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On Holding (ONON +9.5%) is making a big move following its Q1 report this morning. It was only a slight EPS beat, but this Switzerland-based athletic footwear company reported huge upside on the top line. Revenue rose 43% yr/yr to CHF726.6 mln. Also, ONON raised its FY25 revenue outlook to +28% CC from +27% CC. Also, On benefitted from new product launches like the Cloud 6 and the Cloudsurfer 2.

• This was a good result considering ONON's leadership is in flux. Recall that last quarter co-CEO Marc Maurer announced he will be leaving July 1. The current CFO and the other co-CEO, Martin Hoffmann, will become the sole CEO. The outgoing co-CEO helped the company go public in 2021. He also helped to initiate a quick rebound a couple of years ago, ultimately outperforming some of its closest rivals in NIKE (NKE) and Adidas (ADDYY).
• Turning to the Q1 results, demand for On remains incredibly strong, largely fueled by its direct-to-consumer (DTC) channel, which includes online and company-owned stores. DTC channel sales jumped 45.3% yr/yr (+42.4% CC) to CHF 276.9 mln. This growth was ahead of internal expectations with both e-com and retail contributing strongly to this result. What really stood out was its Tokyo store, which even surpassed its richest street store in London in terms of sales. Wholesale was no slouch, with sales up 41.5% yr/yr (+38.6% CC) to CHF 449.7 mln in Q1 as retailer demand for the new Cloud 6 franchise has been exceptionally strong worldwide.
• The company believes its positioning as the most premium global sportswear brand in the marketplace is resonating with fans. For example, its new Cloudsurfer 2 has already gained strong global traction as a key running franchise. Another key launch was Cloud 6, On's largest product launch ever. The company remains very excited about its upcoming LightSpray technology. A robot fuses 1.5km of filament forming a complete shoe in a single, three-minute step with no glues and no seams, reducing waste and emissions. It's one of the lightest sneakers ever at a mere six ounces. 2025 will be a key year for testing and optimizing this technology.
• Looking ahead, On is excited about the remainder of 2025. Entering Q2, it continues to see strong consumer demand across all global markets and channels. Its pipeline of new product launches in 2H25 includes running products like the Cloudsurfer Max, the Cloudflow 5 and the Cloudboom Max, its first super shoe for the everyday runner. On is already seeing strong preorders for 2H from wholesale partners.

Overall, this was an impressive quarter for ONON. DTC sales really stood out, but wholesale performed very well also. Recent launches have performed very well with more to come in 2H25. While other athletic brands have struggled, especially Nike, On really turned it on in Q1. We think this report and commentary is easing fears about losing Marc Maurer as co-CEO in a few weeks. The brand seems to be in capable hands.