On Holding AG

Ladies and gentlemen, thank you for standing by. Welcome and thank you for joining the On Holding AGQ1 2022 results. Throughout today's call, all participants will be in a listen-only mode. Presentation will be followed by a question and answer session. If you would like to ask a question, you may press star followed by one on your touchtone telephone to register for questions. Please press the star key followed by zero for operator assistance. We'd now like to turn the conference over to Florian Maag, head of IR. Please go ahead.

Good afternoon, good morning, and thank you for joining ONCE 2022 Q1 Earnings Conference Call and Webcast. With me today on the call are Executive Co-Chairman and Co-Founder Kasper Kopetti, CFO and Co-CEO Martin Hoffman, and Co-CEO Mark Maurer. For the first part, Kasper and Martin will lead through the prepared statements. Afterwards, we are looking forward to opening the call for a Q&A session. Before we begin, I would like to remind everyone that the remarks during today's call may contain forward-looking statements regarding future events and financial performance within the meaning of the federal securities laws. These forward-looking statements reflect our current expectations and beliefs only, and such statements are subject to certain risks and uncertainties that could cause actual results to differ materially. Please refer to our 20F file to the Securities and Exchange Commission on March 18th for a detailed discussion of the risks that could cause actual results to differ materially from those expressed or implied in any forward-looking statements made today. Please further note that this call will also contain certain non-FRS financial measures, such as adjusted EBITDA and adjusted EBITDA margin. While the company believes these non-IFRS financial measures will provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with IFRS. Please refer to today's release for a reconciliation of non-IFRS financial measures to the most comparable measures prepared in accordance with IFRS. With that, I will turn the call over first to Kasper, followed by Martin for the prepared remarks.

A warm welcome from my side as well, and thank you for joining our call today. We are happy to report that ON had an excellent start into the year and that we were able to further build on the momentum from last year. With Swiss francs, 236 million of net sales, a growth of 68% versus Q1 2021. We have exceeded even our own high expectations. As anticipated, Q1 was still constrained by the supply shortages that have been affecting our industry. But our teams along the supply chain have done a phenomenal job in navigating the challenges, helping us to reach yet another record quarter. Let's have a look at some of the key takeaways from this quarter. On is winning market share at an accelerated pace. The combination of very strong consumer demand for the On brand and better than anticipated supply led to significant market share gains in our key markets. On aims to be the number one brand on Runners' Feet, and the accelerated pace of market share gains mean that we are making good progress towards this goal. ON's new products are resonating with customers. In spring 22, ON has launched a number of key new running styles that are already seeing significant traction with consumers, both online and with our retail partners. In March, we introduced the Cloud Monster, which is ON's most cushioned model to date. Sales on our e-commerce platform during launch week were the second largest in history. only behind the launch of the Roger Center Court. In April, the first consumers were able to buy the long-anticipated Cloud Runner, which, at US$140, offers mid-level cushioning and support and reaches a very wide audience of runners. The Zero Checkit underlines our ambition to expand our apparel business. As the name suggests, it weighs close to nothing and is, to our knowledge, the lightest running jacket on the market today. With these and other products, such as the Cloud Go, coming later this year, we expect to continue winning market share in all key markets. This quarter also saw ON's biggest launch in history with the Cloud 5, ON's flagship product in the performance all-day category. This launch not only led to extremely strong e-commerce revenues thanks to many repeat customers, but because the Cloud 5 is made of more than 40% recycled content overall, which is an industry best, the environment also benefits. This confirms our belief that more sustainable products need to and can be applied at scale. OnSea's continued strong growth across all continents and in both wholesale and D2C. One aspect that sets On apart is that we have strong high-growth multi-channel businesses in the major markets of each continent. To illustrate this, I'd like to call out some examples. Our U.S. business grew 87% versus Q1 2021. U.K. and Germany grew 54% and 49% respectively. while China and Japan were up 178% and 148%. In all of these markets, we are far from majority nor saturation, as many consumers are either just learning about ON or might have purchased their first piece. And those that have already purchased in 2021 are coming back to buy more, both in our own channels and with our trusted retail partners. ON is doubling down on performance technology. From the beginning, ON has been focused on delivering innovation that will drive performance for the world's best athletes. In that spirit, let us introduce you to ON's Lightning program, something that we have not spoken about publicly before. The Lightning program consists of around 20 engineers, sports scientists, material specialists, and coaches who focus on one mission only, how to make the fastest products possible, and to work extremely closely with some of the most talented runners to unleash their full potential. In the past months, we have seen some very encouraging results coming from the Lightning program. In Istanbul, at the end of March, 10K world champion and ON Athletics Club member Helen Obiri towed the line for her first ever half marathon race. On her feet was a prototype racing shoe that she had only received the day before. When she crossed the finish line, she had won the race in the 10th fastest half marathon time on record, despite the conditions being far from optimal. Just two weeks later, the same prototypes helped Thaddeus Abraham win the Zurich marathon with a new course record and also Swiss record. To put things into perspective, Abraham will turn 40 this summer. This goes to show that the ON labs are continuing to innovate at the highest level. And there's more to come. We are excited to announce that ON will introduce a new cushioning technology in spring 2023 called CloudTech Phase. This evolution of ON's existing technology was generated completely by computers using advanced finite element analysis simulations. a computerized method for predicting how a product reacts to real-world forces, which is pioneered in Formula One racing and by NASA, for example. We have been showing this technology to ONT's retail partners over the last weeks as part of Spring 23 sell-in, and the feedback is very encouraging. We are reaffirming ONT's premium positioning through premium prices. In showcasing the Spring 2023 collection, ONN has also announced to our retail partners that we will adjust prices across all product ranges and geographies to reaffirm ONN's premium positioning. This step builds on the selective price increases that we had made in the U.S. for 2022 Q1, which have not slowed down our strong growth in the States during this period. On has always regarded pricing as a brand positioning tool, and we are using this opportunity to defend On's premium positioning as other brands are also increasing prices. This puts On in a strong position to not only absorb some of the expected higher costs in the face of globally rising inflation, but to also reflect inflation in our own 2023 salary rounds as an important retention driver within our teams. ON is strengthening our board of directors. As a public company, we aim to constantly strengthen our team and level of professionalism. We are therefore proud that Dennis Durkin, formerly with Activision Blizzard and Microsoft, stands for election for our board of directors at the upcoming annual general meeting. If elected, Dennis will take the chair of the audit committee and with him, as well as with Alex Perez, ON will have a fully independent and highly experienced audit committee. If elected, the nomination and compensation committee will be further elevated with Amy Banz. We are currently also looking into opportunities to further strengthen and diversify our board over time. So, in closing, Q1 was an incredible start to the year for ON. Like a four-lap mile race, it is always important to get out of the starting block strong and with good momentum, and our teams really did that and more in Q1. We have added new products, brought on incredible team members and capabilities, and achieved new sales records. I'm really proud of the team's work, but we know we can run even faster, so we remain fully focused on pursuing excellence and driving innovation in all parts of our business. I'll now pass the baton over to Martin to cover our financial highlights and our increased outlook for the year.