[GRMN] Garmin: Q3 2026 earnings preview on fitness growth and memory costs

Garmin designs, manufactures and sells GPS-enabled devices and services for five markets: fitness, outdoor, aviation, marine and auto [1]. In this Garmin Q3 2026 earnings preview, the company plans to hold its call on 2026-10-28 to report the fiscal 2026 third quarter (13 weeks ending September 26, 2026) [2]. In the latest disclosed period, the second quarter ended June 27, 2026, revenue was about $2.02 billion, up 11% year over year; gross margin rose to 62.4%; operating income was $616 million, up 30%, for a 30.4% operating margin; and pro forma EPS was $2.81, up 29% [3]. Both revenue and EPS came in above the earnings-calendar consensus at the time of $1.935 billion and $2.31 [2]. Garmin gives only full-year guidance: in July it raised 2026 revenue guidance from about $7.9 billion to about $8.05 billion and pro forma EPS guidance from $9.35 to $10.00, based on a gross margin of about 59.7% and an operating margin of about 27.0% [4], and management guided full-year free cash flow of about $1.4 billion with capital expenditures of about $550 million [5]. Working back from that guidance, second-half revenue would be about $4.274 billion, roughly 9.7% above about $3.896 billion in the second half of 2025, with a second-half gross margin of about 58.5% and operating margin of about 26.4% [4]. On the analyst side, the third-quarter revenue consensus aggregated by Drillr is $1.989 billion (four analysts, range $1.959 billion to $2.029 billion) and the EPS consensus is $2.39 (five analysts) [6], while the earnings calendar shows an EPS estimate of $2.41 [2]; full-year consensus for revenue and EPS stands at $8.110 billion and $10.17, both slightly above company guidance [7].

Three things matter most in these results. The first is whether the Fitness segment can keep growing more than 15% with gross margin above 62% on a higher base: Fitness revenue was $757 million in the second quarter, up 25%, at a 64% gross margin, and already made up 37% of consolidated revenue [8][9], and the second-half growth implied by guidance leans mainly on it. The second is gross margin once memory costs reach the income statement: management said memory chip prices pushed up by AI demand will weigh on margins in the second half and are already in guidance [10], while the 62.4% second-quarter gross margin included about 100 basis points from a one-time tariff refund [9], so whether third-quarter gross margin excluding refunds holds about 58.5% decides whether the 59.7% full-year guidance stands. The third is whether Outdoor returns to growth: Outdoor revenue fell 5% in the first quarter and 2% in the second [11][3], the company attributed the decline to adventure watches and consumer auto navigation and said it expects a stronger second half as new products launch [9][5]; the third quarter is the first window to test whether this is a gap in the product cycle or demand shifting to the Fitness segment.

Company Background and Business Structure

Garmin is a multi-market device company that grew out of GPS positioning technology and designs and builds most of its products itself. The company is incorporated in Switzerland, trades on the New York Stock Exchange as GRMN and offers GPS-enabled, navigation, communications and sensor-based products and services across fitness, outdoor, aviation, marine and auto OEM; it has delivered more than 300 million products since its founding, including more than 20 million in fiscal 2025 [1]. Manufacturing is concentrated in company-owned facilities in Taiwan, the U.S., the Netherlands, the U.K., Poland and China, and Garmin regards this vertical integration as a core competency [12]. Under Swiss law, dividends require shareholder approval, and the 2026 annual meeting approved a $4.20 per share annual dividend payable in four installments [4].

Garmin reports five segments, and in 2025 Fitness overtook Outdoor as the largest for the first time. Consolidated 2025 revenue was $7.246 billion: Fitness $2.357 billion (33%), Outdoor $2.054 billion (28%), Marine $1.183 billion (16%), Aviation $987 million (14%) and Auto OEM $665 million (9%) [13]. Fitness sells Forerunner running watches, smartwatches, cycling computers, bike radars and related products [14], and keeps users engaged through the Garmin Connect platform and the paid Connect+ subscription [15]. Outdoor is built around adventure watches such as fēnix, Instinct, tactix, Enduro and MARQ, alongside products such as inReach satellite communicators [16]. Aviation supplies cockpit avionics to aircraft makers and owners, Marine sells chartplotters, sonar and radar, and Auto OEM supplies domain controllers and infotainment systems to carmakers as a tier-one supplier [17].

Sales channels and seasonality differ sharply across segments, which shapes how each quarter should be read. Consumer products are sold mainly through independent retailers, dealers and distributors, and also directly through garmin.com, connected-service subscriptions and Garmin retail stores, with direct channels accounting for more than 10% of 2025 net sales [18]. Dealer orders carry short lead times, and the company does not consider backlog material to understanding the business; aviation, marine and auto OEM customers usually sign at the start of an aircraft, boat or vehicle life cycle, but generally without firm volume commitments [19]. Consumer products typically sell best in the fourth-quarter holiday season, many marine products peak in the first and second quarters, and aviation and auto OEM depend more on certification and vehicle production timing [20]. By region, 2025 revenue was $3.454 billion in the Americas, $2.742 billion in EMEA and $1.050 billion in APAC, roughly 48%, 38% and 14% of the total [21].

Financial History and Current Position

Over the past two years Garmin's revenue and profit have accelerated together, with Fitness as the largest source of growth. Consolidated revenue rose from $5.228 billion in 2023 to $6.297 billion in 2024 (+20%) and $7.246 billion in 2025 (+15%); 2025 unit shipments were about 20.7 million, up about 11%, and the company attributed revenue growing faster than units to shifts in segment and product mix [13]. Gross profit in 2025 was $4.256 billion, and consolidated gross margin was flat year over year at about 59% (58.7% on a dollar basis) [22]; operating income was $1.876 billion, up 18%, for an operating margin of about 26% [23]; and net income was $1.664 billion, up 18% from $1.411 billion in 2024 [24]. By segment, Fitness operating income was $726 million (+50%), Outdoor $690 million (−2%), Aviation $257 million (+22%) and Marine $251 million (+6%), while Auto OEM posted an operating loss of $48.6 million [25][23].

Garmin generates cash strongly, and its balance sheet carries almost no interest-bearing debt pressure. Operating cash flow was $1.633 billion in 2025 ($1.432 billion in 2024) [26]; capital expenditures were $270 million, dividends paid $664 million, share repurchases $181 million and acquisitions another $176 million [27]. At the end of 2025, cash plus current and noncurrent marketable securities totaled about $4.13 billion and inventories were $1.772 billion [28], including $618 million of raw materials [29]; noncancelable inventory purchase obligations stood at $1.031 billion at that date [30].

Growth and margins in the first half of 2026 ran above 2025, but Outdoor and Auto OEM held results back. First-quarter revenue was $1.753 billion, up 14%, with gross margin of 59.4% (57.6% a year earlier) and operating income of $432 million, up 30%; Fitness grew 42% and Outdoor fell 5% [11], and at that time the company maintained full-year guidance of about $7.9 billion in revenue and $9.35 in pro forma EPS [31]. Second-quarter revenue was $2.022 billion: Fitness $757 million (+25%), Outdoor $483 million (−2%), Aviation $269 million (+8%), Marine $341 million (+14%) and Auto OEM $172 million (+1%); first-half revenue totaled $3.776 billion, up 13%, at a 61.0% gross margin and a 27.7% operating margin [3]. Second-quarter net income was $542 million versus $401 million a year earlier [32]; first-half operating cash flow was $940 million and free cash flow $745 million, up from $594 million and $508 million a year earlier [33]. At the end of the second quarter, cash and marketable securities were about $4.4 billion and about $448 million remained under the repurchase authorization [34], while inventories rose to $1.966 billion [28].

Operating Model

Garmin's revenue equation is the sum of its five segments, and consumer-segment revenue depends on unit volume and product price-tier mix. Most of Fitness, Outdoor and Marine revenue can be read as units times average selling price, with new-product cycles, price-tier mix and short-lead-time retail orders setting the quarterly pattern [20][19]; in the second quarter of 2026, total units rose about 9% to 5.686 million while revenue grew 11%, and the company again attributed the gap to segment and product mix [8]. Aviation revenue follows aircraft-maker deliveries and retrofit demand, and Auto OEM revenue follows carmakers' production cycles, so turning points in these two segments tend to lag orders and certifications by one to two years [20].

The gross profit equation passes segment mix straight through to consolidated gross margin. In 2025, segment gross margins were 75% for Aviation, 66% for Outdoor, 60% for Fitness, 55% for Marine and 17% for Auto OEM [22], so a rising share of high-margin segments and premium new products lifts consolidated gross margin, while a larger Auto OEM share pulls it down. Raw materials are the largest component of cost of goods sold, and freight and currency also affect gross profit [35]; on the second-quarter call, management said the mix improvement comes from higher-margin new products growing as a share of sales, plus incremental product cost reductions from vertical integration and scale [36]. Operating income equals gross profit minus research and development and selling, general and administrative expense; in 2025, R&D was $1.126 billion and SG&A $1.254 billion, about 16% and 17% of revenue respectively, together up 13%, driven mainly by engineering and sales personnel costs and advertising [37]. In the second quarter of 2026, operating expense grew only 9% and fell 80 basis points as a share of revenue, one reason operating income grew 30%, far faster than revenue [38].

Inventory is the key variable in the cash equation, because component inflation shows up first in inventory and purchase commitments and only later in gross margin. Operating cash flow roughly equals net income plus depreciation, amortization and stock compensation, minus increases in inventory and receivables; in the first half of 2026, net income was $947 million and higher inventory absorbed $209 million of cash [39]. On the first-quarter call, management said component costs were not yet affecting results but would show up as inventory turned over, and that the company held significant safety stock of some components facing price pressure [40], with higher input costs appearing more in 2027 [41]. Free cash flow goes mainly to dividends and buybacks; 2026 capital expenditure guidance of about $550 million [5] is well above the $270 million spent in 2025 [27], and management said the new Thailand manufacturing facility is on track [42].

Industry and Competitive Position

Garmin faces a different set of rivals in each market, so its competitive position has to be judged market by market. The 10-K lists fitness competitors including Apple, Google, Samsung, Huawei, Xiaomi, Oura, Whoop, Polar, Coros and Suunto, and outdoor competitors including Apple, Casio, Coros, Suunto, TAG Heuer and Tissot; aviation rivals include Honeywell, Collins Aerospace, Safran and Thales, marine rivals are mainly Furuno, Johnson Outdoors, Navico (Brunswick) and Raymarine (Teledyne), and auto OEM rivals are large tier-one suppliers such as Bosch, Continental, Harman and Visteon [43]. The company names design, functionality, quality and reliability, brand, price and time to market as the principal competitive factors and considers itself a significant competitor in each of its major markets [43].

Garmin's clearest structural advantage is vertically integrated manufacturing, and its most visible external pressures are component costs and trade policy. Garmin believes its own factories give it advantages in cost, quality and time to market, with manufacturing resources shared across high-, mid- and low-volume products so that low-volume products also benefit from scale [12]. Some key components come from single or limited sources, and memory chip shortages could lengthen lead times or raise costs; the company buffers this risk with multi-segment purchasing power and safety stock [44]. The 10-Q says recent global memory chip supply constraints have increased operational complexity and costs and may weigh on future gross margin, and that rapidly changing U.S. trade policy adds uncertainty [45]. The available material contains no segment revenue or profit data for competitors, so any shift in Garmin's share against Apple or Coros can only be inferred indirectly from its own segment growth and the company's own explanations.

Core Debates

Garmin's Fitness segment grew 42% in the first quarter and 25% in the second, becoming its largest business. On a higher comparison base in the third quarter, can Fitness revenue still grow more than 15% while holding gross margin above 62%?

Fitness is Garmin's fastest-growing and largest segment, and its growth rate largely decides whether second-half consolidated growth materializes. In the second quarter, Fitness contributed 37% of consolidated revenue at a 64% gross margin, a 37% operating margin and $277 million of operating income [46]. The company raised full-year revenue guidance to about $8.05 billion [4], while it expects Auto OEM revenue to decline in the second half and Marine to grow at about the same rate as in 2025 [5], so a clear slowdown in Fitness would be hard for the other segments to offset against the roughly 9.7% second-half growth implied by guidance.

The evidence so far shows broad-based Fitness growth with gross margin still improving. Fitness revenue was $547 million in the first quarter, up 42% [11], $757 million in the second quarter, up 25%, and $1.304 billion in the first half, up 32% [47][48], and the company said growth spanned all product categories, led by advanced wearables [8]. Fitness gross margin rose from 60% a year earlier to 64%, which the 10-Q attributed to favorable product mix [9]. The newly launched CIRQA screenless smart band requires no subscription [42], and management said its launch outpaced all internal demand expectations from consumers and retail partners, with the backlog reflecting both stronger-than-planned demand and limited initial supply [49]. TrainingPeaks and TrainHeroic, acquired on July 20, will be folded into the Fitness segment, and the company said the acquisition was not material to its consolidated financial statements [50][42].

The financial transmission is clear, but a competing explanation also holds. Demand for premium wearables and new products drives Fitness units and average selling prices, which lift segment revenue; gross margin reflects the mix effect minus component costs, and the result flows to Fitness and consolidated operating income. The competing explanation is that part of the first-half surge came from the 2025 product cycle and channel restocking, and that the third quarter starts to face a tougher comparison; because premium Fitness and Outdoor watches overlap in features, some Fitness growth may be demand migrating from Outdoor. Fitness revenue was $2.357 billion in full-year 2025, up 33% [13], and that base makes growth harder to sustain as the year goes on.

The third-quarter report can separate these explanations. If Fitness revenue grows at least 15% year over year with gross margin of at least 62%, and total revenue keeps growing faster than units, premium mix is still supporting growth; if the CIRQA backlog has cleared and the company still names Fitness as the largest contributor to full-year growth, demand is more than a one-off. Conversely, if Fitness growth falls below 15%, second-half consolidated growth will need other segments to accelerate; if Fitness gross margin drops back below 60%, memory costs or promotions will have offset the mix improvement.

Garmin's second-quarter gross margin reached 62.4%, but the company has warned that memory chip costs pushed up by AI demand will weigh on margins in the second half. Can third-quarter gross margin, excluding tariff refunds, hold above the roughly 58.5% implied by full-year guidance, and can Garmin keep its 59.7% full-year gross margin guidance?

Gross margin is the core of Garmin's earnings model, and the third quarter is the first in which memory costs begin to reach the income statement. The company designs and builds most of its products, and segment gross margins range from about 20% in Auto OEM to 75% in Aviation [22], with raw materials the largest component of cost of goods sold [35]. In July the company raised full-year gross margin guidance to about 59.7%, 120 basis points above the prior guidance and 100 basis points above 2025, and said this includes higher memory costs in the second half and excludes any tariff refunds beyond those recognized in the second quarter [5]. Working from guidance, the second-half gross margin would be about 58.5% and operating margin about 26.4%, both below roughly 59.2% and 27.5% in the second half of 2025 [4].

Part of the strong second-quarter gross margin was one-time, and the rest came from mix. Second-quarter gross margin was 62.4%, up 360 basis points year over year, with higher margins in every segment [34]; about $21 million of refunds of previously paid tariffs contributed roughly 100 basis points, with about $14 million attributable to Marine [9], leaving about 61.4% excluding the refund. Gross margin was 59.4% in the first quarter [11] and 61.0% for the first half [3]. Meanwhile, raw materials inventory reached $734 million at the end of the second quarter, up 19% from $618 million at the start of the year [51]; noncancelable inventory purchase obligations were $1.534 billion, with $1.170 billion payable within 12 months [52], up 49% from $1.031 billion at the start of the year [30].

The transmission path in this debate runs from component prices to inventory turnover, cost of goods sold, gross margin and cash flow. AI demand is pushing up memory chip prices, and management said most other component categories also face cost pressure [10]; once safety stock is consumed, higher costs reach cost of goods sold with a lag of one to two quarters, are partly offset by a richer mix of high-margin new products and manufacturing scale, and ultimately set consolidated gross and operating margins. The company's explanation is that the impact is well controlled in 2026 and shows up more in 2027 [41]. The competing explanation is that the second-quarter margin included the refund and short-term mix factors, and that the sharp rise in inventory and purchase commitments means Garmin is locking in components at higher prices, so pressure could reach gross margin earlier and harder than guidance assumes, while the stock build also weighs on operating cash flow.

Several third-quarter figures can test this. The things to watch are whether consolidated gross margin excluding tariff refunds holds at or above 58.5%, whether the company keeps its gross margin guidance of about 59.7% and operating margin guidance of about 27.0% [4], whether raw materials inventory and purchase commitments keep rising, and whether year-to-date free cash flow through the third quarter stays on track for the roughly $1.4 billion full-year figure (first-half free cash flow was $745 million) [33]. If gross margin excluding refunds falls below 58.0%, memory costs are arriving faster than the company assumed; if the company cuts gross margin guidance, profit growth will slow even with a higher revenue outlook.

Garmin's Outdoor revenue fell 5% in the first quarter and 2% in the second. The company blamed adventure watches and automotive navigation and expects a stronger second half as new products launch. Can third-quarter Outdoor revenue return to growth and show this was only a gap in the product cycle?

Outdoor is Garmin's second-largest business, with a profit contribution comparable to Fitness, and its recovery determines how dependent the company becomes on Fitness. In 2025, Outdoor revenue was $2.054 billion and operating income $690 million, about 37% of consolidated operating income [23], at a gross margin of about 66% [22]. But Outdoor growth slowed from 16% in 2024 to 5% in 2025 [13] and turned into a 3% decline in the first half of 2026 [48]. The company expects a stronger second half for Outdoor and improved full-year growth compared with 2025 [5]; if that does not happen, consolidated growth will lean even more on a single segment, Fitness.

Revenue is falling, but Outdoor's profitability has not deteriorated with it. First-quarter Outdoor revenue was $418 million, down 5% [11], which the company attributed to a tough comparison against the prior-year Instinct 3 launch; second-quarter revenue was $483 million, down 2%, and the 10-Q blamed declines in consumer auto and adventure watches [9]. Even so, Outdoor gross margin rose from 66% a year earlier to 69%, which the 10-Q also attributed to favorable product mix [9], and second-quarter operating income was $164 million, up from $158 million a year earlier [47].

The two explanations lead to very different financial outcomes. The first is the product cycle: flagship adventure watches are in a gap before a refresh, and once new models launch, units and average selling prices recover and Outdoor revenue grows again at a gross margin of roughly 66% to 69%. The second is demand migration: premium Forerunner watches in the Fitness segment increasingly overlap with outdoor watches in features [14][16], so some consumers buy in Fitness instead, and Outdoor declines while consolidated revenue is unaffected; in that case, any decline in Outdoor operating income would become a lasting trend rather than a one-quarter fluctuation.

The third-quarter report offers the first test. The things to watch are whether Outdoor revenue grows at least 3% year over year, whether the 10-Q still names adventure watches as a source of decline, whether Outdoor gross margin stays at or above 66%, and whether Outdoor operating income grows year over year. If Outdoor keeps falling by more than 2%, the expected second-half improvement will not have arrived; if adventure watches keep being cited as a drag, the decline looks more like demand migration than a cycle.

Risks and Falsifiers

Auto OEM faces a revenue gap between two major programs, which could push the segment back into losses in the second half. Management described 2026 as a temporary revenue air pocket between the peak of the current BMW program and the 2027 launch of a new Mercedes-Benz program [10], and said it expects second-half Auto OEM revenue to decline and operating losses to return, with growth resuming in 2027 after the Mercedes-Benz launch [5]. This risk hits Auto OEM revenue and operating income directly: segment revenue was $665 million in 2025 with a $48.6 million operating loss [25], first-half 2026 revenue was $343 million with a $3.6 million operating loss [47], and the 22% second-quarter gross margin included a one-time effect from year-to-date cost recoveries recognized as revenue [38]. If third-quarter Auto OEM revenue declines no more than 5% year over year and the operating loss is no more than $10 million, the current view of how deep the gap runs would need revising.

Tariffs and trade policy can cause non-operating swings in quarterly gross margin. Garmin manufactures and sources goods in several jurisdictions, including Taiwan and China, and new or higher tariffs on imported goods could materially hurt its business [53]. On February 20, 2026, the U.S. Supreme Court ruled that tariffs imposed under IEEPA were unauthorized; Garmin received about $21 million of refunds in the second quarter and recorded them as a reduction of cost of goods sold, and further potential refunds had not been recognized as of June 27 [54]. This risk acts on consolidated cost of goods sold and gross margin, with the second-quarter refund adding about 100 basis points, about $14 million of it in Marine [9]. If the third-quarter report shows tariff refunds and new tariff effects each worth no more than 50 basis points of consolidated gross margin, and full-year guidance is not adjusted for tariff changes, this risk's impact is limited.

A peak in premium wearable demand or tougher competition could make Fitness growth fall faster than anticipated. The 10-K lists fitness competitors ranging from large consumer electronics companies such as Apple, Google, Samsung, Huawei and Xiaomi to specialist brands such as Oura, Whoop, Polar, Coros and Suunto [43], and part of first-half growth came from the product cycle, so growth could drop quickly as the base rises. This risk acts on Fitness revenue ($2.357 billion in 2025 and $1.304 billion in the first half) and operating income ($726 million in 2025) [13][23][47], as well as on the roughly $8.05 billion full-year revenue guidance [4]. If third-quarter Fitness revenue grows at least 20% year over year with gross margin of at least 62%, concerns about peaking demand can be set aside.

Shortages and price increases in memory chips and other components are the most direct threat to gross margin guidance. The 10-K notes that some components come from single or limited sources and that memory chip shortages could lengthen lead times or raise costs [44], and the 10-Q says recent memory supply constraints have already increased operational complexity and costs [45]. This risk acts on consolidated gross profit ($4.256 billion in 2025 and $2.304 billion in the first half of 2026) [22][3], on full-year guidance of about 59.7% gross margin and about 27.0% operating margin [4], and on $1.534 billion of inventory purchase obligations [52]. If third-quarter gross margin excluding tariff refunds is at least 59.2% and the company maintains or raises full-year gross margin guidance, the concern over memory pressure weakens.

Demand for Outdoor adventure watches could be diverted to premium Fitness watches or to competitors. The 10-K lists outdoor competitors including Apple, Samsung, Coros, Suunto and Casio [43], and adventure watches were one of the main categories behind the second-quarter Outdoor decline [9]. This risk acts on Outdoor revenue ($2.054 billion in 2025) and operating income ($690 million in 2025, 37% of consolidated operating income) [23]. If third-quarter Outdoor revenue grows at least 3% year over year and the 10-Q attributes the growth to adventure watches or new products, the diversion explanation does not hold.

What to Watch Next

The checkpoints below condense the three core debates and the main risks into specific items for the third-quarter report.

• Fitness growth: second-quarter revenue grew 25% (first quarter 42%). Growth of at least 15% would confirm momentum; below 15%, second-half growth needs other segments to fill the gap.
• Fitness gross margin: 64% in the second quarter (60% a year earlier). At least 62% means the mix gains are holding; below 60% means costs or promotions have offset them.
• Revenue growth versus unit growth: second-quarter revenue rose 11% on 9% unit growth. Revenue continuing to outgrow units would confirm premium mix is still at work.
• Gross margin excluding tariff refunds: about 61.4% in the second quarter against roughly 58.5% implied for the second half. Holding 58.5% would support guidance; below 58.0% would mean memory costs are arriving faster than assumed.
• Full-year margin guidance: about 59.7% gross and about 27.0% operating. A cut to gross margin guidance would weaken the current view.
• Raw materials inventory and purchase obligations: $734 million and $1.534 billion. Further sharp increases would suggest components are being locked in at higher prices.
• Year-to-date free cash flow: $745 million in the first half against roughly $1.4 billion guided for the year. Falling clearly behind would show the inventory build is weighing on cash.
• Outdoor revenue: down 2% in the second quarter and 5% in the first. Growth of at least 3% would mark a recovery; a decline of more than 2% would mean the expected improvement has not arrived.
• Outdoor gross margin and operating income: 69% and $164 million in the second quarter. Watch for a margin of at least 66% and operating income growth; adventure watches still cited as a drag would point to demand migration.
• Auto OEM: first-half revenue of $343 million with a $3.6 million operating loss. A revenue decline of no more than 5% and a loss of no more than $10 million would mean the gap is shallower than expected.

Conclusion

Garmin's business is driven by premium wearables, and vertically integrated manufacturing lets it turn mix improvement into a gross margin near 60% and strong cash flow. In 2025 the company earned $7.246 billion in revenue and $1.876 billion in operating income [13][23]; in the first half of 2026, revenue grew 13% at a 61.0% gross margin and a 27.7% operating margin [3], and cash and marketable securities were about $4.4 billion at the end of the second quarter [34]. The central unresolved relationship is whether strong Fitness growth and premium mix can keep outrunning memory cost inflation now entering the cost base, and whether Outdoor can stop declining, so that the company still delivers its full-year guidance of about $8.05 billion in revenue and about 59.7% gross margin while Auto OEM goes through its gap year [4].

Only one independent interpretation published after the second-quarter results could be checked against its original text. On the sports-technology blog the5krunner, the author tfk argued that Fitness remains the growth engine, that Outdoor is "stabilising, not yet recovering," that CIRQA effectively sold out at launch with demand outrunning the company's own expectations, and that every division expanded gross margin year over year, but that memory costs are the next test [55]. That reading broadly matches management's account: the company also expects a stronger second half for Outdoor and lists memory costs as a second-half margin headwind [5][10]. Where they differ is in tone and emphasis: management stresses that cost pressure is already in guidance and will fall more on 2027 [41], while tfk treats both the Outdoor recovery and memory costs as open questions and offers no numbers, so the view remains an outside interpretation and cannot substitute for the actual third-quarter data.

The combination that would materially strengthen the current understanding is third-quarter Fitness growth of at least 15% with gross margin of at least 62%, consolidated gross margin excluding tariff refunds of at least 58.5%, Outdoor revenue returning to growth of at least 3%, and the company maintaining or raising its full-year gross and operating margin guidance. The combination that would materially weaken it is Fitness growth below 15% while Outdoor keeps declining, gross margin excluding refunds below 58.0%, raw materials inventory and purchase commitments continuing to climb sharply, and a cut to full-year gross margin guidance.

Sources

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[15] GRMN 10-K filed 2026-02-18 · connected services and subscriptions · 2026-02-18 · 10-K · https://www.sec.gov/Archives/edgar/data/1121788/000119312526056028/grmn-20251227.htm

[16] GRMN 10-K filed 2026-02-18 · outdoor segment adventure watches · 2026-02-18 · 10-K · https://www.sec.gov/Archives/edgar/data/1121788/000119312526056028/grmn-20251227.htm

[17] GRMN 10-K filed 2026-02-18 · auto OEM products · 2026-02-18 · 10-K · https://www.sec.gov/Archives/edgar/data/1121788/000119312526056028/grmn-20251227.htm

[18] GRMN 10-K filed 2026-02-18 · sales and distribution · 2026-02-18 · 10-K · https://www.sec.gov/Archives/edgar/data/1121788/000119312526056028/grmn-20251227.htm

[19] GRMN 10-K filed 2026-02-18 · OEM arrangements and backlog · 2026-02-18 · 10-K · https://www.sec.gov/Archives/edgar/data/1121788/000119312526056028/grmn-20251227.htm

[20] GRMN 10-K filed 2026-02-18 · seasonality · 2026-02-18 · 10-K · https://www.sec.gov/Archives/edgar/data/1121788/000119312526056028/grmn-20251227.htm

[21] GRMN 10-K filed 2026-02-18 · net sales by geography 2025 · 2026-02-18 · 10-K · https://www.sec.gov/Archives/edgar/data/1121788/000119312526056028/grmn-20251227.htm

[22] GRMN 10-K filed 2026-02-18 · gross profit by segment 2025 · 2026-02-18 · 10-K · https://www.sec.gov/Archives/edgar/data/1121788/000119312526056028/grmn-20251227.htm

[23] GRMN 10-K filed 2026-02-18 · operating income by segment 2025 · 2026-02-18 · 10-K · https://www.sec.gov/Archives/edgar/data/1121788/000119312526056028/grmn-20251227.htm

[24] GRMN 10-K filed 2026-02-18 · net income 2025 · 2026-02-18 · 10-K · https://www.sec.gov/Archives/edgar/data/1121788/000119312526056028/grmn-20251227.htm

[25] GRMN 10-K filed 2026-02-18 · segment results 2023-2025 · 2026-02-18 · 10-K · https://www.sec.gov/Archives/edgar/data/1121788/000119312526056028/grmn-20251227.htm

[26] GRMN 10-K filed 2026-02-18 · cash flows 2025 · 2026-02-18 · 10-K · https://www.sec.gov/Archives/edgar/data/1121788/000119312526056028/grmn-20251227.htm

[27] GRMN 10-K filed 2026-02-18 · cash flow statement 2023-2025 · 2026-02-18 · 10-K · https://www.sec.gov/Archives/edgar/data/1121788/000119312526056028/grmn-20251227.htm

[28] GRMN 8-K filed 2026-07-29 · June 27 2026 balance sheet · 2026-07-29 · 8-K · https://www.sec.gov/Archives/edgar/data/1121788/000119312526322113/grmn-ex99_1.htm

[29] GRMN 10-K filed 2026-02-18 · inventories by category · 2026-02-18 · 10-K · https://www.sec.gov/Archives/edgar/data/1121788/000119312526056028/grmn-20251227.htm

[30] GRMN 10-K filed 2026-02-18 · inventory purchase obligations · 2026-02-18 · 10-K · https://www.sec.gov/Archives/edgar/data/1121788/000119312526056028/grmn-20251227.htm

[31] GRMN 8-K filed 2026-04-29 · 1Q26 cash flow, capital return and guidance · 2026-04-29 · 8-K · https://www.sec.gov/Archives/edgar/data/1121788/000119312526188907/grmn-ex99_1.htm

[32] GRMN 8-K filed 2026-07-29 · 2Q26 income statement · 2026-07-29 · 8-K · https://www.sec.gov/Archives/edgar/data/1121788/000119312526322113/grmn-ex99_1.htm

[33] GRMN 8-K filed 2026-07-29 · free cash flow reconciliation · 2026-07-29 · 8-K · https://www.sec.gov/Archives/edgar/data/1121788/000119312526322113/grmn-ex99_1.htm

[34] GRMN 8-K filed 2026-07-29 · 2Q26 margin, expense, cash flow and capital return · 2026-07-29 · 8-K · https://www.sec.gov/Archives/edgar/data/1121788/000119312526322113/grmn-ex99_1.htm

[35] GRMN 10-K filed 2026-02-18 · cost of goods sold and gross margin drivers · 2026-02-18 · 10-K · https://www.sec.gov/Archives/edgar/data/1121788/000119312526056028/grmn-20251227.htm

[36] GRMN Q2 2026 earnings call 2026-07-29 · margin sustainability Q&A · 2026-07-29 · earnings-call · https://gateway.drillr.ai/mcp/private

[37] GRMN 10-K filed 2026-02-18 · operating expense 2025 · 2026-02-18 · 10-K · https://www.sec.gov/Archives/edgar/data/1121788/000119312526056028/grmn-20251227.htm

[38] GRMN 10-Q filed 2026-07-29 · 2Q26 operating expense and segment operating income · 2026-07-29 · 10-Q · https://www.sec.gov/Archives/edgar/data/1121788/000119312526322114/grmn-20260627.htm

[39] GRMN 8-K filed 2026-07-29 · 1H26 cash flow statement · 2026-07-29 · 8-K · https://www.sec.gov/Archives/edgar/data/1121788/000119312526322113/grmn-ex99_1.htm

[40] GRMN Q1 2026 earnings call 2026-04-29 · component cost and safety stock Q&A · 2026-04-29 · earnings-call · https://gateway.drillr.ai/mcp/private

[41] GRMN Q1 2026 earnings call 2026-04-29 · input cost and margin protection Q&A · 2026-04-29 · earnings-call · https://gateway.drillr.ai/mcp/private

[42] GRMN Q2 2026 earnings call 2026-07-29 · management highlights · 2026-07-29 · earnings-call · https://gateway.drillr.ai/mcp/private

[43] GRMN 10-K filed 2026-02-18 · competition · 2026-02-18 · 10-K · https://www.sec.gov/Archives/edgar/data/1121788/000119312526056028/grmn-20251227.htm

[44] GRMN 10-K filed 2026-02-18 · component supply and memory chips · 2026-02-18 · 10-K · https://www.sec.gov/Archives/edgar/data/1121788/000119312526056028/grmn-20251227.htm

[45] GRMN 10-Q filed 2026-07-29 · business environment: memory chips and trade · 2026-07-29 · 10-Q · https://www.sec.gov/Archives/edgar/data/1121788/000119312526322114/grmn-20260627.htm

[46] GRMN Q2 2026 earnings call 2026-07-29 · segment performance · 2026-07-29 · earnings-call · https://gateway.drillr.ai/mcp/private

[47] GRMN 8-K filed 2026-07-29 · segment results 2Q26 and 1H26 · 2026-07-29 · 8-K · https://www.sec.gov/Archives/edgar/data/1121788/000119312526322113/grmn-ex99_1.htm

[48] GRMN 10-Q filed 2026-07-29 · 1H26 unit sales and segment mix · 2026-07-29 · 10-Q · https://www.sec.gov/Archives/edgar/data/1121788/000119312526322114/grmn-20260627.htm

[49] GRMN Q2 2026 earnings call 2026-07-29 · smart band demand and supply Q&A · 2026-07-29 · earnings-call · https://gateway.drillr.ai/mcp/private

[50] GRMN 10-Q filed 2026-07-29 · TrainingPeaks and TrainHeroic acquisition · 2026-07-29 · 10-Q · https://www.sec.gov/Archives/edgar/data/1121788/000119312526322114/grmn-20260627.htm

[51] GRMN 10-Q filed 2026-07-29 · inventories by category · 2026-07-29 · 10-Q · https://www.sec.gov/Archives/edgar/data/1121788/000119312526322114/grmn-20260627.htm

[52] GRMN 10-Q filed 2026-07-29 · liquidity, cash flows and purchase obligations · 2026-07-29 · 10-Q · https://www.sec.gov/Archives/edgar/data/1121788/000119312526322114/grmn-20260627.htm

[53] GRMN 10-K filed 2026-02-18 · tariff risk factor · 2026-02-18 · 10-K · https://www.sec.gov/Archives/edgar/data/1121788/000119312526056028/grmn-20251227.htm

[54] GRMN 10-Q filed 2026-07-29 · IEEPA tariff refunds · 2026-07-29 · 10-Q · https://www.sec.gov/Archives/edgar/data/1121788/000119312526322114/grmn-20260627.htm

[55] the5krunner 2026-07-30 · Garmin Q2 2026 Earnings: Fenix falls. CIRQA sells out. Fenix 9 teased. · 2026-07-30 · the5krunner · https://the5krunner.com/2026/07/30/garmin-q2-2026-earnings/