Garmin spent the first half of 2026 with a soft spot in the one segment that matters most to watch buyers. This morning it closed that hole.
The company reported third quarter results before the open, and the outdoor segment that houses the Fenix came in at $597.3 million, up 20% from the same quarter last year. That is the same segment that shrank 2% in the second quarter, and the reversal arrived in the first quarter that contains a full five weeks of Fenix 9 and Fenix 9 Pro sales.
Garmin doesn't break out watch units, so nobody can draw a straight line from this number to Fenix 9 sell-through. But the direction is unambiguous, and it answers the question we set up on Monday.
The headline numbers
Third quarter ended September 26, 2026:
- Revenue: $1.99 billion, up 12%
- Operating income: $611.6 million, up 34%, a company record
- Gross margin: 63.3%, up from 59.1%
- Operating margin: 30.8%, up from 25.8%
- Pro forma EPS: $2.76, up 39%
- GAAP EPS: $2.80
Wall Street was looking for about $2.38 per share on $1.98 billion, per estimates compiled by Zacks and Alphastreet ahead of the print. Revenue landed essentially at consensus. Earnings beat it by roughly 16%, which is the pattern Garmin has run all year.
Why the outdoor number is the story
Here is the shape of Garmin's 2026 before this morning. Run the nine month figures against the quarter and the first half comes out like this:
- Outdoor revenue in the first half of 2026 was $900.3 million, down about 3% from $928.9 million a year earlier.
- Fitness revenue in the same stretch was $1.30 billion, up about 32%.
So the adventure watch category was dragging while running and cycling watches were carrying the company. That is a strange look for a brand whose identity is built on the Fenix, and it is exactly the setup that made this quarter worth watching.
Outdoor's operating numbers now: 68% gross margin, 39% operating margin, $233 million in operating income. In dollar terms it is Garmin's second largest segment. In profit terms it is effectively tied with fitness, and the two together produced about $464 million of the company's $611.6 million in operating income. Two thirds of revenue, three quarters of the profit.
One honest caveat before anyone treats this as a pure watch story. The outdoor segment also includes Garmin's Drive GPS navigators, which were refreshed this quarter and which Garmin names in its own segment commentary alongside the Fenix launch. The company attributes outdoor growth primarily to "adventure watches," but it does not split the category, so some of the 20% belongs to dashboard hardware.
Fitness kept growing, just slower
The fitness segment posted $694.3 million, up 16%, with a 63% gross margin, 33% operating margin and $231 million in operating income.
That is a step down from the 32% growth it ran in the first half, which is what happens when you lap a huge prior year and when a chunk of the growth was already banked. It is still a very large number for a hardware business, and the segment now accounts for about 35% of total revenue.
Two product notes from the quarter. Garmin shipped the CIRQA Smart Band, its screenless wellness tracker, and refreshed the Edge cycling computers with the Edge 1060 and Edge Explore 3. The CIRQA band is the company's first real attempt at the Whoop and Fitbit Air category, and it landed in a segment already growing double digits, which gives it room to be additive rather than a replacement for watch sales.
Guidance went up, and the margin line is interesting
Garmin raised its full year 2026 outlook:
- Revenue: about $8.15 billion, up from $8.05 billion
- Pro forma EPS: about $10.80, up from $10.00
- Gross margin: 61.0%
- Operating margin: 29.0%
- Full year tax rate: 16.5%
A $100 million revenue raise on a business already running above $8 billion is a modest move, but the EPS raise is the bigger one, and it comes after a quarter where gross margin expanded 420 basis points.
Some of that margin is not repeatable at the same size. Garmin booked about $33 million in refunds of previously paid tariffs in the quarter, up from roughly $21 million in the second quarter. Strip the $33 million out and gross margin lands closer to 61.6%, which is still excellent, and still well above the 59.1% posted a year ago. The difference between those two numbers is what management thinks is durable.
What this means if you are shopping
The Fenix 9 line launched on August 25 priced from $999.99 to $1,399.99 across 34 SKUs, with the Pro models adding inReach messaging and an all-titanium case option. A quarter of 20% outdoor growth at a 39% operating margin is not the profile of a product that needs a discount in November.
Which points the other way for the previous generation. The Fenix 8 and Fenix 8 Pro are now two flagship cycles old, Garmin has a record operating margin to protect, and the weeks after Thanksgiving are when the older inventory usually moves. If you were waiting on the Fenix 9 itself, the honest read is that this print gives Garmin no reason to cut. If you were waiting on the Fenix 8 Pro, the holiday window is where the price finally moves.
Also worth keeping in view: the fourth quarter is carrying more new hardware than any quarter this year. The Enduro 4 at $899.99 shipped October 6, the MARQ Gen 3 collection arrived October 13, and both are being sold into a channel that already has a strong flagship. That is a good problem to have going into the holidays, and it is why the guidance raise was measured rather than aggressive.
What to listen for on the call
The conference call runs at 10:30 a.m. Eastern today, and three things are worth your attention:
- Any comment on Fenix 9 mix. Garmin has said the titanium and Pro variants are drawing interest. If management puts a number or a percentage on the premium end of the line, that tells you whether the $1,399.99 tier is real demand or aspirational pricing.
- Tariff exposure for the fourth quarter. Refunds helped twice in a row. The question is whether the underlying landed cost is now stable or whether Q4 gets another swing either direction.
- CIRQA. A screenless band inside a growing fitness segment is the most interesting open question in the lineup. Any sales characterization tells you whether Garmin intends to push further from the watch form factor or treat the band as a side project.
Bottom Line
Garmin's outdoor segment went from down 3% in the first half to up 20% in the quarter the Fenix 9 shipped, and the company raised its full year guidance again. That is about as clean a scorecard as a flagship launch can get.
The number to keep in your head is 39%, the outdoor operating margin. Garmin is selling expensive adventure watches into a category it just proved is growing again, and it is doing it at record consolidated margins. Nothing in this print suggests a price cut on the Fenix 9 this year. If you want one, wait for the spring refresh cycle. If you want a deal, the Fenix 8 line is the one to watch as December gets closer.
Numbers are from Garmin's third quarter 2026 results release, published October 28, 2026. Consensus figures are from analyst estimates compiled by Zacks and Alphastreet. At the time of writing no independent wire write-up of the quarter had been published, so every figure here traces to the company's own release.
