Garmin NYSE: GRMN reported first-quarter 2026 results that management described as a continuation of long-term positive trends, highlighted by a record first-quarter revenue performance and margin expansion. Consolidated revenue rose 14% year over year to $1.75 billion, while gross margin expanded to 59.4% and operating margin increased to 24.6%, driving record first-quarter operating income of $432 million, up 30% from the prior year.
President and CEO Cliff Pemble said the company saw “strength in many product categories across the business, including wearables,” which he called a significant contributor to consolidated growth. Garmin reported GAAP EPS of $2.09 and pro forma EPS of $2.08, up 29% year over year on a pro forma basis. Pemble noted that the first quarter is typically Garmin’s lowest seasonal quarter and said the company is maintaining the full-year guidance issued in February, consistent with its typical practice.
Segment performance led by Fitness; Outdoor down against tough compare
Garmin posted double-digit growth in three of its five segments, led by Fitness. Fitness revenue increased 42% year over year to $547 million, a new first-quarter record, which Pemble attributed to “broad-based growth across all product categories, led by strong demand for advanced wearables.” He said higher unit volumes were the primary driver and resulted in “meaningful market share gains.” Fitness gross margin was 62% and operating margin was 29%, producing operating income of $158 million.
During the quarter, Pemble highlighted several Fitness-related launches and feature expansions, including the Varia RearVue 820 radar taillight, a new Connect IQ app enabling WhatsApp message interactions from select wearables, and integrations with the Natural Cycles birth control and cycle tracking app. Pemble reiterated that Fitness is expected to be the strongest contributor to consolidated growth in 2026.
Outdoor revenue declined 5% to $418 million, which management tied to a difficult comparison with the prior-year quarter that included the launch of the Instinct 3 smartwatch family. Pemble said fēnix smartwatches “performed well,” even with that prior-year strength. Outdoor gross margin was 67% and operating margin was 28%, resulting in operating income of $119 million. New product introductions included the Approach G82 handheld GPS with a built-in launch monitor, the Approach J1 junior golf watch, the zūmo XT3 motorcycle GPS device, and the Catalyst 2 motorsports device. Looking ahead, Pemble said second-quarter Outdoor performance is expected to be similar to Q1, with stronger results anticipated in the back half of the year due to product-launch timing.
Aviation and Marine grew; tariffs pressured Marine margins
Aviation revenue increased 18% to $264 million, with growth coming from both OEM and aftermarket categories. Gross margin was 75% and operating margin was 27%, yielding operating income of $71 million. Pemble pointed to Daher’s unveiling of its TBM 980 aircraft featuring Garmin’s G3000 PRIME avionics suite and the FAA certification of the HondaJet Elite II as the first twin-turbine business jet with Garmin Autoland technology. In the Q&A, CFO and Treasurer Doug Boessen said OEM deliveries were a stronger contributor than aftermarket, while noting both contributed to growth. He added that aircraft makers “are sitting on high backlogs,” and Garmin had not heard indications that buyers are hesitating on new aircraft purchases.
Marine revenue rose 11% to $355 million with “broad-based growth across multiple product categories,” according to Pemble. Marine gross margin was 56% and operating margin was 26%, resulting in operating income of $91 million. Pemble said the year-over-year margin compression was “primarily due to higher tariff costs.” He highlighted the launch of a 360-degree scanning sonar with Spy Pole and the quatix 8 Pro nautical smartwatch with inReach technology for two-way satellite and cellular connectivity.
In response to an analyst question, Pemble said Marine strength included “particular strength on deliveries to boat builders,” with retail and aftermarket also contributing. He added that Garmin is beginning to hear some customers express worry tied to geopolitical conditions, but said the company is taking a “wait and see approach,” noting the market has been strong and reception to new products has been positive.
Auto OEM modest growth in Q1; Mercedes ramp expected in 2027
Auto OEM revenue increased 1% to $170 million, with growth “primarily driven by infotainment programs.” The segment operating loss narrowed to $6 million, which Pemble said reflected gross profit improvement and lower R&D expenses. Management reiterated expectations that Auto OEM revenue will decline in 2026 as the BMW program has reached peak volumes and certain legacy programs approach end of life. Pemble said Garmin expects important milestones ahead of the next large-scale program launch with Mercedes-Benz, which it anticipates will drive “significant growth starting in 2027 and beyond.”
In Q&A, Pemble described the Mercedes unit as “a more complex unit and higher ASPs than what we saw with BMW because of its level of integration and also strong volume.” He said 2027 should be a ramp-up year for the Mercedes program, while indicating Garmin was not ready to provide quarter-by-quarter specifics for 2026.
Margins, FX, tariffs, and cost outlook
Boessen said first-quarter gross margin improved 180 basis points year over year, “primarily due to favorable foreign currency impacts.” By geography, Garmin reported growth in all three regions: APAC was up 25%, EMEA grew 15%, and the Americas increased 10%. Boessen noted EMEA and APAC benefited from favorable foreign currency impacts.
On tariffs, Boessen said there was an unfavorable impact in Q1 versus the prior-year quarter because “the tariffs were not in effect at that period of time.” For the rest of 2026, he said Garmin expects some tariff impact “basically at the current trends we’re seeing,” while emphasizing the situation is evolving. Regarding potential tariff refunds, Boessen said Garmin has not recorded any receivable or benefit for refunds and would evaluate and record at the appropriate time.
On component costs, Pemble said Garmin is not currently experiencing cost pressure in reported results, partly because costs flow through inventory. He said the company has significant safety stock for some components under pricing pressure and expects the effect to be “somewhat muted” in 2026, with more impact expected to show up in 2027. He said Garmin will work to protect margins through efficiencies, noting, “It’s not our goal to go backwards.”
Cash, inventory, and shareholder returns
Garmin ended the quarter with approximately $4.3 billion in cash and marketable securities. Accounts receivable were $941 million, down sequentially following what Boessen described as a seasonally strong fourth quarter, but up year over year due to strong sales. Inventory increased year over year and sequentially to approximately $1.9 billion.
Boessen reported free cash flow of $469 million in the first quarter, up $9 million from the prior-year quarter. Capital expenditures totaled $67 million, about $27 million higher than the prior year. Garmin paid approximately $174 million in dividends and repurchased $40 million of stock during the quarter. At quarter-end, the company had about $491 million remaining under its share repurchase authorization through December 2028. The effective tax rate was 14.3%.
During Q&A, Pemble said demand trends remained consistent and strong, with registration rates continuing to be strong. He said Garmin had not seen an impact from recent Middle East developments on registration rates. On competition in wearables and emerging subscription models, Pemble said customers want device choices and called the broader set of options an “expanded opportunity for everyone.” He pointed to Garmin’s own efforts in subscription services, referencing Garmin Connect Plus and other offerings across the business.
About Garmin NYSE: GRMN
Garmin Ltd. is a technology company best known for designing and manufacturing navigation, communication and information devices that leverage global positioning system (GPS) technology. The company serves a diverse set of markets including consumer fitness and wearables, automotive navigation, aviation avionics, marine electronics and outdoor handheld devices. Garmin's products combine hardware, mapping and software services to deliver location-aware solutions for personal, recreational and professional uses.
Garmin's product lineup includes wearable fitness and multisport watches (Forerunner, Fenix, Venu), cycling computers and accessories (Edge, Varia), handheld and handheld-mounted GPS devices for outdoor activities, automotive and portable navigation units, marine chartplotters and fishfinders, and certified avionics for fixed- and rotary-wing aircraft.
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