Garmin NYSE: GRMN reported record second-quarter results for 2026, with revenue rising 11% year over year to $2.02 billion and operating income increasing 30% to $616 million. The company raised its full-year outlook following stronger-than-expected first-half performance, citing demand for advanced wearables and growth in its marine and aviation businesses.
Pro forma earnings per share increased 29% to $2.81, while GAAP EPS was $2.80. Gross margin expanded 360 basis points from the prior-year period to 62.4%, and operating margin rose 440 basis points to 30.4%.
President and CEO Clifton Pemble said favorable product mix was the principal driver of margin gains, while results also benefited from a $21 million tariff refund recognized during the quarter. He said margin performance remained strong even without the refund.
Guidance Raised After Strong First Half
Garmin increased its 2026 revenue forecast to approximately $8.05 billion from its previous estimate of $7.9 billion. The company now expects pro forma EPS of approximately $10, up from its prior forecast of $9.35.
The company raised its full-year gross-margin outlook to approximately 59.7%, 120 basis points above prior guidance and 100 basis points above its full-year 2025 gross margin. Garmin expects operating margin of approximately 27%, up 150 basis points from its earlier forecast.
Chief Financial Officer and Treasurer Doug Boessen said the company’s year-to-date results had not been significantly affected by higher memory costs, but those costs are expected to affect the second half and have been included in full-year guidance. The revised gross-margin outlook does not assume further tariff-refund benefits beyond the amount recognized in the second quarter.
Pemble said Garmin had benefited from strategic inventory of memory components earlier in the year. He added that the company is seeing pressure across component categories amid demand related to artificial intelligence, but intends to manage those costs using the same approach it used in addressing tariffs.
Fitness Leads Segment Growth
Fitness revenue rose 25% to a second-quarter record of $757 million, driven by growth across product categories and continued demand for advanced wearables. The segment’s gross margin reached 64% and operating margin was 37%, generating $277 million in operating income.
During the quarter, Garmin introduced the Forerunner 70 and Forerunner 170 running watches. It also recently announced the CIRQA Smart Band, a screen-less wearable that provides wellness and fitness insights without requiring a subscription.
Pemble said CIRQA includes the features customers expect from Garmin wearables through Garmin Connect, while users can add Garmin Connect+ features such as artificial intelligence tools and nutrition tracking. He said the product’s initial demand exceeded the company’s expectations, with Garmin expecting to work through back orders for some time.
Garmin also announced the acquisition of TrainingPeaks and TrainHeroic, endurance and strength-training platforms that connect coaches and athletes. Pemble said the acquisition is intended to create a more complete training experience by connecting data collected through Garmin devices with coaching recommendations and user behavior.
Outdoor Revenue Declines, While Marine and Aviation Advance
Outdoor revenue declined 2% to $483 million, primarily due to the consumer auto and adventure watch categories. Still, the segment improved profitability through product mix and execution, with gross margin of 69%, operating margin of 34%, and operating income of $164 million.
Garmin expects stronger Outdoor revenue performance in the second half because of the timing of product launches, which it expects will improve full-year growth compared with 2025. New products included the Approach Z10 laser rangefinder for golf.
Marine revenue climbed 14% to $341 million, with growth across multiple product categories. Gross margin expanded to 61%, operating margin reached 29%, and operating income totaled $100 million. The company introduced its Garmin Signal VHF Marine Radio and the LiveScope 2 sonar system, which received a Best Electronics award at the ICAST trade show.
Aviation revenue increased 8% to $269 million, with growth in both OEM and aftermarket categories. The segment posted gross margin of 75%, operating margin of 27%, and operating income of $72 million. Garmin launched the D2 Mach 2 Pro aviator smartwatch and announced AXIS, an integrated cockpit-display platform for certified and experimental aircraft.
Pemble said business aviation demand remains strong, with OEMs working through substantial backlogs. He also described the aftermarket as resilient, saying owners continue to invest in equipment for quality used aircraft.
Auto OEM Faces Near-Term Program Gap
Auto OEM revenue increased 1% to $172 million, primarily due to domain-controller growth. The segment reported gross margin of 22% and operating margin of 2%, with GAAP operating income of $3 million. Gross-margin expansion was driven mainly by year-to-date cost recoveries recognized as revenue during the quarter.
However, Garmin expects Auto OEM revenue to decline and the business to return to an operating loss during the second half as it moves beyond peak BMW volumes. The company is preparing to begin a major Mercedes-Benz program in early 2027 and expects the segment to return to growth in 2027.
Garmin ended the quarter with approximately $4.4 billion in cash and marketable securities. It generated $276 million in free cash flow during the quarter and expects about $1.4 billion for the full year, alongside capital expenditures of approximately $550 million. The company paid approximately $202 million in dividends and repurchased $43 million of stock during the quarter.
Garmin said its Thailand manufacturing facility remains on schedule for completion near the end of 2026, with utilization expected to begin in early 2027. The initial phase will encompass about 400,000 square feet, and Pemble said the site could potentially double Garmin’s overall capacity over time.
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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