Garmin Ltd. (GRMN) Income Statement

The 11.4% year-over-year growth in 2026Q2, while decelerating from the 20.4% in 2025Q2, still represents a robust pace, especially when compared to the 11.1% in 2025Q1. The sequential acceleration from 14.2% in 2026Q1 suggests sustained demand across Garmin's product segments. This growth appears organic, as no major acquisitions are indicated in the data, and it outpaces the broader hardware industry, where peers like Fossil and GoPro are contracting.

The 360 basis point year-over-year expansion in gross margin to 62.4% is notable, especially given the typical seasonality that might pressure margins. This improvement suggests Garmin is successfully shifting toward higher-margin products, possibly in the fitness and aviation segments, and has pricing power that peers like Sonos (43.7%) and GoPro (33.6%) lack. The consistency of gross margins above 57% over the past ten quarters indicates structural advantages in its hardware design and supply chain.

The operating leverage is evident: while revenue grew 11.4%, operating income grew at nearly three times that rate, driven by a 30.4% operating margin, up from 26.0% in 2025Q2. This suggests that Garmin's cost structure is scaling efficiently, with R&D and SG&A growing at a slower pace than gross profit. The company's ability to control overhead while investing in R&D (which grew only 9.8% year-over-year) indicates disciplined expense management, contributing to the margin expansion.

Garmin's cost structure is characterized by a significant investment in R&D, which at 15.2% of revenue in 2026Q2 is higher than the 14.9% in 2025Q2, indicating a commitment to product development. Meanwhile, SG&A as a percentage of revenue declined to 17.1% from 17.5% a year earlier, showing cost discipline. This balance between R&D and SG&A suggests that Garmin is prioritizing long-term innovation while maintaining operational efficiency, which is crucial in the competitive hardware market.