Detailed Narrative
Strong Q3 Performance and Full-Year Outlook
Garmin reported a record third quarter with consolidated revenue up 12% to nearly $1.8 billion, driven by double-digit growth in Fitness, Marine, and Aviation segments. The company reaffirmed its full-year revenue guidance of $7.1 billion and raised its pro forma EPS outlook to $8.15, up $0.15 from prior guidance, reflecting strong year-to-date performance and anticipated holiday season momentum. Management expects another record year of double-digit growth in revenue, operating income, and EPS.
Fitness Segment Momentum
The Fitness segment was a standout, with revenue increasing 30% to $601 million, fueled by strong demand for advanced wearables. New product launches, including the Edge 550/850 cycling computers, Bounce 2 smartwatch for kids, and Venu 4 smartwatch, contributed to this growth. The company also highlighted a collaboration with King's College London for a study on women's health using wearables. Full-year Fitness revenue growth estimate was raised to 29%.
Outdoor Segment Challenges and Long-Term View
Outdoor segment revenue decreased 5% to $498 million, primarily due to challenging comparisons from the highly successful fenix 8 launch in the prior year. While the fenix 8 Pro, launched late in Q3, partially offset this, it did not fully close the gap. Management emphasized the segment's remarkable long-term growth track record and continued innovation, including the new MicroLED display technology in the fenix 8 Pro and the Blaze equine wellness system. Full-year Outdoor revenue growth estimate was lowered to 3%.
Aviation and Marine Segments Outperformance
Both Aviation and Marine segments demonstrated strong growth and had their full-year revenue growth estimates raised to 10%. Aviation revenue increased 18% to $240 million, benefiting from both OEM backlog and resilient aftermarket demand, with new certifications for integrated cockpit systems and autopilot capabilities. Marine revenue grew 20% to $267 million, driven by chartplotters, audio, and cartography, and new product expansions like the Force Current and Force Kraken trolling motors. Garmin was recognized as National Marine Electronics Association Manufacturer of the Year for the 11th consecutive year.
Auto OEM Transition and Warranty Impact
The Auto OEM segment saw a 2% revenue decrease to $165 million as legacy programs wind down, partially offset by growth in the BMW domain controller program. The segment reported an operating loss of $17 million, impacted by a one-time📎 increase in accrued warranty costs related to prior period sales. Management anticipates a new large OEM program to add significant volumes in late 2026, but expects some revenue pressure in 2026 due to the natural dynamics of program transitions.
Financials, Inventory, and Tariffs
Gross margin declined 90 basis points to 59.1% due to higher product costs, including tariffs and a strengthening Taiwan dollar. Operating expenses increased 15% primarily due to personnel-related expenses. The company ended the quarter with $3.9 billion in cash and marketable securities and increased inventory to $1.9 billion to support demand and mitigate potential tariff increases. Free cash flow for Q3 was $425 million, up $206 million YoY, and the company repurchased $36 million of stock, with $107 million remaining in authorization.