Garmin Ltd.’s sales expanded 11 percent in the second quarter to $2.03 billion, propelled by gains of 25 percent in its Fitness segment and 14 percent in its Marine segment. Earnings on a pro-forma basis rose 29 percent. Garmin also lifted its outlook for the year.
Cliff Pemble, president and CEO, said, “We delivered another quarter of outstanding financial results with double-digit revenue growth and robust margin expansion, which resulted in record revenue and operating income. Each business segment contributed to these impressive results. Our performance in the first half of 2026 was very strong giving us confidence to raise our full year 2026 consolidated revenue and EPS guidance.”
Segment Performance
Garmin said revenue from the Fitness segment increased 25 percent in the second quarter with growth across all product categories, led by strong demand for advanced wearables. Gross margin and operating margin were 64 percent and 37 percent, respectively, resulting in $277 million of operating income.
“During the quarter, we launched the Forerunner 70 and Forerunner 170, easy-to-use GPS running smartwatches designed to help runners of all levels reach their goals,” the company said in an earnings release. “In addition, we celebrated global running day and global cycling day with the release of our running and cycling data reports, highlighting how athletes around the world are recording runs and rides. More recently, we announced the CIRQA Smart Band, a screenless wearable that offers rich wellness and fitness insights without requiring a subscription and further expands our addressable market for wellness devices.”
Garmin said revenue from the Outdoor segment decreased 2 percent in the second quarter primarily due to the consumer auto and adventure watch product categories. Gross and operating margins were 69 percent and 34 percent, respectively, resulting in $164 million of operating income.
“We recently announced the Approach Z10, a compact laser rangefinder that sends precise distances to compatible devices bringing a high-fidelity experience to game play, and we also released our Trends in Golf Data Report, highlighting that participation in the sport is up and players improving in nearly every shot category,” the company noted.
Garmin said revenue from the Marine segment increased 14 percent in the second quarter with broad-based growth across multiple categories. Gross and operating margins were 61 percent and 29 percent, respectively, resulting in $100 million of operating income.
“During the quarter, we launched the Garmin Signal VHF marine radios which offer color touchscreens and new features that enhance communication on the water. We recently announced the next generation LiveScope 2, delivering live sonar images with improved range and clarity,” Garmin noted.
Aviation: Garmin said, “Revenue from the aviation segment increased 8 percent in the second quarter with growth in both the OEM and aftermarket product categories. Gross and operating margins were 75 percent and 27 percent, respectively, resulting in $72 million of operating income. For the 11th consecutive year, we were named Best Supplier of the Year by Embraer, recognizing us for outstanding performance as a supplier of Electrical and Electronic Systems for their Phenom business jets. During the quarter, we launched the D2TM Mach 2 Pro, our first aviator smartwatch with inReach technology. We also recently announced AXIS, an all-new family of highly integrated and scalable cockpit display solutions for a broad range of certified and experimental aircraft models.”
Auto OEM: Garmin said, “Revenue from the auto OEM segment increased 1 percent during the second quarter primarily due to domain controllers. Operating income improved to $3 million in the quarter, compared to an operating loss in the prior year period, driven by improved gross profit and lower research and development expense.”
Regional Summary
Profitability & Expenses Summary
The consolidated gross margin expanded 360 basis points to 62.4 percent, compared to the prior year quarter with higher margins across all segments. The consolidated gross margin increase was primarily attributable to favorable product mix within certain segments and approximately $21 million in refunds of previously paid tariffs.
Total operating expenses in the second quarter were $647 million, a 9 percent increase over the prior year. Research and development and selling, general and administrative expenses increased 10 percent and 8 percent, respectively, driven primarily by personnel-related costs.
The effective tax rate in the second quarter was 16.8 percent, compared to an effective tax rate of 16.5 percent in the prior year quarter. The increase in the effective tax rate is primarily due to income mix by jurisdiction. In the second quarter of 2026, Garmin generated operating cash flows of $404 million and free cash flow of $276 million.
Garmin paid a quarterly dividend of $202 million and repurchased $43 million of the company’s shares within the quarter, leaving approximately $448 million remaining as of June 27, 2026 in the $500 million share repurchase program authorized through December 2028. Garmin ended the quarter with cash and marketable securities of approximately $4.4 billion.
Fiscal Year 2026 Guidance
Based on the performance during the first half of 2026 and a positive outlook for the remainder of the year, Garmin reported that it is raising its full-year 2026 guidance. Updated guidance calls for revenues of approximately $8.05 billion and pro forma EPS of $10.00 based on gross margin of 59.7 percent, operating margin of 27.0 percent and a full-year tax rate of 16.5 percent.
Previously, guidance called for approximately $7.9 billion in revenue and pro forma EPS of $9.35.
Image courtesy Garmin Ltd.
