Garmin Q2 2026 revenue rose 11% to $2.02B, and a shift toward higher-margin fitness wearables plus about $21M in tariff refunds lifted operating margin to 30.4% and diluted EPS 35% to $2.80. Full-year guidance was raised to $8.05B in revenue and $10.00 in pro forma EPS.
Revenue
$2.0B
+11.4% YoY
Net income
$542M
+35.2% YoY
Diluted EPS
$2.80
+35.3% YoY
Operating margin
30.4%
Overview
Garmin's second quarter (13 weeks ended June 27, 2026) was a record on both revenue and operating income. Sales rose 11% to $2.02 billion, but profit grew about three times as fast: operating income was up 30% to $615.5 million and net income up 35% to $541.9 million. Three things drove that gap. Sales shifted toward higher-margin products, led by fitness wearables. Garmin got about $21 million back in refunds of tariffs it had already paid. And the year-ago quarter carried a $23.5 million currency loss that did not repeat. Management raised its full-year revenue and EPS guidance, but the new guidance also points to lower margins in the second half.
Key metrics
Metric
Q2 2026
Q2 2025
YoY Change
Revenue
$2,022.1M
$1,814.6M
+11.4%
Gross margin
62.4%
58.8%
+3.6 pts
Operating income
$615.5M
$472.3M
+30.3%
Operating margin
30.4%
26.0%
+4.4 pts
Net income
$541.9M
$400.8M
+35.2%
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Pro forma diluted EPS (company non-GAAP, per earnings release)
$2.81
n/a
+29%
Units sold (thousands)
5,686
5,203
+9%
Fitness revenue (wearables-led)
$756.8M
$605.4M
+25%
Operating margin means the share of revenue left after paying for products, R&D and overhead, before interest and tax. The first half (26 weeks) looked similar: revenue $3,775.6M (+13% from $3,349.7M), operating income $1,047.2M (+30%), net income $947.0M (up from $733.6M) and diluted EPS $4.89 (up from $3.79).
Segment performance: fitness does the heavy lifting
Segment
Q2 revenue
YoY
Gross margin (Q2 26 / Q2 25)
Operating income
Op. income YoY
Fitness
$756.8M
+25%
64% / 60%
$277.0M
+40%
Outdoor
$482.7M
-2%
69% / 66%
$163.6M
+4%
Aviation
$268.7M
+8%
75% / 74%
$72.2M
+14%
Marine
$341.4M
+14%
61% / 55%
$99.8M
+59%
Auto OEM
$172.4M
+1%
22% / 17%
$2.9M
vs. -$9.5M loss
Fitness made up 37% of revenue, up from 33% a year earlier, and contributed roughly $151M of the company's $208M revenue increase. The 10-Q says growth came "across all product categories, led by strong demand for advanced wearables," and says the 330-basis-point gross-margin gain (3.3 percentage points) was mainly "favorable product mix." In plain terms, more of the watches sold were pricier, higher-margin models. First-half fitness revenue was up 32% and operating income up 58%.
Outdoor was the only segment where sales fell. The filing blames "declines in consumer auto and adventure watches." Profit still rose 4% because gross margin improved 2.7 points on product mix, which made up for sales falling and operating expenses rising. In the first half, outdoor operating income fell 1%, the only segment to decline over the six months.
Marine had the biggest jump in profit. Its gross margin rose 6.3 points to 61%, and the 10-Q says that was mainly because of tariff refunds and product mix. About $14M of the $21M in tariff refunds went to this segment. Part of the 59% jump in operating income is therefore a one-time boost.
Aviation grew in both OEM and aftermarket sales, meaning systems fitted in new aircraft by manufacturers and upgrades for aircraft already flying. Margins were roughly flat, and operating income rose 14% because expenses grew more slowly than revenue.
Auto OEM (in-car systems sold to carmakers) moved from a $9.5M loss to a $2.9M profit, but the margin gain comes with a warning. The 10-Q says the 5.6-point gross-margin increase was "primarily attributable to year-to-date cost recoveries recognized as revenue during the current quarter." Some of that benefit belongs to earlier periods and was booked in Q2. Over the first half, the segment still lost $3.6M.
Tariffs, currency and other one-offs
Tariff refunds. In February 2026 the U.S. Supreme Court ruled that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were unauthorized. In Q2 Garmin received about $21M of refunds on tariffs it had already paid and recorded them as a reduction in cost of goods sold. That added about 1.0 point to gross margin, so roughly 2.6 of the 3.6-point improvement came from the business itself. The 10-Q says more refunds may come but have not been recognized yet, so they could lift a future quarter.
Currency. Garmin holds large amounts of cash, receivables and payables in Taiwan dollars, euros and other currencies, and swings in exchange rates change their value in dollars. In the year-ago quarter the dollar fell 14.1% against the Taiwan dollar, which produced a $23.5M foreign-currency loss. This quarter's loss was only $2.5M. That $21M swing boosts GAAP net income growth but has nothing to do with how the business ran. Garmin's pro forma EPS removes currency effects and rose 29%, compared with 35% on the GAAP number.
Interest income rose to $38.2M from $31.7M, with an average return of 3.5% on cash and investments, up from 3.2%. The tax rate was 16.8%, up from 16.5%, because of where the income was earned.
Costs and a new risk: memory chips
Operating expenses rose 9% to $646.5M, slower than revenue. Research and development rose 10% and selling, general and administrative costs rose 8%, both mainly because of higher personnel costs. Expenses fell to 32% of revenue from 33%. The 10-Q adds a new warning: "Recent global supply constraints of memory chips have increased operational complexities and costs, which may unfavorably impact our future gross margin." Inventory rose to $1,966M from $1,772M at year-end, and raw materials went up 19% to $734M. The filing does not say whether that is deliberate stockpiling of components.
Cash, dividends and buybacks
Cash generation: Q2 operating cash flow was $404M, up from $173M. Free cash flow (operating cash flow minus capital spending) was $276M, up from $127M, according to the earnings release. First-half operating cash flow was $939.5M, up from $594.0M. First-half capital spending more than doubled to $194.4M from $85.7M.
Dividend: Shareholders approved $4.20 per share for the coming year, paid in four installments of $1.05, up 16.7% from $0.90 per installment last year. The first installment was paid June 26, 2026, and the next is due September 25, 2026. Garmin paid $376.0M in dividends in the first half.
Buybacks: Garmin repurchased about 178,000 shares in Q2 for $43M, according to the earnings release. About $448M remains under the $500M program, which runs through December 2028.
Balance sheet: Garmin held about $4.4B in cash, cash equivalents and marketable securities.
Takeaway: Earnings are growing much faster than sales mainly because customers are buying more of Garmin's pricier, higher-margin fitness wearables. Take out the $21M tariff refund and the $21M smaller currency loss, and profit still grew well ahead of revenue. The raised guidance, however, implies second-half gross margin of about 58.5%, about 2.5 points below the first half's 61.0%, which is consistent with the memory-chip cost warning.
Guidance and outlook
In the July 29, 2026 earnings release (Exhibit 99.1 to the 8-K), Garmin raised its fiscal 2026 guidance to about $8.05 billion in revenue and $10.00 in pro forma EPS, from $7.9 billion and $9.35 in April. The new guidance assumes a 59.7% gross margin, a 27.0% operating margin and a 16.5% tax rate for the full year.
Comparing that with first-half results shows what the guidance expects for the second half. Revenue of $8.05B minus $3.78B in the first half leaves about $4.27B. On the full-year margins, the second half works out to roughly 58.5% gross margin and 26.4% operating margin, compared with 61.0% and 27.7% in the first half. The raise therefore rests mostly on higher sales. Management is planning for lower margins, which fits the memory-chip warning and a first half that included one-time tariff refunds. In our view, fitness demand is the variable to watch. If advanced-wearable sales keep growing at more than 20% into the holiday quarter, the revenue guidance looks achievable. The main downside risk is gross margin: the sizes of future tariff refunds and memory-chip cost increases are both still unknown.