On Holding AG

Thank you for standing by. My name is Gail, and I'll be your conference operator today. At this time, I would like to welcome everyone to the On Holdings AG Q4 and Fiscal Year 2024 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 followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press star one again. I would now like to turn the conference over to Jarrett Peter, Head of Investor Relations. You may begin.

Good afternoon, good morning to our investor community. Thank you for joining on 2024 fourth quarter and full year earnings conference call and webcast. With me today on the call are ONZ executive co-chairman and co-founder David Aleman, CFO and co-CEO Martin Hoffman, and co-CEO Mark Maurer. 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 of different material. Please refer to our 20F filed with the SEC earlier this morning for a detailed discussion of such risks and uncertainties. We will further reference certain non-IFRS financial measures, such as adjusted EPA and adjusted EPA 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 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, everyone, for joining us today, and welcome to our fourth quarter and full year 2024 results call. This is an exciting moment for us as ON is celebrating its 15th anniversary this year. On January 6, 2010, my co-founders, Olivier Bernhardt, Kasper Kopetti, and I founded ON on a cold winter day in Switzerland. This was in the morning. In the afternoon, I boarded a plane to Asia to oversee the production of the ON Cloud Surfer model, our first tool. We just got started to dream ON. Looking back, zero to one was a tough race. It would not have been possible without an incredibly talented and optimistic team that, together with us founders, made OnGrow into the global sportswear brand it is today. Our gratitude goes to this highly spirited sports team. While every single year has been a new adventure, 2024 was particularly defining as we solidified our global brand presence. This strength translates to the growth we have publicly committed. One and a half years ago, we shared our strategic direction for the three-year timeframe from 24 to 26 with you. On strategic ambition to grow into the most premium global sportswear brand, and the financial ambition to achieve a 26% net sales CAGR, a gross profit margin of north of 60%, and an adjusted EBITDA margin of over 18%. Looking at 2024, I'm thrilled to report that we are tracking very well and exceeding our expectations in both top line and profitability. With a very strong constant currency growth rate of over 33%, we have reached 2.32 billion Swiss francs in net sales. This includes an expansion of our D2C share by more than three percentage points, extending our superpower to connect deeply with our fans through our own channels. This has further supported premium margins with cross-profit margin reaching 60.6% and an adjusted EBTA margin of 16.7%, validating our path towards our mid-term targets. Zooming out in 2024, One experienced a new level of global brand love from its community. ON is resonating with millions of consumers across more than 80 countries on all continents. Our collaboration with Roger Federer, Zendaya, FKA Twigs, and ON's presence as one of the most talked about brands in Paris last summer has propelled ON's global brand awareness and earned it the prestigious Brand of the Year Award by Footwear News. Above all, we are truly humbled by the immense love consumers have for Ron, their strong engagement, and the countless on-fans we all encounter everywhere, running on trails in cities and while traveling. The boost in brand strength even over-indexes on Gen Z consumers, where awareness in the U.S. more than doubled in one year and has elevated on to one of the top most wanted sports shoe brands among teens in the US. No wonder that ON ranks amongst the hottest brands in our industry on social media. We manage our brand strategy in three areas, premium product offerings, strategic partnerships, and an impactful presence in global markets. First, premium product brands. To build our parent brand ON, we're supporting it with a family of product offerings and brands. each with their own personality and purpose. Take the cloud monster, the cloud server, the cloud runner, and the iconic cloud. These aren't just shoes, they're brands in their own right, allowing us to connect with diverse communities and tastes, building lasting loyalty to a franchise, even as our products innovate and evolve. Speaking of the cloud, we just soft-launched the Cloud6. It's a refresh of an icon keeping its signature comfort, versatility, and functionality. The cloud has grown from a running shoe into an everyday essential and one of our most beloved franchises. It's become synonymous with all, strengthening our overall brand. And with the full release just days away, we're already seeing strong momentum. Or take the emerging Light Spray franchise as an example of a product range brand that will support the innovation positioning of the main on-brand. In other words, ON is building a portfolio of strong product brands that support ON as the parent brand. Second, strategic partnerships. We're building the law for the on-brand through lasting partnerships with exceptional talents and brands. As you know, it started with Roger Federer joining ON as a partner over four years ago. Zendaya is now the voice of the next generation and of ON. Brand moments like the air tennis match between her and Roger, a film highlighting our brand promise to dream ON, and product campaigns have been incredible so far. And you're only seeing the beginning of this partnership. They're in for the long haul. Then think about ON's collaboration with FKA Twix around the superpower of sport combined with cultural influences. It's scaling our training vertical. The marriage between sports and culture has created a unique space for powerful collaborations like the multi-year partnership between LOEWE and ON. It's clear, meaningful and lasting partnerships build lasting brands. Third, high impact presence in global markets. Our world is more fragmented. Life moments and society transcending topics that once united us have become rare and golden. It's harder to combine these universal experiences that connect generations and cultures on a massive scale. On is navigating the noise and distraction with more than just visibility, but with creativity, relevance, and the right strategy. Brands that cut through are more valuable than ever. We have two key priorities for penetrating global markets, live sports moments and premium retail stores. First, live sport moments. Sports create some of the last and rare life moments that inspire conversation across society. It transcends generations, cultures, and backgrounds. It's where families gather, nations rally, and the world watches as one. Now fashion and luxury brands are catching up. They're recognizing the power of sports and diving into the arena headfirst. From the Paris Games to sponsoring major events like football and Formula One, they're all vying for a piece of the action. And that's where we come in. Only the premium sports brand perfectly positioned at the intersection of performance and cultural relevance. We're not just riding the wave, we're at the heart of it. ONN leverages these insights to cleverly build brand strength and achieve exceptional results. Take, for example, our recent Super Bowl ad featuring Elmo and Roger Federer captivating millions of Americans and bring on to the center screen. Through a playful conversation about our logo, the two literally put the name of our brand into everyone's mouth and on America's most watched morning show. Online spikes went to new levels and the marketing stone even featured in the New York Times. ELMO perfectly embodies our core value of positive spirit and bridges generations. Roche and ELMO launched a broader campaign centered around softness and our new cloud server tool. In a world obsessed with pushing limits, we encourage runners to embrace soft wins and community. In running, the On Athletics Club and its athletes put training together and winning on full display. These personalities inspire On's core community. A few weeks ago, the beloved US athlete Jared Nogu set a new world record for the Vanamaker mile at the Melrose Games. His smile and his win lit up the live broadcast and social conversations. Our approach to tennis involves creating brand moments around major sporting events and exceptional athletes. This strategy allows us to engage with a wider audience, both young and older. At the upcoming Miami Open, we're hosting the second edition of our own Clubhouse Nights. This event celebrates tennis at the intersection of performance and culture. Set in the vibrant heart of Miami, it blends sport, club culture, and community, creating a unique and immersive experience. You'll see Ben Shelton play against Joao Fonseca on the court, an exciting match set to the pulse of world-class DJs at Young Clubhouse Nights. The massive awareness growth with the Young community serves as proof that ON is scaling the brand with live moments in sports that can reach across generations. Live sports moments build love brands. Second, premium retail stores. We are grateful for our online success, but we know the power of major city centers. They're the heart of nations and communities. They live in our global consciousness. This is why my first point is that we believe in physical on-stores, not just for sales, but to give on apparel a broader presence and to build a beloved brand in the minds of communities. We're going beyond the traditional sports brand, creating premium store experiences that challenge the norm. In 2024, we launched 19 new retail stores in iconic locations. Think Champs-Élysées in Paris, Vittoria Emanuele in Milan, Rush Street in Chicago, and Emporium Melbourne. These aren't just stores. They're brand building hubs, essential for our growth. And it's working. In cities like Paris and Milan, we've seen a significant increase in regional awareness, proving that a physical presence drives digital momentum. At the same time, we're also building retail presence in newer markets with our first distributor-led retail stores opening in Santiago de Chile and Jakarta just a few months ago. A physical store acts as a flag in the ground, a linchpin for emerging markets for all. In 2025, we're looking forward to expanding our presence further in other parts of Southeast Asia as well as the Middle East. My second point is that building partnerships with premium wholesale remains a priority for all. Our partners have been instrumental in building the on-brand. We have been very careful about growing our wholesale network. This deliberate approach has left us with plenty of room to grow our business and brand awareness with the right partners. A recent example, the street facing on-shopping shop at Selfridges is attracting lots of eyeballs for ON apparel. This leads me to my third point, the connection between scaling apparel and physical retail. Powered by our retail expansion, 2024 marked a significant year for ON's apparel business with elevated collections and brand building campaigns centered around Zendaya and training. Proprietary research reveals that these efforts have significantly increased consumer perception of ONN as a head-to-toe sportswear brand. The expansion of ONN stores is elevating the visibility and growth of the apparel category for ONN to a next level. In 2025, we will continue to drive apparel-first categories such as training. Our latest training collection was launched in January with the Body is Art campaign featuring SK Twigs, to enhance our brand presence in gyms. The campaign highlights our approach to training apparel by showcasing an artist who integrates high-performance movement with music, arts, and culture. So, bottom line, showcasing Beyond Brand head to toe in landmark stores in major cities and in live sporting events remains a key to brand growth. To wrap up, My opening remarks today, strong brands stand the test of time, which is what we're building at all, a premium global sportswear brand with long-term value and resilience. Our 2024 financial results exceeded our expectations, filling us with confidence and excitement for the future. We believe that the best days are ahead of us with our exceptional team strong innovation, and globally relevant brand, we're ready to take on the next 15 years. We're incredibly grateful to our amazing community of ON fans for their love, support, and loyalty. I would like to thank you all for your support. Your probing questions, your insights elevate our thinking. And with that, Martin, on to the next 15 years and over to you.