ONON

In this episode of Motley Fool Hidden Gems Investing, Motley Fool contributors Tyler Crowe, Travis Hoium, and Matt Frankel discuss: RocketLab's earnings and the Neutron schedule. Investing opportunities in the space economy. On Holdings earnings. The give-and-take of DTC sales for retailers. eVTOL acquisitions. To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. When you're ready to invest, check out this top 10 list of stocks to buy. Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » A full transcript is below. 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Tyler Crowe: Rocket Lab investors are still waiting on the pad. Motley Fool Hidden Gems Investing starts now. Welcome to Motley Fool Hidden Gems Investing. I'm your host, Tyler Crowe, and today I'm joined by longtime Fool contributors, Travis Hoium and Matt Frankel. A little bit of end-of-the-summer mix-up as everyone gets those last-minute vacations in before kids go back to school. Earnings are still coming in. We're starting to wind down in the earnings season, but we still got a couple coming online. We had On Holdings report. Going to talk about the state of the electric vertical takeoff and landing industry because there's been a lot of moves lately. But we're going to start today with Rocket Lab earnings, which came in yesterday, but obviously didn't get a chance to talk about it yesterday. Shares of Rocket Lab are down a little bit, about 2%, as we’re taping after earnings. But let's be real. Earnings wasn't really the topic du jour. I went through the earnings call transcript, and the word neutron appeared in the conference call 61 times. Iridium, which is the acquisition it just made, came up 30 times, and only 17 times for electron, the rocket they’re actually used to generate those earnings. Guys, what did you see in the report, and what were some of your reactions? Matt Frankel: I'm here because my kids started school today. I'll go ahead and say that. We start early in the South. Rocket Lab's numbers, like you said, this real story is not the current revenue and the current profitability, but let's start there. Rocket Lab's numbers were strong on the top line. Revenue was a little more than expected. The backlog grew a lot faster than expected, more than doubling year over year. The bottom line missed. It was a little bit of a wider loss than investors had expected. That matters because the company is not profitable yet. Investors are skeptical about their near-term path to profitability. This is a company that has a roughly $50 billion market cap. A larger-than-expected cash burn is justifiably a concern for investors, and that’s especially considering that the neutron, which you correctly mentioned, appeared 61 times in the conference call. It still hasn't gotten off the ground. Investors want to know that they're going to get the profitability without having to raise a ton more capital at this point. Travis Hoium: I think this is a story that we've seen over and over again this earning season. What is expectations? Then what's reality? If you actually just take a step back and look at Rocket Lab, the stocks up 1,100% over the past three years. It's been a phenomenal run. Let's not take one day as too much of a positive or a negative, but Matt mentioned $50 billion market cap, $2.36 billion in backlog. That is a very small fraction of that market cap. Investors have very high expectations. Any blip in, you know what? We may be a little bit delayed has been just hammered by the market. I'm actually a little bit surprised that the market's not reacting a little bit more negatively, since this is such a long-term growth story. Anything that pushes that revenue out is going to be a negative, but they're really trying to convince investors the reason that they're talking about these next-generation products about their acquisition of Iridium is they're trying to solidify that business model and vertically integrate, show that they're going to be able to generate that value long term. They're still trying to convince investors, it's a little bit surprising that it's just a little bit of a ho-hum reaction from the market today. Tyler Crowe: The Iridium deal is like what we can be investment that they're making. But at the same time, Iridium is a cash generative business. You can stem the cash burn that's been having for the rest of the business. You can use that to maybe sharp the balance sheet a little bit. It's not going to solve all those problems, but it's certainly going to be a nice salve for what we've seen so far. Let's broaden out the lens a little bit here because there are some key things that have been happening in the space industry. I'm not even mentioning SpaceX did an IPO, and everyone's been talking about SpaceX, but there's a lot of like trends to watch in space recently, and it's part of the reason why people are so excited about investing in space. We've got the golden dome, this major defense space investment priority at the Pentagon. We’ve got a new International Space Station, and then just a lot of commercial interests going on. With all of this in mind, and yes, the space industry is combed over in terms of investment at this point, but where do you see some of the compelling investment opportunities in this particular space? Travis Hoium: I don't know that anything is necessarily compelling to me right now from a valuation perspective, but I do definitely want to watch what's the reality for these companies? If you look at a company like an AST Space Mobile, a lot of hype behind that business. Are people actually going to sign up for a satellite connection for their phone? Is that going to be included in your plan if you're on Verizon or AT&T? What's the real business model behind it? Because we're currently in this phase of, hey, more rockets going up, more payload, more revenue for these rocket companies. All of this is great. We're not at the there there yet point, but we're getting really close where these companies are going to have to start showing revenue, margin, whether they have pricing power or not. That's what I'm keeping an eye on. I don't have many or any investments in this space at this point, but I'm intrigued by the potential for growth. I just think we may be set for a pullback when we get to that reality point. Matt Frankel: I agree with Travis that the valuations pretty much anywhere in the space economy aren't terribly attractive right now. There are some long-term trends that I think have a lot of potential. It sounded ridiculous when I first started, I have to admit, but the data centers and space thing sounds pretty cool. Like it could really be a solution to a lot of the problems that we're going to face. But of the things you mentioned, I'd say that Golden Dome is really the most investible on a near-term basis, at least in my mind. Now, call it a defense play, call it a space play, call it what you will. Depending on the scope and the timeline, estimates have ranged from anywhere 175 billion to 1.2 trillion in total spending. Unlike a lot of the other things we're talking about, there are already real contracts being awarded, real money changing hands. It's a theme that has money moving now, and there are some real legitimate cash-flowing businesses that have a big piece of it. Tyler Crowe: I can't help it, but whenever I hear data centers in space, this is not for anything investment related, but every single time I hear it, I just hear like that Muppet Show “Pigs in Space” thing, and it's like that big cry at the end. Hopefully, I know it dates me incredibly as an old person, talking about the 1970s Muppet Show, but I don't know why, just etched in my brain. Coming up after the break, we're going to come back down to earth a little bit. We're going to take a look at On Holdings earnings. ADVERTISEMENT: You just found out that your sales team is at risk of missing quota. Don't panic. Just ask Rippling AI. 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Tyler Crowe: Shares of a shoe retailer, I'll call it athletic athletire apparel footwear company. On Holding. Their shares are down to about 18.8% after the company reported earnings earlier this morning. 18% sounds awful, but it seems like this quarter, that's what everything happens these days when we report earnings. Either everything jumps 20% or down 15%. Then three days later, we're just right back where we were. We'll see if that happens here, but Travis, I know you followed this company a lot, give me the rundown. What did you see? Maybe the 18% is just another blip or was there actually something that might justify why the market is thinking this? Travis Hoium: The justification in Lee's short term is that their guidance was relatively weak. If we look at the results on always reports in Swiss francs, which makes their results really confusing for investors because you look at revenue was up 13.5% in the quarter. That doesn't sound all that impressive, but on a constant currency basis, it was actually 21.6%. It's always important to look at those constant currency numbers because most of their sales are in the U.S., so a weak dollar is going to make those sales look smaller when you look through the lens of a Swiss franc. But what investors are really focused on right now is that their guidance for the rest of the year was down a little bit. They're expecting growth in the low 20% range instead of, I believe it was 23% plus that they said last quarter, that's telling you that maybe the consumer is a little bit weaker, maybe they're losing a little bit of market share if we're having some recovery with Nike. I don't think we're seeing that the interesting thing for On is that they have made explicit decision to keep their pricing power. Their margins are phenomenal. They're expecting a gross profit margin to be at least 65%. That is just crazy in apparel business. They're saying, you know what, we're going to focus on this profitability. We're going to give up growth as a result. The market’s reaction negatively to that today, but you could look back at the last five years or so with Nike, the last five years at Lululemon and see that, you know what, it's a slippery slope going down. I'm going to start discounting my products, give people a little bit better price to sales to move volume, to increase that sales number. On says that they don't want to do that. Strategically, I think that's probably a good move long term, but it also means if your growth is a little bit slower, those growth investors are going to be disappointed, even if the profitability is going to be a little bit better than maybe we thought it was when the company was growing faster. A lot of trade-offs that they're making, what we don't know, like I said, based on some of those competitors, how many of those are macro trade-offs and how many of those are On specific. Matt Frankel: As Travis said, the time that On beat on earnings, they missed on revenue. Sales were somewhat disappointing, especially on the wholesale side, which they framed as they did that on purpose, and maybe they did. But margins expanded more than expected. Their gross margin, their adjusted EBITDA margin were both pretty impressive compared to a year ago. The big geographical disparity in the results, the Asia Pacific sales grew 55%. All of this is in constant currency, by the way, to not confuse anybody. In the Americas, it was 13% in constant currency. Big sales disparity. America's it's still their core market, but you're really seeing a slowdown in the strange consumer in America and things like that. The real reason for the decline, as he mentioned, was the guidance, a guidance reduction. At the same time, a company reports a big revenue miss, it causes investors to take a step back and consider whether this growth story, which admittedly has been stellar for years, could be slowing down a little quicker than expected. Tyler Crowe: One of the things that stood out to me, Travis, you were talking about gross margins and being so strong. I think part of the reason they do that is that On, one of their strengths is direct-to-consumer channel sales, their own website, not necessarily doing things wholesales at like at Dick's Sporting Goods, nearly as much relative to a lot of the other companies. It mentioned DTC sales were up more than its overall growth numbers, which does tend to explain a little bit on that higher margins because that tends to be a higher margin sale. What I find interesting about this point is comparing it to Nike and Adidas and companies like that, where the other larger companies, which haven't been as successful with DTC channels relative to them. They're still trying to work really hard with the Dick's Sporting Goods, the Foot Lockers. The companies that you end up doing a wholesale. It's larger volume, but much lower margin. My question is whether, like, DTC sales, is this just how new companies that grow up in the age of the Internet and the age of DTC? Is this just how it's going to be? Or can On actually get to the scale of a Nike or Adidas relying heavily on this DTC model? Or is there going to be some point where that channel starts to limit growth, and we'll have to push into those other channels more? Travis Hoium: They're definitely not going to reach the scale of Nike. I think were all similar ages growing up in the late '80s into the '90s. Nike was everywhere, and the model there has just completely shifted because you're going from a supply-driven environment where the supply is the power, having Jordan as a sponsorship, having TV commercials, all that stuff, everybody was wearing Nike. Now you're in much more of a case where there can be individualized ads with those direct-to-consumer sales on Instagram or on Google, where Matt's going to see a different ad from me, and we're going to maybe buy different products as a result. I think there is going to be more of a disparate market. The question for these companies is going to be, where do you fit in that market, and what is your scale going to be? You're right that On maybe reaching a point where this isn't going to be a 30% compounding company anymore, but if they can compound their revenue growth at 15-20% and do so at a really high margin, that can still be really phenomenal business. I think when you're looking at On Holdings, when you're looking at Nike or Lululemon, the question you have to ask yourself is what are they going to be and what are they showing themselves to be? On showed you this quarter, hey, all that talk that we had about pricing power, about keeping margins high, that's exactly what we're doing. What we're doing is we're giving up sales as a result, but that means that in five years, this is still going to be a premium brand. They're not going to go down that slippery slope of Under Armour, for example, which has been disastrous for investors. When you get to that DTC world, you've got to look at, yes, the pie is smaller for an On Holdings to reach. But as long as you're reaching the customers at a very profitable level, that can still be a really phenomenal business. It's a little bit of both, and I don't necessarily think that that means that they're going to give up sales or give up margin long term. It's just a very different business than you had in the '80s and '90s when a lot of these other companies were growing up. Matt Frankel: Speaking of these companies growing up, like the three of us, Nike came up in a different era. The tools to grow direct-to-consumer relationships didn't exist yet. I don't remember anyone being on the Internet back in the late '80s. It was a thing, but it wasn't commercialized yet. Travis Hoium: There weren't Nike ads on Prodigy back then. Matt Frankel: The TV didn't show you a targeted ad. It didn't exist yet. Direct to Consumer was the JCPenney catalog at the time. That was the closest thing we had to direct-to-consumer tools. Its identity was formed completely on its wholesale relationships. Companies these days have more control. Direct consumer gives a company more control over pricing over margins. That's why we mentioned that On Holding is somewhat engineering its margins right now, deliberately by pumping the brakes on wholesale. It can control its brand image better. That's how you maintain that premium brand that On is doing. But I will say that a little more than Travis, I feel like the direct consumer model is going to have more limits at scale when it comes to building out your own stores, building out your fulfillment logistics, especially things like that. It's going to come to a point where On Holding is going to have to make a choice. Become a value stock that's growing at 10-15% annually, which it's approaching value stock territory right now, if I'm being totally honest. Or maintain a 30% plus growth rate but really lean into wholesale and give up a lot of your margins. They're going to have to compromise a little bit within at some point, and I'm not sure what direction they're going to go. So far, I can't argue with anything they've done strategically, so I have no doubt that they're going to make the right call. But it's going to be more of a balancing act, I think, over the next five years. Tyler Crowe: The holding the price thing always works out until all of a sudden, there's a lot of inventory building up on the balance sheet, and then you start to see a little bit more of that wholesale moving stuff maybe in channels that they don't expect. It seems as long as On can keep that inventory supply chain working efficiently and not having a lot of stuff build up on the balance sheet should work. Before we go, Travis, I know you're a fan of the company, also a fan of the shoes. What's the most recent On purchase you've had? Travis Hoium: I've got these new slip-on shoes where the back folds down a little bit like I don't know if you would like a kiss an example. It's like a Croc if you want it to be, or a shoe if you want it to be. They're a little goofy, but I don't know. I'm liking them so far. Matt Frankel: Did you buy them wholesale or direct-to-consumer? Travis Hoium: Direct to consumer. Absolutely. Tyler Crowe: There you go. Coming up out of the break, we're going to look at the moving and shaking in the eVTOL industry. ADVERTISEMENT: Indeed presents. Hires you can't afford to get wrong. Like warehouse operations manager. Where are the forklifts? I sold them. They were too expensive. I got a great deal on these scooters, though. You expect us to move a two ton palette on a scooter. It'll be fun. Just think of the core strength you'll build. This is a job for sponsored jobs. ADVERTISEMENT: This is what happens when you don't sponsor your job and indeed. So the next time you need someone to get the job done right, get matched with quality candidates with an indeed sponsored job. Visit indeed.com/nexthire and sponsor your job today. Tyler Crowe: It's been a minute since the last time we had two companies persistently engaged in a game of anything you can do, I can do better than electric vertical takeoff and landing companies, like Archer Aviation and Joby Aviation. That's not even counting, like the numerous times. Both have dragged each other into the court for various reasons, one suing the other for patent, whatever, stealing stuff. It's been quite a dramatic past couple of years or two. Now, it's only Tuesday, but we've already seen both companies announce significant acquisitions. Again, one does one thing, the other's got to react. Archer announced a deal with Boeing to take over its eVTOL and several of its other non-core Boeing properties. Then, less than 24 hours later, Joby announced it's acquiring a defense contractor Resonant Sciences. Guys, I ask you guys to each, pick one of the deals and give us a quick rundown in the reactions that you guys saw for each of the deals. Matt Frankel: Archer's deal, the market really liked it, it seems like. The stock was up roughly 20% afterwards, that you mentioned, they're acquiring three Boeing subsidiaries. There's the eVTOL developer. There's one company that makes air traffic management software, one that makes defense drones, that's actually a very profitable business already. It's an all-stock deal, so this didn't cost them any money. Gives Boeing a stake of nearly 20% in Archer, including some warrants that it's getting. From a strategic standpoint, it makes a lot of sense for both companies. I mentioned one of the acquired properties called Institute. It's the drone maker. They're already profitable. They have over $200 million of annual revenue. Archer is mostly a pre-revenue company, other than some grants and research funding and things like that. This is a big deal when it comes to, I don't want to even say revenue diversification, but just having some. It also gets a fully autonomous eVTOL design that it didn't have to design itself. That was designed by Boeing, which you can't really get mad at that. From Boeing's perspective, it gets rid of a lot of some of its non-core properties that it was still holding and can focus more of its efforts on its core aircraft business, commercial and military. It gets a long-term upside from the Archer stake if these businesses turn out to be something. It's getting rid of these businesses but still getting financial benefit from them. Investors seem to like the deal. It makes Archer a much more credible defense sector player. Like I said, it adds some real revenue to a balance sheet that really needs it. Travis Hoium: The reaction to Archer’s was positive, and that's generally been the case when Archer makes these press releases, and they're really good at the press release game. But you look at since the beginning of 2025, Joby Aviation has outperformed Archer, and the reason for I think was Joby was the more focused company. We knew what they were going to be doing. They were going to be flying their aircraft with commercial passengers before Archer, potentially more than a year before Archer Aviation. This was really a company that was scaling in the vertical takeoff and landing with air taxis. Building out, they bought a company called Blade last year. Blade's currently running helicopters. We could just imagine just fitting in an eVTOL aircraft and then taking that from LaGuardia to Manhattan, for example. The interesting thing with this deal is this $500 million acquisition, so it was a much smaller acquistion, $450 million of it in cash, only 50 million in stock. But it does move Joby more into the defense space. What they said in the release is that this is actually going to become their new defense business. We'll have two separate divisions because I think that they're worried about exactly what I said earlier. Hey, you're not a focused company anymore. We thought you were an air taxi company, and now you're a defense contractor. I think the idea here is just like with Archer's acquisition, you are bringing in $100 million worth of revenue. It is a growth company. It can operate on its own and yet still have a little bit of optionality on the defense side. But for Joby, I think the bigger question to me is, what does this company want to be long term? If the answer is you want to be a big air taxi company, then just focus on that. Don't take that $450 million and put it into a defense contractor. Put it into scaling out your business and becoming their taxi company. But the market's reaction, ironically loved Archer yesterday. Pretty ho-hum on this Joby deal today. Stocks down about 3%. Tyler Crowe: Two quick notes and things that I noticed with both of these deals for one. Boeing sold them an autonomous eVTOL design but kept the autonomous software for themselves. Interesting little fold in that development. Also, in the Joby press release, I was very surprised how much they were talking about acquiring one-million-square-foot manufacturing space, almost as a little bit of, we bought a defense business, but look at all this manufacturing space we have now, so we can start to scale up. Maybe that was just to your point, trying to stay focused and saying that's what we got, but we'll see. Here is my takeaway from both of these announcements. It appears to be a deliberate move to diversify the holdings. Is this an admission that this eVTOL deployment, commercial air taxi business is much harder than initially expected and will likely take a lot longer? Matt Frankel: I would call it more hedging against the possibility that eVTOLs could take longer than originally thought, not necessarily an admission that they will. Both say that they're still on track to reach some key milestones they set this year, but it's true that anytime you're building a new category a vehicle that flies. Look at Rocket Lab. It's a perfect example. It generally has taken longer and cost more money than originally expected. It makes sense that investors are somewhat getting impatient with these essentially being pre-revenue businesses. But I think they're still on track to deliver the product that they promised just maybe a year or three later than they originally thought. Travis Hoium: I actually think that this shows that they are trying to diversify business and not scaling that core business as quickly as they potentially could. That's where I have a lot more questions than answers, especially on the Joby side, because Joby actually wants to have potentially commercial passengers in 2026. They're potentially going to be operating in Texas in 2026, definitely in 2027. They do not have enough capacity to actually scale that operation today. I don't know where defense fits into that. You could read into both of these deals, I think, and say that the bigger piece of it is actually autonomy, and they're looking at five or 10 years down the road and going, you know what? We don't even want to have a pilot in these aircraft. We wanted to fly fully autonomously. We need to build these software pieces by the sensors. That's part of the Joby deal. But I think there's a lot to play out here. We'll get a little bit more information from both. Joby has a presentation for investors after the market closes today. But I think this just does add a lot more questions because they're trying to be both commercial companies and defense contractors, and it's really hard to do both when you don't have either completed at this. Tyler Crowe: It's definitely a wait-and-see sort of approach. I can see the logic on wanting to get into defense business. It's steady. It's cash generative. You can use that to fund some of this stuff and maybe give yourself a lifeline and not have to go to the capital markets after issuing a slew of press releases, just to pump your stock up enough to make it worthwhile. We'll see. Again, the thing that scared me the most is when Matt said a year or three. I don't think a lot of investors would be too excited when they hear, we're three years behind. I think one year, maybe. That's all the time we have for day. I'm going to have disclosure for down here. As always, people on the program may have interest in the stocks and The Motley Fool may have formal recommendations or against, so don't buy stocks to be solely here. All personal finance content follows Motley Fool editorial standards, and it's not approved by advertisers. Advertisements or sponsored content by informational purposes only. To see our full advertising exposure, please check out our show notes. Thanks to producer Kristi Waterworth and the rest of The Motley Fool team. For Matt Travis and myself, thanks for listening. We'll chat again soon. Matt Frankel, CFP® has no position in any of the stocks mentioned. Travis Hoium has positions in Alphabet, Crocs, Joby Aviation, On Holding, and Verizon Communications and has the following options: long December 2027 $20 puts on AST SpaceMobile. Tyler Crowe has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AST SpaceMobile, Alphabet, Boeing, Nike, On Holding, and Rocket Lab. The Motley Fool recommends Crocs, Lululemon Athletica Inc., Under Armour, and Verizon Communications. The Motley Fool has a disclosure policy. RocketLab's Neutron Update, On Holdings Earnings, and the eVTOL Rivalry Heats Up was originally published by The Motley Fool

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was characterized by a sharp divergence between direct-to-consumer (DTC) strength and a disciplined pullback in wholesale to protect full-price integrity. DTC momentum reached record levels, growing 34% at constant currency, driven by a younger consumer cohort where 1/3 of customers are now under age 34. Management intentionally moderated wholesale sell-in, particularly in the Americas, to avoid building excess channel inventory that would necessitate discounting. The 'movement class' demographic is expanding the addressable market, treating health and longevity as status symbols, which fueled 40% growth in the training vertical. Apparel is becoming a primary entry point for the brand, with sales nearly tripling in the tennis category and reaching a record 28% share of running campaign sales. Operational efficiencies and a favorable channel mix allowed the company to absorb higher U.S. import tariffs while still expanding gross margins to 65.4%. Full-year constant currency net sales growth is projected in the low 20s, reflecting deliberate wholesale restraint to clear the runway for 2027 innovations. Gross margin guidance was raised to at least 65%, predicated on significant DTC mix expansion and continued full-price execution for the remainder of the year. The innovation pipeline is accelerating, with a plan to update all everyday running franchises with new foam technologies and precision fit within the next 14 months. Management expects Q3 growth to be lower than Q4 due to the timing of wholesale recalibration actions taken in the Americas. Adjusted EBITDA margin guidance of 19.5% to 20% is maintained, as gross margin gains are balanced against continued investments in brand building and digital ecosystems. U.S. import tariffs remain a headwind, though management noted that current margin guidance does not yet include anticipated tariff refunds expected in the second half. Inventory levels increased 30% year-over-year, primarily driven by volume growth and foreign exchange movements rather than excess stock. The leadership structure was unified under Co-CEOs to reinforce founder-led DNA while scaling into a multi-decade global sports brand. Selective retail expansion continues with a The company is focusing on store clusters in regions like Germany and the Nordics, while noting that its two Tokyo stores continue to perform exceptionally with no signs of cannibalization. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management believes the 'movement class' represents a permanent societal shift where sports gear is an identity marker rather than just a utility. On's premium positioning and innovation focus allow it to capture market share from incumbents even in a competitive environment. The uplift is almost entirely attributable to a higher-than-expected DTC sales mix and the continued success of the full-price strategy. Operational efficiencies in distribution and last-mile fulfillment are also contributing to the sustainable margin profile. The wholesale softness is localized to the Americas everyday running franchises and is viewed as transitory. A massive product rollout starting in October with the Cloudsurfer 3 is expected to re-energize the channel through late 2027. Management is 'opening the aperture' of pricing, maintaining a $160 entry point while scaling high-demand performance models toward $300. There is no intent to lower prices; instead, the brand is leveraging elite technology like LightSpray to command higher premiums.

Image source: The Motley Fool. Tuesday, Aug. 11, 2026 at 8:00 a.m. ET Head of Investor Relations - Liv Radlinger Founder and Co-Chief Executive Officer - David Allemann Chief Financial Officer - Frank Sluis Founder and Co-Chief Executive Officer - Caspar Coppetti Operator: Hello, everyone. Thank you for joining us, and welcome to the On Holding AG Second Quarter 2026 Earnings Call. [Operator Instructions] I will now hand the conference over to Liv Radlinger, Head of Investor Relations. Liv, please go ahead. Liv Radlinger: Good afternoon, and good morning to our investor community. Thank you for joining On's second quarter earnings conference call and webcast. With me today on the call are David Allemann, Founder and Co-CEO; and Frank Sluis, CFO. 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 March 3, 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. We will begin with David, followed by Frank, leading through today's prepared remarks, after which we are looking forward to opening the call for a Q&A session. With that, I am very happy to turn the call over to David. David Allemann: Good afternoon, and good morning to our global investor community. Thank you so much for joining us today. When we started On 16 years ago, we were told that the sportswear industry operated on a rigid set of rules, standard molds, standard distribution and standard ways of doing business. We politely chose to carve our own path. When told it was physically impossible to put holes into the rubber sole of a running shoe, I took those industry standard molds and broke them. This is how CloudTec was born. That single act of defiance forged our permanent innovation culture. At On, we are reinventing the mold again and again because it is the only way to build a premium global sports brand that will prevail for decades. Stepping into the roles of Co-CEOs just over 12 weeks ago is a strategic commitment to our founder-led DNA. As On continues to scale into a multi-decade global company, we approach our growth with the precise focus of innovators and operators, but with the long-term patience of founders. We are not sprinting for short-term volume. We are deliberately engineering for the multi-decade value of a premium brand. Alongside our President and COO, Scott Maguire; and our CFO, Frank Sluis, this leadership structure unifies our strategic intent with disciplined operational and financial execution. Relentless product innovation, a unique design culture and brand equity remain at the very center of every decision we make. This commitment delivered another exceptional quarter of premium growth. For Q2 '26, net sales reached CHF 850 million, a powerful 22% growth at constant currency. At the same time, we delivered industry-leading profitability, over 65% gross profit margin and close to 20% adjusted EBITDA margin. The strongest proof of the connection we are building is the extraordinary strength of our direct-to-consumer channel, the most premium expression of our brand, which delivered exceptional momentum in Q2, growing 34% at constant currency. This was driven by deep toe-to-head consumer demand across all regions with On's brand awareness increasing to 30% as a whole new generation of fans discovered the brand. We are proving that a brand can achieve global scale without eroding premium positioning or margin ambitions. We do not create exclusivity through artificial scarcity or hype. We scale by bringing superior technology, engineering, unique design, and cultural relevance to millions of consumers, capturing market share while fiercely protecting our margins. On ultimately creates a highly defensible, scalable financial profile of a premium growth compounder. Our actions in wholesale this quarter are perhaps the clearest example of our premium strategy at work. Momentum in our own channels was remarkably strong with growth ahead of our expectations in all regions. On the other hand, in wholesale, the sellout of some of our everyday running franchises tracked below our ambitions in a highly promotional multi-brand marketplace, particularly in the Americas. Clearly, this is something we are not pleased with, but our response is where the premium standard proves itself. We have been intentional and disciplined on managing sell-in to the channel within this environment. Most importantly, we choose not to build in-channel inventory that could compromise our full price integrity. This commitment, discipline, and focus on driving high-value accretive growth will continue into the second half of the year and be evident in our premium financial profile. We expect our full year net sales to grow in the low 20s at constant currency with a higher gross margin outlook and reiterated adjusted EBITDA margin. On this basis, we are on track to close 2026 as the fastest-growing global brand with the highest gross margin in our industry. This is a continuation of the premium strategy that makes us who we are. Let me give you a personal example of where we saw that strategy at work. Early in our journey as a public company, we made the tough choice to prune over-distributed channels in EMEA and protect our full price integrity. Many questioned us then. Today, that discipline is delivering exceptional 21% constant currency growth and record Q2 group margins. EMEA proves that premium growth isn't bought through volume, it's forged through restraint. In the wholesale channel, this discipline does more than protect our margins. It clears the runway for an acceleration of our innovation cycle. We are not just releasing new models. We are deploying a step change in performance engineering. Franchises like the Cloudmonster 3 Hyper, the Cloudsurfer 3, and the Cloudboom Strike 2 are the direct beneficiaries of this strategy. By ensuring a clean premium marketplace today, we allow these breakthrough technologies to land with maximum impact, driving full price demand. So now let's step into our innovation lab. Our premium position is anchored by our innovation engine, and that engine starts with running. Patented performance engineering is our permanent antidote to promotion. This past June, we hosted our inaugural On Running Summit in Paris, bringing together our top 100 global run specialty partners. We gave them an exclusive look at our next-generation marathon racing shoe, the Cloudboom Strike 2, featuring our new CloudTec Sphere geometry paired with Helion HF superfoam. An independent landmark study confirms that the Cloudboom Strike 2 delivers a 1.6% improvement in running economy over the industry's leading super shoes. We are offering the Strike 2 in both a precision laced upper and our revolutionary robotic LightSpray upper. LightSpray is no longer an elite prototype. It's a fast-scaling commercial engine. With our automated facilities in Busan and Zurich fully cranking, LightSpray is driving extraordinary momentum across our running lineup, demonstrated by immediate sellouts for the Cloudmonster 3 Hyper LightSpray that launched in March this year. Crucially, elite breakthroughs must benefit the broader running community. In Paris, we also previewed our Spring/Summer '27 collection, featuring SURREAL foam technology in the Cloudsurfer 3 and the Cloudsurfer Max 2. While the legacy footwear industry accepts a compromise between impact absorption and rebound, we engineered advanced CloudTec structures directly into a superfoam, combining unique chemistry with the physical advantage of dynamic cavities. This represents a first for On, and we expect it to define the industry. On's innovation advantage is tearing up global record books. Zaynab Dosso captured world indoor gold in the 60-meter sprint. To solidify this technical authority, we officially launched the On Athletics Club Sprint Squad in Los Angeles. Led by Coach John Bolton, this elite team is built to dominate short distance track and spark the imagination of a young global audience leading up to the 2028 L.A. Olympics. Let us expand the view across all our sports verticals. Tennis brings On to the most premium spectator sport. At Roland-Garros, Flavio Cobolli captivated millions with an unforgettable underdog run to the final. A 19-year-old Brazilian, João Fonseca, sent shockwaves through the sport by defeating Novak Djokovic in the third round. This isn't just visibility. It's revenue. Tennis is our fastest-growing apparel vertical with sales nearly tripling this quarter. In training and hybrid fitness racing, a hypergrowth category we intend to scale, our training powerhouse, Alex Roncevic, completely redefined what is humanly possible. Bearing an advanced prototype of our Cloud X Tempo Pro, he became the first human in history to shatter the 52-minute barrier, stopping the clock at a blistering 51 minutes and 59 seconds and setting 2 world records in a single race. Our training vertical showed a 40% growth rate as a result. This intersection of performance engineering and cultural relevance is winning what we call the movement class, a generation that treats health, vitality and longevity as the ultimate status symbol. They are expanding our addressable market drastically. Today, consumers under the age of 34 represent over 1/3 of our total customer base and keep growing fast. This massive generational step-up fueled a stellar 190% year-over-year growth for our Cloudtilt franchise within the premium sneaker channel. We are clearly winning in sports lifestyle. A defining moment for this movement was seeing Cloudtilt models take 3 of the top 5 selling positions at Foot Locker Europe last quarter, unseating current incumbents that had held top spots for years. This is not just a statistical win, it is a profound validation of our design language and our ability to capture the zeitgeist. We back this momentum with elevated storytelling. In April this year, Zendaya's co-created collection was a phenomenal commercial success that sold out well ahead of expectations, with 60% of buyers being women under 34. Our Shape of Dreams campaign film, directed by Spike Jonze, won 3 Cannes Lions, reinforcing our strategy to earn consumer attention through entertainment rather than just buying ad space. Furthermore, our Paris Fashion Week installations alongside Loewe and Post Archive Faction prove that On's design language commands a premium position entirely untouched by legacy sportswear. This brand heat validates our strategy of selective expansion, unlocking highly calculated sequential growth across entirely new product categories, channels and geographies. Apparel is hitting its stride. Our proprietary SenseTec fabric is helping us engage further with female customers worldwide, a key priority for us. At the same time, the expansion of our Volt Running collection saw apparel achieve a record 28% share of our running campaign net sales in Q2, proving our ability to complete the runners' uniform from toe to head. Our own retail ecosystem is spearheading this complete uniform. Take the Paris retail flywheel. Our elite visibility during Roland-Garros translated immediately into exceptional apparel and footwear performance. Our Champs-Élysées flagship was our strongest performing store globally this quarter, driving exceptional growth in traffic, conversion and average item values. In Stockholm, our new flagship in the historic Golden Triangle has been opened just 2 months and is already performing at twice our expected level. None of this execution is possible without our global team. We approach our talent architecture with extreme intention, pairing founder vision with world-class operational leadership. To steer our next chapter of scale, we promoted Rebecca Cai to Chief Global Markets Officer, following her stellar growth execution across APAC, our most premium region. We are equally excited to welcome Alice Delahunt as our Chief Customer Officer, injecting profound consumer brand and digital ecosystem expertise directly into our D2C strategy. They join an elite leadership bench ready for our next horizon of growth, and you have the opportunity to meet them face-to-face very soon. On September 21 and 22, we will host our 2026 Investor Day right here at our own labs in Zurich. It has been 3 years since we last shared our long-term road map. We cannot wait to show you up close and personal how we intend to keep pushing the boundaries of what sportswear can be and deliver sustained premium growth for the years and decades ahead. With that, it is my great pleasure to hand the call over to Frank Sluis for his first earnings call as a CFO. Frank brings over 2 decades of global consumer finance leadership, managing multibillion operations in Europe, the Americas and Asia. As an avid marathon and triathlete, he fundamentally understands what it means to build for long-term endurance. Over the past few months, he has brought remarkable discipline, operational rigor and an unwavering conviction in our premium path. He will now walk you through our Q2 performance and how we are calibrating our financial outlook for the balance of the year. Frank, over to you. Frank Sluis: Thank you, David, and a very warm welcome from my side as well. It's a real pleasure to be speaking with you all for the first time. I've spent my first months at On listening and learning, spending time with our teams across the regions, with our partners and naturally diving into the strategy and the numbers. I want to mention 3 things that have impressed me the most. Firstly, the obsession with disruptive innovation, which runs throughout the company and is supported by excellent R&D capabilities and supplier partnerships. Secondly, the huge ambition and growth mindset of our 4,000 team members and the still untapped potential in so many areas, including retail and apparel to just mention a few. Thirdly, the founder-led culture and commitment to building the most premium sports brand for many decades to come. This requires discipline every day in the choices we make to drive long-term and sustainable value creation with a unique earnings model. This is the thread I would like to ask you to hold on to throughout my remarks when going through the financials. Let's now dive further into the details of a strong quarter 2. Net sales this quarter reached a new high of CHF 850 million, growing 21.6% at constant currency and 13.5% on a reported basis. As ever, the composition tells you more than the total. Growth was strongly led by direct-to-consumer, our most elevated channel, our highest margin channel and the clearest read we have on our brand momentum. The strength ran through both e-commerce and retail. Net sales in DTC reached CHF 388 million, up 34.3% at constant currency and by 26.0% on a reported basis, lifting DTC to a second quarter record of 45.7% of sales. This is the channel where we fully define our brand experience. So to see this powering our business is one of the results we are most pleased with this quarter. E-commerce growth exceeded our expectations in every single region. Last quarter, we spoke about deliberately widening the conversation to new communities. We continued to pursue this strategy, and the signals of our commitment to this approach are encouraging. Those newer visitors are already moving deeper into the journey, evidenced in increased engagement. And we did it while driving a further increase in full price share year-on-year. To me, that is the whole strategy in 1 data example. We are broadening and elevating the brand at the same time. Our own stores also performed very well with continued strong growth, both in new doors and comp sales. David mentioned our Champs-Élysées flagship. I would add our 2 Tokyo stores, which both continue to perform exceptionally with no signs of cannibalization, clearly telling us that with the right format in the right location, we have real room to expand even in cities where we are already present and at very attractive economics. Our retail KPIs continue to strengthen from an already high base, proving the incredible value of our deepening consumer connections. Let me turn to wholesale because it is where the choices David spoke about showed up in the numbers. Growth was more moderate, 12.7% at constant currency and 4.8% reported, with DTC outperforming wholesale in every region. As David explained, that is deliberate. With sell-out softer in some of our everyday running franchises in a highly promotional environment, we chose to hold back sell-in rather than ship volume that would build inventory in the channel and put a full price integrity at risk. It costs us some wholesale growth, but it protects our partners' inventory health, our premium positioning and ensures the best position for launching what we believe are outstanding innovations in 2027. Switching to our regions. In the Americas, net sales grew 13.0% at constant currency and by 4.5% on a reported basis, reflecting the wholesale dynamic I just described. Within DTC, momentum accelerated in both North America and Latin America. We also continue to attract younger consumers with the share of e-commerce customers under 24, up by more than 1/3 versus quarter 1. I find this really exciting because it means we are attracting the next generation of On consumers without discounting our way to them. Our stores in the region performed well, too, particularly Miami and our New York Flatiron flagship with higher average basket sizes reflecting the resonance of our premium offer, including a strong performance of our Loewe and Zendaya launches. EMEA was a real standout. Net sales up a very strong 20.5% at constant currency and by 15.4% on a reported basis and all the more striking against a very demanding prior year comparison. DTC growth was in excess of 20% at constant currency across every single subregion, including DACH. The performance in Southern Europe was again exceptional, with France, Spain and Italy all tracking comfortably ahead of our expectations and building real momentum on an ever larger base. Our retail presence in these markets also goes from strength to strength with standout performances of our stores in Madrid and Milan. In APAC, net sales grew 54.7% at a constant currency and by 43.1% on a reported basis, broad-based across the region, making this another quarter of 20% global share. Japan and Korea continued to perform exceptionally well as did Greater China. This market exceeded our expectations in every channel with a great contribution from our stores and particular strength on Tmall despite our choosing not to participate in promotional activity. This quarter, we opened our first store in Macau, which is already matching the strong momentum of our remarkable Hong Kong locations. With the widest assortment in the region, the store achieved above-average conversion, reinforcing our conviction in the potential of larger format stores across the region. Across our categories, growth is increasingly driven by multiple engines. Net sales from shoes were up 18.9% at constant currency and by 10.9% on a reported basis. In performance running, the Cloudmonster 3 Hyper delivered strong sell-through and continues to be widely praised by retailers and consumers alike. We continue to scale LightSpray, which already contributed quite meaningfully to our performance running vertical this quarter despite being still early in the scale-up journey. As a runner myself, attending our inaugural Global Run Summit in Paris and spending time with our retail partners and innovation teams has left me even more excited about what is to come next year. This enthusiasm is clearly shared by our partners with Spring/Summer '27 orders for Cloudsurfer 3 from these retailers doubling after the event. If we turn to Lifestyle, David mentioned the performance of Cloudtilt, which saw strength across all versions, including the remix, which is resonating exceptionally well with the young male consumer. The strength of this vertical is particularly impressive in the context of a highly competitive environment where many brands resorted to promotions. Our authenticity in this space and the newness of our products really resonates with the consumer. Training was also a highlight with Cloudpulse and Cloud X both growing strongly and a great example of how we structurally build new franchises and credibility in new sports. Our tennis momentum continued to build on and off court through the Roger franchise, fueled also by our athletes' performances at Wimbledon and Roland-Garros. Apparel grew 56.2% at constant currency and by 47.7% on a reported basis, continuing to establish itself as a meaningful growth driver in its own right and increasingly an entry point into the brand. Performance running remained the anchor, supported by our established collections, the expansion of Volt and a highly successful limited drop with Air1. The Tennis Court collection delivered excellent growth and sell-through, taking a meaningfully larger share of our apparel business. And the co-created Zendaya collection significantly exceeded expectations. In the U.S., every style beats our forecast by triple digits. To summarize, across regions, channels, and categories, we are building an increasingly global and diversified business, one that remains firmly rooted in performance innovation, thrives at the intersection of sports and culture and continues to be built for the long term with a discipline that comes from founder-led leadership. Turning to the P&L. This is where all that discipline converts into profitability. Constant currency sales growth of 21.6%, coupled with adjusted EBITDA margin expansion to 19.8% drove absolute constant currency adjusted EBITDA growth of over 30% year-over-year. Bottom line margin expansion was primarily fueled by an outstanding gross margin of 65.4%, reflecting our strategy at its best, strong DTC momentum, disciplined execution and continued operating efficiencies. Together with a favorable freight mix and some positive foreign exchange effects, those efficiencies let us fully absorb external pressures, including higher U.S. import tariffs and still expand our gross margin. To be clear, these numbers do not include any tariff refunds, which we anticipate are likely to come throughout half 2. Our gross margin is a clear demonstration of the strength of our premium operating model. While freight mix and foreign exchange will naturally vary over time, the core drivers are in the base, disciplined full price execution, a higher DTC mix and sustainable operational efficiencies. These capabilities allow us to invest deeply into our premium product and consumer experiences, further differentiating our brand. Within SG&A, distribution expenses decreased to 10.0% of net sales, continuing to benefit from operational efficiencies, including in last mile fulfillment. As we have said before, those efficiencies create the capacity to invest where we see the strongest long-term returns for our future, this quarter in brand building and digital opportunities, including those to engage with new communities, driving marketing to 14.0% of net sales. Selling expenses increased as expected, reflecting the strong DTC contribution, while we also continue to invest behind future growth in G&A. Discipline earns the margin, and the margin funds the future. Our strategy and value creation flywheel in action. Turning to our balance sheet, where our earnings translated into another quarter of strong cash generation. Net working capital improved by CHF 14.9 million versus quarter 1 as strong receivable and payables management more than offset our inventory intake for the fall/winter season and our actions to recalibrate sell-in. Total net working capital remained strong at below 20% of sales. Capital expenditure was CHF 28.2 million, focused primarily on our selective retail expansion and the infrastructure to support our continued growth. Altogether, we increased our cash balance by CHF 185.2 million, ending with just over CHF 1.2 billion in net cash and a very strong financial position, one that lets us fund innovation, stores and brand building ourselves. Before I turn to our outlook, I want to thank the whole On team for their performance this quarter. I've spent time with many of you these first months, and the welcome has been wonderful. You've been open, generous, and quick to help. Those qualities are a part of the unique culture of On and key elements of what makes this company so special. This is just one more reason I'm even more excited today than when I joined about growing the company together. Let me close on the balance of the year. In Q3 so far, we have continued to execute on our strategic priorities and premium vision with conviction. In July, we again demonstrated our commitment to impact and sustainability with the launch of the Cloud X 5 with CleanCloud, the first EVA midsole made using captured carbon emissions. This technology has already scaled past 1 million pairs, 4 years ahead of our own target. Our pinnacle LightSpray Cloudboom Strike 2, made for our most dedicated running community, was, as David mentioned, independently validated as one of the very best race shoes globally. And we will begin scaling the Cloudsurfer 3, our first shoe with our new SURREAL superfoam in October with run specialty partners. The response to this innovation at our Paris Run Summit was incredible. We've also opened a number of key premium retail stores in the last few weeks, including in the United Arab Emirates, Copenhagen and São Paulo. When it comes to our outlook for the year, I want to share a bit of context on the philosophy behind how we are guiding. I mentioned it, but it is rare and an absolute privilege to work in an environment where every single team member has incredibly ambitious goals and dreams. But at the same time, it's very clear on the discipline required to build a differentiated premium brand for the long term. Strong growth and premium execution can absolutely go hand-in-hand as we proved this quarter, and doing it the right way is a nonnegotiable. So what you see in our outlook is our premium growth strategy in action. This is a model built on discipline on only pursuing the growth that protects and elevates our positioning. With the deliberate action already taken on sell-in quarter 2 and early quarter 3 and the message that we will not shy away from taking further action to ensure we are setting up for success and a strong pipeline in 2027, we are committing to a 2026 constant currency net sales growth rate in the low 20s. This reflects our premium growth strategy, clear visibility on the wholesale action taken for the third quarter, including in our everyday running franchises, and the focus on continuing to manage sell-in deliberately where we deem it beneficial for our long-term success. With these actions relating to wholesale, it is important to understand that we expect continued very strong momentum in DTC and resulting significant DTC mix expansion for the rest of the year. I want to be equally clear about profitability because this is where the quality of our growth shows. The commitment to premium execution alongside the high DTC mix means we now expect a full year gross margin of at least 65%. And as we pursue high-quality growth and keep investing in our future, we maintain our adjusted EBITDA margin outlook of 19.5% to 20%. Note, this margin outlook does not include any benefits from tariff refunds. We expect to recognize some refunds in our quarter 3 results, and we'll update you when we have fuller visibility on the amount. You heard it today, we're on a journey to build the most premium sportswear brand of the coming decades. The discipline inherent in this is what makes this such a compelling earnings model, strong growth, industry-leading margins and a compounding financial profile. As a CFO, I could not be more excited and convinced of where we are going. I look forward to meeting many of you at our Investor Day in September to share in more detail how we bring this ambition to reality. Operator: [Operator Instructions] For the Q&A, David and Frank are joined by Caspar Coppetti, Founder and Co-CEO. [Operator Instructions] Your first question comes from the line of Jay Sole with UBS. Jay Sole: David, my question is for you. You mentioned in your prepared remarks about the global trend toward fitness and wellness. But at the same time, a lot of brands in the athletic wear space have seen slowing results over the past year. What gives you confidence that the industry growth rate that you envision can remain strong? And what gives you confidence that we're not seeing a real slowdown in athletic wear broadly on a global basis that maybe could cause more weakness going forward? David Allemann: Jay, thanks a lot for your question. This is David. What we are seeing, and you see that really broad-based growth for On in our direct-to-consumer channel that saw the stellar growth. And we are an innovation brand. So really kind of our core comes from innovation. And we're seeing that we have across channels, geographies but then also new verticals like, for example, tennis, training, now our new innovation that comes in running, like, for example, the recently launched Cloudmonster that we have an incredible momentum. And we believe that what we call the movement class is a societal shift that brings a lot more consumers to sports, because it's not just about utility, but it's about identity. And identity is built through innovation, through cultural relevance and ultimately also through price point, because it's a differentiation factor. And so it's the perfect territory for a premium innovation brand. And that's why we're doubling down. We feel that's an opening TAM and that is supporting On's growth, and you've seen that at play in the second quarter as well. Jay Sole: Got it. Maybe, Frank, if I can ask one -- if I can ask you one question. Just on the gross margin guidance increase, can you just walk through the drivers? Is it mostly mix? Is there any markdown increases baked into your gross margin guidance for the year? Frank Sluis: Thanks, Jay. As we said in quarter 1 already is that for this year, I think the margin trajectory will be quite clean and no, basically, significant one-offs in our year-to-date and also not in our outlook. So in quarter 1, you saw, basically, sort of a mid-64% margin, now a low 65% or a mid-65%, 65.4%. And in that, basically, growth versus last year, of course, is a combination of, number one, a higher DTC share -- or number one, I would say, is a continued strengthening of our full price strategy. Number two is the increased share of the DTC mix. And number three, operational efficiencies. And I think as they are in the year-to-date margin, I think they'll also be visible in a similar sort of rate in the year to go. And hence, also, we lifted the outlook a bit from the -- basically, at the 64.5% to 65% plus as we now see that, basically, the DTC mix, in particular, is trending favorable, and we believe that also to remain the case for the remainder of the year. Operator: Your next question comes from the line of Jonathan Komp with Baird. Jonathan Komp: Could you just maybe share a little bit more perspective? When you look at the divergence across channels right now, are you seeing a similar divergence in your everyday running platforms across channels? Or do you think there's some unique factors in the Americas wholesale segment currently? And do you have any insight on how long of a drag some of the intentional actions to limit sell-in into those channels in wholesale might continue here? David Allemann: Jon, thanks a lot for your question. I think what we are seeing is a very, very loyal customer in our own channels. And actually, we also have a lot of new cohorts coming to our channel. Now 1/3 of our consumers are under 34. So it's also a next generation that is coming to us. And of course, they're coming to us as a premium brand, and they're not looking for price, but they're looking for innovation. They're looking for cultural relevance. So that's the primary driver in that channel. While in a wholesale channel, of course, you're more exposed to a very promotional environment. And so it's more of a choice that you have. So that's why we feel we have a very strong consumer. We have higher awareness now, 30% we have a young new cohort coming to us, and that's what drives the DTC growth that you have seen at more than 34%. Caspar Coppetti: Jon, I can weigh in a bit on wholesale. So we want to be quite clear. So this is mostly an Americas wholesale topic where it's been a bit more volatile and the months are different. We had a very strong start to the year with our innovation hitting. Now in the second quarter, we were mostly comping some of our everyday run franchises, which we've still grown, but not maybe at the rate that we are expecting going forward. Now when we look into the start of Q3, we're already off to a very good start with innovation that we have, most importantly, Cloud X 5 and Cloudrunner Max that are landing extremely well. We also had a very strong back-to-school. So even in the region where wholesale is a bit depressed for us right now, which we believe is transitory, we're seeing a lot of good signs. To your question how long this will last, we're starting to roll out Cloudsurfer 3 to our own specialty stores first in October, giving them a 3-month exclusive period to also really gain the credibility for our new technology. And then Cloudsurfer 3 will roll out broadly in January, followed by Cloudsurfer Max 2 in April. And we're also relaunching Flow, which in the past has been quite a strong franchise. So there's a lot of innovation happening in Q4, Q1 and Q2. And then this is the big -- the fastest accelerated rollout of product that we ever have. So all everyday running franchises will update to the new foams and the new technologies and the Swiss Engineering precision fit within 14 months from now. Jonathan Komp: That's very helpful. And maybe more broadly, just given the strength of the pipeline on the performance side, the strength and acceleration on the lifestyle side and then some of the additional drivers that you have over the next few years, how would you frame up thinking about the broader potential for On? Do you think we should assume the growth rate continues to moderate given your focus on quality and larger size? Or do you have enough in the pipeline here to sustain -- the types of growth rate you're projecting for 2026 to continue for a while here? David Allemann: I think, Jon, we talked to it in the opening remarks. We are planting -- we have planted a lot of seeds. And you see these seeds now fully sprouting. Think about our training vertical, 40% growth year-over-year. Think about apparel growing over 56%. Think about tennis. Think about geographies. I mean, if you think about APAC, but also then I'm super excited about EMEA, where we are actually opening new stores in a Nordic cluster with Stockholm and with Copenhagen, but also in Germany, LatAm. So there are so many opportunities for premium growth. I wouldn't worry about, basically, being out of fuel at all. Frank Sluis: And of course, there's a bit more to come in the Investor Day, yes, where we can really talk about the long term. Operator: Your next question comes from the line of Aubrey Tianello with BNP Paribas. Aubrey Tianello: I wanted to ask about the revenue guidance. And should we assume that the change in revenue guidance is entirely coming from a lower wholesale outlook? I think last quarter, you mentioned that the DTC growth we saw in Q1 in the high 20s was the right way to think about the full year for DTC. Is that still the case? Obviously, we saw a really strong DTC number in Q2. Did anything change in terms of the DTC outlook for the year? Frank Sluis: Thanks, Aubrey. Yes. So coming back to DTC. So indeed, coming back on the first one is that indeed, the actions we are taking in wholesale in quarter 2 and also in quarter 3, of course, are indeed the key factor for the new, basically, top line guidance. It is also fair to say that we were -- I think that the DTC growth in quarter 2 has been very strong. I think what you saw in many industries was that I think with the change in the digital landscape that, basically, we also saw a slight slowdown probably at the end of last year. I think we are very positive on the actions we have taken and the good growth in e-commerce in quarter 2. And as David said, we are, basically, exceeding our expectations in all the regions. Secondly, of course, you know that we'll open up quite a bit of stores in the back end of the year. So all in all, I think that, basically, we look with a lot of confidence in half 2 to, basically, our DTC growth. And we -- yes, basically, it should be over the full half sort of continue to be strong. And that's why, indeed, the revised top line guidance is very much linked to the wholesale actions. Operator: Your next question comes from the line of Anna Andreeva with Piper Sandler. Anna Andreeva: We wanted to follow up on the sales guidance. You mentioned a couple of times that you're off to a good start in 3Q with the innovation. How should we think about the cadence of sales growth 3Q versus 4Q? And what's being implied for the Americas and the wholesale channel? And then secondly, inventory was up 30% ending the quarter. Can you talk about what's the composition in terms of units versus price? Frank Sluis: Thanks, Anna. Indeed, when we look -- thanks for the question. When we look at, basically, the balance of the year, indeed, the actions that we are now taking in wholesale, of which we took some in quarter 2, the remaining ones will be -- basically, we will take them in quarter 3. And that's why, indeed, we expect the Q3 growth rate to be lower than the Q4 growth rate. That's what I would say about the phasing. The second question was about the inventory growth. I think it's important to realize that our growth that you see year-to-date has been primarily volume-led. So it's been very significant. That's the first driver of the inventory growth. The second is that the FX rates, and that's quite technical that basically have, basically, increased the value of the inventory a bit due to the FX movements, and that explains the majority of, basically, the increase. So these 2 factors. Operator: Your next question comes from the line of Wendy Liu with JPMorgan. Licong Liu: My first question is actually related to the regional performance. You were seeing a bit of a decel in Americas. I think you mentioned about overall the environment being promotional. But EMEA looks still very solid, while I think some of your peers were warning about the market overall being a bit softer. How do you assess the gap between your performance in these 2 regions? And is there anything that you are doing sort of self-help that are helping your performance in EMEA that perhaps can be replicated to like North America and other regions as well? Caspar Coppetti: Happy to take that question. And then maybe, David, you want to add. EMEA is really a very bright spot for us. We've taken -- as some of you on the call might remember, we've taken some actions about 3 years ago where we completely moved out of the comfort channel because we didn't feel it was premium enough, and that's now paying off. We have a very clean marketplace. We have innovation resonating very well. In fact, for example, running is growing for us in EMEA quite strongly. And then we also have some newer markets for On really helping drive the growth. We have established a very good presence now in France. David spoke to that, but also Italy, one of the largest sporting goods markets in Europe is seeing very, very good results. For example, our Milan store has a line out the door every single day, and that translates extremely well. David Allemann: We're also doubling down in EMEA with store openings. We've seen a store cluster in -- Germany is coming online. We also brought a new store to Stockholm and to Copenhagen. So there's a lot of energy in the market. And this actually also translates to a strong lifestyle momentum. The Cloudtilt and the Cloudtilt outsole was originally born from running technology, is now seeing an incredible growth. And I mentioned it in the call before, it's now taking 3 slots of the top 5 spots at Foot Locker Europe. So we're seeing a very young cohort coming to On to buy the Cloudtilt and many other franchises, and that crosses also over to running and actually to youth. In youth, year-over-year, we have seen 40% growth, and that's also a potential. So the brand is -- has heat, is becoming younger. So that's great momentum for EMEA. Licong Liu: Great. And then maybe a question to Frank. On guidance, I see that you increased your gross margin guidance to at least 65%, but you maintained your adjusted EBITDA margin guidance. Can you perhaps walk us through the different moving parts? And broadly, is growth from DTC accretive or dilutive to adjusted EBITDA margin? Frank Sluis: So starting with the gross margin guidance. The uplift, basically, in the guidance is really, I would say, fully attributable to a higher, basically, DTC mix. Yes. And on the rest of the assumptions, I think, as we said before in quarter 1, and I'll repeat it now, is that the rest of the gross margin, I think, is sort of is clean in the sense of no major one-offs. So I think the other key drivers of, basically, our pricing and the full price, basically, strategy we have, et cetera, is all and also the FOB rates, et cetera, are all, basically, consistent. So the gross margin fully linked to the DTC mix change. Indeed, we have, basically, had the EBITDA margin is unchanged, I think, with 2 big factors in there. One, of course, is the gross margin. The other one I would also say is that, of course, we have a little bit of deleverage coming from the revised top line guidance. And that also, of course, is a factor. And the third one, we want to continue to invest in the business. We want to make really sure that we continue to pursue growth. We see a lot of opportunities, as David and Caspar explained, and we just want to make sure that we continue to have the funds to invest for future growth. And that's why we, basically, decided to maintain the EBITDA margin as it is today. Operator: Your next question comes from the line of Paul Lejuez with Citi. Paul Lejuez: You mentioned some slower sell-through in the running channel. And I'm curious if you could talk about maybe more broadly what you're seeing in terms of sell-through in other channels and other regions and how that compares to your DTC growth in those regions? And also, just bigger picture, should we think about the second half wholesale growth rates as the go-forward growth rate? Or is this something that you look at as being temporary before we see a reacceleration of growth rates in the first half of '27? David Allemann: Let me probably take the first part of the question, and then Frank will take the second part of the question. So if you're referring to what we are seeing in DTC, we are seeing actually strong growth, ahead of our expectation in each region. So it's really a positive momentum that's driven by overall brand heat and brand demand. I talked about the 30-plus awareness. It's about new consumers coming to On, and it's very broad. I mean it's our channel where we are doubling down and running, but also where apparel is growing even more than in the rest of the market. So in our own stores in DTC, we have a higher apparel share. So we're really growing toe-to-head, but then also our new verticals. I mean you can imagine during Roland-Garros in France, there were long, long lines in front of our Champs-Élysées store. And then when we recently signed Alex Roncevic in HYROX, we just saw how training has been exploding. So it's a 40% growth. And even innovation in apparel, like, for example, SenseTec has proven to be one of the most important pathways for bringing new female consumers under 24 to On really in training apparel. So we see that momentum across the board in DTC. Frank Sluis: Yes. And Paul, coming back to, basically, the second part of the question, whether this is sort of a long-term impact. Of course, we've been very clear that our intent is exactly what we do now is to ensure that it is not, right? So basically, we -- I think the wholesale actions are really predominantly in the U.S. And we do it, of course, basically, by managing the sell-in. We do that, that's all driven by our premium strategy. We do it exactly to protect our full price strategy to make sure that inventories are at the right level, because what we are protecting really is, I think, very strong innovations in the running space that we see coming up. And I think Caspar and David can talk more about the technology behind it. But we fundamentally believe it is really strong. And therefore, basically, we want to make sure that the marketplace is, basically, that the inventory levels are healthy so that the innovations can actually land well at the back end of this year and also in 2027. And that's why we do this precisely to make sure that it is, basically, the long-term trend in wholesale continues to also be strong. Paul Lejuez: And just to clarify, is it fair to say that you're happy with the sell-through in the wholesale channel in regions outside of the Americas? Caspar Coppetti: That's correct, yes. Operator: Your next question comes from the line of Aneesha Sherman with Bernstein. Aneesha Sherman: I have 2, please. The first one is on ASP. Last quarter, you talked about strong ASP growth of about mid-single digit per year on average over the last 3 years. As you're now seeing slow performance of everyday running in the U.S., do you believe there's some price resistance in that channel? And how does that shape your view of pricing strategy this year? Is it going to be different across your higher-end products versus your everyday running segments? And then a follow-up on the actions to limit sell-in. Frank, you mentioned a lot of actions taken in Q2. I'm curious, are you seeing any improvement in wholesale sell-through in the U.S. as a result of these actions in the early weeks of Q3? Caspar Coppetti: Happy to take the first one on pricing. Generally, what we're seeing in the market is that runners are really willing to invest against the latest technologies. For On as a premium brand, lowering prices has never been part of the playbook, and you do not expect that from us. What we are going to do, and we spoke to it already on the last call is we're going to open up the aperture of our pricing range. So our entry-level price point, if you want to call it that, that is $160 for everyday running. And in the past, we've maybe had increase of $10 to $20 between models or levels of performance. We're seeing quite a lot of demand in the higher area. So $210 to $250 for us are very attractive price points where we can actually move significant volume. For example, the Cloudmonster Hyper range is doing extremely well. We cannot make LightSpray fast enough, and those SKUs can be up to $290. So in the future, think about maybe 3 price levels for On, the entry level at $160, which is still higher than our competition, something around $200, $210, and then something towards $300 or even above. Frank Sluis: Yes. And Aneesha, to come back on the second part of the question. Indeed, basically, we keep, of course, a very close eye on the performance in particular in the U.S., and we work very closely with our retail partners in order to drive sell-through. And indeed, for now, we see in the first -- basically -- for now, the trend is in line with, basically, our outlook. So yes, yes, so it's positive. Initial signs are positive, but in line with our outlook. Operator: We have reached the end of the Q&A. This concludes today's call. Thank you for attending. You may now disconnect. Before you buy stock in On Holding, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and On Holding wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $411,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,335,252!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 11, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends On Holding. The Motley Fool has a disclosure policy. On (ONON) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

On Holding AG ONON reported second-quarter 2026 results, with both earnings and revenues missing the Zacks Consensus Estimate. On a year-over-year basis, adjusted earnings improved and net sales increased, supported by strong direct-to-consumer (“DTC”) growth, robust Asia-Pacific momentum and continued apparel strength. The company raised its 2026 gross margin outlook while maintaining its adjusted EBITDA margin guidance.ONON reported adjusted earnings of 35 cents per share, missing the Zacks Consensus Estimate of 44 cents by 20.5%. Net sales came in at CHF 850.3 million, below the consensus estimate of CHF 1,114 million by 23.7%. Net sales increased 13.5% year over year and rose 21.6% on a constant-currency basis. Adjusted EPS Class A (CHF) improved to 35 cents from a loss of 9 cents in the year-ago quarter. On Holding AG price-consensus-eps-surprise-chart | On Holding AG Quote The company continued to witness strong momentum in its DTC business. DTC revenues increased 26% year over year to CHF 388.4 million, or 34.3% on a constant-currency basis, with growth exceeding expectations across every region. The DTC business reached a second-quarter high of 45.7% of total net sales, supported by continued strength across On's own retail stores and expanding global store network.Wholesale revenues increased 4.8% year over year to CHF 461.9 million, or 12.7% on a constant-currency basis. The company continued to emphasize disciplined full-price selling and premium brand positioning amid a promotional marketplace.Global brand awareness rose to 30%, while consumers under age 34 represented more than one-third of the customer base. On Holding recently opened its first stores in São Paulo and Copenhagen, extending its network of premium retail locations. Gross profit increased 20.6% year over year to CHF 555.7 million. Gross margin expanded 390 basis points to 65.4% from 61.5%, despite the company fully absorbing higher U.S. import tariffs and excluding any tariff refunds. Selling, general and administrative expenses increased to CHF 436.3 million from CHF 368 million. Adjusted EBITDA increased 23.5% year over year to CHF 168.1 million, while adjusted EBITDA margin expanded 160 basis points to 19.8% from 18.2%. Net income was CHF 105 million against a loss of CHF 40.9 million in the year-ago quarter, with net income margin improving to 12.3% from negative 5.5%. Adjusted net income was CHF 117.6 million against a loss of CHF 29.7 million a year ago. Asia-Pacific delivered the strongest performance, with revenues increasing 43.1% year over year to CHF 170.5 million, or 54.7% on a constant-currency basis. The region again represented more than 20% of total company sales, supported by standout momentum across Japan, South Korea and Greater China.EMEA revenues increased 15.4% year over year to CHF 228.2 million, or 20.5% on a constant-currency basis, reflecting continued growth across the region.Americas revenues increased 4.5% year over year to CHF 451.6 million. On a constant-currency basis, sales increased 13%. Footwear remained the largest contributor to sales, with revenues increasing 10.9% year over year to CHF 781.6 million. On a constant-currency basis, footwear sales rose 18.9%.Apparel revenues increased 47.7% to CHF 54.2 million, or 56.2% at constant currency. Accessories revenues climbed 88.3% to CHF 14.5 million, with constant-currency growth of 102.2%, underscoring faster expansion outside the core footwear category.The company is also advancing its running innovation pipeline. It recently launched the Cloudboom Strike 2 and plans to debut its new SURREAL superfoam in the Cloudsurfer 3 later this year, while expanding LightSpray technology into additional core franchises. The company ended the second quarter with cash and cash equivalents of CHF 1.21 billion compared with CHF 1.02 billion at the end of 2025. Net working capital increased 11.5% to CHF 635.9 million from CHF 570.3 million.For the first six months of 2026, cash inflow from operating activities increased to CHF 255 million from CHF 89.1 million a year earlier. Investing activities used CHF 47.2 million, while financing activities used CHF 43.3 million. Following a strong first half of 2026, management expects constant-currency net sales growth in the low-20% range for the year. At current spot rates, this implies reported net sales of CHF 3.47 billion to CHF 3.56 billion. The company expects DTC to strongly outperform wholesale in the second half as it deliberately manages wholesale sell-in to protect full-price integrity and create a clean runway for upcoming breakthrough innovations.On Holding raised its gross margin outlook to at least 65%, reflecting a favorable DTC mix, full-price discipline and operational efficiencies. The outlook excludes any benefits from anticipated tariff refunds in the second half of the year.Management reiterated its adjusted EBITDA margin guidance of 19.5% to 20% while continuing to invest in future growth opportunities. The company remains focused on pursuing high-quality growth while maintaining its premium positioning. ONON Stock Past Three-Month Performance Image Source: Zacks Investment Research Shares of this Zacks Rank 3 (Hold) company have risen 14.6% over the past three months compared with the industry’s 15.6% growth. FIGS, Inc. FIGS is an apparel company focused on the healthcare industry. Its offerings include lab coats, jackets, footwear, bags, socks and other accessories used by healthcare professionals. The company carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.The Zacks Consensus Estimate for FIGS’ current financial-year earnings and sales suggests growth of 42.1% and 18.2%, respectively, from the year-ago actuals. FIGS delivered a trailing four-quarter average earnings surprise of 201.8%.Boot Barn Holdings, Inc. BOOT is the largest lifestyle retailer in the United States, specializing in western and work-related footwear, apparel and accessories. The company also holds a Zacks Rank #2 at present. The Zacks Consensus Estimate for Boot Barn’s current fiscal-year earnings and sales suggests growth of 22.6% and 15.7%, respectively, from the year-ago actuals. BOOT delivered a trailing four-quarter average earnings surprise of 11.4%.Deckers Outdoor Corporation DECK is a designer, producer and brand manager of footwear, apparel and accessories for outdoor sports, performance activities and lifestyle use. It also carries a Zacks Rank #2.The Zacks Consensus Estimate for Deckers’ current fiscal-year earnings and sales suggests growth of 6.7% and 7.9%, respectively, from the year-ago actuals. DECK delivered a trailing four-quarter average earnings surprise of 15.2%. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report On Holding AG (ONON) : Free Stock Analysis Report Deckers Outdoor Corporation (DECK) : Free Stock Analysis Report Boot Barn Holdings, Inc. (BOOT) : Free Stock Analysis Report FIGS, Inc. (FIGS) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

This article first appeared on GuruFocus. Net Sales: CHF850 million, up 21.6% at constant currency and 13.5% on a reported basis. Gross Margin: 65.4%, reflecting strong DTC momentum, disciplined execution, and operational efficiencies. Adjusted EBITDA Margin: 19.8%, driving absolute constant currency adjusted EBITDA growth of over 30% year-over-year. DTC Net Sales: CHF388 million, up 34.3% at constant currency and 26.0% on a reported basis, reaching a second-quarter record of 45.7% of sales. Wholesale Net Sales: Up 12.7% at constant currency and 4.8% on a reported basis, with deliberate sell-in management to protect full-price integrity. Americas Net Sales: Up 13.0% at constant currency and 4.5% on a reported basis. EMEA Net Sales: Up 20.5% at constant currency and 15.4% on a reported basis. APAC Net Sales: Up 54.7% at constant currency and 43.1% on a reported basis. Shoes Net Sales: Up 18.9% at constant currency and 10.9% on a reported basis. Apparel Net Sales: Up 56.2% at constant currency and 47.7% on a reported basis. Training Vertical Growth: 40% growth rate. Tennis Apparel Growth: Fastest-growing apparel vertical, with sales nearly tripling this quarter. Net Working Capital: Improved by CHF14.9 million versus Q1, remaining below 20% of sales. Capital Expenditure: CHF28.2 million, focused on retail expansion and infrastructure. Cash Balance: Increased by CHF185.2 million, ending with just over CHF1.2 billion in net cash. Full Year 2026 Outlook: Constant currency net sales growth in the low 20s, gross margin of at least 65%, and adjusted EBITDA margin of 19.5% to 20%. Warning! GuruFocus has detected 2 Warning Sign with ONON. Is ONON fairly valued? Test your thesis with our free DCF calculator. Release Date: August 11, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. On Holding AG (NYSE:ONON) delivered strong Q2 2026 results with net sales reaching CHF850 million, a 22% constant currency growth, and DTC channel growing 34% at constant currency. Gross margin expanded to 65.4%, driven by strong DTC mix, disciplined full-price execution, and operational efficiencies, leading to an upgraded full-year gross margin outlook of at least 65%. Adjusted EBITDA margin reached 19.8%, with absolute constant currency adjusted EBITDA growth of over 30% year-over-year, showcasing industry-leading profitability. Innovation pipeline is robust, with new technologies like CloudTec Steel, Helion HF superfoam, and Surreal foam, and the Cloudboom Strike 2 delivering a 1.6% improvement in running economy, driving strong sell-through and partner orders. The company is successfully expanding into new verticals and geographies, with tennis apparel sales nearly tripling, training vertical growing 40%, and APAC region growing 54.7% at constant currency, including strong performance in Japan, Korea, and Greater China. Brand momentum is strong, with awareness increasing to 30%, a growing younger customer base (over one-third under 34), and successful collaborations like Zendaya and Loewe, driving premium positioning and cultural relevance. On Holding AG (NYSE:ONON) experienced softer sell-out in some everyday running franchises in the wholesale channel, particularly in the Americas, due to a highly promotional multi-brand marketplace. The company deliberately reduced wholesale sell-in to protect full-price integrity, which resulted in more moderate wholesale growth of 12.7% at constant currency and a lower overall revenue guidance for the year. The Americas region saw slower growth at 13.0% constant currency, reflecting the wholesale challenges and promotional environment, with DTC outperforming wholesale in every region. Inventory levels increased by 31% year-over-year, driven by volume-led growth and FX impacts, which could pose a risk if sell-through does not improve. The company expects Q3 growth to be lower than Q4 due to continued wholesale actions, indicating near-term headwinds in the wholesale channel. The company maintained its adjusted EBITDA margin guidance despite the gross margin upgrade, as it plans to continue investing in brand building and future growth, which may limit near-term margin expansion. Q: Can you share more perspective on the divergence across channels, specifically whether the slowdown in everyday running is unique to the Americas wholesale segment, and how long the intentional actions to limit sell-in might continue? A: Caspar Coppetti, Co-Founder and Executive Co-Chairman, explained that the company sees a very loyal customer base in its own channels, with a growing cohort of consumers under 34 who are drawn to innovation and cultural relevance rather than price. In contrast, the wholesale channel is more exposed to a promotional environment. Frank Sluis, CFO, clarified that this is mostly an Americas wholesale topic, noting that while Q2 comped some everyday run franchises, the company is already off to a good start in Q3 with innovations like Cloud X 5 and Cloudrunner Max. He emphasized that the rollout of new products like Cloudsurfer 3 and Cloudsurfer Max 2, along with the relaunch of Cloudflow, will accelerate innovation across all everyday running franchises within the next 14 months. Q: Given the strength of the pipeline on the performance side and the acceleration on the lifestyle side, should we assume the growth rate will continue to moderate, or do you have enough in the pipeline to sustain the projected 2026 growth rates? A: Caspar Coppetti highlighted that the company has planted many seeds that are now sprouting, citing 40% growth in the training vertical, over 56% growth in apparel, and strong performance in tennis and geographies like APAC and EMEA. He expressed confidence that there is no shortage of opportunities for premium growth, with new store openings in the Nordics, Germany, and LatAm. Frank Sluis added that the company is not worried about running out of fuel and invited investors to the upcoming Investor Day for a deeper look at long-term plans. Q: Should we assume the change in revenue guidance is entirely from a lower wholesale outlook, and is the DTC growth rate of high 20s still the right way to think about the full year? A: Frank Sluis confirmed that the revised top-line guidance is indeed linked to wholesale actions taken in Q2 and Q3. He noted that DTC growth in Q2 was very strong, exceeding expectations in all regions, and that the company looks with confidence at DTC growth for the second half of the year. The guidance revision is primarily due to deliberate wholesale sell-in reductions, not a change in DTC outlook. Q: How should we think about the cadence of sales growth in Q3 versus Q4, and what is the composition of the 31% inventory increase? A: Frank Sluis explained that the wholesale actions taken in Q2 and Q3 will result in a lower Q3 growth rate compared to Q4. Regarding inventory, he noted that growth has been primarily volume-led, with FX rates also increasing the value of inventory. These two factors explain the majority of the inventory increase. Q: How do you assess the gap between your performance in the Americas and EMEA, and are there self-help actions in EMEA that could be replicated in North America? A: Frank Sluis attributed EMEA's strong performance to actions taken three years ago to move out of the comfort channel, which has resulted in a clean marketplace and strong innovation resonance. Caspar Coppetti added that the company is doubling down in markets like India and Germany, with new store openings and strong lifestyle momentum, including Cloudtilt taking three of the top five spots at Foot Locker Europe. He noted that the brand is becoming younger, with 40% growth in youth, which is driving momentum across regions. Q: Can you walk through the moving parts of the increased gross margin guidance and whether D2C growth is accretive or dilutive to adjusted EBITDA margin? A: Frank Sluis stated that the uplift in gross margin guidance is fully attributable to a higher DTC mix, with no major one-offs. He explained that the EBITDA margin remains unchanged due to two factors: deleverage from the revised top-line guidance and continued investment in the business to pursue growth opportunities. The company is maintaining its EBITDA margin outlook of 19.5% to 20% while investing for future growth. Q: You mentioned slower sell-through in the running channel. What are you seeing in other channels and regions, and should the second-half wholesale growth rate be considered the go-forward rate? A: Caspar Coppetti highlighted strong D2C growth ahead of expectations in every region, driven by brand heat and new consumer acquisition. Frank Sluis clarified that the wholesale actions are predominantly in the US and are intended to protect the full-price strategy and ensure healthy inventory levels for upcoming innovations. He emphasized that the long-term wholesale trend should remain strong, with the actions designed to set up for success in 2027. Q: Is it fair to say you are happy with sell-through in wholesale channels outside the Americas? A: Frank Sluis confirmed that this is correct, indicating that wholesale sell-through in regions outside the Americas is satisfactory. Q: Given the slow performance of everyday running in the US, do you believe there is price resistance, and how does this shape your pricing strategy? A: Caspar Coppetti stated that runners are willing to invest in the latest technologies, and lowering prices is not part of the premium brand's playbook. He outlined a strategy to open up the pricing aperture, with entry-level at $160, mid-range around $200-$210, and high-end towards $300 or above. He noted strong demand at higher price points, such as the Cloudmonster Hyper range and LightSpray products, which can command prices up to $290. Q: Are you seeing any improvement in wholesale sell-through in the US as a result of the actions to limit sell-in in early Q3? A: Frank Sluis noted that the company is closely monitoring performance in the US and working with retail partners to drive sell-through. He stated that initial signs are positive and in line with the company's outlook, though he did not provide specific numbers. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Interested in On Holding AG? Here are five stocks we like better. Strong Q2 growth was led by direct-to-consumer sales: Net sales rose 21.6% at constant currency to CHF 850 million, while direct-to-consumer revenue surged 34.3% and represented 45.7% of sales. Regional growth was particularly strong in APAC, which increased 54.7%. On is maintaining wholesale discipline: The company limited shipments to avoid excess inventory and protect full-price selling amid softer U.S. sell-through in some everyday running products. Management expects the weakness to be temporary and highlighted several upcoming product launches. Profitability outlook improved: On raised its full-year gross-margin forecast to at least 65% from 64.5%, while maintaining its 19.5%–20% adjusted EBITDA-margin target. The company ended the quarter with more than CHF 1.2 billion in net cash and continues to expect low-20% constant-currency sales growth for the full year. These 3 Beaten-Down Stocks Just Saw $25 Million in Insider Buying ON (NYSE:ONON) reported second-quarter 2026 net sales of CHF 850 million, up 21.6% at constant currency and 13.5% on a reported basis, as direct-to-consumer demand outpaced growth in its wholesale business. The Swiss sportswear company also raised its full-year gross-margin outlook while maintaining its adjusted EBITDA-margin forecast. Founder and Co-CEO David Allemann said the company is prioritizing long-term premium positioning over short-term volume growth, particularly in wholesale channels where it has seen softer sell-through in some everyday running franchises. “We choose not to build in-channel inventory that could compromise our full price integrity,” Allemann said. → SoundHound AI Sends a Loud Signal After Its Q2 Earnings Beat On Holdings Sets Up for Marathon Rally: New Highs Are Coming On said it expects full-year constant-currency net sales growth in the low 20% range, a forecast that reflects deliberate limits on wholesale sell-in during the second and third quarters. The company expects direct-to-consumer momentum to remain strong through the rest of the year. Direct-to-consumer sales reached CHF 388 million in the second quarter, rising 34.3% at constant currency and 26.0% on a reported basis. The channel accounted for 45.7% of quarterly sales, supported by growth in both e-commerce and physical retail. → 3 Dividend Champion Utilities for a Market That Can't Sit Still Down 75% From Its High, How Much Lower Can Nike Get? CFO Frank Sluis said e-commerce growth exceeded the company’s expectations in every region. On also reported continued strength in its retail fleet, including its Champs-Élysées flagship in Paris, which was its best-performing store globally during the quarter. Its two Tokyo locations continued to perform strongly, Sluis said, with no signs of cannibalization between the stores. In the Americas, net sales rose 13.0% at constant currency, while EMEA sales increased 20.5% and APAC sales grew 54.7%. Sluis said the Americas result reflected the company’s wholesale actions, while direct-to-consumer momentum accelerated in both North America and Latin America. → Is Wingstop's Growth Story Losing Steam? EMEA benefited from growth across sub-regions, including France, Spain and Italy. In APAC, Japan, Korea and Greater China all performed well, according to management. The company said its Greater China operations exceeded expectations across channels despite its decision not to participate in promotional activity on Tmall. Wholesale revenue increased 12.7% at constant currency and 4.8% on a reported basis. Management said the slower growth was concentrated primarily in the Americas, where a promotional multibrand market affected sell-through of certain everyday running products. Sluis said the company chose to restrain shipments to wholesale partners rather than add inventory to the channel. He said On was satisfied with wholesale sell-through outside the Americas and characterized the U.S. weakness as transitory. The company pointed to several new and upcoming product releases as part of its effort to support future wholesale growth. These include the CloudX 5 and Cloudrunner Max, which Sluis said had begun the third quarter well, as well as the Cloudsurfer 3, scheduled to begin rolling out to run specialty partners in October before a broader January launch. On also plans to release the Cloudsurfer Max 2 in April and relaunch the Cloudflow franchise. Management said all of its everyday running franchises are expected to transition to updated foams, technologies and fit engineering within the next 14 months. The company also highlighted its LightSpray footwear technology, which it said is scaling from facilities in Busan and Zurich. Footwear sales rose 18.9% at constant currency during the quarter, while apparel sales increased 56.2%. Sluis said apparel is increasingly becoming both a growth driver and an entry point for consumers new to the brand. The company cited growth in performance running collections, its Volt apparel line and its Tennis Court collection. Management said the Zendaya co-created collection significantly exceeded expectations, with every U.S. style outperforming forecasts by triple digits. On also reported strong growth in newer sports categories. Allemann said training grew 40%, while tennis was the company’s fastest-growing apparel vertical, with sales nearly tripling during the quarter. The Cloudtilt lifestyle franchise grew 190% year over year, and the company said its Cloudpillow models held three of the five top-selling positions at Foot Locker Europe in the prior quarter. Management said consumers under age 34 now represent more than one-third of On’s customer base. Brand awareness increased to 30%, according to Allemann. Gross margin reached 65.4% in the second quarter, while adjusted EBITDA margin was 19.8%. Sluis attributed the gross-margin performance to full-price execution, a higher direct-to-consumer mix, operating efficiencies, favorable freight mix and positive foreign-exchange effects. The company said it absorbed higher U.S. import tariffs during the quarter without tariff refunds. On now expects full-year gross margin of at least 65%, up from its prior outlook of 64.5%, while maintaining its adjusted EBITDA-margin forecast of 19.5% to 20%. Sluis said the higher gross-margin outlook is primarily tied to an anticipated increase in the direct-to-consumer mix. The EBITDA-margin outlook was maintained as the company plans to continue investing in marketing, digital initiatives, retail expansion and future growth. The company said it expects to recognize some tariff refunds in third-quarter results but has not included potential benefits from those refunds in its margin outlook. On ended the quarter with more than CHF 1.2 billion in net cash after its cash balance increased CHF 185.2 million. Net working capital improved by CHF 14.9 million from the first quarter, while capital expenditures totaled CHF 28.2 million, primarily for retail expansion and growth infrastructure. The company plans to host its 2026 Investor Day in Zurich on Sept. 21 and 22. On Holding AG, commonly known as On, is a Swiss performance footwear and apparel company headquartered in Zurich. Founded in 2010, the company designs, develops and sells running shoes, performance apparel and accessories for road, trail and everyday use. On’s product philosophy centers on engineered cushioning and responsiveness intended to serve both serious athletes and lifestyle consumers. On is best known for its proprietary midsole technology and distinctive sole architecture, marketed under names such as the Cloud family of shoes and related performance lines. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "ON Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Get insights on thousands of stocks from the global community of over 7 million individual investors at Simply Wall St. On Holding (NYSE:ONON) heads into its August 11, 2026 earnings report with two key storylines for investors: expectations for higher earnings and revenue, and a fresh co CEO structure. See our latest analysis for On Holding. On Holding’s recent 1-day share price return of 1.54% and 90-day share price return of 7.12% suggest building momentum ahead of earnings, even as the year to date share price return is down 18.66% and the 1-year total shareholder return is down 18.41%. If you are weighing On Holding against other opportunities in the sector, this may be a useful moment to broaden your search and check out 22 top founder-led companies On Holding’s share price has picked up in recent weeks yet remains well below its year to date and 1 year levels. This puts a clear choice on the table: Is today’s valuation good enough, or is patience the better bet? The most widely followed narrative currently pegs On Holding’s fair value at $52.49 compared with the last close at $38.19. This frames a sizable upside case built on earnings and margin expectations rather than recent share price weakness. Read the complete narrative. Want to see what kind of growth and margin profile has to materialise to support that fair value? The earnings ramp, revenue trajectory and future profit multiple assumptions are all on the table, but the exact mix may surprise you. Result: Fair Value of $52.49 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, that upside narrative for On Holding still depends on premium pricing holding up, as well as on expansion spending not putting lasting pressure on margins. Find out about the key risks to this On Holding narrative. The first story around On Holding centers on future earnings and a fair value of $52.49. The second story looks at today’s price tag. The stock trades on a P/E of 40.8x, which is much higher than the US Luxury industry at 20x and higher than its own fair ratio of 28.1x. That gap points to meaningful valuation risk if sentiment cools even slightly. For a closer read on what that premium could mean for you as an investor, and how the fair ratio might act as a reference point if the market adjusts, See what the numbers say about this price — find out in our valuation breakdown. After all this, do you feel the tone around On Holding is too cautious or not cautious enough? Take a closer look at the optimism already priced in and see what stands out for you in the 3 key rewards. On Holding gives you plenty to think about, but you do not want your portfolio tied to a single story when other opportunities may fit you better. Scan for potential value opportunities by reviewing 51 high quality undervalued stocks that combine solid fundamentals with prices that may not fully reflect their financial strength. Strengthen your income stream by checking out 8 dividend fortresses that focus on higher yielding companies with the potential for more consistent cash returns. Protect your capital with 79 resilient stocks with low risk scores designed to highlight companies that score well on financial resilience and lower overall risk. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include ONON. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]