Garmin, Ltd. CEO Cliff Pemble reported on a Wednesday analyst conference call that company fourth quarter sales and earnings exceeded guidance for the three-month period ended December 27, driven by a 42 percent surge in the Fitness wearables category as well as strong double-digit gains in both the Marine and Aviation segments. Sales within Garmin’s Outdoor segment were said to be flat for the quarter.

GRMN shares reacted nicely on Wednesday, February 18, closing up more than 9.4 percent for the day.

Pemble said consolidated revenue increased 17 percent to more than $2.1 billion for the fourth quarter, which is reportedly a new fourth quarter record and the company’s first quarter to exceed $2 billion.

“We experienced strong double-digit revenue growth in three business segments, reflecting the strength of our highly diversified business model,” Pemble noted.

Gross margin was said to be comparable to the prior-year period at 59.2 percent of revenue while operating margin expanded 60 basis points to 28.9 percent of revenue. The result was record fourth quarter operating income of $614 million, up 19 percent year-over-year (y/y) and record pro forma EPS of $2.79 per share, up 16 percent y/y.

Pemble said full-year 2025 was “another year of remarkable growth and achievement” for Garmin with record consolidated revenue, record operating income and record revenue for all business segments.

Full-year consolidated revenue increased 15 percent y/y to $7.25 billion, which was also said to be a new annual record – and up nearly $1 billion over 2024.

Gross margin was said to be comparable to full-year 2024 at 58.7 percent, which Pemble said is a significant achievement considering the impact of generationally high tariff structures that took effect early in the year. Operating margin expanded 60 basis points y/y to 25.9 percent of revenue, resulting in record full-year operating income of nearly $1.9 billion, which was up 18 percent year-over-year.

Fourth Quarter Segment Summary

Fitness
Revenue from the Fitness segment increased 42 percent in the fourth quarter, primarily due to demand for wearables driven by market share gains and growth.

Gross and operating margins were 59 percent and 34 percent, respectively, resulting in $257 million of operating income.

Garmin said, “During the quarter, we announced our collaboration with healthcare payments provider Truemed to assist customers who wish to use pre-tax HSA/FSA funds for qualifying purchases of select Garmin products. We recently published our annual Garmin Connect Data Report, which shows that, on average, our users increased activity levels by 8 percent during the year, reflecting a high level of engagement with our products and app platforms. At the recent CES show, the Venu 4 and Forerunner 970 received Innovation Awards for novel features in digital health and fitness, and we announced exciting enhancements to our premium Connect+ offering with nutrition tracking and insights powered by AI-based Garmin Active Intelligence to help users achieve nutrition and overall wellness goals.”

Outdoor
Revenue from the Outdoor segment was flat compared to the prior-year quarter, as the company had a tough compare against strong prior-year product launch cycles.

Gross and operating margins were 66 percent and 37 percent, respectively, resulting in $234 million of operating income.

Garmin said, “During the quarter, we launched the Garmin DriveTrack 72, a multifunction GPS navigator that tracks up to 20 dogs. Also during the quarter, we launched the inReach Mini 3 Plus satellite communicator with voice, text and photo sharing. This compact and rugged communicator offers essential SOS safety features and helps explorers stay connected with loved ones while adventuring beyond cellphone coverage. Several outdoor products received CES Innovation Awards, including the Fēnix 8 Pro-MicroLED, the Blaze Equine Wellness System and the Descent S1 Buoy, which highlights our commitment to exploring new product categories and developing groundbreaking technologies.”

Aviation
Revenue from the Aviation segment increased 16 percent in the fourth quarter, driven by growth across both the OEM and aftermarket product categories. Gross and operating margins were 76 percent and 31 percent, respectively, resulting in $85 million of operating income.

Garmin said, “During the quarter, we launched the D2 Air X15 and the D2 Mach 2, our latest aviator smartwatches with cockpit connectivity and advanced aviation, health, fitness, and smartwatch features. Also, we announced that the Garmin G5000H cockpit system was selected for Brazilian Air Force UH-60 Black Hawk helicopters, part of a growing list of military modernization programs based on our advanced, commercially available integrated cockpit systems. Our Garmin Autoland system was used for the first time to return an aircraft safely to the ground following an in-flight malfunction, demonstrating the extraordinary potential of this groundbreaking system to improve aviation safety and save lives.”

Marine
Revenue from the Marine segment increased 18 percent in the fourth quarter, with growth across multiple categories led by chartplotters. Gross and operating margins were 52 percent and 18 percent, respectively, resulting in $52 million of operating income.

Garmin said, “During the quarter, we expanded our chartplotter lineup with the flagship GPSMAP 9000xsv, offering stunning 4K resolution displays, 5Ghz Wi-Fi networking, and industry-leading sonar performance. Also, during the quarter, we launched Garmin OnBoard, a versatile man overboard and engine cutoff solution for boaters that uses wireless technology, offering users the freedom to move around the boat while still enjoying the protection of this important safety system. Garmin OnBoard was selected as the winner of the Safety & Security Aboard category in the 2025 DAME Design Award. Additionally, we were awarded a 2025 National Boating Safety Award from the Sea Tow Foundation and were named Most Innovative Marine company by Soundings Trade Only.”

Auto OEM
Revenue from the Auto OEM segment decreased 3 percent in the fourth quarter as certain legacy programs approached end-of-life, partially offset by growth in our most recent BMW domain controller program. Gross margin was 17 percent, and we recorded an operating loss of $14 million in the quarter.

Garmin said, “At the recent CES, we introduced our next-gen Garmin Unified Cabin domain controller that adds digital key capability, seat-specific audio/video, and an AI assistant designed to make vehicle interactions more conversational and powerful. We also announced our collaboration with Meta to explore new ways of interacting with the automobile.”

Additional Financial Information
Total operating expenses in the fourth quarter were $644 million, a 14 percent increase over the prior-year period. Research and development increased 14 percent, primarily due to engineering personnel costs. Selling, general and administrative expenses increased 14 percent, driven primarily by increased advertising investments and personnel-related costs.

The effective tax rate in the fourth quarter was 16.8 percent compared to the effective tax rate of 15.6 percent in the prior year quarter. The increase in the current quarter’s effective tax rate compared to the prior year is primarily due to the new U.S. tax legislation, which reduced U.S. tax deductions and credits.

In the fourth quarter of 2025, Garmin generated operating cash flow of $554 million and free cash flow of $430 million.

Garmin paid a quarterly dividend of approximately $173 million and repurchased $51 million of its shares during the quarter. Garmin ended the quarter with cash and marketable securities of approximately $4.1 billion.

Full-year sales totaled $7.25 billion, topping company guidance of $7.10 billion. Pro-forma EPS of $8.56 surpassed guidance of $8.15 per share for 2025.

2026 Fiscal Year Guidance
Pemble said the company anticipates 2026 to be another year of strong top and bottom line growth. Garmin expects full-year 2026 revenue of $7.9 billion, up 9 percent from 2025. Full-year pro forma EPS is expected to be $9.35 based upon gross margin of 58.5 percent, operating margin of 25.5 percent of revenue.

“Many are wondering how industry-wide memory constraints will affect us,” he added. “Our guidance considers everything we know about the supply chain environment, including recent cost pressures on memory components. It’s our practice to continually seek efficiency throughout our entire supply chain by leveraging our vertically integrated business model and scale to optimize our cost structure. We’ve always used inventory as a business tool, and we have intentionally increased inventory levels of certain components and products to ensure we can meet long-term demand. We also have strong relationships with our suppliers and are working closely with them to meet the expected demand for our products.”

The CEO continued, “While no one wishes to see supply chain challenges, we believe we are well prepared. Our strong results and positive outlook give us confidence to propose an annual dividend of $4.20 a share, reflecting a 17 percent increase over the current dividend amount, which will be considered by shareholders at the upcoming annual meeting. In addition, our Board of Directors recently approved a $500 million share repurchase program, effective through December 2028.”

 

 

 

 

Image/Charts courtesy Garmin, Ltd.