ONON Earnings Preview: Can it maintain momentum?
3min read On Holding (ONON) is scheduled to release its Q3 earnings on November 12 before the market opens, with FactSet consensus estimates pegging EPS at CHF 0.19 and revenue at CHF 618.20 million. Analysts are cautiously optimistic about ONON’s Q3 performance, with UBS projecting a slight beat on sales and adjusted EBITDA as the company’s topline momentum picked up through the quarter. Investors will be watching for any updates to ONON’s full-year sales guidance, especially any adjustments tied to foreign exchange rates, which could impact its FY24 revenue outlook. ONON’s consistent sales growth, despite temporary logistical challenges, has positioned it as a premium growth stock within the athletic footwear market.
Key metrics to watch include growth in ONON’s Direct-to-Consumer (DTC) and wholesale channels, gross and EBITDA margins, and any commentary on the Atlanta distribution center’s ongoing automation. Analysts expect DTC sales to accelerate due to improved logistics, while wholesale growth, which had surged earlier in the quarter, may see tempered expansion as ONON refocuses marketing closer to the Olympics. Analysts at Telsey and Piper note that ONON’s continued innovation, including new product launches like the Cloud X4 and Cloudnova 2, has boosted demand, which will be critical for sustaining momentum in both DTC and wholesale channels.
The market environment for ONON is favorable as demand for premium athletic wear remains robust across regions. In particular, growth in APAC—driven by China—continues to outpace other regions, reinforcing ONON’s global expansion strategy. Stifel’s recent visit to ONON’s Shanghai store highlighted strong brand momentum in China, supporting the company’s long-term plan to increase APAC’s revenue share. Meanwhile, collaborations with celebrities like Zendaya and high-visibility marketing around major sports events have significantly raised brand awareness, which is expected to continue boosting demand through 2024.
Analysts are generally positive on ONON’s growth outlook and have raised their price targets, with firms like Truist and TDCowen lifting estimates due to strong DTC trends and improved operational efficiencies at the Atlanta facility. Truist highlighted the operational improvements seen as the Atlanta distribution center progresses through its automation, noting that logistical delays experienced in Q2 appear to have eased. Analysts expect ONON’s steady expansion in high-margin DTC sales and reduced wholesale promotions to further strengthen its profitability.
On (ONON) posted mixed results for Q2, with EPS missing expectations slightly at CHF 0.14 (versus CHF 0.15 consensus) while revenue grew by 27.8% year-over-year to CHF 567.7 million, narrowly topping estimates. The earnings miss and a modestly lowered FY24 revenue outlook initially led to a drop in ONON’s stock, but shares quickly rebounded as investors saw the miss as a temporary setback rather than a trend. The company’s transition to an automated warehouse in Atlanta caused inventory and delivery disruptions, limiting ONON’s capacity to meet demand. This warehouse transition, though affecting short-term performance, is positioned as a critical step for scaling distribution capabilities in North America.
Despite the logistical hurdles, ONON demonstrated resilience across its regional markets, with Americas sales up 27.6%, EMEA up 21.8%, and APAC surging 73.7% thanks to strong momentum in China. The company maintained a robust gross margin at 59.9% and achieved a notable 45% year-over-year increase in adjusted EBITDA to CHF 90.8 million. Analysts at UBS and Truist remain bullish, raising price targets to $55 and $51, respectively, due to ONON's solid growth trajectory and the potential for continued gains in brand recognition, especially with initiatives like partnerships with Zendaya and heightened Olympic exposure. Analysts highlighted ONON’s ongoing commitment to innovation and brand-building as key drivers for its long-term growth.
Looking forward, ONON reaffirmed its FY24 guidance for 30% net sales growth on a constant currency basis, with expected gross margins around 60% and adjusted EBITDA margins of 16.0-16.5%. Management anticipates continued strong demand and aims to boost its higher-margin Direct-to-Consumer (DTC) channel while strategically expanding wholesale distribution. Analysts see this guidance as a sign of ONON’s strength despite current headwinds, with KeyB and Truist expressing confidence in its potential to leverage new launches, multi-channel retail strategies, and the Atlanta facility’s efficiency gains for sustained growth into Q3 and beyond. The environment remains favorable as ONON continues to capitalize on consumer demand for premium athletic wear, positioning itself as a leading global brand in a resilient sector.
Overall, ONON enters Q3 earnings with favorable growth dynamics and strong brand positioning. While foreign exchange volatility and potential logistical hiccups remain risks, ONON’s continued product innovation, expanded retail footprint, and targeted marketing campaigns are expected to sustain growth into Q4 and beyond. As analysts look for updates on FY24 sales guidance, ONON’s ability to balance rapid expansion with profitability goals will be critical, as the company works to solidify its place as a global leader in the premium athletic wear market.