookings, and is the current situation the worst you've seen? A: Linh Banh (CFO) stated that as of mid-August, more than 50% of River capacity PCDs in the third quarter have been impacted. The vouchers issued will impact future bookings, mainly in 2027 and 2028. She noted that the current low water levels are probably more severe than past seasons, but Viking is being proactive to ensure guests feel good about their experience. Despite this, pricing to date has been healthy, and the goal of mid-single-digit yield growth remains.

Q: Would the booking curve look meaningfully different if cut today versus August 9, and will you operationally change anything to mitigate if low water conditions repeat? A: Leah Talactac (CEO) explained that river levels naturally fluctuate, and Viking's fleet is designed to navigate these variations. The nearly identical ships allow for efficient ship swaps during water level changes. She noted that similar low water events occurred in 2018 and 2022, and Viking did not cancel cruises during those times. Torstein Hagen (Executive Chairman) added that informing guests about what to expect solves most problems, and Viking's unique position with identical ships allows for minimal disruption. He sees no reason to lower ambitions for river volume.

Q: Can you clarify the 10% to 12% cancellation rate in Q3, and how do the economics of excursions

For the complete transcript of the earnings call, please refer to the full earnings call transcript .