Garmin NYSE: GRMN reported record third-quarter results as revenue rose 12% year over year to nearly $2 billion, supported by double-digit growth in its fitness, outdoor and marine businesses. The company also raised its full-year revenue and earnings outlook as it entered the holiday season with what management described as strong product demand and a substantial order backlog for recently launched devices.
President and CEO Cliff Pemble said third-quarter operating income increased 34% to $612 million, while pro forma earnings per share rose 39% to $2.76. Consolidated gross margin expanded 420 basis points from the prior-year period to 63.3%, aided by favorable business mix, lower product costs and $33 million in tariff refunds recognized during the quarter.
“With most of 2026 behind us and considering the momentum we are experiencing entering the important Q4 holiday season, we anticipate delivering another record year of double digit growth in revenue and profits,” Pemble said.
Full-Year Outlook Raised
Garmin increased its 2026 revenue outlook to approximately $8.15 billion, up from prior guidance of $8.05 billion and representing expected growth of 12% from 2025. The company now expects full-year pro forma EPS of approximately $10.80, compared with previous guidance of $10.
The company also lifted its full-year gross-margin projection to roughly 61%, 130 basis points above its prior forecast, and raised its operating-margin expectation to approximately 29%. Garmin maintained its forecast for a 16.5% pro forma effective tax rate.
Chief Financial Officer and Treasurer Doug Boessen said the updated gross-margin outlook incorporates higher memory costs expected in the fourth quarter. The company’s year-to-date margin guidance includes tariff refunds already recognized, while potential additional refunds will be recorded only when realized or realizable.
Management cautioned that higher memory and other raw-material costs will become more visible in future results. Garmin had benefited from safety stock acquired at lower prices, but new purchases are occurring at significantly higher market prices.
Pemble said Garmin expects its consolidated gross-margin profile to return to a historical range in 2027, primarily because of higher memory costs. He said the company plans to use vertical integration, operating scale and selective cost mitigations to address the pressure.
Fitness and Outdoor Lead Growth
Fitness revenue climbed 16% to a third-quarter record of $694 million, driven by broad-based wearable growth. Segment operating income reached $231 million, while gross margin and operating margin expanded to 63% and 33%, respectively.
During the quarter, Garmin introduced the CIRQA Smart Band, a screenless wearable intended to provide wellness and fitness insights. Pemble said demand for CIRQA had exceeded expectations and that the company was working to meet backlog demand. Garmin also launched the Edge 1060 and Edge Explore 3 cycling computers.
Outdoor revenue rose 20% to $597 million, powered by demand for adventure watches after the fēnix 9 launch. The segment generated operating income of $233 million, with gross margin reaching 68% and operating margin reaching 39%.
Pemble said early fēnix demand had been especially strong among existing Garmin users upgrading from older generations. He added that demand for the company’s fitness and outdoor products remained strong at the registration level, with registrations outpacing sales into channels during the quarter.
Garmin Connect+, the company’s subscription offering, has grown faster than the underlying product segments that support it, Pemble said. He said customer renewals after trial periods have been strong, and CIRQA customers have also been signing up for the service.
Aviation and Marine Expand Margins
Aviation revenue increased 5% to $253 million, led by OEM product categories. Operating income totaled $66 million, with gross margin of 78% and operating margin of 26%.
The company highlighted several aviation milestones, including more than 1,000 G1000 integrated flight deck systems in King Air aircraft and more than 2,500 aircraft equipped with Garmin Autoland. Garmin said Pilatus Aircraft and Epic Aircraft certified Autoland for the PC-12 PRO and E1000 aircraft, respectively.
Marine revenue increased 16% to $310 million, with growth across product categories led by sonar products following the launch of LiveScope 2 systems. Operating income was $94 million, while gross and operating margins reached 64% and 30%, respectively.
Pemble said the tariff refund was the primary driver of Marine’s margin expansion, although margins also improved excluding the benefit. He described the broader marine end market as “a little bit soft,” while noting demand for refitting existing boats and for newer mid-range boats remained supportive.
Auto OEM Declines Ahead of Mercedes Program
Auto OEM revenue fell 20% to $132 million, primarily due to declining domain-controller sales. The segment reported a $12 million operating loss, which narrowed from the prior year as Garmin shifted research and development resources to other businesses.
Management expects fourth-quarter Auto OEM revenue to decline at a rate similar to the third quarter. However, Pemble said the next major Mercedes-Benz domain-controller program is expected to drive significant growth in 2027, with the ramp anticipated earlier in the year rather than later.
Garmin ended the quarter with approximately $4.1 billion in cash and marketable securities. Inventory rose to about $2.3 billion as the company increased supplies of key components and made prepayments to secure future deliveries, particularly amid memory-supply constraints. The company generated $293 million in third-quarter free cash flow and expects about $1.1 billion for the full year.
The company paid approximately $202 million in dividends and repurchased $41 million of stock during the quarter. About $407 million remained available under its share-repurchase authorization through December 2028.
About Garmin (NYSE:GRMN)
Garmin Ltd. NYSE: GRMN designs and manufactures GPS-enabled technology and smart devices for fitness, outdoor recreation, aviation, marine, and automotive markets. Its product portfolio includes smartwatches, cycling computers, sports and activity trackers, satellite communication devices, navigation systems, and related sensors and accessories.
The company also develops aviation systems and avionics, marine chartplotters and sonar equipment, and navigation and infotainment solutions for vehicle manufacturers.
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