On Holding Stock Tumbles as a Revenue Miss Overshadows a Strong Quarter

On Holding AG (ONON) sold off sharply on Tuesday, with shares sliding more than 20% after the Swiss sportswear and footwear maker reported second quarter revenue that fell short of Wall Street’s expectations. Notably, the miss overshadowed an otherwise strong quarter, in which the company beat on profit, expanded its margins, and posted robust growth across its direct-to-consumer channel.

Key Points

• On Holding (ONON) shares fell more than 20% after Q2 revenue missed estimates.
• Revenue rose 21.6% in constant currency to CHF 850.3 million but came in below the CHF 881.4 million consensus.
• EPS of CHF 0.31 beat the CHF 0.29 estimate, so profitability was not the problem.
• Direct-to-consumer sales jumped 34.3% and apparel surged 56.2% (constant currency).
• Gross margin climbed to 65.4% even after fully absorbing higher US import tariffs.
• Full-year guidance of low-20% growth implies CHF 3.47–3.56 billion, with the top end only matching consensus.

A Revenue Miss Drives the Selloff

Although On Holding delivered growth across the board, investors zeroed in on the top line. Revenue climbed 21.6% on a constant currency basis to CHF 850.3 million, yet it still fell short of the CHF 881.4 million that analysts had projected. As a result, the stock sank more than 13% in early US premarket trading and extended those losses to roughly 20% once the market opened. In other words, the market punished the company for growing fast — just not quite fast enough.

Profit and Margins Actually Improved

Despite the sharp reaction, the ONON results told a more encouraging story beneath the headline. The company posted earnings per share of CHF 0.31, comfortably beating the CHF 0.29 consensus. Moreover, profitability strengthened: gross margin reached 65.4%, up 3.9 percentage points year over year, even as On Holding absorbed higher US import tariffs and excluded any tariff refunds. Meanwhile, adjusted EBITDA margin rose to 19.8% from 18.2% a year earlier, and adjusted EBITDA reached CHF 168.1 million.

Direct-to-Consumer and Apparel Lead the Way

Growth, meanwhile, came from exactly where investors want to see it. The direct-to-consumer channel surged 34.3% in constant currency and beat expectations in every region. In addition, Asia-Pacific once again drove momentum, contributing more than 20% of global net sales on the strength of Japan, South Korea, and Greater China. Perhaps most striking, apparel net sales jumped 56.2% in constant currency, signaling that On Holding (ONON) continues to expand well beyond its running-shoe roots.

Guidance Gives the Market Pause

Even so, the full-year outlook likely explains much of the disappointment. On reaffirmed net sales growth in the low-20% range on a constant currency basis, and it expects the DTC channel to significantly outpace wholesale in the second half. However, at current spot rates that guidance implies net sales of CHF 3.47 billion to CHF 3.56 billion — and the top end merely matches the CHF 3.56 billion consensus rather than exceeding it. On the margin side, the company still guided confidently, targeting a gross margin of at least 65.0% and an adjusted EBITDA margin of 19.5% to 20.0%.

The Takeaway

Ultimately, On Holding’s selloff reflects the steep expectations that come with a premium valuation. The company grew revenue more than 20%, widened its margins through a tariff headwind, and accelerated in apparel and DTC — yet because it only met rather than beat on revenue and guidance, investors sold first and asked questions later. For long-term holders, therefore, the quarter may look far better than Tuesday’s price action suggests.