Good morning, and thank you for standing by. Welcome to the Garmin Ltd. Fourth Quarter 2023 Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one, one on your telephone. You will then hear an automated message advising you your hand is raised. To withdraw your question, press star one, one again. Please be advised that today's conference call is being recorded. I would now like to hand the conference call over to your speaker today, Teri Seck. Please go ahead. Good morning. We would like to welcome you to Garmin Limited's fourth quarter and fiscal year-end 2022 earnings call. Please note that the earnings, press release, and related slides are available at Garmin's Investor Relations site on the Internet at www.garmin.com/stock. An archive of the webcast and related transcript will also be available on our website. This earnings call includes projections and other forward-looking statements regarding Garmin Limited and its business. Any statements regarding our future financial position, revenues, segment growth rates, earnings, gross margins, operating margins, future dividends or share repurchases, market shares, product introductions, future demand for our products and plans and objectives are forward-looking statements. The forward-looking events and circumstances discussed in this earnings call may not occur and actual results could differ materially as a result of risk factors affecting Garmin. Information concerning these risk factors is contained in our Form 10-K filed with the Securities and Exchange Commission. There is significant uncertainty about the duration and impact of the COVID-19 pandemic. This means that results could change at any time, and any statement about the impact of COVID-19 on the company's business results and outlook is the best estimate based on the information available as of today's date. Presenting on behalf of Garmin Ltd. this morning are Cliff Pemble, President and Chief Executive Officer, and Doug Boessen, Chief Financial Officer and Treasurer. At this time, I would like to turn the call over to Cliff Pemble. Thank you, Teri, and good morning, everyone. As reported earlier today, consolidated fourth quarter revenue came in at $1.3 billion, which is down 6% from the prior year and consistent with trends we experienced for most of 2022. There are several factors that influenced our results, including the year-over-year strengthening of the U.S. dollar, macroeconomic and geopolitical concerns affecting Europe, and the performance of retailers who focused on inventory control. One bright spot is the performance of our direct sales channel, including garmin.com, which increased by strong double digits and accounted for greater than 10% of total net sales. While our priority is to serve the needs of third-party retail partners, our direct channels are an increasingly important pillar of our go-to-market strategy. Another bright spot is our gross margin performance, which improved 150 basis points over the prior year and exceeded expectations as we benefited from lower freight costs. Our performance in 2022 was solid despite facing a mix of persistent and emerging headwinds affecting the general business environment and consumer behaviors. We reported revenue of $4.86 billion, a 2% decline year-over-year. Revenue was negatively impacted by approximately $228 million due to the strengthening of the U.S. dollar relative to other currencies. Excluding this impact, revenue would have increased about 2% over the prior year. Our gross margin performance was strong at 57.7% for the year, and operating margin exceeded 21%. As announced earlier this morning, we've combined the product categories of the consumer auto segment with outdoor. I'll provide more context in a moment. Factors considered include the current size and scope of the consumer auto segment, as well as the expected growth of the auto OEM segment. We're cautiously optimistic as we turn our attention to 2023. We have a great lineup of new products and additional product launches are planned throughout the year. We anticipate consolidated revenue will increase approximately 3% to $5 billion for the year. In the first quarter, we expect that revenue will decline in line with recent trends as we compare against the strong product launches from the prior year. We expect a return to growth starting in the second quarter as we benefit from planned new product introductions. It's important to remember that we are not focused on quarter-by-quarter or category-by-category performance. Rather, we focus on delivering solid results year after year by creating highly differentiated products and leveraging our diversified business model. We're proposing a dividend of $2.92, consistent with the prior year, which will be considered by shareholders at the upcoming annual general meeting. Doug will discuss financial results in greater detail in a few minutes. First, I'll provide highlights on the performance and outlook for each business segment. Starting with Fitness, revenue decreased 28% for the year, with declines across all categories. Full year growth and operating margins were 50% and 9% respectively, resulting in operating income of $105 million. During the quarter, we launched our first LTE-connected kids smartwatch, available exclusively at garmin.com. Bounce offers two-way text and voice messaging, as well as real-time location tracking. Bounce also tracks activities and steps throughout the day, offers games, and allows parents to assign chores and give rewards. We continue to explore new verticals in health and wellness, recently received US FDA approval for a clinically validated ECG app for the Venu 2 Plus smartwatch. This app allows users to record their heart rhythms and check for signs of AFib. We believe this is an important step towards providing a full line of devices for managing a variety of health conditions. For 2023, we expect revenue to be down approximately 5% in the segment as it stabilizes and as we anticipate the benefit of new product introductions. Moving to Outdoor, full year revenue increased 17%, resulting in record revenue of nearly $1.5 billion for the year. We experienced growth across multiple product categories, led by strong demand for adventure watches. Full year growth and operating margins were 65% and 37% respectively, resulting in operating income of $556 million. During the quarter, we launched the second generation MARQ luxury smartwatch, featuring a bright AMOLED touchscreen display and premium Grade 5 titanium materials. We also expanded the Instinct product line with the new Crossover, a unique hybrid smartwatch that is fully analog and fully digital. Looking ahead, we expect the Outdoor segment to grow approximately 2%, which includes contributions from consumer auto. We expect the first quarter of 2023 to be challenging as we compare against the strong results from the prior year, which were driven by the launch of the flagship fēnix 7 series, the Instinct 2 series, and the all-new epix. We expect growth to resume starting in the second quarter, driven once again by new product introductions. Looking next at Aviation, full year revenue increased 11%, with contributions from both aftermarket and OEM categories. As supply chain constraints eased, 2022 was a record year for our Aviation segment, with revenue approaching $800 million and exceeding the levels achieved during the ADS-B mandate, which demonstrates our ability to deliver long-term growth in core product categories such as autopilots, GPS/Nav/Comm, display systems and services. Full year growth and operating margins were 72% and 27% respectively, resulting in operating income of $213 million. During the quarter, we announced that L3Harris Technologies has chosen the G3000 Tandem Integrated Flight Deck as part of the U.S. Special Operations Command Armed Overwatch program. The G3000 system will provide the latest communication, navigation, surveillance, and air traffic management capabilities for the Sky Warden aircraft. We received EASA approval for the G5000 Retrofit Integrated Flight Deck in the Cessna Citation Excel and the XLS. We also received FAA Supplemental Type Certificate for the GI 275 electronic flight instrument in the Dassault Falcon 7X business jet. These approvals expand the addressable market for integrated flight decks and standby instrumentation in business jets. The Aviation segment continues to benefit from strong demand for both aftermarket products and new aircraft equipped with integrated cockpit systems. We expect these trends to drive revenue growth of approximately 5% for the year. Turning to Marine, the segment delivered its tenth consecutive year of revenue growth, starting from about $200 million in 2012 and exceeding $900 million in 2022, which is a new record and represents a compounded annual growth rate of 15%, driven by both market growth and significant market share gains. For 2022, revenue increased 3%, with growth across multiple candidate categories led by strong demand for sonar systems. Full year growth and operating margins were 54% and 24% respectively, resulting in operating income of $215 million. During the quarter, we announced that Garmin Navionics+ is now preloaded in certain flagship GPSMAP chart plotters, combining the best-in-class charts from both Navionics and Garmin. Throughout the year, we received multiple accolades and awards, most recently the prestigious IBEX Innovation Award, the National Boating Industry Safety Award, and recognition as one of the most innovative marine companies by Soundings Trade Only. Looking forward, we anticipate revenue from the Marine segment will increase approximately 5% for the year as we leverage our strong market share position with typical Marine growth patterns. Moving to the Auto segment, full year revenue decreased 4% as growth in auto OEM was more than offset by declines in consumer auto categories. As mentioned earlier, we recently combined the product categories of consumer auto with outdoor. As many know, we were an early innovator in the consumer automotive market, and the hyper growth we experienced in the mid-2000s allowed us to invest in new opportunities and become the strong, highly diversified company that we are today. Looking back in 2008, revenue from the automobile segment exceeded $2.5 Billion and represented more than 70% of our consolidated revenue. Since that time, we've diversified our revenue base, and the consumer auto segment has evolved into a collection of important specialty categories, many of which target adventure and off-road vehicles that complement the strategic focus of the outdoor segment. Separately, we believe that the auto OEM segment has reached a critical inflection point as new programs move into production, driving significant growth over the next few years. We will report auto OEM as a standalone segment starting with fiscal year 2023. This change in segment organization provides an opportunity to discuss why we have chosen to participate in the auto OEM market. The automotive market is undergoing significant transformation as electrification gains momentum. While the industry has many capable suppliers, not all are equipped to meet the demand as the electronic and software content in vehicles rapidly evolves. Our vision is to be recognized as a leading global supplier of integrated electronic solutions to the auto industry. To achieve this vision, we intend to leverage our technology portfolio, our vertically integrated business model, and our global manufacturing footprint. Auto OEM revenue is generated from three product categories: domain controllers, infotainment units, and all other. Explaining a little bit about these categories, domain controllers are remote computing modules that control various systems throughout the vehicle. The BMW program consists primarily of domain controllers for infotainment, instrumentation, and rear seat entertainment. Infotainment units are self-contained systems that include a display and a user control system for functions such as navigation, audio, multimedia, and Internet-based apps. We currently supply infotainment units to automakers in Asia and Europe. The other category includes a collection of software, map database, cameras, wearables, and other revenue lines. Our current customer base includes some of the most respected global automakers, including BMW, Toyota, Yamaha, Honda, Daimler, Ford, and Geely. We are working with these and many other OEMs on future opportunities. During 2022, auto OEM revenue increased 11% to $284 million, with growth driven by contributions from new programs. Full year gross margin was 32%. We recorded an operating loss of $79 million, driven by ongoing investments to complete new programs. This operating loss was $29 million lower than the prior year and was better than expectations due to higher sales and a reduction in development expenses. Late last year, the BMW Group recognized Garmin with a Supplier Innovation Award for our work on the theater screen rear seat entertainment system offered on the flagship 7 Series automobile. This is a significant achievement considering the complexity of the program, the high expectations of our customer, and the fact that we're a relative newcomer to the industry. I'm also pleased to report that during 2022, we secured additional commitments from BMW that increased our total awarded volume by nearly 50% and expanded our supply footprint, which now encompasses the North American region, Europe, and China. Looking forward, we expect auto OEM revenue to increase 30% in 2023. We expect the first quarter to be approximately flat to the prior year, with significant growth starting in Q2, driven by the timing of new model launches. Many are wondering about our long-term outlook for the auto OEM segment and importantly, the pathway to profitability. While we do not provide guidance beyond the current year, we can share our vision for where the auto OEM segment goes from here. Our long-term projections consider programs currently awarded along with many other assumptions that may or may not materialize. Based only on the business already secured, our projections indicate that we could experience a compound annual growth rate of approximately 40% over the next few years, which, if achieved, would result in 2025 revenue of approximately $800 million. We anticipate much of this growth will be driven by domain controllers that carry a lower gross margin profile, but also generate significant volume leverage as we aim for profitability in 2024. We plan to build on this success with innovation that leads to new opportunities, such as the highly acclaimed Unified Cabin concept we showcased at the recent Consumer Electronics Show. In summary, 2023 marks the beginning of a new era for our auto OEM segment. The opportunity is significant, the path forward is clear, and we're focused on delivering growth and profits in the auto OEM segment. That concludes my remarks. Next, Doug will walk you through additional details on our financial results and our 2023 guidance. Doug? Thanks, Cliff. Good morning, everyone. I begin by reviewing our fourth quarter and full year financial results, provide comments on the balance sheet, cash flow statement, taxes, and 2023 guidance. Cost of revenue of over $1.3 billion for the fourth quarter, representing a 6% decrease year-over-year. Gross margin was 57%, 150 basis point increase from the prior quarter. Increase was primarily due to lower freight costs. Operating expense as a percent of sales was 36.5%, 370 basis point increase. Operating income was $267 million, a 15% year-over-year decrease. Operating margin was 20.5%, 210 basis point decrease from the prior year. Our GAAP EPS was $1.53. Our pro forma EPS was $1.35, a 13% decrease from the prior year pro forma EPS. Looking at the full year results, posted revenue of $4,860 billion, representing a 2% decrease year-over-year. Gross margin was 57.7%, 30 basis point decrease from the prior year. Operating expense as a percent of sales was 36.6%, 300 basis point increase. Operating income was $1,028 billion, a 16% decrease. Operating margin was 21.1%, 340 basis point decrease from the prior year. Our GAAP EPS was $5.04. Pro forma EPS was $5.13, a 12% decrease from the prior year pro forma EPS. Next, look at fourth quarter revenue by segment and geography. In the fourth quarter, growth in the aviation, marine, and outdoor segments was more than offset by declines in the fitness and auto segments, resulting in a 6% consolidated decline. By geography, the 4% growth in Americas was more than offset by 17% decline in EMEA and 9% decline in APAC, which was negatively impacted by foreign exchange rates during the quarter. For the full year 2022, consolidated revenue declined 2%, with growth in the outdoor, aviation, and marine segments being more than offset by declines in the fitness and auto segments. By geography, we achieved 3% growth in both Americas and APAC, but these increases were more than offset by a 12% decline in EMEA. Looking next, operating expenses. Fourth quarter operating expenses increased by $21 million, or 5%. Research and development increased approximately $11 million year-over-year, primarily due to engineering personnel costs. SG&A increased approximately $13 million compared to the prior quarter, primarily due to increases in personnel-related expenses, information technology costs. Advertising expense decreased approximately $3 million due to lower co-op advertising. A few highlights on the balance sheet, cash flow statement, dividends, and share purchases. We ended the quarter with cash market securities approximately $2.7 billion. Account receivable increased sequentially to $657 million due to seasonally strong sales in the fourth quarter and decreased year-over-year. Inventory increased year-over-year to approximately $1.5 billion. Year-over-year increase is due to executing our strategy to reduce freight costs through a higher mix of ocean versus air shipments, as well as implications of navigating the challenging supply chain environment in which we've been operating. As the business environment continues to evolve, we're working to optimize our inventory. As such, we anticipate our 2023 ending inventory balance to be relatively flat year-over-year, with expected declines in our consumer inventory offset by expected increases associated with the growth of our auto OEM business. During the fourth quarter 2022, we generated free cash flow of $309 million, a $260 million increase from the prior quarter. For the full year 2022, we generated free cash flow of approximately $544 million, a $161 million decrease from the prior year. This was primarily due to the higher use of cash for inventory and income taxes. For 2023, we expect free cash flow to be approximately $700 million, with approximately $275 million of capital expenditures. For 2023, we expect to continue to make investments in platforms for growth, including continued renovation of our facilities in Taiwan and Olathe and IT-related projects. As a result of the additional week in the fourth quarter 2022, we paid two quarterly dividends totaling approximately $280 million. We announced our plan to seek shareholder approval for an annual dividend of $2.92, or $0.73 per share per quarter, beginning with our June 2023 payment. Through 2022, we purchased $207 million of company stock and had approximately $93 million remaining as of year-end, the share purchase program, which was authorized through December 2023. For full year 2022, we report an effective tax rate of 8.6%. Pro forma effective tax rate was 7.9%, 240 basis point decrease from the prior year, primarily due to favorable income mix by tax jurisdiction, increase in U.S. tax deductions and credits. Fiscal year 2023 Pro forma effective tax rate is expected to be 8%, relatively flat year-over-year. Turning next to our full year guidance. We estimate revenue approximately $5 billion, an increase of approximately 3% over the prior year. We expect gross margin to be approximately 57.5%, which is relatively consistent to our full year 2022 gross margin. We expect an operating margin approximately 20.3%. In the full year, Pro forma effective tax rate is expected to be approximately 8%. This results in expected pro forma earnings per share approximately $5.15. This concludes our formal remarks. Corey, could you please open the line for Q&A? Thank you very much. At this time, we will conduct our question-and-answer session. As a reminder, to ask a question, you will need to press star one one on your telephone and wait for your name to be announced. To withdraw your question, press star one one again. Please stand by while we compile the Q&A roster. First up, we have Paul Chung with JPMorgan. Paul, your line is open. Hi. Thanks for taking my question. Just first up on outdoor, can you talk about, you know, some of the drivers that could provide some upside to your guidance here of 2%? I know you have some, you know, kind of tough comps in the first half. If you could kind of expand on, you know, price versus volume benefits, product mix would be helpful. Then, you know, outdoor finishes the year kind of exceeding 50% of operating profit as mix. Where do you see that mix trending this year? As we layer in, you know, consumer auto, I know this is small, but it seemed to keep margins kind of in the high 30% moving forward. I have a follow-up. Good morning, Paul. In terms of potential drivers for upside, you know, we're really not thinking about, you know, forecasting some of those. I would just point people back to the history in terms of the segment and our product introduction cadence around wearables in particular. We have a very active product roadmap for the year. We're factoring that in, but also recognizing that 2022 was a banner year for growth in those product lines. That's really what's affecting our thinking and that's what we use to create the guidance that we've offered. In terms of consumer auto, yes, those product lines are gonna continue to have the margin profiles that have historically been disclosed, although we won't be talking about that going forward anymore. I would say that as consumer auto products move to more specialty-driven applications, the margins will definitely come up as we have more unique products there. Thanks. Just on overall gross margins, you know, I would've thought see some benefits here from, you know, kind of lower component inflation, FX and freight. Can you quantify the impact in 2022 kind of related to those costs and expectations for 2023 related to that? Where could you kind of see some upside to initial guide of kind of flattish margins? Similar question on operating margins. It seems some recovery in fitness, maybe some pressure in marine. Auto is still probably a big drive, but where could you see some upside to flattish margin guide here? Thank you. Yeah. Yeah. I'll start maybe with a comment and then hand it over to Doug. I would say that, you know, the 57.5% is a very good initial margin guide, and it reflects a lot of benefits that we're seeing in the supply chain, particularly freight. It's offset also by the growing mix of auto OEM products. That's kind of the highest level view of how we came up with that 57.5%. Doug probably has additional comments that he can make on the details. Yeah. Yeah, Cliff is correct from the big picture. That's right. We are expecting, you know, some favorability in 2023 due to freight costs. You know, we've made a concerted effort to ship a larger percentage of our products on ocean versus air, as well as we're seeing the overall freight rates come down. We did see that come down throughout 2022, so there'll probably be a little more favorability, you know, in the first part than the latter part of the year. The other big factor impacting 2023 is the segment mix. As Cliff mentioned, you know, the auto OEM business does have a lower gross margin than average. you know, as that becomes a larger piece of our total, that will cause the gross margin to come down as such. As it relates to, you know, FX, you know, if you look at FX, Euro rate, you know, the average during 2022 was about 1.06. That's about where we are today. You know, it's really difficult to, you know, predict that FX, you know, in there from that standpoint, but that's just kind of a point of reference, you know, as it relates to the FX that in there. That kind of gives you a flavor. Maybe I'll give you a little bit also on operating expenses since you had mentioned things about, you know, the operating margin. As it relates to these are percentage of sales for the full year. When we think about 2023, we expect, you know, the total operating expenses probably to be up around 60 basis points or so. In looking at the different categories in OpEx, their first one, advertising, we'd expect, you know, that to probably be a little bit lower, maybe about 10 basis points or so. You know, that's primarily due to that segment mix, auto OEM's bigger piece, you know, the total, which doesn't spend that much on advertising. As you move into R&D, that'll probably be up, we estimated around 30 basis points or so. We'll continue to make, you know, investments in innovation on new products as such. SG&A, we anticipate up about 40 basis points. There, as you know, we're continuing to build, you know, the infrastructure, IT expenses to support that, the growth. Great. Thank you so much. Yep. Thank you. Please stand by for our next question. Remember, to ask a question, please press star one one. Our next question comes from George Wang at Barclays. George, your line is open. Hey, guys. Thanks for taking my questions. I have two. Firstly, can you talk about the kind of channel inventory, you know, does that sort of influence your view on the growth for kind of finished segments for this year? Yeah. Good morning, George. I think in terms of channel inventory, we view that as in a much healthier place as we enter 2023 compared to what it was a year ago at this time. Our sell-in was definitely far below levels of registrations that we saw for our products. We view that as a signal that the inventory in the channel came down quite a bit. In terms of our outlook, we're not thinking our guide really reflects any more stocking or destocking. We're looking at things as being pretty stable in that regard. We're simply trying to, you know, kind of moderate our outlook based on obviously the results that we had in 2022, combined with the new product introductions that we see going forward that should stabilize things. Those are great. My second question is just, maybe you can unpack a little more in terms of the areas or kind of product categories where you are taking shares. You know, in the prepared remarks, you talked about, you guys are taking share in the marine segment. Maybe you can give more color just, you know, what about in aviation, where you guys have a higher share as well. Just kind of for any, you know, particular areas you want to call out in terms of share gains. Yeah, I think, you know, as we look across our product lines, we have various categories that are super strong in their markets because of the unique differentiators that we offer compared to others. You know, you've already mentioned that marine and aviation are two major market areas where we're leaders in the respective areas. For example, in marine, we're the top marine electronics provider, consumer electronics provider to the industry by sales. In aviation, we're the market share leader in both aftermarket and integrated cockpit systems for new aircraft in the midsize business jet on down through piston aircraft. Very strong positions. It's due to again, highly differentiated, unique products. That's our focus for our investment and our activities going forward is continuing to create those kinds of products. If you look at one of the bigger categories, obviously, broadly is wearables. There's all kinds of categories that comprise that, anywhere from kids activity trackers on through to luxury smartwatches. It's hard to quantify on any one level where market share is because there's not a lot of data. What we do is try to focus on being unique and innovative and offer things that customers can't get anywhere else. Great. That's it for me. Thank you. Thank you very much. One moment for our next question. Our next question comes from David MacGregor of Longbow Research. David, your line's open. There we go. Sorry, I was on mute. I apologize for that. Good morning. Good morning. Just a couple of questions. First of all, on inventory, I know you had expected to be down about 10% in the fourth quarter, you ended up relatively flat. Was that just maybe a little stronger investment in the automotive ramp than you'd anticipated? Maybe you could just talk about what happened there? Yeah, really, primarily I'd probably say mix type of thing. We had made an estimate, you know, coming into the quarter about, you know, what type of a mix, you know, we'd have during that period of time. It may have been a little bit different. We had a little, maybe stronger sales of some of our newer products where we had to build some inventory. Wasn't necessarily relating to OEM, but some other consumer products that we had. You know, as we think about, you know, inventory for next year, you know, I mentioned, you know, we want to optimize that. You know, we've had significant increases in inventory the last couple years. Our goal for 2023 is to keep that relatively flat, you know, with our 2022 levels. That'll help our free cash flow also. Right. Right. Okay. Thank you for that. Then just, you mentioned consumer, I guess, as you think across the broader consumer exposure you have, I guess, what were your takeaways from the holiday season? Did you see any mix down within the various product lines? Yeah. I would say, David, that, you know, we have such a broad range of products that we're probably exposed across all levels of the strata of consumers. I would say that, in some of our more bell curve consumer-facing product categories, you know, in certain price points, that we did see more pressure in those than we did in the upper price point ranges, where customers are probably more resilient to the economic factors that are impacting everyone right now. There is some sign of that. Again, we have been focused more on products that have unique differentiators and, as such, higher price points that we can command in the market. Right. Right. That makes sense. A question on marine. I guess, you know, this was a pull forward category during the pandemic. How do orders look now heading into the season? I think one of the things we've been saying for a while now is that we've definitely noticed the marine market has returned to its more typical seasonality behaviors and growth patterns that were prevalent, you know, before the pandemic. I think I've been personally pleased to see the market really do kind of a soft landing at a very high level. We still see strong demand for products both at the OEM level as well as at the retail level, and especially in the really unique categories that we offer, the sonar systems that are very popular and command much higher price points. Okay. Thanks. Last question from me. Just on outdoor, there was some negative operating leverage in the fourth quarter. Can you just talk about what happened there? I think it's primarily due to, you know, our expenses there. We continue to make new investments, you know, in our R&D to really improve or to deliver innovation for our new products that are coming out. Got it. Thanks very much. Good luck on everything. Thank you. Thank you very much. One moment for our next question. Our next question comes from Ben Bollin at Cleveland Research Company. Ben, your line is open. Thanks. Good morning, everyone. Good morning. Cliff or Doug, I'm interested in your thoughts when you think about the forecast into 2023, across the wearable segments, most notably. Could you share with us how you think about refresh and the average duration that your existing users are holding onto devices? Maybe any thoughts on how that's changed as you approach 2023. I had a follow-up. Yeah. I think Ben, refresh really depends on the product line. You know, I think as you can appreciate, people that spend more for some of these devices tend to hold onto them longer. We, we probably see a longer refresh cycle on the more premium families such as fēnix than we do, for example, in the lower end wearables such as vīvoactive and Venu. I think the good news for our customer base and what we notice consistently in behaviors of our customers is that they tend to be active customers and more dedicated to the purpose of the device than what we've heard from others. We have a very strong active user base. They remain active, and it continues to grow, year after year. Okay. The last one from me. You made a comment about potentially longer term auto OEM CAGR, 40% CAGR through 2025 based on existing wins. Could you talk through some of the factors that would get you to this? Is this based on unit performance from the existing OEM partners? Is it a content angle? Is it, you know, dependent on what consumers select? What's the right way to think about how you get to that type of level? Thanks. Well, we created those projections based on the outlook provided to us by the OEMs. As we win these programs, the programs are scoped based on a certain estimate of volumes which may or may not materialize. Those volumes assume certain kinds of consumer uptake on various features. Again, lots of assumptions built into that. But it's a significant amount of volume that comprises these programs. Consequently, that's what drives the compounded growth rate that we talked about. Thank you. Thank you very much. Stand by for our next question. Remember to press star one, one to be put into the queue. Our next question comes from Erik Woodring of Morgan Stanley. Eric, your line is open. Thank you, Lynn. Good morning, guys. Thanks for taking the call. The question, I should say. You know, Cliff, it's very rare to see- The gap between fitness and outdoors, it's rare to see those results deviate from each other so widely over a 12-month span. You know, I realize some of that was impacted by the fēnix, the flagship fēnix launch. Looking back, outside of that, what were some of the biggest factors that drove this deviation? Kind of what are you doing as you look into 2023 and beyond to make sure that the fitness business can actually inflect back to growth at some point? Underscoring that question, can you just maybe talk about some competition and whether that's playing into that, or is this more of a market dynamic? I have a follow-up. Thanks. I think really good question. I would explain the gap of the differences between fitness and outdoor, driven by a couple of factors. One, you already mentioned fēnix. That was an outsized result in terms of a product category. That widened on one side. In fitness, however, what we saw are really two things. One is the indoor cycling area, the bike trainers and generally the cycling category has normalized after the pandemic. We had a significant headwind in the segment due to cycling products coming back to their normal sales levels, which we feel are still very healthy compared to 2019 levels, but reflect a change in priorities for customers as they do other things with activities. The other factor is the advanced wearables within the segment are the products that compete in the most active area of the market against the biggest players. The competitive factors there are certainly higher. The promotional considerations are more nuanced, consequently, there's definitely some market and market share considerations in that product line because they're the hardest market really to compete in terms of the overall space there. That's how I would frame those things. In terms of what we're doing going forward, you know, again, there's probably two factors for fitness I would say are important. One is that we see the cycling market stabilizing, that shouldn't be a factor going forward as we comp against those declines from last year. Secondarily, we have a very active product roadmap for the year, with some really exciting product releases. We always know we benefit from those new product introductions. Great. That's really helpful. Thank you, Cliff. I guess maybe a second one is, you know, in your prepared remarks, you just highlighted a number of what I think of as very interesting, you know, either approvals or wins in the aviation business during the quarter. You know, kind of similar to. I'm not asking you to do the same for these types of wins as you did with the auto OEM business. Can you just help us maybe understand, like, when and by how much some of these approvals or wins can actually translate into P&L contribution? Meaning, like, are they material to the model in 2023? Is this, you know, you get approval today and this becomes a driver in a few years? Any ways to just help us understand the importance of these wins in the context of the P&L would be helpful. Thank you. Yeah. I think generally our philosophy about when we make announcements about progress in with various approvals or new product launches, we first and foremost make sure that those announcements are material to the revenue that we'll start to realize right away. We hardly ever announce something that's years and years in advance. There's some minor exceptions to that. For the most part, every announcement we make is meaningful to the ongoing revenue stream. The aviation programs with the approval of the G5000 and the XLS and also the GI 275 is revenue we're starting to generate now. Okay, very helpful. Thank you so much. Thank you. Thank you. One moment for our next question, please. Our next question comes from Ivan Feinseth of Tigress Financial. Ivan, go ahead. Good morning. Hi, good morning. Thank you for taking my question. Congratulations on the great aviation OEM wins. Can you go into some product, new product introduction detail as far as kind of the categories and, you know, the types of products where we could see going forward this year? Good morning, Ivan. I can't share details on the specific products, as we mentioned, we have an active roadmap across all of our segments. This is our strategic focus is to drive revenue through new product introductions, we have a very active year planned. Last year was a great year too, which rebounded a lot from kind of the pandemic dip that we saw, you know, in some introductions. 2023 should also be a very great year for introductions. Also congratulations on the announcement of working with Qualcomm on the SOS and the satellite messaging program. Could we see some more expansion in the OEM automotive market that incorporates some of that and further work with Qualcomm and their Snapdragon Ride stack? Qualcomm is a significant partner of ours in the auto OEM segment for our platforms. The SOS activity with them is really focused more on mobile phones. They're somewhat different. We do see that as an interesting new avenue to utilize our inReach response center and leverage the capability we have in coordinating rescues and responses to remote concerns that customers have for a long time now. Thanks. One more question on the growth in, you know, online sales. What do you see as the driver of that? Are you just getting a lot of people who have joined the Garmin ecosystem buying more products and just going direct, or is it from some of the effectiveness of digital advertising that's driving traffic to your website? Yeah. I would say there's really two factors that have influenced the growth in our direct sales channel. One is the underlying subscription business that goes along with things like inReach and golf and many other categories that we have driving subscription revenue for the company. The other is really, frankly, the retail situation with our products out at third-party retailers. As I mentioned, you know, many of them were focused on inventory control, consequently, I think in some cases probably undershot the amount of inventory they needed to satisfy demand. We saw a big uptick in our garmin.com sales because people were looking for products and able to find it on our website. All right. Thank you. Wishing you a big 2023. Thank you. Thank you very much. At this time, I would now like to turn the call back to Teri Seck for closing remarks. Thank you, everyone. As always, Doug and I are available for callbacks throughout the day, and we hope you have a wonderful day. Bye. Thank you for your participation in today's conference. That does conclude the program. You may now