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Private placement derivative drags Viking's Q1 though yield, revenue rise

Viking Holdings' first quarter net loss widened on the loss related to a private placement derivative though both net yield and revenue rose.

Net loss was $493.9m compared to $214.4m a year ago. This includes a loss of $330.5m and Q1 2023  includes a gain of $15.5m related to the net impact of a private placement derivative and interest expense related to the company’s Series C preference shares. Those shares converted into ordinary shares prior to the completion of the company's initial public offering.

Occupancy rises

Revenue increased 14.2%, to $718.2m, on ship additions and higher occupancy. Passenger cruise days were up 14.5%, and occupancy was 94% compared to 92.8% a year ago.

Viking allows up to two people per stateroom and sometimes sells solo rooms, so CFO Leah Talactac noted occupancy will never exceed 100% (as it typically does for big ships). 

Q1 record $508 net yield

Adjusted gross margin increased 19.1% year-over year, resulting in net yield of $508, up from $494 and the highest Viking ever recorded in a first quarter. Adjusted EBITDA was up $46.1m.

Vessel operating expenses increased 6.8%, and operating expenses excluding fuel were up 7.8% year over year.

As of May 19, Viking had sold 91% of its 2024 season and 39% of 2025 for its core products.

Viking Chairman Torstein Hagen was pleased with the performance and encouraged by strong advance bookings.

A seasonal business

The results reflect the seasonality of Viking's business. While ocean, expedition and Mississippi products operate year-round, the primary river cruise season runs from April to October. Additionally, the highest occurs during the Northern Hemisphere’s summer months.

Viking explained it recognizes cruise-related revenue over the duration of the cruise and expenses marketing and employee costs when the related costs are incurred. As a result, the majority of the company's revenue and profits have historically been earned in the second and third quarters.

Net proceeds of IPO

On May 3, Viking closed its $1.8b initial public offering, with net proceeds of approximately $245.5m to Viking and approximately $1.4b to certain selling shareholders.

As of March 31, the company had $1.7b in cash and cash equivalents, which does not include the IPO proceeds, and net debt of $3.9b.

Leverage declines and credit rating rises

Net leverage declined from 3.8x on Dec. 31 to 3.4x as of March 31. In May Standard & Poor's upgraded Viking's corporate rating to BB- from B+.

See also 'Viking firms options for two more ocean newbuilds in 2029' and 'Viking continues contrarian: No guidance nor striving for investment grade'