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ONON Q3 Earnings Call Highlights Margins and Growth Plans
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Key Takeaways
ONON raises its 2026 underlying gross margin outlook to 66%, maintaining low-20% revenue growth guidance.
ONON's DTC sales rise 25%, while apparel grows 38% at constant currency amid expanding retail reach.
ONON plans to expand LightSpray production to four locations by mid-2027; Vietnam will double capacity.
On Holding AG (ONON - Free Report) emphasized premium pricing, product innovation and direct-to-consumer (DTC) expansion during its third-quarter 2026 earnings call. Management maintained its revenue outlook while raising underlying gross margin expectations despite a promotional retail environment.
The company reported earnings of $0.66 per share, exceeding the Zacks Consensus Estimate of $0.50. Revenues of $1.14 billion surpassed the consensus estimate of $1.13 billion. Executives focused on sustaining profitability while investing in next-generation footwear, manufacturing capacity and new sports categories.
ONON Raises Margin Outlook While Maintaining Sales Target
Chief financial officer Frank Sluis reiterated expectations for full-year 2026 constant-currency revenue growth in the low-20% range, implying net sales of CHF 3.47 billion to CHF 3.56 billion at prevailing exchange rates.
Management raised its gross margin outlook to approximately 66%, excluding tariff refunds, from at least 65%. The adjusted EBITDA margin forecast remained unchanged at 19.5-20%.
Including tariff refunds, management expects a gross margin of approximately 67.5% and an adjusted EBITDA margin of 21-21.5%. Sluis anticipates fourth-quarter revenue growth accelerating from the third quarter, primarily through DTC sales.
On Defends Premium Pricing Amid Promotional Pressure
Co-Founder and Co-CEO Caspar Coppetti emphasized maintaining full-price discipline despite widespread industry discounting. Management continues prioritizing product differentiation over promotional volume.
Underlying gross margin reached 66.9%, while reported gross margin benefited from CHF 52.6 million in U.S. tariff refunds. Adjusted EBITDA margin excluding refunds reached 21.9%.
During questioning from Bernstein, Coppetti indicated that U.S. promotional conditions remained broadly unchanged. Sluis added that wholesale sell-through exceeded sell-in, supporting healthier partner inventories.
ONON Targets Running Gains Through Product Innovation
Coppetti highlighted the Cloudsurfer 3 launch as an early indicator of demand for next-generation running technology. First-week sell-through exceeded that of its predecessor by more than fourfold.
During questioning from BMO Capital Markets, Coppetti explained that specialty running retailers received three months of exclusive access. Strong initial demand subsequently encouraged larger wholesale partners to increase spring 2027 orders.
Management expects nearly all performance running franchises to incorporate new supercritical foams by the end of 2027. Sluis cautioned during questioning from UBS against assuming another sharp growth acceleration in first-quarter 2027, emphasizing the more substantial rollout during the second half.
On Expands Direct Sales and Apparel Opportunities
Sluis reported 25% DTC revenue growth, lifting the channel's contribution to 42.2% of quarterly sales. However, performance fell slightly below internal expectations because of softer online traffic and delayed store openings.
During questioning from Piper Sandler, Co-founder and Co-CEO David Allemann emphasized younger customers, larger shopping baskets and expanded retail distribution as growth drivers.
Apparel sales increased 38% at constant currency. Management highlighted stronger women's training demand and improved apparel productivity across newer stores, supporting its three-year expansion ambitions.
ONON Plans Broader LightSpray Production
During questioning from Barclays, Coppetti detailed plans to expand LightSpray manufacturing beyond existing facilities in Switzerland and South Korea.
Additional production facilities in Vietnam and Portugal should bring the manufacturing network to four locations by mid-2027. Once fully developed, the Vietnam facility should more than double current capacity.
Coppetti described the previously discussed 10% LightSpray penetration objective as directional rather than tied to a firm deadline. Management also expects broader lifestyle applications and additional design variations beginning in 2028.
On Maintains Disciplined Regional Expansion
Sluis highlighted Asia-Pacific's 31.9% constant-currency sales growth while emphasizing selective distribution and premium positioning.
During questioning from BNP Paribas, Coppetti identified substantial opportunities across Japan, South Korea and China. However, management intends to moderate expansion rather than pursue maximum near-term growth.
Sluis clarified that the region's mid-to-high-20% growth corridor applies to the 2027-2029 planning period, not specifically to the fourth quarter.
ONON Emphasizes Long-Term Earnings Growth
Management's overarching message centered on expanding earnings faster than sales through innovation, premium pricing and operating efficiencies.
Executives also outlined continued investment in technology, retail infrastructure, football and golf, with more significant operating expense leverage expected from 2027.
On Zacks Rank and Style Scores Signal Mixed Prospects
ONON currently carries a Zacks Rank #3 (Hold), indicating a neutral near-term outlook. Its Growth Score of A and Momentum Score of A highlight favorable growth and price momentum characteristics. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
However, its Value Score of D points to less attractive valuation characteristics, while its VGM Score of B reflects a favorable combined assessment. These scores complement rather than override the Zacks Rank, which can change as analysts revise earnings estimates following the latest results.
View the Zacks #1 Rank List
Image: Bigstock
ONON Q3 Earnings Call Highlights Margins and Growth Plans
Key Takeaways
On Holding AG (ONON - Free Report) emphasized premium pricing, product innovation and direct-to-consumer (DTC) expansion during its third-quarter 2026 earnings call. Management maintained its revenue outlook while raising underlying gross margin expectations despite a promotional retail environment.
The company reported earnings of $0.66 per share, exceeding the Zacks Consensus Estimate of $0.50. Revenues of $1.14 billion surpassed the consensus estimate of $1.13 billion. Executives focused on sustaining profitability while investing in next-generation footwear, manufacturing capacity and new sports categories.
On Holding AG Price, Consensus and EPS Surprise
On Holding AG price-consensus-eps-surprise-chart | On Holding AG Quote
ONON Raises Margin Outlook While Maintaining Sales Target
Chief financial officer Frank Sluis reiterated expectations for full-year 2026 constant-currency revenue growth in the low-20% range, implying net sales of CHF 3.47 billion to CHF 3.56 billion at prevailing exchange rates.
Management raised its gross margin outlook to approximately 66%, excluding tariff refunds, from at least 65%. The adjusted EBITDA margin forecast remained unchanged at 19.5-20%.
Including tariff refunds, management expects a gross margin of approximately 67.5% and an adjusted EBITDA margin of 21-21.5%. Sluis anticipates fourth-quarter revenue growth accelerating from the third quarter, primarily through DTC sales.
On Defends Premium Pricing Amid Promotional Pressure
Co-Founder and Co-CEO Caspar Coppetti emphasized maintaining full-price discipline despite widespread industry discounting. Management continues prioritizing product differentiation over promotional volume.
Underlying gross margin reached 66.9%, while reported gross margin benefited from CHF 52.6 million in U.S. tariff refunds. Adjusted EBITDA margin excluding refunds reached 21.9%.
During questioning from Bernstein, Coppetti indicated that U.S. promotional conditions remained broadly unchanged. Sluis added that wholesale sell-through exceeded sell-in, supporting healthier partner inventories.
ONON Targets Running Gains Through Product Innovation
Coppetti highlighted the Cloudsurfer 3 launch as an early indicator of demand for next-generation running technology. First-week sell-through exceeded that of its predecessor by more than fourfold.
During questioning from BMO Capital Markets, Coppetti explained that specialty running retailers received three months of exclusive access. Strong initial demand subsequently encouraged larger wholesale partners to increase spring 2027 orders.
Management expects nearly all performance running franchises to incorporate new supercritical foams by the end of 2027. Sluis cautioned during questioning from UBS against assuming another sharp growth acceleration in first-quarter 2027, emphasizing the more substantial rollout during the second half.
On Expands Direct Sales and Apparel Opportunities
Sluis reported 25% DTC revenue growth, lifting the channel's contribution to 42.2% of quarterly sales. However, performance fell slightly below internal expectations because of softer online traffic and delayed store openings.
During questioning from Piper Sandler, Co-founder and Co-CEO David Allemann emphasized younger customers, larger shopping baskets and expanded retail distribution as growth drivers.
Apparel sales increased 38% at constant currency. Management highlighted stronger women's training demand and improved apparel productivity across newer stores, supporting its three-year expansion ambitions.
ONON Plans Broader LightSpray Production
During questioning from Barclays, Coppetti detailed plans to expand LightSpray manufacturing beyond existing facilities in Switzerland and South Korea.
Additional production facilities in Vietnam and Portugal should bring the manufacturing network to four locations by mid-2027. Once fully developed, the Vietnam facility should more than double current capacity.
Coppetti described the previously discussed 10% LightSpray penetration objective as directional rather than tied to a firm deadline. Management also expects broader lifestyle applications and additional design variations beginning in 2028.
On Maintains Disciplined Regional Expansion
Sluis highlighted Asia-Pacific's 31.9% constant-currency sales growth while emphasizing selective distribution and premium positioning.
During questioning from BNP Paribas, Coppetti identified substantial opportunities across Japan, South Korea and China. However, management intends to moderate expansion rather than pursue maximum near-term growth.
Sluis clarified that the region's mid-to-high-20% growth corridor applies to the 2027-2029 planning period, not specifically to the fourth quarter.
ONON Emphasizes Long-Term Earnings Growth
Management's overarching message centered on expanding earnings faster than sales through innovation, premium pricing and operating efficiencies.
Executives also outlined continued investment in technology, retail infrastructure, football and golf, with more significant operating expense leverage expected from 2027.
On Zacks Rank and Style Scores Signal Mixed Prospects
ONON currently carries a Zacks Rank #3 (Hold), indicating a neutral near-term outlook. Its Growth Score of A and Momentum Score of A highlight favorable growth and price momentum characteristics. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
However, its Value Score of D points to less attractive valuation characteristics, while its VGM Score of B reflects a favorable combined assessment. These scores complement rather than override the Zacks Rank, which can change as analysts revise earnings estimates following the latest results.