Viking Holdings Ltd (VIK) Earnings

Management highlights

### Demand & Booking Position - The 2026 full season is effectively sold out, with 96% of core product capacity already booked. Total 2026 advanced bookings are $6.4 billion, 13% higher than the 2025 season at the same point, on 7% higher total capacity. - As of August 9, 2026, 53% of 2027 core product capacity is booked, with 15% year-over-year capacity growth and $4.7 billion in advanced bookings (21% higher than 2026 at the same point in 2025). Early 2027 booking trends are described as very encouraging. ### Fleet Expansion & Design Strategy - Since the last earnings call, Viking added four new river vessels and one new ocean ship, consistent with its long-term growth strategy. A full 12 total new ships (10 river, 2 ocean) are expected to be delivered in 2026. The company also exercised options for two additional ocean ships scheduled for 2032 delivery. - Viking's standard nearly identical ship design across each product category is a key competitive advantage. It enables operational efficiencies across sales, marketing, purchasing, crew training, maintenance, and deployment, and allows consistent yield achievement across similar itineraries regardless of ship age. - The company maintains one of the youngest fleets in the industry, which lowers maintenance costs, improves operational reliability, and extends earnings power. Ships are designed to balance high operational efficiency and consistent guest experience. ### Product Enhancement - Viking is expanding its offering of pre-voyage, post-voyage land extensions and optional premium shore excursions to add more destination-focused experiences for guests. Recent additions include a four-night Swiss Alps guided extension and a Zeppelin flight over Cologne. - Approximately 40% of guests currently opt to add pre or post land extensions, and guests who add extra experiences report higher overall experience quality scores. The company maintains its core all-inclusive model, as optional add-ons are completely discretionary for guests. ### European Low Water Response - Historically low water levels on the Danube and Rhine rivers have created industry-wide operational challenges in the 2026 season. Viking's purpose-built fleet, deployment flexibility, and established ship swap capabilities allow it to minimize disruptions, and the company has operated without full cruise cancellations to date. - The company is prioritizing guest satisfaction: it has enhanced proactive communication with guests on disrupted itineraries and is issuing future cruise vouchers to affected guests. This investment is expected to strengthen long-term guest loyalty, though it will create a financial impact extending into 2027 and 2028 when vouchers are redeemed.

Guidance

- Management maintains its long-term target of mid-single-digit annual net yield growth for both the river and ocean segments, and reaffirmed this target for 2027 despite low water-related voucher impacts. Current advanced booking rates for 2027 are higher than 2026 at the same point, with 10% higher advanced revenue per PCD driven partially by favorable itinerary mix. - Committed ship capital expenditure for full-year 2026 is expected to be approximately $1.9 billion ($650 million net of financing). For full-year 2027, total expected committed ship capex is approximately $1.0 billion ($260 million net of financing). - Scheduled principal debt payments for the remainder of 2026 are $117 million, and $234 million for full-year 2027. All bond maturities are scheduled for 2028 and beyond, with net debt of $2.4 billion and net leverage of 1.2x as of June 30, 2026. - Some financial impact from low water levels and voucher issuances is expected to be reflected in the third quarter of 2026, with additional deferred impact in 2027 and 2028 as vouchers are redeemed. Management did not quantify the full impact as conditions remain ongoing.

Segment performance

Viking reports two core reportable segments, with year-to-date (six months ended June 30, 2026) performance as follows: 1. **River Segment**: Capacity Passenger Cruise Days (PCDs) increased 3.2% year-over-year, with occupancy of 94.8%. Adjusted gross margin grew 11.3% year-over-year, and net yield reached $660, an 8.8% year-over-year increase driven by strong regional demand and favorable itinerary mix. For full-year 2026, the river segment has 96% of capacity sold, with $3 billion in advanced bookings (11% higher year-over-year) and 6% total capacity growth. For 2027, the river segment is 42% booked with 13% capacity growth, holding $1.8 billion in advanced bookings (11% higher year-over-year). River contributes approximately 48% of total 2026 advanced core product bookings. 2. **Ocean Segment**: Capacity PCDs increased 11.4% year-over-year, with occupancy of 95.4%. Adjusted gross margin increased 20.3% year-over-year to $1.1 billion, and net yield increased 7.7% to $593, driven by strong demand and favorable itinerary mix. For full-year 2026, the ocean segment has 96% of capacity sold, with $2.9 billion in advanced bookings (17% higher year-over-year) and 9% total capacity growth. For 2027, the ocean segment is 62% booked with 18% capacity growth, holding advanced bookings 29% higher year-over-year. Ocean contributes approximately 45% of total 2026 advanced core product bookings. Consolidated total second quarter 2026 revenue was $2.2 billion, up 16.5% year-over-year; adjusted EBITDA was $748 million, up 18.2% year-over-year.

Risks & headwinds

- Prolonged historically low water levels on core European rivers (Danube and Rhine) have created operational disruptions, with over 50% of third quarter 2026 river capacity PCDs impacted, and 10-12% of impacted voyages ultimately canceled. Additional incremental transportation and operational costs are expected in the third quarter, though full quantification is not yet possible as conditions remain in flux. - Issuance of goodwill vouchers to affected guests will defer revenue recognition to future periods (2026, 2027, 2028) when vouchers are redeemed, creating downward pressure on reported net yields in those future periods. - Forward-looking statements are inherently subject to risks and uncertainties that could cause actual results to differ materially from projections, including unpredictable natural conditions for river cruising, changes in consumer travel demand, and cost inflation (including airfare transportation costs). - Entry into new markets (such as domestic Chinese cruising) carries competitive risk, as the local market is fiercely price competitive and dominated by wholesaler-controlled pricing models that compress margins.

Analyst Q&A

• Q: Have low water levels impacted near-term 2027 booking demand, and what is the expected impact on long-term brand loyalty and guest satisfaction? /

  A: Viking has 30 years of experience operating through fluctuating European river levels, and its fleet is purpose-built to handle these conditions. The company has been able to operate without full voyage cancellations using ship swaps and itinerary adjustments. Current 2027 river bookings are already over 42% booked, which is in line with expectations, and no measurable impact on booking pace has been observed. Guest feedback on Viking's proactive response (including vouchers and adjusted itineraries) has been positive, with no observed material harm to brand loyalty. (397 chars)

• Q: How much of the 10% year-over-year increase in 2027 advance booking revenue per PCD is driven by product mix vs. core pricing, and will this trend persist as more inventory is sold? /

  A: A meaningful portion of the current year-over-year increase is driven by favorable product mix, as higher-priced new itineraries (such as Egypt and Vietnam) are sold earlier in the booking cycle. As more core European inventory (the company's bread-and-butter product) is sold over time, the growth rate is expected to moderate. Management reaffirmed that the company's target remains mid-single-digit net yield growth for 2027, which includes the impact of higher airfare and other cost pressures. (478 chars)

• Q: What is the total value of the low water-related vouchers issued to guests, and how are they reflected in current 2027 booking numbers? /

  A: As of mid-August, more than 50% of third quarter river capacity has been impacted by low water, with 10-12% of impacted voyages seeing cancellations. Vouchers are provided as goodwill for disrupted trips, and can be redeemed for any future cruise through 2028. They are not reflected in the current 2027 advanced booking numbers, as they are discounts applied to future new bookings rather than new unearned revenue. Management did not provide a full total value as conditions are still evolving. (462 chars)

• Q: How does Viking approach capital allocation, and would acquisitions of land experience providers fit into the company's strategy? /

  A: Viking's top capital priority is organic reinvestment in fleet expansion, which generates consistent strong returns. Any potential acquisition must meet three core criteria: it must be scalable, generate returns equal to or higher than organic fleet investment, be margin accretive, and be complementary to the Viking destination-focused brand ethos. The company currently holds $4 billion in cash and maintains a strong balance sheet to pursue opportunities that meet these criteria. (391 chars)