Garmin has announced results for its second quarter ended 25 June 2016. For Q2 2016, Garmin has reported total revenue of US$812 million, up 5% year on year, with the company’s fitness, outdoor, marine and aviation business divisions collectively growing 20% over the previous year quarter and contributing 70% of total revenue. (Due to an ongoing market contraction, Garmin’s auto division declined 18% year on year.)
Overall gross margin expanded to 57.0% compared to 54.2% in the prior year quarter, and operating margin expanded to 24.7% compared to 21.5% in the prior year quarter.
Garmin added that its wearable offerings continued to expand in the quarter as it introduced and shipped the Forerunner 735XT, vivosmart HR+, and vivomove.
Garmin’s Connect IQTM store now offers over 2,000 apps, watch faces, and widgets for select Garmin wearables and has ‘delivered over 13 million downloads to customers since its inception in early 2015.’
Cliff Pemble, Garmin’s President and Chief Executive Officer said “We achieved strong results in the second quarter of 2016. Fitness and outdoor achieved impressive revenue and profit growth driven by our strengthening position in the wearables market. Aviation and marine also delivered revenue and profit growth while auto remains a solid base of profit contributions to the overall business. I am pleased with our performance in the first half of 2016 which gives us confidence to raise our guidance for the full year.”
Garmin’s fitness business segment posted robust revenue growth of 34% in the quarter driven by wearable devices. Gross margin was consistent year-over-year at 56% while operating margin improved to 25% from 21% in the prior year.
Garmin’s outdoor segment posted robust revenue growth of 23%, driven by wearable devices and a full quarter contribution of the recently acquired DeLorme satellite tracking operation. Gross and operating margin was 64% and 36% respectively, an improvement over a year ago resulting in a 31% increase in operating income.
Based on its performance in the first half of 2016, Garmin is updating its full year guidance. The company now anticipates revenue of approximately US$2.9 billion (versus a previous guidance of US$2.82 billion). This projected uplift has been driven primarily by a stronger outlook for Garmin’s outdoor and fitness segments.
