Asked about the competitive implications of private wearable companies pursuing different form factors and aggressive subscription models, and if this expands the market for Garmin.

Pemble views the market as expanding, with customers wanting choices. Garmin is open to various devices and form factors and is also expanding its role in subscription-based services across its products and segments. “I would say that if there's anything that we've learned over the years is that customers want choices when it comes to devices, especially those that they wear.”

Asked about demand trends in the lower tier of the wearable portfolio compared to advanced wearables.

Pemble clarified that 'advanced wearables' include many price tiers, from entry-level to premium, and Garmin is seeing strong demand across both the low and high ends of these ranges. Basic wearable bands are a small part of the portfolio. “we're definitely seeing strong demand, both at the low end and the high end of those ranges.”

Inquired if Q1 saw a stronger than normal new product quarter and its impact on growth and margins.

Pemble stated that the number of new products is historically consistent, typically around 100 per year. New products generally drive revenue growth and can enhance margins due to fresh designs and appropriate pricing for competitive landscapes. “In general, we rely on new products to really drive revenue growth within the company.”

GRMN

Garmin (GRMN) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Information Technology· Apr 29, 2026

Source: earnings call transcript

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

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

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

Category	Target	Timeline	Confidence
Full-year 2026 consolidated financial results	Maintaining guidance issued in February high materiality	FY26 · 2026	Medium
Outdoor segment Q2 performance	Similar to that of Q1 medium materiality	Q2 · 2026	Medium
Outdoor segment H2 performance	Achieve stronger performance medium materiality	H2 FY26 · 2026	Medium
Outdoor segment full-year growth	Improved full year growth when compared to 2025 medium materiality	FY26 · 2026	Medium
Auto OEM segment revenue	Decrease in 2026 medium materiality	FY26 · 2026	High
Auto OEM segment operating loss	Narrow compared to 2025 medium materiality	FY26 · 2026	High
Auto OEM segment profitability	Not expecting the segment to be profitable on a GAAP basis for the full year medium materiality	FY26 · 2026	High
Auto OEM segment growth from Mercedes-Benz program	Drive significant growth high materiality	Starting in 2027 and beyond	High
Component cost impact on financials	Well controlled in 2026, more pronounced in 2027 medium materiality	FY26 and FY27	High
Operating expenses as percentage of sales	Relatively consistent year-over-year medium materiality	FY26 · 2026	Medium

Segment performance

Segment	Revenue	YoY	QoQ	Margin
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 million	42%	—	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 million	18%	—	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 million	11%	—	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 million	1%	—	Operating loss of $6 million

Product announcements

Product	Type	Timeline
Saveria Rearview 820	launch	—
Connect IQ app for WhatsApp	expansion	—
Natural Cycles app integration	update	—
Approach G82	launch	—
Approach J1	launch	—
Zumo XT 3	launch	—
Catalyst 2	launch	—
G3000 Prime avionics suite in Daher TBM 980	milestone	—
Garmin Emergency Autoland in HondaJet Elite II	milestone	—
360-degree scanning sonar with SPY pole	launch	—
quatix 8 Pro	launch	—

Risks & headwinds

Outdoor Segment Revenue Decline Q1 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 Compression Q1 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 2026 FY26

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 2026 FY26

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 Increases Expected 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 Prices Ongoing

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

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 read 5 chapters

Detailed narrative

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.

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.

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.

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 impacts. 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.

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.