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    GRMN
    Earnings call· Dec 2025(Q4 FY25)

    GARMIN Q4 FY25 earnings call GRMN

    Feb 18, 2026 Source

    Executive summary

    Garmin Q4 FY25 — Record Revenue and Strong Growth Across Segments

    Garmin delivered a record-breaking Q4 and full year 2025, driven by strong demand and market share gains across diversified segments. The company anticipates continued top and bottom-line growth in 2026, supported by new product introductions and strategic investments, despite navigating supply chain challenges and specific segment headwinds. Management remains confident in its vertically integrated model and customer engagement.

    Highlights

    5

    • Consolidated revenue increased 17% to over $2.1 billion in Q4 FY25, marking a new quarterly record.

    • Operating income grew 19% to $614 million in Q4 FY25, with operating margin expanding 60 basis points to 28.9%.

    • Pro forma EPS increased 16% to $2.79 in Q4 FY25.

    • Fitness segment revenue grew 33% to $2.36 billion for the full year FY25, surpassing $2 billion for the first time.

    • The company proposed a 17% increase in its annual dividend to $4.20 per share and approved a new $500 million share repurchase program.

    Concerns

    4

    • Auto OEM segment revenue is expected to decrease year-over-year in 2026 due to peak BMW domain controller volumes and legacy programs approaching end of life.

    • The Auto OEM segment reported an operating loss of $49 million for the full year 2025.

    • Gross margin for 2026 is expected to be approximately 58.5%, 20 basis points lower than 2025, primarily due to higher product costs.

    • Industry-wide memory constraints are causing cost pressures on components, though Garmin believes it is well-prepared.

    Guidance & targets

    17
    CategoryTargetConfidence
    Full-year 2026 Revenue
    approximately $7.9 billion
    high materiality
    High
    Full-year 2026 Operating Income
    exceed $2 billion
    high materiality
    High
    Annual Dividend
    $4.20 a share
    high materiality
    High
    Share Repurchase Program
    $500 million
    high materiality
    High
    Full-year 2026 Gross Margin
    approximately 58.5%
    medium materiality
    Medium
    Full-year 2026 Operating Margin
    approximately 25.5%
    medium materiality
    Medium
    Full-year 2026 Pro Forma Effective Tax Rate
    16%
    medium materiality
    High
    Full-year 2026 Pro Forma EPS
    approximately $9.35
    high materiality
    High
    Full-year 2026 Free Cash Flow
    approximately $1.4 billion
    medium materiality
    High
    Full-year 2026 Capital Expenditures
    approximately $400 million
    medium materiality
    High
    Fitness Segment Growth
    strongest contributor to 2026 consolidated growth
    medium materiality
    High
    Outdoor Segment Growth
    accelerate in 2026 compared to 2025
    medium materiality
    High
    Aviation Segment Growth
    continue to grow in 2026, in line with historical norms
    medium materiality
    High
    Marine Segment Growth
    consistent with the prior year
    medium materiality
    High
    Auto OEM Segment Revenue
    decrease year-over-year
    medium materiality
    High
    Auto OEM Operating Losses
    narrow
    medium materiality
    High
    Mercedes-Benz Domain Controller Program Contribution
    limited contributions in late 2026, significant volumes ramping up in 2027
    high materiality
    High

    Segment performance

    16
    SegmentRevenueYoYQoQMargin
    Consolidated
    Record fourth quarter revenue and operating income.
    Gross margin: 59.2%
    		$2.125 billion17%—28.9% operating margin
    Consolidated
    New annual record for consolidated revenue and operating income.
    Gross margin: 58.7%
    		$7.246 billion15%—25.9% operating margin
    Fitness
    Double-digit growth in Q4 FY25, leading all segments.
    		—42%——
    Fitness
    First time exceeding $2 billion in revenue, driven by wearables, market share gains, and market growth. Operating margin expanded 360 bps.
    Gross margin: 60%Operating income: $726 million
    		$2.36 billion33%—31% operating margin
    Outdoor
    First time exceeding $2 billion in revenue, primarily driven by adventure watches, including the fenix 8 series and fenix 8 Pro.
    Gross margin: 66%Operating income: $690 million
    		$2.05 billion5%—34% operating margin
    Aviation
    Double-digit growth in Q4 FY25.
    		—16%——
    Aviation
    Growth contributions from both OEM and aftermarket product categories. Gross and operating margins expanded year-over-year.
    Gross margin: 75%Operating income: $257 million
    		$987 million13%—26% operating margin
    Marine
    Double-digit growth in Q4 FY25.
    		—18%——
    Marine
    Driven by growth across multiple categories, led by chartplotters.
    Gross margin: 55%Operating income: $251 million
    		$1.18 billion10%—21% operating margin
    Auto OEM
    Primarily driven by growth in domain controllers. Operating loss for the year.
    Gross margin: 17%
    		$665 million9%—Operating loss of $49 million
    Americas
    Achieved strong double-digit growth in Q4 FY25, exceeding $1 billion for the first time.
    		exceeding $1 billion21%——
    Americas
    Strong growth for full year FY25.
    		—40%——
    EMEA
    Growth in Q4 FY25.
    		—14%——
    EMEA
    Strong growth for full year FY25.
    		—18%——
    APAC
    Growth in Q4 FY25.
    		—8%——
    APAC
    Growth for full year FY25.
    		—12%——

    Operational metrics

    18
    Operating Income
    $1.876 billion18% increase YoY
    FY25

    Record full year operating income.

    GAAP EPS
    $2.73
    Q4 FY25

    GAAP EPS for the fourth quarter.

    Pro Forma EPS
    $2.7916% increase YoY
    Q4 FY25

    Record fourth quarter pro forma EPS.

    GAAP EPS
    $8.59
    FY25

    GAAP EPS for the full year.

    Pro Forma EPS
    $8.5616% increase YoY
    FY25

    Pro forma EPS for the full year.

    Operating Expenses
    $80 million14% increase YoY
    Q4 FY25

    Increase in fourth quarter operating expenses, driven by personnel-related, advertising, and R&D expenses.

    Cash and Marketable Securities
    $4.1 billion
    Q4 FY25

    Balance at the end of the quarter.

    Accounts Receivable
    $1.3 billionincreased sequentially and year-over-year
    Q4 FY25

    Increased due to strong sales in the fourth quarter.

    Inventory
    $1.8 billionincreased year-over-year
    Q4 FY25

    Inventory balance increased year-over-year, intentionally increased for certain components and products.

    Capital Expenditures
    $270 million$77 million increase YoY
    FY25

    Capital expenditures for the full year.

    Dividends Paid
    $664 million
    FY25

    Total dividends paid during 2025.

    Share Repurchases
    $181 million
    FY25

    Company shares purchased during 2025.

    Annual Dividend Increase
    $0.6017% increase
    Annual

    Proposed increase in annual dividend, beginning with June 2026 payment.

    Quarterly Dividend Per Share
    $1.05
    Quarterly

    Proposed cash dividend per share per quarter.

    Previous Share Repurchase Authorization Remainder
    $300 million
    Through December 2028

    The remainder of the previous share repurchase authorization, which was replaced by a new $500 million program.

    Pro Forma Effective Tax Rate
    17.4%vs 16.7% in prior year
    FY25

    Increase due to 2025 U.S. tax legislation changing capitalization requirements of R&D costs.

    Garmin Connect User Activity Levels
    8%increased
    FY25

    Average increase in activity levels among Garmin Connect users, reflecting high engagement.

    Tariff Cost
    15%down from 20%
    Current

    Current tariff rate, noted as a significant cost adder, with excellent mitigation efforts by the company.

    Industry KPIs

    4
    MetricValueDetails
    Full year guidance revisionsConsolidated revenue: $7.9B (9% increase); Operating income: >$2B; Pro forma EPS: $9.35 (9% increase)USD
    Tariff trade impact by segment20% (now 15%)%
    Monthly active users engagement8%%
    Segment revenue operating income mixFitness: $2.36B revenue, 33% growth, 31% operating margin; Outdoor: $2.05B revenue, 5% growth, 34% operating margin; Aviation: $987M revenue, 13% growth, 26% operating margin; Marine: $1.18B revenue, 10% growth, 21% operating margin; Auto OEM: $665M revenue, 9% growth, -49M operating lossUSD

    Product announcements

    11
    ProductTypeDetails
    Venu 4launch
    Forerunner 970launch
    inReach Mini 3 Pluslaunch
    fenix 8 Pro MicroLED versionlaunch
    Blaze Equine Wellness Systemlaunch
    Descent S1 Buoylaunch
    D2 Air X15launch
    D2 Mach 2launch
    GPSMAP 9000xsv lineuplaunch
    Garmin OnBoardlaunch
    Next-gen Unified Cabin domain controllerlaunch

    Deals & partnerships

    4
    Truemedpartnership

    Collaboration with health care payments provider Truemed to assist customers using pre-tax Health Savings Account (HSA) and Flexible Savings Account (FSA) funds for qualifying purchases of select Garmin products. This has become a significant sales channel.

    Brazilian Air Forcecustomer contract

    The Garmin G5000H cockpit system was selected for the Brazilian Air Force UH-60 Black Hawk helicopter, as part of a military modernization program using commercially available integrated cockpit systems.

    Mercedes-Benzcustomer contract

    Garmin achieved an important milestone with Mercedes-Benz for its next domain controller program, which will broadly apply across their portfolio of passenger car models with significant volumes ramping up in 2027. Limited contributions are expected in late 2026.

    Metapartnership

    Collaboration with Meta to explore new ways of interacting with the vehicle within the Auto OEM segment.

    Risks & headwinds

    5
    Industry-wide memory constraints2026

    Cost pressures on memory components

    Mitigation: Leveraging vertically integrated business model, scale, and intentionally increased inventory levels of certain components and products. Strong supplier relationships are in place to meet demand.

    Generationally high tariff structuresOngoing

    20% tariff (now 15%) is a significant cost adder

    Mitigation: Teams across the world have done a phenomenal job mitigating the impact. Guidance assumes tariffs remain as is, not counting on an overturn.

    Auto OEM segment revenue decrease2026

    Revenue expected to decrease year-over-year

    Mitigation: Due to reaching the peak of BMW domain controller volumes and certain legacy programs approaching end of life. R&D resources are being shifted to accelerate product roadmap development in other segments.

    Auto OEM operating losses2026

    Operating loss of $49 million for FY25; expected to narrow in 2026

    Mitigation: Shifting certain Auto OEM R&D resources to accelerate product roadmap development in other segments to improve profitability.

    Gross margin compression2026

    Gross margin expected to be approximately 58.5% (20 bps lower than 2025)

    Mitigation: Primarily due to higher product costs, partially offset by favorable segment mix. Vertical integration helps mitigate the overall impact.

    Q&A highlights

    6

    How material is the memory impact on 2026 guidance, which segments are affected, and what mitigation levers (de-specking, pricing) are being considered beyond inventory?

    Cliff Pemble stated that Garmin does not quantify individual component impacts but manages the entire Bill of Materials (BoM) for cost efficiency. He noted that Garmin's higher overall margin structure, due to vertical integration, makes BoM variations less impactful. All angles are being worked, not just one area.

    “I would remind everyone that our overall margin structure is higher, and that's because we're a vertically integrated company. And so therefore, when we see some variation at the BoM level, of course, the impact to the overall margin is less impactful.”

    asked by Joseph Cardoso · answered by Clifton Pemble

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Diversification and Vertical Integration

    Garmin's record 2025 performance, with consolidated revenue of $7.25 billion and operating income of $1.9 billion, is attributed to its long-standing strategy of market diversification and creating essential products. The company's vertically integrated business model and scale are leveraged to optimize cost structure and manage supply chain challenges🌐, including recent memory cost pressures. This approach has been a winning strategy for over 36 years, enabling multiple paths to achieving consolidated goals.

    02

    Supply Chain Management and Inventory Strategy

    Despite industry-wide memory constraints and cost pressures on components, Garmin is well-prepared, having intentionally increased inventory levels of certain components and products to meet long-term demand. The company maintains strong relationships with suppliers to navigate the supply chain environment. Management emphasized that Garmin's higher overall margin structure, due to vertical integration, helps mitigate the impact of variations at the Bill of Materials level.

    03

    Connect+ Service Enhancements and Customer Engagement

    The premium Connect+ service received exciting enhancements, including nutrition tracking and AI-based active intelligence insights, which have significantly accelerated free trial uptake and conversion rates. This service is seen as an important adder to the business, with plans for continued expansion and enhancement to add more value to customers. The annual Garmin Connect data report showed users increased activity levels by 8% in 2025, reflecting high engagement with Garmin's products and app platforms.

    04

    Auto OEM Business Evolution and Mercedes-Benz Program

    The Auto OEM segment is undergoing a strategic shift, reallocating R&D resources to accelerate product roadmap development in other segments. While 2026 revenue is expected to decrease due to peak BMW volumes and legacy programs ending, operating losses are projected to narrow. The new Mercedes-Benz domain controller program, with significant volumes ramping in 2027, represents a key future growth driver, demonstrating Garmin's innovation and operational capabilities.

    05

    Aviation Expansion and Military Opportunities

    Garmin's aviation segment continues to grow, with the recent acquisition of a new facility in Olathe, Kansas, enabling significant hangar space and a new staff for certification work and aircraft modifications. This expansion is expected to open new opportunities, including potential for larger aircraft and increased engagement with military modernization programs seeking commercial off-the-shelf components, such as the G5000H cockpit system selected for the Brazilian Air Force UH-60 Black Hawk helicopter.

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