Garmin is delivering improved versions of its Virb action camera in the second quarter, with enhanced mobile applications, to help counter the competition from GoPro. Introduced last year, Garmin's Virb has failed to make a significant dent in the market until now, helping to depress its sales in the outdoor segment by 10 percent to €75.9 million in the first quarter of this year.
By contrast, the bigger fitness segment enjoyed a 30.6 percent sales increase in the quarter to $131.0 million, with strong contribution from its activity trackers, its recently launched Forerunner 920XT watch and cycling products. Following higher R&D investments, which reached 18.1 percent of revenues, Garmin is introducing new products in the category including two pedal-based power meters, the Vector 2 and 25.
Gross margins remained strong at 66.2 percent of sales in outdoor and 63.4 percent in fitness. However, higher R&D and marketing expenses, coupled with lower progress in the marine segment, led to a 43.0 percent drop in net income to $66.8 million in the quarter on 0.4 percent higher total revenues of $585.9 million.