Executive Summary

Record Q3 revenue and operating income: $1.771B (+12% YoY) and $457M, with gross margin 59.1% and operating margin 25.8% . Pro forma EPS was $1.99; GAAP EPS $2.08 .
Versus S&P Global consensus: EPS met ($1.99 vs $1.99)* and revenue was a slight miss ($1.771B vs $1.796B, ~1.4% below)*. Management raised full‑year pro forma EPS guidance to $8.15 (from $8.00) on a higher operating margin outlook, while keeping revenue at ~$7.10B .
Segment mix strong: Fitness +30%, Marine +20%, Aviation +18%; Outdoor −5% on tougher comps; Auto OEM −2% with an operating loss from a prior‑period warranty accrual .
Cash/returns: Q3 free cash flow $425M; quarterly dividend $0.90 next payable Dec 26; $36M buybacks in Q3 with ~$107M remaining; cash and marketable securities ~ $3.9B .
Likely stock narrative: Raised EPS/margin guidance and broad-based growth (fitness/aviation/marine) vs. modest revenue shortfall, outdoor normalization, and gross margin headwinds from tariffs/TWD strength and warranty accruals .

What Went Well and What Went Wrong

What Went Well

Fitness outperformed with 30% growth on demand for advanced wearables; product cadence (Edge 550/850, Bounce 2, Venu 4) broadened the lineup . CEO: “strong double-digit revenue growth in three business segments…well positioned for the holiday selling season” .
Marine reaccelerated (+20%) across categories; Garmin named NMEA Manufacturer of the Year for 11th consecutive year and won eight Product of Excellence awards .
Aviation grew 18% with both OEM and aftermarket strength; notable certifications (CJ1 retrofit; King Air 350 Autoland/Autothrottle) underscore differentiation and safety leadership .

What Went Wrong

Outdoor declined 5% on tough prior‑year product launch comps; management reduced Outdoor FY revenue growth expectation to ~3% as Phoenix/Fēnix 8 Pro launched late in Q3 .
Gross margin down vs prior quarter on higher product costs tied in part to tariffs and a stronger Taiwan dollar; Auto OEM posted operating loss from increased accrued warranty costs on prior‑period sales .
Effective tax rate rose to 21.2% (from 17.9% LY) due to U.S. tax legislation, creating a YTD adjustment from reduced deductions/credits .

Financial Results

Headline metrics vs prior periods and estimates

Metric	Q3 2024	Q2 2025	Q3 2025
Revenue ($B)	$1.586	$1.815	$1.771
GAAP Diluted EPS ($)	$2.07	$2.07	$2.08
Pro forma Diluted EPS ($)	$1.99	$2.17	$1.99
Gross Margin %	60.0%	58.8%	59.1%
Operating Margin %	27.6%	26.0%	25.8%

Q3 2025 actuals vs S&P Global consensus

Metric	Consensus	Actual
Revenue ($)	$1,795,116,670*	$1,770,901,000
Pro forma EPS ($)	$1.99*	$1.99
# EPS Estimates	8*	—
# Revenue Estimates	6*	—
Values retrieved from S&P Global.

Segment performance (Q3)

Segment	Net Sales Q3 2024 ($M)	Net Sales Q3 2025 ($M)	YoY	Operating Income Q3 2024 ($M)	Operating Income Q3 2025 ($M)
Fitness	463.9	601.0	+30%	147.8	193.6
Outdoor	526.6	497.6	−5%	208.9	169.7
Aviation	204.6	240.4	+18%	44.3	60.8
Marine	222.2	267.0	+20%	37.8	49.4
Auto OEM	168.7	164.8	−2%	−1.3	−16.7
Total	1,586.0	1,770.9	+12%	437.5	456.8

Net sales by geography (Q3)

Region	Q3 2024 ($M)	Q3 2025 ($M)	YoY
Americas	724.6	795.6	+10%
EMEA	612.7	692.6	+13%
APAC	248.8	282.7	+14%
Total	1,586.0	1,770.9	+12%

Operating and cash flow KPIs (Q3)

KPI	Q3 2024	Q3 2025
Operating Cash Flow ($M)	258.0	485.6
Free Cash Flow ($M)	219.4	425.1
Total Operating Expenses ($M)	514.1	589.7
Research & Development ($M)	249.2	286.5
SG&A ($M)	265.0	303.2
Effective Tax Rate (%)	17.9%	21.2%

Non‑GAAP note: Pro forma EPS excludes FX gains/losses and discrete tax items; in Q3, FX gains reduced pro forma EPS vs GAAP ($1.99 vs $2.08) per reconciliation .

Guidance Changes

Metric	Period	Previous Guidance (as of Q2)	Current Guidance (Q3)	Change
Revenue ($B)	FY 2025	~$7.10	~$7.10	Maintained
Gross Margin %	FY 2025	~58.5%	~58.5%	Maintained
Operating Margin %	FY 2025	~24.8%	~25.2%	Raised
Pro forma Effective Tax Rate %	FY 2025	~17.5%	~17.5%	Maintained
Pro forma EPS ($)	FY 2025	~$8.00	~$8.15	Raised

Dividend: next $0.90/share installment Dec 26, 2025 (record Dec 12, 2025); remaining quarterly installment currently anticipated Mar 27, 2026 (record Mar 13, 2026) .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2025)	Current Period (Q3 2025)	Trend
Tariffs/FX on margins	Assumed ~$100M FY tariff headwind; mitigations and FX tailwinds; no tariff on wearables; inventory build to mitigate; TWD strength a cost headwind .	Gross margin pressured by higher product costs incl. tariffs, stronger TWD; Q4 similar dynamics; FX tailwinds on sales; tariff framework assumed in guide .	Continued headwind; mitigated.
Outdoor demand/product cycle	Expected moderation post fēnix 8 anniversary; maintained 10% growth in Q2 guide .	Outdoor −5% YoY; launch of fēnix 8 Pro (late Q3) with satellite/cellular; FY Outdoor growth now ~3% .	Normalizing off tough comps.
Fitness demand/new users	Strong advanced wearables; new users driving registrations; channel not overstocking .	Fitness +30%; robust product cadence; raised FY segment growth to 29% .	Acceleration vs H1.
Channel inventory	Healthy; sell‑out > sell‑in; retailers preparing for Q4 .	Channel lean/healthy; Q4 promotional cadence “comparable” to prior years .	Healthy ahead of holidays.
Marine end‑market	Stabilizing; raised FY growth to 5% in Q2 .	Market stabilized/uptick esp. aftermarket; raised FY marine growth to ~10% .	Improving.
Auto OEM margin/trajectory	Narrowing losses; BMW domain controllers ramp; new program 2H26 .	Auto OEM −2% revenue; operating loss on prior‑period warranty accrual (isolated); FY +~8% growth; mid‑upper teens GM/mid‑single‑digit OM at scale reiterated .	Short‑term noise; LT intact.
CapEx/infrastructure	FY CapEx planned ~$350M; often pushed out .	CapEx slips timing‑wise; still investing for growth; Q3 CapEx $60M .	Timing shift only.
Subscriptions/Services	Growing across Outdoor (inReach), Fitness (Bounce, Connect+), Aviation content; <10% disclosure threshold .	Continued focus; connectivity attach on Bounce/fēnix 8 Pro; unique SOS/off‑grid capabilities .	Growing base.
AI/Tech initiatives	Launch of Connect+ premium plan with AI‑based insights (Q1) .	EMBRACE AI maternal health research collaboration; product innovation cadence (Edge 550/850; Venu 4) .	Expanding use cases.

Management Commentary

CEO: “We achieved another quarter of strong financial results…strong double‑digit revenue growth in three business segments…well positioned for the holiday selling season with a strong lineup of innovative products.”
Segment color: Fitness +30% on advanced wearables; Outdoor −5% on tough comps; Aviation +18% with OEM/aftermarket strength; Marine +20% broad‑based; Auto OEM −2% with a $17M operating loss (warranty accrual on prior‑period sales) .
CFO: Q4 gross margin to reflect similar product cost pressures (tariffs/TWD) and seasonally higher promotions; raised FY operating margin to ~25.2% and pro forma EPS to ~$8.15 .
Non‑GAAP: Pro forma EPS adjusts for FX gains/losses and tax effects; Q3 pro forma EPS $1.99 vs GAAP $2.08 .

Q&A Highlights

Outdoor guidance reset: Late fēnix 8 Pro timing and tough prior‑year pipeline fill drove a more conservative H2 outlook; long‑term Outdoor growth track intact .
Gross margin drivers: Higher product costs (incl. tariffs), stronger TWD; partially offset by FX tailwinds on sales; Q4 to reflect similar “moving parts” plus promotions .
Channel inventory: Lean and healthy; sell‑out strong; Q4 promotions similar to prior years .
Auto OEM: Warranty accrual tied to prior‑period sales deemed isolated and corrected; at scale, segment targets mid‑upper teens GM and mid single‑digit OM .
CapEx: Spending often shifts timing but supports capacity/infrastructure; Q3 CapEx $60M .
Marine: Aftermarket strength and share gains in chartplotters/trolling motors/audio; end‑market stabilizing/improving .

Estimates Context

Q3 2025: EPS met; revenue was a slight miss vs S&P Global consensus (see table above).* Full‑year pro forma EPS guidance raised to ~$8.15, implying Street models likely need to move up from ~$8.00 to reflect the higher operating margin outlook .
Values retrieved from S&P Global.

Key Takeaways for Investors

Mix‑driven durability: Broad‑based growth (fitness/aviation/marine) offset Outdoor normalization; product cadence remains a core advantage heading into holiday .
Margin management: Despite tariff/TWD headwinds and a one‑off auto warranty accrual, management still raised FY operating margin and EPS guidance—evidence of cost control and operating leverage .
Fitness momentum: Advanced wearables and new‑user adds sustain double‑digit growth; recent launches (Venu 4, Edge 550/850) support category strength .
Marine stabilization: Aftermarket resilience and share gains underpin raised FY outlook; awards reinforce product leadership .
Outdoor reset is transient: Late fēnix 8 Pro timing and tough comps drove near‑term pressure; connectivity (inReach/cellular) enhances monetization opportunities over time .
Capital returns/cash: Robust FCF ($425M in Q3) supports dividend and opportunistic buybacks with ~$3.9B cash/marketable securities .
2026 auto catalyst: New auto OEM program expected to add significant production volumes in back half 2026; near‑term noise does not alter medium‑term margin targets .

Appendix: Product/Innovation Highlights During Q3

Wearables: Venu 4 launched with enhanced health/AI‑driven coaching and accessibility features .
Cycling: Edge 550/850 introduced with adaptive training, smart fueling, and real‑time weather overlays .
Aviation: FAA certification of Autoland/Autothrottle for select King Air 350 retrofits; largest aircraft to date with Autoland .
Recognition: NMEA Manufacturer of the Year (11th straight) and eight Product of Excellence awards .

GARMIN LTD (GRMN)·Q3 2025 Earnings Summary