GRMN

• Overall Financial Performance

  • Garmin delivered record-breaking Q2 2026 results, extending long-term positive growth trends
  • Gross and operating margin expansion was driven primarily by favorable product mix, with an additional $21 million one-time benefit from a tariff refund
  • Even excluding the tariff refund, margin performance outpaced historical averages, supported by the company's vertically integrated model and strong global team execution
  • All geographic regions delivered revenue growth, led by 13% growth in EMEA, 12% in the Americas, and 7% in APAC

• New Product Launches & Updates

  • Fitness: Launched entry-level Forerunner 70, mid-tier 4Runner 170 running watches, and the screenless Circus Smartband wellness wearable that does not require a subscription, expanding the segment's addressable market
  • Outdoor: Launched the Approach Z10 compact laser golf rangefinder, and published an annual golf data report confirming growing sport participation
  • Aviation: Launched the D2 Mach 2 Pro aviator smartwatch with in-reach technology, and announced the new Axis family of integrated scalable cockpit displays that reduce installation complexity and cost
  • Marine: Launched the Signal VHF marine radio, and the next-generation LiveScope 2 sonar system which won the Best Electronics award at the 2026 ICAST trade show
  • Auto OEM: Current growth is driven by domain controller sales, as the segment prepares for the 2027 launch of a major new program with Mercedes-Benz

• Strategic Moves

  • Completed the strategic acquisition of training platforms TrainingPeaks and Train Heroic, which will be integrated into the fitness segment to expand service offerings
  • The new Thailand manufacturing facility is on track and progressing as planned as part of the company's supply chain diversification efforts
  • Garmin was named Best Supplier of the Year for the 11th consecutive year by Embraer for its work on Phenom business jets

• Full year 2026 revenue guidance was raised to approximately $8.05 billion, up from the prior guidance of $7.9 billion
• Full year 2026 gross margin guidance was increased to approximately 59.7%, 120 basis points higher than prior guidance and 100 basis points higher than 2025 full year gross margin; this guidance includes expected higher memory costs in the second half of 2026 and does not include any additional tariff refund benefits beyond the Q2 2026 recognition
• Full year 2026 operating margin guidance was raised to approximately 27%, 150 basis points higher than prior guidance
• Effective tax rate guidance was revised to 16.5%, up from the prior 16% guidance, due to changes in geographic income mix
• Proforma full year 2026 EPS guidance was raised to $10 per share, up from the prior guidance of $9.35
• Full year 2026 free cash flow is expected to be approximately $1.4 billion, with total capital expenditures of approximately $550 million
• Outdoor segment expects stronger revenue performance in the second half of 2026 leading to improved full year growth compared to 2025
• Auto OEM expects revenue to decline and a return to operating losses in the second half of 2026, with growth resuming in 2027 following the Mercedes-Benz program launch
• Marine expects full year 2026 growth consistent with 2025 levels, and aviation expects continued full year growth

Consolidated Q2 2026 revenue increased 11% year-over-year to $2.02 billion, with operating income up 30% to $616 million and proforma EPS up 29% to $2.81. Gross margin for the consolidated company was 62.4%, up 360 basis points YoY, and operating margin was 30.4%, up 440 basis points YoY.

• Fitness: Revenue increased 25% to $757 million, contributing 37.5% of total consolidated revenue. Gross margin was 64%, operating margin was 37%, and operating income was $277 million.
• Outdoor: Revenue decreased 2% to $483 million, contributing 23.9% of total consolidated revenue. Gross margin was 69%, operating margin was 34%, and operating income was $164 million.
• Aviation: Revenue increased 8% to $269 million, contributing 13.3% of total consolidated revenue. Gross margin was 75%, operating margin was 27%, and operating income was $72 million.
• Marine: Revenue increased 14% to $341 million, contributing 16.9% of total consolidated revenue. Gross margin was 61%, operating margin was 29%, and operating income was $100 million.
• Auto OEM: Revenue increased 1% to $172 million, contributing 8.5% of total consolidated revenue. Gross margin was 22%, operating margin was 2%, and operating income was $3 million (positive on a GAAP basis).

• Forward-looking statements are inherently uncertain, and actual results may differ materially from guidance due to a range of market and operational risk factors disclosed in Garmin's Form 10-K filing with the SEC
• Higher memory chip costs, driven by broad AI-related industry demand, are expected to create a margin headwind in the second half of 2026, which has been incorporated into guidance
• Most other component categories are also facing cost pressure amid broad industry demand trends, though the company has managed these dynamics effectively to date
• The outdoor segment experienced a 2% YoY revenue decline in Q2 2026 driven by weakness in consumer auto and Adventure Watch product categories
• Auto OEM is facing a temporary revenue air pocket in 2026 between the peak of the current BMW program and the 2027 launch of the new Mercedes-Benz program

Q: The new Circus Smartband expands Garmin into new screenless wearable form factors. Do users need a Connect+ subscription to access advanced AI features, and will Garmin expand into additional adjacent wearable form factors? / A: All core Garmin Connect wellness and fitness features are included out of the box with no subscription; advanced AI and nutrition tracking via Connect+ can be added as an optional upgrade. Garmin does not comment on specific future product roadmap, but the company has a history of expanding into new categories, so additional new form factors can be expected in line with past practice.

Q: How sustainable is current margin expansion, and what specifically drives the mix tailwind you cite? / A: Garmin does not plan to reverse margin gains, but recognizes higher memory costs will create a headwind in the second half, which is already factored into guidance. Mix improvement comes from higher-margin new product launches growing as a share of overall sales, paired with incremental product cost reductions from vertical integration and scale leverage.

Q: How should investors think about the strategic rationale for acquiring TrainingPeaks and Train Heroic, and what synergies are expected? / A: Traditional cost synergies are not the primary focus. The acquisition enables a full 360-degree training experience for customers: workout data recorded on Garmin devices can be shared directly on the training platforms for coaches to review and provide customized recommendations, creating a more integrated value proposition that complements the existing Garmin Connect and Connect+ ecosystem.

Q: Early demand for the Circus Smartband has been very strong, with sell-outs and 5-8 week ship times. Is this driven by unanticipated demand or supply constraints? / A: The product launch has outpaced all internal demand expectations from both consumers and retail partners. The backlog is driven by both stronger-than-planned demand and limited initial supply, and the company will work through backorders over the coming months. Early customer adoption and tracking data has already been very strong.