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SCHAFFHAUSEN, Switzerland - On Wednesday, Garmin Ltd. (NYSE:GRMN) reported third-quarter revenue that fell short of analyst expectations, despite posting better-than-expected earnings and raising its full-year profit outlook.
The company’s shares fell 7.29% in pre-market trading after the results.
The navigation and wearable technology maker reported third-quarter revenue of $1.77 billion, slightly below the consensus estimate of $1.78 billion, though it represented a 12% increase compared to the same period last year. Adjusted earnings per share came in at $1.99, narrowly beating analyst expectations of $1.98, but remained flat compared to the year-ago quarter.
Investors appeared concerned about the revenue miss despite Garmin raising its full-year earnings guidance to $8.15 per share, above the consensus estimate of $8.12. The company now expects fiscal 2025 revenue of approximately $7.1 billion, which falls short of analyst expectations of $7.157 billion.
"We achieved another quarter of strong financial results with growth in both consolidated revenue and operating income, and we experienced strong double-digit revenue growth in three business segments reflecting the strength of our unique, diversified business model," said Cliff Pemble, President and CEO of Garmin.
The company’s fitness segment was a standout performer, with revenue surging 30% YoY to $601 million, driven by strong demand for advanced wearables. The aviation and marine segments also delivered impressive growth of 18% and 20%, respectively. However, the outdoor segment declined 5% and auto OEM revenue fell 2%.
Garmin’s operating margin contracted to 25.8% from 27.6% in the prior-year quarter, while gross margin declined to 59.1% from 60.0%. The company generated $486 million in operating cash flow and $425 million in free cash flow during the quarter.
Looking ahead, Garmin expects a gross margin of 58.5% and an operating margin of 25.2% for the full year, as it prepares for the holiday selling season with what it describes as "a strong lineup of innovative products."
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