Garmin Q3 2025: Why Fitness Crushed it and the Fenix 8 Pro Failed to Meet Expectations
The latest quarterly stats from Garmin show record sales for the company. Of particular note is the performance of the Fitness division (Forerunner, Edge), the largest division in Garmin.
(Garmin) experienced strong double-digit revenue growth in three business segments reflecting the strength of our unique, diversified business model [Pemble, CEO]
Fitness: Revenue…increased 30%… Gross and operating margins were 60% and 32%…we launched…the Edge 550 and Edge 850 (with) new coaching plans and cycling metrics…; the Bounce 2 smartwatch for kids offering voice calling, messaging, and geofencing alerts; and the Venu 4 smartwatch with a… built-in flashlight.
Outdoor: Revenue from the outdoor segment decreased 5% in the third quarter…Gross and operating margins were 66% and 34%, respectively…we launched the Fenix 8 Pro series…with inReach satellite and cellular connectivity…we launched the Fenix 8 Pro – MicroLED, which is the first smartwatch to incorporate a high-resolution MicroLED…we launched…the GPSMAP H1 connected handheld, the Instinct Crossover hybrid smartwatch, the Descent S1 smart buoy and X30 large-format dive computer.
Looking at the various regional pictures, growth was steady at just over 10% YoY. EMEA’s growth of 13% is lower than that of the first half of the year.
Garmin’s cash flow strongly improved as its overall cash (and similar) position steadied, remaining at over 2 billion dollars.
Against Expectations
Good growth is one thing, but it only affects the share price if it differs from expectations. This quarter clearly differed, triggering a share price fall relative to the tech-heavy NASDAQ.
On the day Garmin released its financials, the NASDAQ… fell very slightly, but Garmin significantly underperformed with a further 8% fall, then a subsequent fall (in line with the market). The issue is the underperformance of the Outdoor division. While the overall results were impressive, management had previously steered analysts toward expecting growth that didn’t materialise; worse still, the growth that failed to happen was for Garmin’s flagship Fenix 8 Pro.
Take Out
Key Takeaways for Garmin’s Future
- Excellent Quarter, but… Q3 was strong and steady, but the underperformance of the flagship Fenix 8 Pro series is a cautionary sign for Garmin’s ultra-premium pricing strategy.
- Macro Tailwind: Trump’s apparent plan to weaken the dollar will likely translate into a slightly positive overall profitability effect for Garmin (higher $-reported sales outweighing higher $-reported costs).
- Demographics Favourable: The continued explosive growth of the Fitness division confirms the Gen Z trend is working in Garmin’s favour, serving growing youth running and cycling markets.
- Outlook: Barring disasters, Garmin’s immediate financial future remains positive. In the very short term, expect no new releases (2025) and expect Black Friday sales strategies in line with 2024.
Sources & Resources
explosive Garmin Q2 Earnings – significant Forerunner 970 contribution (2025)
https://test.kothea.com/2024/10/30/garmin-growth-surprises-the-market-q3-2024-results-are-in/
Small correction: “Garmin’s cash position weakened slightly” is incorrect. The cash position actually stayed the same – and improved by $87m when taking into account marketable securities:
Cash and cash equivalents $ 2,072,208 $ 2,079,468
Marketable securities 515,038 421,270
The table/exhibit you posted is not cash position (which is a balance sheet item) but rather for (free) cash _flow_ during the period. And even then, the decline in free cash flow is quite benign because it is mostly due to a significant (> $200m) net increase in inventories – no doubt connected to the new device launches and in order to avoid OOS situations, like noted for the FR970.
If you go to Garmin Forums and compare the comment sections of the 570 and 970, it’s staggering….either the 570 is perfect out of the box with no bugs whatsoever…or no one is buying it….I suppose the latter.
But it seems the the Sleep Index Band has been delivered to the early adopters, because the first complain are coming in…Did you get one? I wonder how much the band data will deviate from the watch data.
in the context of this artcile i dont know how garmin books its revenue
it could invoice trade buyers of Index as it ships bulk volumes
i dont plan to get one. but i might eventally. if it was designed for sport i would