On Holding AG

ONON
NYSEFree primer · Steps 1–3 of 21Updated May 27, 2026Coverage as of 2026-Q2

Business Model

title: "Step 01 — Business Model & Overview" ticker: ONON company: On Holding AG source: coverage-next-full step: 01 created: 2026-05-27

Step 01 — Business Model & Overview

On Holding AG (NYSE: ONON)

1. Business Description

On Holding AG is a Swiss premium athletic footwear and apparel company. Founded in 2010 in Zurich by Caspar Coppetti, David Allemann, and Olivier Bernhard (a former professional triathlete), On creates running shoes with its patented CloudTec® cushioning technology — hollow pods that compress on impact and rebound for propulsion, creating a distinctive "zero-gravity" feel [S1]. The company sells directly to consumers via its own e-commerce platform and ~70 branded retail stores, and through ~8,000 wholesale partners globally. Roger Federer joined as a co-entrepreneur and shareholder in 2019 [S1].

On went public on NYSE in September 2021. As of FY2025, the company generates CHF 3.0 billion in annual revenue, employs ~4,000 people, and operates in 60+ countries [S5].

2. Value Chain Layer Map

DESIGN & IP                    MANUFACTURING                  DISTRIBUTION                   END CONSUMER
─────────────                  ─────────────                  ─────────────                  ─────────────
CloudTec® R&D                  Vietnam (90% shoes,            DTC (42% of sales):            Performance runners
(Zurich, Switzerland)          60% apparel)                   - on.com e-commerce             Lifestyle consumers
                               Contract manufacturers         - ~70 own stores                Outdoor/Trail athletes
Helion™ foam                   (Tier 1 partners)              (brand hubs)                   Tennis players
development                                                                                   (Iga Swiatek, B. Shelton)
                               Raw materials:                 Wholesale (58% of sales):
Product design                 China Tier 2 exposure          - ~8,000 premium retail
& innovation                                                  partners globally              
(12–18 month cycles)                                          - Select department stores
                                                              - Specialty running shops
                                                              - No off-price channels

Key: On is a design-led, asset-light company. It outsources all manufacturing to contract manufacturers, retaining design, IP, and brand as core value-creating activities. The company explicitly avoids commodity/mass-market distribution (terminated relationships with off-price retailers like Zalando's off-price channel) [S5].

3. Revenue Model

On generates revenue from four primary drivers:

Driver FY2025 Revenue % of Total Growth YoY
Footwear (DTC) ~CHF 1,172M ~38.9% +31% est.
Footwear (Wholesale) ~CHF 1,632M ~54.1% +26% est.
Apparel CHF 169.9M 5.6% +68.2%
Accessories CHF 39.6M 1.3% +124.1%

Channel economics:

  • DTC margins significantly higher than wholesale (estimated 20–30 pp gross margin premium on DTC vs. wholesale, consistent with consumer brand industry norms)
  • DTC mix growing: 38% in FY2023 → 41% in FY2024 → 42% in FY2025; target ~45–50% over 3–5 years
  • Own stores: ~70 as of FY2025 (up from ~50 in FY2024); described as "brand hubs" — high-design, experiential format, not traditional retail

Geographic revenue:

  • Americas (primarily US): 57.7% — largest and most mature market
  • EMEA: 25.3% — growing steadily
  • Asia-Pacific: 17.0% — highest growth (+96% YoY in FY2025); China is primary APAC driver

4. Cost Structure

Cost Layer FY2025 (CHF M) % of Revenue
Cost of Sales 1,120.3 37.2%
Gross Profit 1,893.6 62.8%
SG&A 1,516.6 50.3%
R&D 10.6 0.4%
Operating Income 377.0 12.5%

Cost structure commentary:

  • Gross margin of 62.8% is premium-brand caliber — comparable to Lululemon (~57%) and significantly above Nike (~44%) and Adidas (50%). Higher gross margins reflect premium ASP ($180–$250), selective distribution, and growing DTC mix [S2]
  • SG&A at 50.3% of revenue reflects heavy marketing investment (Zendaya campaign, athlete partnerships) and store build-out costs; expected to leverage as revenue scales
  • R&D of CHF 10.6M (~0.4% of revenue) is extremely low — suggesting CloudTec® innovation is embedded in COGS/design function rather than a separate R&D line
  • SBC of CHF 66.6M (2.2% of revenue) is meaningful dilution

5. Key Products

Product Line Category Key Features ASP (Est.)
Cloudmonster Performance Running Max-cushion CloudTec® $170–$200
Cloudsurfer Performance Running Balanced ride $160–$180
Cloudrunner Performance Running Trail/road versatile $150–$170
Cloud X Cross-training Multi-purpose athletic $140–$160
Cloudnova Lifestyle Casual/street wear $140–$160
The Roger Tennis/Lifestyle Federer collaboration $160–$200
Cyclon (Cloudneo) Subscription/Sustainability Recyclable; subscription model $29.99/mo

6. Brand & Marketing

Roger Federer: Strategic equity partner (not a paid endorser). Co-designs The Roger line; participates in brand strategy. Stake reportedly ~3% (pre-IPO grant). Unique because Federer is a co-owner with aligned financial incentives [S1].

Zendaya: Named global brand partner (2024). Connects the brand to lifestyle/cultural demographics beyond pure performance running. Major campaign investment.

Iga Swiatek (World #1 tennis) and Ben Shelton: Tennis athlete partnerships reinforcing performance credibility.

"Born in the Alps" brand identity: Swiss precision, clean aesthetic, performance obsession — strong differentiation from US-headquartered Nike/Adidas.

7. Business Model Assessment

Strengths:

  1. Premium ASP with demonstrated pricing power — raised prices in 2025 to offset tariffs without demand destruction
  2. DTC flywheel: direct consumer relationship generates data + higher margins + brand storytelling control
  3. Category expansion (apparel +68%) is early-stage and margin-accretive as it scales
  4. APAC underpenetration: brand awareness approaching 30% globally — most premium brands operate at 60–80% in mature markets, suggesting 2–3x awareness growth runway

Risks:

  1. Single-brand risk — all revenue from the "On" brand; no sub-brand diversification
  2. Manufacturing concentration — Vietnam (~90% shoes); US tariff headwind
  3. Founder-transition execution risk — professional CEO/CFO departures replaced by founding entrepreneurs in 2025

8. Source Index

Tag Source
S1 On Holding AG company history (press.on-running.com, Wikipedia), SEC 20-F FY2025
S2 StockAnalysis.com financial data (retrieved 2026-05-27)
S5 20-F FY2025 press release (investors.on-running.com, 2026-03-03)

Financial Snapshot

title: "Step 04 — Financial Quality" ticker: ONON company: On Holding AG source: coverage-next-full step: 04 created: 2026-05-27

Step 04 — Financial Quality

On Holding AG (NYSE: ONON)

1. Statement Quality Assessment

On Holding files under IFRS, reports in CHF. As a Foreign Private Issuer, it files 20-F (not 10-K). Financial reporting appears straightforward with no significant restatements identified. Key quality considerations:

Reporting conventions:

  • Adj. EBITDA vs. GAAP: Management regularly references Adjusted EBITDA (CHF 567M in FY2025 vs. GAAP operating income CHF 377M), with adjustments primarily for SBC (CHF 66.6M) and depreciation. The gap is meaningful (~50% higher than EBIT) — investors should use Adj. EBITDA for comparability but track SBC as a real economic cost.
  • Net income volatility: FY2024 net income (CHF 242.3M) exceeded FY2025 (CHF 203.7M) despite higher revenue and operating income in FY2025. This disconnect reflects lumpy tax items (deferred tax asset recognition in FY2024 and normalization in FY2025). Adjusted EPS (CHF 0.80 diluted) is the better proxy for recurring earnings [S5].
  • IFRS 16 lease treatment: CHF 521.5M in lease liabilities (FY2025) must be considered "economic debt" for enterprise value calculations. These are primarily operating store leases as On expands its retail network.

Balance sheet health:

  • No financial debt outstanding — clean capital structure
  • Cash of CHF 1,020M provides significant cushion and optionality
  • Working capital of CHF 570.3M (net working capital per company definition) and CHF 1,237.6M current assets less current liabilities per StockAnalysis [S2]
  • Current ratio 2.71x (FY2025) — strong liquidity

2. Statement Adjustments

Item FY2025 Adjustment Rationale
SBC expense CHF 66.6M Real economic cost; deduct from FCF analysis
IFRS 16 lease liabilities CHF 521.5M Add to debt in EV calculation
Tax benefit/(expense) normalization Lumpy Adj. EPS more reliable than GAAP EPS
D&A ~CHF 170M est. EBITDA = EBIT CHF 377M + D&A ~CHF 170M ≈ CHF 547M; Adj. EBITDA at CHF 567M includes ~CHF 20M add-back beyond D&A

Adjusted earnings estimate (FY2025):

  • Adj. Net Income = Operating Income + Finance Income – Tax = ~CHF 377M + ~CHF 62M (net finance) – normalized tax at ~20% ≈ ~CHF 350M → divided by ~296M shares = Adj. EPS ~CHF 0.81 (matches company disclosure of CHF 0.80–0.81 adj. EPS) [S5]

3. Cash Flow Quality

Metric FY2023 FY2024 FY2025
Operating CF CHF 232.1M CHF 510.6M CHF 359.5M
Capex (42.8M) (60.5M) (72.9M)
Free Cash Flow CHF 189.3M CHF 450.1M CHF 286.6M
FCF / Net Income 2.38x 1.86x 1.41x
FCF / Adj. EBITDA 70.8% 116.1% 50.6%

FCF quality observations:

  • FY2024 had unusually high FCF (CHF 450.1M) driven by favorable working capital movements; not the run-rate
  • FY2025 FCF declined to CHF 286.6M due to working capital investment for growth (inventory build for APAC expansion) and increased capex (store build-out)
  • FCF conversion will normalize as inventory buildup stabilizes; steady-state FCF margin should be 12–15%
  • Capex is predominantly growth capex (new stores) — maintenance capex likely CHF 30–40M annually

4. Accruals Quality

Revenue recognition: On follows IFRS 15; revenue recognized at point of sale (DTC) or upon delivery/transfer of title (wholesale). No complex multi-element arrangements or significant deferred revenue identified. Revenue quality: HIGH [S5].

Inventory: CHF 419.8M (FY2025) — reasonable for CHF 3B revenue company. Inventory days ~55–60. No significant inventory write-downs identified in recent filings. The APAC expansion has required incremental inventory build.

Receivables: CHF 305.4M trade receivables — days receivable ~37. Consistent with wholesale/DTC mix. No major bad debt provisions identified.

5. Adversarial Research Sweep

Short Reports

No prominent short reports targeting On Holding AG identified as of research date. ONON has been a long-favored position among growth funds; the stock has not been a prominent short-seller target.

Regulatory Investigations

No SEC investigations, PCAOB issues, or Swiss regulatory actions identified against On Holding AG [Web search 2026-05-27].

Litigation
  • No material disclosed litigation in 20-F beyond routine commercial disputes standard for a consumer brand of this size
  • Standard IP/trademark protection litigation (protecting CloudTec® patents) — normal for any technology-protected consumer brand
ESG/Labor Concerns
  • Manufacturing in Vietnam by contract manufacturers — standard for the footwear industry; On publishes sustainability reports but detailed labor auditing disclosure is limited (consistent with industry norms)
  • Cyclon subscription shoe (recyclable) represents proactive sustainability positioning
Accounting Red Flags
  • None identified. The gross-margin vs. net-income divergence in FY2024/FY2025 is fully explained by tax timing, not accounting manipulation
  • SBC as a % of revenue (2.2%) is elevated but disclosed clearly
  • IFRS 16 lease liabilities are standard and fully disclosed
Governance Concerns
  • Dual-class share structure: Founders retain 52% voting control with 13.8% economic ownership through Class B shares (10:1 voting). This is a governance risk but is industry-standard for founder-led consumer brands and was disclosed at IPO.
  • Founder transition (2025): Professional CEO/CFO replaced by founding co-CEOs. Transition risk is real but founders have deep brand knowledge and are making open-market share purchases (positive signal).

Adversarial sweep verdict: No material red flags in accounting, regulatory, or litigation domains. Primary investor concerns are valuation (premium multiple), execution risk on founder transition, and tariff/FX headwinds — all disclosed and consensus-known risks, not hidden risks.

6. Financial Quality Score

Dimension Score (1–5) Notes
Revenue recognition 5 Simple IFRS 15; no complex arrangements
Cash flow quality 4 FCF/NI ratio healthy; FY2024 peak FCF was one-off
Earnings quality 4 Adj. EPS needed due to tax lumpiness; SBC material
Balance sheet quality 5 No financial debt; strong cash; clean structure
Disclosure quality 4 FPI 20-F; channel/geo/product disclosure good; segment profitability not disclosed
Overall 4.4 / 5 High quality financial reporting

7. Source Index

Tag Source
S2 StockAnalysis.com (retrieved 2026-05-27)
S5 20-F FY2025 (0001858985-26-000008), press releases

Recent Catalysts

title: "Step 12 — Catalysts (Bull/Bear)" ticker: ONON company: On Holding AG source: coverage-next-full step: 12 created: 2026-05-27

Step 12 — Catalysts (Bull/Bear)

On Holding AG (NYSE: ONON)

1. Key Findings

Net assessment: BULLISH with defined bear cases. The bull/bear debate on ONON is well-defined: bulls see a rare combination of a premium brand at an early global stage + expanding margins + APAC optionality at a de-rated multiple (~22x EV/EBITDA vs. 40-50x a year ago). Bears see tariff headwinds, founder transition risk, and a still-elevated valuation for a company whose path to 20%+ EBITDA margin requires sustained execution over 3-5 years. The base case is bullish — the company's Q1 2026 gross margin of 64.2% exceeded consensus and demonstrated tariff offsets are working.

Note: Earnings call transcripts were not loaded (coverage-next-full path). Bull/bear debate is inferred from filings, press releases, consensus notes, and recent news.

2. Implications for Thesis and Valuation

  • Market has de-rated significantly: ONON traded at 70-90x P/E at its peak (+); it now trades at ~43x forward P/E and ~22x EV/EBITDA at ~. This de-rating represents a significant compression that makes the bull case more compelling.
  • The debate is about execution, not business model: Both bulls and bears agree On's business model is attractive. The debate is whether: (a) tariffs and FX will sustainably impair margins; (b) APAC can maintain 50%+ growth for 2-3 more years; (c) the co-CEO founder transition executes smoothly.
  • Consensus is firmly bullish (83-88% Buy): Street sees ~-60 target price vs. current — 33-51% upside. The bear case is a minority view but it is well-articulated and cannot be dismissed.

3. Objective

Define the bull and bear arguments, identify the key debate drivers, and establish the catalyst calendar that will prove or disprove each side. This step feeds Step 15 scenario modeling in /complete-coverage.

4. Narrative Analysis

The Debate Structure

On Holding's investment debate is fundamentally about three questions:

Question 1: Can On sustain 60%+ gross margins in a tariff + FX environment?

  • Bull: Q3 2025 (65.7%) and Q1 2026 (64.2%) already above the FY2026 guidance floor of 64.5%. Pricing power is stronger than feared.
  • Bear: Tariff pressure compounds with FX compression; 2026-2027 may see gross margin retracement to 62-63% if pricing volume effects kick in.

Question 2: Is APAC (especially China) a durable growth engine or a one-time penetration surge?

  • Bull: On is at <30% brand awareness globally; China specifically has a large affluent middle class with appetite for premium Western athletic brands; DTC-first in China is margin-accretive.
  • Bear: China consumer nationalism (guochao), US-China trade tensions, and the market's own cyclicality could compress APAC growth from 96% to 20-30% within 2 years.

Question 3: Does the valuation multiple hold as growth moderates?

  • Bull: At , On trades at 22x EV/EBITDA and 3.8x EV/Revenue — reasonable for a brand growing at 20%+ CC with expanding margins. 50-60% upside to -65 over 12-18 months.
  • Bear: Even at , On is priced for perfection in a revenue-heavy multiple (3.8x EV/Revenue). If growth decelerates to 15%, the multiple could compress to 2.5-3x EV/Revenue, implying -30 stock.
Catalyst Calendar

Near-term (6-12 months):

  • Q2 2026 earnings (August 2026): First full-tariff quarter in 2026; acid test for gross margin guidance ≥64.5%
  • Q3 2026 (November 2026): APAC growth trajectory; will deceleration be sharp or gradual?
  • FY2026 full-year results (March 2027): Validates or refutes ≥CHF 3.44B guidance

Medium-term (12-24 months):

  • Apparel reaching 8-10% of sales: Margin-accretive mix shift catalyst
  • US tariff resolution/trade deal: Could be a significant positive catalyst if Vietnam tariff reduced from 20% to 10-15%
  • APAC own stores opening in China: DTC-first China strategy becoming visible in store count
  • CHF/USD reversal: If CHF weakens toward 0.85, reported growth accelerates significantly

5. Evidence and Sources

  • Consensus file: Analyst ratings, price targets, key themes [S4]
  • 20-F FY2025: Risk factors, financial guidance [S1]
  • Investor presentation: Company bull narrative [S3]
  • Market overview: Tariff context, industry dynamics [S4b]

6. Assumption Register Updates

ID Step Category Assumption Basis Sensitivity Source
A034 12 Valuation Base-case exit EV/EBITDA in 3 years: 18-20x on FY2028E Adj. EBITDA (~CHF 900M-1.0B) implies equity value CHF 15-18B; ~CHF 50-60/share Estimate High Peer multiple, growth profile
A035 12 Risk Bear case: APAC growth decelerates to 20-25% in FY2027, Americas growth stagnates at +5%; stock tests -30 Estimate High Scenario analysis

7. Tables and Calculations

Bull vs. Bear Summary
Factor Bull Case Bear Case
Revenue growth (FY2026-28 CAGR) 20-25% CC 10-15% CC
Gross margin trajectory 64.5% → 66-67% 64.5% → 62-63%
APAC growth (FY2026) 50-70% 20-30%
Tariff impact on margins Offset by pricing -150 to -250 bps headwind
Valuation at exit 20-22x EV/EBITDA 14-16x EV/EBITDA
Implied stock price -70 -35
Time horizon 12-24 months 12-24 months
Analyst Consensus Summary (May 2026)
Metric Value
% Buy/Strong Buy 83-88%
% Hold 12-17%
% Sell 0%
Avg. Price Target -60
Current Price ~
Implied Upside 33-50%

Bull Case — 3 Bullets

  1. Premium gross margin flywheel intact: Q3 2025 (65.7%) and Q1 2026 (64.2%) gross margins prove tariff offsets (pricing + DTC mix) are more than covering Vietnam duty headwinds. On is on track to exit FY2026 at 65%+ gross margins — an extraordinary level for a volume-scale footwear brand.

  2. APAC is 2-3 years into a 10-year opportunity: With global brand awareness below 30% and Asia-Pacific growing +96% from a base of only 17% of sales, On has a multi-year geographic runway that Hoka, NKE, and LULU have proven is achievable for premium performance brands. China DTC-first strategy protects margins even as revenue scales.

  3. De-rated valuation creates a compelling entry for a compounder: At ~ (B market cap), ONON trades at 22x FY2025 Adj. EBITDA and 3.8x EV/Revenue for a brand compounding revenue at 20%+ CC with expanding margins and ROIC of 34%. The PEG ratio (P/E 43x / EPS CAGR ~30%) is 1.4x — reasonable for a premium growth brand at this stage of development.

Bear Case — 3 Bullets

  1. Tariff + FX double headwind could compress margins and slow revenue for 2-3 years: The combination of 20% US-Vietnam tariff (affecting ~53% of revenue) and CHF strength (-8pp on reported growth) creates a real risk that FY2026-2027 reported revenue growth slows to 10-14% for 2+ years. At that growth rate, the current 22x EV/EBITDA is difficult to sustain, and multiple compression to 14-16x could halve the stock from peak.

  2. Founder co-CEO transition is an unquantified governance risk: Maurer built the operational and wholesale infrastructure over 12 years. Allemann and Coppetti are brand and product visionaries, not traditionally operational executives. Any sign of execution stumble (inventory mismanagement, retail store economics deteriorating, key executive departures) in the first 12-18 months of the transition will be disproportionately punished by the market.

  3. Valuation requires perfection in a volatile environment: Even at (down 35% from peak), ONON is priced at 43x forward earnings for a company facing tariff headwinds, FX compression, and management transition simultaneously. If any one of these factors disappoints, the multiple can compress rapidly — the stock was at in early 2026 (52-week low) and could retest that level on a bad quarter.

8. Open Questions and Data Gaps

  1. China revenue breakdown: Is China 50%, 70%, or 90% of APAC revenue? This determines APAC concentration risk.
  2. Consumer elasticity data: How elastic is On's core consumer to a 7% price increase? No public data; inference from Q1 2026 volume trends post-price increase would be the indicator.
  3. CFO vacancy: Has On appointed a new CFO to replace Hoffmann? Not disclosed in current filings.

Source Index

Source Tag Document or URL Section Date Notes
S1 20-F FY2025 (0001858985-26-000008) Risk Factors, Guidance 2026-03-03 Bear case inputs
S3 investor_presentation_2025.md Strategy 2026-05-27 Bull case inputs
S4 consensus.md Analyst ratings, themes 2026-05-27 Street bull/bear
S4b market_overview.md Tariff, industry 2026-05-27 Tariff context

Full Research Available

This primer covers steps 1–3 of 21. The full deep dive includes moat analysis, DCF valuation, bull/bear scenarios, management quality, earnings transcript analysis, competitive positioning, returns on capital, institutional/insider activity, and an investment memo.

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