Garmin Navigates Mixed Q1 Results with Strong FY25 Outlook

Garmin Ltd. (GRMN) reported a mixed performance for its first quarter of 2025, with revenue growth outpacing expectations but adjusted earnings per share (EPS) falling short of Wall Street estimates. Despite the slight miss, the company reaffirmed its optimistic FY25 outlook, projecting an 8% revenue rise and a $7.80 EPS target. The results highlight Garmin’s ongoing reliance on innovation in wearables, marine tech, and automotive solutions, even as it faces headwinds in certain segments.

Q1 2025: Revenue Rises, but EPS Misses Estimates

Garmin’s Q1 revenue hit $1.535 billion, a 11.2% year-over-year increase, driven by strong demand for its fitness, outdoor, and marine products. Net profit also rose to $332.77 million, up from $275.96 million in Q1 2024. However, adjusted EPS of $1.61 fell short of the consensus estimate of $1.64, reflecting higher-than-expected costs or margin pressures.

The miss, though minor, underscores Garmin’s balancing act between aggressive product launches and managing expenses. For instance, the company’s recent acquisitions—such as Lumishore (marine lighting) and JL Audio (marine audio)—likely contributed to revenue but may have weighed on margins during integration phases.

Segment Breakdown: Fitness and Outdoor Lead the Charge

Garmin’s Fitness segment grew 16.3% year-over-year to $398.9 million, fueled by new releases like the Instinct 3 multisport smartwatch and the Lily 2 Active, which targets female athletes. The Outdoor segment expanded 9.3% to $400.3 million, benefiting from its inReach SOS emergency communication service and the Descent G2 dive computer.

The Marine segment saw a 6.9% revenue increase to $349.2 million, driven by sales of advanced navigation systems like the APK 10 Autopilot Keypad and the Lumishore acquisition. Meanwhile, the Aviation segment grew 5.9% to $229.6 million, supported by demand for cockpit solutions in private aviation.

The Auto OEM segment, however, delivered the strongest growth at 10% to $141.8 million, as partnerships with automakers like BMW boosted shipments of domain controllers and infotainment systems.

FY2025 Outlook: Ambitious but Achievable?

Garmin raised its full-year 2025 revenue guidance to $6.80 billion (+8% vs. 2024) and set a pro forma EPS target of $7.80, reflecting confidence in its product pipeline. This optimism is rooted in Q4 2024’s stellar performance, where revenue surged 23% to $1.82 billion, with pro forma EPS jumping 40% to $2.41.

The company also announced a proposed $3.60 annual dividend per share, payable in four installments, signaling financial strength. With a four-quarter earnings beat streak and a Zacks Earnings ESP of +2.88%, Garmin appears poised to outperform consensus estimates in upcoming quarters.

Investment Considerations

• Strengths: Garmin’s diversified portfolio, strong cash flow, and innovation in wearables and marine tech position it well in niche markets. Its dividend proposal reinforces shareholder-friendly policies.
• Weaknesses: The Q1 EPS miss and margin pressures suggest execution risks, especially as competitors like Suunto (Nokia-owned) and Apple (AAPL) expand in wearables.
• Opportunities: Emerging markets in aviation and marine tech, along with partnerships in automotive, offer growth avenues.
• Threats: Supply chain disruptions and rising input costs could challenge margins, as seen in Q1.

Conclusion

Garmin’s mixed Q1 results reflect both the opportunities and challenges in its high-growth sectors. While the adjusted EPS miss is a minor setback, the company’s robust revenue growth, segment momentum, and FY25 guidance suggest a positive trajectory. With a track record of beating estimates and a dividend that rewards investors, Garmin remains a compelling play on innovation in wearable tech and niche electronics.

The stock’s Zacks Rank #3 (Hold) rating may understate its potential; however, investors should monitor margin trends and competitive dynamics. For long-term investors, Garmin’s $6.80 billion revenue target and $7.80 EPS goal provide a clear roadmap to sustained success—if it can navigate the choppy waters of cost management.

In sum, Garmin’s FY25 outlook is ambitious but grounded in strong fundamentals. While the Q1 stumble is a cautionary note, the company’s innovation engine and market positioning argue for cautious optimism.