Garmin Q3.2020 Fitness/Outdoors Revenues UP

This is getting boring. Another quarter ends. And Garmin posts yet another quarter of growth.

Official Garmin revenue figures for the quarter have been published and show very strong growth in the FITNESS and OUTDOOR segments of Garmin’s business despite CV19. Interestingly FENIX sales are reported in the OUTDOOR segment and that didn’t perform so well LAST quarter but THIS quarter DOES include sales from the release of the Fenix SOLAR models which are partly responsible for the goos revenues.

In the commentary that was released alongside the figures, Garmin also notes the cycling business is a lower margin which definitely includes the impact of sales of TACX products (lower margins) but perhaps also there is pressure on Edge unit prices?

“Fitness:

“Revenue from the fitness segment grew 35% in the third quarter driven by strong demand for our advanced wearables and cycling products. Gross margin and operating margin were 54% and 27%, respectively, resulting in 75% operating income growth. We launched the new Forerunner® 745, adding daily suggested workouts helping competitors reach their goals, and the Garmin Clipboard^™ app that offers an integrated solution for coaches to manage team training and performance. We also launched the Venu® Sq, an entry-level smart watch with GPS capability that combines daily style with industry-leading health monitoring.

“Outdoor:

“Revenue from the outdoor segment grew 30% in the third quarter across all categories led by strong demand for our adventure watches. Gross margin and operating margin were 67% and 44%, respectively, resulting in 40% operating income growth.”

As the notes above suggest, we’ve more to see from the sales that arise from the release of Venu SQ and the FR 745.

Also interesting is that the Venu SQ is formally accepted by Garmin as an entry-level product, clearly distinguishing it from the earlier high-end Venu.

Guidance for the FULL year predicts growth for Garmin’s outdoor and fitness products. So they’re hoping for a good Christmas. Maybe the 745 and VenuSQ won’t do as well as might be hoped? Let’s see, it could go either way as there has been a lot of negativity around the 745 that I’ve seen even though it’s a good product.

From a market perspective, the Results have gone down VERY WELL. The share price is static but this is in light of a 3.7% fall in the NASDAQ at the same time ie Garmin is out-performing the market.

Source: Garmin, Spotify