Sign in
GL

GARMIN LTD (GRMN)·Q2 2025 Earnings Summary

Executive Summary

  • Record Q2 results: revenue $1.81B (+20% YoY), gross margin 58.8%, operating margin 26.0%, GAAP EPS $2.07, pro forma EPS $2.17; raised FY25 guidance to revenue ~$7.1B and pro forma EPS ~$8.00 .
  • Significant beat vs consensus: revenue $1.81B vs $1.70B*, pro forma EPS $2.17 vs $1.90*; broad-based strength with double-digit growth in every segment; fitness led at +41% YoY .
  • Segment growth guidance raised: Fitness to +25%, Aviation to +7%, Marine to +5%, Auto OEM to +10%; Outdoor maintained at +10% .
  • Catalysts: MYLAPS acquisition to integrate race-day timing with Garmin devices ; Autoland certified for Cirrus SR G7+; SmartCharts launched; new Forerunner 570/970 and Venu X1 driving advanced wearables demand .

What Went Well and What Went Wrong

What Went Well

  • Fitness outperformance: +41% revenue YoY to $605M, margins 60% gross/33% operating; “advanced wearables” drove strength, including new Forerunner 570/970 and Venu X1 .
  • Margin expansion: gross margin 58.8% (from 57.3%), operating margin 26.0% (from 22.7%), operating income +38% YoY to $472M; CEO: “double-digit growth in every segment” .
  • Guidance raise despite tariff headwinds: FY25 revenue ~$7.1B, pro forma EPS ~$8.00; CFO noted tariffs impact offset by FX and mitigations; effective tax rate raised to 17.5% .

What Went Wrong

  • Free cash flow compression: Q2 FCF $127M vs $218M prior year; management cited inventory build to support demand and mitigate tariffs .
  • Auto OEM margin pressure: segment gross margin 17% and operating loss of $10M despite +16% revenue; continued investment ahead of next major program ramp in 2H26 .
  • FX and tariffs create mixed effects: FX benefited top-line, but stronger New Taiwan dollar pressured product costs; OpEx as % of sales expected to increase ~30 bps in FY25 .

Financial Results

Consolidated Performance vs Prior Year and Prior Quarter

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Billions)$1.507 $1.535 $1.815
Gross Margin %57.3% 57.6% 58.8%
Operating Income ($USD Millions)$342 $333 $472
Operating Margin %22.7% 21.7% 26.0%
GAAP Diluted EPS ($)$1.56 $1.72 $2.07
Pro forma Diluted EPS ($)$1.58 $1.61 $2.17
Net Income ($USD Millions)$301 $333 $401
Cash from Operations ($USD Millions)$255 $421 $173
Free Cash Flow ($USD Millions)$218 $381 $127

Actuals vs S&P Global Consensus (Quarter)

MetricQ2 2025 ConsensusQ2 2025 ActualSurprise
Revenue ($USD Billions)$1.705*$1.815 +$0.110B / +6.5%*
Pro forma EPS ($)$1.90*$2.17 +$0.27 / +14.2%*
EPS # of Estimates6*——
Revenue # of Estimates4*——

Values marked with * retrieved from S&P Global.

Segment Net Sales and Profitability

SegmentNet Sales Q2 2024 ($MM)Net Sales Q2 2025 ($MM)YoYGross Margin Q2 2025Operating Margin Q2 2025Operating Income Q2 2025 ($MM)
Fitness$428 $605 +41% 60% 33% $198
Outdoor$440 $490 +11% 66% 32% $158
Aviation$218 $249 +14% 74% 25% $63
Marine$273 $299 +10% 55% 21% $63
Auto OEM$147 $170 +16% 17% —$(10)

KPIs and Balance Sheet Highlights

KPIQ1 2025Q2 2025
Cash & Cash Equivalents ($MM)$2,176 $2,072
Marketable Securities – Current ($MM)$499 $515
Marketable Securities – Noncurrent ($MM)$1,226 $1,286
Inventories ($MM)$1,582 $1,788
Accounts Receivable ($MM)$787 $1,011
Operating Cash Flow ($MM)$421 $173
Free Cash Flow ($MM)$381 $127
Quarterly Dividend ($/sh)$0.90 (approved schedule) $0.90 (Sept 26, 2025)
Share Repurchases ($MM in quarter)$27 $67

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Consolidated RevenueFY 2025~$6.85B ~$7.10B Raised
Gross MarginFY 2025~58.5% ~58.5% Maintained
Operating MarginFY 2025~24.8% ~24.8% Maintained
Pro forma EPSFY 2025~$7.80 ~$8.00 Raised
Pro forma Effective Tax RateFY 2025~16.5% ~17.5% Raised
Fitness Segment Revenue GrowthFY 2025~15% ~25% Raised
Outdoor Segment Revenue GrowthFY 2025~10% ~10% Maintained
Aviation Segment Revenue GrowthFY 2025~5% ~7% Raised
Marine Segment Revenue GrowthFY 2025~0% (flat) ~5% Raised
Auto OEM Segment Revenue GrowthFY 2025~7% ~10% Raised
Dividend InstallmentsFY 2025–FY 2026$0.90/sh quarterly schedule Next payments: Sept 26, 2025; Dec 26, 2025; Mar 27, 2026 Confirmed

Earnings Call Themes & Trends

TopicQ4 2024 (Q-2)Q1 2025 (Q-1)Q2 2025 (Current)Trend
Tariffs/MacroIntroduced FY25 guide; tax rate changes explained; strong FY momentum Detailed tariff assumptions (~$100M cost), FX tailwinds; mitigation plans; demand conservatism Tariff impact lower than April; FX favorable to revenue; NT$ strength raises costs; OpEx to rise modestly Improving top-line outlook; cost headwinds manageable
Advanced WearablesStrong Q4 fitness growth (+31%) Connect+ premium/AI launched; vivoactive 6 Forerunner 570/970, Venu X1; advanced wearables key driver Strengthening
Aviation TechRecognition, product support awards G3000 PRIME selections; CO sensor SmartCharts launch; G5000 PRIME; Autoland certified for Cirrus SR G7+ Accelerating innovation
Marine Market+5% Q4; stability Softer, promotions timing; 2025 flat guide Resilience beyond expectations; guide raised to +5% Stabilizing
Subscriptions/ServicesNot separately disclosed (<10% revenue) Connect+ launched; inReach SOS report Growing across segments; still <10% threshold Building
Regional TrendsEMEA strength in 2024 EMEA +23% growth; Americas +4% EMEA +25% led regions; FX aided Europe Continued EMEA outperformance

Management Commentary

  • “We delivered another quarter of outstanding financial results with double-digit growth in every segment… give us confidence to raise our full year guidance.” – Cliff Pemble, CEO .
  • “We estimate revenue of approximately $7.1 billion… pro forma EPS of $8.00… impact from tariffs lower than previously estimated; offset by NT$ strength on costs.” – Doug Boessen, CFO .
  • On MYLAPS: “Combination of Garmin devices with MYLAPS timing and race management technology will provide a comprehensive experience from training to race day.” – Cliff Pemble ; “Transform the competitive experience” – Brad Trenkle, Co-COO .

Q&A Highlights

  • Channel dynamics: Minimal channel fill impact; sell-in vs sell-out tracking shows no stockpiling; retailers constrained by credit limits .
  • Expense cadence: OpEx up ~30 bps FY; R&D headcount and SG&A infrastructure; back-half FX impacts; MYLAPS costs; performance comp; co-op advertising .
  • Tariffs/FX: Tariff assumptions lowered vs April; wearables currently not tariffed; FX favorable to top-line but NT$ raises costs; mitigations ongoing (pricing case-by-case) .
  • Growth algorithm: Potential structural shift with broader opportunities; focus on differentiated products and new categories .
  • Subscriptions: Growing in Outdoor (inReach), Fitness (Bounce, Connect+), Aviation content; not yet 10% disclosure threshold .
  • Auto OEM: 1M BMW domain controllers shipped; next program on track for 2H26; margin model still high-teens/20% GM medium-term .

Estimates Context

  • Revenue beat: $1.815B actual vs $1.705B* consensus; EPS beat: pro forma $2.17 vs $1.90*; broad-based segment outperformance and margin expansion drove beats .
  • FY25 guidance ($7.1B revenue, $8.00 EPS) sits modestly below current consensus ($7.212B*, $8.27*), implying potential estimate convergence as company executes raised segment growth plans .

Values marked with * retrieved from S&P Global.

FY25 Consensus vs Company Guidance

MetricFY 2025 ConsensusCompany GuidanceDelta
Revenue ($USD Billions)$7.212*~$7.10 −$0.112B*
Pro forma EPS ($)$8.27*~$8.00 −$0.27*
EPS/Revenue # of EstimatesEPS: 9*, Rev: 8*——

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Broad-based strength and margin expansion underpin a high-quality beat; fitness advanced wearables momentum appears sustainable into 2H on new launches .
  • Guidance raised despite tariff headwinds suggests confidence in pricing power, FX tailwinds, and mitigation levers; watch NT$ and tariff policy for cost pressure .
  • Segment guide increases (Fitness, Aviation, Marine, Auto OEM) are catalysts; Outdoor growth normalization expected post fenix anniversary .
  • MYLAPS acquisition augments Garmin’s ecosystem with race-day integration—potential for enhanced services engagement and monetization over time .
  • Inventory build strategically positions Garmin against tariff volatility and demand strength; near-term FCF impacted but FY FCF target ~$1.2B reiterated qualitatively .
  • Auto OEM remains on long-run margin trajectory with program ramp in 2026; watch OEM cadence and cost recoveries .
  • Tactical: Positive narrative on advanced wearables, guidance raise, and aviation innovation are likely stock catalysts; monitor FX, tariffs, and back-half OpEx cadence for leverage dynamics .