Garmin Lifts Outlook as Profit Growth Outpaces Sales
The device maker raised its 2026 revenue forecast to about $8.05 billion.
Garmin Ltd. (GRMN) expanded second-quarter operating margin to 30.4% as profit growth outpaced a slowing revenue gain. Operating income rose 30% to $615.5 million, while the margin increased from 26.0% a year earlier and 24.6% in the first quarter.
The navigation and wearable-device maker benefited from a richer product mix, higher margins across every segment and about $21 million of tariff refunds. Gross margin rose 3.6 percentage points from a year earlier to 62.4%, extending its rise from 59.4% in the first quarter.
Revenue increased 11% to $2.022 billion, easing from 14% growth in the first quarter and 17% in the fourth quarter of 2024. Sales nevertheless rose about 15% sequentially from $1.753 billion. GAAP diluted earnings climbed 35% to $2.80 a share, while pro forma earnings increased 29% to $2.81 a share.
Fitness remained Garmin's main growth driver, with revenue rising 25% to $756.8 million. That pace slowed from 42% in each of the prior two quarters, though the segment's operating margin increased sequentially to 37% from 29% and operating income rose to $277 million from $158 million.
Marine revenue advanced 14% to $341.4 million, accelerating from an 11% first-quarter gain, and its operating margin widened sequentially to 29% from 26%. Outdoor revenue declined 2% to $482.7 million, an improvement from the first quarter's 5% drop, while aviation growth slowed to 8% from 18%.
Garmin now expects about $10.00 a share in full-year pro forma earnings, supported by a 59.7% gross margin and a 27.0% operating margin. Operating cash flow more than doubled to $403.6 million in the quarter, and free cash flow rose to $275.8 million even as capital spending increased.
The company repurchased $43 million of shares during the quarter, leaving about $448 million under a program that runs through December 2028. Garmin also added TrainingPeaks and TrainHeroic through an acquisition and announced CIRQA, its first screenless smart band, broadening its fitness platform as growth in the core segment moderated.