On Holding AG

Hello and welcome to the On Holdings AGQ3 2023 results 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 1 on your telephone keypad. If you would like to withdraw your question, again, press star 1. We'll now turn the conference over to Jared Peter, Head of Investor Relations. Please go ahead.

Good afternoon, good morning, and thank you for joining on 2023 third quarter earnings conference call and webcast. With me today on the call are executive co-chairman and co-founder Kasper Kopebi, 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 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 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 a reconciliation to the most comparable IFRS measures. We will begin with Kasper, followed by Martin, leading through today's prepared remarks, after which we're looking forward to opening the call for a Q&A session. With that, I'm very happy to turn over the call to Kasper.

It is our great pleasure to be here today with you to discuss the results of our thriving business. ON continues to have a very strong momentum. In Q3, the outstanding demand for our brand resulted in another record top line quarter with over 480 million Swiss francs net sales. This represents 47% growth year over year, or even 58% on a constant currency basis. Many of you joined us six weeks ago for our investor day in Zurich, and we tremendously enjoyed sharing more about ON's unique culture, innovation pipeline, and brand vision with you. We aim to be the most premium global sportswear brand, rooted in innovation, design, and sustainability. Allow me to share how we have made progress towards this goal in the third quarter. The on-brand is in very high demand and has further gained in popularity and desirability. We are seeing great success by connecting our celebrity athletes to product innovation. When Ben Shelton stormed to the semifinals at the US Open, for instance, we amplified his skyrocketing popularity through the on-brand campaign, Dream On. As announced, we are making strategic shifts in our marketing spending further build global awareness for all. The headline dream on Helen O'Berry could also be seen on billboards across New York city in the recent weeks and dream on she did with her dominating win at the marathon, making Helen the first woman to win Boston and New York in the same season in 34 years. I cannot emphasize enough how important successes like this one are for our brand. and for our ambition to become the number one running brand. Performance is at the very core of the ON brand and our superior products allow us to command premium prices. More importantly, performance is also a passion across the team. Last month, our co-founder Olivier spent a good week in Boulder to support our local teams during Helen's final preparations for New York and the testing of new racing technologies for the upcoming Olympics with the On Athletics Club. And let us share another anecdote with you that illustrates our culture. Ten OAC athletes traveled to New York from Boulder to support Helen in her race. Among them, world class athlete Jared Nguz, who in September won the 1500 meters in the Diamond League meeting in Zurich. You may not be used to hearing these kind of stories in an earnings call, but we feel that how we achieve our results is just as important as the results themselves. As shared during the investor day, ON has a very strong product innovation pipeline. In recent months, we were able to deliver a number of highly successful product launches. Let me name a few. The Cloud Eclipse is catering to runners who are looking for a maximum cushioning experience. It is built on our newest patented cushioning platform, CloudTech Phase, which consumers have already adopted so quickly on the cloud server. And CloudTech Phase isn't just for running shoes. Ant's computer-optimized outsell technology has been adapted for ultimate all-day comfort as well. I am, of course, talking about the all-new Cloud Tilt, which we pre-launched in a hugely successful collaboration with Louisville. Retailing at $490, the model sold out almost entirely within a few days and generated significant traction across our social platforms. We are excited to see how far the Cloud Tilt will go when it becomes more widely available to consumers in February next year. Our design collaboration with JW Anderson and Loewe is a testament to the premium positioning of the ON brand, and in particular to ON's apparel range, which will again be featured in the collaboration with Loewe in the coming months. Speaking of apparel, we've seen exciting launches in the past weeks and have been very present around the globe with our campaign Run Together. Another key innovation milestone in apparel is the PACE collection, which launches today. It is made from captured carbon emissions, and we are proud to bring ONZE Clean Cloud technology to apparel for the first time. The strong presence on the tennis court has also increased demand for ONZE apparel range, and we look forward to introducing specific tennis performance and lifestyle apparel in spring. Congratulations to Iga Sviatek for taking the WTA finals title, and returning to world number one. Q3 also marks a milestone in the continuing shift of how we reach our customers. With 55% growth, ON's D2C business has significantly outpaced the wholesale business, which grew 43%. We are very encouraged by the strong performance across both e-comm and own retail, which saw store openings in Miami and London's Biddlefields in recent weeks. In line with our three-year plan, we expect D2C to continue to grow faster than wholesale, which will remain an important channel for our business. I'm happy to say that as a brand, we have found the wholesale partners that we want to work with. And going forward, we will focus on deepening these partnerships and jointly delivering an intimate consumer experience across categories through these channels. As we enter the holiday season and prepare for more product launches to surprise our fans in 2024, We are grateful to share that the on-brand has never been stronger than today, and that we never had more reasons to be optimistic about the future trajectory of our business. This is a pivotal moment in our story, as we are successfully transforming from a challenger in the running category to a running leader, from a running brand to a multi-sport brand, from a wholesale let to a true omnichannel brand, and from a footwear brand to a sportswear brand. With this, I will now hand over to Martin for the detailed discussion of our business and the financials. But not without correcting my earlier mistake of not naming him among the athletic feats of our top athletes. Congratulations on your finish in the New York Marathon, Martin.