Shares of On Holding jumped 18 percent after the Swiss running brand hiked its outlook for the current year after delivering Q3 results well ahead of analyst targets, forecast currency-neutral growth of at least 23 percent in 2026, and eased concerns over slowing U.S. growth.

A slowdown in growth in the Americas region had been a concern by investors, particularly given past comments from On management indicating that it was seeking to control growth in its U.S. to ensure demand remains strong.

Currency-neutral sales in the Americas in the third quarter grew 21.0 percent, only slightly below the 23.6 percent pace seen in the second quarter. Impacted by currency headwinds, net sales on a reported basis moved up 10.3 percent to CHF 436.2 million in the region.

Martin Hoffmann, CEO and CFO, said on an analyst call that the third quarter marked a “pivotal test of our premium strategy” since the brand was risking a negative reaction by consumers to the implementation of higher prices to mitigate U.S. tariffs.

“The results confirmed our view,” said Hoffmann. “Demand remained incredibly strong for our premium offerings, clear validation of our brand’s pricing power and the impact of our full price strategy. This gives us tremendous confidence heading into the holiday season where our premium positioning and unwavering commitment to full price selling will be a significant competitive advantage.”

Hoffmann also said strength in the U.S. region was embedded in On’s forecast for at least 23 percent growth on a currency-neutral basis for 2026. He said in the Q&A session of the call, “ Of course, we could not give such a strong outlook for next year if we would have doubts about the growth opportunity that we have in our largest region, America.”

Asked about On’s ability to continue to support premium margins amid its rapid expansion in the U.S., Caspar Coppetti, executive co-chairman and co-founder, said, “Executing a premium strategy takes a lot of discipline. The comment that we’ve made repeatedly also on these calls is that we’re not chasing growth by adding especially wholesale doors that don’t make any sense. We’re also not chasing growth by discounting.”

Regarding growth potential in the U.S. market, Coppetti said one reason for On’s confidence in continued robust growth is because the pricing actions so far haven’t affected demand. He said, “We’re very happy to see that the price increases that we’ve done now in July of this year have been very well received and we see continued demand growth implying that our affluent consumers are not price sensitive. I think that’s a very important fact as a lot of people seem to be concerned about the tariff impact.”

He also said On’s brand tracker analysis shows that the U.S. is one of the regions “where we’ve gained the most awareness and we’re also gaining with relevance, especially with high-income teens and affluent demographics combined with a high relevance in running.”

He said continued successful achievements by On ambassadors, citing Kenya’s Hellen Obiri recent breaking of the women’s course record in winning the recent New York City Marathon as an example, “translate into more demand from consumers.”

Finally, Coppetti noted that On in the quarter had less seasonal sales in the U.S. region. He elaborated, “We always have a very small percentage anyway, but we saw even less than we had last year. We are going into this holiday season with a full price strategy. We have no discounts coming up. That is against the backdrop of a very price competitive environment. We are really staying true to the discipline that the premium strategy demands.”

On Wednesday, shares of On rose $6.33 to $41.51 in over-the-counter trading.

Q3 Sales Top Analyst Targets
In the quarter, sales in Swiss francs climbed 24.9 percent year-over-year, and by 34.5 percent on a constant currency basis, to CHF 794.4 million ($956 mm), topping analysts’ consensus target of CHF 763.8 million. The gains reflected broad-based demand, with a strong performance across both Direct-to-Consumer (DTC) and Wholesale channels.

Regional Performance
In other regions outside the Americas, sales in EMEA, increased by 28.6 percent to CHF 213.3 million and gained 33.0 percent in constant currencies. Hoffman said “Our performance highlights the breadth of the brand heat in the region. We are seeing exceptional demand in the U.K., which has firmly established itself as one of our largest global markets, incredible momentum in newer markets like France and Italy, and a sustained re-acceleration in growth across the German-speaking region.”

Sales in the Asia-Pacific region catapulted 94.2 percent to CHF 144.9 million and added 109.2 percent on a constant currency basis. Hoffman said, “Asia Pacific is now approaching 20 percent of our total sales. What was once a new frontier has become a major engine for the brand. The remarkable demand is broad based, with continued triple-digit growth in Greater China, South Korea, and Southeast Asia amplifying the success we see in Japan. This increasing regional balance is a core strength, a direct reflection of our global strategy, and proof of our ability to drive high-quality growth across all markets.”

Channel Performance
By channel, sales through DTC climbed 27.6 percent to CHF 314.7 million, or by 37.5 percent on a constant currency basis. Hoffman said, “Our success is driven by strong synergies between our e-commerce and retail ecosystems. Omnichannel customers are more loyal and deliver materially higher lifetime value, validating our seamless premium experience.”

He said the opening of its Zurich flagship saw a strong reception while established flagships “continue to excel.” He added, “We saw standout contributions in Q3 from key locations including Kett Street in Tokyo, Miami, and the Champs-Élysées in Paris, proving the productivity and longevity of our retail investments.”

Net sales through the wholesale increased 23.3 percent to CHF 479.6 million, or by 32.5 percent on a constant currency basis. Hoffman said, “This performance reflects sustained elevated demand from our key account partners. The enthusiasm for our future pipeline is clear. The fall winter 2026 sell-in has kicked off with ongoing strong momentum and our building order book for 2026 already reflects our partners’ deep confidence in our endless innovation.”

Product Performance
By product category, sales from shoes increased 21.1 percent to CHF 731.3 million and gained 30.4 percent on a constant-currency basis. Said Hoffman, “In performance, the Cloudmonster continues to win new fans and our latest innovations like the Cloud Surfer Max and Cloudboom Max are off to exceptional starts, driving strong results in key sporting goods and run specialty distribution. Meanwhile, in lifestyle, the Cloud Tilt, the Cloud, and The Roger continue to see tremendous demand. This combination of elite performance products and the distinctive edge in the lifestyle segment is what sets On apart.”

Sales of apparel gained 86.9 percent to CHF 50.1 million and 100.2 percent on a constant-currency basis.  Hoffman said, “Our apparel category is rapidly establishing itself as a significant standalone growth pillar. Net sales reached CHF 50.1 million, an increase of 86.9 percent year over year on a reported basis and an amazing 100.2 percent at constant currency. This performance was kept by a major operational milestone as we sold over 1 million apparel units in a single quarter for the first time. This success is rooted in a global and multi-channel expansion with a meaningful and balanced increase in apparel share across all channels and regions.”

Sales of accessories jumped 145.3 percent to CHF 13.0 million or 160.8 percent on a constant currency basis.

Gross Margins “Materially Ahead” of Expectations
Gross margins jumped 510 basis points to 65.7 percent. Hoffman said gross margins were “materially ahead of our expectations and reflect the power and momentum of our premium brand position.”

He noted that “some temporary and one-off factors” supported the margin gains. The quarter included a positive one-time adjustment of approximately 200 basis points, reflecting lower-than-anticipated freight and other costs. Hoffman said, “Throughout half year one we saw these lower costs emerging partly from successful negotiations and scale benefits, but we prudently continued to accrue at our higher prior levels. Now in Q3 we have confirmed these efficiencies are sustainable and are updating our cost assumptions. This one-time adjustment therefore represents the release of those accruals related to the first half of the year.”

Margins also saw a “slightly positive” benefit from the lag between when On raised U.S. prices to offset tariffs and when the tariff rate was effective. Finally, the current devaluation of the U.S. dollar against the Swiss franc since early April added approximately a 100-basis-point benefit to margins.

Hoffman added, “Crucially, even after accounting for these effects, our underlying gross profit margin is significantly above our communicated long-term target. This is the result of the structural strength of our business and the great work of our team, our increasing D2C share, our premium positioning, durable operational efficiencies and economies of scale. These structural effects are expected to be sustained and are expected to be reflected in our future results.”

Earnings Top Analyst Targets
Net income in the quarter grew 289.8 percent to CHF 118.9 million, or CHF 36 cents a share, from CHF 30.5 million, or CHF 9 cents, a year ago. Adjusted earnings advanced 182.9 percent to CHF 142.0 million, or CHF 43 cents, from CHF 50.2 million, or CHF 15 cents, and well above analysts’ consensus estimate of CHF 15 cents.

Adjusted EBITDA leapt 49.8 percent to CHF 179.9 million, topping analysts’ estimate of  CHF 142 million.

Outlook
Given the quarter arriving above plan and continued momentum, On raised its guidance for the year. The outlook now calls for:

  • Net sales: Expected to grow by 34 percent year-over-year on a constant currency basis (previously at least 31 percent). At current spot rates, this corresponds to reported net sales of CHF 2.98 billion (previously CHF 2.91 billion).
  • Gross profit margin: Expected to be around 62.5 percent (previously 60.5-61.0 percent).
  • Adjusted EBITDA margin: Expected to be above 18.0 percent (previously 17.0-17.5 percent).

Looking further ahead, Hoffman noted that given its recent performance and the strength of its product pipeline, validated by its existing order book, On is “driving a trajectory well ahead of the targets outlined at our Investor Day in October 2023.”

At the time, On set a goal to double net sales by 2026, implying a 26 percent sales constant currency CAGR over the three years. On is now on track to complete the first two full years of its three-year plan with over 33 percent constant currency growth each year.

On now expects its three-year constant currency CAGR from 2023 to 2026 to reach at least 30 percent, implying “at least 23 percent growth” in 2026 based on its current outlook for 2025.

Hoffman added that the significantly higher gross margin achievement expected this year will also enable On “to continue to invest meaningfully into the brand, fueling our global momentum by driving even more progress around new technologies and AI and ultimately to build an even stronger foundation for continued growth in 2026 and beyond.”

Hoffman concluded in his prepared remarks, “We are thrilled with the continued strength of our brand. We head into the holiday season with high momentum and conviction in our plan which allows us to look beyond the immediate horizon towards our next phase or as we like to say, to dream on.”

Image courtesy On