Garmin raises 2026 forecast as Q3 profit tops estimates

Garmin Ltd. (GRMN) said on Oct. 28 that third-quarter pro forma earnings per share were $2.76, topping the $2.45 consensus estimate compiled by Finnhub.

Revenue of $1.99 billion missed the $2.03 billion consensus estimate. Revenue still rose 12% from a year earlier, the company said in a filing.

The company said in a filing that it set a record for third-quarter operating results, with gross margin of 63.3% and operating income of $612 million, up 34% from a year earlier.

Here's how the company did:

• Pro forma EPS: $2.76 vs. $2.45 expected, according to Finnhub
• Revenue: $1.99 billion vs. $1.77 billion a year earlier, and $2.03 billion expected, according to Finnhub
• GAAP EPS: $2.80 vs. $2.08 a year earlier
• Operating income: $612 million vs. $457 million a year earlier

CEO Cliff Pemble said the quarter reflected strength across markets and product categories. "We are raising our 2026 outlook based on the results we have achieved so far and the momentum we are experiencing as we enter the important holiday selling season."

2026 guidance

Garmin now expects 2026 revenue of about $8.15 billion and pro forma EPS of $10.80. In its previous results release on July 29, it had forecast revenue of about $8.05 billion and pro forma EPS of $10.00.

The new outlook assumes gross margin of 61.0%, operating margin of 29.0% and a full-year tax rate of 16.5%. Before the update, the company had assumed gross margin of 59.7% and operating margin of 27.0%, with the same tax rate.

Segment results

Fitness revenue rose 16% to $694.3 million, with operating income of $231 million. Outdoor revenue rose 20% to $597.3 million, with operating income of $233 million, driven mainly by adventure watches.

Aviation revenue rose 5% to $252.7 million, with operating income of $66 million. Marine revenue rose 16% to $309.9 million, led by sonar products.

Auto OEM revenue fell 20% to $131.9 million, primarily due to domain controllers. The segment posted an operating loss of $12 million.

Costs, cash and capital returns

The consolidated gross margin rose 420 basis points to 63.3%. The company said about $33 million in refunds of previously paid tariffs helped the result, along with segment mix and lower product cost.

Total operating expenses rose 10% to $646 million. The effective tax rate was 18.1%, compared with 21.2% a year earlier.

Garmin generated operating cash flow of $394 million and free cash flow of $293 million in the quarter. It paid a quarterly dividend of $202 million and repurchased $41 million of its shares. About $407 million remained under its $500 million share repurchase program, authorized through December 2028. Cash and marketable securities totaled about $4.1 billion.

The Board has set Dec. 24, 2026, as the payment date for the next $1.05 per share dividend installment, with a record date of Dec. 11, 2026.