ONON Q1 Results Raise Outlook With Margin Gains And Growth Potential

ONON Q1 Results Show Strong Execution

On reported adjusted earnings of 47 cents per share, above the Zacks Consensus Estimate of 35 cents. Net sales of $1.06 billion also surpassed the consensus mark of $1.05 billion. In Swiss francs, net sales rose 14.5% to CHF 831.9 million and increased 26.4% at constant currency. 

Profitability improved faster than revenue. Adjusted earnings per Class A share increased to CHF 0.37 from CHF 0.21, while adjusted net income rose 75.2% to CHF 123.6 million. Adjusted EBITDA advanced 45.4% to CHF 174.3 million, and its margin expanded 450 basis points to 21%.

On Holding Margins Improve Despite Tariffs

Gross margin increased 430 basis points to 64.2% even as higher U.S. import duties remained a headwind. Supply measures contributed about 250 basis points of improvement, while full-price execution added roughly 150 basis points. Lower air freight, sourcing gains and pricing discipline also supported the result.

Management now expects full-year gross margin of at least 64.5%. The forecast includes a 20% incremental tariff rate on products imported into the United States from Vietnam and excludes potential refunds. The raised outlook suggests that operational initiatives are offsetting part of the external cost pressure.

ONON DTC Growth Improves Business Quality

Direct-to-consumer sales rose 16.4% to CHF 322.3 million and increased 28.7% at constant currency, outpacing wholesale growth. DTC represented 38.7% of net sales compared with 38.1% a year earlier, supported by higher traffic, more transactions and retail expansion.

Greater DTC penetration gives On more control over merchandising, brand presentation and consumer relationships. Stores in Miami, Milan and Tokyo continued to generate comparable growth, while planned locations in San Francisco, Stockholm and São Paulo should extend the premium retail network. NIKE, Inc. NKE is also investing across direct and wholesale channels, underscoring the competitive importance of an integrated marketplace.

On Holding Guidance Highlights Future Growth

On continues to expect at least 23% constant-currency net sales growth in 2026, implying reported sales of at least CHF 3.51 billion at current exchange rates. Adjusted EBITDA margin is projected at 19.5%-20%, allowing for continued investment in product innovation, retail and brand building.

Management expects DTC, Asia-Pacific and apparel to outperform the broader business. Asia-Pacific sales increased 61.4% at constant currency in the first quarter, while apparel advanced 57.5%. adidas AG ADDYY reported double-digit 2025 growth in both footwear and apparel, showing that competition remains active across the same performance and lifestyle categories.

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ONON Ratings Reflect Earnings Momentum

The bottom line is that On’s quarter combined an earnings beat, faster profit growth and a higher margin outlook. Continued gains in DTC, apparel and Asia-Pacific could support the growth case, but tariff exposure and elevated investment needs still require disciplined execution.

ONON currently carries a Zacks Rank #3 (Hold), indicating a neutral near-term earnings-estimate outlook. Its Growth Score of A reflects favorable growth characteristics, while the Momentum Score of C points to a more balanced price-and-estimate trend. Together, the ratings support a measured view of the earnings-driven opportunity. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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