Garmin's Q1 Earnings Miss Expectations, Revenues Increase Y/Y

Garmin Ltd. GRMN reported first-quarter 2025 pro forma earnings of $1.61 per share, missing the Zacks Consensus Estimate by 2.41%. The bottom line, however, improved 13.4% on a year-over-year basis.

Net sales were $1.54 billion, which missed the Zacks Consensus Estimate by 2%. The figure, however, increased 11.1% from the year-ago quarter.
GRMN’s year-over-year growth in the top line was attributed to the solid momentum across the Outdoor, Fitness, Aviation, and Marine segments, partially offset by the Auto OEM segment.

Due to the weaker-than-expected top and bottom-line performance, Garmin shares lost 6.4% in the pre-market trading hours of Wednesday. However, the stock has gained 25.4% in the past year, outperforming the Zacks Electronics - Miscellaneous Products industry’s return of 7.9%.

Garmin’s Segmental Details

Outdoor (28.6% of Net Sales): The segment generated sales of $438.5 million in the reported quarter, up 20% year over year, primarily driven by strong performance in adventure watches. Operating income was $128.8 million, with a 29% operating margin.

Fitness (25.1%): The segment recorded sales of $384.7 million, reflecting a 12% year-over-year increase, led by robust demand for advanced wearables. Operating income was $77.7 million, with a 20% operating margin.

Aviation (14.5%): The segment achieved sales of $223.1 million, up 3% year over year, fueled by strength in OEM product categories. Operating income came in at $48.4 million, with a 22% margin.

Marine (20.8%): Garmin posted sales of $319.4 million, down 2% year over year due to the timing of promotions. Operating income was $86.9 million, resulting in a 27% margin.

Auto OEM (11%): Sales reached $169.3 million, marking a 31% year-over-year increase due to higher domain controller shipments. The segment posted an operating loss of $8.9 million, with a gross margin of 18%.

Garmin’s Operating Results

In first-quarter fiscal 2025, Garmin’s gross margin was pinned at 57.6%, down 50 basis points.

GRMN’s operating expenses of $552 million grew 10% from the prior-year quarter.

Operating income rose to $333 million, which increased 12% year over year, with the operating margin expanding slightly to 21.7%, up by 10 basis points.

Balance Sheet & Cash Flow of GRMN

As of March 29, 2025, Garmin held $2.67 billion in cash and marketable securities, up from $2.5 billion in the previous quarter.

Operating cash flow for the first quarter of 2025 was $420.8 million, and free cash flow was $380.7 million.

The company paid a quarterly dividend of $145 million and repurchased $27 million in shares during the quarter.

Garmin’s Guidance for 2025

Garmin expects fiscal 2025 revenues to be $6.85 billion, up from the previous guidance of $6.80 billion. The Zacks Consensus Estimate for the same is pegged at $1.57 billion, indicating a year-over-year decline of 13.4%.

Garmin anticipates pro forma EPS to be $7.80. The Zacks Consensus Estimate for the same is pegged at $1.65, indicating a year-over-year decline of 16.2%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

It also expects a gross margin of 58.5%, an operating margin of 24.8%, and a pro forma effective tax rate of 16.5%

Zacks Rank and Stocks to Consider

Currently, GRMN carries a Zacks Rank #3 (Hold).

Affirm AFRM, Super Micro Computer SMCI and Paycom Software PAYC are some better-ranked stocks that investors can consider in the broader Zacks Computer & Technology sector. ACIW, SMCI and PAYC sport a Zacks Rank #1 (Strong Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

AFRM shares have gained 4% in the past year. The Zacks Consensus Estimate for AFRM’s 2025 is pegged at a loss of 6 cents per share, narrowed by 7 cents over the past 60 days, suggesting growth of 96.7% from the year-ago quarter’s reported figure.

SMCI shares have plunged 56.4% in the past year. The Zacks Consensus Estimate for SMCI’s fiscal 2025 earnings has been revised downward to $2.52 in the past seven days, suggesting year-over-year growth of 14%.

PAYC shares have gained 6% over the past year. The Zacks Consensus Estimate for PAYC’s 2025 earnings is pegged at $8.72 per share, implying a rise of 6.21% from the year-ago quarter’s levels.

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This article originally published on Zacks Investment Research (zacks.com).

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