On (ONON) Q1 2026 Earnings Call Transcript

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DATE

Tuesday, May 12, 2026 at 8 a.m. ET

CALL PARTICIPANTS

• Founder and Co-CEO — Caspar Coppetti
• Outgoing CEO and CFO — Martin Hoffmann
• CFO — Frank Sluis
• Founder and Co-CEO — David Allemann
• Head of Investor Relations — Liv Radlinger

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TAKEAWAYS

• Net Sales -- CHF 831.9 million, up 26.4% at constant currency and 14.5% on a reported basis; first time surpassing CHF 800 million in a quarter.
• Americas Revenue -- CHF 450.7 million with 17.1% growth at constant currency and 3.1% reported growth, reaching a new quarterly record.
• EMEA Revenue -- CHF 207.1 million, increasing 25.6% at constant currency and 22.8% reported; sixth straight quarter above 25% constant currency growth.
• APAC Revenue -- CHF 174 million, rising 61.4% at constant currency and 44.4% reported; APAC now exceeds 20% of total business.
• Wholesale Sales -- CHF 509.6 million, increasing 25.1% at constant currency and 13.3% reported; first quarter where wholesale surpassed CHF 0.5 billion.
• D2C Sales -- CHF 322.3 million, up 28.7% at constant currency and 16.4% reported; D2C share is 38.7%, on targeted path for 100-200 basis points annual increase.
• Footwear Net Sales -- CHF 763.7 million, advancing 24% at constant currency and 12.2% reported, led by blockbuster franchises and emerging lines.
• Apparel Net Sales -- CHF 55.3 million, up 57.5% at constant currency and 45.1% reported, accounting for more than 10% of D2C sales for the first time.
• Gross Profit Margin -- 64.2%, an increase of 430 basis points from the prior year period; guided as the new baseline for the year.
• Adjusted EBITDA Margin -- 21%, up 450 basis points year over year, the second highest in company history.
• Distribution Expenses -- 10% of net sales, down 1 percentage point year over year, attributed to warehouse automation.
• G&A Expenses -- 16% of net sales, lowest level in two years, with scale gains offsetting FX headwinds from Swiss franc-heavy overhead.
• Capital Expenditures -- CHF 23.6 million, 2.8% of net sales, up from 1.7% last year; driven by store and expansion investments.
• Cash Position -- Exceeds CHF 1 billion and remains stable relative to year-end.
• Sales Guidance -- Reiterates at least 23% constant currency net sales growth for the year, equating to CHF 3.5 billion at current spot rates.
• Gross Margin Guidance -- Expects full-year at least 64.5%, including impacts from 20% incremental Vietnam tariffs but excluding any refunds.
• Adjusted EBITDA Margin Guidance -- 19.5%-20%, above previous expectations.
• Brand Awareness -- Reached over 30% in the U.S. for the first time, supporting further growth runway.
• Apparel Growth in D2C -- Apparel contributed over 10% of D2C sales, with apparel-first customers increasingly entering the brand.
• Younger Consumers -- Largest ever Q1 increase in 18-to-24-year-olds in the D2C customer base, with trend accelerating into early Q2.
• Innovation Milestone -- LightSpray Cloudmonster Hyper sold out rapidly; LightSpray capacity expanded 30-fold, now selling several hundred pairs per day in D2C.
• Marketing Expenses Guidance -- Marketing investments expected at 13%-13.5% of net sales for the full year, supporting awareness and new growth pillars.
• Leadership Transition -- Martin Hoffmann stepped down as CEO and CFO; Frank Sluis assumed CFO role May 1, 2026; company affirms continuation of its existing strategy and premium focus.

SUMMARY

On Holding AG (NYSE:ONON) delivered record net sales, with all regions showing double-digit constant currency growth and APAC surpassing 20% of overall revenue for the first time. Gross profit margin reached 64.2%, setting a new company baseline as premium pricing, operational efficiencies, and channel shift supported margin expansion. The company reiterated confidence in its guidance, forecasting at least 23% annual constant currency sales growth and raised full-year adjusted EBITDA margin expectations, even as incremental tariffs are absorbed. Management highlighted the ongoing momentum from innovation—including capacity growth for LightSpray—and noted that increased marketing outlays are resulting in higher brand awareness and a shift toward younger, apparel-driven customers. Leadership transition was presented as a continuation of current strategy, maintaining premium positioning and long-term brand equity priorities.

• Management emphasized that "the innovation that we have, the premium strategy and the full price discipline ensures that we're selling issues at high prices and at full price."
• Order books for run specialty partners are "up over 25% year over year," indicating robust demand in core categories.
• In wholesale, distribution remains controlled: "we are only present in around 50% of doors" with major partners, implying further multiyear runway for store expansion while preserving brand quality.
• Inventory management is prioritized, with management explaining, "we want to be cautious that we start into that firework of innovation with clean inventory levels in our wholesale partners."
• Operational excellence is driving down SG&A ratios, which management connects directly to improved gross margin fundamentals and reinvestment in future growth drivers.

INDUSTRY GLOSSARY

• D2C (Direct-to-Consumer): Company-operated channel encompassing both e-commerce and branded stores, bypassing wholesale partners to sell directly to end customers.
• LightSpray: In-house footwear production technology utilizing advanced robotics for rapid, filament-based shoe fabrication, commercialized with the Cloudmonster Hyper model.
• SuperFoam: Proprietary midsole material providing energy return 60%-70% higher than industry-standard EVA, used in upcoming Cloudsurfer 3 and future everyday running franchises.

Full Conference Call Transcript

Operator: Hello. My name is Ellie, and I will be your operator for today. Welcome to the On Holding AG First Quarter 2026 Results Call. Please note that this call is being recorded. [Operator Instructions] Thank you. I'd now like to hand the call over to Liv Radlinger, Head of Investor Relations. Please go ahead.

Liv Radlinger: Good afternoon, and good morning to our investor community. Thank you for joining on first quarter earnings conference call and webcast. With me today on the call are Caspar Coppetti, Founder and Co-CEO; Martin Hoffmann, outgoing CEO and CFO; and Frank Sluis, our new CFO as of May 1; David Allemann, Founder and Co-CEO, will also join us for the Q&A session. Before we begin, I will briefly remind everyone that today's call will contain forward-looking statements within the meaning of the federal securities laws. These forward-looking statements reflect our current expectations and beliefs only and are subject to certain risks and uncertainties that could cause actual results to differ materially.

Please refer to our annual report on Form 20-F for the 2025 fiscal year filed with the SEC on 3rd March 2026, for a detailed discussion of such risks and uncertainties. We will further reference certain non-IFRS financial measures such as adjusted EBITDA and adjusted EBITDA margin. These measures are not intended to be considered in isolation or as a substitute for the financial information presented in accordance with IFRS accounting standards. Please refer to today's release for a reconciliation to the most comparable IFRS measures.

Lastly, we present certain metrics in U.S. dollars during this call using the exchange rate as set forth in the H10 statistical release of the Federal Reserve Board as of March 31, 2026, solely for the convenience of our investors. We begin with Caspar followed by Martin and Frank leading through today's prepared remarks, after which we are very much hitting forward to opening the call for a Q&A session. With that, I'm very happy to turn the call over to Caspar.

Caspar Coppetti: Thank you, and a very warm welcome, everyone, to our first quarter 2026 earnings call. It is a great pleasure to share more on an outstanding quarter. The year is off to an extremely strong start. Net sales exceeded CHF 830 million, the first time we have crossed the CHF 800 million mark, growing 26.4% at constant currency. At the same time, On's disciplined focus on premium execution delivered exceptionally strong gross profit and adjusted EBITDA margins, a clear reaffirmation of our premium strategy. Demand is incredibly broad-based. Our strategy is resonating across regions, categories and channels, reaching more fans than ever before.

You see it in our numbers. strong constant currency double-digit growth in the Americas, in EMEA and in APAC. And well over 50% constant currency growth in apparel globally as we continue our strategy of growing to ahead. These are numbers we are extremely proud of. And as our business becomes more global and more multidimensional, our vision to be the most premium global poster brand is only becoming clear we are even more committed to continuing to chart our own course. You see in the products we create the innovation we bring to market and aggressive we build.

The energy around the brand was clear everywhere this quarter, whether it was the electric atmosphere and [indiscernible] title or the possible excitement at the Tokyo [indiscernible] or the [indiscernible] at the opening of our new stores in Sol, Shenzhen and London. It was clear our vision and strategic execution is reaching far and wide. For me, nothing captured [indiscernible]. But again, as one of the boldest ideas we've ever had is today proving itself in the world's most competitive stages. This spring, [ Human Trippe ] won the Paris Marathon in the prototype of the next generation of [ platoon ] strike.

And at the London Marathon, Hellen Obiri posted our most recent personal best, the second class of time ever recorded in a female-only marathon. And more importantly, we're also making huge strides in building out the technology into a true commercial engine for On. In February, we increased our production capacity for LightSpray [ 30-fold ] when we opened our Lightspay factory in Busan, South Korea. The quarter also saw us bringing LightSpray closer to a much larger community of runners. From Los Angeles to Boston to London, thousands of fans saw the robot in action, watched the shoe move from filament to asphalt in just minutes and then felt the product for themselves.

The LightSpray Cloudmonster Hyper sold out quickly across many of our channels with particularly strong demand in Asia Pacific and in the U.S. In the opening week of our new Boston store, LightSpray represented close to 20% of footwear net sales. We are currently selling several hundred pairs a day in our DTC channels alone. For technology still at the starting line of its commercial journey, this is an exceptional indicator of demand. During the quarter, LightSpray also played a significant role in one of our blockbuster franchisees product launches, the Cloudmonster 3. The top-of-the-line LightSpray Cloudmonster Hyper spray in Busan brings our revolutionary technology to a broader consumer base for the first time.

The entire franchise update resonated strongly with consumers and is outpacing its predecessor across all regions. At the same time, LightSpray is only one part of our innovation pipeline. [indiscernible], on Super Foam for everyday runner is another major step forward. Compared with industry standard EVA, it weighs roughly half as much but provides 60% to 70% more energy return. Having achieved the combination of SuperFoams with the structural engineered cushioning of Cloudtilt represents a generational shift in running technology, not just for O but for the industry. ural will debut with Cloud Surface 3 this October and roll out at a rapid pace across the key everyday running franchises in 2027.

We will present these products at the inaugural On Global Run Summit in Paris, where we will host our top 100 On Global run accounts. All of this matters because consumers are choosing to spend where products are truly differentiated, exactly where we are built to win. On innovates at the intersection of performance, design and sustainability. In that sweet spot, we create an unmistakable high-quality experience for our customers, an experience that we can build on and protect through every channel and every touch point as we grow for the long term. This is what we mean when we say that we aim to be the most premium brand in sports.

And we see this play out in the commercial results and in consumer perception data. Our Q1 brand tracker showed a sharp increase in run awareness, especially in the U.S. In Q1, we grew nearly 30% with our run specialty accounts in Europe. At the same time, we continue to win new customers in everyday running through our closer relationships with leading sports retailers in markets, including the U.S., Japan and Europe. Running is where we continue to prove the power of our innovation and our great product with authentic communities. And it continues to open doors far beyond running, creating deep engagement, growing our relationship with the movement class.

As you heard from David last quarter, this new ageless consumer sees health as the new wealth and sportswear as identity, not utility. They want to buy into a brand that has strong cultural relevance and truly sits at the intersection of performance and lifestyle. Accordingly, we continue to see exceptional momentum in the quarter in lifestyle. We are being extremely intentional here. Products like Cloudtilt are designed for sneaker tastes with the comfort, design language and premium feel that young consumers are looking for. The proof is in the numbers. In Q1, Cloudtilt and Cloudtilt Remix saw exceptional growth in all regions with Cloudtilt becoming the #1 salad foot Locker in Europe by wide margin in March.

Additionally, partnerships with leaders in the sneaker space are helping us acquire new young consumers at attractive margin profiles while continuing to enhance our premium positioning. The highly sought after [indiscernible] Cloudswift relaunch with [indiscernible] and the female-led head-to-toe silouette launch with Zendaya show how we are building credibility with new communities through design, culture and premium product. The broader impact is already visible in our data. In Q1, 18- to 24-year-olds significantly increased their share of our DTC customer base, the largest increase we have seen since our data began, and this trend has accelerated into early Q2. Our Q1 brand tracker also showed strong progress in both performance and style cues.

We have engaged with and converted new communities successfully before. When we entered tennis, it was a new community for us. Today, it is one of our most engaged audiences, our highest growth apparel vertical and continues to deliver outstanding results in footwear. Training is also bringing thousands of new customers to the brand every quarter. And in outdoor, the Cloud Sola trail running franchise has had a very strong debut, giving us another platform for product-led expansion. For us, this is all part of the same ambition to build the most premium global sportswear brand with the breadth to resonate across communities, genders, categories and generations. As our reach grows, we are protecting and strengthening our brand.

In an increasingly promotional market, we are even more committed to our full price strategy. We are reaching new consumers, but we're doing it with quality and discipline. Our results represent this strategy, sustainable premium growth, the kind that builds the brand for years and decades to come. So when I look at Q1, I see much more than a strong quarter. I see a brand scaling with momentum, a team executing with clarity and a strategy that gives us even greater conviction. And we are charting our own course. We are as ambitious as ever, and we believe the next chapter of on can be even better.

On that note, I'm very pleased to confirm that we will host an Investor Day in Zurich on September 21 and 22, 2026. It has been 3 years since our last Investor Day in 2023, and we have made tremendous progress since then. We look forward to sharing with you all the things we have dreamed about in this next phase of our journey and how we will continue to deliver on our vision to become the most premium global sportswear brand in years to come. This brings me to a moment of gratitude. To you, Martin, I want to express our deep and heartfelt thank you for an incredible run together over the last 13 years.

You have been one of our closest partners on this incredible journey. Together, we have built, challenged, debated, pushed and celebrated a true team. You have left an indelible mark as a strong leader in the last 5 years as CEO and CFO, who ensured we had the financial strength, operational rigor and clarity to make our dreams real. We are deeply grateful for your leadership, your friendship and your commitment. We wish you the very best for all your future endeavors, and we are pleased you will continue to support us all as an adviser into next year.

David and I are thrilled to continue to lead our incredibly talented global team at On in this next chapter serving as co-CEOs. The two of us built on together with our Co-Founder, Olivier from an idea into a business 16 years ago. setting the foundation for what you see today. We then led it through over a decade of hyperscaling and our IPO, after which we continue to work hands on as Executive Chairman in partnership with our senior leadership team, shaping On's premium vision and strategy, product and channel innovation as well as defining and building our growth engines across the business.

It is in this spirit of continuity that David and I see it as an immense privilege to further help forge On's path in these new roles. We're also very pleased to have Scott Maguire step into an expanded role as President and COO and to have welcomed our new CFO, Frank Sluis, at the beginning of this month. They both completed our broader leadership team of both long-serving executives and new additions as we continue our growth at global scale. So we're not changing direction. We follow the same strategy, the same values and the same conviction that have guided us over the past 16 years since we founded the business.

Our strategic growth pillars, premium positioning and innovation-led approach remain the path forward. As co-CEOs, David and I will ensure our strategic intent is fully aligned with decisive execution as we continue to grow in size. With that, I'm honored for one final time on this call to hand over to my great friend and partner, Martin, for the financial review.

Martin Hoffmann: Thank you so much, Caspar, and hello, everyone. Before I go into the financial review for the quarter, I want to take a moment to say how thankful I am for my time at On and for everything we have built together. I'm often asked, what is most underestimated about On? My answer is always the same, the team and our culture. The dedication, ambition and humility of the whole On team is extraordinary. And for that, I will always be grateful. It is the reason we have been able to dream so big, move so fast and keep raising the bar for what this brand and premium sportswear can become.

I also want to thank David, Caspar and Olivier for so many years of partnership, trust and friendship. I'm deeply grateful for the shared belief and commitment that have shaped this journey. While the timing feels right for me to move on, I could not be more proud to do so at the moment when the company is stronger than ever. Close to 5 years after our IPO, seeing our mission and vision translate into such incredible global success is nothing short of a dream. Those who know me well know that I will not miss the opportunity to say this in numbers. First, we have achieved significant top line growth.

Since our IPO, we have more than quadrupled the business from CHF 725 million net sales in 2021 to more than CHF 3 billion this past year, with 15 of the 19 quarterly results as a public company being record quarters. Second, our vision to be the most premium global sportswear brand has driven one of the highest gross profit margins in the industry, far surpassing even our own high expectations. We are building a company that sits on the apex of our industry when it comes to being premium. At our Investor Day in 2023, we set out a plan to consistently exceed 60% gross profit margin.

With the outlook we are providing today, we now expect to deliver a gross profit margin approaching 65%. We have achieved this by staying true to who we are, committed to delivering high-quality products rooted in performance and design at full price and with the best consumer experience. We have provided the consumer with a new level of premium performance products, and they are trading up. During this time, our average selling price has increased from around USD 145 to over USD 170. In tandem with this, our own digital and physical stores offer the best brand experience, allowing us to grow our D2C share from 38% to 42% and further expand the realized gross profit margin.

And third, we have reinvested into the future growth of the brand while driving higher profitability and cash flows. On is a growth company. Our priority is to consistently invest into new pillars for future durable growth into the expansion of our addressable market and into our brand, while at the same time, driving efficiencies, economies of scale and ultimately, profitability and cash flow. In 2021, our adjusted EBITDA margin was 13.3%. In 2025, we achieved 18.8%, and we expect a further increase in 2026. Our strong gross profit margin and our operational leverage today allow us to invest into more growth opportunities simultaneously than ever before. To summarize, our mission and our strategy are clear.

In some segments of the premium sportswear market, we have already proven to be amongst the top 3 brands, but still have room to grow from a large base. In other market segments, we have just planted the seeds for massive growth in the near future. And we can do all of this relying on strong financials and most importantly, on an incredible team. These core pillars of our growth strategy are directly reflected in our first quarter results. Net sales reached a record CHF 831.9 million, well above CHF 1 billion if converted to U.S. dollar. Net sales grew a very strong 26.4% year-on-year at constant currency or 14.5% on a reported basis.

More important than the total is the strength of each building block within our growth engine. We continue to deliver industry-leading performance in our established markets like North America and Central Europe. In these markets, we are seeing our toe-to-head strategy truly taking hold with apparel and sneakers acting as powerful new catalysts for growth. Simultaneously, our newer geographic segments in Latin America and Asia Pacific, including China, are gaining significant share with constant currency growth exceeding 50%. This ensures that every pillar of our business is contributing to a more balanced, resilient global footprint, one that is perfectly positioned to compound our success over the coming years. Growth was once again led by our direct-to-consumer channel.

Net sales reached CHF 322.3 million, growing 28.7% year-on-year at constant currency and 16.4% on a reported basis. What is most compelling is the brand momentum we see. Our digital and physical traffic is outstripping our revenue growth, meaning demand is ahead of our current conversion, a great sign of the potential we have for future quarters. This we see. Our digital and physical traffic is outstripping our revenue growth, meaning demand is ahead of our current conversion, a great sign of the potential we have for future quarters. This validates our investments to further broaden the conversation with newer communities to grow the premium market and ultimately to lay the foundation for long-term strong growth.

Within direct-to-consumer, our own stores continue to elevate the physical brand experience for our fans in key cities around the world. This allows us to deepen our brand presence in existing markets as well as to accelerate our growth in markets with fewer potential wholesale partners. We now have a growing number of stores in the second and third years of operations, including Miami, Milan and our first store in Tokyo. And we are thrilled to see continued meaningful same-store growth and improvement of key retail metrics across this group and beyond.

This is an important signal as we continue to scale retail, and we look forward to opening stores in new cities for us, including Stockholm and Sydney in the coming months. Wholesale also delivered strong growth, again, outperforming our expectations and validating our multichannel distribution strategy. For the first time in our history, quarterly net sales in the channel exceeded CHF 0.5 billion, reaching CHF 509.6 million. This corresponds to growth of 25.1% at constant currency and 13.3% on a reported basis. We continue to see great momentum with our global key accounts, including DICK'S Sporting Goods, Foot Locker and JD Sports.

Even with these major partners, we are only present in around 50% of doors, giving us a meaningful multiyear runway for further openings while preserving the controlled nature of our expansion and premium quality of our distribution. Looking across regions. The Americas reached CHF 450.7 million, a new quarterly record. At constant currency, net sales grew a strong 17.1%. Reported growth was 3.1%, reflecting significant foreign exchange headwinds. We are pleased with the continued increase in awareness and our maintained commitment to premium execution and full price sales. Overall awareness crossed the 30% mark for the first time, an important milestone.

Our latest campaign with Zendaya, an outreach to younger and more lifestyle-oriented consumer has already generated over 20 million highly engaged views in the U.S. alone. Together, these prove our continued diversification of our customer base, setting the brand up for long-term success. The strength of our strategy is also clear in Europe, Middle East and Africa. Net sales reached CHF 207.1 million, growing 25.6% at constant currency and 22.8% on a reported basis. This marks the sixth consecutive quarter of more than 25% constant currency growth in the region. The performance was again broad-based with more countries contributing to the growth.

The U.K., a market with a strong taste-making sneaker community as well as engaged runner base showed strong momentum. Germany continued to sustain very healthy growth. The regional performance is even more impressive considering the current geopolitical situation in the Middle East, further evidence of the broad-based success and resilience of the region. Asia Pacific continued its rapid controlled expansion. Net sales reached CHF 174 million, growing 61.4% at constant currency and 44.4% on a reported basis. For the first time, the region exceeded 20% of our overall business. Growth remained balanced across subregions and channels. Greater China grew well above the regional average.

In addition, I would particularly like to highlight South Korea, where net sales more than tripled year-over-year. We grow our markets with conviction. After opening 2 mall-based stores in Seoul in Q4 last year, we opened our first stand-alone location in Hannam, one of the cities sought after and affluent shopping districts for consumers in their 20s and 30s. The store is already driving strong results, performing significantly ahead of expectations. Across product categories, it's inspiring to see how we further earn our place across more moments in our fans lives from toe to head. Net sales from shoes reached CHF 763.7 million, increasing 24% at constant currency and 12.2% on a reported basis.

We are very happy to see the majority of growth continue to come from our blockbuster franchises while adding meaningful volumes from newer franchises. The Cloudzone, for example, which launched in early 2025, grew by over 350% in volume from a low base. Performance running maintained excellent momentum, with a strong contribution from the Cloudmonster franchise. The positive feedback on Cloudmonster 3 and Cloudmonster Hybrid is evident in the financial performance, and we look forward to both gaining further momentum in Q2 and beyond. Outside of performance running, the Cloudtilt Remix further elevated the already exceptional performance of the Cloudtilt franchise, strengthening our position in a lifestyle context. Apparel continues to be an increasingly important entry point into the brand.

Net sales reached CHF 55.3 million, growing 57.5% at constant currency and 45.1% on a reported basis. The value of customers acquired through apparel continues to strengthen, with successive improvements in cross-category purchase rates and time to repeat purchase. Growth was particularly strong in direct-to-consumer, with apparel contributing more than 10% of our D2C sales for the first time, proof that apparel is one great example for a new driver of growth. Turning to profitability. As mentioned before, our premium market position not only allows us to drive continued strong top line growth, but to drive strong profitability as well. In Q1, this means a record gross profit and adjusted EBITDA margin.

Despite significant investments into performance of our products, our ASP strength combined with new levels of operational excellence allowed us to deliver a further step change in gross profit margin despite the increasing headwind from higher U.S. tariffs. In the first quarter, gross profit margin reached 64.2%, up from 59.9% in the prior year period, an increase of more than 4 percentage points. This increase isn't a onetime peak. It is driven by the fundamentals of the brand and our business model, and we consider this new level as our new baseline for the year, as you will hear later from Caspar. Economies of scale and operational efficiency are also visible within SG&A.

Distribution expenses declined by 1 percentage point year-on-year to 10% of net sales, mainly driven by the ongoing automation of our global warehouses. G&A reached 16% of net sales, the lowest level in 2 years. We saw meaningful scale gains, more than offsetting the material foreign exchange headwinds from our Swiss franc heavy overhead cost base. As has always been our philosophy, we continue to reinvest efficiency gains selectively where we see the clearest long-term return. This quarter, that included incremental upper funnel, brand-building investments behind Zendaya, LightSpray innovation activations and media to reach other newer communities, helping us speak to new audience while strengthening our credibility as a pinnacle premium performance brand. This will remain our focus going forward.

The result was an adjusted EBITDA margin of 21%, up 450 basis points year-on-year and the second highest adjusted EBITDA margin in our history. While our highest margin in Q3 '25 was supported by some one-off effects. This quarter is an exceptional reflection of the underlying strength of our premium strategy in action. Turning to the balance sheet. Capital expenditures were CHF 23.6 million, representing 2.8% of net sales, increasing from 1.7% recorded in prior year as we continue to invest in our stores and store expansion.

Over the last years, we have invested a lot of time and resources to shorten our development time and to further improve our planning efficiency, both important backbones for our premium strategy, driving the higher inventory turns and improved stock health we see today. Our cash position remained stable compared to year-end, continuing to exceed CHF 1 billion. Now my final thanks are to you, our investors and analyst community. I am extremely grateful for the thoughtful conversations and perspectives you have shared with us over the years. The positive ones, but especially the challenging ones have made us a better and stronger company. Thank you for your trust, your support and your ongoing partnership.

And with that, I'm very happy to formally introduce our new CFO, Frank, who will share some initial reflections. Frank is joining a company that is operating from a position of great strength. And I have total confidence in his ability to help David and Caspar build upon this momentum and lead on into its next era of global scale.

Frank Sluis: Thank you, Martin, and hello, everyone. It is a real privilege to join On at such an exciting moment in the company's journey. Although this is only my second week of officially in the role, I have already had the opportunity to spend a few weeks with teams across the business. I wanted to listen, learn and get close to the company quickly to understand the culture, strategy and the opportunities ahead. One moment that really stayed with me was the recent Global Summit. Seeing teams from around the world come together with such energy, ambition and belief made very clear what makes On special and why I was so drawn to be part of it.

This is a company with great culture, inspiring purpose and clarity of vision. Having seen the product pipeline, I'm struck by the level of innovation and ambition in this company and look forward with great confidence to the future. Martin and the team have built an exceptional financial foundation. My focus is to build on that foundation to support On's long-term growth, preserve the premium economics of the brand and help the company scale with the same agility and entrepreneurial energy that has made it so successful.

I'm especially looking forward to being a close business partner to David, Caspar, Olivier, Scott and the wider leadership team as we capture the opportunity ahead with ambition, discipline and a clear focus on long-term value creation. I also look forward to engaging with all of you in the financial community and continuing the strong dialogue that Martin and her team have built with such care over many, many years. With that, I will hand it to Caspar for the outlook.

Caspar Coppetti: Thank you, Frank. We are so pleased to have you on board. As we looked for the right next financial leader for On, we were struck by your drive, your passion for the brand, your alignment with our values and your experience in global consumer companies operating at a far greater scale than we are today. And of course, running [ S3 ] Marathon also played a part. I know you will be a strong strategic partner to me, David, our Board and our entire leadership team.

Q1 was a clear proof point of our premium strategy in action, high-quality growth, record first quarter revenue and margins and continued investment into the areas that will define our next chapter, product innovation, brand awareness and relevance, retail and our communities. As we look ahead, our confidence is extremely high. In running, feedback on SURREAL, our upcoming Superfoam innovation launching with Cloudsurfer 3 has been excellent with exceptional demand also for the new Cloudrunner Max. In all regions, our partners are ordering with strong conviction. In R Specialty, in particular, order books are up over 25% year-over-year.

LightSpray remains at the beginning of its commercial journey, but the early proof points with the LightSpray to Cloudmonster 3 Hyper give us strong conviction in its potential as a pinnacle innovation product for a broad consumer base. This month, we will also bring LightSpray into our ongoing collaboration with LOEWE, a powerful expression of how our most advanced performance technology can live at the highest end of premium design. The recent Zendaya co-created apparel range launched alongside the Cloudnova Moon is driving very high engagement and strong sell-through.

The response to the Cloudtilt Remix and early feedback on upcoming launches later this year, including the [ Cloud 99 ] give us even greater confidence that sneak communities will form an increasingly meaningful driver of reach, culture relevance and premium growth. In retail, we are scaling with discipline and increasing confidence. Our stores are true brand roads, bringing our product, communities and premium positioning to life in a way no other channel can. Apparel-led merchandising is elevating the consumer experience and contributing to exceptional store KPIs. Upcoming openings in San Francisco, Stockholm and Sao Paulo are strong examples of how we are bringing the brand closer to important communities in highly selective premium locations.

The pace of innovation in apparel is also accelerating. As part of our focus on building deeper relevance with her, we launched and are expanding SenseTec into our studio and training collections, bringing our feel nothing to feel everything experience to buttery soft smooth materials designed for movement. And we will build on this again for fall/winter with Formtech, a new fabric innovation that brings more sculpting and shaping into our Tides lineup. Together, these proof points give us confidence even against an unpredictable macroeconomic backdrop to reiterate our constant currency net sales growth guidance for the year of at least 23%. Within that, we continue to expect D2C, APAC and apparel to outperform.

True to our Swiss roots, we value continuity and reliability. Part of that approach is that our guidance philosophy remains unchanged. We are not pursuing growth at any cost. We are building premium, high-quality growth rooted in brand desirability, product innovation, channel discipline and the long-term value creation. Based on current spot rates, this growth translates to reported net sales of CHF 3.5 billion. On gross margin, we now expect a full year level of at least 64.5%, materially ahead of 2025 despite the additional impact from tariffs. This is an exceptional level of profitability and one of the clearest proof points of the structural strength of our premium model and our excellence in operation.

Importantly, this outlook assumes 20% incremental tariff rates from Vietnam and excludes any potential refunds. The strength of this gross profit allows us to invest into our biggest long-term opportunities, absorb external pressure and still expand profitability. We now expect an adjusted EBITDA margin in the range of 19.5% to 20%, meaningfully above our prior guidance. With that, we're ready to take your questions. Operator, please open the line for Q&A.

Operator: [Operator Instructions] Your first question comes from the line of Aubrey Tianello of BNP Paribas.

Aubrey Tianello: First, thank you to Martin for all the help over the years. Question for Caspar and David. Can you share more about the division of responsibilities between the 2 of you going forward? And I know you've both been active throughout the years through On's journey. Could you maybe share more about some of the initiatives you've worked on over the years in your prior roles?

Caspar Coppetti: Thank you. Good to hear your voice. Look, this management transition is really in the spirit of continuity. So we've worked very closely for 13 years now. In the last year, we spent a lot of time together with Martin and the senior leadership team on developing the strategy that we're going to share with you in the Investor Day. And so nothing changes in how we approach the business, nothing changes in how we guide and nothing changes about the confidence that we have in the outlook. I just wanted to get that -- make that very clear on the call.

So when it comes to how we divide and conquer -- there are basically 2 levels on the strategic levels, we've been both driving some of the building blocks that we're now really seeing come to fruition, be it the retail expansion, being apparel, be it light spray. And there, we will continue the division of labor that we had before. When it comes to really operating together with the team, Frank, our new CFO, will report to both of us, and so will Scott as President and COO. So we'll be helping them executing the strategy with their teams.

Operator: Your next question comes from the line of Rick Patel of Raymond James.

Rakesh Patel: Congratulations, Martin, on all your success, wishing you the best going forward here. I was hoping we can double-click on the trends in the U.S. business. Just given the geopolitical developments over the last -- since the last call, how should we think about demand quarter-to-date? And how have your expectations for this market changed for the rest of this year versus 3 months ago?

Caspar Coppetti: Very happy to give you some color. I will say -- start with the overall picture and then David will double down a bit on the D2C part of the Americas. Overall, we're extremely happy with what we're seeing in the U.S. We feel this is a very strong quarter for us. What's making us very optimistic is that for the first time in the U.S., awareness crossed the 30% threshold. It also shows that we still have a long way to go in terms of growth. But what we're really seeing and what we're particularly excited about is that we're not just repeating our running customers, but we're actually reaching new audiences.

And this quarter, we saw a really uptick in younger audiences, and we're skewing more female. We spoke on the call to the Zendaya collection. We saw the success that we're seeing with Cloudtilt and Cloudtilt Remix in Foot Locker and JD and other channels like that. So that -- we look at that as confirmation that we have growth pillars ahead there. There's also no change in how we are going to build the Americas, the business in the Americas. So premium execution will always come first. When we look at wholesale, an area where I've always been very hands-on involved, even with our largest partners, we still have a lot of room to expand.

We're only in about half of the doors, and we're further penetrating those stores and in the categories that we are, which is now a lot more than just running. We have a fantastic training business. We're starting to see real good traction with apparel. Tennis is interesting. And so -- and then, of course, the lifestyle side of that. And then maybe I want to hand over to you, David, because you've been very closely involved with the D2C part of the Americas.

David Allemann: So we continue to be, on a global level, very, very excited about the D2C expansion. I mean, just a growth of 28.7% is even faster than our wholesale expansion. And we have been very consistent in saying that we want to increase D2C share by 100 to 200 basis points per year, and that also remains our expectation for the full year '26. Currently, we are at 38.7% in D2C share. So it's really exciting where we are. And then when it comes to the individual channels, I think in e-commerce, we really see a very, very healthy growth. So that it's full price growth that we have a very, very strong demand.

We feel that in a very disciplined way. And so you see that, of course, also reflected then in the margin profile that we communicated in the call and the new consumers based on the whole energy that Caspar mentioned around Zendaya and sneaker that's coming into that channel with high demand. Of course, also then in our retail channel, we see a lot of energy also behind apparel. The D2C channel as a whole cross now over to -- over 10% when it comes to apparel share. So you really see how the multidimensionality of the brand is building out and how apparel becomes a new entry point for the brand.

So a lot of these young consumers that are coming into our e-com that are coming to our stores are actually apparel first consumers, which is amazing, and we're sure that they're going to expand to footwear as well. So it builds that out. So we are truly very excited about how this expands.

Unknown Executive: Maybe adding a few more points from my side and obviously [indiscernible]. Thanks for your feedback. I think it's always important to understand that we manage to the growth on a global level. And I think we have demonstrated in Q1 the quality of the growth that we have achieved that is driven by established and new markets by established end new product categories and then established end new communities. And we will see those newer market segments grow in size and drive a bigger share of the growth going forward. And at the same time, you heard it on the call.

I mean, we bring our most exciting and innovative product pipeline to the market, and this is expected to drive strong growth in all parts of the world. And then, of course, we have a couple of areas where one is not present today, and we can dream about this.

And -- so of course, if we also look into the guidance, if we see an opportunity to drive more sales and more growth, then we will do this, but always if it's in line with our premium strategy and the premium delivery and adding to the D2C insights from David, so what is embedded in our guidance is basically the same strong D2C growth rate that we have seen in the first quarter for the rest of the year. And I think this underlines momentum and the continued demand that we expect for the brand.

Operator: Your next question comes from the line of Jay Sole of UBS.

Jay Sole: Great. Cas, my question is for you. You mentioned that the company is not about pursuing growth at any cost, and you've said that for since even before the IPO. But with the management change, I think people are wondering if you're really truly still committed to being premium. And the question is what keeps the company able to resist the temptation to drive more sales growth by lowering prices or to do something that maybe would reduce brand equity and maybe impact the long-term brand equity and the ability to come in to grow strong over the long term?

Caspar Coppetti: Thank you, Jay, for giving me the opportunity to share our view on that. Look, our dream is to build a company that's completely different from anything that exists. So we're charging our own course. And so from day 1, we never dreamed of building the largest company, where we dreamed of building the most desirable most beautiful, most sustainable, most performant most emotive company. And with that also, and I think the results this quarter show that our ambition also the most profitable.

And so that will always come first. we're truly inspired by the platform that we have to continue building something that hopefully, when we look back in 10 years' time, people say they have changed the game of what the sportswear -- sportswear brand can be. That's really what motivates not share size at any cost.

Unknown Executive: And if I can probably add to that, Jay, I think just if you see what we have built out as really future growth pillars for the brand from not just footwear, but now to apparel as well as the global footprint, how we're building performance and innovation, but how we expand that to lifestyle as well. The channel mix and how you're opening stores on a global level, there are so many growth trajectories that we have that we definitely can do that in a very, very premium way. And you see that from product to stores to apparel. So we feel there is the defining decade actually ahead of us to build this very, very premium brand.

Operator: Your next question comes from the line of Jonathan Komp of Baird.

Jonathan Komp: Caspar, David, I want to follow up. Are you willing to share a little bit more about your vision as you think forward to the 2030 road map. I know it's come up on the call. You've highlighted an opportunity that really scale the brand with premium positioning here. But any further thoughts as you think about the road map that you see out in the future here.

Caspar Coppetti: Thank you, Jon. Look, it's really about continuity. So we have a business that works extremely well. We have the growth drivers. We have the profitability drivers. We have, over time, always seeded new stuff and new potential growth drivers. Many of them, you're very, very aware of, like apparel, like on retail, that we've spoken about. We see a very interesting emerging sneaker business. We invite you all to come to Zurich in the last week of September to join us where we're going to present the new 2030 vision and plan.

And we have a couple of surprises in stock for you. that hopefully will convince you all that on is a growth story and a profitability story for the long run.

Jonathan Komp: Great. Certainly, we'll look forward to that. If I could ask one follow-up, just specific to the quarter. The marketing expense looked like a pretty significant investment this quarter. You highlighted some of the reasons for that. Could you share a broader outlook, how we should think about marketing? And then as you think about efficiencies across the business, both from an expense standpoint, but also from a speed and innovation standpoint, what can you share on that front?

Martin Hoffmann: John, Martin here. So I think this is an important part of the story and correlated to the growth. So in the end, what we have created is something like a loaded spring, we shared this on the call. So we have significantly increased our brand awareness and some of this awareness is still sitting outside of the premium market yet. And we see this in the fact that the traffic that comes to our direct channels and also to our wholesale partners, is much stronger than net sales growth.

And we have proven over and over again in the past that we can win those additional customers that additional awareness into the premium segment and ultimately into our products by the innovation of our products, but also by the stories that we are telling. And this is why we feel this is the right moment to invest into the brand and our strong gross profit margin gives us all the reasons to invest into the brand and to spin that flywheel faster. And therefore, we expect that our marketing expenses for the full year will be rather somewhere between 13% and 13.5%, that's baked into the guidance that you have seen.

Caspar Coppetti: And then I'm happy to speak to efficiencies. Of course, we're athlete. So we reserve the right to get better every day. And so Part of what you see in the gross profit margin is that we're starting to unlock efficiency of scale. And at the same time, I think you asked how we're driving speed in innovation now.

Innovation design are actually 2 areas where we're starting to really see the impact of AI, where our teams have started to work with very sophisticated tools that allow a smaller team to come up with more options we can test them virtually and ultimately drive better results either for racing like we've seen with Hellen in London or to just benefit the overall consumer like this is our [indiscernible] platform that we will be launching in the fall.

Operator: Your next question comes from the line of Aneesha Sherman of Bernstein Research.

Aneesha Sherman: Let me add my best wishes to you, Martin. So looking at your 2026 guidance, it seems you're modeling a slight slowdown from Q1 into the second half. Can you give us an update on how you see the cadence shaping of cadence of growth shaping through the year? And I know you have some pricing tailwinds in H1 that go away midyear. Maybe you can remind us about what the other factors are shaping that cadence of growth? And then a quick follow-up on gross margin. You talked about the outperformance this quarter. There were some factors that you knew about the FX tailwind lapping your freight accruals. What were the unanticipated?

I mean why did gross margin outperform even beyond your expectations this quarter? What was the surprise from?

Martin Hoffmann: Thanks, Aneesha. So as I shared before, what's embedded in our guidance is a continued very strong growth of our D2C channel, similar to the strong growth rate that we have now seen in the first quarter. So that implies a slower growth on wholesale compared to that strong growth in D2C, which basically ultimately leads to the continued share gain of our D2C business. We have a lot of innovation coming early '27. And so we want to be cautious that we start into that firework of innovation with clean inventory levels in our wholesale partners. And therefore, we put this into our guidance.

But I said that the conviction on the D2C side supports the strong momentum that we are seeing.

Caspar Coppetti: Yes. And let me walk you through the gross margin profile. Very happy to do so. So obviously, on the top line, the innovation that we have, the premium strategy and the full price discipline ensures that we're selling issues at high prices and at full price. If you then go at the cost, we're really starting to see these measures that we've taken. A year ago, we started taking a year ago on the supply side take effect. So that's about 250 basis points of effect right there. The full price I spoke about, it's about 150 basis points. The FX tailwind is only about 100 basis points and then about 100 basis points from tariffs as well.

So that's how the gross margin delta shapes up. What's important to remember, as we have guided for the year, we considered the 64.5% as our new baseline as we continue to unlock further efficiencies of scale. And second, we're not just going to keep all their money to ourselves, but we're already today reinvesting in making the product better giving it more detail, making it more desirable, so we can continue to drive the innovation and desirability of the product.

Operator: Our last question comes from the line of Cristina Fernandez of Telsey Advisory Group.

Cristina Fernandez: I'll add my congratulations to Martin and best wishes in the future. I wanted to follow up on Aneesha's questions about the guidance. You maintained your constant currency sales guidance for the year at 23% based on what you see today or the order books for the fall/winter or -- I mean, is there anything -- do you see upside to their guidance? Or are there things like, for example, you mentioned an increasing promotional landscape that's making you kind of cautious about the remainder of the year?

Martin Hoffmann: Yes. Thank you. We feel that the 23% is the right aspiration for growth this year, given the quality of the growth that we are seeing. As I said, if we see an opportunity to go faster, we will go faster and we can go faster. We, of course, need to consider we have a change in leadership. We have a macroeconomic environment with a lot of moving pieces that's also embedded in here. But as you heard, there's a lot of exciting product coming.

We're in very early in the year, but 23% is a very strong growth rate if it comes at the quality and the full price discipline and the strong margin profile that we are currently delivering.

Operator: Thank you. That concludes our question and answer for today. Thank you so much, everyone, for attending today's call. You may now disconnect. Goodbye.

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