Garmin Growth Continues – Q2.2024 results show stall in the Fenix group (Outdoor)
Garmin’s growth in its Fitness division keeps on delivering with a QonQ revenue growth of 28%. The outdoor division includes Fenix/Epix sales and shows a 2% decline, perhaps because many informed buyers now realise a Fenix 8 is about to hit the shelves.
Looking at regional growth, the Americas and EMEA both show double-digit growth. Interestingly, Garmin struggles to make headway in Asia.
The official company commentary perhaps doesn’t say too much that readers of this blog would be interested in.
Fitness:
Revenue from the fitness segment increased 28% in the second quarter primarily driven by growth in wearables.
Gross and operating margins were 57% and 25%, respectively, resulting in $108 million of operating income.
During the quarter, we launched the Edge® 1050 premium cycling computer with a vivid color touchscreen
display, a built-in speaker for audible feedback, and Garmin Pay contactless payments. …
Outdoor:
Revenue from the outdoor segment decreased 2% in the second quarter primarily due to declines in adventure
watches. Gross and operating margins were 65% and 31%, respectively, resulting in $136 million of operating
income. During the quarter, we launched the Approach® Z30 smart laser range finder with the Range Relay
feature, which sends distance measurements to a compatible Garmin smartwatch or the Garmin Golf™
smartphone app. We also launched our first cellular based dog tracking collar, Alpha® LTE. [Pemble, CEO]
Whilst Edge 1050 hasn’t started selling en-masse due to the normal delays in ramping up production, pre-orders and trade orders might have positively impacted Fitness in Q2. I don’t know the exact accounting policies Garmin uses for that.
The clear stand-out info is that Fenix 7 and Epix 2 sales are probably in decline. You could attribute that to too high a price at the products’ lifecycle stage, an ageing product, competitive pressures from Apple watch Ultra 2 or customer knowledge of Fenix 8 and Fenix E. Or you could attribute it to something else!
Share Price Growth
Over the past 5 days, Garmin’s share price has fallen by 1% against a growth in the NASDAQ of almost 1%. The market is NOT happy about this news hence the sharp drop from the high of over $180 (31 july) to the current price around $172. The drop coincided exactly with the announcement of Garmin’s quarterly figures.
Cash
Edit: Garmin’s cash position increases every quarter. It’s now $1.9bn and likely to hit $2bn next quarter. Maybe it’s time for them to blow it on a questionable acquisition like Peloton.
Take Out
Mixed results that the market doesn’t like.
I don’t think we can read too much into some of these figures until next quarter.
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Does it mean Instinct 3 is imminent ?
please use a consistent ID/name when making comments
It does not MEAN an Instinct 3 is imminent.
One may well be imminent. We know for sure that Fenix 8/E are due very soon.
man you sure love to cherry pick news to fit a narrative. outdoor adventure was down simply because they haven’t released new models in the quarter as you glossed over. as for stock price, well, the stock was $90 a share 9 months ago, so a 5 day hit is meaningless without context, but i’m sure you knew that
err. no. the hit came because of the quarterly financials. this post is about the quarterly financials
you say: “outdoor adventure was simply…” it really isn’t that simple. A new product might be annoucned in one quarter but not bump the sales figures until the next quarter. as I say in the article even then the production quantities might be initially limited. Counteracting all of that is precisely how garmin books trade orders and customer pre-orders as sales (I assume based on shipment but don’t know, when they take it from your credit card is different)
not sure what narrative you think I am fitting. I do similar narratives for each quarter’s results. The last few quarters have been very positive so I said as much at the time. A different narrative for different results.
how do you explain a 5% (ish) drop in the share price coinciding exactly with the release of the results? (there was no similar move in the NASDAQ)
Might be the Garmin firmware policy is one reason for their lackluster performance here? As an expat in Asia was burned with the FR745 due to the gimped regional firmware. Major bug fix firmwares are released 6-12 months after rest of the world. So frustrating to see the change lists and wait and wait and wait for it to be released. The firmware releases seem to stop, and watch not support as long as Europe … Now stuck with this firmware with Asian languages that i do not speak, and cannot switch to a European language that i do speak!
I dont think that any of the other manufacturers do this…
that’s not good
I would add that you could also attribute to pissing existing customers with forced connect design update and with firmware updates that are not finished.
Just find out that Olympic challenges doesn’t work well with old connect, have to upgrade, finish challenge and then downgrade again.