On Holding AG

Good morning. My name is Rob and I will be your conference operator today. At this time, I would like to welcome everyone to the on second quarter 2023 results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. Thank you. Jarrett Peter, Head of Investor Relations, you may begin your conference.

Good afternoon, good morning, and thank you for joining on 2023 Second Quarter Earnings Conference Call and Webcast. With me today on the call are Executive Co-Chairman and Co-Founder David Aleman, CFO and Co-CEO Martin Hoffman, and Co-CEO Mark Maurer. Before we begin, I would like to remind everyone today's call will contain certain 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 the SEC on March 21st 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 margins. 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 figures. We will begin with David, 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 David.

Thank you all, and a warm hello. It's a pleasure to reconnect today. I hope you have had a splendid summer and are now filled with renewed vitality as we approach the second half of the year. In my introduction, I would like to talk to the tremendous vitality of our young team, business, and brand. It's this very energy that allows us to present such an outstanding set of results. Q2 23 net sales of 444 million Swiss francs are the highest in our history, reflecting a growth rate of over 52% versus the prior year period, or over 60% on a constant currency basis. Our adjusted EBTA grew to 63 million Swiss francs, growing by nearly 100% year over year, supported by the highest gross profit margin since our IPO. These numbers are the evidence for the ongoing strength of the on-brand and the exceptional demand we continue to see across all channels, which we will dive into further later in today's call. Remember our recent conversation during the full year results call? We spoke with conviction about 2023 promising to be the best year yet for all. Well, Halfway through, and it's held true on so many measures. We aren't just riding the numbers wave, but also reaping the rewards of being a bold, community-focused brand that you can't ignore. Let's now direct our attention to the three crucial pillars that make ONTIC the vitality of our product, our brand, and our global outreach. Firstly, our product's vitality is at an all-time high. As a founder deeply involved with the product team, I'm thrilled by the achievements. ON has launched six all-new performance shoes within a short 24 months, with four transforming into major franchises. They already contribute a substantial share to our product range after recent launch and keep growing fast. As you travel, keep an eye out for our cloud monsters, cloud runners, cloud goals, and cloud surfers on major running routes. You'll see that our shoes are loved by runners everywhere. And don't forget our recent triumph, the Cloud Boom Echo 3, the long-distance running shoe worn by all athletes to win some of the biggest races around the globe, including the Ironman World Championships. The majority of our product sales stems from shoes exclusively made for runners with a lot of vitality from the already mentioned new franchise. You will appreciate that On's product success has a uniquely broad base with seven franchises that have evolved from a single product into a major building block for the business. We never aspired to be a one-trick pony. Obviously, I can't speak of ponies without mentioning the stellar reception that our new kids shoe business has experienced. A nascent franchise and major building block for ON in the making. Number two, ON's brand vitality resonates with a new generation of customers. You know that dream ON is our mantra. As a community-driven brand, we challenge the status quo igniting the human spirit through movement. A prime example is our latest retail store in Williamsburg, New York, opened on June 30th. If you have already visited, you know it's a true community space. During the opening week, we hosted a 5K run and block party featuring local DJs and dancers, attracting over 1,200 community members. We also highlighted our social impact program, Right to Run. It's aimed at supporting community organizations that break down barriers to movement, from assisting individuals with disabilities in running races to encouraging city kids to explore the countryside. Our goal is to amplify these efforts and uphold everyone's right to run and move. The screening of the short film Ride to Race was a very special moment. Premiering on Eurosport on World Refugee Day, it tells the inspiring story of on-athlete Dominic Lobaru. The Diamond League winner is on his journey of hope from fleeing Sudan to his quest for the Olympics. We're humbled to support Dominic and eager to see him at the starting line in Paris next year. In June, Paris joined LA, London, and Vienna in hosting On Track Night. Unlike typical track events, these nights infuse festival culture, creating an unforgettable atmosphere for runners and spectators. They will continue to be a pillar in our ambition to engage the community, celebrate the sport of running, and build a loyal fan base for the on-brand. This also brings me to my third point. One is driving fast global expansion with a localized approach. And this is backed by global initiatives that drive the vitality of home as a performance-running brand. The UK's growth, more than doubling in Q2, exemplifies this strategy. Initially, a distributor market taking it in-house has allowed us to make even more customer-informed decisions on focus locations. We are partnering with retailers like JD, Foot Locker, and premium department stores. Our London Regent Street store, introduced earlier this year, is a huge success, exceeding our expectations in driving brand awareness. Additionally, a targeted CloudMonster pop-up in Liverpool in May, tailored to local demographics, provided opportunities to engage with fans through events and run clubs. These trends fall through across our global markets, and we are building a strong playbook of specific initiatives that make tangible impacts on brand awareness and sales. You can bet that we are not just tracking the metrics. We're actively monitoring how the whole brand is perceived by consumers. Our commitment to performance running and continuous innovation is hitting the mark, and we're pleased with the results. We observed this in the U.S., where the outstanding results of our athletes in recent months have significantly elevated the performance credibility of our brand and products. We have already spoken about how Noviris Boston Marathon wins. Recent successes with our cloud spike on shorter distances have further propelled On's reputation. At the U.S. Track and Field Championships in early July, On Athletics Club members Jared Luguse, Joe Klecker, and Alicia Monson reached a combined four podium finishes in the 1,500, the 5,000, and the 10,000-meter races. So you can expect all athletes to be ready for Budapest World Athletics Championships this coming weekend. As you see, the strategy of integrating local community outreach with the global approach is proving highly effective, particularly in new or emerging markets. Regions such as the UK, Northern and Southern Europe, the Middle East, China, Japan and Latam are now vital parts of our growth, contributing a quarter of our overall business. The success in these areas underscores the tremendous potential for further expansion. So in conclusion, ON is full of vitality, thriving in product innovation, brand resonance, and global expansion like never before. Now, let's take a pause and look back. We're approaching our two-year anniversary post-IPO this coming mid-September. Our life as a public company has been marked by remarkable progress and significant achievements. exceeding nearly all expectations we set two years ago. We view this milestone as an opportunity to update all our investors on our plans and trajectory for the future. Therefore, we're thrilled to announce that we will host an analyst and investor day on October 4th, 2023 in Zurich. We look forward to many of you joining the ON team as we continue to dream on. Now, it's my pleasure to hand over to Martin for the detailed Q2 financial review and the updated outlook for the year. Martin.