Garmin (GRMN -0.62%), a leader in GPS technology across multiple sectors, reported its Q3 2024 earnings on Oct. 30, showcasing record achievements in both revenue and operating income.
The company's revenue reached $1.59 billion, marking a 24% year-over-year increase. Its non-GAAP earnings per share (EPS) reached $1.99 — a 41% jump compared to the prior year. Garmin highlighted record performances amidst increased competitive pressures and operating expenses, projecting an optimistic future with revised annual guidance.
| Metric | Q3 2024 Result | Q3 2023 Result | Change (%) |
|---|---|---|---|
| Total Revenue (in billions) | $1.59 | $1.28 | 24% |
| GAAP Earnings Per Share | $2.07 | $1.34 | 54.5% |
| Pro forma Earnings Per Share | $1.99 | $1.41 | 41% |
| Gross Margin | 60.0% | 57.0% | - |
| Operating Margin | 27.6% | 21.2% | - |
Source: Garmin.
Understanding Garmin
Garmin is renowned for its comprehensive range of navigation and communication devices, integral to its operations across five main sectors: fitness, outdoor, aviation, marine, and auto original equipment manufacturer (OEM). Emphasizing product diversity, Garmin designs GPS-enabled gadgets and integrated systems tailored to consumer and business needs, strengthening its market position through strategic acquisitions.
Recently, Garmin has focused on expanding its product lines in the fitness and marine sectors, bolstered by acquisitions like JL Audio and Lumishore. The company aims to leverage innovations across segments, maximizing cross-selling and reducing risks tied to single-market dependency. This diversified approach underpins Garmin's resilience amid competitive challenges from tech giants such as Apple and Alphabet's Google.
Quarterly Highlights
In Q3 2024, Garmin reported robust growth, spearheaded by innovations in the fitness and auto OEM sectors. The Fitness segment surged to $463.9 million, up 31% year-over-year, driven by a heightened demand for wearables and optimized margin management. The Auto OEM segment's revenue spiked by 53%, largely attributed to rising domain controller sales. This trajectory underscored Garmin's capability to adapt and capitalize on industry trends.
The Outdoor segment also performed well, showing a 21% revenue increase through launches such as the fēnix 8 series and Enduro 3 watches, offering advanced AMOLED displays. The Marine sector maintained solid performance, with revenue increasing 22% due to the JL Audio acquisition, which expanded Garmin's audio offerings and market reach.
Garmin acknowledged facing formidable competition from major tech players, impacting its market share in wearables. The quarter was also marked by a 12% increase in operating costs, tied to personnel expenses, and a significant jump in the effective tax rate from 8.0% to 17.9%, which exerted pressure on the bottom line.
Despite these pressures, the company's operating income rose from $270 million in the previous year to $437 million, showcasing efficient operations. Additionally, Garmin declared consistent dividends, demonstrating commitment to returning value to shareholders.
Looking Ahead
Garmin has confidently revised its full-year revenue forecast upwards to approximately $6.12 billion, with expected pro forma EPS of $6.85. This revision underscores its belief in continuing growth driven by product innovation and strategic execution. Garmin aims to sustain this momentum through new launches and deeper market penetration across multiple sectors.
Management stresses the importance of innovation and diversification to maintain competitiveness, particularly focusing on GPS advancements and wearable technology. Investors should watch for further developments in Garmin's R&D endeavors and strategic partnerships as indicators of its growth trajectory and market position evolution in the coming quarters.
