# On Holding AG (ONON) — Financial Analysis

**Exchange:** NYSE  
**Coverage as of:** 2026-Q2  
**Updated:** 2026-05-27  
**Tier:** Free primer (step 2 of 19)  
**Sibling pages:** /stocks/ONON/thesis · /stocks/ONON/memo

## 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 |

## Deeper Financial Analysis

The fundamental tier ($1.00) adds 8 dimensions not included here:

- Revenue Breakdown — segment revenue, geographic mix, product-line margins
- Financial Trends — QoQ momentum, leading indicators, inflection points
- Balance Sheet — debt structure, dilution risk, working capital dynamics
- Capital Allocation — ROIC, buyback cadence, reinvestment efficiency
- Earnings Analysis — beats/misses, guidance vs actuals, transcript highlights
- Competitive Positioning — market share, pricing power, peer benchmarks
- Industry Context — TAM, sector tailwinds/headwinds, regulatory backdrop

**API endpoint:** GET /api/v1/research/ONON/fundamental

## Navigation

- Overview: /stocks/ONON
- Financials (this page): /stocks/ONON/financials
- Thesis: /stocks/ONON/thesis
- Investment Memo: /stocks/ONON/memo
- Coverage universe: /stocks