Table of Contents
1. On Holding (ONON) – Earnings Review
ONON is a premium athletic shoe and clothing company quickly gaining ground against Nike and Adidas. They have several popular running shoe products, with 8 of them contributing at least 5% of overall revenue. This is not a one-trick pony. In terms of sports, they’re popular for runners and in tennis, with expansion into more activities going well. It’s founder-led, with a focus on operational excellence and creating the next category trends through impactful, focused innovation – like LightSpray. As a reminder, LightSpray is On Running’s new automated manufacturing technique. It uses robotic arms to (as the name indicates) spray a light material right onto the sole of the shoe to form a single-piece, laceless model. Impressively, it takes a robot 3 minutes to make a shoe and is comparatively quite cheap. That combination should be fantastic for On’s long-term margin ceiling.
a. Key Points
Strong quarter for rising brand awareness and market share.
Demand was healthy across all regions.
LightSpray is expected to scale in 2026.
2026 should be another year of fast growth with strong margins.
b. Demand
Beat revenue estimates by 2.2%.
Wholesale revenue beat estimates by 6.5%.
Direct-to-consumer (DTC) revenue missed estimates by 1%.
By geography, Americas revenue beat by 1%, Europe, Middle East & Africa (EMEA) revenue beat by 6% and Asia-Pacific (APAC) revenue beat by 4%.
Revenue from shoes beat CHF 667M estimates by 3%; revenue from apparel missed CHF 47M estimates by CHF 2M; revenue from accessories missed CHF13M estimates by CHF 2M.
2025 sales from accessories and apparel rose from 5.1% of revenue to 7.0% Y/Y. Good progress.
Good to see year-over-year constant currency (CC) growth comps get seven points harder sequentially, while growth only slowed by four points sequentially.
For the full year, CC revenue growth accelerated from 33.2% to 35.6%.
Growth within their 15-35 year-old demographic was faster than any other.
There is no single country or two to call out as a standout. Why? Because every region for the company was strong. From China, where in-store holiday traffic doubled Y/Y... to every part of Europe... to Latin America, North America, and everywhere else... this brand is rocking.
c. Profits & Margins
Beat 62.7% GPM estimates by 120 basis points (bps; 1 basis point = 0.01%).
Beat EBITDA estimates by 13.4%.
Selling, general, and administrative expenses rose by 21.3% Y/Y to modestly trail revenue growth. While the company did enjoy some leverage here, that's not currently the main focus. They remain in growth mode and are motivated to plow operating profit back into the business to support innovation, brand awareness, and scaling. Margins could easily be expanding even more quickly if they wanted them to be.
Beat CHF 0.21 EPS estimates by CHF 0.04.
EPS fell from CHF 0.33 to CHF 0.25 Y/Y. This metric is heavily influenced by volatile foreign exchange (FX) movements. This quarter, that line item lowered net income by CHF 13M vs. a CHF 38M benefit last year.
GPM continues to benefit from this company's strict approach to full-price sales, ongoing supply chain, operational efficiencies, and healthy demand. Additionally, while foreign exchange is currently slowing down revenue quite a bit, the net impact on GPM is actually positive, and that's modestly amplifying the leverage we're currently seeing.
The company is already well beyond the 2026 targets it set at its 2023 investor day, which called for a 60%+ GPM and an 18%+ EBITDA margin.
d. Balance Sheet
CHF 1.02B cash & equivalents.
Net working capital grew 14.3% to CHF 570.3 million.
Inventory was roughly flat Y/Y.
They are very comfortable with inventory quality & quantity. The company told investors a lot of it includes highly anticipated product launches coming in 2026 that they're confident will rapidly sell out. They built up inventory ahead of these debuts to make sure they could take advantage of the excitement.
No debt.
1.6% Y/Y dilution.
Capital expenditures were 3.8% of sales vs. 3.3% Y/Y in Q4. The increase was to support store expansion, supply chain optimizations, and their roadmap.
e. Guidance & Valuation
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