Garmin Ltd. (NYSE: GRMN) saw its shares plunge 11.97% in pre-market trading on Wednesday after the company reported first-quarter earnings that fell short of analyst expectations, despite posting better-than-expected revenue growth.

The GPS technology company reported adjusted earnings per share of $1.61 for Q1 2025, missing the consensus estimate of $1.67. This disappointing result came even as Garmin's quarterly revenue rose 11% year-over-year to $1.53 billion, surpassing analysts' projections of $1.50 billion. The earnings miss appears to have overshadowed the company's strong sales performance, leading to the sharp stock decline.

Adding to investors' concerns, Garmin's gross margin contracted to 57.6% in Q1 2025, down from 58.1% in the same period last year. This margin pressure, combined with the earnings shortfall, seems to have sparked worries about the company's profitability outlook. Despite the mixed results, Garmin maintained its full-year earnings per share guidance, suggesting management remains confident in the company's overall trajectory. However, the market's negative reaction indicates that investors may need more convincing about Garmin's ability to meet profit expectations in the face of potential margin challenges.