Garmin readjusted its full-year guidance on the strength of its outlook for outdoor and fitness segments, projecting overall revenue $2.9 billion.
Garmin's Forerunner 735XT began shipping in the second quarter. (Photo by Garmin.)
Garmin, Schaffhausen, Switzerland, grew year-over-year second quarter fitness segment revenue by 34 percent to $212.8 million, according to financials released on Wednesday.
Fitness segment net sales for 2016 as of June 25 were $355.2 million, marking a 22.6 percent increase from the $289.6 million reported during the same period in 2015.
“Fitness and outdoor achieved impressive revenue and profit growth driven by our strengthening position in the wearables market," Garmin CEO Cliff Pemble said in a statement. "I am pleased with our performance in the first half of 2016 which gives us confidence to raise our guidance for the full year.”
Garmin readjusted its full-year guidance on the strength of its outlook for outdoor and fitness segments, projecting overall revenue $2.9 billion. Garmin's previous revenue projection for 2016 was $2.82 million.
Garmin (NASDAQ:GRMN) shares rose more than 11 percent in midday trading to $51.79 per share.
The fitness segment growth was driven by wearable devices, Garmin noted in its earnings release. Gross margin in the fitness segment was consistent year-over-year in the second quarter at 56 percent and operating margin improved to 25 percent, up from 21 percent reported in 2015. Garmin began shipping the viviactive HR, vivofit 3, Forerunner 735XT, vivosmart HR+ and vivomove in the second quarter.
Garmin's reported revenue of $812 million across all of its segments in the second quarter, marking year-over-year quarterly growth of 5 percent. The fitness, outdoor, marine and aviation segments collectively grew 20 percent over the second quarter of 2015, while the company's auto segment declined 18 percent to $245 million.
Garmin's second-quarter growth in its fitness segment followed the year-over-year first quarter revenue increase of nine percent to $142 million reported in April.
In May, the International Data Corporation (IDC) ranked Garmin No. 4 on the top five worldwide wearables vendors for the first quarter of 2016 with 900,000 unit shipments, up from the 700,000 unit shipments in the first quarter 2015. Fitbit was No. 1 with 4.8 million shipments, Xiaomi was No. 2 with 3.7 million shipments and Apple was No. 3 with 1.5 million shipments.
Garmin finished ahead of the fifth-place tie between Samsung and BBK in the IDC's first quarter report. The IDC noted the strength of Garmin's wristbands and watches that appeal to a wide range of athletes, notably golfers, runners and fitness tracker enthusiasts.