Garmin (GRMN) Q3 2026 Earnings Call Transcript

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DATE

Wednesday, Oct. 28, 2026

CALL PARTICIPANTS

• Director of Investor Relations – Teri Seck
• President and Chief Executive Officer – Cliff Pemble
• Chief Financial Officer and Treasurer – Douglas Gerard Boessen

TAKEAWAYS

• Revenue — $1.99 billion, representing 12% growth driven by double-digit increases in the outdoor, fitness, and marine segments.
• Pro Forma EPS — $2.76, an increase of 39% due to operating leverage and a lower effective tax rate.
• Operating Income — $612 million, rising 34% as a result of gross and operating margin expansion.
• Fitness Revenue — $694 million, growing 16% on strong demand for wearables and the launch of the CIRQA smart ring.
• Outdoor Revenue — $597 million, increasing 20% primarily due to demand for the Fenix 9 adventure watch series.
• Marine Revenue — $310 million, rising 16% following the launch of the LiveScope 2 sonar system and sailboat products.
• Aviation Revenue — $253 million, growing 5% led by original equipment manufacturer (OEM) product categories.
• Auto OEM Revenue — $132 million, declining 20% due to expected reductions in domain controller programs.
• Gross Margin — 63.3%, expanding 420 basis points reflecting favorable segment mix, lower product costs, and tariff refunds.
• FY 2026 Revenue Guidance — $8.15 billion, raised from the previous estimate of $8.05 billion.
• FY 2026 Pro Forma EPS Guidance — $10.80, increased from $10.00 reflecting current performance and momentum.
• Tariff Refunds — $33 million, recognized in the third quarter as a benefit to gross margin.
• Inventory — $2.3 billion, increased to mitigate risks of supply constraints for critical components.
• Free Cash Flow — $293 million, decreasing from $425 million in the prior year quarter due to inventory prepayments.
• Capital Expenditures — $101 million, which was $40 million higher than the prior year quarter.
• Research and Development Expense — $313 million, increasing 9% primarily due to personnel-related expenses.
• Americas Revenue — $913 million, growing 15% during the quarter.
• EMEA Revenue — $778 million, increasing 12% compared to the prior year.
• APAC Revenue — $295 million, growing 4% as challenging conditions in China offset growth in other markets.
• Cash and Marketable Securities — $4.1 billion, available at the end of the third quarter.
• Share Repurchases — $41 million, with $407 million remaining in the authorized program through Dec. 2028.
• Quarterly Dividend — $202 million, with the next payment of $1.05 per share scheduled for Dec. 24, 2026.

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RISKS

• Boessen stated, “We expect higher memory costs to impact the fourth quarter, which has been factored in our full year gross margin guidance,” noting this as a headwind for the 2027 gross margin profile.
• Boessen noted that APAC sales growth was lower than other regions “due to challenging market conditions in China.”
• Pemble indicated that revenue in the auto OEM segment decreased 20% “primarily driven by domain controllers” as older programs decline.

SUMMARY

Garmin Ltd. (GRMN -4.85%) reported record operating results for the third quarter, driven by demand for recently launched wearables and adventure watches. Management increased the full-year 2026 outlook for revenue and earnings per share, citing momentum entering the holiday selling season and strong operational execution. The company is leveraging its vertically integrated business model to manage supply chain headwinds, specifically rising memory component costs, while investing in manufacturing capacity expansion. Strategy remains focused on product innovation across the fitness, outdoor, aviation, and marine segments to attract new users and support existing customer upgrades.

• Initial demand for the new CIRQA smart ring has been strong, with CEO Pemble stating, “Initial demand for CIRQA has been very strong and feedback from customers has been positive.”
• The company is expanding manufacturing capacity in Thailand, with Pemble noting, “we are on track to open the new facility, expected start producing new products in the first quarter of 27.”
• Management expects significant growth in the auto OEM segment in 2027 driven by the launch of a major domain controller program with Mercedes Benz.
• The Garmin Connect Plus subscription service has outpaced the growth rates of underlying hardware segments, with strong renewal rates following free trial periods.
• The aviation segment reached a milestone with the G1000 integrated flight deck retrofit surpassing 1,000 systems in the field.
• Management noted the general marine market was experiencing softness during the off season, though innovation and boat refitting projects supported segment growth.
• Inventory levels were strategically increased to secure safety stock of memory and other critical components before market prices rose significantly.

INDUSTRY GLOSSARY

• CIRQA: A screenless smart ring launched by Garmin to provide wellness and fitness insights.
• Fenix 9: Garmin’s flagship series of rugged adventure watches featuring AMOLED displays and titanium cases.
• AMOLED: Active-Matrix Organic Light-Emitting Diode, a display technology used in smartwatches for high contrast and color.
• Autoland: A certified autonomous system designed to safely fly and land an aircraft in an emergency without human interaction.
• Domain Controllers: Centralized computing units in vehicles that manage multiple electronic functions or systems.
• G1000: An integrated flight deck system used in various general aviation aircraft.
• LiveScope 2: A high-definition live scanning sonar system used for fishing.
• NMEA: National Marine Electronics Association, an industry organization that sets standards and recognizes excellence in marine electronics.

Full Conference Call Transcript

Operator: Hello, everyone. Thank you for joining us and welcome to the Garmin Limited Third Quarter 2026 Earnings. After today’s prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Teri Seck, Director of Investor Relations. Please go ahead.

Teri Seck: Good morning. We would like to welcome you to Garmin Limited’s third quarter 2026 earnings call. Please note that the earnings press release and related slides are available at Garmin’s Investor Relations site on the internet at www.garmin.com/investors. An archive of the webcast and related transcript will also be available on our website. This earnings call includes projections and other forward looking statements regarding Garmin Limited and its business. Any statements regarding our future financial position

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