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    GRMN
    Earnings call· Jun 2026(Q2 FY26)

    GARMIN Q2 FY26 earnings call GRMN

    Jul 29, 2026 Source

    Executive summary

    Garmin Q2 FY26 — Record Revenue and Raised Full-Year Guidance

    Garmin delivered record Q2 FY26 financial results, driven by strong performance in its Fitness and Marine segments, and expanded margins benefiting from favorable product mix and a tariff refund. The company raised its full-year guidance, reflecting confidence in its product portfolio and strategic acquisitions, even with anticipated headwinds from higher memory costs and a temporary decline in Auto OEM revenue.

    Highlights

    5

    • Consolidated revenue increased 11% to $2.02 billion, achieving a new record.

    • Operating income increased 30% to $616 million, driven by robust margin expansion.

    • Pro forma EPS increased 29% to $2.81, reflecting strong profitability.

    • Fitness segment revenue grew 25% to $757 million, marking a new Q2 record.

    • Full-year 2026 revenue guidance raised to $8.05 billion and pro forma EPS to $10.

    Concerns

    3

    • Outdoor segment revenue decreased 2% to $483 million, primarily due to consumer auto and adventure watch product categories.

    • Auto OEM segment expects revenue decline and a return to operating loss in H2 2026 due to a transition period between contracts.

    • Higher memory costs are anticipated to impact gross margin in the second half of 2026, despite current strong performance.

    Guidance & targets

    15
    CategoryTargetConfidence
    Full-year 2026 Revenue
    $8.05 billion
    high materiality
    High
    Full-year 2026 Pro Forma EPS
    $10 per share
    high materiality
    High
    Full-year 2026 Gross Margin
    approximately 59.7%
    medium materiality
    High
    Full-year 2026 Operating Margin
    approximately 27%
    medium materiality
    High
    Full-year 2026 Pro Forma Effective Tax Rate
    16.5%
    low materiality
    Medium
    Full-year 2026 Free Cash Flow
    approximately $1.4 billion
    medium materiality
    High
    Full-year 2026 Capital Expenditures
    approximately $550 million
    medium materiality
    High
    Outdoor Segment Revenue Performance
    stronger revenue performance
    medium materiality
    Medium
    Aviation Segment Growth
    continued growth
    low materiality
    Medium
    Marine Segment Full-Year Growth
    consistent with prior year
    low materiality
    Medium
    Auto OEM Segment Revenue
    decline
    medium materiality
    High
    Auto OEM Segment Operating Income
    return to an operating loss
    medium materiality
    High
    Auto OEM Segment Growth
    return to growth
    medium materiality
    Medium
    Thailand Facility Completion
    finished towards the end of the year
    medium materiality
    High
    Thailand Facility Utilization Start
    early 2027
    medium materiality
    High

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    Fitness
    Achieved a new second quarter record driven by growth across all product categories, led by strong demand for advanced wearables. Operating income was $277 million.
    Gross margin: 64%
    		$757 million25%—37% operating income margin
    Outdoor
    Revenue decrease primarily due to consumer auto and adventure watch product categories. Delivered improved profitability and operating income growth through favorable product mix and disciplined execution. Operating income was $164 million.
    Gross margin: 69%
    		$483 million-2%—34% operating income margin
    Aviation
    Reflected growth in both OEM and aftermarket product categories. Operating income was $72 million. Named Best Supplier of the Year by Embraer for the 11th consecutive year.
    Gross margin: 75%
    		$269 million8%—27% operating income margin
    Marine
    Growth across multiple product categories. Primary driver of margin expansion was the tariff refund recognized during the quarter, with product margins also improving when excluding this benefit. Operating income was $100 million.
    Gross margin: 61%
    		$341 million14%—29% operating income margin
    Auto OEM
    Growth primarily driven by domain controllers. Gross margin expansion due to year-to-date cost recoveries. Operating income was positive at $3 million on a GAAP basis, driven by improved gross profit and lower R&D expenses.
    Gross margin: 22%
    		$172 million1%—2% operating income margin

    Operational metrics

    22
    Consolidated revenue growth
    11%YoY
    Q2 FY26

    Achieved record-breaking financial results.

    Consolidated gross margin
    62.4%+360 bps YoY
    Q2 FY26

    Expanded significantly, even excluding the tariff benefit.

    Tariff refund benefit
    $21 million
    Q2 FY26

    Recognized in the second quarter, contributing to gross margin expansion.

    Operating expense as percentage of sales
    32%-80 bps YoY
    Q2 FY26

    Decrease in operating expense as a percentage of sales.

    Consolidated operating income growth
    30%YoY
    Q2 FY26

    Increased to $616 million.

    Consolidated operating margin
    30.4%+140 bps YoY
    Q2 FY26

    Expanded compared to the prior year quarter.

    GAAP EPS
    $2.80
    Q2 FY26

    Reported GAAP earnings per share.

    Pro forma EPS
    $2.81+29% YoY
    Q2 FY26

    Increased significantly year-over-year.

    EMEA revenue growth
    13%YoY
    Q2 FY26

    Led growth across geographies.

    Americas revenue growth
    12%YoY
    Q2 FY26

    Strong growth in the Americas region.

    APAC revenue growth
    7%YoY
    Q2 FY26

    Growth in the APAC region.

    Research and development expense growth
    10%+$27 million
    Q2 FY26

    Increase primarily driven by personnel-related expenses.

    SG&A expenses growth
    8%+$25 million
    Q2 FY26

    Increase primarily driven by personnel-related expenses.

    Cash and marketable securities
    $4.4 billion
    Q2 FY26 end

    Balance at the end of the quarter.

    Accounts receivable
    $1.2 billionincreased YoY and sequentially
    Q2 FY26 end

    Increased on seasonally strong sales in the second quarter.

    Inventory
    $2 billionincreased YoY and sequentially
    Q2 FY26 end

    Increased year-over-year and sequentially.

    Capital expenditures
    $128 million+$82 million YoY
    Q2 FY26

    Higher than the prior year quarter.

    Dividends paid
    $202 million
    Q2 FY26

    Paid during the second quarter.

    Stock repurchases
    $43 million
    Q2 FY26

    Purchased during the second quarter.

    Remaining share repurchase authorization
    $448 million
    Q2 FY26 end

    Remaining under the authorized program.

    Effective tax rate
    16.8%vs 16.5% prior year
    Q2 FY26

    Increase primarily due to income mix by jurisdiction.

    Memory costs impact
    higher
    H2 2026

    Expected to impact gross margin in the second half, factored into full year guidance.

    Industry KPIs

    2
    MetricValueDetails
    Tariff refunds duties$21 millionUSD
    Segment revenue operating income mixConsolidated revenue $2.02 billion, operating income $616 millionUSD

    Product announcements

    8
    ProductTypeDetails
    Forerunner 70launch
    Forerunner 170launch
    Circa Smartbandlaunch
    Approach Z10launch
    D2 Mach 2 Prolaunch
    Accesslaunch
    Garmin Signal VHF Marine radiolaunch
    LiveScope 2 sonar systemlaunch

    Deals & partnerships

    1
    Training Peaks and TrainHeroicAcquisition of leading endurance and strength training platforms.

    Strategic acquisition to enhance the fitness segment by connecting coaches to athletes and maximizing training impact. Expected to provide a 360-degree experience for customers using Garmin devices.

    Risks & headwinds

    3
    Higher memory costsH2 2026

    expected to impact second half

    Mitigation: Management will use the same playbook as with tariffs to mitigate costs and maintain performance.

    Auto OEM revenue decline and operating lossH2 2026

    revenue to decline, return to operating loss

    Mitigation: Preparing for the launch of a major program with Mercedes-Benz in 2027, which is expected to return the segment to growth.

    Outdoor segment revenue decreaseQ2 FY26

    -2% YoY

    Mitigation: Expect stronger revenue performance in H2 2026 due to the timing of product launches, leading to improved full-year growth compared to 2025.

    What to watch in Q3 FY26

    5

    Auto OEM segment performance

    H2 2026
    CurrentRevenue increased 1%, operating income $3M in Q2 FY26
    TargetRevenue decline and operating loss

    Why it matters

    Indicates transition between major contracts and future growth trajectory for the segment.

    While we're excited about the positive quarter, we are expecting revenue to decline and the return to an operating loss in the back half of 2026, leading up to the launch of our next major program with Mercedes Benz in 2027.

    Q&A highlights

    8

    Clarification on Circa's subscription requirements for advanced features and Garmin's willingness to expand into other wearable form factors.

    Circa offers full features out of the box, with additional Connect features (AI, nutrition) available. Garmin continuously explores new product categories and expects future innovations, but did not comment on specific roadmap details.

    “I won't comment specifically on our product road map, but as we've demonstrated over time, we -- we tend to move into categories and explore new things. And so our product road map is very rich, and I would expect that we'll see additional new product in the future, just like you've always seen from us.”

    asked by Erik Woodring · answered by Clifton Pemble

    2 min read5 chapters

    Detailed Narrative

    01

    Record Q2 Performance and Margin Expansion

    Garmin achieved record Q2 FY26 consolidated revenue of $2.02 billion, an 11% increase year-over-year. Operating income surged 30% to $616 million, and pro forma EPS rose 29% to $2.81. This strong financial performance was primarily driven by favorable product mix and a $21 million tariff refund, contributing to significant expansion in consolidated gross margin to 62.4% and operating margin to 30.4%.

    02

    Strategic Acquisitions and Product Innovation

    The company expanded its ecosystem through the strategic acquisition of Training Peaks and TrainHeroic, leading endurance and strength training platforms. Garmin also introduced several new products across its segments, including the Forerunner 70 and 170, the Circa Smartband, the Approach Z10 laser rangefinder, the D2 Mach 2 Pro Aviator smartwatch, the Access integrated flight display system, the Garmin Signal VHF Marine radio, and the LiveScope 2 sonar system.

    03

    Fitness Segment Drives Growth

    The Fitness segment was the strongest contributor to Garmin's consolidated growth, with revenue increasing 25% to a new Q2 record of $757 million. This growth was fueled by continued strong demand for advanced wearables across all product categories. The newly launched Circa Smartband, offering rich wellness and fitness insights without a subscription, saw demand significantly ahead of expectations, leading to back orders.

    04

    Auto OEM Transition and Future Outlook

    The Auto OEM segment saw a 1% revenue increase to $172 million, driven by domain controllers, and achieved a positive operating income of $3 million. However, the segment anticipates a revenue decline and a return to operating losses in the second half of 2026 as it navigates an air pocket between contracts. Growth is expected to resume in 2027 with the launch of a major new program with Mercedes-Benz.

    05

    Manufacturing Capacity Expansion in Thailand

    Garmin's new manufacturing facility in Thailand is progressing on schedule, with completion expected towards the end of 2026 and initial utilization in early 2027. The first phase of the facility will span 400,000 square feet and has the potential to double Garmin's total manufacturing capacity, providing strategic diversification and additional options for future production.

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