Garmin Ltd.
GRMN · NYSE
Next quarter
Reports Nov 4, 2026.
Consensus is $2.38 EPS for Sep 2026 across 3 estimates, ranging $2.32 to $2.43.
GRMN Jun 2026
- 23.79%
- +0.92%
- $2.27
- $2.81
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Highlights
- Record quarter: Revenue reached $2.02 billion, up 11% year over year and approximately 16% from Q1 FY2026's $1.75 billion.
- Large earnings beat: Pro forma diluted EPS was $2.81 versus the $2.27 consensus, a 23.79% surprise; GAAP diluted EPS was $2.80 versus $2.07 a year ago.
- Margin expansion: Gross margin rose 360 basis points year over year to 62.4%, while operating margin expanded 440 basis points to 30.4%.
- Operating leverage: Operating income increased 30% year over year to a record $615.5 million, versus $431.7 million in Q1 FY2026.
- Fitness led growth: Fitness revenue rose 25% to $756.8 million and operating income increased 40% to $277.0 million, driven by advanced wearables.
- Diversified segment contribution: Marine revenue grew 14% to $341.4 million, aviation increased 8% to $268.7 million, and auto OEM rose 1% to $172.4 million; outdoor declined 2% to $482.7 million.
- Guidance raised: Garmin now expects fiscal 2026 revenue of approximately $8.05 billion and pro forma EPS of $10.00, with 59.7% gross margin and 27.0% operating margin.
- Strong cash generation: Second-quarter operating cash flow was $403.6 million and free cash flow was $275.8 million; cash and marketable securities ended at approximately $4.4 billion.
Analysis
Garmin's second quarter was a broad-based, margin-led beat. Revenue of $2.02 billion grew 11% from $1.81 billion a year ago and was approximately 16% above Q1 FY2026's $1.75 billion. Pro forma diluted EPS of $2.81 exceeded the $2.27 consensus by 23.79%, while GAAP diluted EPS of $2.80 rose from $2.07 a year ago and $2.09 in the prior quarter. Operating income reached a record $615.5 million, up 30% year over year and roughly 43% sequentially.
The central driver was fitness, where advanced wearable demand lifted revenue 25% to $756.8 million and operating income 40% to $277.0 million. Marine and aviation also grew, while outdoor was the main soft spot, with revenue down 2% amid weaker consumer auto and adventure-watch sales. Profitability benefited from product mix, expense leverage and approximately $21 million of tariff refunds, which contributed about 100 basis points to consolidated gross margin. Garmin raised its full-year outlook to $8.05 billion of revenue and $10.00 of pro forma EPS. The company also completed the TrainingPeaks and TrainHeroic acquisitions after quarter-end, though their initial financial impact was not material.
Revenue and margins
Garmin converted 11% revenue growth into 30% operating-income growth as mix and cost leverage amplified the top-line performance. Gross profit increased 18% to $1.26 billion, while operating expenses rose 9% to $646.5 million and declined to 32% of revenue from 33% a year ago. The effective tax rate was broadly stable at 16.8%, compared with 16.5% in the year-ago quarter.
- Gross margin: Consolidated gross margin expanded to 62.4% from 58.8%; all five segments posted higher margins.
- Tariff benefit: Approximately $21 million of previously paid tariff refunds reduced cost of goods sold, adding about 100 basis points to consolidated gross margin. Marine received approximately $14 million of the refunds.
- Underlying mix: Fitness and outdoor gross margins rose 330 and 270 basis points, respectively, primarily on product mix; marine margin rose 630 basis points to 61%.
- Operating income: Operating margin increased to 30.4% from 26.0%, with operating income of $615.5 million versus $472.3 million a year ago.
Fitness and segments
Fitness was the defining growth engine and represented 37% of quarterly revenue, up from 33% a year ago. Growth extended across product categories, led by advanced wearables. Marine and aviation provided meaningful support, while outdoor remained a drag on revenue despite improved profitability. Auto OEM moved back into operating profit.
- Fitness: Revenue increased 25% to $756.8 million; operating income rose 40% to $277.0 million, a 37% margin.
- Marine: Revenue grew 14% to $341.4 million and operating income increased 59% to $99.8 million, helped by tariff refunds and favorable mix.
- Aviation: Revenue rose 8% to $268.7 million and operating income increased 14% to $72.2 million, with growth in OEM and aftermarket products.
- Outdoor: Revenue declined 2% to $482.7 million, primarily because of consumer auto and adventure watches, while operating income increased 4% to $163.6 million.
- Auto OEM: Revenue increased 1% to $172.4 million, while operating income improved to $2.9 million from a $9.5 million loss as gross profit improved and research and development costs declined.
Raised full-year outlook
After a strong first half, Garmin raised its fiscal 2026 targets. The new outlook implies that management expects continued growth while consolidating much of the first-half margin improvement, including a full-year operating margin target of 27.0% versus 27.7% achieved in the first half.
- Revenue: Approximately $8.05 billion for fiscal 2026.
- Earnings: Pro forma EPS of $10.00.
- Profitability assumptions: Gross margin of 59.7%, operating margin of 27.0% and an effective tax rate of 16.5%.
- First-half base: Revenue was $3.78 billion, up 13% year over year; operating income was $1.05 billion, up 30%, and pro forma EPS was $4.89 versus $3.78.
Cash and capital allocation
Cash generation strengthened alongside earnings, although inventory and capital spending increased as Garmin supported growth. The company retained substantial financial flexibility while increasing shareholder returns through its higher dividend and ongoing repurchases.
- Cash flow: Second-quarter operating cash flow was $403.6 million versus $173.2 million a year ago, and free cash flow was $275.8 million versus $127.5 million.
- First-half cash flow: Operating cash flow reached $939.5 million, up from $594.0 million, while free cash flow was $745.1 million versus $508.2 million.
- Liquidity: Cash and marketable securities totaled approximately $4.4 billion at quarter-end; inventories were $2.0 billion, up from $1.8 billion at fiscal year-end.
- Shareholder returns: Garmin paid a $202 million quarterly dividend and repurchased $43 million of shares during the quarter, leaving $448.1 million available under its $500 million repurchase authorization.
- Dividend: The approved fiscal 2026 dividend is $4.20 per share, or $1.05 per quarterly installment, versus $3.60 for fiscal 2025.
Products and acquisitions
Garmin continued to expand its product ecosystem while adding training-platform capabilities. The product announcements span its core markets, with particular emphasis on wearables, aviation displays and connected training.
- Fitness launches: The Forerunner 70 and Forerunner 170 were introduced, and Garmin announced CIRQA, its first screenless smart band with health and wellness features and no subscription requirement.
- Aviation and marine: Garmin unveiled AXIS, a scalable family of flight displays, and launched the D2 Mach 2 Pro with inReach; marine launches included Signal VHF radios and the next-generation LiveScope 2.
- Acquisitions: Garmin acquired TrainingPeaks and TrainHeroic on July 20, 2026. The 10-Q said the acquisition's effect was not material to the consolidated financial statements.
