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On Running is a premium athletic shoe and clothing company quickly gaining ground against Nike and Adidas. It’s founder-led with a culture that demands operational excellence and impactful, trend-setting innovation.
a. Demand
Please note that CHF = Swiss Francs.
ONON missed revenue estimates by 3.5%. This was an extremely noisy quarter for demand. Its lower-quality wholesale channel endured voluntary pullbacks while its higher-quality direct-to-consumer (DTC) channel killed it. Much more on this later in the piece.
- The proportion of e-commerce customers under the age of 24 rose significantly Q/Q.
- The proportion of overall customers under the age of 34 also rose Q/Q.
b. Profits
- Beat GPM estimate by 120 bps. They did not enjoy any tariff refunds this quarter (they’re coming). This was due to some freight help, strength in full-price sales and a shift to DTC sales.
- Missed EBITDA estimate by 4%.
- EBITDA rose by 30% Y/Y on a constant currency (CC) basis.
- GPM expanding Y/Y by 2 points more than EBITDA did is related mainly to marketing rising from 12% of revenue to 14%. They’re leaning into brand building and new country scaling to support growth.
- Met $0.35 EPS estimate.
c. Balance Sheet
- 1.21B CHF cash & equivalents.
- 1% Y/Y dilution.
- 31% Y/Y inventory growth.