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    GRMN
    Earnings call· Mar 2026(Q1 FY26)

    GARMIN Q1 FY26 earnings call GRMN

    Apr 29, 2026 Source

    Executive summary

    Garmin Ltd. Q1 FY26 — Record Revenue and Strong Wearables Growth

    Garmin delivered a record first quarter, driven by robust demand for wearables and strong performance across most segments. The company maintained its full-year guidance, anticipating continued strength despite geopolitical uncertainties and component cost pressures expected to materialize more significantly in 2027. Management emphasized product innovation and customer service as key drivers of resilience.

    Highlights

    5

    • Consolidated revenue increased 14% to a record $1.75 billion, driven by double-digit growth in three segments.

    • Fitness segment revenue grew 42% to $547 million, achieving a new first quarter record due to strong demand for advanced wearables.

    • Operating income rose 30% year-over-year to $432 million, with gross and operating margins expanding to 59.4% and 24.6%, respectively.

    • Aviation revenue increased 18% to $264 million, with contributions from both OEM and aftermarket products.

    • Marine segment revenue increased 11% to $355 million, showing broad-based growth across multiple product categories.

    Concerns

    3

    • Outdoor segment revenue decreased 5% to $418 million, comparing against a strong prior-year quarter.

    • Auto OEM segment operating loss was $6 million, though narrowed, and revenue is expected to decrease in FY26.

    • Marine segment experienced year-over-year margin compression primarily due to higher tariff comps.

    Guidance & targets

    10
    CategoryTargetConfidence
    Full-year 2026 consolidated financial results
    Maintaining guidance issued in February
    high materiality
    Medium
    Outdoor segment Q2 performance
    Similar to that of Q1
    medium materiality
    Medium
    Outdoor segment H2 performance
    Achieve stronger performance
    medium materiality
    Medium
    Outdoor segment full-year growth
    Improved full year growth when compared to 2025
    medium materiality
    Medium
    Auto OEM segment revenue
    Decrease in 2026
    medium materiality
    High
    Auto OEM segment operating loss
    Narrow compared to 2025
    medium materiality
    High
    Auto OEM segment profitability
    Not expecting the segment to be profitable on a GAAP basis for the full year
    medium materiality
    High
    Auto OEM segment growth from Mercedes-Benz program
    Drive significant growth
    high materiality
    High
    Component cost impact on financials
    Well controlled in 2026, more pronounced in 2027
    medium materiality
    High
    Operating expenses as percentage of sales
    Relatively consistent year-over-year
    medium materiality
    Medium

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    Fitness
    New first quarter record driven by broad-based growth across all product categories, led by strong demand for advanced wearables. Primary driver is higher unit volumes, resulting in meaningful market share gains.
    Gross margin: 62%Operating margin: 29%
    		$547 million42%—Operating income of $158 million
    Outdoor
    Revenue decreased as we compared against a strong prior year quarter, which included the launch of the Instinct 3 smartwatch family. Phoenix smartwatches performed well.
    Gross margin: 67%Operating margin: 28%
    		$418 million-5%—Operating income of $119 million
    Aviation
    Growth contributions from both OEM and aftermarket product categories. Very pleased with performance and expect solid growth throughout the remainder of the year.
    Gross margin: 75%Operating margin: 27%
    		$264 million18%—Operating income of $71 million
    Marine
    Broad-based growth across multiple product categories. Year-over-year margin compression primarily due to higher tariff comps. Off to a very good start and on track to achieve growth consistent with the prior year.
    Gross margin: 56%Operating margin: 26%
    		$355 million11%—Operating income of $91 million
    Auto OEM
    Growth primarily driven by infotainment programs. Segment operating loss narrowed due to gross profit improvement and lower R&D expenses. Expect revenue decrease in 2026 and operating loss to narrow but not be profitable for the full year.
    		$170 million1%—Operating loss of $6 million

    Operational metrics

    21
    Consolidated Revenue
    $1.753 billion14% increase year-over-year
    Q1 FY26

    New first quarter record.

    Gross Margin
    59.4%180 basis point increase
    Q1 FY26

    Increase primarily due to favorable foreign currency impacts.

    Operating Margin
    24.6%290 basis point increase
    Q1 FY26
    Operating Income
    $432 million30% increase year-over-year
    Q1 FY26
    Pro Forma EPS
    $2.0829% increase year-over-year
    Q1 FY26
    GAAP EPS
    $2.09
    Q1 FY26
    Operating Expense as % of Sales
    34.8%110 basis point decrease
    Q1 FY26
    Operating Expense Increase
    $59 million11%
    Q1 FY26

    Primarily due to personnel-related expenses.

    Research and Development Expense Increase
    $28 million
    Q1 FY26

    Primarily due to personnel-related expenses.

    SG&A Expense Increase
    $31 million
    Q1 FY26

    Primarily due to personnel-related expenses.

    Cash and Marketable Securities
    $4.3 billion
    Q1 FY26 end
    Accounts Receivable
    $941 milliondecreased sequentially
    Q1 FY26 end

    Increased year-over-year due to strong sales.

    Inventory
    $1.9 billionincreased year-over-year and sequentially
    Q1 FY26 end
    Capital Expenditures
    $67 million$27 million higher than the prior year quarter
    Q1 FY26
    Dividends Paid
    $174 million
    Q1 FY26
    Stock Repurchased
    $40 million
    Q1 FY26
    Remaining Share Repurchase Program
    $491 million
    Q1 FY26 end
    Effective Tax Rate
    14.3%comparable to 14.5% in the prior year quarter
    Q1 FY26
    APAC Revenue Growth
    25%
    Q1 FY26

    Benefited from favorable foreign currency impacts.

    EMEA Revenue Growth
    15%
    Q1 FY26

    Benefited from favorable foreign currency impacts.

    Americas Revenue Growth
    10%
    Q1 FY26

    Industry KPIs

    6
    MetricValueDetails
    Foreign exchange impactFavorablequalitative
    Full year guidance revisionsMaintaining guidancequalitative
    Tariff trade impact by segmentUnfavorable impact on gross margin; margin compression in Marinequalitative
    Monthly active users engagementStrongqualitative
    Segment revenue operating income mixFitness: $547M revenue, 42% growth, 29% OI margin; Outdoor: $418M revenue, -5% growth, 28% OI margin; Aviation: $264M revenue, 18% growth, 27% OI margin; Marine: $355M revenue, 11% growth, 26% OI margin; Auto OEM: $170M revenue, 1% growth, -6M OIUSD
    Subscription paying subscriber metricsExpanding rolequalitative

    Product announcements

    11
    ProductTypeDetails
    Saveria Rearview 820launch
    Connect IQ app for WhatsAppexpansion
    Natural Cycles app integrationupdate
    Approach G82launch
    Approach J1launch
    Zumo XT 3launch
    Catalyst 2launch
    G3000 Prime avionics suite in Daher TBM 980milestone
    Garmin Emergency Autoland in HondaJet Elite IImilestone
    360-degree scanning sonar with SPY polelaunch
    quatix 8 Prolaunch

    Risks & headwinds

    6
    Outdoor Segment Revenue DeclineQ1 FY26

    Revenue decreased 5% to $418 million

    Mitigation: Expect to achieve stronger performance in the back half of the year due to the timing of product launches, resulting in improved full year growth when compared to 2025.

    Marine Segment Margin CompressionQ1 FY26

    Year-over-year margin compression

    Mitigation: None explicitly stated, but overall segment is off to a very good start and on track for growth consistent with the prior year. Primarily due to higher tariff comps.

    Auto OEM Revenue Decrease in 2026FY26

    Revenue expected to decrease

    Mitigation: Due to BMW program reaching peak volumes and legacy programs approaching end of life. Significant growth anticipated starting in 2027 with Mercedes-Benz program.

    Auto OEM Unprofitability in 2026FY26

    Not expected to be profitable on a GAAP basis for the full year

    Mitigation: Operating loss expected to narrow compared to 2025.

    Future Component Cost IncreasesExpected to appear more in 2027

    Component costs under pricing pressure

    Mitigation: Significant safety stock of some components has been accumulated, mitigating impact in 2026. Company will work to protect margins through efficiencies.

    Geopolitical Uncertainty and Fuel PricesOngoing

    Not quantified

    Mitigation: Could lead to hesitancy in marine and aviation markets due to fuel prices, but initial indications show no impact on registration rates and strong financial markets tend to offset hesitation.

    Q&A highlights

    7

    Inquired about demand trends through Q1 and into Q2, and how component cost/availability trends are evolving.

    Cliff Pemble stated demand trends are consistent and strong, with no impact from geopolitical events on registration rates. Component cost increases are not currently impacting results due to inventory, but are expected to show more effect in 2027.

    “I would expect that 2026 is still going to be somewhat muted, and we'll start to see some effect in 2027.”

    asked by Joseph Cardoso · answered by Clifton Pemble

    2 min read5 chapters

    Detailed Narrative

    01

    Strong Q1 Performance and Outlook

    Garmin reported record first-quarter revenue of $1.75 billion, a 14% increase year-over-year, with double-digit growth in Fitness, Aviation, and Marine segments. Gross margin expanded by 180 basis points to 59.4%, and operating margin increased by 290 basis points to 24.6%, leading to a 30% rise in operating income to $432 million. Despite the strong start, management is maintaining its full-year 2026 guidance, consistent with its typical practice, and will provide updates as the year progresses.

    02

    Wearables and Fitness Segment Momentum

    The Fitness segment was a significant contributor to consolidated growth, with revenue increasing 42% to $547 million, a new first-quarter record. This growth was broad-based across all product categories, driven by higher unit volumes and meaningful market share gains for advanced wearables. New product introductions included the Saveria Rearview 820 radar taillight, expanded WhatsApp messaging for wearables, and integration with the Natural Cycles app.

    03

    Auto OEM Transition and Future Growth

    The Auto OEM segment saw a modest 1% revenue increase to $170 million, primarily from infotainment programs, and its operating loss narrowed to $6 million. The company anticipates a revenue decrease for Auto OEM in 2026 due to the BMW program reaching peak volumes and legacy programs nearing end-of-life. However, significant growth is expected from 2027 onwards with the launch of a new large-scale program with Mercedes-Benz.

    04

    Geographic and Component Cost Dynamics

    All three geographic regions experienced growth, led by APAC with 25%, EMEA with 15%, and Americas with 10%, with EMEA and APAC benefiting from favorable foreign currency impact🌐s. While component costs are under pricing pressure, Garmin has accumulated significant safety stock, mitigating the impact on 2026 financials. The more pronounced effects of higher input costs are expected to appear in 2027 as inventory rolls through.

    05

    Balance Sheet and Capital Allocation

    Garmin ended the quarter with $4.3 billion in cash and marketable securities. The company generated $469 million in free cash flow, paid $174 million in dividends, and repurchased $40 million of company stock. Inventory increased year-over-year and sequentially to $1.9 billion, which management views as a strategic tool to manage supply chain and commodity risks.

    AI-generated summary of the company’s earnings call. Not investment advice.