A Member of Pat McKeough’s Inner Circle recently asked for his advice on a luxury cruise company that operates small-ship river, ocean, and expedition cruises which target affluent, culturally focused travelers.
Pat likes the firm’s strong financial performance and sustainable competitive advantages as well as its strategic fleet expansion.
However, Pat notes that Viking needs consumer confidence to remain high to continue delivering improved results.
VIKING HOLDINGS LTD. (Symbol VIK on New York) operates luxury river and ocean cruises.
The company was founded in 1997 by CEO Torstein Hagen. It started with four river ships in Europe. Hagen’s intent was to provide travel that was more destination-focused and culturally immersive. In 2015, Viking entered the luxury ocean market. Today, it’s a global leader in experiential travel.
Viking went public on April 30, 2024, issuing 73.6 million shares at $24. That was at the high end of its $21 to $25 pre-IPO proposed price range. Its shares are now hitting new highs and are up 143% since then.
The company operates 97 vessels worldwide, with over 12,000 employees serving 683,000 guests in 2024. Viking has an estimated 52% share of the North American outbound river market and 24% of the luxury ocean market.
Viking expects to take delivery of the world’s first hydrogen-powered cruise ship in 2026. It will also take delivery of 11 additional ships by 2031.
Inner Circle: Exceptional revenue growth from more cruise days with higher passenger spending
In the three months ended March 31, 2025, Viking’s revenue rose 24.9%, to $897.1 million from $718.2 million a year earlier. Revenue increased due to a higher capacity, combined with a higher revenue per passenger cruise day.
Excluding one-time items, Viking lost $105.5 million, or $0.24 a share, in the latest quarter. That’s compared to a loss of $137.9 million, or $0.33.
Investors should note that Viking’s first quarter results reflect the seasonality of its business. While its ocean, expedition and Mississippi products operate year-round, the primary cruising season for its river product is from April to October, although some of its river cruises run longer seasons.
Additionally, its highest occupancy occurs during the Northern Hemisphere’s summer months. The company recognizes cruise-related revenue over the duration of the cruise, and it expenses its marketing and employee costs when the related costs are incurred. As a result, the majority of Viking’s revenue and profits have historically been earned in the second and third quarters of each year.
Viking needs consumer confidence to remain high to continue delivering improved results. While the demographic target is impressive—55 years old and over, the fastest-growing population segment, which accounts for 70% of U.S. wealth.
Meanwhile Viking remains focused on the places its cruises visit, unlike its competitors, which sometimes market their ships as the destination. This means lower costs to build and maintain its ships.
Recommendation in Pat’s Inner Circle: Viking Holdings is okay to hold.
