Key Points
Full-year 2026 EPS guidance increased from $10.00 to $10.80 per share.
Operating income grew 34% year over year to a record $612 million.
Higher memory costs will lower 2027 gross margins toward historical ranges.
On its third-quarter 2026 earnings call, held on Oct. 28, 2026, Garmin (NYSE:GRMN) announced new full-year revenue guidance of $8.15 billion, up from $8.05 billion. Premium product momentum and expanding hardware margins are driving record operating performance across fitness and outdoor segments. Three things management said stand out.
1. Component Costs Will Drag Margins Back to Historical Norms
Surging memory component prices are creating a profitability headwind that is starting to affect the business. Management plans to use operational scale and vertical integration, which means controlling its own manufacturing and supply chain, to cushion the impact.
While it is too early to offer a comprehensive outlook for 2027, we expect our consolidated gross margin profile will return to a historical range primarily due to higher memory costs.
-- Cliff Pemble, President and Chief Executive Officer
2. Vertical Integration and Scale Are Countering Inflationary Pressures
In-house manufacturing gives the company cost flexibility and pricing power that direct competitors struggle to match during inflationary cycles. Management relies on these structural controls to protect profitability when input prices rise across the industry.
As we formulate our 2027 plan, we will look for every opportunity to offset this headwind by leaning heavily on our vertical integration and scale of operations and through strategic and selective mitigations, which we have successfully used in the past.
-- Cliff Pemble, President and Chief Executive Officer
3. Premium Software Subscriptions Are Outpacing Hardware Growth
The Garmin Connect Plus subscription service, which offers advanced wellness features like specialized nutrition insights, is expanding faster than core device categories. Customer retention after free trial periods signals high engagement and high-margin recurring revenue potential.
Connect Plus has outpaced our expectations and the renewals and the commitments after the free periods have been very strong.
-- Cliff Pemble, President and Chief Executive Officer
Looking Ahead
Holiday demand is building across fitness and outdoor segments, positioning the business for record full-year execution. Vertical integration and software monetization provide clear competitive advantages, while management navigates increasing component pricing and monitors inventory build.
With most of 2026 behind us and considering the momentum we are experiencing entering the important Q4 holiday season, we anticipate delivering another record year of double-digit growth in revenue and profits.
-- Cliff Pemble, President and Chief Executive Officer
Long-term growth hinges on delivering essential hardware features that command pricing power while scaling high-margin digital services across its active user ecosystem.
We believe success is driven by our commitment to create products that are essential to our customers, and supporting them with industry leading quality, reliability, and innovation.
-- Cliff Pemble, President and Chief Executive Officer
The Motley Fool has positions in and recommends Garmin. The Motley Fool has a disclosure policy.