Swiss sportswear company On Holding AG (NYSE:ONON) reported financial results for the fourth quarter and full year 2025, delivering a top-line performance that met expectations while profitability metrics painted a more complex picture. The market's immediate reaction was sharply negative, with shares falling nearly 10% in pre-market trading following the release.
Quarterly Performance Versus Estimates
The company's fourth-quarter results presented a mixed bag when held against analyst forecasts. Revenue growth remained robust, but earnings per share fell short of consensus expectations.
- Revenue: On reported Q4 net sales of CHF 743.8 million (approximately $732.9 million). This represented a 22.6% increase year-over-year, or 30.6% on a constant currency basis. The figure came in just below the analyst estimate of approximately $738.8 million.
- Earnings Per Share: The non-GAAP adjusted diluted EPS for the quarter was CHF 0.25 (approximately $0.244). This missed the analyst consensus estimate of $0.207.
While the revenue miss was marginal, the significant shortfall in earnings per share appears to be a primary driver behind the negative investor sentiment in pre-market activity. The company's reported net income for the quarter decreased by 22.9% to CHF 69.1 million, highlighting pressures on the bottom line despite strong sales growth.
Full-Year 2025 Highlights and 2026 Outlook
For the full fiscal year 2025, On achieved a significant milestone, surpassing CHF 3 billion in annual net sales for the first time. Sales grew 30% to CHF 3.01 billion, with constant currency growth of 35.6%. The company also expanded its profitability at the operational level, with the adjusted EBITDA margin increasing to 18.8% from 16.7% the prior year.
Looking ahead, management provided an outlook for 2026 that sets a high bar. The company expects constant currency net sales growth of at least 23%, which implies reported net sales of at least CHF 3.44 billion (approximately $3.44 billion). This outlook is notably higher than the current analyst sales estimate of CHF 3.749 billion for the full year 2026, suggesting management confidence exceeds Wall Street projections.
The company also guided for a gross profit margin of at least 63.0% and an adjusted EBITDA margin between 18.5% and 19.0%.
Key Financial and Operational Takeaways
Beyond the headline numbers, the earnings release underscored several strengths in On's business model and strategic direction:
- Premium Margin Expansion: The gross profit margin increased to 62.8% for the full year, up from 60.6% in 2024, demonstrating the strength of its premium brand positioning.
- DTC Channel Strength: Direct-to-consumer (DTC) net sales grew 33.7%, outpacing wholesale growth and contributing to higher profitability.
- Explosive APAC Growth: The Asia-Pacific region was a standout, with net sales more than doubling year-over-year to CHF 511.1 million, indicating successful global brand scaling.
- Apparel & Accessories Scaling: While footwear remains the core, sales from apparel and accessories grew 68.2% and 124.1% respectively, signaling progress in building a multi-category brand.
- Strong Balance Sheet: Cash and cash equivalents grew to CHF 1.02 billion, providing ample fuel for continued strategic investments in retail, innovation, and marketing.
Market Reaction and Investor Sentiment
The steep pre-market decline suggests investors are focusing on the earnings miss and the year-over-year drop in net income, potentially viewing it as a sign that soaring costs are offsetting strong revenue growth. The market may also be weighing the company's aggressive investment phase—evident in increased selling, general, and administrative expenses—against its future profit potential. The provided 2026 sales outlook, which is ambitious relative to analyst estimates, may not have been enough to offset concerns about near-term profitability pressures evident in the Q4 report.
For a detailed breakdown of future earnings estimates and past performance, you can review the earnings and estimates data for ON HOLDING AG (NYSE:ONON).
Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation, or an offer to buy or sell any securities. Investing carries risks, including the potential loss of principal.
