On Holding AG

Ladies and gentlemen, thank you for standing by. Welcome and thank you for joining the On Holding AGQ1 2023 results call. Throughout today's recorded presentation, all participants will be in a listen-only mode. The 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 touch-tone telephone. Please press the star key followed by zero for operator assistance. I would now like to turn the conference over to Jared Peter. Please go ahead.

Good afternoon, good morning, and thank you for joining ONS 2023 First Quarter Earnings Conference Call and Webcast. With me today on the call are Executive Co-Chairman and Co-Founder Jasper Kopetti, CFO and Co-CEO Martin Hoffman, and Co-CEO Mark Maurer. Before we begin, I would like to remind everyone that today's call will extend 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 20F filed with SEC on March 21st for 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. Please refer to today's release for reconciliation to the most comparable IFRS measures. We will begin with Kasper, followed by Martin, leading through today's prepared remarks, after which we are looking forward to opening the call for a Q&A session. With that, I'm very happy to turn over the call to Kasper.

Thank you and a warm welcome from my side. It's a great pleasure to be here with you to discuss our first quarter performance and recent milestones. On entrance 2023 with high ambitions of continuing our growth journey, capturing market share and further increasing profitability. We are pleased to share that the on-growth story continues. We were able to exceed our expectations and post record net sales of 420.2 million Swiss francs in the three-month period. This reflects a growth rate of 78% versus Q1 2022, which have been somewhat constrained by the supply shortages that had affected our industry a year ago. As we have shared before, Delivering best-in-class profit margins is a focus for ONN, and I'm happy to report that we have been able to substantially expand our margins in the first quarter. Gross margin for the first quarter was 58.3%, and adjusted EBITDA was 14.5%. We are tracking well towards our midterm ambition of delivering best-in-class gross profit margins of 60% and EBITDA margins in the high teens. And Martin will expand on this in his comments in a minute. But first, let's have a look at some business highlights from this quarter. ON is an innovation company at heart, and we are happy to report that ON's recent running launches have met with very strong consumer demand and have helped ON capture additional market share in the running category. I'd like to highlight the extremely successful introduction of the CloudSurfer 6, which is the first ON product to feature computer-optimized technology, which we call CloudTech FACE. and will roll out to further models in coming seasons. And Ahn is also capturing mindshare in the running space. An emotional highlight was Ahn's first win in the Boston Marathon, with Ahn Athletics Club member, Helen Obiri, distancing a very strong women's field, and once again proving that Ahn's highest performance running shoes are some of the fastest marathon products. The Cloudboom Eco3, for example, will be more broadly available to consumers starting in July this year. We are very satisfied to see that ON's lightning and rain strategy, winning races and converting everyday runners to ON, is delivering strong results. To illustrate, with the Cloud Surfer, the Cloud Monster, the Cloud Runner, and the Cloud Go, four running products that were only launched within the last 12 months are now making up 45% of ON sales at the leading US running store franchise, Fleet Feet. On the tennis side, we are thrilled to see world number one Iga Sviatek and Ben Shelton competing on the court in their new OnGear. Iga stunned us all, coming back from an injury to win her first tournament as a non-athlete by defending her title at the Stuttgart Open in late April. Both the Roger Pro tennis performance products, as well as the Roger lifestyle tennis franchise, are in high demand and have been growing even significantly faster than On overall. The on-brand is strong and keeps getting stronger. In recent months, we have started to shift some of our marketing spend to awareness, image, and top funnel investment. And it is paying off. In March, the Cloud Surfer and our tagline Dream On were part of a global brand campaign that featured mega posters in key cities and airports supported by digital ads. In preparation for the spring marathon season, an additional emphasis was put on apparel with the Feel Nothing campaign, dedicated to the design and functionality of Allens apparel. Boston Marathon was supported by concerted PR outreach, resulting in strong media presence before and after the race, and amplified by Helen O'Berry's stellar performance. As you know, ON is regarded as the thought leader for sustainability among sports brands, and we have further put significant steps into action. ON's strategy is to pioneer sustainable technologies and scale them rapidly. And so we have taken learnings from Cyclone, ON's circular subscription, and have scaled them to mass market products. The new CloudSurfer, for example, is the first commercial running shoe to feature a single material upper made from recycled polyester. which makes the product ready to be recycled. In addition, we use dope dyeing, which saves 90% water compared to conventional dyeing. We are now rolling these technologies out to further models in the coming seasons. It will give you further insights into ON's sustainable transformation in the upcoming Impact Progress Report due to release in Q3. Overall, We are extremely happy with how the brand and products are resonating with our fans around the world, and we still have a lot more to come in 2023 to be excited about. Our deepest gratitude goes out to our stellar team here at ON, who have planned and executed this quarter to perfection. With this, it is my great pleasure to hand over to Martin for the Q1 financial review, market deep dives, and elevated outlook for the full year.