On Reports First Quarter 2024 Results
ZURICH, Switzerland, May 14, 2024 - On Holding AG (NYSE: ONON) (“On,” “On Holding AG,” the “Company,” “we,” “our,” “ours,” or “us”), has announced its financial results for the first quarter ended March 31, 2024.
- On kicks off the financial year 2024 with record net sales, surpassing CHF 500 million in a single quarter for the first time in its history. On's total net sales reached CHF 508.2 million, a growth of 20.9% year-over-year and by 29.2% on a constant currency basis. This achievement is led by exceptionally strong demand and momentum in On's direct-to-consumer ("DTC") channel, with DTC net sales growing in the first quarter by 39.0% year-over-year and by 48.7% on a constant currency basis.
- The significant increase in DTC net sales, which now make up 37.5% of On’s total net sales, and efficient inventory management support On's further expansion of its premium gross profit margin to 59.7%. This is an increase from 58.3% in the previous year and is close to On's mid-term goal of exceeding 60%.
- In line with On's goal of achieving substantial growth and continuous profitability expansion, the increased gross profit margin has resulted in a record high quarterly net income and significant adjusted EBITDA expansion, reaching CHF 91.4 million and CHF 77.4 million respectively.
- The continued high demand for the On brand provides further confidence in the stated goals for 2024 and beyond. On reiterates its full year expectation of at least 30% growth in net sales on a constant currency basis, which translates to reported net sales of at least CHF 2.29 billion at current spot rates. On further continues to expect a gross profit margin of around 60% and an adjusted EBITDA margin in the range of 16.0 - 16.5% for the full year 2024.
- Supported by On athlete successes such as Hellen Obiri's second consecutive win at the marathon in Boston, On's increasing performance credibility continues to lead to significant market share gains with runners around the globe. At the same time, initial launches in newer verticals such as Tennis and Training are expanding On's addressable market on its mission to be the most premium global sportswear brand.
Martin Hoffmann, Co-CEO and CFO of On, said: “The first quarter was a very strong start to the year and a further step in the execution of our long-term strategy to be the most premium global sportswear brand. We are thrilled to have exceeded our expectations and surpassed the half-billion net sales mark in a single quarter. This serves as a validation of the strong demand we have experienced across all channels, regions, and product categories. Notably, we see the strength in our DTC channel as a clear marker of the ongoing strong brand momentum. The significantly increased DTC share has also allowed us to reach a very strong gross profit margin in the first quarter, close to the mid-term target we laid out a couple of months ago. Looking ahead, we're extremely excited for the months to come, filled with groundbreaking innovations, big partnerships, and the opportunity to have a notable impact in Paris this summer.”
Caspar Coppetti, Co-Founder and Executive Co-Chairman of On, said: “We are starting 2024 with very high confidence and a whole lot of excitement, achieving record net sales and profitability in the first quarter. Hellen Obiri's win at the marathon in Boston highlights our team's relentless dedication to delivering cutting-edge and sustainable innovations to athletes and consumers alike. These are the achievements that strengthen On's performance credibility, and they continue to fuel our increasing market share at key running routes around the globe. We are eagerly looking ahead to the remainder of the year with many more athlete success stories to come, as well as being laser-focused on the premium execution of our strategic priorities."
Key Financial Highlights
Key highlights for the three-month period ended March 31, 2024 compared to the three-month period ended March 31, 2023 include:
- net sales increased by 20.9% to CHF 508.2 million, or by 29.2% on a constant currency basis;
- net sales through the direct-to-consumer (“DTC”) sales channel increased by 39.0% to CHF 190.5 million, or by 48.7% on constant currency basis;
- net sales through the wholesale sales channel increased by 12.2% to CHF 317.7 million, or by 19.8% on constant currency basis;
- net sales in Europe, Middle East and Africa (“EMEA”), Americas and Asia-Pacific increased by 6.1% to CHF 126.2 million, 22.0% to CHF 329.6 million and 68.6% to CHF 52.4 million, respectively;
- net sales in EMEA, Americas and Asia-Pacific increased by 10.4%, 30.4% and 90.7% on a constant currency basis, respectively;
- net sales from shoes, apparel and accessories increased by 21.0% to CHF 484.7 million, 16.7% to CHF 19.7 million and 36.8% to CHF 3.8 million, respectively;
- net sales from shoes, apparel and accessories increased by 29.3%, 24.9%, 42.9% on a constant currency basis, respectively;
- gross profit increased by 23.9% to CHF 303.3 million from CHF 244.9 million;
- gross profit margin increased to 59.7% from 58.3%;
- net income increased by 106.0% to CHF 91.4 million from CHF 44.4 million;
- net income margin increased to 18.0% from 10.6%;
- basic earnings per share (“EPS”) Class A (CHF) increased to 0.28 from 0.14;
- diluted EPS Class A (CHF) increased to 0.28 from 0.14;
- adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") increased by 27.0% to CHF 77.4 million from CHF 61.0 million;
- adjusted EBITDA margin increased to 15.2% from 14.5%;
- adjusted net income increased to CHF 106.5 million from CHF 48.8 million;
- adjusted basic EPS Class A (CHF) increased to 0.33 from 0.15; and
- adjusted diluted EPS Class A (CHF) increased to 0.33 from 0.15.
Key highlights as of March 31, 2024 compared to December 31, 2023 included:
- cash and cash equivalents increased by 18.2% to CHF 584.6 million from CHF 494.6 million; and
- net working capital was CHF 562.9 million as of March 31, 2024, which reflects an increase of 13.5% compared to December 31, 2023.
Adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted basic EPS, adjusted diluted EPS, net working capital and net sales on a constant currency basis are non-IFRS measures used by us to evaluate our performance. Furthermore, we believe these non-IFRS measures enhance investors' understanding of our financial and operating performance from period to period because they enhance the comparability of results between each period, help identify trends in operating results and provide additional insight and transparency on how management evaluates the business. Adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted basic EPS, adjusted diluted EPS, net working capital and net sales on a constant currency basis should not be considered in isolation or as a substitute for other financial measures calculated and presented in accordance with IFRS. For a detailed description and a reconciliation to the nearest IFRS measure, see the section below titled “Non-IFRS Measures.”
Outlook
On has experienced continued strong demand across channels, regions and product categories in the first months of its third full financial year as a public company. Delivering a further record quarter, On has for the first time surpassed CHF 500 million in net sales in a single quarter.
On continues on its Dream On strategy and looks to further increase the global awareness for the On brand, and build even closer connections with existing fans and new audiences globally through the power of a seamless omni-channel experience. Significant brand moments and exciting product launches in the coming months are expected to pave the way for the next growth phase on On's vision to be the most premium global sportswear brand.
The ongoing strong brand momentum provides On with confidence to reiterate its full year expectation of at least 30% growth in net sales on a constant currency basis, while remaining prudent in light of the dynamic macroeconomic and consumer environment. At current spot rates, this implies reported net sales of at least CHF 2.29 billion in 2024.
Considering the strength of On's DTC channel and commitment to ongoing profitability increases, On is further maintaining its ambition to reach a gross profit margin of around 60% and an adjusted EBITDA margin of 16.0 - 16.5% for the full year 2024.
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 U.S. Securities and Exchange Commission (the "SEC").
High-res images available for download here.
Conference Call Information
A conference call to discuss first quarter results is scheduled for May 14, 2024 at 8 a.m. US Eastern time (2 p.m. Central European Time). Those interested in participating in the call are invited to dial the following numbers:
United States: +1 646 307 19 63
United Kingdom: +44 203 481 42 47
Switzerland: +41 43 210 51 63
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 in 2010 with the mission to ignite the human spirit through movement – a mission that still guides the brand today. Fourteen years after market launch, On delivers industry-disrupting innovation in premium footwear, apparel and accessories for high-performance running, outdoor, training, all-day activities and tennis. On’s award-winning CloudTec® innovation, purposeful design and groundbreaking strides within the 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.