OneSpaWorld Holdings Limited (OSW) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The company shows positive growth with an 11% increase in Q4 revenue and a 10% rise in adjusted EBITDA. Despite a net income drop due to restructuring, adjusted net income rose by 15%. AI initiatives promise future efficiency gains, and the dividend increase and share buybacks signal confidence. However, supply chain risks and vague AI details temper enthusiasm. Considering the small-cap nature, the stock is likely to react positively, but not overwhelmingly, leading to a 'Positive' sentiment rating.
Key Financial Performance
Total Revenue (Q4 2025) $242.1 million, an 11% increase year-over-year. Growth was driven by fleet expansion from 2025 new ship builds, a 2% increase in revenue days, and a 1% increase in average guest spend. $2.8 million of the increase was attributable to prebook services.
Adjusted EBITDA (Q4 2025) $31.2 million, up from $26.7 million in Q4 2024. This reflects strong operational performance and revenue growth.
Net Income (Q4 2025) $12.1 million, down from $14.4 million in Q4 2024. The decrease was due to restructuring expenses and asset impairments totaling $5.7 million, partially offset by a $4.4 million improvement in income from operations.
Adjusted Net Income (Q4 2025) $24.3 million, up from $21.4 million in Q4 2024. This increase reflects improved operational performance.
Total Revenue (Fiscal Year 2025) $961 million, a 7% increase year-over-year. Growth was driven by fleet expansion, increased guest spend, and prebook services.
Adjusted EBITDA (Fiscal Year 2025) $123.3 million, a 10% increase year-over-year, reflecting strong operational performance and revenue growth.
Adjusted Net Income (Fiscal Year 2025) $102.9 million, a 15% increase year-over-year, reflecting improved operational performance and cost management.
Total Cash (Year-End 2025) $17.5 million, reflecting dividend payments, share repurchases, and debt reduction.
Total Debt (Year-End 2025) $84 million, down from $98.6 million at year-end 2024, due to debt repayments.
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Operating Highlights
Introduction of new ship builds: Two new health and wellness centers were introduced aboard Disney Destiny and Star Seeker, bringing the total ship builds to 8 for the year.
Expansion of Medi-Spa services: New technologies like Thermage FLX, CoolSculpting Elite, and Acupuncture LED were introduced, generating 23%-40% revenue growth in Q4 compared to last year. Medi-Spa services expanded to 153 ships, with plans to reach 157 ships by the end of 2026.
Fleet expansion: Operated health and wellness centers on 206 ships at year-end, up from 199 ships in fiscal 2024. Six new ship builds are planned for 2026.
Higher-value services: Expanded offerings like Medi-Spa and Acupuncture to increase addressable market and ship revenue performance.
AI-driven operational efficiencies: Implemented machine-learning algorithms for dynamic pricing and prebooking, improving utilization and revenue. Virtual assistant deployed on 180 vessels, reducing help desk hours and improving operational scalability.
Staff retention: Achieved a 4 percentage point increase in staff retention compared to 2024, leading to higher revenue per day from experienced staff.
Exit from non-core operations: Exited land-based health and wellness centers in Asia and reorganized operations in the UK and Italy to focus on high-growth areas.
Capital allocation: Returned $93 million to shareholders through stock buybacks and dividends, while reducing outstanding debt.
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Risk or Challenges
Exiting land-based health and wellness centers in Asia: The company has decided to exit land-based health and wellness centers in Asia, which led to restructuring expenses of $2.7 million and a $2.8 million impairment charge on long-lived assets. This decision could impact revenue streams and operational presence in the region.
Reorganization of operations in the United Kingdom and Italy: The company undertook a reorganization of operations in the United Kingdom and Italy, incurring restructuring expenses. This could pose challenges in maintaining operational efficiency and market presence in these regions.
Supply chain and inventory challenges: The company faced a $0.3 million increase in freight expenses and $0.3 million in nonrecurring inventory write-off charges related to the exit from land-based operations in Asia, indicating potential supply chain and inventory management risks.
Dependence on cruise ship operations: The company’s heavy reliance on cruise ship operations for revenue growth makes it vulnerable to disruptions in the cruise industry, such as economic downturns, regulatory changes, or health crises.
Implementation of AI and technology initiatives: While AI and technology initiatives aim to improve efficiency and revenue, their implementation involves risks such as high costs, potential delays, and the need for organizational adaptation.
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Guidance & Outlook
Revenue Projections: Fiscal 2026 total revenues are expected to exceed $1 billion for the first time, with a range of $1.01 billion to $1.03 billion, representing high single-digit increases at the midpoint of the guidance range from actual 2025 results, excluding exited and reorganized operations.
Adjusted EBITDA: Fiscal 2026 adjusted EBITDA is expected in the range of $128 million to $138 million, representing high single-digit increases at the midpoint of the guidance from actual fiscal 2025 results.
First Quarter 2026 Guidance: Total revenue is expected in the range of $241 million to $246 million, with adjusted EBITDA expected in the range of $30 million to $32 million.
New Ship Builds: In 2026, the company will introduce health and wellness centers on 6 new ship builds, 3 of which are expected to commence voyages in the first half of the year.
Medi-Spa Expansion: Medi-Spa services are expected to be available on 157 ships by year-end 2026, up from 153 ships at the end of fiscal 2025.
AI and Technology Initiatives: The company is implementing AI-driven initiatives, including a machine-learning algorithmic engine for dynamic pricing and a virtual assistant to improve operational efficiency. These are expected to enhance revenue, utilization, and scalability.
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Shareholder Return Plan
Quarterly Dividend Payments: The company disbursed $17.5 million throughout the year in quarterly dividend payments.
Stock Buyback: The company invested $75.4 million to repurchase 3.9 million of its common shares.
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Key Q&A
Q:Can you provide more details on the potential benefits of AI integration, including its impact on costs, revenues, and margins? Is the timeline for meaningful results in the second half of 2026 still accurate, and is this impact included in the current full-year guidance?
A:The company remains on track to provide more specific details after the second quarter results. Initial results are encouraging, and the incremental rollout of initiatives is progressing. The timeline for meaningful results in the second half of 2026 is still accurate, and the current guidance does not include the potential impact of these initiatives.
Q:How are consumer trends shaping up, specifically regarding attachment rates, discounting, and changes in spending patterns across brands, geographies, and ship sizes? What is the outlook for price increases in 2026 compared to 2025?
A:In 2025, no service price increases were implemented, but the company will evaluate opportunities for 2026. Current guidance does not assume service price increases. Consumer trends show higher prices being accepted, with slightly increased discounting but a strong net revenue. The first quarter guidance reflects these positive trends.
Q:Can you provide details on the rollout of the dynamic price optimization model? Will it be implemented on specific banners, itineraries, or vessels first, or will it be a broader rollout?
A:The rollout will begin with prebooking, covering 94% of vessels on the prebooking platform. It is in early stages, and the first phase will focus on prebooking. A broader rollout to remaining vessels is expected in the back half of the year.
Q:Is there a broader rollout planned for the reformatting of spa menus observed on one of your ships?
A:The company has condensed spa menus to focus on popular items and specific price points and time slots. This strategy aims to increase higher treatment rates and retail attachments. There are no plans to broaden the menu, as the condensed format has proven effective.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the potential benefits of AI integration, stating that more information would be shared after the second quarter results. They also did not provide clarity on the exact impact of consumer trends on future pricing strategies, leaving some aspects vague.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI reorganization
Acupuncture LED
Acupuncture market
Asia United
Conference participant
CoolSculpting Acupuncture
Destiny Star
Disney Destiny
FLX CoolSculpting
Italy objective
Kingdom Italy
LED result
Malkin Investor
MedSpa service
Medi Spa
OneSpaWorld pleasure
Relations addition
Seeker ship
Spa Acupuncture
Star Seeker
United Kingdom
ability outlook
acupuncture conversion
asset light
delivery
end Medi
light model
positioning
record
ship service
technology
treatment
OSW Transcript
OneSpaWorld Holdings Limited (OSW) Q4 2025 Earnings Call Transcript
Positive2-18
The company shows positive growth with an 11% increase in Q4 revenue and a 10% rise in adjusted EBITDA. Despite a net income drop due to restructuring, adjusted net income rose by 15%. AI initiatives promise future efficiency gains, and the dividend increase and share buybacks signal confidence. However, supply chain risks and vague AI details temper enthusiasm. Considering the small-cap nature, the stock is likely to react positively, but not overwhelmingly, leading to a 'Positive' sentiment rating.
OneSpaWorld Holdings Limited (OSW) Q3 2025 Earnings Call Transcript
Positive10-29
The earnings call shows strong financial performance with increased revenues and EBITDA. The Q&A reveals positive guest spending, no adverse tax impact, and strategic AI and talent management plans. Despite a lack of AI margin details, optimistic guidance and strategic initiatives indicate a positive stock outlook. With a market cap of $1.6 billion, expect a 2-8% stock price increase.
OneSpaWorld Holdings Limited (OSW) Q2 2025 Earnings Call Transcript
Positive7-30
The company reported solid financial performance with significant year-over-year growth in revenue, income, and EBITDA. The continuation of the share repurchase program and expected dividend increase further enhances shareholder value. Despite not raising revenue guidance, the strong consumer spending and onboard metrics, coupled with AI-driven strategies, present a positive outlook. Although some uncertainties exist regarding the timing of AI impact and vessel additions, the overall sentiment is positive, especially given the market cap and potential for enhanced profitability.
OneSpaWorld Holdings Limited (OSW) Q1 2025 Earnings Call Transcript
Positive4-30
Despite some risks related to economic environment and personnel costs, the earnings call presents a positive outlook. The company reported a 4% increase in total revenue and a 5% increase in adjusted EBITDA. Additionally, the approval of a new $75 million share repurchase program and consistent demand for high-end services are strong positives. The Q&A session revealed no significant downturns in spending or booking trends. Given the company's small market cap, these factors are likely to lead to a positive stock price movement over the next two weeks.
OSW Report
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