On Announces Fourth Quarter and Full Year Results, and The Filing of Its Annual Report on Form 20-F for 2022
ZURICH, Switzerland, March 21, 2023 - On Holding AG (NYSE: ONON) (“On,” “On Holding AG,” the “Company,” “we,” “our,” “ours,” or “us”) today announced its financial results for the fourth quarter and full year, and that it has filed its annual report on Form 20-F (the "Form 20-F") for the year ended December 31, 2022, with the U.S. Securities and Exchange Commission (the "SEC").
- On achieves strong full-year results in 2022, reaching net sales of CHF 1,222.1 million, surpassing the CHF 1 billion mark for the first time in history and growing by 68.7% year-over-year. The company reports a gross profit margin of 56.0%, an adjusted EBITDA margin of 13.5%, and net income of CHF 57.7 million, showcasing On's commitment to managing the company for long-term, sustainable growth and profitability.
- On reports fourth quarter net sales of CHF 366.8 million, growing by 91.9% year-over-year, driven by an exceptional underlying full-price demand throughout the holiday season across regions and channels.
- On's gross profit margin in Q4 2022 reached 58.5%, continuing the sequential improvement over the 2022 quarters and reflecting a normalization of operations to return to sea freight as the main mode of shipment.
- The ongoing exceptional demand for On's products, the strong product pipeline and multi-channel success gives the company confidence for achieving strong results in 2023. On the back of this, On anticipates reaching net sales of at least CHF 1.7 billion, gross profit margin of 58.5% and an adjusted EBITDA margin of 15.0% for the full year 2023.
- On continues to drive run culture with the launch of the global event series "On Track Nights", the unveiling of innovative technologies such as the next phase of CloudTec®, CloudTec Phase™, and the signing of reigning Olympic Champion triathlete Kristian Blummenfelt. In addition, On is taking its head-to-toe innovations to the tennis courts and has announced the signing of top-ranked tennis professionals, including women's number one ranked player, Iga Świątek.
Martin Hoffmann, Co-CEO and CFO of On, said: “After a great year and exceptionally strong fourth quarter well beyond our own expectations, we are heading into 2023 with a lot of momentum and in a position of strength. After navigating through a challenging 2022, including supply shortages, tight production capacities and disruption of global trade lanes, we are looking forward to a great year with largely normalized operations. We have made significant progress in many areas in the 18 months since our IPO, which will set us up for ongoing success and market share gains. The rollout of our new website, the purchase of the on.com domain, our latest owned retail store in London and the next phase of CloudTec®, CloudTec Phase™, are only a selection of recent drivers that excite us about the opportunities which lie ahead. With the Paris Olympics in 2024 as an important medium term target, we will continue to invest in both our athlete team as well as pinnacle products at the forefront of innovation."
David Allemann, Co-Founder and Executive Co-Chairman of On, said: “We have often spoken about our commitment to drive growth while at the same time driving profitability. Finishing our first full year as a public company with net sales exceeding CHF 1.2 billion and a net income of CHF 57.7 million is a huge testament to the incredible work that our team continues to do every day. We are thrilled to see how our continued innovations are supporting the expansion into new consumer groups and are building our community of fans and incredible athletes. Running will continue to be our focus in 2023, but we are also extremely excited to announce On is increasing its presence on the tennis court too. We are honored that the women's world number one ranked player, Iga Świątek, and America's newest men's sensation, Ben Shelton, are joining the On team on this journey."
Key Financial Highlights
Key highlights for the three-month period ended December 31, 2022 compared to the three-month period ended December 31, 2021, included:
- net sales increased 91.9% to CHF 366.8 million;
- net sales through the direct-to-consumer ("DTC") sales channel increased 76.4% to CHF 149.4 million;
- net sales through the wholesale sales channel increased 104.3% to CHF 217.3 million;
- net sales in North America, Europe, Asia-Pacific and Rest of World increased 81.5% to CHF 242.1 million, 80.6% to CHF 79.6 million, 103.8% to CHF 21.6 million, and 680.5% to CHF 23.4 million, respectively;
- net sales from shoes, apparel and accessories increased 96.7% to CHF 353.4 million, 15.4% to CHF 11.5 million and 30.9% to CHF 1.8 million;
- gross profit increased 91.9% to CHF 214.6 million;
- gross margin remained unchanged at 58.5%;
- net (loss) changed to CHF (26.4) million from CHF (187.0) million;
- net (loss) margin changed to (7.2)% from (97.8)%;
- basic EPS Class A (CHF) increased to (0.60) from (0.08);
- diluted EPS Class A (CHF) increased to (0.60) from (0.08);
- adjusted EBITDA increased 451.7% to CHF 61.8 million;
- adjusted EBITDA margin increased to 16.8% from 5.9%;
- adjusted net income increased to CHF 7.5 million from CHF (13.8) million;
- adjusted basic EPS Class A (CHF) increased to 0.02 from (0.04); and
adjusted diluted EPS Class A (CHF) increased to 0.02 from (0.04).
Key highlights for fiscal year 2022 compared to fiscal year 2021 included:
- net sales increased 68.7% to CHF 1,222.1 million;
- net sales through the DTC sales channel increased 61.4% to CHF 445.1 million;
- net sales through the wholesale sales channel increased 73.1% to CHF 777.0 million;
- net sales in North America, Europe, Asia-Pacific and Rest of World increased 80.3% to CHF 738.5, 36.1% to CHF 354.3 million, 87.7% to CHF 80.2 million and 310.5% to CHF 49.1 million, respectively;
- net sales from shoes increased 70.9% to CHF 1,167.5 million, net sales from apparel increased 30.2% to CHF 47.3 million and net sales from accessories increased 48.3% to CHF 7.4 million;
- gross profit increased 59.2% to CHF 684.9 million;
- gross profit margin decreased to 56.0% from 59.4%;
- net income increased to CHF 57.7 million from a net (loss) of CHF (170.2) million;
- net income / (loss) margin changed to 4.7% from (23.5)%;
- basic EPS Class A (CHF) increased to 0.18 from (0.59);
- diluted EPS Class A (CHF) increased to 0.18 from (0.59);
- adjusted EBITDA increased 71.4% to CHF 165.3 million;
- adjusted EBITDA margin increased to 13.5% from 13.3%;
- adjusted net income increased to CHF 90.6 million from CHF 31.1 million;
- adjusted basic EPS Class A (CHF) increased to 0.29 from 0.11; and
adjusted diluted EPS Class A (CHF) increased to 0.28 from 0.11.
Key balance sheet highlights as of December 31, 2022 compared to December 31, 2021 included:
- cash and cash equivalents decreased 43.2% to CHF 371.0 million; and
- net working capital was CHF 459.2 million which reflected an increase of 144.9%.
Outlook
On finished the 2022 financial year on a high note and with a further record net sales quarter. The exceptional ongoing momentum across all regions, channels and product groups, combined with a normalization of product supply and significantly improved inventory position versus twelve months ago, has set On up to hit the ground running in 2023. Compared to a supply constrained first quarter of 2022, On expects a net sales growth rate of 61% in the first quarter of 2023 versus the prior year period.
In line with On's mission and strategic focus to build a brand that is set up for the long-term by emphasizing controlled and durable growth, On expects to reach net sales of at least CHF 1.7 billion for the full year 2023. This represents a year-over-year growth rate of 39%, which takes into account approximately 300 basis points of the current foreign exchange headwinds and therefore reflects a currency-neutral growth rate of 42%.
As a result of the normalized supply chain environment, On currently does not expect exceptional air freight usage in 2023. Together with a strong inflow of recent products, which will enable a continued high share of full price sell-through, On foresees the continuation of the gross profit margin expansion towards the stated mid-term target of 60%. Considering current FX rates, On currently anticipates a full year 2023 gross profit margin of 58.5%. Driven by ongoing scale gains in SG&A expenses, somewhat offset by an intended re-acceleration of marketing expenses, On expects its adjusted EBITDA margin for the full year 2023 to increase to 15%.
Other than with respect to IFRS net-sales and gross profit margin, On only provides guidance on a non-IFRS basis. The Company does not provide a reconciliation of forward-looking adjusted EBITDA to IFRS net income due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation. As a result, we are not able to forecast with reasonable certainty all deductions needed in order to provide a reconciliation to net income. The above outlook is based on current market conditions and reflects the Company’s current and preliminary estimates of market and operating conditions and customer demand, which are all subject to change. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of risks and uncertainties, including those stated below and in our filings with the SEC.
High-res images available for download here.
Conference Call Information
A conference call is scheduled for March 21, 2023, at 8 a.m. US Eastern time (1 p.m. Central European Time). Those interested in participating in the call are invited to dial the following numbers:
United States: +1-561-771-1427
United Kingdom: +44-16-1250-8206
Switzerland: +41-91-261-1447
Germany: +49-69-244-37-186
China: 108-001-401-785 (Toll Free)
No access code necessary.
Additionally, a live webcast of the conference call will be available on the Company's investor relations website and under the following Link. Following the conclusion of the call, a replay of the conference call will be available on the Company's website.
About On
On was born in the Swiss Alps with one goal: to revolutionize the sensation of running by empowering all to run on clouds. Thirteen years after market launch, On delivers industry-disrupting innovation in premium footwear, apparel, and accessories for high-performance running, outdoor, and all-day activities. Fueled by customer recommendation, On’s award-winning CloudTec® innovation, purposeful design, and groundbreaking strides in sportswear’s circular economy have attracted a fast-growing global fan base — inspiring humans to explore, discover and dream on.
On is present in more than 60 countries globally and engages with a digital community on www.on.com.