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What were the key takeaways from On Holding's earnings call?

Did On Holding beat or miss consensus estimates last quarter?

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What were the key takeaways from On Holding’s earnings call?

- **Revenue Surge**: Q3 net sales up 34.5% YoY, with apparel sales tripling and Asia Pacific growing 109%.
- **Profit Leap**: Gross margin 65.7%, EBITDA 22.6%, driven by D2C expansion and cost efficiencies.
- **Innovation Lead**: LightSpray tech wins NYC Marathon; Cloudsurfer Max ranks top 5 in specialty stores.
- **Guidance Raised**: 2025 sales growth 34%, 2026 CAGR 30% (vs. prior 26%), fueled by 1M+ apparel units and 20+ new stores/year.
- **Sustainability**: Gross margin 62.5% target achievable despite tariffs, with 2026 EBITDA margin >18%.

**【CEO Summary Section】**
- **Revenue Growth**: Q3 net sales reached CHF 794.4 million, up 24.9% YoY (34.5% at constant currency), driven by premium strategy and innovation. Apparel sales surpassed 1 million units, contributing 8% of total revenue.
- **Regional Momentum**: Asia Pacific grew 109.2% YoY (constant currency), with standout performance in Japan, China, and South Korea. Flagship stores in Tokyo and Zurich achieved record sales.
- **Product Innovation**: Launch of Cloudsurfer Max and LightSpray technology in running shoes, with Q1 2026 Cloudrunner 3 and Cloudrunner Max set to redefine the category.
- **Brand Expansion**: Collaborations with Zendaya and Burna Boy expanded appeal to younger demographics, with kid’s line products selling out rapidly.

**【CFO Financial Commentary】**
- **Profitability**: Gross profit margin 65.7% (vs. 60.6% prior year), EBITDA margin 22.6% (vs. 18.9% prior year), driven by D2C growth (37.5% YoY) and operational efficiencies.
- **Cost Management**: Freight and tariff savings reduced SG&A by 200bps, with FX tailwinds adding 100bps to gross margin. Inventory turnover improved, with cash conversion cycle reduced.
- **Guidance Update**: 2025 net sales expected to grow 34% (vs. prior 31%), with gross margin 62.5% (vs. 60.5%-61% prior). 2026 CAGR target raised to 30% (from 26%), implying 23% 2026 growth.

**【Q&A Highlights】**
- **Apparel Growth**: 100.2% YoY growth, D2C-focused strategy with 20-25 new stores/year. Apparel EBITDA margin expected to exceed footwear.
- **Gross Margin Sustainability**: Structural improvements (D2C share, scale) offset tariffs, with 62.5% 2025 gross margin target achievable despite 2026 tariff headwinds.
- **Inventory Management**: Lean inventory (CHF 380.6M) supports full-price selling, with Q4 holiday campaign showing strong demand despite no discounts.
- **Long-Term Outlook**: 3-year CAGR 30% driven by product pipeline (LightSpray, Cloudrunner 3), retail expansion, and brand awareness (75% of target market unaware of On).

On Holding AG (ONON) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

Selling and Marketing Expenses

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Research and Development Expenses

Loss on Bad Debts

Loss on Impairment of Other Assets

Loss on Disposal of Assets

Other Operating Expenses

Operating Income

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Income (Loss) from Affiliates

Income (Loss) from Associates

Income (Loss) from Joint ventures

Gain (Loss) on Other Investment

Gain (Loss) on Change in Fair Value

Gain (Loss) on Foreign Currency Exchange

Other Non-Operating Income (Loss)

Net Interest Expense

Interest Expense

Interest Income

Pretax Income From Continuing Operations

Income Tax Expense

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Net Income from Continuing Operations

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Other Items Before Net Income

Net Income

Net Income Attributable to Minority Interests

Net Income Attributable to Owners of the Company

Preferred Stock Dividends

Other Adjustments

Net Income Attributable to Common Stockholders

Other Comprehensive Income

Total Comprehensive Income

Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

Basic EPS from Continuing Operations

Basic EPS from Discontinued Operations

Diluted EPS

Diluted EPS from Continuing Operations

Diluted EPS from Discontinued Operations

ONON

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