[Management View]
Garmin reported consolidated revenue of $1.815 billion for Q2 2025, up 20% YoY, with double-digit sales growth across all segments. Gross margin expanded to 58.8%, and operating margin increased to 26%, resulting in operating income of $472 million, up 38% YoY. Pro forma EPS was $2.17, up 37% YoY. The acquisition of MyLabs, a leader in timing and performance analysis, was highlighted as a strategic move to enhance Garmin's ecosystem.

[Outlook]
Garmin raised its full-year revenue guidance to $7.1 billion (previously $6.85 billion) and pro forma EPS guidance to $8.00 (previously $7.80). Segment growth guidance was updated: Fitness raised to 25%, Outdoor maintained at 10%, Aviation raised to 7%, Marine raised to 5%, Auto OEM raised to 10%.

[Financial Performance]
Garmin achieved double-digit growth in all segments: Fitness revenue up 41%, Outdoor up 11%, Aviation up 14%, Marine up 10%, Auto OEM up 16%. Geographic revenue growth was strong: EMEA up 25%, Americas up 19%, APAC up 16%. Inventory increased to $1.82 billion, and free cash flow was $127 million, down $91 million YoY due to higher inventory levels.

[Q&A Highlights]
Question 1: Did channel fill impact the fitness segment's outperformance, and is there any pull forward of demand affecting the back half outlook?
Answer: Channel fill was not a significant factor, and there is no evidence of stockpiling. Retailers have credit limits that prevent exceeding set limits, ensuring well-managed channels.

Question 2: Why is operating profit guidance flat despite strong revenue and gross profit growth in the second half?
Answer: Operating expense assumptions include increases in R&D and SG&A due to headcount and infrastructure growth, foreign currency impacts, MyLabs acquisition expenses, performance-based compensation, and co-op advertising.

Question 3: Is Garmin entering a new higher revenue growth paradigm, especially with auto OEM becoming a tailwind?
Answer: Garmin sees opportunities in all segments and continues to innovate and create unique products. The wearable market is stable, and Garmin is gaining share with high levels of innovation and differentiation.

Question 4: How does Garmin view the elasticity of demand for its smart wearable products?
Answer: Garmin introduces new product lines with new features that command higher prices, rather than raising prices on existing products. Innovation drives demand, and Garmin promotes both new and existing products.

Question 5: What are the synergies and opportunities with the MyLabs acquisition?
Answer: MyLabs specializes in timing competitive events, and Garmin sees an opportunity to merge training and race day experiences dynamically and integratedly.

Question 6: What are Garmin's thoughts on smart wearables' role in health management and the potential for smart glasses?
Answer: Garmin is excited about wearables' role in health management and offers diverse products for different lifestyles and goals. The utility of smart glasses remains to be seen, and Garmin believes in the strong utility of wearables.

Question 7: What is driving the strength in the fitness category, and how sustainable is the growth in Europe?
Answer: Advanced wearables, particularly running products, drove fitness growth. Garmin is seeing stronger growth in new users. Europe’s outperformance is partly due to favorable FX impacts.

Question 8: What factors are driving growth in the marine segment, and what progress is being made on the new auto OEM program?
Answer: Stable demand and unique innovation drive marine growth. Garmin is validating production lines globally for the new auto OEM program, ensuring readiness for 2026.

Question 9: How is Garmin managing subscription momentum and working capital?
Answer: Subscription revenue is growing across all segments but has not reached the 10% disclosure threshold. Inventory and receivables increases align with strategies to meet demand and mitigate tariff impacts.

[Sentiment Analysis]
Analysts were positive and inquisitive, focusing on Garmin's strong performance, strategic acquisitions, and future growth potential. Management was confident and detailed in their responses, emphasizing innovation and strategic planning.

[Quarterly Comparison]
| Metric | Q2 2025 | Q2 2024 | YoY Change |
|-----------------------|---------------|---------------|--------------|
| Consolidated Revenue | $1.815 billion| $1.512 billion| +20% |
| Gross Margin | 58.8% | 57.3% | +150 bps |
| Operating Margin | 26% | 22.7% | +330 bps |
| Operating Income | $472 million | $342 million | +38% |
| Pro Forma EPS | $2.17 | $1.58 | +37% |
| Free Cash Flow | $127 million | $218 million | -41.7% |

[Risks and Concerns]
Potential risks include tariff impacts, foreign currency fluctuations, and inventory management challenges. The acquisition of MyLabs introduces integration risks and additional expenses.

[Final Takeaway]
Garmin delivered record financial performance in Q2 2025, driven by strong growth across all segments and regions. The strategic acquisition of MyLabs is expected to enhance Garmin's ecosystem and provide new growth opportunities. Management's confidence in raising full-year guidance reflects robust demand and successful execution of strategic initiatives. Investors should monitor potential risks related to tariffs, currency impacts, and inventory management.