On Stock

Before we begin, today's presentation and our remarks, including the Q&A contain forward-looking statements. Actual results may differ materially from those projected. Important factors that could cause that difference are set out in our press release issued this morning in our annual report on Form 20-F for the year ended December 31, 2025, and in our subsequent reports on Form 6-K, all available at sec.gov and on our Investor Relations website. Reconciliations of the non-IFRS measures we discuss today to the most directly comparable IFRS measures are also available on our Investor Relations website at investors.on-running.com.

[Presentation]

Good afternoon. A very warm welcome to Zurich, to our home, and of course, to our innovation lab. And to everyone joining in the webcast wherever your day is right now, thank you. Thank you for investing time, and thank you for your loyalty.

Thank you for being with us this afternoon. Since the very first day, On has been an innovator and a disruptor. We have never stood still nor rested on our laurels. And today is no different. Encouraged by the success that we've seen over the past 16 years and also encouraged by the rapidly growing number of fans around the world, we have formulated a bold vision for On's future, redefining what a sportswear brand can be.

So here's our promise for you for this afternoon. You will leave with 3 things. First, you will understand the On premium playbook that connects everything that On does. Second, you will get the back story on the big news of the last couple of days. And this morning, news about new sports, news about new athletes, and news about capital allocation. And third, you will see the road map to '29 that turns On into the high-quality earnings compounder in our industry.

Caspar, before we start, let me take you to my kitchen 17 years ago, almost 17 years ago, and show you something. This is where the company you are invested in started. So just look at it at this weird garden hose pieces, a shaved-off shoe, 3 guys crouching over a kitchen table, and talking about running shoe technology. And everyone said that this market was saturated, dominated, mature. People literally thought we're crazy.

So our question was, what if running could feel completely different, not just better, different. A soft landing, a firm push-off, far less drain on the body. And could the best-performing running shoe actually also be the best-looking one...

Right. We definitely believe so, David. And of course, I had also brought a spreadsheet to that kitchen. We had studied the market, and we had found something very surprising. Passion runners were investing more into their gear into their sport every year. They were basically willing to pay for progress. The most valuable customers in the category. However, there was no brand that catered to them exclusively. And I think that was the moment where it all made sense to us. We would disrupt running with innovation, and we would only sell at the premium end.

And of course, Olivier back then, we felt that we needed a strong mission, and we all know the power of sports. So what we set out to do is to ignite the human spirit through movement. We call this start-up, as you know, On. And within 2 years, On was in 10 countries. Within 3 years, we had won our first world championship title. And after 6 years, On took home its first Olympic medal in Rio. 11 years after that kitchen table, we rang the bell at the New York Stock Exchange. We were the first Swiss consumer brand ever to do so.

And so 17 years later, today, we are doubling down on what has made On special throughout, disruptive innovation and a premium playbook. What is new is everything around it, the organization, the scale, and the financial discipline to execute at a different level. What has not changed is the founder mindset, restless, challenge what exists, invent what comes next. The experience to dream big and take calculated risks.

But before we look ahead, allow us a moment to look back. When we went public, we made you a promise. We were going to build a much bigger company and make it more profitable at the same time. Then we set out to prove it. So today, we can say we did. We never stopped dreaming, and we also learned to execute at scale without losing what made On different in the very first place.

So think back to '21, most people saw us as a running shoe company. We, of course, saw something much broader, but granted, it was mostly still on paper. Back then, our apparel business was an emerging idea. We had just opened our first retail store in the middle of a pandemic, nonetheless. The Asia Pacific region was an emerging business, and our foothold in elite sports was just taking shape. Today, On is a full toe-to-head sportswear brand. Beyond running, we have a strong business in tennis, training, trail and outdoor, and also with kids, with young movers.

On is a highly desired brand on every continent of this planet. And we are closing in on 100 retail stores in the cities that matter. And as you've seen just this weekend, our athletes stand on podiums almost every weekend of the year. So here is what we promised you 3 years ago in '23 at our last Investor Day, the targets we would reach in '26. For top-line sales growth, we had forecasted more than 26% compounded annual growth per year in constant currency. We now expect more than 30%, ahead of our original promise.

For gross margin in '23, we promised above 60%. This year, we expect to achieve above 65%, ahead of our promise. And for adjusted EBITDA in '23, we promised to deliver above 18% by '26. Now we expect it to be between 19.5% and 20% this year, again, ahead of our promise. We grew bigger and more profitable, both at the same time. So notice one thing about these numbers. It's not that we grew, plenty of brands grow. It is that the bottom line structurally grew faster than the top line. That is the foundation for what lies ahead.

Now of course, today is about the long term. But before we go into the details of our plan, we also want to acknowledge the more recent decisions we have taken that demonstrate On's commitments to our premium playbook and also to the discipline it takes in executing it. In the second quarter, we made a choice. When the market became highly promotional, we could have just followed it down that path. But as you know, we have never taken that path. So we held back sell-in rather than build inventory in the channel that could potentially compromise On's full-price integrity down the line.

At the same time, our teams, together with our wholesale partners, have emphasized strong in-store storytelling to drive a very successful back-to-school campaign. With this, we have observed a meaningful uptick in sell-out momentum in U.S. wholesale versus the second quarter, notably at the highest ASP and lowest promotion share of our industry. With this, as you saw in the release this morning, we are reiterating our full year '26 growth outlook in the low 20% range that we provided at Q2. The midterm outlook through '29 we are sharing today is built from that base. And Frank will share further details on the Q3 specific guidance later today.

And Caspar, you know this. People ask us all the time, what makes On On? What is the secret behind the success? And here is the honest answer. A single piece of On can be copied. A foam can be reverse-engineered. An athlete can sign with somebody else, right? And a beautiful store can be built. What cannot be copied is how the pieces reinforce each other. We call that the On premium playbook, and it has 5 moves.

1, exceptional talents and a high risk-taking culture [indiscernible] deliver breakthrough innovation, Swiss engineering, and our design signature. We make premium products that stand out. 2, these products earn validation from the world's best athletes and talents performing in them. We tell the stories, and preference is earned, not bought. And 3, we then wow our customers with a premium experience across our own channels and with carefully chosen partners.

And 4, we protect full-price demand through disciplined commercial execution. This strengthened our best-in-class economics and superior margin profile. And 5, we reinvest into the one thing that drives our relentless innovation mindset. It's our world-class people and the culture we all live at On every day. And then the loop turns, better product, stronger preference, better experience, better economics, next innovation, 17 years of turning it. So simple in principle, demanding in practice, powerful because it compounds.

So let us take you through the 5 moves. Move 1, it begins where On has always begun, with innovation and with design. We're a young brand. We have no archive, no established way of engineering and sensation. So we had to become something else. We had to become the brand from the future. Every time we start with a clean slate in material and science, in structural engineering, in radical design, in how the shoe is actually built. And our inspiration is the athlete.

And we obsess like one over that millisecond of ground contact time, over details so small that the everyday runner simply feels them and the elite athlete knows they will win the race. So innovation leads, design makes it felt. One builds performance, the other makes it visible, desirable, and unmistakably On. So yesterday, we opened the doors of On Labs to you, and you were able to see firsthand, we have a very deep innovation pipeline for years to come.

So On is no longer just about CloudTec. On's Foam Competence centers that you saw creates formulas for new super foams and combines them with structural engineering. So it's chemistry and it's physics. LightSpray now brings the performance and manufacturing of footwear to a new level across all categories. And here is where this leads right now. In running, we are rolling out the biggest innovation cycle in On's history, not 1 shoe. Every major running franchise gets its next generation. The Cloudsurfer 3 will be first out of the gate.

When we take what the running shoe learned and bring to the street, then we create something special. Take the Cloudtilt. Our technology translated into lifestyle, today one of the fastest-growing sneaker franchises in the industry and the precursor of much more to come. And apparel, you mentioned it. 4 years ago, just an emerging idea, right? Today, our fastest-growing category. And the mission from here is clear. It became very clear after our fashion show this morning as well, win with her, the woman who is redefining what sportswear is for her. So run, sneaker, apparel, 3 engines, all born in Move 1. So Caspar, take them into the lab.

So Move 2 coming up. The strongest innovation in our experience happens when a new technology meets a world-class athlete. Athletes are On's most demanding customers. They're as obsessed about marginal gains as our own engineers. But the technology only becomes a breakthrough on the right feet. So allow me to take you into the lab. It's September '23, the Paris Olympics are 10 months away. We had just developed LightSpray to a point where we felt it was ready to be applied to a product.

LightSpray is a robot spraying an upper in 1 continuous filament in about 3 minutes. And we had a dream, what if we could win an Olympic medal in the marathon in this technology. So Olivier and the engineers, they flew to Boulder, Colorado, with a few rough prototypes in the back and one mission: convince running superstar, Hellen Obiri, to build the world's fastest marathon shoe with us. Now you can imagine Hellen had many questions. Hellen had opinions, very strong views.

So a huge shout-out to the team, nearly 50 iterations later, she put a pair on and finally said the words we had all been waiting for -- now we have made the best racing shoe in the world. She then wore it in the Boston Marathon and won. And in Paris, she made our dream come true and won an Olympic medal.

So technology plus talent equals breakthrough. Roger co-engineering his comeback shoe, Iga winning Wimbledon in hers, Zendaya co-designing her own collection, our sprinters, they're world championship gold winners in spikes, they helped create. And most recently, Roncevic, the HYROX World Record in shoes we have built together. You see the value of this validation in 1 number. Global brand awareness for On is now above 30%. And in the growth phase ahead, we are working towards more than 50%. So when you see a new athlete partnering with On, we actually see an opportunity to disrupt through innovation and to grow brand awareness at the same time.

So Move 3, elevate the experience in how we go to market and how we manage our channels. When people want your brand, every touch point becomes a chance to make that desire stronger. So picture walking into 1 of our stores, the light, the materials, 1 shoe on a shelf with space around it, someone who runs talking to you about how you run. Nothing in that room is accidental. Every detail says, it's premium, and this is On.

Now a question we get often, is that a store a loss leader that is just dressed up as marketing. And a very clear no. Our own retail is a profitable business in its own right. And so we are doubling it and planning for 100 additional stores by '29 in the most important city centers across the planet. Every one of them strengthens the brand. And every one of them is a full toe-to-head store, which is why retail and apparel grow as an ambition together.

And the same is true for our biggest store, our website, and the loyalty it builds through digital experience. And this does not stop at our own door. Our wholesale partners are carefully chosen, and we work with them on how On is presented, and we protect our premium positioning. So that wherever you meet On, our site, our store, a partner's shelf, it's the same brand, the same experience at the same level. And that is exactly what makes Move 4 possible, right?

Yes. Let's now have a look at how the On premium playbook creates strong growth and best-in-class margins. Some of you may have walked into this room with a question on your mind. Is On just a growth story? Or is there more to it? And yes, there is more to it. To be very clear, we have never pursued growth for growth's sake. Growth has always been a result, a result of the On premium playbook. What we have shown year after year is that On can outgrow the industry and expand margins at the same time.

And in the phase ahead, we expect to do both again, grow faster than the industry and grow adjusted EBITDA faster than revenue. So when radically innovative products are validated by the world's best athletes, people want them. And when people want what you make, you earn pricing power. The premium playbook ensures that our desirability is protected by a balance of demand and supply, following a disciplined full-price strategy, carefully curating our go-to-market and our channels, no volume at the expense of the brand.

And this leads to Move 5, reinvestment. The financial results overall and the margin that this discipline produces goes back into our people, our labs, our technology, and into the innovation culture that fuels it. Let me talk about this innovation culture at On. This is a culture of yes. It's a culture where possibility beats constraint, where teams are allowed to dream and to act on their dreams. Really at On, we look at it this way. Failure is not trying and falling short. Failure is never taking the shot.

And this is where Olivier, David, and myself, we still make the biggest difference today. When the boldest ideas show up, we are there, and we're the ones who say yes. That together is the On premium playbook. So in '23, in economic terms, we called the outcome of it durable growth, you remember. As we now set out to redefine what a sportswear brand can be going forward, we will aim for what we call premium growth. Through '29, On aims to become a high-quality earnings compounder.

So now why is the opportunity ahead bigger than On? So a quick question. Who in this room has already moved today? Along the lake, the gym, a long walk to get here. Some of you are jetlagged, I give you 24 hours. Who has moved? Hands up. No pressure. Look around you. That is the shift. Sport has moved to the center of our lives. Movement is no longer a weekend activity. It's an identity every day of the week.

We call this group, and of course, now you as well with your hands up, the movement class, a generation that treats health, vitality, and longevity as the new premium status symbol. And we are not the only ones seeing it. McKinsey surveyed 9,000 consumers across the U.S., the U.K., Germany, and China last year. McKinsey's words, wellness has become a daily practice, not an occasional purchase. And the largest cohort in that market is 1/4 of consumers with more than 40% of the spending. Their #1 buying criterion not price, quality.

Now look at your wrist and even fingers, sports watches, rings, devices, a $60 billion market built just in the last 10 years. It spans every age bracket. And it is looking for performance brands that deliver premium innovation and design, rings a bell, right? So as you know, multibillion-dollar brands have been built exactly at the intersection, the intersection that is at the heart of On's playbook.

The vacuum cleaner that performs like a jet engine and actually looks like one and sells at 5x the category price, or the computer that became a personal identity device in your pocket and on your ear, beautiful shell, innovation inside, premium price. Unlike the scarcity playbook of luxury fashion, which by definition is scarce, On's premium innovation playbook opens a far bigger market. That market is our opportunity. Caspar, how big?

How big is the opportunity? We believe it's big, and it's getting more interesting. So global sportswear generally is about CHF 350 billion, and it grows at 3% per year. The premium segment of that market sits at CHF 125 billion today and is growing more than twice as fast. And we expect it to continue to grow faster. By some estimates, premium apparel alone will be a CHF 71 billion market by 2030. But be not mistaken, this market is not lifting every boat. It favors performance, and it favors premium brands that stand for something specific.

The premium consumer is looking for somewhere credible to go. And that consumer is also redefining premium, less about what you own, more about how you live. Spending on experiences, so travel, events, recreation, has outpaced spending on goods for a decade. We feel that in our own numbers. Our average footwear price has moved from $145 to $170 in just 5 years, with demand growing. Meanwhile, the luxury brands have priced out some 80 million aspirational customers in the past 2 years. We're asking where does that aspiration go? We believe it will go into well-being, experience identity, and into premium sportswear.

3 things become very obvious here. 1, our addressable market is sizable and it's growing. 2, On is growing considerably faster than the premium segment of the sportswear market. And 3, On is uniquely positioned to capture this growth. So when you ask about our addressable market, we define it by the movement class and everything they wear to move through their life. That is our market, and we're ready for it. Today, we will present to you how we will capture the growth in our addressable market across product, brand, and channels.

Very simply put, in performance, we will lead with running. In lifestyle, we will lead with sneaker. And in apparel, we will lead with her.

The movement class reaches far beyond the sports we play in today. And it would be easy to chase every category. We don't. Every new sport has to come through the playbook. Look at the sequence of our last 17 years, running, then all-day footwear, outdoor and trail, tennis, training, young movers. None chosen because the category was big, each chosen because we could bring something unique to that sport, to the sport that, that sport did not have. And because it made On more relevant in the world and for a bigger community.

3 conditions. Can we disrupt it with our innovation and Swiss engineering? Does it build cultural relevance beyond performance and widen our market? And is it ready to be premiumized? Tennis actually passes all 3. 6 years in, tennis boasts our highest customer lifetime value, a 61% net sales CAGR since '21, and millions of people who found On who had never previously known us when we were mainly a running brand.

The next chapter follows the same rule. 4 days ago, we told the world On enters football. And here is what happened next. 80 billion earned media reach -- 8 billion earned media reach. Sorry, I was a little bit exaggerating. 8 billion earned media reach, the most seen story in On's history. In Mexico, 312x our baseline reach. In China, 344x our baseline reach. 50.5% share of voice in all football-related media mentions. 72% of new followers we attracted since the announcement are under the age of 35. And organic social media, over 4,000x the engagement than our comparable average.

This is what football does to a brand's relevance before we have sold a single boot. This morning, you stood on real grass in a tent, saw the first pieces of our football world, and heard Thierry Henry and Kylian. So both incredible icons and legends. So I'm not here to announce football. I'm here to tell you what it does to this company. And I'm talking about global football, not the other one. So 140 million watched the Super Bowl, 1.5 billion watched the World Cup Final. A footwear market of roughly $29 billion, heading for $38 billion by 2030, growing fastest in Asia Pacific and in the women's game.

But again, we're not entering because the market is big. We're entering because at the premium end of the sport, there is still space open. Radical innovation on the pitch, extending to the pavement and the runway. A few incumbents own the architecture of the category, they compete head-to-head. We will play a different game. And here is how we know we can build a sport, not just sign one. Look at tennis. Roger didn't become just an ambassador. He became a partner, an owner, a co-creator. And around him, we built the generation, right? Iga, Ben, Joao, Flavio, this is how On builds a sport.

And football starts in the same way. Thierry Henry, one of the greatest ever to play the game, is our Director of Football, helping us since 2025 on our strategic entry, and you heard him this morning. Kylian Mbappe, the defining player of his generation, fresh off the World Cup Golden Boot. Sydney Schertenleib, Switzerland's best, the first of a women's roster, you will hear much more about very soon. So a builder, a legend in the making, and the next generation. Caspar, with Sydney, Kylian, and Thierry on our side, right, we carve our own path.

Absolutely. Do you want to hear why we can? Our innovation engine, and you have seen the LightSpray product this morning, has given us an entry ticket nobody else holds. I'm quoting Sydney here, I have never felt the ball like this before, is what she said after her very first practice in an early concept of our upcoming performance football boot that you have seen this morning. This is the disruptive power of LightSpray. On a football boot, LightSpray does something no boot has done. It puts almost nothing between the foot and the ball.

As always, innovation is really at the core of our playbook. As we've just heard, football produces the most watched human beings on the planet. They're heroes on the pitch, but they are cultural icons off it. Again, the On premium playbook in action, combining innovative product with validation in the elite performance space that then needs to translate and will translate into cultural relevance. Now picture football in our own stores and on our online channels. What it can do to our relevance with wholesale partners and to consumers that meet On for the very first time, and they meet us in a new arena.

Football instantly increases On's awareness and relevance in many corners of the world. In South America, Africa, in Southeast Asia, regions where the sport is not a category, but culture, some would even say it's a religion. We're excited about football, and you will see more and more momentum building over the next months and a true market entry over the course of 2027. Now from the football pitch to the golf course. Which looking around this room and the reactions we had this morning means the world to quite a few of you.

Roger, of course, let the cat out of the bag this morning. So let me repeat, in the first half of '27, On enters golf, toe to head. It is no secret that many golfers already play in On. You might want to know, is that a coincidence? Or is it maybe that our Chief Design Officer, Thilo, is a golf fanatic. That our President and COO, Scott Maguire, who will be here in a second, grew up in St Andrews, the home of golf, or that our partner, Roger now plays rather more golf than tennis. In any case, here is the business case.

Golf is the most premium mass sport in the world, roughly 150 million players, over $5 billion annual spend in golf gear, and a consumer who spends more per head than in any other sport that we play in. And it has changed since post-COVID, a younger, more diverse, and style-conscious player is now coming onto the course. This is On's consumer. So let's run you through the 3 criteria that David outlined, the 3 criteria of the On premium playbook that define whether we can enter a new sport or not.

First, can we disrupt with innovation? Yes, golf footwear has barely moved in a decade. Is there a cultural relevance beyond performance? Of course, golf is fashion, travel, and status in one. And third, do you think golf is ready for premium? Golf was born premium. So football and golf, the same ambition. Bring the playbook into new arenas with products that perform at the highest level and experiences that connect course, stadium, and street.

So how do we capture this opportunity, the movement class, running, sneaker, apparel as the immediate growth engines, training, tennis, football, golf to build for the future. There's ample room ahead of us to run the playbook. So the rest of today is about how, how we operate it, how we run this business. And let me start with us. Throughout On's history, the founders have set the strategy, taken the operating decisions that matter, and driven the major growth engines ourselves. That has not changed.

It is why we are standing here as CEOs and why Olivier as founder and professional athlete remains absolutely instrumental at the very heart of On in innovation. But a playbook at this scale needs a leadership bench, and ours is very, very deep. You have met many of them today. You will hear from more this afternoon. one of them is responsible for turning the playbook into daily execution across the whole company, our President and COO, Scott Maguire.

Scott joined us 18 months ago after helping scale some of the world's leading premium innovation brands, again, rings a bell, right? His job is to keep strategy, innovation, product, brand, and commercial execution connected and to keep us fast and disciplined as we grow. So Scott, please join us here on stage.

Thank you, David, and thank you, Caspar. The bigger a company gets, you all know the easier it is to get slower, to get more complex, to get more siloed, and to be much more interested in itself than its consumer. My job is to ensure that On does the opposite. We've been changing our operating model under one principle, start with the consumer and work backwards across every function, across the whole journey from the idea in the lab to the moment someone picks up a box in the store. It's not just a concept.

Let me bring it to life with an example of how David, Caspar, and I work every day. I've spoken to some of you about this today already. But last year, Caspar and I flew to the U.S. We spent a whole day in a run specialty store. We watched as people came in, they picked up our shoes and put them down. Some chose On and some chose others. And we went super deep on why. Some of the answers were in the product, some were in the storytelling. Some were in the channel and even some was the information on the side of the shoebox.

The store staff couldn't quickly work out what product they were pulling. We were losing out exactly when it mattered. We immediately got on the flight back to Zurich, and we put every function around that one day in that one store. And the result, a product built in record time, with an engineering breakthrough we've been chasing for years, the combination of super foam and CloudTec together, the structural engineering of CloudTec.

We had a whole new color palette for that market, a new way of explaining our technology, a totally different channel plan for that launch, and of course, even a new label on the box. The Cloudsurfer 3 launches next month. Early feedback from running media has been exceptional. That is what a consumer-led cross-functional organization does. It turns insight into action quickly across the whole company. And it's how we're running all of the 2029 strategic plans, and it's how we'll scale faster without losing the premium playbook discipline. Every decision for us comes back to 2 questions. Does this make On more relevant to the consumer? And does it strengthen the economics?

Caspar?

Thank you, Scott.

Yes. And now let's look at the economics. Let's look at what On's premium playbook aims to deliver for shareholders in the next 3 years. By '29, our goal is to add more than CHF 2.1 billion to our net sales. This will turn On into a roughly $7 billion global sportswear brand at current spot rates. At the same time, we aim to maintain our premium profitability profile with a gross margin of above 65%.

The combination of disciplined investments and leverage in economies of scale will enable us to grow the bottom line faster than the top line in order to achieve adjusted EBITDA margins of at least 22%. Our goal is to make sure that the bottom line grows faster than the top line. We anticipate an adjusted EBITDA CAGR of above 20%. This whole team is laser-focused on delivering the plan for '29. We will continue to apply the On premium playbook with a lot of discipline.

The playbook has delivered. It has delivered unparalleled results in the last period, and we will keep executing it play by play in the future. So this year, the team at On expects to deliver a business of roughly CHF 3.5 billion. And with the growth engines you will see this afternoon, we have strong conviction in our premium growth path, which brings us to the question of how we use our excess capital. You may have read this morning that we are announcing a $1 billion share buyback framework over 3 years.

And of course, our first priority for allocating capital has not changed. Reinvest into the business where the long-term return is highest. You heard it, innovation, product, brand, markets, and capabilities. But our success now generates more capital than our strategy and premium playbook requires. Like you, we are shareholders, and capital the strategy doesn't need belongs to you and to all shareholders. That is the whole logic, not a substitute for growth, but an outcome of the premium business model.

So 17 years ago, 3 people sat at the kitchen table. That company is now a high-quality earnings compounder and is returning up to $1 billion to its shareholders. That is what premium growth means. Remember this. 17 years ago, 3 people believed in this shoe. Today, millions of people in more than 90 countries believe in On. Some of them are in this building right now, and you will meet them this afternoon.

Everything you have seen today, every product, every category, every store, is this shoe turned through the playbook again and again, not by 3 founders, but by a world-class team that has made the playbook its own. So if you take 3 things from this stage, take this. 1, we've done it before. 3 promises made, 3 promises not just kept, but actually beaten. 2, the consumer, the movement class is moving toward us. And this movement class is real. It is global, and it is just getting started.

And 3, we have the people, an innovation culture where yes is the default, where the boldest idea gets the shot and the leadership team that turns it into results quarter after quarter. Caspar, Olivier, and I are here to protect that culture. But it no longer depends on us. That is the point. On has come a long way from that kitchen. And everyone in this company, founders very much included, is more excited about what is ahead than anything behind us. The brand from the future, the On premium playbook, simple in principle, demanding in practice, powerful because it compounds. So dream On.

Thank you for listening to our dream and to the plan. This afternoon, it's also the proof and it belongs to the people who build the dream together with us. Scott, why don't you show us what's ahead for the rest of the afternoon.

So you have just heard the playbook from those that wrote it. And this afternoon, you're going to hear it from the people who run it and strengthen it every day. Each session connects and brings the playbook to life. First, we're going to hear from Katharina Berg on people and culture, our most important asset. And the reason we really believe we're going to deliver this plan and the premium playbook. Then innovation and design. How science-driven innovation and our design language create differentiating product and pricing power.

Then community and brands. How we turn what makes On distinctive, into cultural relevance and relevance into demand. And GTM and channels. How we connect people with On through a premium experience while growing with discipline. And finally, Frank Sluis will show you the financial outcome, the real result of all this work. For these sessions, we have one ask, do not hear them as separate strategies. They are deeply connected and integrated to one another.

You'll see a focus on the three immediate growth engines, and they're running through all of them. Remember, performance led by Run. Lifestyle led by Sneaker and apparel led by Her. This is where the economics of the next 3 years will be made. And the new sports, the categories we just announced will help us build the growth for decades. So with that, Katharina, please.

Thank you, Caspar, David and Scott. My name is Katharina Berg. I might pronounce it differently because I'm not Scottish. I head up everything talent here at On. I'm going to talk a bit about something that I'm super passionate about. And it might not be strange with my role and if you think about that this is what I've been doing for the last 30 years. I know I'm in a room with a lot of people that is good at math and numbers. So you already figured out that I started when I was 12.

But what's unique with this company is that it's not just the person that heads up HR that is passionate about people and culture. You just heard the founders and Scott, but the whole executive team are very, very dedicated, and they believe in the culture as something that will set us apart. So that uniqueness is what we build and what makes us drive and find the talent for the future on an ongoing basis. So that is also what brought me here. It's more than a year since I joined this company.

I worked for some ethical brands and all of them, all of them said that culture was important, but none of them put people and culture first at their investment days. So this mission of ours is the reason why I came. This is the reason why most of our people come to work every day. It's something that we strive, something that really talks to us. You heard David and Caspar say and also allude to some of the most globally researchers in the world. Everybody is interested in movement. Everybody is interested in longevity and everybody is interested in health. And this is why this is important, and this is why people are engaged.

So at the moment, On is 4,880 people. We speak more than 110 languages, and we are in 33 locations and growing. So in a fairly fast pace, we've been growing. But that means also if culture is important to you, you have to make sure that you have a structured way to grow, that you are very, very deliberate on what you do and that everything that you do means something. So you can even say that you can summarize our whole existence with the 4 Ps, the people in the organization, the product, obviously, in a company like this, the planet and our promise to the planet, but also profitability.

But you can't do really anything with the last 3 Ps if you don't double down on your people. It's not going to move. It's not going to change. It's not going to evolve. And therefore, people and culture is truly very important to us. So everybody that works at this company are relentlessly obsessed with excellence. That is how we drive the premium playbook for us. We also, I think, going back, thinking about what it was when I joined here that really struck me as very unique. It's a very humble culture, but we never done, right? And it's unapologetically resourceful in everything that we do and everything that we strive to achieve.

We dare to think differently, act differently and do things our way. You heard Caspar and David say that one of the most important things that they do on a daily basis is to say yes. It is true. But I dare to say that everybody that comes to work at On may frame it slightly different. They might say, what if and why not? And it's the same thing as, yes, we can. We dare to think different. We dare to act different and therefore, there's a constant movement. Change is the only concept that we have, and it's all about raising the bar for all of us.

So bold culture doesn't happen by a reason, right? They are defended, but first, they are designed. You can either be a passive driver to your culture or you can lean in. You can also understand that this could be what really sets you apart. Standing still is not necessarily an option for us. And I think you by now, since you've known us for a long time and you've been loyal, you understand that this is part of where we're going. [indiscernible], we are made to move forward. And I think the progress and everything that we build, how we attract people, how we grow people, how we engage people and also how we retain people is very much the answer of what we do.

So culture is a part of our core business, the way that we do things, the way we choose, and we also think it is an advantage. So if you ask our organization and our people, which we do on a yearly basis, 87% states that they know that they contribute to On. They're proud to work here, and all of you know proud people perform. So culture of innovation. You're going to hear that word many times this afternoon. It is exactly what is unmistakable with us. Culture of innovation. If you think about it, what does that then mean, right?

It is very much still for all of us, an entrepreneurial mindset. Yes, we can. It is also about speed and execution. You heard, Scott give many examples of that. It is innovations everywhere. It's not just in the product lab. It doesn't matter if you're part of the legal team, if you're part of the finance team, can we do things in a different way and what is the unique way to do it here. So it goes right through cross-functional in everything that we do. Innovation also is part of the attraction. A good idea is a good idea whoever comes with it.

And that is also the reason why as we grow, and you know most companies don't get faster when they grow. They actually go slower. That's not true here. You also know that to make simple easy, it's getting harder and harder, the more complex you get. Our people say that they find us to move faster and faster. And again, innovation, how do you make sure after year after year after year that you keep innovating. We see no matter of size that we keep doing that in a good and fast way.

This translates into the super exciting innovation like you heard it before, [ spray light, ] right? CleanCloud and [ Cyclon ], just to mention a couple of examples. But it also is how we bring and design apparel into the market. And obviously, it would be very, very remiss on me if I don't say how we also bring the beautiful sport of football into the world, right? I think that cross-functional way of doing it in a very fast, almost crunch hour, crunch week, crunch year of doing things that most people might have thought that, that could be the next play, but do it in that way precisely and also communicate, market, everything again from legal to all the functions that needs to play part. I think that is where we are very different.

So to show you a couple of data points to you, 87% of all our people leaders feel encouraged to innovate and have the autonomy to do so together with the teams. Think about it. It's close to 90%. And that number, as I said before, has actually become higher and higher. We're not happy there. That would not be us. So we're trying to make that something that is constant. It demonstrates also that we are able to do so. 86% of our people leaders respond favorably when they say that they can do this and they feel that they are encouraged, but also that they have the autonomy, the freedom and the flexibility to add something and have impact.

We know in all the research that we see around the world that most companies are struggling with exactly this. So when we compare ourselves, yes, we are in a good position. We're doing a lot of things right, but that means that we need to lean in and we need to make sure. And as leaders, we also need to remove those blockers. So growth is our baseline. When our people grow, we grow. When our people are doing well, we do well too. Easy to say, harder to do. But growth is really embedded in our DNA. It's connected to everything we do on a daily basis, but it's also rooted in that we are a purpose-driven company.

We have that North Star. We have that beacon and people do know what our vision and mission is. So as we usually say, when the why is clear, the how is easy. Therefore, it's also a strength of ours that everybody understands what we are doing, where we're going, when we are going and how we are doing. So a couple of hero events that will help us as we grow, as we become more complex, we are more parts of the world, and we are in every time zone of the world. And one of those things is something we call Ignition Days.

So we fly every person that comes to and joins this company, no matter what their role is, no matter what their function is, no matter where they're based. They come to Zurich, they come to the mothership where you are now to hear the founder stories, to meet most of the executive team to understand what makes us uniquely us, to also find a way so they can navigate and contribute much faster than they wouldn't otherwise. 93% of everybody that's been to Ignition Days said it helped them achieve and perform much faster to understand who we are and also what their role is. They also found and met other colleagues that would help them do their job much faster.

Another of these hero events was that we do understand that our leaders, our people leaders or our manager, if you will, are very, very important. They could either be blockers or they could be the coaches, the mentors and the people that push back that also enables, but in the long run, also make sure that we grow the next generation of leaders. So we created and we designed a leadership program on the principles that we have. So people are set up for success today and tomorrow, but also that we continue to foster that culture of innovation.

So we're now in our ninth cohort, again, it's a 9.2 out of 10 scale of do you now think that it's easier for you to again foster, develop, coach, but also push and challenge the people that report to you so we can do what we are set out to do here, which is not a small feat. And then we are launching a new Oniverse. And most of you would maybe think, oh, is that another intranet? If you think about it, especially if you have different types of skills, different types of roles, you are everywhere in the world.

For us to have a tool where we can communicate, we can inform from the same person or from the same message at the same time to everybody, no matter if you work in an office or you work in a store is quite powerful. All these things are there, just to mention a couple, to make sure that everybody is more or less culture vaccinated because we think we are on to something special. And these are the things that we also all the time pressure test. So it's not a chosen truth of what's working here. And then we keep them forever because our culture obviously has to evolve.

Our people is our culture and our culture is our people. And it needs to evolve for different reasons, but one, because the people that's been here for a long time, they have to understand that they matter and the people that join also have to understand that they also matter. And together, we are creating and we are set off on a journey that is super, super important to us. So the commitment that we have to all the people that join and the expectations we have on them is a couple of things. One, what helps guides us is these 5 spirits.

In most other companies, you would call them values. They've been with us for a long time. They served us really well. And the thing that really sets us apart is this. In most companies, you ask, do you know what the values are? It maybe scores okay. Here, it scores over 90%. You could go, okay. And then we ask them, do you live by the values? Do you embody the brand? And again, it scores super high. What is different at this company compared to other companies is, do you also think that other people in other functions, in other roles live our values. And everybody again says, they truly believe so.

So this is the values or the spirits as we call them, that is here to guide us, make us make decisions, but also how we show up, how we treat each other and the playbook of On. So growing our people is a commitment that we have. We dare to be trust-based, we dare to be value-driven, but growth is very, very important. I said earlier, when people grow, the company grows. So that is a promise, but also something we expect from our people. They need to lean in, they need to stretch. They need to make sure that they grow with us. We need to make sure that succession planning is on point.

We need to make sure that we stay a high-performing team. Very much back to the athlete spirit. How can we all the time make sure that we find new ways of doing things in a different way and not changing for the sake of change, but just to improve. We also know that it's much more fun to learn new things. If you believe in a growth mindset, and we do, then it is super, super, super important that you find ways to evolve, push, but also develop and grow your people.

This, all of these things makes On a destination employer. And what we have seen, which makes us both happy and proud is lately, we have had the reason and opportunity to add a couple of tentpole hires. And it's been easy for us to attract people that has not necessarily had the same experience and skill set that we needed before. And these people can choose any employer, any brand in the world, and they can also live in most parts of the world. And we still come out on top, which is a strong signal to our brand, our attraction and our employee brand.

So if culture is our kind of original innovation lab. And when we dream together, we dream big together and we grow and we become something else together. Everything that I have described in this session is an innovation mindset. You heard before, like being complacent is not necessarily a choice here. Doing it the same way over and over again is not necessarily us. The culture of growth and the investment in our people is kind of a service to something larger. On has always been a company with a sense and very clear sense of purpose.

As we become bigger and bigger and bigger company, we need to master how to scale. And some of us have done that before. It's not necessarily easy, but having that strong and very relevant evolving culture will help us do that. Our premium standard completes this logic. Our culture extends to how we treat our people. It extends to how we engage our communities. It also is kind of a fact that we refuse to compromise. Again, unapologetically us. The same discipline that goes into building product goes into building teams, building functions, building our culture, building this company.

I'm just going to end off with saying that what you have heard and seen this morning and while you hear my colleagues come up here and give you examples of what we're doing, I think it's very, very hard not to be very excited about what's next and also what the future holds. And with that, I would love to invite up on stage my dear colleagues, Thilo, Olivier and also Scott to talk about innovation and design. Thank you.

Thank you, Katharina. I couldn't read more, right? You probably don't know so much, but there's still some people in the audience. I love people and culture is everything to me. And the beauty of it that both enable actually innovation and innovation is not just innovation. Innovation is an important mindset at On. And I'm not here on stage by myself over the next 30 minutes or so, we're going to talk about innovation, product and design as well. And hey, the good news is my presence on stage is 8 minutes.

Now it's 9:30, 12 in the U.S. The market opens in 18 minutes. You don't have to make any notes from my presentation. Can I ask you to close the laptops for 8 minutes only for me? I think if there's information, you want to take notes from Scott, so please feel happy to 8 minutes, be with me. I need your eye contact. Hey, I don't know how you feel, but looking at the industry lately, I sometimes get the feeling that many of the legacy brands, they view innovation as a single annual event tied to a product circle. At On, that's not the case.

You have heard it a couple of times, even yesterday at the Maker space. It's a relentless continuous loop across many multiple teams. It's how we formulate the new foam. It's how we sequence the textile, but also how we reengineer our supply chain. And with us, innovation, it's not a corporate initiative. I said it before, it's a mindset. And it's also to innovate means it's also a mindset to fail. We celebrate failure. If you don't fail, you're not trying hard enough. And I'm sure you have heard us saying Dream On, and also that is not a marketing tagline. It's an engineering protocol.

Start with athletes intuition, create our space, create in our maker space with our engineers. And then we go validate in our labs with our biomechanics, test to failure, we want the product to fail at some point in our labs and out in the fields like. And that loop goes on and on and on. What we've learned from that protocol is pretty easy. It doesn't make sense to make for a breakthrough, it doesn't make sense to try to improve the product by only 5%. Real breakthroughs, they come from questioning the core assumptions the industry is built on.

And to make those breakthroughs a success every time, I circle back to Katharina, we need people. We need the right people and we need a lot of people. Over the past years, we brought 400 specialized designers, engineers and sport scientists right here to Zurich to let those disciplines collide and sometimes tell you it's literally collide. To exactly understand where the obsession for innovation comes from and how this entire engine scales today, I want to take you back where it all started.

Probably some of you know I've been a professional athlete and it was in 2009, again, when I was retired for a couple of years, I realized that I knew that the competitive years were over, but my drive for running was still there. So I kept searching for running sensation that simply did not exist in the market. And at that time, if you circle back, probably you recall, the market forced a permanent trade-off. You either could take heavily cushioned, soft or thin, hard and fast. Basically, you had to choose between running on mattresses or on concrete bricks.

Me, of course, I wanted both, a soft protected landing paired with a firm explosive push off to drive forward. But, and I guess just lately, you have seen some Instagram posts. I've tried to pitch that concept to legacy brands. Hey, they looked to me, you should have seen their faces. They looked at me like I was crazy and told me the physics were not possible. The trade-off was fixed. Not a good idea. Never tell an athlete, something is impossible. I'll go fix it.

So we went into my garage in the tiny village. I grew up. By the way, I still live. Much to my neighbor's ongoing concern, by the way, but after tinkering with a few questionable ideas, we took a pair of scissors. I mean, you see it here, right, to a garden hose, do it on a shoe. And I know exactly what you're thinking now. And yes, you're totally right. Most billion-dollar companies start with sophisticated pitch decks or Silicon Valley incubators. Us, we started with garden equipment, a scissor and some glue.

To be very honest, initially, I mean, come on. Will that one of you go out running these kind of shoes? Probably not, right? I had a hard time because, hey, it looked uglier than this prototype. It was even higher stacked. It was ridiculously heavy. And on top of it, I had a reputation to protect. I was still an athlete, right? But only a few steps in, I knew I was on to something. I've never felt that feeling before. And I have gone around the planet a couple of times in my life. But 10 minutes in, things change.

The friction that you get from running probably melted the glue. And pieces of the garden hose went flying off left and right into the bushes like small rubber missiles. Oh boy, neighbors definitely thought I've lost it. But for those first 10 minutes, the compromise was completely gone. There wasn't, I didn't have to choose between soft and hard, slow and fast. It was all there. And that moment, that particular moment, that was the moment the spark of On. I felt compelled to create a running shoe, not for professional athletes, for anyone, for the people.

But of course, I had no idea where to begin. And that hands-on, curious and slightly chaotic spirit was born in my garage, and it remains the unfair advantage till today. Still to confirm, I wasn't hallucinating. I wanted to take the raw concept to some experience biomechanics. So I talked to people at the ETH, which is super close here up the hill. The ETH, by the way, is the Swiss Federal Institute of Technology, and we mapped how hollow structures could collapse vertically to absorb impact, then instantly lock to form a rigid platform to top propulsion.

And yesterday, you had the chance to walk our Zurich maker space and saw where [ Tor ] was the guy that presented. And that facility still today is the link to the spirit of innovation in my garage back almost 20 years now. The main difference, and it's really the main difference, the spirit hasn't moved. It's the main difference. We have state-of-the-art machinery and hopefully less of this fragments flying off nowadays. What we've learned from since is also pretty simple. True innovation begins with a genuine idea with bold decisions, raw materials and very important, rapid prototyping.

And we don't spend 6 months exchanging digital renders across the ocean. We focus on innovation, and it all happens right here in Zurich. Look, it's that simple. If a designer has a crazy idea of morning coffee, they don't create a PowerPoint presentation. They don't even ask for permission. What they do. They simply walk around down to the maker space, they cut up a shoe, fine-tune a midsole, mold the plate and have an athlete generating data on a treadmill all before lunch. And that compromise of time to prototype is how a crazy idea with the garden hose became a movement, a global movement. And it's how we will continue to scale radical innovation across the globe. And to show you now how innovation translates directly into commercial margin and category growth, I hand over to Scott, our President and CEO.

Thank you, Olivier. Thank you. So last night, you walked through our labs, you saw firsthand how deep our teams go. We're here to connect the dots on why this engineering depth builds competitive advantage. We've scaled what Olivier built over 17 years ago into a world-class innovation engine. And we believe that even our recent unparalleled growth in lifestyle, remember David talked about it, is authentically earned because of our technical performance credibility. This link is so incredibly important for us. And it's the reason that our whole strategy, everything that you're hearing today deeply invests in performance innovation.

It doesn't just fuel a performance business. We truly believe it fuels our lifestyle business as well. We built a portfolio of over 650 patents to translate this immense engineering output into an unmatched business model. And we think of 3 pillars. Science to technology, CloudTec and Swiss engineering and LightSpray. So let me talk about Pillar 1, science to technology. Olivier alluded to it. To own human movement, which is what the teams you've seen yesterday strive for every day. We start with a deep scientific understanding of biomechanics. Insights from this measurement are the absolute catalyst to invent all of our new technologies.

So let me make it real with an example. Caspar talked about Hellen Obiri. Hellen Obiri comes to us. This is a real story and says her legs feel like lead in the last 10K of a marathon. So we go deep into the biomechanics and with independent studies into a new research phenomenon in running called leg stiffness, we go really, really deep into understanding that. We use that insight to invent a whole brand-new CloudTec, CloudTec Sphere. That optimizes legs stiffness and then we build the latest racing product that you see that we launched 2 months ago.

Not only does that same study show a huge jump in running economy, our elite marathon athletes, of course, including Hellen, all go on to smash their PBs as soon as they put that shoe on. This approach is now what we've taken across all of our categories from running, tennis, apparel and now football and golf. So that's science to technology. The second pillar is CloudTec and Swiss engineering. So what does all that mean? So when people think of On, they think of the shoe brand with the holes. That's what people know as CloudTec.

For us, CloudTec is something very, very different and much more technical. We see it as structural engineering. Most brands can buy super foams off the shelf, and then that's the midsole of the shoe done. Very few have the engineering capability to structure the foam based on the sensations we want from the biomechanical insights we just talked about. No other brand can blend their own super foams in their lab on their R&D site and combine that with CloudTec. Nearly half of our patent portfolio are different CloudTec innovations. They are not just holes. This is what gives On shoes the unique sensation and differentiation.

And high-performance engineering comes with an equal responsibility on our planet. Katharina talked about it, one of the Ps. Our goal is to prove that high performance and environmental impact do not have to be in conflict. And this brings me to CleanCloud, another huge innovation from On. Almost every running midsole today is made from petroleum-based EVA foam. In 2019, we asked the ambitious question. In fact, as usual, Olivier asked the ambitious question. What if we could take carbon industrial emissions and capture it and turn it into high-performance foam.

We did it, and we announced CleanCloud in 2022. The chemical industry told us it would not be able to scale until 2030. We didn't wait. We built a global supply chain from scratch, converting captured CO2 into e-naphtha and high-performance EVA pellets. More importantly, we made zero compromises on performance for lower carbon impact. And even more importantly than that, we do this while staying incredibly disciplined in our economics. So when you add this proprietary material innovation, structural engineering, along with extensive durability, acoustic testing for squeaking, premium material selection, highest manufacturing standards and you see it on the side of our shoes.

All this together is what we mean by Swiss engineering in the On context. It's a lot, but it all comes together in one phrase and a beautiful lockup as well from Thilo. So Pillar 3, LightSpray. LightSpray is not just an automated manufacturing breakthrough. It's one of the lightest and most sustainable upper technologies on the planet today. When we combine our latest cloud technologies, gives step change performance improvements, LightSpray just adds on top of that. We have obviously designed the LightSpray shoes, but what most of you do not know is we also designed the robots that make it because we had to.

We hold over 250 patents already across product and process, and we're so excited how fast it is scaling production. It's scaling fast because we see LightSpray technology already translating into some of our lifestyle products. We're starting to pilot that. And that is the unlock to scale this technology. And we've got a lot of work to do, but we see incredibly great initial signs. It's the fasting and evolving technology at On, and we predict it will be 10% of our footwear business. It's not about the volume that's important. And that's not the reason I love LightSpray.

The reason I love LightSpray is what it does to technology, the paradigm shift in global supply chains, but the real reason I love LightSpray is what it represents about us. We can take the most ambitious challenge. We can make it real even if no manufacturing process exists today and break through where many others before us have tried and failed. When you combine these 3 pillars of technology, all of that innovation with our design philosophy, that is what drives On pricing power. So I'll say it again, when you combine all of that technology with a very distinct design language, that's what drives our pricing power. And I would like to introduce Thilo, our Chief Design Officer, who will take you through how we bring the emotion to all of that tech. Thilo?

Thank you, Scott. I had a lot of fun this morning, did you? Good. I'm glad. So you saw a lot of applied design this morning already on finished products. So we're going to take it a bit on the design meta level. And I especially welcome again the people I met 3 years ago. So design is consistent. It's super important to really build up on a story. So what is the function of design at On? It is here to show you how innovation feels. And that's an equation I really love.

As David said earlier, engineering solves a functional requirement and design makes this solution desirable. And I like this so much because there is so much in it in the word engineering, you have innovation, you have credibility, how a product feels physically. And in the word design, you have expression, how a product and therefore, a brand feels emotionally. And what in other places might be a reason for a lot of friction internally because people would want to build either a performance or an expression brand. We see this, as I call it, semantic ambiguity as the main contributor to our unique design proposition that we've built now for 1.5 decades.

I say it for the first time, I will repeat a few times. We design for the and, not the or. But why is this so? I think there's ingredients that play a role, and one of them is our provenance. You see the famous Zurich School of Arts that made the Swiss style that became international style big in the 50s of last century. And the foundation of this is really the rigor and the clarity and the purity with which design was done in Switzerland. With design, it's no different than with engineering, precision is king, and it runs very deep in the DNA.

But next to Swiss rigor, I think there's as well a thing that we love to entitle as modern craft. Modern craft is as important as conceptualizing and think about design, you have to be able to go and build it. You touched the word on it. Currently, the more people spend time on AI-enhanced digital landscapes, the more I ask people to just go to the workshop and quickly try and do it. And I truly think if you both do in parallel, that's really a super power. The third ingredient that we love to work with or even define is the design vocabularies.

I think a traditional design vocabulary is useful, but it's not what keeps us hungry. And while we keep an eye on the competition, I would say it was never the main source for our inspiration. So while we respect the past of Swiss Design, we are the brand of the future and the languages, the aesthetic expression that we push is the principle we call or that you know as well from a different context, Maya, most advanced, yet acceptable. I think we have never been afraid creating something new that hasn't been out there. And so I think one of the biggest motivations of the design team is to create our own visual and tactile vocabularies for the movement.

The tools that we work with currently, they deserve as well I mentioned. What you see on the left appearing on the big screen, this was the reality. That's what a sketch looked like, a first sketch that we presented at the so-called initial design review, which was the first design review in a series of several ones in 9 months or a year. What you see on the right is the images that we now bring along to a first initial design review. And this is not photography. This is AI-enhanced from what we sketch and we line draw in a very, very few days.

So we're not only producing pack shots, we're producing editorial images on body. We even animate it and in cooperation with marketing and comms, we can imagine campaigns. So I'd rather tell you why we do this, not only about the advancements that we did. Design administration is somewhat the enemy of the beautiful design mind because drawing plants, filling in material sheets, hundreds of color specs, this all takes away actually from creating. And by letting digital tools absorb all of this, we liberate the full capacity of the design teams for really creative work, which for us are defined by exploratory thinking, by judgment, by intuition, by taste, which are all the most human of qualities and not necessarily the forte of AI.

So the best designers in the future are needed for the best curation, the most unlikely of combinations, the most illogical but beautiful choices and for thinking the unthinkable. But now let's get to the result. What does design enable us to do at On? First of all, we've always had the goal to operate with one design language because we believe, a, in the stretch of the brand, but we always as well believe that we can speak one design language in several dialects and that we can go very far with that and that we don't need 100 sub-brands.

The more that we grow On, the more it becomes recognizable and the more we can build bridges across verticals. Something which I enjoyed a lot is last week when the rumor kitchen was boiling at its hottest and you could see AI images appear of what perhaps would a football shoe look like or another shoe that we might go after. You could say, oh, the people copy us with AI, but what I'm really fascinated is the people are getting it pretty right, which means they pretty much understand the design language. So the design philosophy unifies, but it's not only about the aesthetic language, it's as well about implementing the horizontal tech transfer.

So we've always rejected to just say the best physical product comes at the highest price just for an elite buyer, but our goal is always to apply that as horizontally as possible, not only aesthetically recognizable, but as well really offering the function. My very favorite example these days is our lightweight jackets. This started in a way where strictly for our athletes, trail runners and runners, we set out to get 2 records, lightest windbreaker and lightest membrane jacket. We achieved 2 outstanding pieces that were foreseen as safety gear mostly for the trail runners, so they can pack it up that size and take it along.

But very quickly, this very techy appeal was recognized by buyers far, far into active lifestyle. We've identified this gap, and we very, very deliberately want to be the brand that occupies this gap as we see it, which is defined by technology, material and a very translucent lightweight tech appearance. And last but not least, then the third piece is now we really can start to compound. It's about cross-category expansion, and this has been very enjoyful, I have to say. In the very beginning, we had to learn so many things in running. We had to learn so many things in tennis.

Then when we entered training slowly, we could tell, we have learned something that we can use again. And while footwear always remains hyper special at the end, I think about the process in design and engineering, you can take so many things along. And now that we're adding sports, so the things that you've seen this morning, this all comes very, very beautifully together. And this is exactly how this design discipline establishes technical credibility all across the board. As an example, in footwear, I would like to give the word back to Scott, who shows us how this unfolds on the road.

So let's talk about performance running. As a brand born from running, we're absolutely privileged to be part and right at the epicenter of an ongoing megatrend. The running landscape today is more competitive and faster moving than ever. Global participation is exploding to historic highs. The London Marathon in 2010 had 120,000 applicants. Today, in 2026, it's 1.3 million applicants. If we look at our premium TAM for us, we define that above $160 is outgrowing the broader market, growing to 36% of the $22 billion total running market.

We disrupted the industry 16 years ago, and we're accelerating that disruption today. We are taking that proven science, that Swiss engineering, a very disruptive manufacturing and bringing them together into a franchise architecture that we could build 20 generations of running product upon. So remember, we're only on Surfer 3. Most other brands are on 20. That's what we're building upon. The playbook Olivier pioneered using innovations to build unique sensations for running has not changed. What is new is how we explain our product architecture to our communities and to our retailers.

So it truly brings that differentiation to life. To make the product choice easier and more intuitive, we engineer 4 distinct underfoot sensations, pairing specific CloudTec geometries with custom super forms. First, support delivered through the franchise Cloudrunner. This builds a runner's confidence measured by core stability, not by weight or size by core stability. It uses wider-based geometries, asymmetric heel clips and a cradle-like CloudTec cavity that guides the foot naturally. The second is soft, delivered by Cloudsurfer. This focuses on neutral cushioning and smooth effortless transitions.

CloudTec Phase cavities collapse sequentially paired with SURREAL super foam for an intuitive heel-to-toe ride. The third is Cloudmonster. This is designed for high rebound forward acceleration and explosive bounce, combining maximus clouds with responsive foams and an aggressive rocker profile. And the fourth and last is fast, and we've talked about it a lot already, is our Cloudboom franchise. This is built for maximum propulsion, fatigue resistance in that last 10K and race day personal best. Feedback from our customers and key accounts on this new architecture at our recent Paris Run Summit was overwhelmingly positive and not only enables our performance credibility, but enables us to really cut through on that shop floor and online.

We've already substantiated this architecture with 2 releases so far this year. We've talked a lot about it, but the Cloudsurfer 3 has already launched actually exclusively with Run Specialty, but officially on October 1. This marks the commercial debut of the SURREAL super foam combined with CloudTec Phase. SURREAL is 15% lighter, 20% softer and 15% more explosive than Helion. In Pinnacle Racing, the LightSpray Cloudboom Strike 2 has a brand-new CloudTec technology, the CloudTec Sphere, 15% lighter and a lightweight 158 grams with a LightSpray upper.

It showed a huge jump in running economy and the demand 6x more than initial availability. So we're working hard to catch that up. This potent mix of advanced midsole technologies and industry-defining LightSpray upper delivers meaningful performance. That same integrated approach that we've taken to running, clear communication and simple methodology is exactly what we're now bringing to the apparel range, and Thilo will talk through that.

That's a very nice jacket.

Olivier and I were the same one.

Okay. Thank you. So I want to start this section with the same precision is the silent authority of premiumness. I think we have been very encouraged in the past by the fact that a lot of people who ever picked up a piece of On apparel immediately saw and felt the precise make of it. We made this an absolute nonnegotiable product brand marker physically. But of course, beyond its precision of make and function, apparel, of course, is the cultural expressive element, which is able to connect all sports. Two simple points and a very strong view on expression guide us here.

The first one is not new to you, so I'm keeping it short. We view the athlete as a single integrated performance system, and we want to deliver toe-to-head confidence and emotional connection precise to the tenth of a millimeter no matter what piece. Everything said. I think what you saw this morning was hopefully not what you knew and expected, but you do know our performance expression that we've been building for years. Secondly, we've invested really a lot into materials and material innovation. As in footwear, we believe that materials and therefore, technology in materials are going to be even more defining for design than they already are.

They are the base on which every expression is built, and this is exactly where we've come a long way. What franchises are in product portfolios, technology brands can be to material innovation. It's a purposeful, intentional compass on what to focus on, both for us internally when we build and for the customer externally to find guidance. We, therefore, built out 2 material technology families. One is about functional technologies, engineered performance and climate utility. In there, we have DryTec, which is a 2-directional moisture wicking and rapid evaporative cooling technology.

We have ThermaTec, which is a high loft, low-weight insulation, and we have GuardTec, our own system of waterproofs and breathable membranes. On the other hand, we have a material technology family, which is more on the side of tactile sensory experience and of adaptive fit. We named it SenseTec, which is a family of [ valvity ] next-to-skin touch that prevents cling when wet for distraction-free movement. And we have FormTec, high-power elastic recovery and adaptive body sculpting. It's way more than rationalizing about material. SenseTec, for example, has been one of the most successful pathways to bring more female athletes to On.

And after the foundation of those 2 logical points, here comes a bit my emotional closing speech about expression. Everywhere, but I think especially in apparel, we just refuse to play in the sea of sameness. And we very deliberately want to be a brand of the AND, easy to remember. I put up this picture here because on the left, I think, is what people know from a high-performance context. On the right is what we think is the expression of a contemporary sportswear brand into active lifestyle. And you've seen many of the pieces and their expression with a very strong focus on her this morning.

It all comes back to the AND. Remember that in the very beginning, it was the soft landing and the hard push off. And today, we still reject very deliberately design and everywhere else to be a monodimensional brand. We design for the AND. And we're not doing it in a way where we're all over the place, but we do it so very, very deliberately. A recent industry feature, which you might have read, placed On squarely between mass athletic wear and luxury outerwear, and we loved it. We believe that we both have the brand and the design team that can take the stretch and that can create a perfect product for an active TAM, while we maintain from the beginning design-wise, the rigor to execute on it.

These principles that I just told you about, they give us the clarity and the confidence to explore many facets of sportswear, many, many more, and we don't dilute our design equity with it. Remember, we speak one language, different dialects, everybody gets. It's one brand. And this might be the difference really to others because if we did not challenge the aesthetic status quo, if we did not connect the dots in the most unexpected ways and if we did not rely on human intuition, then perhaps others and even AI could do it. Oli? Do you want to close this out?

Thank you, Thilo. Yes. Happy to. Yes. I saw laptops closing as soon as I stood up. I don't know what the impression I left. You could leave it open, but still you don't need to take any note. It takes 45 seconds to close. So isn't that amazing? What all started in this little kitchen in my small village. I mean I'm really emotional, getting emotional. I never thought that we could become a company. And I'm sure nor David, Caspar or anyone that joined us truly believed what we see, what it had become nowadays.

And what you have witnessed firsthand in our maker space from material science at our foam competence center to the automated robotics of LightSpray and from podiums at the elite running to technical textiles, every single breakthrough. And it's every single breakthrough reflects one relentless drive to reset the industry's benchmark. And that's our reason for being here. And now not only looking at you also myself and looking at my 2 founder -- co-founder friends, I think it's time for a break. It's 7 minutes to 10 in the U.S. I think it's time for the second, third or fourth coffee for all of us to stretch a little bit to use the washroom. Hey, use that time, again, whatever you need to do, we give you 20 minutes. So that means let's gather back at a quarter past 4:00 our time. Thank you, everyone, and we truly appreciate your presence today and your attention to our story. Thank you so much.

[Break]

Please have a seat. We're in the tough slot after the coffee.

I'm Alex. I'm not sure whether I should apologize for being responsible for marketing or to phrase it based on a number of questions I've had today and yesterday, I think we're on the edge somewhere.

My name is Gerald. If you have any caller recommendations for the products, I'm your guy, the Chief Product Officer.

Thank you.

So we're here for the next 4.5 hours to speak about product and marketing. I'm just checking everyone's still awake, the classic gag. But hey, Gerald and I actually represent 2 incredible forces at On, 2 incredible teams that work on product and also on marketing. What does that do together? It creates a brand. So amongst our very busy schedules of meetings throughout the day, our teams are working incredibly hard on forging that brand because, as Scott said earlier, when a consumer comes to our brand for the first time and maybe comes back for a second and hopefully, a third and fourth, they're feeling the brand.

They don't feel a functions. They don't feel all the ins and outs of our day-to-day. They feel something hopefully very special. And that's really that killer combination that we work on every single day. And what does that mean? What's the result of that? That, of course, increases our TAM. It's the overall addressable market that we want to increase.

And in product, you heard it before, we slice and dice that addressable market in what we call community mindsets. We have 14 community mindsets that we build and through our innovation pipeline and through product sensations, we make sure that we can satisfy those community mindsets altogether. That starts with the peak performer in running and goes now all the way to a premium active mindset when we talk to her in apparel.

But that leads to a pretty big question, and I've heard it a few times today and yesterday, it's how do we stay true to who we are as we grow. It's a very clear question, relatively complex question, but the answer actually sometimes is quite simple. We stay very true to who we are by focusing on innovation. This is not just in the product space. It's pretty much in everything that we do. You saw we went to market last week in the biggest sport on the planet. Our approach was very unconventional.

It was very different to how other brands would approach that. And that's really, if there was a secret sauce of On, it will be something in this approach of saying, this is how others do it. This is how we're going to do it. We want to be different. We want to approach it in a very unique way. So the role of our brand within the premium playbook is hopefully very clear. We start from a point of view of authenticity. You've seen this slide earlier from David and Caspar. It shows some of our best partners that we're currently working with.

There's a lot more behind the scenes as well. What I can add a little bit more flavor on to this picture is that when we work with these partners, they're not just a face for hire. They come to our brand. We sit often around their kitchen table or somewhere when they come to On labs in our spaces. And we talk about what are the things that we really find important together. It's actually more like a slight sibling relationship from brothers and sisters, they tell you when you're doing good and weekly when you're doing bad, sometimes it's hard to hear.

But the reality is that all of these partners, they spend time with us at On. Zendaya a few months ago, she came, looked through the entire collection. We had about 10 or 15 different versions of yoga types for her to try and sample. She has given us extremely direct clear feedback. We're doing the same breath. People often think, hey, does he really come to On, does he spend his time here? He actually does. He has a park, his space. He does have a real badge. He comes here, he tries product. He tells us what he thinks, it improves everything for us.

What we know from all of this is through attention, adoption that we buy does not compound. Attention that we earn, that does. That's the engine that keeps all of this brand actually running. And we're building at the same time in a pretty new and different environment. When I was on the stage 3 years ago, we were talking about this emergence of this thing called AI. Now we're living and breathing this all day and absolutely every day. And to be honest, this has radically changed the way that we go to market and the way that we tell stories, the way that we capture demand.

So in this space, it's a real shift in the marketing playbook. And it's meant that whilst media spend absolutely still matters, it's not the driving factor around how we're going to go and build this brand. You see from the examples on the screen. When we go to market, when we tell our stories in the most authentic way through entertainment, through storytelling, through things that really capture attention in an entertainment space, this is where the media power becomes even more important. So when we're all scanning on our phones going through the feed, what is the thing that you stop and you engage with?

Is it an ad in the classic sense? I think now, especially with younger generations, they are extremely in tune to when they're being classically marketed to. They want to be entertained. They want to feel authenticity. They want things that stop that thumb, help them to engage and hopefully help them to come back over time. So as a brand that believes in innovation and in creativity. That's great for us because we're very well placed to tell more of those kind of stories. We want to work with the algorithm, not against it. And in this very fast-evolving space, this means that we can be pretty rapid.

We can test and learn. I've spoken at length over the last couple of days about how AI plays a role, not necessarily in the things that we create, but how we test and learn over what we create. This is just amazing opportunity for us to be different. So I want to give you a slight look back over what we've done over the last 3 years. When I was here last time, the buzzword was communities back then. The core has always been run. It will always be run. This is the absolute epicenter of the brand. But back through 2023, we spoke about how the emergence of a couple of new core sports.

We had tennis, we had training that was amplifying out to a few more communities that we were reaching. And you heard earlier, what is that hard work achieved of building the brand? This has increased overall by 2.5%, which is fantastic. And what we actually promised back then was that we would be at over 30%. I'm very happy to say that all of that hard work has now achieved that. Now in the performance space, actually, one of the questions I've had over the last few days has been around our athlete approach. We are not a scattergun brand.

We do not go out and bring on endless number of athletes, endless number of partners. We are extremely selective. We're very precise in who we bring to this brand. We make sure that we say see eye to eye, as I mentioned earlier. The things that they care about are the things that we care about. And when we forge that partnership, that's when the magic really happens. So you can see here that this is back in European Championship just last year. We only had 3.4% of the athlete quota that got to the start line. That equated to 10.7% of the medals.

So a precise formula that gets us from people that want to work with us that feel credible, give us incredible feedback like brothers and sisters, and then we go and create the products that they need to perform. Switching gears from performance and into the more lifestyle space, we have someone relatively well known called Zendaya, one of the best actors on the planet. And we select partners like this to help us to amplify the brand overall. So major moments with people like Zendaya. We had an incredible Super Bowl advert where we put Roger Federer and Elmo together to not necessarily the partners you imagine going together on Super Bowl.

But we created entertainment. We created cultural moments. We created these elements and these moments where consumers really interact with us as a brand and they start to understand what we actually stand for. So this is really the power with this film, this recent spot that we created with Spike Jonze, Emmy Award-winning Director with Zendaya. We crashed every benchmark possible. We had 87 seconds of average viewing time. That's on a 3-minute film, which is pretty exemplary. Our partners at YouTube, Google or somewhere in the audience, they tell us that this crashed to every benchmark that they had.

And the ultimate goal of that was a 730% brand lift. So we're really putting the playbook at work, great partners, great entertainment pieces, tell the story of product. This equates to our overall brand growth. Another great example of this is how we take from performance all the way to what we call expression and lifestyle. So you heard earlier around the Cloudsurfer 3, an incredible product that's coming to many feet of runners in the coming months. This actually started very much in the lab. It was around the creation of CloudTec Phase.

So think of this in the lab, you see on the picture on the left-hand side, engineers working on perfecting the exact version of CloudTec Phase, how is this going to compress to create the soft landing and the firm pushoff that we have back in the garden hose from the early days. And that was really the nucleus of the idea. But then fast forward a couple of years, we took that through to one of our best partners, Loewe, one of the hottest fashion brands on the planet. They picked that up and said, "Hey, that's just an incredibly looking technology and design."

So we took that to a fashion market for the very first time. And now we see that going all the way through to a more expressive version with the [ CloudTec remix ], which is now one of the hottest sneakers with our European partners in the top 3 actually of the best-selling sneakers. So performance, relevance, expression back to the playbook is how everything starts with performance. Consumers really want it, but we can take it all the way through to lifestyle. I think another great thing with this is that we've mentioned it before, we don't have an archive.

We can't go down into the dusty -- dust bins in the basement and pick out something from decades before. But what we know from consumers is that other brands can do that. They want newness. They want innovation. They want freshness. They're actually pretty hungry for a brand like us to come along with something very, very different. We were on the streets of Marseille just this year, and we start to see the nucleus of consumers putting this on their feet. We see groups of 6 or 10 friends together, and there's 1 or 2 on, this didn't happen a couple of years ago.

These are really the green shoots of what we see from the future. So that awareness development that I mentioned earlier. Back in 2023, we were around the 12%. We put a lot of effort into growing that brand. Back then, we were in this cohort, what we call the run peers. So we were kind of hanging out. We were emerging brand hot on the toes of some of our competitors. But we've seen through that growth within brand awareness, we now get to above 30%. And that really is now the headroom that we have because the brands on the left-hand side, which are a little bit longer in the tooth than us, been around for a few more decades.

They're more in the lifestyle space. They have more categories to play in. You saw it with the emergence of football just over the weekend. This is now the permission that we believe we have as a brand, the opportunity, the growth that we have to go after ever more fans. David mentioned over the weekend, we're just talking about 3 days here. We had 50%, over 50% of the awareness share of the voice of people talking about On as a brand. Was it 8 billion? Was it 80 billion? I think we will have our eyes somewhere on the future. 3 days of 8 billion, I think we're quite happy. We'll take 80 billion in the years to come.

So we mentioned the 30%. Now that obviously grows. We set our target of over 50%. I think we're absolutely going to smash that when we come back in a few years' time. Run still at the core, core sports, new sports, as we now mentioned, and then broadening out into lifestyle and culture. It's not a compromise. As I said earlier, consumers are very hungry for innovation. They actually want to know how CloudTec works. And the next step, of course, is how does it feel, how does it look? Are the colors? Is it my size?

All of those things are obviously extremely important. But we set that target very precisely. And with the new sports, we feel that that's fully achievable. So unsurprisingly, when you look at, when you break down that 30% that we're currently at, Running being our core is the largest at 40%. With the female consumer with women, we're at roughly 30%, non-runners and the younger age range is a bit lower. So don't look at this as a negative thing. We see this as opportunity. We have just one sneaker that we feel we can stand behind as the sneaker of the moment. We're going to add many more franchises over the future. We're adding apparel, we're adding new sports. So fueling these awareness engines is fully in our grasp and something we can get after with our premium playbook.

So that brings us to what we would call a confidence framework because, of course, if the consumer wants to feel the brand and wants to hopefully fall in love with the brand, they should have some confidence that we're doing some great things.

As Scott and everyone has mentioned, we put the consumer at the heart of absolutely everything that we do. And we feel that when we have these 6 signals working extremely powerfully, that's when the consumer has the most confidence with us as a brand. And it starts, of course, with Gerald in product experience.

With product experience...

Yes. And Scott, Thilo, Olivier talked a lot about product experience. So I think just in a nutshell, as I hold a bottle of water, what we're trying to do is to really give consumers 10% extra. The 10% you speak about, the 10% of that experience where you go to your peers, to people in the gym, to people on a run route and you say, have you seen this? Have you felt this? So we will always do the 100% job, but we also want to leave the little extra that gives you the confidence on the product experience to bring everyone else along.

And the athletes and cultural relationships, as I mentioned, are a key element of that process. We turned up in Copenhagen just last weekend, absolutely smashed it with incredible athlete results with product that we turned around with LightSpray, actually an incredibly fast time. We know that when more people talk about our brand, when they enthuse about our brand, that's when the magic happens, and that leads then into the retail space...

Which for us was so crucial to break through in apparel and accessories. And if you look at how we now really build toe to head, our own retail is the perfect expression of that. Alice and Rebecca are going to speak a little bit more about how we build now beyond the 80 stores that we have. Our own retail is where our confidence is expressed at its best.

Think we spent quite a lot of years as the brand speaking to the consumer. I think that was very important in the early years, those first formation moments. So a lot of us explaining the technology, what we stand for as a brand, almost introducing ourselves with a handshake. I think what we now know is that the voice in peer and social proof is ever more important.

So you'll see a lot more people speaking about On through their voice now and in the future is something that we are focused on a lot in the coming years because, hey, if someone recommends you as a brand, that's often more powerful than the brand speaking for itself. So we've had the early days of when someone would see a shoe and say, "Hey, what is that?" And hopefully, that will tell a very good story. Now we know through the digital media and the algorithm is that we have to have more people amplifying our brand, more people talking about the great things that we're doing.

Which in the premium playbook that we heard in the keynote makes this demand generation opportunity much more precise. And if you look at where we place content and how we make media bets, we can be extremely concise and precise in our execution.

Alex and Rebecca, who are up next, will talk a lot about the experience, particularly in the digital space. We know now more than ever when we're trying to find a brand, are you going to ChatGPT? Are you going to a lot more people going to Google still or some of the other spaces. Our digital space is really where a consumer can feel everything from us as a brand. You've experienced lots of new things in the spaces today, but our digital space is really that global flagship digital experience, which has to be the absolute pinnacle when you come to experience the brand.

So we're going to go through the engines. You heard the 3 core engines earlier, run, sneaker and apparel. We've added a fourth one sneakily to the right-hand side because there's always room for one more. And we're going to give you a bit more insights into how we look at this. So we'll start with run. You heard earlier the incredible amount of effort that's going into our core run franchises and how we're going to double down on bringing those best sensations to the world.

There's really 3 core things that we look at when we try and amplify our run story. We want to be there with run culture. It's something that has emerged over the last number of years. What that simply means is being at the places where runners are, speaking to them in a way that connects with them. So whether that's turning up at the best running routes of the planet, being at the most incredible events that we can put on or infusing about that with athletes, that's really the focus of our run culture work.

I mentioned athletes, we leverage them. We believe that the precise nature of how we bring these athletes on board, having them talk about what we do and then obviously put the -- put the money, where the mouth is and put it on the track, that's where the magic really happens. And then the third of that third portion of that is about the right experiences. So the very best product experience, walking into our stores, immediately understanding the differences between our franchises, having an incredible conversation with the sales assistant, going on to our website and being able to just do a shoe finder to find that very best product. This is where we will put our efforts within the run space.

And you heard it from Scott, CloudTec can now do it all. So we want to make it extra simple for our consumers to understand where they should find their home with us. We have 4 product brands that we build in running across the 4 sensations that we strongly believe in. And then we add extra sensations within those 4 product brands. So if you think about the Cloudmonster, where we now bring a trail running shoe within that franchise, it's very clear that through CloudTec engineering and our high-performance approach and how we put those 2 things together, you're going to get great energy return even if you go off for a trail run.

And across all of those franchises, of course, LightSpray is coming to life as our pinnacle technology, and we'll make sure that from a strong retail partner all the way through our homes in D2C, you're going to be very easy and clear to understand where your home is depending on your style of running.

Sneaker, next big area. So as I mentioned earlier, we've made some early, really big steps with the Cloudtilt, which we're all very happy about. The younger audience is starting to take notice of us. We're disrupting in the space, which is pretty much ripe for innovation from the shoe room, the footwear room that you saw downstairs, the lineup is incredible.

Again, with our partners, they give us a lot of feedback. We're very happy to take that. We want to work in combination with them to bring the right products to their consumer in a very authentic way. But again, we want to be different. We don't want to be just like everyone else. So we're very precise on what we do. With our kids and youth space, actually it's only 5% of the current footwear business. So a lot of headroom there at the same time.

And I really love this chart because we can build lifestyle through different lenses now with adding football to the mix. So we will always have a very strong lineup when it comes to what is worn and run. And if you look at the Cloudswift, the Cloudmonster and the Cloudtilt, this is all true running technology that we now translate with our core partners in the sneaker space and give that more options, more materials, more color so that you can renew your inventory every other season. We're also very proud to continue the journey, obviously, with Roger and what was born in tennis.

And as we open up also having a leather in our portfolio, we're renewing the Clubhouse as our center point of the sneaker strategy for what we call born in tennis. And then last but not least, and I think that is a very important point and just the first glimpse of how we will translate what we built on the pitch to off the pitch. We know that is incredibly important, and we have a lot of great ideas, and we will very early in 2027, start to go off pitch in football as well. And I can't wait to show you what that's going to look like.

There's a little example from last weekend, just to give you a little bit more color on the sneaker strategy. This is the latest release with our friends at Kith in New York. And Ronnie has now for a couple of years, edited several of our sneakers and the main focus point for this drop was the Cloudswift, but also the Cloudzone, where we look at how we can bring energy, the same as Alex spoke about with Louis Vuitton previously through our sneaker franchises with a Kith run club, who will be now New York, L.A., Tokyo and Seoul. Running in these products every week and at the same time, then translating that towards an in-line business for us as we go in spring '27 and build a bigger business behind the Cloudswift.

Kids you mentioned, they're not just cute, the very little ones on top there, but they're also absolutely through product integrity followed through that is super important to us. So we always say it's from 0 to 99 now, and we want to make sure that we really execute at the highest level from the toddlers all the way to the kids, to the youth and then to the adults, you will be able to get full product franchises from us, and we're super, super proud to bring the very little ones into something comfy and something very good looking as well.

So with apparel, we build from her. Again, when we speak to consumers, which we've done a lot of over the last year within apparel, we hear from her that she actually does sports a lot. The interesting point is we've heard from consumers that they actually don't do sport that much. And then when you hear how did they actually look, you realize they do sport a lot. It's extremely integral to what they do. But they don't want to be defined by that look. I think there's other looks from the past, which are the sporty girl, the sporty look. And what we know from this consumer, they definitely want the functionality. They want the performance and the materials, but they want to style it in a slightly different way.

So everything that you've seen from the product presentations has been about elevating that look, starting that look in a very different way. And we feel that's something that the next generation of consumer is very keen for. I want to keep this very brief product strategy and our 3 pillars. We're not going to slow down in dedicated. And for those in the room, you've seen this morning in the fashion show, there's a lot of great things that you can run in, look great. We have a lot of material innovations coming. Thilo spoke about that.

So we're going to double down on that and make sure that we have that peak performer mindset represented continuously in a dedicated space for all the sports that we do. When it comes to the second pillar, it's what we call the essentials. We want to take the best materials that we've built and the most mainstream. Can I say that?

You said it.

Yes. The most mainstream silhouettes to as many people as we can. So we built an essentials range together with our creative team that should capture a huge market out there with our best materials, our greatest silhouettes and a very easy to style look. And then last but not least, the one thing that we're all so excited about is how we build our foray into premium active, how we take a more natural approach to materials, how we look at the silhouettes altogether and make sure they transition well from a more workout or gym space all the way through your every day and how we innovate a lightweight jacket together with the pant so that we can represent her in her true self with the ideas that we bring in premium active.

So we had sneakily add the last fourth engine with football. We're 3 days in. So there's not too much to report. You've heard some of the fantastic numbers that we're very happy with. I think overall, how we see football is not just -- it's a new engine. It's not a completely separate one. We know that a lot of the consumers or the customers we already speak to in those other 3 engines, they care a lot about football.

And we see from the very first days that actually that audience is very connected to those other spaces. They're already asking what people like Kylian Mbappé is wearing when he turns up with a training ground is decked out in you guess On apparel and On footwear, not just from the football space, but from the lifestyle space. So this just shows how that engine is going to really be a superpower for the other spaces that we have.

Actually decked out in On Essentials.

There you go. We have 3 incredible athletes that we partner with, and we spoke a lot about how the athlete is at the core of how we develop. So with Sydney, Thierry and Kylian, we've really found great partners or siblings as you call them. And they're in the lab and they're working on pitch, off pitch altogether. And we want to make sure that we create that full sport through On's DNA and that we have our own take in that sport.

And that actually started last week. This is one of our prototypes that Kylian wore in one of the trainings last week, and we're tinkering back and forth. There's a lot of little details, a little thing here, a little thing there, but I can guarantee you this is going to be the best football shoe that was ever made.

That's a promise.

Yes, it's okay.

We take it.

We can do that.

So those are the four core engines. Three clearly the biggest focus that we have. And over the coming years, you're going to see how football comes to life in a more meaningful way. So just as a reminder, we actually probably should have added a fifth circle on football. I would have been interested to see what the global brand awareness would have been today.

But it just shows how we can keep adding these different engines. We can keep adding these different awareness drivers. Overall, that's going to supercharge us up to 50% and above. And that's just the future of the ride that we're all together on now.

So yes, with that, please bear with us. We're going to set up for a panel. We'll close brand and community. Thank you very much.

Thanks a lot.

All right. I wasn't gone too long. I hope you didn't get bored. This is going to be fabulous. That's all I'm going to say, but we're going to watch video first.

[Presentation]

Ladies and gentlemen, please welcome to Absolute Legends, Roger Federer and Thierry Henry. I hope they're happy with us that we're sitting in the wrong order.

We're sitting in the wrong, oh sorry. Okay. You got some you guys were standing I was like I hope we're going to have some seats.

It's comfy, you know?

Yes, very comfy.

Roger, let's start this off with how often you're here. People sometimes don't believe it. We know your dog's name. I still don't know it's breed. That's fine. You know more or less every team member's name and you welcome them and you're here, you're humble. You just love it, but we actually output a lot. How do you do it? You come in every day and you're like easy, easy? Or how do you get yourself to come in and create product together with us?

I mean it's great to be always at headquarters here in Zurich. And I try to come in as much as I can. I think the beginning of the relationship partnership -- and then friendship as well was very important when -- well, unfortunately, through COVID and my knee problems that I had, I actually had a lot of time working on product, getting to know the team and actually getting to know the brand and obviously, the founders then who became friends.

And it was amazing. And then, of course, because it's just so close to home, I can always pop in for a quick lunch or coffee or just catch up with either the Roger franchise team or the tennis team or marketing team or whatever it is. So I try to come obviously as much as I can. I'm also very busy traveling the road a lot, but it's been an amazing journey so far. I'm very happy that the way we got going and announced the partnership to the world and now welcoming Thierry and football to on is a dream come true for me personally because I know Thierry since a long time and call him a friend as well. So it's so cool to be doing things again together. It's an absolute dream come true, and it's good to see also Thierry at HQ. Fantastic.

Is it just him why you chose On? Or you could have worked with any other brand in the world. Why did you choose us to build together?

The vision about the innovation, where the game was going to go, the impact that we wanted to have. I mean we talked about it before throughout the whole day. We started in this building where we had a meeting and you guys talked to me about the vision that you were going to take, and I wanted to be part of that first and foremost, because of the relationship that we're going to have with the athletes that we need to have in terms of how close we're going to work on the product and the boots and obviously, the impact that I can have that you can have and everybody involved the athlete, but also the impact that we can have on women's football, which is important and now we can develop a boot specifically made for women, which is very important for a very long time.

Women football is up to wear men's boots, which I don't think is normal. So all of that -- and I mean, we're talking about it with Roger earlier I do think that the game, the brand, whatever game it is, it's just limitless in terms of where you can go and how far you can go. That's -- I'm sure Roger had the same kind of attitude when he was a player. You're always learning and seeing where you can go. And that's why I see us going, learning every day and trying to be the best version that you can be.

When you came in a year ago, we put all the team in the room and was like 1, 2, 3, 4 big ideas, and we have an immediate collision of big ideas and innovation. If you think of that for a long time, creating product together that was always sort of in your back pocket?

No, it's not so much about creating products. You have a vision of how the game should be and how you should go about it and why you want -- what you want to bring back or not. And I mean you're talking about in the first meeting that we had, obviously, people were talking about different ideas. You had one, I had a couple, maybe more than a couple. But at the end does it work, does it not work, where do we go with that?

But we all know that diamond comes from pressure. And so you need to be able to push people to a certain way on what they can achieve and that doesn't happen by relaxing and nodding at any idea, they must come in together and sometimes argue about it and it's just normal. But I will take the time quickly to thank everybody because to be able to -- and I said it earlier, but I will say it again, to be able to create something so quick in what we were thinking of when we were in that room to be able to impress Sydney, Kylian and everybody is just outstanding. So I had ideas. But like I said, I was sleeping at night and those guys were not sleeping so much and pressure was there, but that's just how it goes.

Talks a lot to the athlete's respect, right, that we have as a center of gravitas almost, Roger. I mean, you were almost at the end or towards the end when we started working together, and then we were able to attract a lot of young athletes through that. How do you define that kind of athlete mindset when you bring it in and you work on product or the athlete respect in that sense?

Yes. I mean, like that was obviously a very interesting learning curve for me as well at the back end of my career. To then start basically the tennis division here and on and trying to understand who could be a good fit to the brand, how do we -- well, design a shoe with Olivier, which has been a very cool and fun journey, stressful at times, but we made it work. We even started before we even had a deal and made it in time 3 days before my comeback in Doha, and that was obviously super special. But I think it's very important to make the athletes feel very special because everybody has a unique character.

They all want to shine in their own right. And I think it's the difficulty for us to make that happen that they feel are being seen and listened to. And they all have some inputs like Kylian now with his boots and me with my shoes in the beginning or Iga when she tried to move into her shoe. These are like really fun challenges can be stressful at times. But coming from an athlete's perspective, some guys are just super chilled and like give me whatever you want and some others, they tinker for life and it never stops.

So I think this is where we need to have strong teams in place that can speak to them, build product for them, but also sometimes mentally calm everybody down that we'll get to it eventually. And it's just -- we need to also play the long game and understand some things just take time as well.

They also executed on your golf shoe briefing, right?

Yes. Wearing the golf shoe, very excited about my new sport. Yes, retirement is good. You should try it out, by the way, gives you more time to play golf. And obviously, I'm very excited to see that we have officially moved into golf.

And I think we can maybe also use the blueprint from Tennis when it comes to golf because football is very different in my opinion, even though that's a sport I used to play and then chose tennis over football and now I mean to golf, and it's a very exciting sport, very demanding, technically and mentally demanding and challenging. So love the shoe, really comfortable. It's great, and I'm looking forward to everything that's to come.

On a product integrity lens, right, where we spend a lot of time, it's beautiful to see now those overlaps. Obviously, your input also into training and how we think about lateral movement, how we take what we learned in tennis, we apply it to training, you being also on many different fronts.

What is important for you, Thierry, when you think about this as a product. And you've been wearing our stuff now, please be critical. What excites you? What is that premium playbook that we spoke about all day for you in your mind?

Well, I always say that when something is good, something is good, people don't mind to go to where they need to go to a premium price or say anything that's premium. That's the start, but I'll go back to what you just said. And yes, people will say, obviously, I'm saying that because I'm part of the team. But generally, I do exercise a lot. I don't know if a lot of people follow me or not, but I do exercise a lot.

A lot. How he knows, look at his shoulders.

I do wear the product and it feels great in those it's running, lifting or. No, I do wear it. And it does feel comfortable to -- obviously, to where it first time. But to go back to the point of reaching that proximity with the players, it's always great, when if you're not that and you reach a certain level, I mean, and some of us try to emulate what it did in our own sports, but you want to be seen.

People don't understand that without that although you play in front of a lot of people, people might see. But sometimes on a human level, you want to be seen, you want to be heard. You want to be part of the conversation. You want to be like can I -- at one point, I mean, if you talk about Roger or even me in my game, you reach a level where you're like, okay, I think I've done enough to be part of someone conversation in terms of what can be achieved into creating something that I'm going to perform in, by the way.

So yes, it is important being seen, I'm going to repeat what Roger just said and being heard. But yes, so far, I have to say in terms of what I'm using in the gym is good enough. So I don't have to be too critical.

And Roger, can this shoe, are they good for your tennis?

Yes, you know what, they don't make me play better because I'm not that great. But I move better. That's for sure.

That's for sure. He's a very good mover. Makes no mistakes. And I was very impressed when I saw it's been a while ago. So I don't know if you're rusty or better, I will I have to check it out.

I'm actually better.

You want to judge his football.

Sorry.

You want to judge his football?

No. Did you see what he did the other day. But this guy is not normal because it's like. No, you're not. just we took -- I mean, we -- you normally -- I mean, the difficult looks normal. That's your issue. That's on you. But he's not normal. I told him to do something. He did it 3 to 4x or whatever it is, and he did it, like who does that?

Like you give -- like I wouldn't be able to -- if he says to me, take the racket, do that and then play it along or across the court or whatever, that will never go across the court straight away, whatever gesture is, and it did that straight away. So I mean -- but we already know how his brain function. Actually, we don't. But anyway.

There's a very fun one where within 11 days, you won the Champions League and this guy won his Roland Garros title.

We've always chased that.

For a very long time. That's for sure, is kind of where you said that we actually never realized that. So 11 days apart, my first Champions League and Champions League and the same with Roland Garros.

Only Roland Garros, yes.

Well, I mean you have the rest you won 20 billion tournaments, but still...

It's still you want.

Smells like 11 days capsule that we should probably do together.

Yes, maybe why not something... Yes.

We're going to have fun. It's going to be good times looking forward.

You can always spending more time and creating... Or redo one of the workouts we used to do on holiday.

Yes. Nope.

I just want to close it with one last thing, I think, which is kind of the spirit you bring in, and we talk a lot about culture, but the way I think that this company operates and what we've learned from not just hard to understand the athletes in that level of detail, but the mindset and the overall sort of obsession that you bring in and how we create product together. Just from your own point of view, I think what are you most excited about when it comes to now the next few years ahead? And how do you look at that together with Roger?

Well, it's what I always say what I don't know about yet, if you know what I mean because that comes from being in the room to be and create something. Sometimes things comes like that, arguing you might have something that I don't think is going to be working. Like I said, it's limitless. Like this is what it is, like what's the best dream you can have is the one you didn't have it. That's always what I think of.

So -- and I'm going to repeat that, and I will say it again, like the most important thing is to be in a race to be able to win something. When you're not in a race, you can't be there to try to win anything. So -- but I always say that there is never a finish line, right? This is not a thing in the finish line. Run as much as you can and as fast as you can and keep the right stamina if it comes to the right tempo, it comes to me because I can't run that long. That's for sure. But you know what I mean, that's what I'm thinking of all the time, like what did we still not think about, and that comes by thinking about it altogether.

We try to call it the explorer spirit. I think that when you come 5, 6 years ago and you're like, let's go, let's do tennis and then you just go. And we did the same thing 12 months ago. You come in, you coach people to impossible. It's that explorer spirit that I think brings us together. But I want to leave the last words with you. We call you the blueprint, right, internally because you created that idea on how we can expand, create new verticals and make sure that we stay so true to what we do.

It's been quite a journey, I must admit. I loved it. It's been super interesting. I learned a lot along the way, and I'm happy to see that we're having success doing it. Of course, we -- in sports, we always -- winning is important, but also the journey and the smiles and the memories we take along the way, I think, are really important for us. And I think that's what I'm looking forward to also create in the future.

It's obviously a great product for people who have whatever they're going to wear or especially also how they're going to feel in their shoes in the arms that they really feel that a lot of details and work have been put into it. And it's nice to have seen that with tennis now golf and now also football coming and running, obviously, thriving. Really exciting times for the brands, and I'm really happy to be part of it. And hopefully, when we sit here again in 10 years from now, whenever it is, we're going to look back and actually how amazing the journey has been altogether, and that's something very exciting and ready to go. So thank you for having me.

Thank you, Both.

[Presentation]

Now that the men's doubles is over. It's time for the women's doubles. Hi, everyone. I'm Rebecca Cai, our Chief Global Markets Officer. Previously, I was running our business in Asia, and now I oversee all of our markets globally. And I'm very excited to be joined on stage by Alice.

Hi, everyone. So nice to see you all. I'm Alice Delahunt, On's Chief Customer Officer, and I oversee our D2C channels with a specific focus on retail, digital, customer and loyalty. And I'm officially on week 3. So I mean, a lot of time to start, albeit nervous to follow a panel like that, phenomenal. But I'm going to talk to you today a little bit about my experience, what I've done in the past, I think the opportunity we have here and the work we have to do, too.

And by the end of this presentation, you will see that we have an opportunity to be even closer to our customer. You will see that we have significant runway for growth in all markets and all channels. And this is why Rebecca and I are the perfect partners. We have 2 dedicated roles: one, to accelerate penetration within our markets through an ecosystem approach and the other to drive our direct channels with a specific focus and a customer lens. So I'm going to pass over to Rebecca now, who's going to talk you through the plan for growth.

Thank you, Alice. So today, you've heard about our obsession with innovation, which shows us in our product. How to validate these products through athletes and talents and drive resonance and excitement within our communities. This session is going to cover how we take that resonance, demand and through premium experiences, translate that into commercial success. Before we start, please enjoy a short film of our recent store openings.

[Presentation]

This video gives you a snapshot of just how far we've come. 3 years ago, we were just at the beginning of our retail journey with only 22 stores globally contributing to a low single-digit percentage of our business. In the first half of this year, retail already accounted for over 10% of net sales, what we shared with you at Investor Day in 2023. Our global retail footprint has increased by more than 3x since 2023. The number of active On fans online has roughly doubled, and our presence in key account partner doors has also more than doubled.

Furthermore, when we look at our markets globally, we can see that we haven't had any major market entries. Thus, much of our growth has come from existing markets through expanding our omnichannel presence, driving activation and awareness and deepening our connection with consumers. Looking ahead, each of our regions have highly premium but underpenetrated markets like Mexico, the Middle East, Indonesia, just to name a few, where we have further opportunity to penetrate and scale the business.

This demonstrates that every single one of our channels can win simultaneously, compounding our growth and reinforcing our market leadership. We believe that channels can compound, not compete and not or. You've already heard today that our plan is to take our net sales from CHF 3.5 billion to more than CHF 5.6 billion over the next 3 years. Within this, we expect to take our D2C share from around 45% this year to 50% by 2029, a very healthy 50-50 mix, wholesale and D2C.

With the 50% wholesale mix planned for 2029, wholesale will add more absolute net sales than D2C e-com or retail. It's a strong, strong contributor to our growth, and I'll speak more about that a little bit later in this session. But I first want to start out by sharing the 3 distinct purposes of our channels, so you can really understand how we view them and why we believe they can compound. Wholesale is where we start as a business. This is where we are authenticated by our community that you've just been hearing about from Alex and Gerald.

Run Specialty is the running community's own room rather than ours, the sneaker doors where brand earns its place through culture and general sporting good retailers, who put us in front of people at a scale that nothing else matches. It's also the channel where many people meet us for the first time. Retail is where the brand experience in person, the space, the people, the product in front of a fan orchestrated together. It's where she can be styled toe to head by somebody who knows what she's training for and where our communities gather, runs, the classes, the nights that we host.

In our website and app are where our relationship lives and accumulates. It's our own voice speaking to her directly. It's also where what we learn shapes what she sees next. And it's also our largest store by some distance. What unites each of these channels are some key principles, elevated premium brand expression, unified communication, which enables price discipline.

In fact, in many markets, including the U.S., our wholesale data shows that we have the highest average selling price in the industry and the lowest discount rate. This is the result of those key principles in practice. Now let's start with retail, our youngest channel, but already the most premium expression of the brand. Over the last 3 years, we've learned a lot about what it means to operate a network of stores globally. And these learnings are evident in many places, including how our formats have evolved.

We have 4 formats, and we keep raising the bar on each of them. We first consider location. Location determines traffic and consumer. This determines our store and how much of the brand that we can showcase. Let's zoom in. So first is flagship. Flagship is the most complete expression of our brand, and it is what established us in key global cities. Tokyo Ginza is one of the most demanding luxury environments in the world and Paris on the Champs-Élysées carries our broadest head-to-toe offering anywhere. A Chapter stand-alone does a similar job, a statement of intent in a city that matters, where a flagship is not the right answer.

Stockholm and Copenhagen are both new ultra-premium stores that both say exactly what we intend in those cities. A chapter complement deepens our presence in a city that we're already in. Abbot Kinney in L.A. is the clearest example. It's a neighborhood door, where people are hanging out. It's a community hub with runs and events going in and out of it. And a footprint store is how we build local loyalty in a neighborhood, and it's doing a lot of that work in Europe and in Asia.

We've evolved our range that we can be present in far more places and tailor much more to each city and each consumer all around the world. Back in 2023, we had 22 stores. Today, we have around 80 stores and expect to have 180 by 2029. The foundation that we've built on gives us confidence that we can quicken the pace of the stores in absolute terms. If we zoom in on where we have stores today, it reveals that we have plenty of room to grow.

I've met many of you, a lot of you call New York City Home. And there, we just have 3 stores, where many of our competitors or other sportswear brands have double-digit number of stores in that city. And our expansion starts with intention on where we open before the format, in the cities that matter, amplifies our reach, not necessarily a flag everywhere. And our own retail store serves as a role model for our franchise and distributor managed stores globally.

One key learning from the past few years runs against instinct. Bigger stores drive higher sales productivity, not lower. I'll say it again, I know it's maybe 5-ish. Bigger stores are more efficient, not less. This is really clear from our strategic investments that premium environments are actually yielding results. So we've heard you can scale more doors, larger and more premium doors yield higher productivity and apparel, where we believe we can further raise our productivity in our store fleet. This is quite a statement as we've actually already increased our average productivity by 1.5x since 2023.

As you can see on the chart here, our footwear productivity is already very high, above the luxury and premium benchmark. We're very, very proud of this productivity, and we deliberately did not model this improving much further. Apparel and accessories sits at roughly half of this level, and this is where the opportunity lies. We look towards 2029, we expect that our apparel sales productivity more than doubles, but still sits well below footwear.

And we've already started to shift this. We have opened a new generation of fleet that features a stronger apparel-led journey in our stores. And with this, we already see at least a 50% increase in the apparel share versus the existing fleet. And it doesn't stop there. We will continue to elevate across our entire store fleet through these 3 pillars. First, store experience, creating inspiring premium environments in our prime locations; two, customer excellence, high-end memorable journeys for anybody who walks in the door; and three, operational excellence.

Not glamorous, but really what drives a lot of things behind the scenes and makes the other 2 possible. This is very much the high-level version. I can appreciate that. And underneath is a long list of small things that someone like Alice or I could talk about all day, visual merchandising, from head to toe, clear navigation in store, optimizing assortment, smart placement accessories. None of these look like much on their own, but they add up over and over in how we increase our productivity.

And we're in the early rollout of these initiatives, but we see that our store Net Promoter Score in those that we've reached out has already increased by 5 percentage points. Where we see proof of this is in our most scaled fleet in China. I know many of you guys believe that no sports brand can scale globally without winning here. So I'm here to answer some of those questions today. As you know, I've led Asia very recently and have lived in China for the last couple of years. So what follows here is firsthand.

Before I begin, I want to reiterate that we are on track to achieve our target of 10% of sales whilst building a brand that is deeply connected to our fans. We will continue to do 3 things in this market, which is how we are winning in China. First, deliberate expansion, simultaneous with elevation; two, disciplined channel management; and three, differentiated consumer engagement. Let me share with you 3 proof points of each of these.

When we expand our door fleet in top cities, we simultaneously elevate our fleet. Next year, we will relocate as many doors as we will add. An example of this is Shanghai in Grand Gateway 66, where we traded from the fourth floor in the sports zone to the ground floor location next to the mall's entrance, 114 square meter of space to almost 300 square meter space, allowing us to provide a wider offering, a more premium experience and maintain our strong productivity where our customers are already living and where we already have relationships with those customers.

Opening stores in China is not necessarily difficult. But what you can see here, this is what's difficult to do that over and over and over and over again. These locations are earned. And we have consistently shown our ability to draw traffic and provide a premium experience that is worthwhile of luxury neighbors. And the result is very clear in our sales. We will complete our 2023 sales plan in 2026 with a little over half of the stores that we expected in 2023.

This strategy needs to be consistent across all channels for this to work and for -- on it is. During 618, which is one of China's largest shopping festivals in the first half of the year, On entered top 20 sportswear brand for the first time, but we were the only brand doing that at full price, the only brand in the top 20 at full price. This shows that our discipline and execution over the years is working despite whatever the competition is doing.

And one string ties everything together, and that's the consumer. We host over 1,000 community events every single year from running to training to loyalty to membership events in our stores. And it's through this that we can engage directly with our fans and become a brand that people love and come back for over and over again. Our position in China is recognized by our partners, by our consumers, and we've earned this position through disciplined execution and differentiated consumer engagement. We are building a brand that is not just known but also loved in that market. And this is what gives us clear air between us and other brands, whether they be global or local.

And one last thing before I hand it over to Alice because I'd rather -- I answer it rather than you assume it. I see a lot of you guys have your laptops out. A rising retail mix can be sometimes read as margin dilution. Hopefully, we've shown you enough that you cannot view our estate this way. Our payback period in retail is around 2 years today. We are not talking about marketing just up as a channel. Our stores are commercially strong from our largest formats in high-end locations to our community-driven neighborhood stores.

And with that, I will go from the street to the cloud, just kidding us not my best transition. And with that, I'll hand it over to Alice.

Thank you, Rebecca. So I'm delighted today to be talking to you as On's first Chief Customer Officer. And I want to tell you a little bit about how I was introduced to On. So last year, I signed up for my first marathon. And like first-time marathoners, I didn't know where to start, but a runner friend directed me towards On.

My journey took me from TikTok to the brand's Instagram account. I did some further research on on.com. And then finally, I made my way to Lafayette Street. I'm in New York crew too, despite the Irish accent. And where they explained to me what it actually meant to train for a marathon, what I should be thinking about and what I really needed for my running shoes. And on November 1, I'll run the New York City Marathon in my LightSpray cloudmonsters and a full tote-ahead on look. Firstly, as a customer and now so proudly as On Chief Customer Officer. Thank you.

There was a lot of strength in that journey, but there was a lot of opportunity, too. So let me tell you a little bit about my background so I can introduce myself. I spent my career building detail -- excuse me, I spent my career building digital and retail businesses that stay true to a brand's vision while putting the customer at the center of absolutely everything that we do.

As Chief Content Officer and Chief Digital Officer at Ralph Lauren, that meant transforming the digital business and building a more connected retail ecosystem, bringing that same sense of brand magic consistency to experience irregardless of where you encounter the brand on the screen, in a store. At Burberry, I was proud to be a part of a team that helped transform an industry through digital at a front row seat to something that shaped how I think ever since.

And that's really the power of community, how people galvanize around the brand, how cultural relevance creates desire and how that desire, it becomes lasting loyalty. And from my board seat at Zalando, I've had -- I've had an opportunity to have a completely different vantage point, the ability to watch consumer behavior at enormous scale. A few very few individual brands actually ever get to see different businesses, different moments, but they told me the same thing. The brands that endure treat the relationship as the asset and the transaction as the evidence. It's not the other way around. And that's what brought me to On.

When I met the founders, I could see so clearly the vision. And quite genuinely, there's magic in the air here. And the combination in front of us is so rare. We have an extraordinary brand. You heard about that from Alex and Gerald earlier. We have extraordinary demand. You've heard about that from Rebecca. And now we have an opportunity to build a much deeper relationship with the people creating that demand. And I want to be -- today, I want to be specific with you about how we can turn that magic into something enduring. And I can be specific because I've built much of this before, and I know what great can look like.

So what are the 4 core beliefs we're thinking about as we go through this? #1, as I said, putting the customer at the center of everything. It sounds obvious, but as Scott spoke to earlier, this has real implications for how we organize, how we show up and ultimately, how we make decisions because our customer doesn't think in channels. She doesn't distinguish between us having a retail experience, digital experience. It's a service experience. She simply experiences On, and we start from an incredibly privileged position.

She already loves the brand. And our opportunity is to take that Spark and build a relationship around it to understand not only what she bought, but what brought her to us, what she's trying to achieve and what might inspire her next. And that's what being truly customer-led means. #2, highly personalized, deeply relevant in those environments, not personalization as a technological capability, relevance that you can actually feel, a site that understands the difference between someone preparing for their fifth marathon and someone exploring running for the first time like me, a store associate who knows you ran that marathon last weekend, congratulates you, knows the footwear, knows your apparel and can introduce you to what's up next and make sure you're part of our local run club. The benchmark isn't a clever algorithm. It's the experience that you get in a brilliant specialist running store with the scale of millions. That's what technology should enable.

Third, let's create belonging for our customers because ultimately, the strongest relationships aren't built around transactions. They're built around participation. Football is an incredibly powerful expression of that. The strongest clubs aren't simply teens people watch or jersey people buy. They're part of people's identity. They create rituals, communities and a sense of belonging that can last generations. I think there's something really powerful for us in that. We already have an extraordinary community around On. Our opportunity is to connect that physical community with our digital one, giving reasons fans not to simply buy from On, but to participate with On, to keep running discover other experience and be recognized to us by us and ultimately, feel like a part of On.

And fourth, we need to connect it all together, connecting our retail environment for our customer. Quite simply, On everywhere. The experience should be unmistakably On every time you encounter us and effortless as you move between our channels, discover digitally, experience physically, build a relationship in store, continue it on our app, buy in one place, collect another, return somewhere else. The infrastructure can be complex. But for the customer, it's got to be simple.

So how do we make that happen? And why do we work to do? Because I want to be clear eyed with you today because this is the part of the opportunity that excites me most. The ambition is clear, but there's foundational work that we need to do to unlock it. First, we got to know the fan. Today, personalization is live, but it's early. We've made a strong start with fans we already recognize. But our understanding of a fan still sits across more than one system. And naturally, that experience is thinner for someone arriving for the first time.

Therefore, building that single customer view is foundational because once we recognize the fan across our and their relationship at On, we can do so much more with it. We can equip our teams with real customer knowledge. We can turn a retail associate from someone completing a transaction into someone guiding the On experience. Someone who knows what you run in, what you care about, what you just achieved and what might be relevant for you next. That is how personalization becomes useful. It's not about more messages, it's about better experiences.

Secondly, we need to build out our loyalty proposition. Today, we don't have a loyalty program, and we need to give our fans a reason to belong. That was a sequencing decision, not an oversight. For the past 3 years, the priority has been product and demand, and that was the right call. But the next chapter is about what we do with that demand. How do we turn a first purchase into a second, a customer into a fan and a fan into someone who genuinely belongs with us. That's our loyalty opportunity.

And third, I mentioned it before, we need to connect our world. We have to be intentional about how we build. We have been intentional about how we build our stores and platforms as premium destinations. Now it's time to enable those channels and connect those worlds. And this is where the work becomes quite practical. Clienteling allows an associate to build a relationship with a fan over time, buy online, pick up in store, ship from store, real-time inventory visibility, the ability to recognize a fan and serve them regardless of where they choose to interact. Individually, they can sound like operational capabilities. Together, they fundamentally change the customer experience. Because the customer never sees the complexity underneath, they simply experience ease.

And I have seen those capabilities drive true commercial value, improving conversion and inventory productivity, strengthening retention, increasing customer lifetime value and creating a much more powerful relationship between stores and digital and our customer experience. And On has already seen the evidence of the value here. In our key markets, fan who engage across both retail and digital yield up to 4.5x the lifetime value of single channel shoppers. So we know the multiple. What we haven't yet built is the machinery to deliver and create more of those fans.

And that is just one reason why I believe D2C will continue to expand as a share of our business. There's foundational work for us to do here, but we are not building those foundations simply to catch up. We are building them so we can accelerate from foundation to differentiation and in true On spirit to leadership. But critically, this work can't stop at the edge of the channels we own because our customer doesn't. And that takes me right back to my partner, Rebecca, who's going to talk to you about wholesale.

Thank you, Alice. As Alice said, our customer doesn't see channel. They see the brand in many different environments, and wholesale is the environment where they meet on for the first time. And I was clear at the start of this session from our numbers that the wholesale growth is an important contributor and the biggest absolute net sales contributor of our future growth. Wholesale authenticates us with the communities that made this brand and helps us to also reach new audiences.

Our wholesale growth, much like our retail growth will be driven by space and comp growth. From 2023 to 2026, we were in the phase of opening large key accounts for the first time, DICK'S Sporting Goods, Foot Locker, JD and driving rapid premium growth as a challenger brand. The next phase will be about deepening these partnerships, establishing new verticals and elevating brand presentation to become the clear leader in the premium segment. As evidenced, we've already gone from 20% of doors in 2023 to 50% today.

Looking towards 2029, we have significant runway in these key wholesale partners across all of our regions to around 75%. While we could easily be in all doors tomorrow, 75% is a premium distribution that we believe fits our brand. Beyond door growth, we also see opportunity in comp growth through 3 key pillars. The first is deepening and diversifying our product verticals, riding momentum that we already see in tennis and sneaker and what you've heard about earlier today. As an example, we've already become a true Gen Z lifestyle stable in Europe, driven by the explosive growth of the Cloudtilt franchises, the #1 brand in some stores all across Europe and Asia and the Americas.

Alex also spoke about the power of new sports to drive awareness and to reach a younger and more diverse audience, which hasn't connected to On in the past. This net new consumer will drive sneaker growth in the apparel business at a premium price point in a way that none of our existing sports does today, particularly with the strong impact in Europe and the Americas. Second, we want to strengthen our key partnerships, deeper collaboration with those partners who share our ambition, whether that's a rent specialty account or a global retailer, joint planning, joint investment and investing for the long run.

And there's proof of that already. Here, you can see an example of one of our Japan rent specialty training events, tech session that we did on the Cloudboom Strike 2. From this event, we already saw 52% sell-through in that product in the first month, and we are doing this at scale and across markets, driving true commercial impact. And the third is elevating our premium positioning. This is making sure that the shared standard is across all of our doors and particularly elevating that concept that tailored towards shop-in-shop concepts in some of our top doors.

An example here, you see it On KaDeWe in Berlin, where once the shop-in-shop was introduced, it increased our sell-through by triple digits versus the year before, and we achieved over 35% plus apparel share. In order to fuel this growth, we'll continue to invest in how we service this channel, building dedicated teams for distribution like brand specialty, sneaker and global accounts because we know that these 3 need different people, different products and different levels of conversations.

And where we see this come to life is at scale in the Americas, particularly in the U.S. market, where our expansion is actively shaping and expanding the premium segment.

We are the brand that is prompting consumers to trade up into the premium segment and bringing new consumers into the fold. We're both driving the market's growth and elevating it standard. We've already done this today in general sporting goods, and now we are seeing it unfold in sneaker as well.

We're also at the start of tapping into our new verticals. You heard today about golf and football. These are 2 categories where our wholesale partners already have highly engaged, sizable audiences that will allow us to efficiently reach a new audience and increase our shelf space inside both new and existing doors. And despite heightened promotional activity recently in the market, our brand equity and our brand commitment has remained unchanged. As we've said before, in the U.S., we are the highest -- we have the highest average selling price and the lowest discount rate in the industry.

And our premium growth has been driven by partners who share that premium vision, and they know that our premium growth directly accelerates the growth of our partners today. To illustrate this powerful synergy, we want you to hear from our friend in Pittsburgh, you might know him. Please look at this video from Ed Stack, the Executive Chairman of DICK'S Sporting Goods.

Hello. I'm Ed Stack, Executive Chairman of DICK'S Sporting Goods.

I'm pleased to share a few thoughts with you today about the terrific partnership we have with On. In recent years, On has become an extremely important strategic partner and growth driver for our business. The relationship started small. On first started selling in our outdoor specialty store, Public Lands. Today, On is available across DICK'S and Foot Locker, and it's resonating across our customer base from the DICK'S customer base focused on sport and running to the Foot Locker customer drawn to the lifestyle side of the business.

Our customers are also responding to the newness and innovation, and we're seeing that strongly on the On Cloudtilt products. As we look forward, we see a tremendous opportunity to partner and grow the business beyond footwear. Today, our teams are working closely as On expands existing categories and into new sports like football and golf, 2 of the largest categories in our business. We also see a meaningful opportunity to bring On story to life in our stores in ways that will excite customers and draw new ones into the brand, particularly at our House of Sport concept, which is our premium, highly experiential concept that's helping change the way customers experience retail. And at Foot Locker, we've rolled out our Fast Break stores, which offer new and improved opportunities for storytelling across the merchandising spectrum.

A couple of weeks ago, I visited Caspar, David, Scott and the team at On Labs in Zurich. Seeing their innovation work firsthand reinforce my confidence in the strength of the product pipeline across so many categories. And more importantly, have further solidified my excitement about this partnership and how we can do this together and grow on a global scale. We're proud and fortunate to have a partner like On and even more energized by the opportunities ahead to inspire athletes and serve consumers around the globe. Thank you for the partnership. We really appreciate it, and we look forward to the future together.

To round this session out, I want to take you to Europe, where we see the omnichannel premium playbook already in action. Specifically in Italy. If we take ourselves to what Alex and Gerald were sharing, we first start with athletes. Our partnership with FIDAL Federation and Flavio Cobolli in Tennis has helped broaden our reach and strengthen and build our performance credibility. We've paired this with run activations around Milano Marathon, co-created campaigns with Foot Locker and other partners and especially with tastemakers in the sneaker space, which has strengthened our engagement and helped us to reach a younger audience.

Our Milan flagship also opened in 2024, which has established itself as an anchor part -- anchor point and home for our brands, we're also hosting lots of events as well. This strong momentum with our strategic wholesale partners and investment in brand activation, it's translating into our own channels, especially in D2C. The results are here. One, 50% revenue growth in our store, followed by strong double-digit year-over-year growth thereafter. Our wholesale partners continue to grow at strong double-digit year-over-year growth.

Our Italy e-commerce business has more than doubled. And our cross-channel consumer, as Alex said, is delivering up to 4.5x customer lifetime value. This is what compounding looks like in practice. The momentum can start through our brands or our partners, channel that resonance into local relevance, build demand, which compounds across our channels. We know we've said a lot. So this is what you can expect from our partnership in the next few years. We're going to be expanding retail globally as well as driving apparel. We are going to be deepening the connection with our customers and with our retail environments. We're going to accelerate penetration in new and existing doors, and we're going to capture our fans in new sports as well as bring their audiences into all of our channels.

We are confident that the exceptional product, powerful brand demand captured through our expanding footprint will drive high-quality earnings over the next 3 years. Premium is the guiding principle that touches all of those touch points. And as we scale, our plan is that D2C will compromise 50% of our business, while wholesale delivers sustained growth through both new space and comp store performance. Ultimately, we're turning our customers into lifelong fans. And with that, we're going to pass it over to Frank. Thank you so much.

Thanks, Rebecca. Thanks, Alice. Hi, everyone. And now probably the session where most of you have been waiting for all day. The numbers and how it all adds up. But before we go there, I would like to say 2 things. First of all, it's been great meeting all of you in the last 2 days here in Zurich, come to our office and basically meet our team. And I know you are here mostly as analysts, investors, but I think the objective of today was to really give you a sense of what's behind the numbers, the people, the products and the way we work and the methodology, the premium playbook.

And therefore, I want to start with a big thank you to the On team who made the day happen. Now a special thanks to 2 people that you know for long, Jerrit and Liv, who have been the architects of the session. I don't know where they were, where they are because Liv is actually mastering the slides, so she is clicking up there somewhere, but a huge thanks for making it happen.

Now let's dive into the content. Caspar, David and Scott explained how the movement class is emerging and how this is opening a large TAM of $125 billion today. And that TAM is growing fast, faster than the industry average. And basically, that's our first belief. By being premium, we generate demand. And with that demand, we generate growth. And as Thilo mentioned, it is and, not or. It's premium and growth. We also took you through the premium playbook and all the individual elements. And when all of these 5 moves are working in sync, innovative products, inspiration, storytelling, premium experiences, it creates a baseline for exceptional financial profile because it creates pricing power. And that's what On is about.

Visible in our ASP, 1.4x the industry average, which many people -- which recommended as well, which we maintain with our full price strategy and the lowest promotional rate in the industry. And that's the second core component of the playbook, growth and margin, and again, and we believe it is compounding. Now earlier today, David and Caspar took you through the past, hyper growth and durable growth. As you see on the screen and read in the release this morning, for 2026, we expect to deliver around CHF 3.5 billion at a full year growth rate in the low 20% range.

As Caspar mentioned, I wanted to give some additional color on quarter 3. We are happy with how the business has performed in line with our plan. As we previewed in quarter 2 results, this included actions that we took on the wholesale side and which would be visible mostly in quarter 3 in our third quarter results in the wholesale channel. And together with the continued strength of our DTC channel that we see today, we expect, therefore, to achieve around 17% constant currency growth in quarter 3. That's the short-term that brings us today back to the long-term where this day is about. Many people say few brands can actually break the $5 billion mark. The reality is we may exceed that point somewhere next year. And that also means we are today a company of scale and ready to scale further. We have a clear premium playbook, how to execute across all the verticals we've been talking about today with a global retail footprint, with a global supply chain and with increasingly robust functional processes.

The point is we have built a platform from which we can scale further. And you have seen all the innovations, the new sports and with that, we believe we can compound. David and Caspar took you earlier today through the financial performance over the last 3-year period, and that's been a remarkable performance. And of course, with that, On is already operating today at a significant larger scale than we envisioned in 2023. Now more important is the numbers are an outcome. It means the strategy works. Beyond our 2026 targets, you will recall the long-term ambitions that we also set in 2023 based on 3 key strategic priorities, and we're happy to report strong progress on all 3.

On apparel, of course, we report on that, you have visibility throughout. With the plan that we laid out today, we're on track to achieve the 10% target over the next 3-year horizon. On retail, Rebecca explained, 2026 will be the first year with over 10% retail share. And for China, Rebecca explained to the strategy, we have meaningfully increased our share, and we are closing in on the 10% mark, and we expect this threshold to be exceeded before 2029. So strong progress underpinning our growth, and these 3 areas will remain key focus areas going forward. And therefore, our strategy of premium growth is merely an evolution rather than a revolution. It's an evolution of a philosophy that Olivier, David and Caspar started almost 70 years back at their kitchen table that they explained. And let me -- yes, that's -- it is an evolution.

Let me explain the premium growth model in a bit more detail as it is the core of the financial strategy. Number one, multidimensional top line growth. As explained, the movement class provides the opportunity, and we are uniquely placed to capture this opportunity. Multiple verticals built on disruptive innovation, authenticity and premium, 3 strong regions and 3 strong channels. Secondly, industry-leading gross margin. Our premium playbook enables strong pricing power, and we showed earlier the ASP in our full price strategy, which we are committed to just as much in our next growth horizon. Third, significant operating cost leverage and productivity gains. We have invested in a thoughtful and disciplined way to bring us to the scale that we are today. And with functional capabilities now mostly in place, we can start driving productivity and leverage. And together, these 3 will drive compounding EBITDA growth and strong free cash flow generation together, a high-quality earnings compounder at scale.

Turning this into numbers. In short, as you have seen, we continue to dream big, and we have credible building blocks to deliver an ambitious plan. Here is what we are building to towards 2029. High teens net sales growth in constant currency, compounding from 2026. At current FX rates, this implies at least CHF 5.6 billion. It's also important to look at absolute scale. In our next phase, we intend to add more absolute scale with the CHF 2 billion than we have done in the previous period. We intend to achieve a gross profit margin of at least 65%, among the highest in the industry and to reach an adjusted EBITDA margin of 22% or better through material SG&A leverage. And that would result in an EBITDA compounding at more than 20% a year.

Now the phone size represents the importance to us. It's the outcome of the premium playbook and this means a high earnings compounder at scale. CHF 5.6 billion at current spot rates means we have a plan laid out to approach approximately $7 billion in 2029. And that brings me to another topic. We intend to move to U.S. dollar reporting as early as 2027. As you know, the majority of our net sales, product costs and operating costs sit outside Swiss francs and reporting in francs has meant a significant part of what you see every quarter is translation. Moving to dollars puts the reporting currency closer to the economics of the business and aligns to our share price currency. And we believe that will enable you to have more clarity in understanding the results and how we communicate to you going forward.

As you will appreciate, it is a significant undertaking from a systems and process point of view, but we will update you on the timing, the transition and the restated history well before it happens to ensure you have everything you need in order to make that transition with us. Again, the ambition is to do it as early as 2027.

Brings me to the composition of the growth. We have a plan for over 75% of the absolute net sales addition to come from the 3 key priorities you have heard a lot about today. Run, lifestyle led by our sneaker ambition and apparel. Run is about performance-led innovation. It's the origin of On, and it's the vertical where we invest the most of our R&D capabilities, as you've seen yesterday. Gerald showed you the technical evolution and also the intuitive segmentation of the portfolio, which will make consumer navigation much simpler. And we have light spray across the majority of our franchises. We started as a running company. We will accelerate as a running company. There is no doubt.

And then move into the largest TAM, lifestyle. Within this, sneaker is about cultural relevance. Thilo showed the horizontal tech transfer from the track to the street. And with the Tilt franchise, we have step changed our reach into Gen Z and with that into the global sneaker accounts. And that gives a platform for future growth. Apparel is about winning with her. You've seen the clear segmentation, dedicated essentials and premium active. With 2 commercial benefits, apparel increasingly an entry point for new consumers into our brand and a way to expand the share of wallet with existing customers. And with that, our ambition on apparel is to triple the business over the next 3-year horizon.

Other verticals, we've talked less about as they are smaller in absolute size, but not in growth and not in importance. These verticals are training, tennis, outdoor, young movers. They are built with the same rigor, disruptive innovation, validation and premium. And these verticals provide further growth resilience to our overall growth trajectory. Let me also give some context on the new sports because there is a temptation to model them large. David explained it very clear. We enter a category if we can disrupt it with innovation, if we can be authentic and if we can premiumize, and we are convinced we can. LightSpray is disruptive, the selective, and I will say it again, the selective roster of the greatest athletes on the planet is there, and we will launch at the premium end. The TAM for dedicated products is substantial, but we will build it slowly and steadily with care for the decades to come. 2027 will start with limited drops and in 2028, we will start with in-line portfolios for cleats and some performance all day products.

As important, as our athletes in football are also brand ambassadors, we also aim to deliver a halo effect on the other verticals. And of course, it will drive brand awareness. Now golf, you've seen it as well, is a new sport we are very excited about. As Caspar mentioned, our customers already wear on the fairways. And for years, many customers have been asking when do you come with dedicated products. As you've seen, we will enter with existing credibility, but obviously, in a TAM that is a bit smaller. Hence, in total for the new sports, we are modeling a modest contribution from new sports over the 3-year horizon. Again, on the new sports, they relate to dedicated products and exclude a halo effect on the rest of the business.

Switching to the regional and the channel view, we want to provide some directional guidance on how we are planning the composition through 2029. As Rebecca and Alice mentioned, we see strong opportunities in every channel and also in the regions where we started early. This as our portfolio is widening across verticals, our segmentation within the verticals is becoming increasingly clear, as in particular, you saw in running and apparel, and our commercial capabilities still have meaningful room to grow, as Alice explained. So let's get into it.

We're planning for Americas to grow in the low to mid-teens, EMEA in the high teens to low 20s and APAC in the mid- to high 20s. And Rebecca showed in much more detail what's behind these numbers. But in summary, starting with Americas, as you've seen, we still have meaningful potential to grow our door count with our key wholesale partners as well as with the specialty accounts for the new verticals. Beyond that, we see tangible opportunities for same-store growth, extending our shelf space through both existing and new verticals. Retail growth is planned to be our fastest-growing channel as we still have many cities uncovered. And for e-commerce, growth potential lies in the ambition to grow brand awareness to 50% as well as further growth in our omnichannel capabilities, as Alice explained.

Brings me to EMEA. I expect this is the region where we exceed your expectations possibly. Whilst the growth drivers are the same as for the Americas, the reality is that our market share in Southern Europe, in Eastern Europe, in the Benelux and in Scandinavia is around half of what it is in DACH and the U.K. And that gap is now starting to close. And that's why you see good growth rates today in EMEA, which we expect to continue in the planned period.

In APAC, we are being very intentional in how we expand to further elevate our premium positioning. Rebecca talked about it. In China, we are building our store fleet consciously, and it's a combination of more stores, but also upgrading our store locations as a result of the trust we have earned in the market.

Turning to our channels. We spoke through the role of the channels earlier and each one has a significant importance over the next 3 years, and they're complementary. With the ample opportunity we have in terms of retail footprint and the levers on driving e-com, we do see the opportunity to drive our DTC share towards the 50% mark. But important to note, we see growth opportunities in all channels that elevate the brand. And that means the channel split is an outcome. It's not a target. Gross margin, whilst we guide from 65% to 65%, it's not a margin at rest, it's a margin at work. And as mentioned before, it's a cornerstone in our financial growth model. There are 4 drivers that I would like to highlight. We expect margin accretion to come from channel mix, which you all know. Next to that, we expect continued operational efficiencies.

We have made significant steps here over the past 3 years. Our growing scale has led to sourcing and manufacturing efficiencies, and our planning processes have improved, leading to better inventory management. And the journey continues as we grow scale. An example is digital product creation to enable or to reduce physical sampling or, for example, further automation with our manufacturing partners. And we expect to reinvest the savings into 2 areas. One is product. Leading by innovation and by undisputed product quality is a non-negotiable in our premium growth model. And that's why we plan for this in the financial construct. And let me just give you 2 examples. Our new generation of running products with Superfoams, it exceeds every competitor product or for example, we talked about it light spray being closer to consumer. We will not compromise on quality and on investments in product, and we have built room to invest in our margin profile.

The second one is category mix, which is mostly around apparel. Apparel today is subscale. And whilst the long-term margin outlook is sound, our margin will also improve in the plan period, but it's the fast growth of the category that will be an investment in the margin rate. So in summary, it's a margin at work, not at rest, and it's a core input to our financial premium growth strategy.

Turning to EBITDA margin. We plan to grow our adjusted EBITDA margin from today's 19.5% to 20% to 22%. And as mentioned this morning, these numbers are excluding any tariff refunds in 2026. In our financial model, we do not include a material contribution from gross margin expansion, which means that we intend to deliver the EBITDA margin expansion largely through operating efficiencies and leverage across our SG&A cost base. Starting with distribution. We indicated in 2023, we would focus on this, and we have delivered from 13.4% in 2023 to 10% in half 1 this year. In the next phase, still to come is a full automation ramp-up of our Atlanta facility. And at the end of the year, we plan to combine 2 legacy hubs into one automated facility. And therefore, over the plan period, we see opportunities of at least 1% or more.

Turning to marketing. As you saw throughout today, we have big plans. Nevertheless, from a baseline in 2026, where we are seeing already upfront investments into our new sports, we have the opportunity to achieve efficiencies over the next 3-year horizon. The key is what you heard from Alex, being selective, creative and maximizing the impact of our spend through storytelling and organic reach.

That brings me to G&A, a key focus area. I know you have not seen visible efficiencies before, but I do want to stress that if you take out currency in the past 3 years, there would have been a reduction of around 1%. Going forward, as we've been scaling for growth and have set up many functional capabilities in the past 3 years, it's now time to work on efficiencies through automation as well as drive operating leverage. And to give you some examples, in finance, we are deploying AI tools today, and we're scaling volume in a rather stable team. Another one is our indirect procurement function that is still emerging and has potential to come.

Coming to selling expenses. There, you see an investment, and that is merely a consequence of our growing store network and the expenses are booked in this line. I do want to note once more that our retail profitability, including these costs, sits comfortably above the group adjusted EBITDA number and our growth in this channel is not hindering the company margin. Now all in all, the SG&A benefits are built on a comprehensive plan, a key focus area, and it's based on productivity and operational leverage.

Then let's move to the capital allocation policy. Our premium growth model is producing cash. The next question is, how do we deploy it? Let's first look back. A consistent trend indicating the quality of our growth, our P&L management and discipline in net working capital and CapEx investments. We moved from CHF 0.5 billion cash in 2023 to CHF 1.2 billion today, and we've been net cash throughout, more than doubling our cash in a period of strong growth. Looking forward, we will continue to allocate our cash in a logical order. First, organic growth. The largest investment we have planned is our retail expansion with a target of plus 100 stores that you saw earlier today. Retail remains one of our highest returning investments with a cash payback of less than 2 years and the channel comfortably above the group adjusted EBITDA.

Another area will be technology and infrastructure. All these investments are facilitated by robust business cases focused on growth or efficiencies. These are the core investments fully funded. Second, a strong balance sheet. And by that, I mean maintaining a net cash position. Here, we are prudent, Swiss, combined. A strong balance sheet is what allows us to keep investing through cycles. We will keep net cash. And third, as mentioned by David earlier this afternoon, returning excess cash to you, our shareholders. And that brings me to something we've not done before. We mentioned this morning, we have received authorization to repurchase shares of up to USD 1 billion during the course of '26 to '29. Again, everything in our plan is funded.

In full, we continue to operate at net cash, and this program comes on top. It's an outcome of our premium growth strategy, which includes a strong translation of adjusted EBITDA to free cash flow. And as a high-quality earnings compounder, this will continue. At the start, I said On is a high-quality earnings compounder, and I will close on the same sentence because you have now seen all 3 parts of it. High quality, the demand is multidimensional and premium, 3 large verticals run, sneaker, apparel as the highest impact growth drivers. A number of smaller verticals as important, growing fast and new sports, which we built for growth well beyond the plan period. Every region growing, every channel growing. And that's why high teens on a base of CHF 3.5 billion is the number we plan for.

Earnings Premium comes from brand strength and pricing power. It produces a gross margin of at least 65% and that allows reinvest in our innovation power and brand experience, as David explained, it funds itself and compounder. I mentioned it, we are closing somewhere next year on the USD 5 billion mark, meaning we are a company of scale, a global footprint, strong commercial capabilities and robust operations. You've had the opportunity to see the breadth of our innovation pipeline, our ambition on new sports, which we can efficiently scale and which will compound our earnings. And there is a reason we keep using the phrase premium playbook. The 5 interconnected moves deliver an attractive financial outcome. It's a strategy that our founders chose from the start and have maintained it with discipline since. And it lets us redefine what a sportswear brand can be. Thank you.

With that, we want to open for the Q&A in the room, and I will ask David, Caspar and Scott to join me. A lot of hands. I book for 4 hours and you still have questions. So let me have 2 mics.

Great. Thank you. Thanks for putting everything on here. Clearly, the theme of premium growth was evident throughout the day. I want to ask a little bit differently about really shifting to a consumer focus in everything you're doing. Could you share a little bit more about that shift, how that plays out and speak to some of the opportunities that you see?

Yes, I can take that. So if you look at the last few years, we've had an incredible business model. Alex can talk about the brand awareness we've been driving, it's been relatively simple to then capture that demand. I think as you go into new areas and you get into this new growth phase, Gerald mentioned it as well, we now have 14 customer mindsets. We really need to understand each of them and their confidence level, as Alex talked about, to then convert. That's the next phase that we're going into. And then Alice talked about it. We've got the data, but we haven't built any of the tools yet to truly understand how to drive loyalty, personalization, all those sort of things.

So if you look at it just from a pure consumer lens, we're going from a very big loud speaker that is driving a lot of brand heat, and we're capturing the demand to now that live speaker is becoming very surgical, very surgical. And that allows us to really have the confidence that we can deliver this premium compounding effect across all the verticals that we've got. So that's consumer-facing.

When you look internally, what does that mean? If you look at many other brands, and I'm sure you study them all, they become very siloed as they get bigger, very, very siloed and everything is handed off to each other from innovation to product to sourcing to marketing, supply chain, customer service, retail, wholesale partners. That makes the whole thing incredibly slow. We've pivoted those silos that way. The consumer is there and everybody is facing the consumer. That's the model that we've built.

And then all of our priorities, we actually are already and we have been for some of them 9 months now, some of it 6 months. We run QBRs, which are all cross-functional teams, all delivering on that consumer insight for the plan, and it's not one function. It's all the functions in the business. We have people from the U.S. calling in the whole lot. So it fundamentally changes not just how we talk to consumers and how we keep them and how we bring them back and achieve those LTVs that Alice and Rebecca talked about, it fundamentally changes how we work internally. So that's a big shift. And we've been going through that now for about 6 months.

Maybe we have a question from that side or you kind of go back and forth.

Laurent Vasilescu from BNP Paribas. I wanted to ask about DTC, the growth, the comment about 100 stores. I think in the past, you talked about half of the openings would be in China and the balance would be between the other regions. How do we think about that evolution? And then I think you mentioned also about relocations as many relocations next year as openings, which I thought was very interesting. How do we think about that for year 2, year 3 for the 2029 target?

We will not give specific guidance of the number of doors per region, as you might understand. But it will probably somewhere as we have done historically. It's -- I would expect. Yes, that's, I think, I would say first. In terms of the expansion overall, firstly, I think it will be rather linear, if anything else. There's not a reason why it would not be as such. And on China, we're extremely excited that we have a combination of door growth, but also relocation as the latter is providing significant growth.

I think over the last years, we learned a lot in retail. And Rebecca mentioned it, we learned that bigger is better. So from an economics perspective, and it also gives us the opportunity with bigger stores now representing the different aspects of the brand. You have probably seen that in the past, especially also smaller stores has, to a large extent, been footwear and apparel was an add-on. That is turning now. So we found out that we can represent 70% of apparel in the store and 30% of footwear in terms of display, but then the return is inverse. So we're getting much more sales from footwear, but then still a significant growing uptick in apparel as well. So it's about the mix and it's about the space and the floor to also represent some of our new verticals and doing more justice to them, how they represent it. So it's all about the storytelling, the innovation storytelling to really serve the customer first and put the customer in the center.

Alex Straton at Morgan Stanley. I had a question on that fun chart on the path to $7 billion in revenue in the next few years. Of the core piece, can you just help us understand the starting point? And then for the run, lifestyle and apparel within it, are those 3 equal contributors as we think about the path? Or is one more important or 2 more important than the other?

Thanks, Alex. It is broadly to come straight to the point, broadly, they are about the same in terms of size. That's how we look at it. Also means all 3 of them are super important and reinforcing. I think performance run, basically the translation of the tech and lifestyle and then apparel, we all believe they complement. And I think that is where you would probably take over to give more color.

Thanks, Alex, for the question. I think you're probably also asking what's jump-off point, right? We've reiterated our guidance for the year. So I think a lot of people have been very obsessed with the growth percentage. I think what we demonstrated today is the actual term of the growth. And I think you should focus on that. So we're adding -- we're going to add more -- we plan to add more business over the next 3 years than we did in the last period. So roughly -- yes, the numbers that you've shown. So we're going to continue to execute this year as well as we can and hopefully reach the highest possible jump-off point. Very soon from now, we will update -- give you a deep insight into our Q3, which is under good progress right now. So I'll be a bit patient with that. But think about the overall number of business that we want to...

Adrienne Yih from Barclays. My first question is on the brand awareness chart. It was a global brand awareness number of 30%. Can you break that down by region? And then can you help us understand when you open either a retail store or go into doors, which of those gives you the biggest return on brand awareness to get to that 50%?

And then secondly, for Scott, can you talk about LightSpray? In the journey over 2029, how much of the supply chain is embedded in that moving over to LightSpray technology?

I can probably take the first part. So we're not breaking down awareness by markets. But what I can tell is this is -- the 30% is, of course, from the markets where we're currently operating in. And so we expect to see a significant brand lift from everything that we're doing. And to your channel question, channels will be a key part of that uplift. We need customers where they are. So when you think about the communities that we have been talking about, some of these communities probably come more to our direct channel first. When you think, for example, about premium active and apparel, probably our retail channels are best positioned to show that full proposition and then also bring it over to our D2C, to our e-com business.

While when you think about sneaker, the sneaker community is clearly predominantly with our wholesale partners. And so that's a great channel to help this awareness uplift in the sneaker community through our wholesale partners. So meaning we don't care which channel it is, we care where the community is and then to do the work together with our wholesale partner or in our own channels to capture that opportunity in the very best way in terms of narrative.

And then on the question and maybe coming off of David's one and the multiplication effect we see of the omnichannel, which we truly haven't built yet at scale. I think that's where -- we don't fully know yet exactly what channel drives what, but we do know that the LTV is significant when we get that right. So I think that will be the add-on to that one. On LightSpray supply chain, if I understand the question correctly, how does the current supply chains feed into that? Is that the question?

Yes. So I mean we've done a lot already. We have -- obviously have a factory here in Zurich. We have a factory in Korea. We've got other factories that are under construction right now. We believe the economics and you see how many labor is on that line, the economics make sense for -- it can go anywhere.

The reality of what we want to build is and really leverage it is not the supply chain benefits per se of less labor. What we want is the proximity to the consumer, back to the first question, which is, in a premium strategy, if you can forecast much closer to the consumer demand, if you could pivot very well, not only can you drive more full price sales, you have less inventory and less closeout stock and volume, right? So we are thinking in those terms to the premium playbook, much more than just how does the supply chain evolve. We're thinking about it from a consumer lens and we're thinking about it from a margin lens. But I think hopefully, you all go away from here believing because you've seen it for your own eyes that you could probably drop what you've seen anywhere in the world, and it would run pretty well.

Rick Patel from Raymond James. Great presentation today. I wanted to better understand the building blocks of growth as we think about pricing versus units. And as we think about the elevation journey and premiumization story, how much of that pricing change would come from potentially like-for-like increases versus innovation versus changes in the revenue mix?

Happy to take that. If you go back to the On premium playbook, we're not just raising the price because we can, but it basically starts with an innovation and that creates that creates pricing power, right? And so Frank has shown this quite well on this chart. We're also reinvesting some of the margin that we're capturing through some of the operational leverage that we have through the supply chain into a better product, right? That will allow us to raise prices.

Now to break this down a bit, it's probably -- you have to differentiate between our performance product and our sneaker product and then our premium active higher-priced lifestyle products as well. So generally speaking, we will not take prices down. That's off the table. But we have different playbooks on to what price points we design, right? So in performance, what we've seen is that the aperture is opening up. I can give you an example. We have a really strong response to Cloudmonster 3, and that comes in 3 versions, regular Cloudmonster, Cloudmonster Hyper and LightSpray Cloudmonster Hyper. So a very large share, much more than we expected, not quite half, but somewhere between 40% and 50% of Monster is in these higher-priced versions, right, which is much more than we expected. We've actually been chasing the units to go after that.

So what we were seeing is that if a consumer perceives and they can feel the difference between the regular Monster and the Hyper, they're willing to pay the $50 more or whatever the number is, right? And so in performance, we want to open up the aperture and have an internal price point probably around $160, something $200 plus and then something closer to $300, right? In sneaker, it's going to be -- the bands are narrower. We also don't want to price kids out of the market. That's not our intention, but we definitely want to always be the premium option. And then, of course, in say, a ROGER lifestyle business with real leather, if you look into a premium department store in China, will people be willing to pay $400 for a pair of exclusive ROGER in leather, of course. So that's how we're thinking about it.

Aneesha Sherman from Bernstein. I want to ask about growth versus margins. And I know a big message of your presentation has been growth and margins. But if you take a step back, the sector around you is becoming more competitive, more promotional. The categories that you're growing in tend to be more promotional, lifestyle, apparel. And as you said, you're hitting that $5 billion mark soon, you're becoming a big guy in this market. So how do you think about the risk and the trade-off between growth and margin? And do you think you'll have to make that trade-off at some point in this forecast period? And what kind of full price selling percent is embedded into your guidance?

Yes. Maybe I can teed this off. So I just don't think that holds true. The premium playbook and other industries have applied it. If you look at, say, consumer electronics, what Apple has done, they have done both. they are super high margin, highest price point, highest market share, right? We have done the same at Dyson, too modest to say that. So I think what it comes down to, and I think that's what your question is leading to, it's discipline. Like you can't -- we're educating our consumer not to expect a sale from us. And so we're going to fulfill that promise, like as long as we stay the course on the premium playbook, this is not a tension of either or it's an end, and it's actually reinforcing. So that's how we think about it.

To add to that, I think you also have to look at that from the movement class opportunity. We feel that the whole industry is really changing. And so you shouldn't anchor it in the classical mainstream sports model, but really think about how this market is changing and how this opens up as well. And so you mentioned it in the presentation. There's even now the tailwind of the luxury industry losing 80 million customers. Where do they go? So I think between kind of the price mainstream model and the luxury model, which we're both clearly not, there's a huge opening already opened up, but now with the tailwind of consumers really kind of want to have aspirational but accessible price points. And so I think that's the secular shift that we are seeing.

We have 10 questions for 3 minutes. It's going to be interesting.

Paul Lejuez, Citi. I want to ask about the wholesale channel, specifically a little bit about the U.S. wholesale channel, multipart question, but all related. Can you talk about what's going on? You've already limited some of your sell-in as a result of what you're seeing out there. How short-term do you view that dynamic? When do you expect to accelerate? I think you've said third quarter marks the low point in terms of -- that limiting the sell-in. And then how should we be thinking about the first half of '27 in terms of that U.S. wholesale business, or really the wholesale business overall?

Yes. I mean we've still got to obviously close Q3. So what we did see from our own actions that we took in Q2 and then we got to work really doing the things that I talked about last night before we kicked off the innovation tour and what we talked about today, we got out to really focus on customer and customer sell-through and storytelling about our differentiation. We know that when On gets that right, we can -- I wouldn't say weather any storm, but we have a very good response when we bring that to bear in the best way that we've got. So I think that's the actions to particularly our U.S. team took with a little bit of help from here, but mainly the U.S. team really driving that. I think that shows the power of the brand where we execute really, really well.

So we're really confident about even in a tough market, can we make our voice heard even when it's very promotional. And we've seen that certainly come through in Q3 and that gives us more confidence.

When does the market recover from that? I don't truly know exactly -- you probably know better than me exactly how much inventory the big guys have got. They've got some other -- there are some brands in particularly in lifestyle that we see that is going down. Our lifestyle is going up. So to be honest, we just focus on ourselves and what we can do to truly differentiate and make sure the customer really sees what our differentiation is in wholesale. And I think you heard a little bit of that from Ed as well in terms of some of the activations you see in his video overall Q3.

Yes. Maybe if I can add to that. Frank, you mentioned how our planning capabilities have improved a lot. And so we have basically day-by-day sell-through information from our wholesale partners. So what's a bit special about the current situation is that as we're really kind of -- we want our retail partners to have -- our wholesale partners to have a certain amount of days of inventory, right? So if there is, like, say, an event like the World Cup happening that people spend elsewhere or there's promotions, and we see that in this case, with all our running franchises updating shortly, we kind of -- we don't have that much runway, right? So that's why we managed it very tightly.

Now through, I would say, the middle of next year, this generational update of running franchises will be over, right? And then most of these shoes will be brand new market and we will have 18 months of life. And so we can be a bit more flexible, and we'll have more runway to sell through even right now, you spoke to it. I mean, the U.S. consumer, it's a bit -- it's up and down. We had a really, really strong back-to-school, but Q2 was weak and it's sometimes reading tea leaves, right? There's just a lot of things happening in the macro environment. And we always want to be on the safe side, so like keep supply a bit below demand. Sam, you've had your hand up for a while.

Sam Poser with Williams Trading. So you talked about the SG&A on the selling expenses going up, and you talked about that related to new stores. Let's talk about that related to U.S. wholesale and the support mechanism needs on the ground for that and what kind of spend and where you are with that? And then -- I mean, that's the main thing.

And then the other question related to that was the plan that was brought up to get to 75% of the JD and Foot Locker stores. Getting items placed is different than having good sell-through. And so -- and I think like so -- but you need those -- like what are you doing with the ground game to make sure you get the right stuff in the right place versus just trying to get to a 75% sell-in, which we'll see how that goes? I mean...

You answer the first one and I'll do the second one.

Thanks, Sam. I'll indeed answer the second one, and I'll hand over to Scott on -- to the first one, and then I'll hand over to Scott for the second. You're right. I think there is improvement for us to improve basically the capabilities, how we manage key accounts, and we will invest in that. And we have also seen in recent days that it pays off. There is a good return on that. And I don't think that's going to change the picture, right? So yes, but it's a clear opportunity for growth, and that's what we see, close collaboration.

You know as well, I think as anyone does, we've come from a period of growth where the demand was almost whatever we produced, it would go in the stores. And now I think we get to a broader portfolio. The segmentation, therefore, is really clear now. And I think the next step is to get that really right presented in wholesale. And I think that will drive strong organic growth. And that will require some investments, but that's built in the plan.

On the penetration of doors, so that number isn't just a number that Rebecca sort of finger in the air. And you heard from Ed, Ed and his whole team, including DICK'S and the Foot Locker banners were here. We had an amazing day. We weren't just -- it wasn't nice. We were going through details of plans and road maps of all their upgrades that they're doing in terms of their CapEx deployment to premiumize a lot of their doors. We are following in line with where we know that works for the brand, where it doesn't work for the brand or doesn't work for them, we're being very, very cautious.

So we've got detailed plans across all banners, all doors, investment, and we understand store space, and we're almost at the level of understanding what we merchandise in each of these new doors as well, that level of plan. So it's a true strategic partnership, and we've got that with some of the other wholesale -- big wholesale partners as well. So it's a detailed plan before we came to you and shared that.

You actually know the difference between, let's say, what's going on, on 34th Street, Foot Locker and what's going on in Washington Heights, which I saw one of the pictures of or Harlem and with the different consumer that is in those markets, not we want that consumer, but you can do exceptionally well in some stores and not in others and other things are fingers crossed. So -- and you're allowing DICK'S or Foot Locker or these retailers to tell you a story that sounds really good because you're a hot brand and they want the shoes. But you got to know the brand belongs to you, not to them. And that's where -- I just want to know how much you really know what's going on at store level. And do you have the people out there to report back to say, Flatbush Avenue in Brooklyn is not good for us, but 34th Street, we should put more shoes in.

Yes. We don't -- it's not just people either. We get weekly sell-through data from all the partners to not even franchise level to color level. So we can see and we review it every single week on sell-through for wholesale. So we do know. And so we don't just need to send need to send an army of people out there.

So we have time for one more question before drinks.

I took the mic, so sorry about that, everyone. I'm a buy-sider. So I'll ask a different question. That's a much more high level. Kelly Granat, Lone Pine Capital. Great day. Thank you so much for the depth of the presentations and seeing the breadth of the team, super impressive. Curious about the anchoring of the apparel strategy to her. And I'm curious the context underneath that. To me, it seems like a big opportunity across the board. And I'm curious if that comes from an observation around that part of the market being underserved in your estimation or early traction you've gotten from the launch of your apparel businesses and seeing more engagement from females versus males, just what underpins the anchoring of apparel to her versus just apparel being a big pillar for the company?

Yes. Excellent question. We have seen kind of the 3 different dimensions of apparel up here. So it's dedicated, which is performance. It's essentials, which also allow us to go broader. And then it's apparel for her. So while the other 2 brackets, we continue to scale, and that's also pretty broad, apparel for her, premium active for her, we see that as an opportunity. And if you think about what we talked before, that space that is opening and if you see also a little bit of a sea of sameness in premium active right now, where it's Match, Match Pink, we believe that there is an opportunity to go beyond that and to have not -- I think Alex mentioned it, not the sporty girl, but the woman who wants to express your sport. That's a different identity. You saw that identity firsthand in the fashion show tomorrow and also in the store. We feel also it's a different price point.

So it's definitely not a luxury price point. It's also not what you have seen in a little bit price point, but it can be a step-up from just the normal price points that you see in premium active right now. It's a consumer there. We touched on it before. It's 80 million luxury customers that are about aspirational. It's a consumer there. So we see a blue ocean and not a red ocean, and that's where we jump into.

Wow, a lot of questions, a long day. If you allow, we will close the Q&A. And David, why don't you say some final remarks about the day?

So it's a pleasure. You have spent a day with On. We have spent a day with you, even a great evening and a great dinner. You've seen the products, you have seen the innovation. You've heard the strategy. So you especially you also have met the people who build it, bring it to market and run the business. I think that's super important. You've seen the caliber of people at On. And you have heard from Frank what the premium playbook is designed to deliver as a high-quality earnings compounder, very important.

When Olivier, Caspar and I started on, there were 3 of us around that imaginary kitchen table over there. But today, we're a global company with thousands of people, millions of consumers and a playbook that has taken us from a single running shoe to a global sportswear brand. And we are still founders. So we have continuously been accountable for dreaming, important, building and directing this company, and we are committed to do what comes next than to anything. So we are more committed to do what comes next than to anything we have done so far. So Frank joined us to help architect the financial discipline in this next phase demand. You heard him today. The ambition is clear: grow the top line at a very high rate, protect our premium economics, you've seen them, and grow earnings even faster than sales.

So what remains is to say thank you, thank you, first of all, to our teams. It takes about 6 months to pull together an Investor Day like this. So I hope you felt that. I hope you felt that we did it with intention. I hope you felt a bit beyond premium playbook at work also on how we interact. But it also -- it helps your lens helps us get better. So it's like almost like an athlete-coach relationship in a way. So we're very grateful. We're very grateful for the huge turnout that we've had for the engagement. Every little break, every coffee break sounds like a Q&A in its own. I hope you got everything you wanted from us, you knew from us. We'll take like a 3-year break until the next Investor Day.

And with that, thank you. We're closing the official part. I think we have drinks and food on the way. Thank you so much for coming out.

Hello, everyone. Thank you for joining us, and welcome to the On Holding AG Second Quarter 2026 Earnings Call.

[Operator Instructions]

I will now hand the conference over to Liv Radlinger, Head of Investor Relations. Liv, please go ahead.

Good afternoon, and good morning to our investor community. Thank you for joining on second quarter earnings conference call and webcast. With me today on the call are David Allemann, Founder and Co-CEO and Frank Sluis, CFO.

Before we begin, I will briefly remind everyone that today's call will contain forward-looking statements within the meaning of the federal securities laws. These forward-looking statements reflect our current expectations and beliefs only and are subject to certain risks and uncertainties that could cause actual results to differ materially. Please refer to our annual report on Form 20-F for the 2025 fiscal year filed with the SEC on third March 2026 for a detailed discussion of such risks and uncertainties. We will further reference certain non-IFRS financial measures such as adjusted EBITDA and adjusted EBITDA margin. These measures are not intended to be considered in isolation or as a substitute for the financial information presented in accordance with IFRS accounting standards. Please refer to today's release for a reconciliation to the most comparable IFRS measures.

We will begin with David, followed by Frank, leading through today's prepared remarks, after which we are looking forward to opening the call for a Q&A session. With that, I'm very happy to turn the call over to David.

Good afternoon, and good morning to our global investor community. Thank you so much for joining us today. When we started On 16 years ago, we were told that the sportswear industry operated on a rigid set of rules, standard malls, standard distribution and standard ways of doing business. We politely chose to carve our own path. When told it was physically impossible to put holes into the rubber sole of a running shoe, I took those indices stranded molds and broke them. This is how Cloudtilt was born. That single act of defines forged our permanent innovation culture. At On, we are reinventing the mold again and again because it is the only way to build a premium global sports brand that will prevail for decades.

Stepping into the roles of Co-CEOs just over 12 weeks ago, is a strategic commitment to our founder led DNA. As On continues to scale into a multi-decade global company, we approach our growth with the precise focus of innovators and operators but with the long-term patients or founders. We are not sprinting for short-term volume. We are deliberately engineering for the multi-decade value of a premium brand. Alongside our President and COO, Scott McGuire and our CFO, Frank Sluis, this leadership structure unifies our strategic intent with disciplined operational and financial execution, relentless product innovation, a unique design culture and brand equity remain at the very center of every decision we make. This commitment delivered another exceptional quarter of premium growth.

For Q2 '26, net sales reached CHF 850 million a powerful 22% growth at constant currency. At the same time, we delivered industry-leading profitability over 65% gross profit margin and close to 20% adjusted EBITDA margin. The strongest proof of the connection we are building is the extraordinary strength of our direct-to-consumer channel. The most premium expression of our brand which delivered exceptional momentum in Q2, growing 34% at constant currency. This was driven by deep toe-to-head consumer demand across all regions with On's brand awareness increasing to 30% as a whole new generation of fans discovered the brand. We are proving that a brand can achieve global scale without eroding premium positioning or margin ambitions. We do not create exclusivity through artificial scarcity or hype. We scale by bringing superior technology, engineering, unique design and cultural relevance to millions of consumers, capturing market share while seriously protecting our margins.

On ultimately creates a highly defensible, scalable financial profile of a premium growth compounder. Our actions in wholesale this quarter are perhaps the clearest example of our premium strategy at work. Momentum in our own channels was remarkably strong with growth ahead of our expectations in all regions. On the other hand, in wholesale, the sellout of some of our everyday running franchises tracked below our ambitions in a highly promotional multi-brand marketplace, particularly in the Americas. Clearly, this is something we are not pleased with, but our response is where the premium standard proves itself. We have been intentional and disciplined on managing sell-in to the channel within this environment. Most importantly, we choose not to build in channel inventory that could compromise our full price integrity. This commitment, discipline and focus on driving high-value accretive growth will continue into the second half of the year and be evident in our premium financial profile.

We expect our full year net sales to grow in the low 20s at constant currency with a higher gross margin outlook and reiterated adjusted EBITDA margin. On this basis, we are on track to close 2026 as the fastest-growing global brand with the highest gross margin in our industry. This is a continuation of the premium strategy that makes us who we are. Let me give you a personal example of where we saw that strategy at work. Early in our journey as a public company, we made the tough choice to prune over distributed channels in EMEA and protect our full price integrity. Many question us then. Today, that discipline is delivering exceptional 21% constant currency growth and record Q2 group margins. EMEA proves that premium growth isn't bought through volume, it's forged through restraint. In the wholesale channel, this discipline does more than protect our margins. It clears the runway for an acceleration of our innovation cycle. We are not just releasing new models. We are deploying a step change in performance engineering.

Franchises like the Cloud Monster 3 hyper, the Cloudsurfer and the Cloudboom Strike 2 are the direct beneficiaries of the strategy by ensuring a clean premium marketplace today, we allow these breakthrough technologies to land with maximum impact, driving full price demand. So now let's step into our innovation lab. Our premium position is anchored by our innovation engine, and that engine starts with running. Patented performance engineering is our permanent antidote to promotion. This past June, we hosted our inaugural On Run Fun Meet in Paris, bringing together our top 100 global run specialty partners. We gave them an exclusive look at our next-generation marathon racing shoe the Cloudboom Strike 2, featuring our new Cloudtilt [indiscernible] geometry paired with Helion HF super foam. An independent landmark study confirms that the Cloudboom Strike to delivers a 1.6% improvement in running economy over the industry's leading super shoes. We are offering the strike to in both a precision laced upper and our revolutionary robotic LightSpray upper.

LightSpray is no longer an elite prototype. It's a fast scaling commercial engine. With our automated facilities in Busan and Zurich fully cranking, light spread is driving extraordinary momentum across our running lineup demonstrated by immediate sellout for the Cloudmonster 3 Hyperlite spray that launched in March this year. Crucially, Elite breakthroughs must benefit the broader running community. In Paris, we also previewed our spring/summer '27 collection, featuring the real phone technology in the cloud server and the cloud server Max tool. While the legacy footwear industry accepts a compromise between impact absorption and rebound, we engineered advanced cloud tech structures directly into a super form. Combining unique chemistry with the physical advantage of dynamic cavities. This represents the first for On and we accepted to define the industry. On's innovation advantage is tiering up global record books. [indiscernible] also captured world indoor gold in the 60-meter sprint. To solidify this technical authority, we officially launched on Atlantic Club Spring squat in Los Angeles. Led by Coach John Bolton, this Elite team is built to dominate short-distance track and spark the imagination of a young global audience, leading up to the 2028 L.A. Olympics.

Let us expand the view across all our sports verticals. Tennis bring on to the most premium spectator sport. At Roland Garros, Flavio copoly captivated millions with an unforgettable on the dark ground to the final, a 19-year-old Brazilian Jawonseka sent shockwave through the sport by defeating Novaco in the third round. This isn't just visibility, it's revenue. Tennis is our fastest-growing apparel vertical with sales nearly tripling this quarter. In training and hybrid fitness racing, a hypergrowth category, we intend to scale our training powerhouse, Alex Roncevic, completely redefined what is humanly possible. bearing an advanced prototype of our Cloud X Tempur Pro, he became the first human in history to shatter the 52-minute barrier, stopping the clock at a blistering 51 minutes and 59 seconds, and setting 2 world records in a single race. Our training vertical showed a 40% growth rate as a result. This intersection of performance engineering, cultural relevance is winning what we call the movement class. A generation that treats health, vitality and longevity as the ultimate status symbol. They are expanding our addressable market drastically.

Today, consumers under the age of 34 represent over 1/3 of our total customer base and keep growing fast. This massive generational step-up fueled a stellar 10% year-over-year growth for our cloud field franchise within the premium sneaker channel. We are clearly winning in sports lifestyle. A defining moment for this movement was seen cloud tilt models take 3 of the top 5 selling positions at Foot Locker Europe last quarter, [indiscernible] current incumbents that had held top spots for years. This is not just a statistical win. It is a profound validation of our design language and our ability to capture the site gist. We backed this momentum with elevated storytelling. In April this year, Zendeya cocreated collection was a phenomenal commercial success that sold out well ahead of expectations with 60% of buyers being women under 34. Our shape of Dreams campaign film directed by Spike Jones won 3 con lines, reinforcing our strategy to earn consumer attention through entertainment rather than just buying ad space.

Furthermore, our Paris Fashion Week installations alongside Love and post archaean prove that On's design language commands a premium position, entirely untouched by legacy sportswear. This brand heat validates our strategy of selective expansion, unlocking highly calculated sequential growth across entirely new product categories, channels and geographies. Apparel is hitting its stride. Our proprietary [indiscernible] fabric is helping us engage further with female customers worldwide, a key priority for us. At the same time, the expansion of our walled running collection, so apparel achieved a record 28% share of our running campaign net sales in Q2. proving our ability to complete the runners uniform from toe to head. Our own retail ecosystem is spearheading this complete uniform. Take the Paris retail flywheel. Our elite visibility during Roland Garros translated immediately into exceptional apparel and footwear performance.

Our [indiscernible] flagship was our strongest performing store globally this quarter, driving exceptional growth in traffic, conversion and average item values. In Stockholm, our new flagship in the historic Golden Triangle has been opened just 2 months and is already performing at twice our expected level. None of this execution is possible without our global team. We approach our talent architecture with extreme intention, pairing founder vision with world-class operational leadership. To steer our next chapter of scale, we promoted Rebecca [ Kaye ]to Chief Global Markets Officer following her stellar growth execution across APAC, our most premium region. We are equally excited to welcome Alice Delahan as our Chief Customer Officer, injecting profound consumer brand and digital ecosystem expertise directly into our D2C strategy. They join an elite leadership bench ready for our next horizon of growth and you have the opportunity to meet them face-to-face very soon. On September 21 and 22, we will host our 2026 Investor Day right here at our own labs in Zurich. It has been 3 years since we last shared our long-term road map. We cannot wait to show you up close and personal, how we intend to keep pushing the boundaries of what sportswear can be and deliver sustained premium growth for the years and decades ahead.

With that, it is my great pleasure to hand the call over to Frank Sluis for his first earnings call as CFO. Frank brings over 2 decades of global consumer finance leadership, managing multibillion operations in Europe, the Americas and Asia. As an avid marathon and triathlete, he fundamentally understands what it means to build for long-term endurance. Over the past few months, he has brought remarkable discipline, operational rigor and an unwavering conviction in our premium path. He will now walk you through our Q2 performance and how we are calibrating our financial outlook for the balance of the year. Frank, over to you.

Thank you, David, and a very warm welcome from my side as well. It's a real pleasure to be speaking with you all for the first time. I spent my first month at on listening and learning, spending time with our teams across the regions with our partners and naturally diving into the strategy and the numbers. I want to mention 3 things that have impressed me the most. Firstly, the obsession with disruptive innovation which runs throughout the company and is supported by excellent R&D capabilities and supplier partnerships.

Secondly, the huge ambition and growth mindset of our 4,000 team members and the still untapped potential in so many areas including retail and apparel to just mention a few. Thirdly, the founder-led culture and commitment to building the most premium sports brand for many decades to come. This requires discipline every day in the choices we make to drive long-term and sustainable value creation with a unique earnings model. This is the threat I would like to ask you to hold on to throughout my remarks when going through the financials. Let's now dive further into the details of a strong quarter 2. Net sales this quarter reached a new high of CHF 850 million, growing 21.6% at constant currency and 13.5% on a reported basis. As ever, the composition tells you more than the total. Growth was strongly led by direct-to-consumer, our most elevated channel, our highest margin channel and the clearest read we have on our brand momentum. The strength went through both e-commerce and retail.

Net sales in DTC reached CHF 388 million, up 34.3% at constant currency and by 26.0% on a reported basis, lifting DTC to a second quarter record of 45.7% of sales. This is the channel where we fully define our brand experience. So to see this powering our business is one of the results we are most pleased with this quarter. E-commerce growth exceeded our expectations in every single region. Last quarter, we spoke about deliberately widening the conversation to new communities. We continue to pursue this strategy and the signals of our commitments to this approach are encouraging. Those newer visitors are already moving deeper into the journey evidenced in increased engagement. And we did it while driving a further increase in full price share year-on-year. To me, that is the whole strategy in one data example. We are broadening and elevating the brand at the same time.

Our own stores also performed very well with continued strong growth, both in new doors and con sales. David mentioned our [indiscernible] flagship, I would add our 2 Tokyo stores. which both continue to perform exceptionally with no signs of cannibalization. Clearly, telling us that with the right format in the right location, we have real room to expand even in cities where we are already present and at very attractive economics. Our retail KPIs continue to strengthen from an already high base, proving the incredible value of our deepening consumer connections. Let me turn to wholesale because it is where the choices David spoke about showed up in the numbers. Growth was more moderate, 12.7% at constant currency and 4.8% reported with DTC outperforming wholesale in every region. As David explained, that is deliberate. We sell out software in some of our everyday running franchises in a highly promotional environment. We chose to hold back, sell-in rather than ship volume that would build inventory in the channel, and put a full price integrity at risk. It costs us some wholesale growth, but it protects our partners' inventory health, our premium positioning and ensures the best position for launching what we believe are outstanding innovations in 2027.

Switching to our regions. In the Americas, net sales grew 13.0% at constant currency and by 4.5% on a reported basis, reflecting the wholesale dynamic I just described. Within DTC, momentum accelerated in both North America and Latin America. We also continue to attract younger consumers with the share of e-commerce customers under 24, up by more than 1/3 versus quarter 1. I find it really exciting because it means we are attracting the next generation of on consumers without discounting our way to them. Our stores in the region performed well, too, particularly Miami and our New York Flatiron flagship with higher average basket sizes reflecting the resonance of our premium offer, including a strong performance of our Leave and Zendeya launches. EMEA was a real standout. Net sales up a very strong 20.5% at constant currency and by 15.4% on a reported basis and all the more striking against a very demanding prior year comparison. DTC growth was in excess of 20% at constant currency across every single subregion, including DAC. The performance in Southern Europe was again exceptional, with France, Spain and Italy all tracking comfortably ahead of our expectations and building real momentum on an ever larger base.

Our retail presence in these markets also goes from strength to strength with standout performances of our stores in Madrid and Milan. In APAC, net sales grew 54.7% at a constant currency and by 43.1% on a reported basis, broad-based across the region, making this another quarter of 20% global share. Japan and Korea continued to perform exceptionally well, as did Greater China. This market exceeded our expectations in every channel with a great contribution from our stores and particular strength on Tmall despite our choosing not to participate in promotional activity. This quarter, we opened our first store in Macau, which is already matching the strong momentum of our remarkable Hong Kong locations. With the widest assortment in the region, the store achieved above-average conversion, reinforcing our conviction in the potential of larger format stores across the region. Across our categories, growth is increasingly driven by multiple engines. Net sales from SUs went up 18% at constant currency and by 10.9% on a reported basis.

In performance running, the Cloud Monster 3 hyper delivered strong sell-through and continues to be widely praised by retailers and consumers alike. We continue to scale LightStream, which already contributed quite meaningfully to our performance running vertical this quarter despite being still early in the scale-up journey. As a run and myself, attending our inaugural global run Summit in Paris and spending time with our retail partners and innovation teams has left me even more excited about what is to come next year. This enthusiasm is clearly shared by our partners with Spring/Summer '27 orders for Cloudsurfer 3 from these retailers doubling after the event. If we turn to lifestyle, David mentioned the performance of Cloudtilt which saw strength across all versions, including the remix, which is resonating exceptionally well with the young mill consumer. The strength of this vertical is particularly impressive in the context of a highly competitive environment where many brands resorted to promotions. Our authenticity in this space and the newness of our products really resonates with the consumer.

Training was also a highlight with Cloud Pulse and Cloud X both growing strongly and a great example of how we structurally build new franchises and credibility in new sports. Our tennis momentum continued to build on and off court through the Roger franchise fueled also by our athletes performances at Wimbledon and Roland Gara. Apparel grew 56.2% at constant currency and by 47.7% on a reported basis. continuing to establish itself as a meaningful growth driver in its own right and increasingly an entry point into the brand. Performance running remain the anchor supported by our established collections, the expansion of Volt and a highly successful limited drop with Air1. The tennis court collection delivered excellent growth and sell-through, taking a meaningfully larger share of our [indiscernible] business. and the co-created Zendeya Collection significantly exceeded expectations. In the U.S., every style beats are forecast by triple digits.

To summarize, across regions, channels and categories, we are building an increasingly global and diversified business, one that remains firmly rooted in performance innovation thrives at the intersection of sports and culture and continues to be built for the long term with a discipline that comes from founder that leadership. Turning to the P&L. This is where all that discipline converts into profitability. Constant currency sales growth of 21.6%, coupled with adjusted EBITDA margin expansion to 19.8%, drove absolute constant currency adjusted EBITDA growth of over 30% year-over-year. Bottom line margin expansion was primarily fueled by an outstanding gross margin of 65.4%, reflecting our strategy at its best -- strong DTC momentum, disciplined execution and continued operating efficiencies. Together with a favorable freight mix and some positive foreign exchange effects, those efficiencies let us fully absorb external pressures including higher U.S. import tariffs and still expand our gross margin. To be clear, these numbers do not include any tariff refunds, which we anticipate are likely to come throughout half 2.

Our gross margin is a clear demonstration of the strength of our premium operating model. While freight mix and foreign exchange will naturally vary over time, the core drivers are in the base, disciplined full price execution higher DTC mix and sustainable operational efficiencies. These capabilities allow us to invest deeply into our premium product and consumer experiences, further differentiating our brands. Within SG&A, distribution expenses decreased to 10.0% of net sales, continuing to benefit from operational efficiencies, including in last-mile fulfillment. As we have said before, those efficiencies create the capacity to invest where we see the strongest long-term returns for our future. This quarter in brand building and digital opportunities, including those to engage with new communities driving marketing to 14.0% of net sales. Selling expenses increased as expected, reflecting the strong DTC contribution, while we also continue to invest behind future growth in G&A. Discipline earns the margin and the margin funds the future. Our strategy and value creation flywheel in action.

Turning to our balance sheet where our earnings translated into another quarter of strong cash generation. Net working capital improved by CHF 14.9 million versus quarter as strong receivable and payables management more than offset our inventory intake for the full winter season and our actions to recalibrate solid. Total net working capital remained strong at below 20% of sales. Capital expenditure was CHF 28.2 million, focused primarily on our selective retail expansion and the infrastructure to support our continued growth. Altogether, we increased our cash balance by CHF 185.2 million, ending with just over CHF 1.2 billion in net cash and a very strong financial position. One, that lets us fund innovation, stores and brand building ourselves. Before I turn to our outlook, I want to thank the whole On team for their performance this quarter. I spent time with many of you these first months and the welcome has been wonderful. You have been open, generous and quick to help. Those qualities are a part of the unique culture of On, a key elements of what makes this company so special. This is just one more reason I'm even more excited today when I joined about growing the company together.

Let me close on the balance of the year. In Q3, so far, we have continued to execute on our strategic priorities and premium vision with conviction. In July, we again demonstrated our commitment to impact and sustainability. With the launch of the Cloud X5 with Clean Cloud, the first EVA missile made using captured carbon emissions. This technology has already skilled past 1 million pairs 4 years ahead of our own target. Our Pinnacle LightSpray Cloudboom Strike I made for our most dedicated running community was, as David mentioned, independently validated as one of the very best ratios globally. And we will begin scaling the cloud service, our first 2 with our new SURREAL superfoam in October with RunSpecialty Partners. The response to this innovation at our Paris run Summit was incredible. We've also opened a number of key premium retail stores in the last few weeks, including in the United Arab Emirates, Copenhagen and Sao Paulo.

When it comes to our outlook for the year, I want to share a bit of context on the philosophy behind how we are guiding. I mentioned it, but it is rare and an absolute privilege to work in an environment where every single team member as incredibly ambitious goals and dreams. But at the same time, it's very clear on the discipline required to build a differentiated premium brand for the long term. Strong growth and premium execution can absolutely go hand in hand as we proved this quarter and doing it the right way is a nonnegotiable. So what you see in our outlook is our premium growth strategy in action. This is a model built on discipline. On only pursuing the growth that protects and elevates our positioning. With the deliberate action already taken On selling in quarter 2 and early quarter 3 and the message that we will not shy away from taking further action to ensure we are setting up for success and a strong pipeline in 2027, we are committing to a 2026 constant currency net sales growth rate in the low 20s.

This reflects our premium growth strategy, clear visibility on the wholesale action taken for the third quarter, including in our everyday running franchises and the focus on continuing to manage sell-in deliberately where we deem it beneficial for our long-term success. With these actions relating to wholesale, it is important to understand that we expect continued, very strong momentum in DTC and resulting significant DTC mix expansion for the rest of the year. I want to be equally clear about profitability because this is where the quality of a growth shows. The commitment to premium execution alongside the high DTC mix means we now expect a full year gross margin of at least 65% and as we pursue high-quality growth and keep investing in our future, we maintain our adjusted EBITDA margin outlook of 19.5% to 20%. Note this margin outlook does not include any benefits from tariff refunds. We expect to recognize some refunds in our quarter 3 results, and we'll update you when we have fuller visibility on the amount. You heard it today, we're on a journey to build the most premium sportswear brand of the coming decades. The discipline inherent in this is what makes this such a compelling earnings model.

Strong growth, industry-leading margins and a compounding financial profile. As a CFO, I could not be more excited and convinced of where we are going. I look forward to meeting many of you at our Investor Day in September to share in more detail how we bring this ambition to reality.

We will now begin the question-and-answer session. For the Q&A, David and Frank are joined by Caspar Coppetti, Founder and Co-CEO.

[Operator Instructions]

Your first question comes from the line of Jay Sole with UBS.

Great. David, my questions for you. You mentioned in your prepared remarks about the global trend toward fitness and wellness. But at the same time, a lot of brands in the athletic wear space have seen slowing results over the past year. What gives you confidence that the industry growth rate that you envisioned can remain strong? And what gives you comments that we're not seeing a real slowdown in that, but were broadly on a global basis that maybe could cause more weakness going forward?

Okay. Thanks a lot for your question. This is David. Hey, what we are seeing, and you see that really broad-based growth for on in our direct-to-consumer channel that saw the stellar growth and we're an innovation brand. So really kind of our core comes from innovation. And we're seeing that we have across channels, geographies, but then also new verticals like, for example, tennis, training. Now our new innovation that comes in running, like, for example, the recently launched Cloud Monster that we have an incredible momentum.

And we believe that what we call the movement class is a societal shift that brings a lot more consumers to sports because it's not just about utility, but it's about identity. And identity is built through innovations through cultural relevance and ultimately also through a price point because it's a differentiation factor. And so it's the perfect territory for a premium innovation brand. And that's where we're doubling down. We feel that's an opening TAM, and that is supporting on growth, and you've seen that at play in the second quarter as well.

Got it. Maybe, Frank, if I can ask one -- if I can ask you one question. Just on the gross margin guidance increase. Can you just walk through the drivers? Is it mostly mix? Is there any markdown increases baked in to your gross margin guidance for the year?

Thanks, Jay. As we said in quarter 1 already is that for this year, I think the margin trajectory will be quite clean and no basically significant one-offs in our year-to-date and also not in our outlook. So in quarter 1, you saw basically sort of a mid-64 margin. Now a low 65 or a mid 65, 65.4%. And in that, basically, growth versus last year, of course, is a combination of #1 and higher DTC share or #1, I would say, is a continued strengthening of our full price strategy, #2 is the increased share of the DTC mix and #3, operational efficiencies.

And I think as they are in the year-to-date margin, I think they'll also be visible in a similar sort of rate in the year to go, and hence, also, we lifted the outlook a bit from the -- basically added 64.5% to 65% plus. As we now see that basically the DTC mix, in particular, is trending favorable. And we believe that also to remain the case for the remainder of the year.

Your next question comes from the line of Jonathan Komp with Baird.

Could you just maybe share a little bit more perspective when you look at the divergence across channels right now, are you seeing a similar divergence in your everyday running platforms across channels? Or do you think there are some unique factors in the Americas wholesale segment currently? And do you have any insight on how long of a drag, some of the intentional actions to limit sell-in into those channels and wholesale might continue here?

Jon, thanks a lot for your question. I think what we are seeing is a very, very loyal customer in our own channels. And actually, we also have a lot of new cohorts coming to our channel. Now 1/3 of our consumers are under 34. So it's also a next generation that is coming to us. And of course, they're coming to us as a premium brand and they're not looking for price, but they're looking for innovation. They're looking for cultural relevance. So that's the primary driver in that channel.

While in a wholesale channel, of course, you're more exposed to a very promotional environment. And so it's more of a choice that you have. So that's why we feel we have a very strong consumer. We have higher awareness now, 30%. We have a young new cohort coming to us, and that's what drives the D2C growth that you have seen at more than 34%.

Jon, I can weigh in a bit on wholesale. So we want to be quite clear. So this is mostly an Americas wholesale topic where it's been a bit more volatile and the months are different. We had a very strong start to the year with our innovation hitting. Now in the second quarter, we were mostly comping some of our everyday run franchises which we've still grown, but not maybe at the rate that we're expecting going forward. Now when we look into the start of Q3, we're already off to a very good start with innovation that we have.

Most importantly, Cloud X 5 and CloudoneMax that are landing extremely well. We also had a very strong back-to-school. So even in the region where wholesale is a bit depressed for us right now, which we believe is transitory. We're seeing a lot of good signs. To your question how long this will last. We're starting to roll out cloud server to our own specialty stores first in October, giving them a 3-month exclusive period to also really gain the credibility for our new technology. And then Surfer3 will roll out broadly in January, followed by Surfer MAX 2 in April, and we're also relaunching flow, which in the past has been quite a strong franchise. So there's a lot of innovation happening in Q4, Q1 and Q2. And then this is the big -- the fastest accelerated rollout of product that we ever have. So all everyday running franchises will update to the new foams and the new technologies, and the Swiss engineering precision fit within 14 months from now.

That's very helpful. And maybe more broadly, just given the strength of the pipeline on the performance side, the strength and acceleration in the lifestyle side and then some of the additional drivers that you have over the next few years, how would you frame up thinking about the types of growth rate you're projecting for 2026 to continue for a while here?

I think, Jon, we talked to it in the opening remarks. We are planting -- we have planted a lot of seeds. And you see these seeds now fully sprouting. Think about our training vertical, 40% growth year-over-year. Think about apparel, growing over 56%, think about tennis, think about geographies. I mean, if you think about APAC, but also then I'm super excited about EMEA, where we are actually opening new stores in a Nordic cluster with Stockholm and with Copenhagen, but also in Germany, Lat Am. So there are so many opportunities for premium growth I wouldn't worry about basically being out of fuel at all.

And then of course, to come in the Investor Day where we can really talk about the long term.

Your next question comes from the line of Aubrey Tianello with BNP Paribas.

I wanted to ask about the revenue guidance. And should we assume that the change in revenue guidance is entirely coming from the lower wholesale outlook I think last quarter, you mentioned that the DTC growth we saw in Q1 in the high 20s was the right way to think about the full year for DTC. Is that still the case? Obviously, we saw a really strong DTC number. Did anything change in terms of the DTC outlook for the year?

Thanks, Aubrey. Yes. So coming back to DTC. So indeed, coming back on the first one is that, indeed, the actions we are taking in wholesale in quarter 2 and also in -- of course, there are indeed the key factor for the new basically top line guidance. It is also fair to say that we were, I think, that the DTC growth in quarter 2 has been very strong. I think what you saw in many industries was that I think with the change in the digital landscape that basically, we also saw a slight slowdown probably at the end of last year. I think we are very positive on the actions we have taken and the good growth in e-commerce in quarter 2. And as David said, we are basically exceeding our expectations in all the regions.

Secondly, of course, you know that we'll open up quite a bit of stores at the back end of the year. So all in all, I think that basically, we look with a lot of confidence in half 2 to basically our DTC growth. And we -- yes, basically, it should be over the full half sort of continue to be strong. And that's why, indeed, the revised top line guidance is very much linked to the wholesale actions.

Your next question comes from the line of Anna Andreeva with Piper Sandler.

Great. I wanted to follow up on the sales guidance. You mentioned a couple of times that you're off to good start in 3Q with the innovation. How should we think about the cadence of sales growth through Q versus 4Q? And what's being applied for the Americas and the wholesale channel? And then secondly, inventory was up 30% ending the quarter. Can you talk about what's the composition in terms of units versus pricing?

Thanks, Anna. Indeed, when we look -- or thanks for the question, when we look at basically the balance of the year, indeed, the actions that we are now taking in wholesale of which we took some in quarter 2, the remaining ones will be -- basically, we will take them in quarter 3. And that's why, indeed, we expect the Q3 growth rate to be lower than the Q4 growth rate. That's what I would say about the phasing. The second question was about the inventory growth. I think it's important to realize that our growth that you see year-to-date has been primarily volume-led. So it's been very significant. That's the first driver of the inventory growth.

The second is that the FX rates, and that's quite technical, that basically have basically increased the value of the inventory a bit due to the FX movements. And that explains the majority of basically the increase. So these 2 factors. Thank you.

Your next question comes from the line of Wendy Liou with JPMorgan.

My first question is actually related to the regional performance. You were seeing a bit of a decel in Americas, I think you mentioned about overall environment being promotional. But EMEA looks still very solid where I think some of your peers were warning about the market overall being a bit softer. How do you assess the gap between your performance in these 2 regions? And is there anything that you are doing sort of self-help that are helping your performance in EMEA that perhaps can be replicated to like North America and other regions as well.

Happy to take that question. And maybe, David, you want to add EMEA is really a very bright spot for us. We've taken a -- some of you on the call might remember, we've taken some actions about 3 years ago where we completely moved out of the comfort channel because we didn't feel it was premium enough, and that's now paying off. We have a very clear marketplace. We have innovation resonating very well. In fact, for example, running is growing for us in EMEA quite strongly. And then we also have some newer markets for On, really helping drive the growth. We have established a very good presence now in France. David spoke to that, but also Italy, one of the largest sporting goods markets in Europe, is seeing very, very good results. For example, our Milan store has a line out the door every single day, and that translates extremely well.

We're also doubling down in EMEA with the store openings. We've seen a store cluster in Germany is coming online. We also brought a new store to Stockholm and to Copenhagen. So there's a lot of energy in the market. And this actually also translates to a strong lifestyle momentum. The Cloudtilt and the Cloudtilt outsole was originally born from running technology. is now seeing an incredible growth.

And I mentioned it in the call before, it's now taking 3 slots of the top 5 spots at Foot Locker Europe. So we are seeing a very young cohort coming to buy the Cloudtilt and many other franchises. And that cross is also over to running and actually to use in use of year-over-year, we have seen 40% growth. So -- and that's also a potential. So the brand is -- has heat is becoming younger. So that's great momentum for EMEA.

Great. And then maybe a question to Frank. On guidance, I see that you increased your gross margin guidance to at least 6% but you maintained your adjusted EBITDA margin guidance. Can you perhaps walk us through the different moving parts? And broadly, is growth from D2C accretive or dilutive to adjusted EBITDA margin.

So starting with the gross margin guidance. The uplift basically in the guidance is really, I would say, fully attributable to an higher basically DTC mix. And on the rest of the assumptions, I think as we said before in quarter 1, and I'll repeat it now, is that the rest of the gross margin, I think, is sort of is clean in the sense of no major one-offs. So I think the other key drivers of basically our pricing and the full price basically strategy we have, et cetera, is all -- and also the FOB rates, et cetera, are all basically consistent.

So the gross margin fully linked to the DTC mix change. Indeed, we have basically had the EBITDA margin is unchanged, I think, with 2 big factors in there. One, of course, is the gross margin. The other one I would also say is that, of course, we have a little bit of deleverage coming from the revised top line guidance. And that also, of course, is a factor. And the third one, we want to continue to invest in the business. We want to make really sure that we continue to pursue growth. We see a lot of opportunities, as David and Caspar explained and we just want to make sure that we continue to have the funds to invest for future growth. And that's why we basically decided to maintain the EBITDA margin as it is today.

Your next question comes from the line of Paul Lejuez with Citi.

You mentioned some slower self in the running channel. I'm curious if you could talk about maybe more broadly what you're seeing in terms of sell-through in other channels, in other regions and how that compares to DTC growth in those regions? And also just bigger picture, should we think about the second half wholesale growth rate as the go-forward growth rate? Or is this something that you look at as the temporary before we see a reacceleration of growth rates in the first half of '27?

Let me probably take the first part of the question, and then Frank will take the second part of the question. So if you're referring to what we are seeing in we're seeing actually strong growth ahead of our expectation in each region. So it's really a positive momentum that's driven by overall brand heat and brand demand. You've -- I talked about the 30-plus awareness. It's about new consumers coming to on, and it's very broad. I mean, it's our channel where we are doubling down and running but also where apparel is growing even more than in the rest of the market. So in our On stores, indeed to see we have a higher apparel share and so we're really growing toe to head. But then also our new verticals.

I mean, you can imagine during Roland-Garros in France, there were long, long lines in front of our Chances store. And then when we recently signed Alex Roncevic in HYROX, we just saw how training has been exploding. So it's a 40% growth and even innovation in apparel like, for example, [indiscernible] has proven to be one of the most important pathways for bringing new female consumers under 24 to on really in the in training apparel. So we see that momentum across the board in DTC.

Yes. And Paul, coming back to basically the second part of the question, whether this is sort of a long-term impact. Of course, we've been very clear that our intent is exactly what we do now is to ensure that it is not, right? So basically, we -- I think the whole selections are really predominantly in the U.S., and we do it, of course, basically by managing the sell-in. We do that. That's all driven by our premium strategy. We do it exactly to protect our full price strategy to make sure that inventories are at the right level because what we are protecting really is, I think, very strong innovations in the running space that we see coming up.

And I think Caspar and David can talk more about the technology behind it. but we fundamentally believe it is really strong. And therefore, basically, we want to make sure that the marketplace is basically that the inventory levels are healthy. so that the innovations can actually land well at the back end of this year and also in 2027. And that's why we do this precisely to make sure that is that basically had the long-term trend in wholesale continues to also be strong.

And then just to clarify, is it fair to say that you're happy with the sell-through in the wholesale channel in regions outside of the Americas?

That's correct, yes.

Your next question comes from the line of Aneesha Sherman with Bernstein.

I have 2, please. The first one is on ASP. Last quarter, you talked about strong ASP growth of about mid-single digit per year on average over the last 3 years. as you're now seeing slow performance of everyday running in the U.S., do you believe there's some price resistance in that channel? And how does that shape your view of pricing strategy this year? Is it going to be different across your higher-end products versus your everyday running segment? And then a follow-up on the actions to limit sell-in, Frank. You mentioned a lot of actions taken in Q2. I'm curious, are you seeing any improvement in wholesale sell-through in the U.S. as a result of these actions in the early weeks of Q3?

Happy to take the first one on pricing. Generally, what we're seeing in the market is that runners are really willing to invest against the latest technologies. For On as a premium brand, lowering prices has never been part of the playbook and you do not expect that from us. What we are going to do, and we spoke to it already on the last call is we're going to open up the aperture of our pricing range. So our entry-level price point, if you want to call it that, that is $160 for everyday running. And in the past, we've maybe had an increase of $10 to $20 between models or levels of performance.

We're seeing quite a lot of demand in the higher areas, so $210 to $250 for us are very attractive price points where we can actually move significant volume. For example, the Cloud Monster Hyper range is doing extremely well. We cannot make LightSpray fast enough and those issues can be up to $290. So in the future, think about maybe 3 price levels for On, the entry level at $160, which is still higher than our competition, something around $200, $210 and then something towards $300 or even above.

Yes. And Aneesha to come back on the second part of the question. indeed, basically, we keep, of course, a very close eye on the performance in particularly in the U.S., and we work very closely with our retail partners in order to drive sell-through. And indeed, for now, we see in the first, basically, for now, the trend is in line with basically our outlook. So yes, yes, so it's positive. Initial signs are positive, but in line with our outlook.

We have reached the end of the Q&A. This concludes today's call. Thank you for attending. You may now disconnect.

Hello. My name is Ellie, and I will be your operator for today. Welcome to the On Holding AG First Quarter 2026 Results Call. Please note that this call is being recorded. [Operator Instructions]

Thank you. I'd now like to hand the call over to Liv Radlinger, Head of Investor Relations. Please go ahead.

Good afternoon, and good morning to our investor community. Thank you for joining on first quarter earnings conference call and webcast. With me today on the call are Caspar Coppetti, Founder and Co-CEO; Martin Hoffmann, outgoing CEO and CFO; and Frank Sluis, our new CFO as of May 1; David Allemann, Founder and Co-CEO, will also join us for the Q&A session.

Before we begin, I will briefly remind everyone that today's call will contain forward-looking statements within the meaning of the federal securities laws. These forward-looking statements reflect our current expectations and beliefs only and are subject to certain risks and uncertainties that could cause actual results to differ materially. Please refer to our annual report on Form 20-F for the 2025 fiscal year filed with the SEC on 3rd March 2026, for a detailed discussion of such risks and uncertainties. We will further reference certain non-IFRS financial measures such as adjusted EBITDA and adjusted EBITDA margin. These measures are not intended to be considered in isolation or as a substitute for the financial information presented in accordance with IFRS accounting standards.

Please refer to today's release for a reconciliation to the most comparable IFRS measures. Lastly, we present certain metrics in U.S. dollars during this call using the exchange rate as set forth in the H10 statistical release of the Federal Reserve Board as of March 31, 2026, solely for the convenience of our investors. We begin with Caspar followed by Martin and Frank leading through today's prepared remarks, after which we are very much hitting forward to opening the call for a Q&A session.

With that, I'm very happy to turn the call over to Caspar.

Thank you, and a very warm welcome, everyone, to our first quarter 2026 earnings call. It is a great pleasure to share more on an outstanding quarter. The year is off to an extremely strong start. Net sales exceeded CHF 830 million, the first time we have crossed the CHF 800 million mark, growing 26.4% at constant currency. At the same time, On's disciplined focus on premium execution delivered exceptionally strong gross profit and adjusted EBITDA margins, a clear reaffirmation of our premium strategy.

Demand is incredibly broad-based. Our strategy is resonating across regions, categories and channels, reaching more fans than ever before. You see it in our numbers. strong constant currency double-digit growth in the Americas, in EMEA and in APAC. And well over 50% constant currency growth in apparel globally as we continue our strategy of growing to ahead. These are numbers we are extremely proud of. And as our business becomes more global and more multidimensional, our vision to be the most premium global poster brand is only becoming clear we are even more committed to continuing to chart our own course. You see in the products we create the innovation we bring to market and aggressive we build. The energy around the brand was clear everywhere this quarter, whether it was the electric atmosphere and [indiscernible] title or the possible excitement at the Tokyo [indiscernible] or the [indiscernible] at the opening of our new stores in Sol, Shenzhen and London. It was clear our vision and strategic execution is reaching far and wide. For me, nothing captured [indiscernible]. But again, as one of the boldest ideas we've ever had is today proving itself in the world's most competitive stages. This spring, [ Human Trippe ] won the Paris Marathon in the prototype of the next generation of [ platoon ] strike. And at the London Marathon, Hellen Obiri posted our most recent personal best, the second class of time ever recorded in a female-only marathon. And more importantly, we're also making huge strides in building out the technology into a true commercial engine for On.

In February, we increased our production capacity for LightSpray [ 30-fold ] when we opened our Lightspay factory in Busan, South Korea. The quarter also saw us bringing LightSpray closer to a much larger community of runners. From Los Angeles to Boston to London, thousands of fans saw the robot in action, watched the shoe move from filament to asphalt in just minutes and then felt the product for themselves. The LightSpray Cloudmonster Hyper sold out quickly across many of our channels with particularly strong demand in Asia Pacific and in the U.S. In the opening week of our new Boston store, LightSpray represented close to 20% of footwear net sales. We are currently selling several hundred pairs a day in our DTC channels alone. For technology still at the starting line of its commercial journey, this is an exceptional indicator of demand.

During the quarter, LightSpray also played a significant role in one of our blockbuster franchisees product launches, the Cloudmonster 3. The top-of-the-line LightSpray Cloudmonster Hyper spray in Busan brings our revolutionary technology to a broader consumer base for the first time. The entire franchise update resonated strongly with consumers and is outpacing its predecessor across all regions. At the same time, LightSpray is only one part of our innovation pipeline. [indiscernible], on Super Foam for everyday runner is another major step forward. Compared with industry standard EVA, it weighs roughly half as much but provides 60% to 70% more energy return. Having achieved the combination of SuperFoams with the structural engineered cushioning of Cloudtilt represents a generational shift in running technology, not just for O but for the industry. ural will debut with Cloud Surface 3 this October and roll out at a rapid pace across the key everyday running franchises in 2027. We will present these products at the inaugural On Global Run Summit in Paris, where we will host our top 100 On Global run accounts.

All of this matters because consumers are choosing to spend where products are truly differentiated, exactly where we are built to win. On innovates at the intersection of performance, design and sustainability. In that sweet spot, we create an unmistakable high-quality experience for our customers, an experience that we can build on and protect through every channel and every touch point as we grow for the long term. This is what we mean when we say that we aim to be the most premium brand in sports. And we see this play out in the commercial results and in consumer perception data. Our Q1 brand tracker showed a sharp increase in run awareness, especially in the U.S. In Q1, we grew nearly 30% with our run specialty accounts in Europe. At the same time, we continue to win new customers in everyday running through our closer relationships with leading sports retailers in markets, including the U.S., Japan and Europe. Running is where we continue to prove the power of our innovation and our great product with authentic communities. And it continues to open doors far beyond running, creating deep engagement, growing our relationship with the movement class.

As you heard from David last quarter, this new ageless consumer sees health as the new wealth and sportswear as identity, not utility. They want to buy into a brand that has strong cultural relevance and truly sits at the intersection of performance and lifestyle. Accordingly, we continue to see exceptional momentum in the quarter in lifestyle. We are being extremely intentional here. Products like Cloudtilt are designed for sneaker tastes with the comfort, design language and premium feel that young consumers are looking for. The proof is in the numbers. In Q1, Cloudtilt and Cloudtilt Remix saw exceptional growth in all regions with Cloudtilt becoming the #1 salad foot Locker in Europe by wide margin in March. Additionally, partnerships with leaders in the sneaker space are helping us acquire new young consumers at attractive margin profiles while continuing to enhance our premium positioning. The highly sought after [indiscernible] Cloudswift relaunch with [indiscernible] and the female-led head-to-toe silouette launch with Zendaya show how we are building credibility with new communities through design, culture and premium product.

The broader impact is already visible in our data. In Q1, 18- to 24-year-olds significantly increased their share of our DTC customer base, the largest increase we have seen since our data began, and this trend has accelerated into early Q2. Our Q1 brand tracker also showed strong progress in both performance and style cues. We have engaged with and converted new communities successfully before. When we entered tennis, it was a new community for us. Today, it is one of our most engaged audiences, our highest growth apparel vertical and continues to deliver outstanding results in footwear. Training is also bringing thousands of new customers to the brand every quarter. And in outdoor, the Cloud Sola trail running franchise has had a very strong debut, giving us another platform for product-led expansion. For us, this is all part of the same ambition to build the most premium global sportswear brand with the breadth to resonate across communities, genders, categories and generations.

As our reach grows, we are protecting and strengthening our brand. In an increasingly promotional market, we are even more committed to our full price strategy. We are reaching new consumers, but we're doing it with quality and discipline. Our results represent this strategy, sustainable premium growth, the kind that builds the brand for years and decades to come. So when I look at Q1, I see much more than a strong quarter. I see a brand scaling with momentum, a team executing with clarity and a strategy that gives us even greater conviction. And we are charting our own course. We are as ambitious as ever, and we believe the next chapter of on can be even better.

On that note, I'm very pleased to confirm that we will host an Investor Day in Zurich on September 21 and 22, 2026. It has been 3 years since our last Investor Day in 2023, and we have made tremendous progress since then. We look forward to sharing with you all the things we have dreamed about in this next phase of our journey and how we will continue to deliver on our vision to become the most premium global sportswear brand in years to come.

This brings me to a moment of gratitude. To you, Martin, I want to express our deep and heartfelt thank you for an incredible run together over the last 13 years. You have been one of our closest partners on this incredible journey. Together, we have built, challenged, debated, pushed and celebrated a true team. You have left an indelible mark as a strong leader in the last 5 years as CEO and CFO, who ensured we had the financial strength, operational rigor and clarity to make our dreams real. We are deeply grateful for your leadership, your friendship and your commitment. We wish you the very best for all your future endeavors, and we are pleased you will continue to support us all as an adviser into next year.

David and I are thrilled to continue to lead our incredibly talented global team at On in this next chapter serving as co-CEOs. The two of us built on together with our Co-Founder, Olivier from an idea into a business 16 years ago. setting the foundation for what you see today. We then led it through over a decade of hyperscaling and our IPO, after which we continue to work hands on as Executive Chairman in partnership with our senior leadership team, shaping On's premium vision and strategy, product and channel innovation as well as defining and building our growth engines across the business. It is in this spirit of continuity that David and I see it as an immense privilege to further help forge On's path in these new roles.

We're also very pleased to have Scott Maguire step into an expanded role as President and COO and to have welcomed our new CFO, Frank Sluis, at the beginning of this month. They both completed our broader leadership team of both long-serving executives and new additions as we continue our growth at global scale. So we're not changing direction. We follow the same strategy, the same values and the same conviction that have guided us over the past 16 years since we founded the business. Our strategic growth pillars, premium positioning and innovation-led approach remain the path forward. As co-CEOs, David and I will ensure our strategic intent is fully aligned with decisive execution as we continue to grow in size.

With that, I'm honored for one final time on this call to hand over to my great friend and partner, Martin, for the financial review.

Thank you so much, Caspar, and hello, everyone. Before I go into the financial review for the quarter, I want to take a moment to say how thankful I am for my time at On and for everything we have built together. I'm often asked, what is most underestimated about On? My answer is always the same, the team and our culture. The dedication, ambition and humility of the whole On team is extraordinary. And for that, I will always be grateful. It is the reason we have been able to dream so big, move so fast and keep raising the bar for what this brand and premium sportswear can become.

I also want to thank David, Caspar and Olivier for so many years of partnership, trust and friendship. I'm deeply grateful for the shared belief and commitment that have shaped this journey. While the timing feels right for me to move on, I could not be more proud to do so at the moment when the company is stronger than ever. Close to 5 years after our IPO, seeing our mission and vision translate into such incredible global success is nothing short of a dream. Those who know me well know that I will not miss the opportunity to say this in numbers. First, we have achieved significant top line growth. Since our IPO, we have more than quadrupled the business from CHF 725 million net sales in 2021 to more than CHF 3 billion this past year, with 15 of the 19 quarterly results as a public company being record quarters.

Second, our vision to be the most premium global sportswear brand has driven one of the highest gross profit margins in the industry, far surpassing even our own high expectations. We are building a company that sits on the apex of our industry when it comes to being premium. At our Investor Day in 2023, we set out a plan to consistently exceed 60% gross profit margin. With the outlook we are providing today, we now expect to deliver a gross profit margin approaching 65%. We have achieved this by staying true to who we are, committed to delivering high-quality products rooted in performance and design at full price and with the best consumer experience. We have provided the consumer with a new level of premium performance products, and they are trading up.

During this time, our average selling price has increased from around USD 145 to over USD 170. In tandem with this, our own digital and physical stores offer the best brand experience, allowing us to grow our D2C share from 38% to 42% and further expand the realized gross profit margin. And third, we have reinvested into the future growth of the brand while driving higher profitability and cash flows. On is a growth company. Our priority is to consistently invest into new pillars for future durable growth into the expansion of our addressable market and into our brand, while at the same time, driving efficiencies, economies of scale and ultimately, profitability and cash flow. In 2021, our adjusted EBITDA margin was 13.3%. In 2025, we achieved 18.8%, and we expect a further increase in 2026. Our strong gross profit margin and our operational leverage today allow us to invest into more growth opportunities simultaneously than ever before.

To summarize, our mission and our strategy are clear. In some segments of the premium sportswear market, we have already proven to be amongst the top 3 brands, but still have room to grow from a large base. In other market segments, we have just planted the seeds for massive growth in the near future. And we can do all of this relying on strong financials and most importantly, on an incredible team. These core pillars of our growth strategy are directly reflected in our first quarter results. Net sales reached a record CHF 831.9 million, well above CHF 1 billion if converted to U.S. dollar. Net sales grew a very strong 26.4% year-on-year at constant currency or 14.5% on a reported basis. More important than the total is the strength of each building block within our growth engine. We continue to deliver industry-leading performance in our established markets like North America and Central Europe. In these markets, we are seeing our toe-to-head strategy truly taking hold with apparel and sneakers acting as powerful new catalysts for growth.

Simultaneously, our newer geographic segments in Latin America and Asia Pacific, including China, are gaining significant share with constant currency growth exceeding 50%. This ensures that every pillar of our business is contributing to a more balanced, resilient global footprint, one that is perfectly positioned to compound our success over the coming years. Growth was once again led by our direct-to-consumer channel. Net sales reached CHF 322.3 million, growing 28.7% year-on-year at constant currency and 16.4% on a reported basis. What is most compelling is the brand momentum we see. Our digital and physical traffic is outstripping our revenue growth, meaning demand is ahead of our current conversion, a great sign of the potential we have for future quarters. This we see. Our digital and physical traffic is outstripping our revenue growth, meaning demand is ahead of our current conversion, a great sign of the potential we have for future quarters. This validates our investments to further broaden the conversation with newer communities to grow the premium market and ultimately to lay the foundation for long-term strong growth.

Within direct-to-consumer, our own stores continue to elevate the physical brand experience for our fans in key cities around the world. This allows us to deepen our brand presence in existing markets as well as to accelerate our growth in markets with fewer potential wholesale partners. We now have a growing number of stores in the second and third years of operations, including Miami, Milan and our first store in Tokyo. And we are thrilled to see continued meaningful same-store growth and improvement of key retail metrics across this group and beyond. This is an important signal as we continue to scale retail, and we look forward to opening stores in new cities for us, including Stockholm and Sydney in the coming months.

Wholesale also delivered strong growth, again, outperforming our expectations and validating our multichannel distribution strategy. For the first time in our history, quarterly net sales in the channel exceeded CHF 0.5 billion, reaching CHF 509.6 million. This corresponds to growth of 25.1% at constant currency and 13.3% on a reported basis. We continue to see great momentum with our global key accounts, including DICK'S Sporting Goods, Foot Locker and JD Sports. Even with these major partners, we are only present in around 50% of doors, giving us a meaningful multiyear runway for further openings while preserving the controlled nature of our expansion and premium quality of our distribution.

Looking across regions. The Americas reached CHF 450.7 million, a new quarterly record. At constant currency, net sales grew a strong 17.1%. Reported growth was 3.1%, reflecting significant foreign exchange headwinds. We are pleased with the continued increase in awareness and our maintained commitment to premium execution and full price sales. Overall awareness crossed the 30% mark for the first time, an important milestone. Our latest campaign with Zendaya, an outreach to younger and more lifestyle-oriented consumer has already generated over 20 million highly engaged views in the U.S. alone. Together, these prove our continued diversification of our customer base, setting the brand up for long-term success.

The strength of our strategy is also clear in Europe, Middle East and Africa. Net sales reached CHF 207.1 million, growing 25.6% at constant currency and 22.8% on a reported basis. This marks the sixth consecutive quarter of more than 25% constant currency growth in the region. The performance was again broad-based with more countries contributing to the growth. The U.K., a market with a strong taste-making sneaker community as well as engaged runner base showed strong momentum. Germany continued to sustain very healthy growth. The regional performance is even more impressive considering the current geopolitical situation in the Middle East, further evidence of the broad-based success and resilience of the region. Asia Pacific continued its rapid controlled expansion. Net sales reached CHF 174 million, growing 61.4% at constant currency and 44.4% on a reported basis. For the first time, the region exceeded 20% of our overall business. Growth remained balanced across subregions and channels.

Greater China grew well above the regional average. In addition, I would particularly like to highlight South Korea, where net sales more than tripled year-over-year. We grow our markets with conviction. After opening 2 mall-based stores in Seoul in Q4 last year, we opened our first stand-alone location in Hannam, one of the cities sought after and affluent shopping districts for consumers in their 20s and 30s. The store is already driving strong results, performing significantly ahead of expectations. Across product categories, it's inspiring to see how we further earn our place across more moments in our fans lives from toe to head. Net sales from shoes reached CHF 763.7 million, increasing 24% at constant currency and 12.2% on a reported basis. We are very happy to see the majority of growth continue to come from our blockbuster franchises while adding meaningful volumes from newer franchises.

The Cloudzone, for example, which launched in early 2025, grew by over 350% in volume from a low base. Performance running maintained excellent momentum, with a strong contribution from the Cloudmonster franchise. The positive feedback on Cloudmonster 3 and Cloudmonster Hybrid is evident in the financial performance, and we look forward to both gaining further momentum in Q2 and beyond. Outside of performance running, the Cloudtilt Remix further elevated the already exceptional performance of the Cloudtilt franchise, strengthening our position in a lifestyle context. Apparel continues to be an increasingly important entry point into the brand. Net sales reached CHF 55.3 million, growing 57.5% at constant currency and 45.1% on a reported basis. The value of customers acquired through apparel continues to strengthen, with successive improvements in cross-category purchase rates and time to repeat purchase. Growth was particularly strong in direct-to-consumer, with apparel contributing more than 10% of our D2C sales for the first time, proof that apparel is one great example for a new driver of growth.

Turning to profitability. As mentioned before, our premium market position not only allows us to drive continued strong top line growth, but to drive strong profitability as well. In Q1, this means a record gross profit and adjusted EBITDA margin. Despite significant investments into performance of our products, our ASP strength combined with new levels of operational excellence allowed us to deliver a further step change in gross profit margin despite the increasing headwind from higher U.S. tariffs. In the first quarter, gross profit margin reached 64.2%, up from 59.9% in the prior year period, an increase of more than 4 percentage points. This increase isn't a onetime peak. It is driven by the fundamentals of the brand and our business model, and we consider this new level as our new baseline for the year, as you will hear later from Caspar.

Economies of scale and operational efficiency are also visible within SG&A. Distribution expenses declined by 1 percentage point year-on-year to 10% of net sales, mainly driven by the ongoing automation of our global warehouses. G&A reached 16% of net sales, the lowest level in 2 years. We saw meaningful scale gains, more than offsetting the material foreign exchange headwinds from our Swiss franc heavy overhead cost base. As has always been our philosophy, we continue to reinvest efficiency gains selectively where we see the clearest long-term return. This quarter, that included incremental upper funnel, brand-building investments behind Zendaya, LightSpray innovation activations and media to reach other newer communities, helping us speak to new audience while strengthening our credibility as a pinnacle premium performance brand. This will remain our focus going forward.

The result was an adjusted EBITDA margin of 21%, up 450 basis points year-on-year and the second highest adjusted EBITDA margin in our history. While our highest margin in Q3 '25 was supported by some one-off effects. This quarter is an exceptional reflection of the underlying strength of our premium strategy in action.

Turning to the balance sheet. Capital expenditures were CHF 23.6 million, representing 2.8% of net sales, increasing from 1.7% recorded in prior year as we continue to invest in our stores and store expansion. Over the last years, we have invested a lot of time and resources to shorten our development time and to further improve our planning efficiency, both important backbones for our premium strategy, driving the higher inventory turns and improved stock health we see today. Our cash position remained stable compared to year-end, continuing to exceed CHF 1 billion.

Now my final thanks are to you, our investors and analyst community. I am extremely grateful for the thoughtful conversations and perspectives you have shared with us over the years. The positive ones, but especially the challenging ones have made us a better and stronger company. Thank you for your trust, your support and your ongoing partnership.

And with that, I'm very happy to formally introduce our new CFO, Frank, who will share some initial reflections. Frank is joining a company that is operating from a position of great strength. And I have total confidence in his ability to help David and Caspar build upon this momentum and lead on into its next era of global scale.

Thank you, Martin, and hello, everyone. It is a real privilege to join On at such an exciting moment in the company's journey. Although this is only my second week of officially in the role, I have already had the opportunity to spend a few weeks with teams across the business. I wanted to listen, learn and get close to the company quickly to understand the culture, strategy and the opportunities ahead.

One moment that really stayed with me was the recent Global Summit. Seeing teams from around the world come together with such energy, ambition and belief made very clear what makes On special and why I was so drawn to be part of it. This is a company with great culture, inspiring purpose and clarity of vision. Having seen the product pipeline, I'm struck by the level of innovation and ambition in this company and look forward with great confidence to the future.

Martin and the team have built an exceptional financial foundation. My focus is to build on that foundation to support On's long-term growth, preserve the premium economics of the brand and help the company scale with the same agility and entrepreneurial energy that has made it so successful. I'm especially looking forward to being a close business partner to David, Caspar, Olivier, Scott and the wider leadership team as we capture the opportunity ahead with ambition, discipline and a clear focus on long-term value creation. I also look forward to engaging with all of you in the financial community and continuing the strong dialogue that Martin and her team have built with such care over many, many years.

With that, I will hand it to Caspar for the outlook.

Thank you, Frank. We are so pleased to have you on board. As we looked for the right next financial leader for On, we were struck by your drive, your passion for the brand, your alignment with our values and your experience in global consumer companies operating at a far greater scale than we are today. And of course, running [ S3 ] Marathon also played a part. I know you will be a strong strategic partner to me, David, our Board and our entire leadership team.

Q1 was a clear proof point of our premium strategy in action, high-quality growth, record first quarter revenue and margins and continued investment into the areas that will define our next chapter, product innovation, brand awareness and relevance, retail and our communities. As we look ahead, our confidence is extremely high. In running, feedback on SURREAL, our upcoming Superfoam innovation launching with Cloudsurfer 3 has been excellent with exceptional demand also for the new Cloudrunner Max. In all regions, our partners are ordering with strong conviction. In R Specialty, in particular, order books are up over 25% year-over-year. LightSpray remains at the beginning of its commercial journey, but the early proof points with the LightSpray to Cloudmonster 3 Hyper give us strong conviction in its potential as a pinnacle innovation product for a broad consumer base. This month, we will also bring LightSpray into our ongoing collaboration with LOEWE, a powerful expression of how our most advanced performance technology can live at the highest end of premium design.

The recent Zendaya co-created apparel range launched alongside the Cloudnova Moon is driving very high engagement and strong sell-through. The response to the Cloudtilt Remix and early feedback on upcoming launches later this year, including the [ Cloud 99 ] give us even greater confidence that sneak communities will form an increasingly meaningful driver of reach, culture relevance and premium growth. In retail, we are scaling with discipline and increasing confidence. Our stores are true brand roads, bringing our product, communities and premium positioning to life in a way no other channel can. Apparel-led merchandising is elevating the consumer experience and contributing to exceptional store KPIs. Upcoming openings in San Francisco, Stockholm and Sao Paulo are strong examples of how we are bringing the brand closer to important communities in highly selective premium locations.

The pace of innovation in apparel is also accelerating. As part of our focus on building deeper relevance with her, we launched and are expanding SenseTec into our studio and training collections, bringing our feel nothing to feel everything experience to buttery soft smooth materials designed for movement. And we will build on this again for fall/winter with Formtech, a new fabric innovation that brings more sculpting and shaping into our Tides lineup.

Together, these proof points give us confidence even against an unpredictable macroeconomic backdrop to reiterate our constant currency net sales growth guidance for the year of at least 23%. Within that, we continue to expect D2C, APAC and apparel to outperform. True to our Swiss roots, we value continuity and reliability. Part of that approach is that our guidance philosophy remains unchanged. We are not pursuing growth at any cost. We are building premium, high-quality growth rooted in brand desirability, product innovation, channel discipline and the long-term value creation.

Based on current spot rates, this growth translates to reported net sales of CHF 3.5 billion. On gross margin, we now expect a full year level of at least 64.5%, materially ahead of 2025 despite the additional impact from tariffs. This is an exceptional level of profitability and one of the clearest proof points of the structural strength of our premium model and our excellence in operation. Importantly, this outlook assumes 20% incremental tariff rates from Vietnam and excludes any potential refunds. The strength of this gross profit allows us to invest into our biggest long-term opportunities, absorb external pressure and still expand profitability. We now expect an adjusted EBITDA margin in the range of 19.5% to 20%, meaningfully above our prior guidance.

With that, we're ready to take your questions. Operator, please open the line for Q&A.

[Operator Instructions] Your first question comes from the line of Aubrey Tianello of BNP Paribas.

First, thank you to Martin for all the help over the years. Question for Caspar and David. Can you share more about the division of responsibilities between the 2 of you going forward? And I know you've both been active throughout the years through On's journey. Could you maybe share more about some of the initiatives you've worked on over the years in your prior roles?

Thank you. Good to hear your voice. Look, this management transition is really in the spirit of continuity. So we've worked very closely for 13 years now. In the last year, we spent a lot of time together with Martin and the senior leadership team on developing the strategy that we're going to share with you in the Investor Day. And so nothing changes in how we approach the business, nothing changes in how we guide and nothing changes about the confidence that we have in the outlook. I just wanted to get that -- make that very clear on the call.

So when it comes to how we divide and conquer -- there are basically 2 levels on the strategic levels, we've been both driving some of the building blocks that we're now really seeing come to fruition, be it the retail expansion, being apparel, be it light spray. And there, we will continue the division of labor that we had before. When it comes to really operating together with the team, Frank, our new CFO, will report to both of us, and so will Scott as President and COO. So we'll be helping them executing the strategy with their teams.

Your next question comes from the line of Rick Patel of Raymond James.

Congratulations, Martin, on all your success, wishing you the best going forward here. I was hoping we can double-click on the trends in the U.S. business. Just given the geopolitical developments over the last -- since the last call, how should we think about demand quarter-to-date? And how have your expectations for this market changed for the rest of this year versus 3 months ago?

Very happy to give you some color. I will say -- start with the overall picture and then David will double down a bit on the D2C part of the Americas. Overall, we're extremely happy with what we're seeing in the U.S. We feel this is a very strong quarter for us. What's making us very optimistic is that for the first time in the U.S., awareness crossed the 30% threshold.

It also shows that we still have a long way to go in terms of growth. But what we're really seeing and what we're particularly excited about is that we're not just repeating our running customers, but we're actually reaching new audiences. And this quarter, we saw a really uptick in younger audiences, and we're skewing more female. We spoke on the call to the Zendaya collection. We saw the success that we're seeing with Cloudtilt and Cloudtilt Remix in Foot Locker and JD and other channels like that. So that -- we look at that as confirmation that we have growth pillars ahead there.

There's also no change in how we are going to build the Americas, the business in the Americas. So premium execution will always come first. When we look at wholesale, an area where I've always been very hands-on involved, even with our largest partners, we still have a lot of room to expand. We're only in about half of the doors, and we're further penetrating those stores and in the categories that we are, which is now a lot more than just running. We have a fantastic training business. We're starting to see real good traction with apparel. Tennis is interesting. And so -- and then, of course, the lifestyle side of that.

And then maybe I want to hand over to you, David, because you've been very closely involved with the D2C part of the Americas.

So we continue to be, on a global level, very, very excited about the D2C expansion. I mean, just a growth of 28.7% is even faster than our wholesale expansion. And we have been very consistent in saying that we want to increase D2C share by 100 to 200 basis points per year, and that also remains our expectation for the full year '26. Currently, we are at 38.7% in D2C share. So it's really exciting where we are.

And then when it comes to the individual channels, I think in e-commerce, we really see a very, very healthy growth. So that it's full price growth that we have a very, very strong demand. We feel that in a very disciplined way. And so you see that, of course, also reflected then in the margin profile that we communicated in the call and the new consumers based on the whole energy that Caspar mentioned around Zendaya and sneaker that's coming into that channel with high demand. Of course, also then in our retail channel, we see a lot of energy also behind apparel. The D2C channel as a whole cross now over to -- over 10% when it comes to apparel share. So you really see how the multidimensionality of the brand is building out and how apparel becomes a new entry point for the brand.

So a lot of these young consumers that are coming into our e-com that are coming to our stores are actually apparel first consumers, which is amazing, and we're sure that they're going to expand to footwear as well. So it builds that out. So we are truly very excited about how this expands.

Maybe adding a few more points from my side and obviously [indiscernible]. Thanks for your feedback. I think it's always important to understand that we manage to the growth on a global level. And I think we have demonstrated in Q1 the quality of the growth that we have achieved that is driven by established and new markets by established end new product categories and then established end new communities. And we will see those newer market segments grow in size and drive a bigger share of the growth going forward. And at the same time, you heard it on the call. I mean, we bring our most exciting and innovative product pipeline to the market, and this is expected to drive strong growth in all parts of the world. And then, of course, we have a couple of areas where one is not present today, and we can dream about this.

And -- so of course, if we also look into the guidance, if we see an opportunity to drive more sales and more growth, then we will do this, but always if it's in line with our premium strategy and the premium delivery and adding to the D2C insights from David, so what is embedded in our guidance is basically the same strong D2C growth rate that we have seen in the first quarter for the rest of the year. And I think this underlines momentum and the continued demand that we expect for the brand.

Your next question comes from the line of Jay Sole of UBS.

Great. Cas, my question is for you. You mentioned that the company is not about pursuing growth at any cost, and you've said that for since even before the IPO. But with the management change, I think people are wondering if you're really truly still committed to being premium. And the question is what keeps the company able to resist the temptation to drive more sales growth by lowering prices or to do something that maybe would reduce brand equity and maybe impact the long-term brand equity and the ability to come in to grow strong over the long term?

Thank you, Jay, for giving me the opportunity to share our view on that. Look, our dream is to build a company that's completely different from anything that exists. So we're charging our own course. And so from day 1, we never dreamed of building the largest company, where we dreamed of building the most desirable most beautiful, most sustainable, most performant most emotive company. And with that also, and I think the results this quarter show that our ambition also the most profitable. And so that will always come first. we're truly inspired by the platform that we have to continue building something that hopefully, when we look back in 10 years' time, people say they have changed the game of what the sportswear -- sportswear brand can be. That's really what motivates not share size at any cost.

And if I can probably add to that, Jay, I think just if you see what we have built out as really future growth pillars for the brand from not just footwear, but now to apparel as well as the global footprint, how we're building performance and innovation, but how we expand that to lifestyle as well. The channel mix and how you're opening stores on a global level, there are so many growth trajectories that we have that we definitely can do that in a very, very premium way. And you see that from product to stores to apparel. So we feel there is the defining decade actually ahead of us to build this very, very premium brand.

Your next question comes from the line of Jonathan Komp of Baird.

Caspar, David, I want to follow up. Are you willing to share a little bit more about your vision as you think forward to the 2030 road map. I know it's come up on the call. You've highlighted an opportunity that really scale the brand with premium positioning here. But any further thoughts as you think about the road map that you see out in the future here.

Thank you, Jon. Look, it's really about continuity. So we have a business that works extremely well. We have the growth drivers. We have the profitability drivers. We have, over time, always seeded new stuff and new potential growth drivers. Many of them, you're very, very aware of, like apparel, like on retail, that we've spoken about. We see a very interesting emerging sneaker business. We invite you all to come to Zurich in the last week of September to join us where we're going to present the new 2030 vision and plan. And we have a couple of surprises in stock for you. that hopefully will convince you all that on is a growth story and a profitability story for the long run.

Great. Certainly, we'll look forward to that. If I could ask one follow-up, just specific to the quarter. The marketing expense looked like a pretty significant investment this quarter. You highlighted some of the reasons for that. Could you share a broader outlook, how we should think about marketing? And then as you think about efficiencies across the business, both from an expense standpoint, but also from a speed and innovation standpoint, what can you share on that front?

John, Martin here. So I think this is an important part of the story and correlated to the growth. So in the end, what we have created is something like a loaded spring, we shared this on the call. So we have significantly increased our brand awareness and some of this awareness is still sitting outside of the premium market yet. And we see this in the fact that the traffic that comes to our direct channels and also to our wholesale partners, is much stronger than net sales growth. And we have proven over and over again in the past that we can win those additional customers that additional awareness into the premium segment and ultimately into our products by the innovation of our products, but also by the stories that we are telling.

And this is why we feel this is the right moment to invest into the brand and our strong gross profit margin gives us all the reasons to invest into the brand and to spin that flywheel faster. And therefore, we expect that our marketing expenses for the full year will be rather somewhere between 13% and 13.5%, that's baked into the guidance that you have seen.

And then I'm happy to speak to efficiencies. Of course, we're athlete. So we reserve the right to get better every day. And so Part of what you see in the gross profit margin is that we're starting to unlock efficiency of scale. And at the same time, I think you asked how we're driving speed in innovation now. Innovation design are actually 2 areas where we're starting to really see the impact of AI, where our teams have started to work with very sophisticated tools that allow a smaller team to come up with more options we can test them virtually and ultimately drive better results either for racing like we've seen with Hellen in London or to just benefit the overall consumer like this is our [indiscernible] platform that we will be launching in the fall.

Your next question comes from the line of Aneesha Sherman of Bernstein Research.

Let me add my best wishes to you, Martin. So looking at your 2026 guidance, it seems you're modeling a slight slowdown from Q1 into the second half. Can you give us an update on how you see the cadence shaping of cadence of growth shaping through the year? And I know you have some pricing tailwinds in H1 that go away midyear. Maybe you can remind us about what the other factors are shaping that cadence of growth? And then a quick follow-up on gross margin. You talked about the outperformance this quarter. There were some factors that you knew about the FX tailwind lapping your freight accruals. What were the unanticipated? I mean why did gross margin outperform even beyond your expectations this quarter? What was the surprise from?

Thanks, Aneesha. So as I shared before, what's embedded in our guidance is a continued very strong growth of our D2C channel, similar to the strong growth rate that we have now seen in the first quarter. So that implies a slower growth on wholesale compared to that strong growth in D2C, which basically ultimately leads to the continued share gain of our D2C business. We have a lot of innovation coming early '27. And so we want to be cautious that we start into that firework of innovation with clean inventory levels in our wholesale partners. And therefore, we put this into our guidance. But I said that the conviction on the D2C side supports the strong momentum that we are seeing.

Yes. And let me walk you through the gross margin profile. Very happy to do so. So obviously, on the top line, the innovation that we have, the premium strategy and the full price discipline ensures that we're selling issues at high prices and at full price. If you then go at the cost, we're really starting to see these measures that we've taken. A year ago, we started taking a year ago on the supply side take effect. So that's about 250 basis points of effect right there. The full price I spoke about, it's about 150 basis points. The FX tailwind is only about 100 basis points and then about 100 basis points from tariffs as well. So that's how the gross margin delta shapes up.

What's important to remember, as we have guided for the year, we considered the 64.5% as our new baseline as we continue to unlock further efficiencies of scale. And second, we're not just going to keep all their money to ourselves, but we're already today reinvesting in making the product better giving it more detail, making it more desirable, so we can continue to drive the innovation and desirability of the product.

Our last question comes from the line of Cristina Fernandez of Telsey Advisory Group.

I'll add my congratulations to Martin and best wishes in the future. I wanted to follow up on Aneesha's questions about the guidance. You maintained your constant currency sales guidance for the year at 23% based on what you see today or the order books for the fall/winter or -- I mean, is there anything -- do you see upside to their guidance? Or are there things like, for example, you mentioned an increasing promotional landscape that's making you kind of cautious about the remainder of the year?

Yes. Thank you. We feel that the 23% is the right aspiration for growth this year, given the quality of the growth that we are seeing. As I said, if we see an opportunity to go faster, we will go faster and we can go faster. We, of course, need to consider we have a change in leadership. We have a macroeconomic environment with a lot of moving pieces that's also embedded in here.

But as you heard, there's a lot of exciting product coming. We're in very early in the year, but 23% is a very strong growth rate if it comes at the quality and the full price discipline and the strong margin profile that we are currently delivering.

Thank you. That concludes our question and answer for today. Thank you so much, everyone, for attending today's call. You may now disconnect. Goodbye.

Thank you for standing by, and welcome to the On Holding AG Fourth Quarter and Full Year 2025 Results Conference Call. [Operator Instructions]

I'd now like to turn the call over to Liv Radlinger, Head of Investor Relations. You may begin.

Good afternoon, and good morning to our Investor Committee. Thank you for joining On 2025 Fourth Quarter Earnings Conference Call and Webcast.

With me today on the call are on Executive Co-Chairman and Co-Founder, David Allemann; and CEO and CFO, Martin Hoffmann. Before we begin, I will briefly remind everyone that today's call will contain forward-looking statements within the meaning of the federal securities laws. These forward-looking statements reflect our current expectations and beliefs only and are subject to certain risks and uncertainties that could cause actual results to differ materially.

Please refer to our 20-F filed with the SEC earlier this morning for a detailed discussion of such risks and uncertainties. We will further reference certain non-IFRS financial measures, such as adjusted EBITDA and adjusted EBITDA margin. These measures are not intended to be considered in isolation or as a substitute for the financial information presented in accordance with IFRS counting standards. Please refer to today's release for a reconciliation to the most comparable IFRS measures. We will begin with David followed by Martin leading through today's prepared remarks. After which, we are looking forward to opening the call for a Q&A session.

With that, I'm very happy to turn the call over to David.

Good morning, everyone, and a very warm welcome from now this time [ not ] as itself but the New York Stock Exchange. Standing here always brings me back to day where we rang the bell for our IPO almost 5 years ago. That moment was never just about becoming a public company. It was about sharing a dream that the brands built on innovation and design and human energy could grow into the most premium global sportswear brands. Looking at where we are today, I feel both proud and deeply grateful to the global communities who choose to move with us every day.

At the beginning of 2025, we set ambitious expectations for strong profitable growth. What followed went well beyond them. Demand for our brand accelerated faster than we had planned. And for the first time, sports brand On cleared the CHF 3 billion revenue hurdle in 2025. Sales grew 36% at constant currency, and we delivered our highest ever gross profit and adjusted EBITDA margins. For me, this outperformance is deeply meaningful because it shows our premium strategy is working. And our elevated offer is resonating with consumers even stronger than anticipated. In fact, we see an acceleration in key areas.

Let me zoom out as this acceleration happens on the backdrop of a profound societal shift. The traditional leisure class is giving way to the movement class. All signifier of wells, sedentary comfort and over consumption are being replaced by a desire for vitality. You see the shift in the declining sales of self-indulgent categories.

Today, status is an investment in the self. Health is the new wealth, longevity is the ultimate luxury. For this new ageless athlete, sportswear has shifted from utility to identity, capturing a massive share of their life and their spending power. The traditional volume-driven sportswear model is simply not built to capture this discerning consumer. This societal shift has blown the market wide open for new generational premium brands like On. So we have to ask, what does the movement as demand from us?

We see three defining answers driving our acceleration. First, relentless performance innovation. We don't just talk about innovation. We engineer it. In the past 5 years, we scaled our R&D team by 1,000%. Today, over 400 experts, sports scientists, robotic specialists and AI engineers operate out of our [ SREC ] labs. It's all about performance and feel for the movement class. In 2025, our engineers have made several industry-changing innovation breakthroughs. On labs in Zurich is home to the only advanced home competence center outside of Asia and thanks to this competitive advantage, we are the first brand, which is able to combine structural engineering with SuperFoams.

The immediate result is the upcoming Cloudsurfer 3, which is 15% lighter, 20% softer and provides 15% more energy push-offs.

Over the next couple of years, we will bring this technology to a wide range of On's everyday running shoes, making cutting-edge innovation accessible for many of our [ fabs ]. But our [ crown ] cool is light spread. We are completely rewriting the future of manufacturing by changing the very nature of how sure is constructed. We are no longer building upper. We are spraying the a robotic arm, spins a 1.5 kilometer continuous filament into a perfect fit upper in exactly 3 minutes. We took 200 assembly steps and reduced them to 1.

It generates 75% less CO2 and the entire shoe weighs just 170 grams, making one of the lightest elite super shoes ever to compete in Amerisol. The proof is on the podium, wearing the Cloudboom LightSpray, [indiscernible] didn't just win the marathon in New York in November. She shattered a 22-year-old course record. And now we scale. Last week, we opened our newest LightSpray facility in Busan, South Korea, increasing our production capacity 30-fold compared to 2025. And later this month, we will scale this elite record-breaking technology to everyday runners everywhere with the launch of the Lightspray Cloud Monster 3 Hyper.

Second, premium inspiration. For the movement class movement isn't just a work out. It's their identity. They are buying into a brand that intersects with fashion and the [ saga ]. We aren't following trends. We are co-creating culture. Take our collaboration with Loewe now we need fifth year. We just launched our [ a drop ] featuring the cloud solar at USD 750.

The consistent and strong demand we see at this premium price point is a profound validation of our premium pricing power. The global energy is electric. At Paris Fashion Week, our high-fashion collaboration sorted with younger consumers from APAC to [ Lonza ]. We are pushing the boundaries of what sportswear can be, like our highly sought after ballerina shoe with [ FX ] and the ultimate cultural catalyst is Zendaya. We are shifting from a partnership to true growth creation leading to our first fully co-created collection for Spring/Summer '26.

Expects an important moment from On's Zendaya and an Academy Award-winning director, very soon. Here is what matters to our long-term success. This culture heat translates into undeniable revenue. We opened 18 new stores this past year. You see it in the queues outside our doors. The proof is in the hard numbers. Tokyo Giza became a top 10 global store despite only opening in September. Sale rocketed into the top 10 in [ just ] months. Our retail footprint will scale to close to 20 countries in the next few months. It proves that when you interact clinical innovation with cultural relevance, the commercial results are extraordinary.

A premium brand doesn't stop at the physical product. It defines the entire experience. That's why we are applying our Swiss engineering directly to our digital ecosystem. We recently deployed a conversational AI layer across our customer service platforms. This isn't about processing returns. It's about having deep, personalized conversations with our community at a massive scale. But this is just step one. We are building the digital engine for our future. Over the next few years, you are going to see this AI blueprint transform how we operate. It will elevate our premium experience and drive efficiency. From the moment we design a shoe to how we run our global supply chain.

Third, a complete expression of the brand from toe to head. Performance footwear will always be our anchor. To truly serve this community, we are building a complete Sports Warehouse. And the breakthrough is happening right now. In 2025, our apparel business delivered an incredible 76% net sales growth at constant currency. Proving we can build a highly profitable multi-category business. We saw apparel share of sales clients across every single region and every single channel, driven primarily by our direct-to-consumer business.

Our foundation is running, but the movement class lives in our year long after [ Belron ] is over. They demand our performance in the [ Tim ], on the streets and across entirely new sports. We are capturing these everyday hours with female-focused innovations like our new [ Sentec ] fabric. [ Daltimates ] proof for this multi-category power, tennis. Demand across all our apparel business was outstanding last year and tennis was our fastest-growing category.

[ That ] was fueled by extraordinary moats on the court, like Egalet Winning in [ Nimble ] and [ Benchelttaking ] the Masters 1000 in Toronto, but it's also combined with our offcutstory telling. By bringing [ Burnaby ] into our Tennis Lifestyle brand, we are successfully redefining the court-size space for a younger demographic. And we are taking the same useful energy rate into the global paddle boom. In January, we brought On the youngest #1 in history, Arturo Coello. Arturo isn't just an athlete on our roster, he's a co-creator driving our pedal specific innovation. So what we have built courtside is a blueprint. Wherever sport and culture collide on a global stage, you can expect On to be there.

Let me be clear. We are not just building a better performance footwear company. We are building a lasting premium house for the movement class. Our premium growth strategy is working, and our global momentum is accelerating, and our foundation for the future is broader and stronger than ever.

With that, it is my great pleasure to hand the baton to our CEO, Martin to walk you through the numbers and the details of historic foundational year. Martin, please?

Thank you, David. I'm incredibly proud of what we achieved as a team in 2025. For the first time, uncrossed the CHF 3 billion net sales mark, a milestone that, in a single year matches our total sales from our first two full years as a public company combined. Growth reaccelerated. A 30% year-on-year growth rate on a reported basis and the 35.6% at constant currency proves that today, On is the best version of itself it has ever been.

Beyond the top line, our performance is anchored in operational health and power. We delivered a record gross profit margin of 62.8% and adjusted EBITDA margin of 18.8%, already exceeding our 2026 aspirations. Our cash flow generation strengthened further, lifting our cash position to more than CHF 1 billion. These results are the fuel for us to dream on bigger and bolder than ever before. What stands out to me is the power of our vision to be the most premium global sportswear brand, riding our own playbook, growing the addressable market for premium performance.

At the same time, this has created a powerful financial engine. Our premium positioning generates high gross margins, which we partially reinvest into product innovation, brand experience, and our culture and our team. which in turn fuels future growth and even greater profitability. Strengthening this position while remaining the most authentic brand and maintaining our defining operational excellence remains our northstar.

Because we are so clear on who we are and where we are going, we are able to take a huge step forward as an organization. We expanded our reach meaningfully with global awareness now approaching 30%, still leaving 70% untapped growth opportunity. We saw our communities responding. New fans are building full looks, basket sizes are growing, and crucially, customers are choosing on at full price across every region. At the same time, we became a more integrated and focused operator, strengthening operational backbone and elevating the platforms that support our long-term growth.

This process is visible in the broad-based strength we see across all regions and channels. Our D2C share increased globally to 41.8%, a rise of 110 basis points, reflecting our deepening direct connection with our fans. While maintaining strong momentum in the Americas, we saw a strategic acceleration across EMEA and APAC. The result is a more balanced regional distribution, providing a significantly broader base for our future expansion.

We ended the year with a global footprint of 67 retail stores, representing a net addition of 18 locations since the end of 2024. These premium brand hubs showcased our fullest assortment through an elevated aesthetic. Our focus on larger high-impact spaces with 2025 store openings, nearly 40% bigger than our existing estate is yielding exceptional results. Despite the relatively early stage of our retail rollout, these more experiential formats are driving further gains in our market-leading sales productivity, which increased by around 20% during the year.

The resonance is evident across categories, with apparel and accessories now contributing 15% of our total retail net sales with many flagship stores achieving an even higher share. Complementing this direct footprint, our select franchise and distributor partners operate 45 monobrand stores within our wholesale business. With its superior margin profile and the highest average item value across all channels, our retail network has solidified its position as a strategic cornerstone of our premium growth strategy. Multi category expansion remains a standout driver of our performance, too.

On a constant currency basis, apparel grew by 75.5% and accessories by 135.1%. Today, they now represent 7% of our total net sales, a meaningful increase of 190 basis points year-over-year. With the majority of these sales, in excess of 60% flowing through our high-margin D2C channels, this category growth is structurally improving our premium mix and overall business profitability. [ This ] is only possible through the passion and dedication of our nearly 4,000 team members globally. Our [ counters ], partners, ambassadors athletes, and our fans. Thank you all so much.

On a personal note, this was my first year as sole CEO. Spending time with our teams and communities has only deepened my belief in our unique combination of ambition and humility. I'm deeply grateful to our finance team for their support during this transition, and I'm incredibly excited to welcome Frank Sluis as our new CFO in May. Frank's global experience and shared values, making the perfect partner to help elevate on to the next level as we continue to chart our own course.

Our Q4 results are a direct reflection of the strong momentum of the On brand globally. The final month of the year [ was ] a true reflection of the work done in the preceding quarters. We held our discipline and our commitment to premium execution across all regions. Even during Black Friday and Cyber Monday, new customer acquisition was led by full price purchases. Despite being less promotional, we outperformed our growth expectations.

Net sales reached CHF 743.8 million, increasing 22.6% year-on-year and 30.6% at constant currency, significantly ahead of our updated guidance in November. Our direct-to-consumer channel delivered another outstanding quarter. Net sales reached CHF 360.6 million, growing 21.7% reported and 3% constant currency, an impressive result on top of a very demanding prior year comparison. Our globally coordinated holiday campaign amplified brand heat, attracted new customers and drove high repeat engagement, while disciplined full price execution was clearly visible across all regions.

Our retail network continues to express the brand at its highest standards. During the quarter, recent openings, including Tokyo [ Ginza ], Madrid, Stanford and our two sole locations, performed strongly, with many exceeding expectations and ranking among the top-performing locations in our store network. Across the existing fleet, productivity rose further even as the network expanded with particularly strong performances from stores in Paris, Miami and Hong Kong. This sustained productivity growth reflects both the strength and the scalability of our retail strategy.

Wholesale also delivered exceptional results, outperforming our expectations, driven by strong sell-through numbers and sustained demand from key accounts in the Americas and EMEA together with strong momentum across our distribution markets in Southeast Asia, net sales reached CHF 383.2 million, increasing 23.4% year-on-year and 31.2% at a constant currency. Looking across regions. The Americas delivered net sales of CHF 434.3 million, growing 12.8% reported and 21.3% at constant currency. Close to 50% of net sales were driven by our D2C channels. Even during the most promotional period of the year, our full price execution held firm and demand remains strong.

Within D2C, we saw particular strength in our core running franchises, which grew their share of sales by over 5 percentage points. Our performance in D2C was complemented by exceptional demand across wholesale, where our key account partners are leaning further into the brand. Expanding space, elevating presentation and driving strong sell-through. Europe, Middle East and Africa maintained excellent trajectory with net sales which [ in ] CHF 183 million, increasing 24.2% year-on-year and 27.5% at constant currency. Growth was brought across markets and channels.

Momentum in the German-speaking region built further into year-end, the U.K. remained very strong across all channels, and Southern Europe continued to scale rapidly. The opening of our first store with a distributor partner in Rehard in November marked an important milestone and is already driving incredible strong consumer response. Asia Pacific delivered another exceptional quarter. First of solidifying its role as a key growth driver for the brand. Net sales reached CHF 126.5 million increasing 70.8% reported and 85.1% at constant currency. We continue to see deep resonance and incredibly high demand across the entire region and in all channels. We saw outstanding results from our Double 11 execution in China. Ranking top 5 on Tmall for footwear over $140 in December.

This momentum carried into a very strong Chinese New Year performance. with in-store traffic in China more than doubling relative to our baseline. During the holiday, we saw our highest productivity globally in two of our Hong Kong stores, and a stellar performance in our recently opened Shenzhen flagship, our largest retail store in China. This location is capturing a high share of GenZ consumers and delivering an over 20% apparel share.

With Asia Pacific now suppressing the CHF 0.5 billion mark for the full year 2025, we are proving that scale and premium can and do go hand-in-hand. Across product categories, it is inspiring to see how we are earning our place across the full spectrum of our fans stay. And that's happening not just on their feet, but on their bodies as well. Net sales from shoes reached CHF 687.3 million. Increasing 20.8% reported and 28.8% at constant currency. Performance running maintains strong forward progress, supported by the Cloudsurfer franchise and the strong launch of the Cloudsurfer Max earlier in the year.

We continue to strengthen our connection with both dedicated [ and ] everyday runners in Q4. We across other verticals, franchises such as Cloud, Cloudtilt and the Roger also delivered excellent momentum. Apparel continues to become an increasingly important entry point into the brand. The share of new customers acquired through apparel grew from 6% to 10%. Net sales reached CHF 45.1 million, growing 38.3% reported and 46% at constant currency against a tough prior year comparative.

Growth was particularly pronounced in D2C, where [ par ] forward store concepts are delivering measurable improvements in key retail KPIs, including conversion. Performance running and training lead growth, supported by strong reception of new Court and courtside collections in performance tennis.

Turning to profitability. We delivered another outstanding gross margin, reaching a new Q4 high of 63.9%. That is up 180 basis points year-on-year. and materially ahead of our latest guidance. This result reflects our strategy at its best, an unwavering commitment to disciplined full price execution. Supported and strengthened by sustainable operating efficiencies. It's a powerful combination, alongside favorable foreign exchange dynamics allowed us to fully absorb external pressures like higher U.S. import tariffs and still expand our profitability, clear proof of the strength of our execution.

SG&A, excluding share-based compensation, was 50.9% of net sales, up 40 basis points year-on-year. This modest increase reflects the conscious and decisive choice. Our relentless focus on operational excellence is generating significant savings, particularly in distribution. We are strategically redeploying those savings to fuel our biggest growth drives. Our global retail expansion and brand building. This is a key tenet of our philosophy. Our growth is self-funding. It demonstrates our commitment to scaling with discipline by delivering strong top line and bottom line growth.

Moving to our balance sheet. Our commitment to disciplined, high-impact growth is clear. We continue to demonstrate remarkable capital efficiency. In Q4, capital expenditure was CHF 28.6 million representing 3.8% of net sales, up 50 basis points year-on-year, representing significant targeted investments in our retail expansion, innovative infrastructure and supply chain capabilities. Our year-end inventory stood at CHF 419.8 million. Net working capital improving to 18.9% of net sales. As in prior quarters, the underlying volume of products grew faster than the reported value due to the negative currency translation.

Volume growth is more in line with our sales expectations for 2026. We're also very pleased with the composition of our inventory across all channels putting us in a strong position ahead of our Q1 launches, Cloudrunners 3 and Cloudmonster 3. Driven by our strong profit and precise planning, we generated CHF 359.5 million operating cash flow in 2025 and ended the year with a milestone moment. Crossing the CHF 1 billion mark in cash. This is the strongest cash position in our history, providing us with the power and flexibility to continue investing into our future.

Now looking ahead, 2026 will be defined by our commitment to premium growth by exciting brand moments and a very strong pipeline rooted in innovation and performance. As I mentioned earlier, our vision is powered by a unique financial engine. Our strong brand momentum, combined with high gross profit margins, allow us to treat bigger, accelerate product innovations and reinvest into standout customer experiences and our culture while consistently delivering strong adjusted EBITDA growth.

David highlighted the [ pick ] projects that will reshape our industry. But I want to emphasize the operational groundwork behind them. Throughout 2025, our engineers and scientists laid the foundation for market first advances in technology. With the upcoming launch of the Cloudsurfer 3 in the second half of the year, we will introduce a world-first informed development. The combination of our unique CloudTec engineering with the new cereal phone delivers a step change in performance.

We are also innovating in how we manufacture at scale with the opening of our new LightSpray facility in South Korea last week. We increased our production capacity for this revolutionary technology. This moves LightSpray from a breakthrough concept to a meaningful commercial reality, starting with the Cloudmonster franchise. This trajectory of performance excellence is already visible in our recent launches and a strong start into 2026. The successful introduction of the Cloudrunners 3 in February reinforced our momentum.

Furthermore, prelaunch activations for the Cloudmonster 3, one of our largest franchises generated exceptional consumer engagement. For example, at the marathon in Tokyo, the strength of our now complete Fall/Winter '26 order book, which exceeded our expectations, reflects high partner confidence in our product pipeline now our long-term trajectory. Apparel remains central to this evolution. In 2026, we will deepen its performance credibility, bringing proprietary and innovative materials to more consumers and unlocking the women's opportunity through refined studio and training collections.

We will elevate our premium expression across all touch points. From higher productivity retail flagships to more immersive brand worlds within our key wholesale partnerships. This disciplined scaling ensures that our growth remains both brand accretive and highly profitable. All of this builds the foundation of our continued journey of sustainable growth as we enter the final year of our 3-year strategy. And it allows us to perform materially ahead of our 2026 growth and margin aspiration that we laid out almost 3 years ago at our Investor Day.

In 2026, we expect net sales to grow at least 23% at constant currency. It is important to recognize that this now factors in a significantly higher base following our Q4 results and therefore, represents a further elevation of our ambition. Reflecting the compounding strength of the own brand as we continue to grow at an exceptional rate. Our continued outperformance has fundamentally shifted our trajectory. Now implying a 3-year constant currency CAGR from 2023 to 2026 of at least 30.5%.

The opportunities ahead are compelling. Underpinned by the continued strength of demand we see across the entire business. We anticipate robust, high-quality growth to persist across all regions. Furthermore, our relentless innovation in footwear and apparel is engineered to drive an even more premium mix, leading to D2C outperforming wholesale. As part of this category expansion, we expect apparel to meaningfully outpace overall growth. This further elevation of our D2C share is a strategic catalyst. It allows us to expand our member base. and engage more directly with our fans, leveraging the unique opportunities created by our ongoing investments in technology.

By fostering deeper connections, we are positioned to achieve increased engagement, significantly higher repurchase rates and ultimately, stronger customer lifetime values. As we grow, we remain intentional about every step forward, ensuring we build a lasting premium community. We are navigating an exceptional currency environment. At current spot rates, we anticipate of a reported net sales target of at least CHF 3.44 billion. These foreign exchange fluctuations do not affect the underlying health or strength of our business. Alongside the raise of our '23 to '26 top line CAGR, we expect the full year gross margin of at least 63% above our 2025 results despite the additional impact from tariffs.

The sustain desirability of our brand. The continued expansion of our premium full price offer, cumulative benefits of our operational efficiencies and an ongoing shift towards our D2C channel. Alongside some foreign exchange tailwinds are expected to drive new highs to our margin. As outlined in our last call, the combination of strong net sales growth and exceptional gross profit generation allows us to accomplish three strategic objectives simultaneously.

Offset material foreign exchange headwinds on our Swiss franc heavy cost base, accelerate targeted investments into our brand, technology and innovation pipeline, and elevate our profitability outlook for the year. We now expect an adjusted EBITDA margin in the range of 18.5% to 19%, significantly beyond the 18% target set at our Investor Day in 2023. We are confident that when we look back at 2026 in a year from now, we will be able to share that we have built the foundation for something much bigger through our relentless innovations, incredible products, unique brand moments, but most importantly, through an even larger and more powerful team.

With that, thank you to our investment community for your continued trust and partnership over the past year and as we look to the horizon. Operator, we are now ready to open the line for Q&A.

[Operator Instructions] Your first question today comes from the line of Jonathan Komp from Baird.

Yes. Martin, could you talk a little bit more about your expectations for growth across regions at a high level for 2026? And maybe more specifically, when you look at North America, what are some of the key drivers that stand out to you? And how are your partners accepting some of the new innovation as they build out their assortments?

The on-prem is extremely hot in every part of the world. And I think if we look into 2026, our we have clearly the strongest product pipeline in terms of innovation and performance that we ever had. We will redefine how running shoe performs and fields, LightSpray is not just a manufacturing revolution. It's a revolution on really how upper materials allow us to provide a new sensation for runners in terms of lightness and feel.

With the Cloudmonster and the Cloudrunner, we are relaunching two of our three most important franchises in the category. You see the amazing success that we have with apparel as a growth engine on an ever-growing base. And then when it comes to our premium position, we are so clear that where we are and where we are going and how we are charting our own way. And this is a global story. This is the momentum that we have all around the world. And as a result, we are seeing a much broader demographic coming into the brand.

The growth with the 15 to 35 is the strongest across all the demographics. And so we expect very strong growth rates in each of the regions. And as we said, we expect a stronger growth rate in our D2C channel, given the innovation investments that we also made in technology, our expansion of own retail. And we had a good start into the year across all the different regions. We expect that the first half of the year is growing slightly higher than the full year. We leave him some cautioning for the second half of the year.

We indicated that we have a very strong order book, which puts us in a good position also for the second half to deliver additional growth. So I think the momentum that you have seen in our numbers in '25 and especially also in Q4, just reflects the momentum of the brand.

And Jon, this is David. I believe you have been at our CRE at the running event in San Antonio and have seen all the behind-the-scenes innovation that is coming, so we're really also extremely excited how the run specialty community is reacting to that. I think they voted us the most innovative memorable booth at CRE. And that probably speaks to the excitement and you already see how we're winning share in running, and this will continue with all the exciting innovation that comes from us in CloudTec also in SuperFoams and, of course, in [ upper ] and the whole manufacturing revolution in LightSpray.

Your next question comes from the line of Janine Stichter Sticker from BTIG.

Just on the wholesale distribution, I think you said that you're in 40% to 50% of your major wholesale doors with our U.S. partners. Wondering how you're thinking about expanding that this year. Do you see the opportunity to add more doors? Or is it more shelf spacing category driven? And then just broadly, if you could give us some insights as to how you're planning global door expansion this year.

Yes. I think the important way to look at this is we still have 50% opportunity to expand in basically all of the key accounts all around the world. And we are so laser focused on growing our brand in a very premium in a very durable, long-standing way. And at the same time, the opportunity is right there. We could grow at a higher pace. But we are fully committed to that elevating that customer experience also driving a higher share of [ parcels ] in our key accounts.

And if we look further out, there are many opportunities to expand our product portfolio to then drive additional growth even on a same-store base in the stores that we are in. And while wholesale remains an incredibly important partner, as I said, we expect that our D2C channel continues to outgrow our wholesale channel, allowing us to just deepen the direct relationship with our consumers, and at the same time, really showcasing the brand in a more premium way to elevate our premium assortment, reach new price points, like David alluded to the Cloud [ solo ] and the Loewe collection. So I think really, what we are what we are doing with the brand and direction where we are going, will allow us to grow comp stores, expand in new stores, and then drive incremental D2C share into the rent.

Your next question comes from the line of Anna Andreeva from Piper Sandler.

You mentioned coming into '26 in a position of strength and pipeline of innovation of the best you've ever seen. Should we think strong momentum from the holiday is continuing so far into '26? Just a little bit of color on that. And with the expectation for DTC to outperform wholesale again in '26, just curious, can you talk about what kind of growth did you see in your database in '25? And any color on the new customer adds, specifically with the younger consumer?

So probably just kind of talking to D2C and retail extension. It's fantastic to see how our brand becomes really super multidimensional across regions, across channels, across product. And retail is a super important factor in that because as the most premium global sports brand that we want to be, it's about really serving our consumer, this movement class that I have been speaking about in a very premium way.

We can do that in our D2C channel. We can especially also do it in our retail channels that gives us the opportunity to present our product in the most exciting way. And so if you're seeing how we are presenting apparel in a very, very exciting way to consumers, you also understand why this becomes a very important entry point, especially also for our young consumer. Also when it comes to basket ads, [ often ], it's the fastest way how consumers add additional items in apparel in our D2C channel. And of course, the way how you can experience TriTech, [ SenseTask ] but then also all the new innovation in our product footwear is very, very exciting in retail.

And this development goes hand-in-hand with being more attractive to also a younger consumer group. And again, this is not a replacement, it's an additional consumer group that comes into the brand. And at the same time, we know there's still a huge untapped opportunity also with the younger male consumer that we are clearly going after in the near-term future.

But, I mean, we expect the next drop of our co-created power products with Zendaya in 2 months from now. Clearly, those are products that very strongly resonate with the younger [ a ] consumer Cloudsurfer server. Those are products that skewing much stronger to the younger consumer. So this is an important pillar of growth and at the same time, as I said, with all the innovation that comes in the running space. We clearly expect an acceleration of winning share on the key running rounds all around the world.

Our next question comes from the line of Thierry Cota from Bank of America.

Three questions for me. First, do you confirm that you will organize a CMD in the second half? And if yes, what do you think are the key investor questions that you want to address in the CMD.

Secondly, you expect a 10-point slowdown, if I'm not wrong, of the organic growth rate for the group this year, it's pretty large. Can you tell us what regions and what categories do you expect will drive this drop?

And lastly, on the LightSpray product, you highlighted how much [ sat ] production capacity you're going to have this year with the South Korean opening. Can you give us an idea of the percentage of volume that will be under LightSpray in '26 and in '27, approximately, please.

Yes. So just on the Investor Day, we clearly will do an Investor Day to outline our big aspirations that we have for the years to come. We are currently looking into the dates. We are -- we're trending a bit more towards the first quarter of next year. Also given that Frank is just starting as the new CFO, and I think it would be important to develop that journey together. So at the moment, we expect it more to be in early next year. David, do you want to talk a bit about LightSpray?

I mean, LightSpray is fast developing. I mean, 2024 was when we had proof of concept, [indiscernible] winning the Boston Marathon 2025 is when we really expanded with our athlete community, the Cloudboom Strike LS has been at the feed winning gold metals, world champion titles as [indiscernible] the New York Marathon.

Now this is clearly the year very scaling. You've seen how we opened the Busan LightSpray Factory. That gives us a trifold increase in terms of capacity. So going from thousands of shoes to hundred thousands of shoes, and so it really leads to the democratization of this technology. Now also with the Cloudmonster 3 LightSpray coming along, so it's really broadening out. So this is not just a product for athletes, this is really a product for the right market. And we've just seen how the Cloudboom Strike that we now made for the first time available to broader user base sold out in 2 weeks. So we're very, very positive about the momentum of this technology.

When it comes to the growth rate by region. As I said before, we expect strong momentum across all the different regions. Very clearly, Americas is our strongest -- largest region, and we will not be able to put out such a strong growth outlook without full confidence in that region. Asia-Pacific had an amazing run more than doubling quarter-over-quarter.

I think given the fact that this is now a CHF 500 million business, we also need to be realistic on the on the speed of growth and maintaining the premiumness of growth. So I think being more conscious on the growth rates here, it's just super important in the benefit of this multibillion opportunity that is there here for the years to come. And we are super excited about Europe because it's -- the momentum there from U.K. to Southern Europe, but also the accelerated momentum in Central Europe. I think is huge. So again, it's going to be a continuous story of strong growth across all the different regions and all product groups and channels.

I think probably a last point, Thierry, what's really important, we're building a brand not just for the next year but for the next decades. And so we see an incredible demand. You've just seen how our awareness just lifted from 20% to 30%. So really demand is incredible, but we're very, very disciplined in how we fill it in terms of which channels that we go, how we also pan [ of ] at stores, how we add to our digital community and how to also make sure that we build long-lasting franchises.

Your next question comes from the line of Cristina Fernández from Telsey Advisory Group.

I have two. I wanted to see if you could give more color on the 30% brand awareness, you mentioned the brand has gone to how it differs by region in customer demographic, if you can share those details. And two, on the gross margin, for the year, should we expect a higher gross margin in the first half of better strength, just given your comment on the sales growth being better earlier in the year?

I mean, awareness is just through the roof. Good thing is there's also sell 70% of people that don't know us. So -- and there's a lot of potential as well. Of course, we are seeing in specific hubs, we see even higher awareness. So this is kind of the -- this is the overall awareness number. But if you look at what we're going to build out this year with an incredible first co-created partnership with Zendaya and an academy winning director, doing that together with us with all the partnerships that continue with [ Roche ] with Loewe, so you can expect a lot of cultural relevance and heat that is continue to drive this awareness.

And then on the gross margin. So really the strength in the gross margin is fundamental, and we expect this to be very strong throughout the whole year. Of course, Q4 with the highest D2C share usually will see -- is expected to see also the strongest gross margin what really is a strength that is deeply embedded in the business and will positively benefit each quarter, of course, compared to last year, the strongest upsides are then in the first two quarters. And very important, the guidance that we have given, a 63% and more is still based on the tariff regime that we have seen before the Supreme Court ruling. So it's embedded on the on the 20%.

Now all our inventory, of course, is behind customs. So all customers change [ come ] in with a bit of a delay of 2, 3 months. But if we are now seeing that the 15% or 10% incremental tariffs are becoming the new norm. There's even upside to the guidance that we have given. And then there are also no refunds embedded into our guidance at the moment, also this would come incremental and would just give us so many more opportunities to accelerate some of the strategic projects for the future.

Your next question comes from the line of Aubrey Tianello from BNP Paribas.

I'd love to hear more about EBITDA margin and specifically, how we should be thinking about the distribution and G&A line items in your guidance for 2026, but also how these shoe items should develop longer term beyond this year, especially after seeing some really nice leverage there in 4Q.

I think we really see the incredible work that the operations and supply chain team is waiting there together with our partners, continue to automate our supply chain driving efficiencies. We have seen a huge improvement on the distribution line this year, and we expect that there's more upside in the future. And as we reiterated many times in the past, our focus is to drive incremental profitability in a very controlled way and to really reinvest into the brand, into building a much bigger business for the future while driving incremental profitability.

And I think if you look into Q4, you see how we -- how this is working out and the ability that we had to reinvest into bigger brand stories into our holiday campaign clearly is driving the strong momentum and then so the positive outlook. And we'll continue to do this. So really combining the strong profitability and increasing profitability with those reinvestments.

Our last question comes from the line of Jay Sole from UBS Financial.

David, my question is for you. You talked a lot about building a community on a global basis in multi-categories as well. Can you just talk about how you think about the total size of the addressable market that you're going after, given the community that you see, and also maybe what market share you think of that total addressable market today and where you can go?

And then maybe, Martin, just a follow-up on gross margin. You talked about some efficiencies that are going to be positive drivers of gross margin in fiscal '26. Can you outline what some of those efficiencies are? And that would be helpful.

Thank you for the question. Let me probably some out here a little bit. I spoke about the movement [indiscernible] that this is not just a trend, but it's really a societal shift. And we believe that investing in one sales in -- is becoming much more important, and we've seen that over the last 10, 15 years, and we've been part of that story. Even if you look outside of our market, how you invest in yourself when it comes to travel, when it comes to food, just look at hotel prices or restaurant prices in the U.S. and how this has been expanding 3x, 4x.

So we feel there's a complete white space opening beyond how you traditionally think about the sportswear market. This is where we're tapping into. This is a huge growth opportunity, and we are best positioned to actually fill this demand because we're not just about utility, but we're very much about identity. You see that in the margins. You see it in the willingness of people to invest in our innovation, to invest into the cultural element of On and now increasingly also to invest into toe to head so -- which is an additional growth opportunity for us, and you see the growth rates behind it.

And then to the gross profit margin. Really, fundamental driver here is our premium position and with that, the pricing power that we have. We were able to increase the average selling price of our products quite substantially. And this is not driven by price increases, but it's driven by the mix and the ability to basically bring the customer into higher price points.

Well, which links to the opportunity that David just mentioned. Besides that, I mean, you see that our inventory position is very strong, so we can fully focus on full price sales. We made huge steps forward in planning our business, reducing the share of airfreight. And we are still scaling. We're scaling with our factories, which also gives us additional opportunities there to have a wider spread between purchase and selling price.

And this concludes today's conference call. Thank you for joining. You may now disconnect.

Okay. We're going to kick off. Hi, everyone. My name is Aneesha Sherman. I cover sportswear, apparel and Soft Wins retail at Bernstein. And I'm delighted to have this conversation with Martin Hoffmann, CEO and CFO of On. Morning, Martin.

Good morning.

Before we kick off, we're going to see a short video, and then we're going to jump into the Q&A.

[Presentation]

Lot of cool products in that video. I'm eager to ask you a little bit more about the pipeline in 2026. But maybe to start with, one of the things that really stands out about the On brand relative to most of the other sportswear brands that you compete with is the premiumness. And this is something you're really passionate about. You recently described it as On super power. So let's start with that.

Maybe you can talk about what that actually means in terms of how you manage the business, the decisions you make. And then in particular, as you're scaling up this company, is there a point at which you reach a trade-off between premium positioning and scale? Are those at odds with one another?

Yes. Very happy. Hello, everyone. So the premium refers to the vision of the company, which is to be the most premium global Sportswear brand. And now premium is something we can talk a lot about as a brand, but ultimately, this is something that you experience as a customer. It's an emotion that you have -- as a customer or we as customers have towards a brand. So just think about brands that you perceive as premium, not as luxury, but as premium. And then -- and think about what this does for you.

So maybe you have a desire to have a product. Maybe once you have a product, it gives you certain identity, it elevates your identity. Maybe you think about amazing brand campaigns from those brands. And -- so our task is to curate this feeling with the customer. But what it really does, it really sets ourselves apart from the mass market where I feel today's world, there's a lot of competition there. And this allows us to actually charter our own path and not just fish in the same pond like everyone else.

Now the second piece of our vision is the vision of a growing company, of a growth company. And what we are doing and continue to do is to expand our addressable market. So ultimately, you can think about this, how can we bring more people into our products for a longer period of their day. And this has to do with growing our brand awareness, bringing products that are exciting with -- exciting for the customer, leading with innovation. And the premium recipe is something that we expand to or basically apply to all those communities that we want to be relevant with. And this starts with the product. It needs investing in the product, in the innovation, quality, into the design, into the sustainability. It's then about who are your brand ambassadors? Who speak about the brand? How do you distribute this? Discounting doesn't fit to a premium brand. Certain channels don't fit to the brand. Others do very well. And then ultimately, the margin power that you gain from this comes from the position, which is a strength and allows us to reinvest into the business and the team into the innovation.

So coming out of 2025, it's been a tough year for the sector. Many of your competitors have cut guidance, pulled guidance. You've had some remarkable performance. You've raised multiple times. You are now tracking ahead of your 2026 or you're tracking at your 2026 margin targets. You're on track to exceed your sales targets. Talk about what has driven this outsized growth of the brand relative to what you anticipated 3 years ago when you set these targets.

Yes. I mean you said targets and you have aspirations. And I think the beautiful thing really is that everything that we set out to do is working. And this gives us so much confidence. And it's linked back to what we were just talking about. The DNA of the brand has been there from the very beginning. This is what you do if you are a Swiss brand, you are building a premium brand. Switzerland is not really good in building a mass market brand. And -- so be it dominating in running. We brought amazing running franchises out with the Runner, the Surfer, the Monster. Our expansion in own retail works. Our expansion in apparel works. China became the second largest market for us. Asia Pacific is clearly outgrowing our expectations.

So everything is working, and this is the beauty where we are now that we can make a check on this. We can look at it and say, "Okay, what are the pieces that will carry us much further in the future and where do we need to add more things in the near term to continue the growth journey." But we do this out of very clear understanding who we are as a brand and what is the super power that we ultimately have.

And let's talk about holiday. So you sounded bullish into the holidays on your last earnings call. Can you give us an update on what the holiday performance was like? Any key takeaways? And how do you think the consumer is doing?

It's always important. If you are a premium brand, the holiday period is a moment in time in the year, and you are not existing the rest of the year just to perform in the holiday period. So this is super important. So for us, it is an important moment in terms of sales, but it's not a moment to buy sales. It's moment to stay true to who we are. So focus on full price sales. Don't discount in-line products. And we had an amazing holiday season last year. We spent even more work going into the holiday season this year to work with our retail partners, our wholesale partners to ensure that we have all the same mission going into the sales season. We are not discounting. We are promoting the right product. Ideally, we are promoting in a way that everything is additive. And in the end, you harvest in the holiday season what you see throughout the year. And I think we have done a lot of great work. Last year, we brought a lot of amazing products. And as a result, we also had a really good holiday season. And it gives us the confidence going now into '26. The brand is hot. Our full price share is very high. And so we are actually elevating even more on the premium side. And yes, it's a confirmation of the path that we have. Really all the channels did really well. Wholesale partners had a really strong sell-out and then also sell-in. But also on our own retail stores, it was like the first time that we really understood the holiday season as a holiday season. And we're activating our retail stores as well, which elevated that part of the business, so we are very happy. And I think it's always very interesting.

Many people think the holiday season is a very discount-driven season. If you look at our share of last season product versus in-season product, it's relatively stable throughout the year. It's not so much elevated during the holiday season. Even so, of course, Black Friday, Cyber Monday are big sales days for us, but with a lot of full price product.

That's interesting. And the in-season product is not discounted, right? It was not discounted through the holiday?

No, not discount, yes.

Okay. I want to jump into your core offering running. This has been a very controversial and competitive area recently. Can you remind us how important is the running category to On's business today? And then as you look at the competitive landscape, a lot of brands are trying to buy for this market share, what do you think about On's ability to continue to grow and gain share in the running category going forward?

We were born in running. And so we want to stay extremely relevant in running and our aspiration is still to be the leader in running. And we have built amazing franchises, the Cloudmonster, the Cloudsurfer, the Cloudrunner, two of them are updating this year in '26. So there's amazing innovation coming to the market. At the same time, we bring LightSpray. Now that's a product that really revolutionize running, but also how products are made. And we will launch the first product also on a more commercial platform that is relevant for an everyday runner like you and me as of March, and we will do this together with Run Specialty.

The other element is really -- what we are seeing at the moment is there's a lot of innovation happening around phones. And at TRE, we really showed our latest innovation to the market. And what no one else has done so far is being able to combine the super foams with engineering. And we have now brought our CloudTec technology into the age of super foams. And the first product that will have this is the Cloudsurfer 3, which will see a prelaunch in October, again, with Run Specialty because this is the channel that is creating the reputation for the product and the authenticity for the product. So it's a very important category for us.

At the same time, it's only a part of the business, right? We expand into many different sports. And then we always embrace that duality of performance and lifestyle and ultimately being a bigger part of your daily life. And -- but it's just the life insurance of the brand and that's how we look at this.

A lot of cool product coming out. For those of you who haven't seen this, you should watch the video of the LightSpray shoe being spun together by a robotic arm, very cool. So I want to talk about nonrunning as well, you alluded to. You've expanded into a number of other verticals the last couple of years. As you look at other categories, what are the characteristics you look for in terms of which categories to enter? And looking forward, where do you see the biggest growth opportunities for On beyond running?

So it always comes back to how can we expand the addressable market for On. And how can we relevant -- be relevant for more customers for a bigger part of their day. And we expanded from running into tennis, outdoor, training over the last years, which really made us relevant with a wider range of customers with new demographics. So take our entrance into training and the collaboration with [ Senda ] around this. This has led to a massive growth of our share that we are doing with the 18- to 35-year-old female customer.

Tennis makes apparel extremely visible, on-court, off-court. And our apparel business in the Tennis segment is the fastest-growing part of our apparel segment. And -- the sports that we find most attractive are the sports that live at its intersection of performance and life because we want to tap into both markets. And -- the areas where we are in provides a lot of opportunity for growth in the near-term future. And at the same time, I think we can all dream very big about what's still out there and a lot of sports where On is not yet present today. And those are all big opportunities for the future to make the brand much bigger, but also more relevant with an even wider customer group.

So I want to pick up on your point about being at the intersection of sports and lifestyle, it's a point that you've made before as well. Sometimes when we see this mix shift towards lifestyle, there's obviously increasing exposure to the fashion cycle, more volatility in sales and margins. We've seen other brands go down this path. How do you think about that risk for On?

I think we're extremely aware and I think there's a lot to learn from history. And this is why that focus on premium is so important because ultimately, this is how you avoid this by having the DNA of a premium brand very deep in your organization. And that's why I said before, the performance part is the life insurance of the brand. And you win in performance by bringing innovation and by really disrupting the market by getting the credibility for your products from people who wear the product at the highest level of competition or challenge the brand in the most fashion-forward way, for example. And at the same time, in today's world, I think it's just so blurry what is performance and what is lifestyle. And that's why I'm saying, in the end, it's life. It's our life and I think many of us can't define anymore. It's like, do I do sports now or do I move or I walk? And that's a nice thing about our category that is expanding so much in that fashion really becomes or sports becomes the new fashion. And that's where we want to be. And one has a unique opportunity to be standing out here from the -- from many other brands because of the design DNA that we have, the innovation DNA. And when we think about -- also when we think about our apparel business, we think much more about how can we elevate that performance that fit that nice comfort with just much more style than other brands are providing. And -- so I think it's a -- yes, it's just a big market opportunity, and we are very clear how we want to play in there.

What about the channel dynamics? Many of your competitors are going aggressively into wholesale. You've been very controlled about your wholesale growth. You're in very few retailers in the U.S., even within them, not in all doors. Can you talk about the balance of where you see the wholesale growth coming from? Is it new partners, new doors, same-store sales?

I think it's all of this. And again, we always need to start with the customer. One has a brand awareness between 25% to 30%, depending on the market that you're looking in. So 75% of the customers don't know us. So they also don't know us when they are in the store. By growing our brand awareness and growing then our relevance with those customers that don't know us yet or also with the customers that know us today, but don't really consider us as a buy, we are growing also the pull that our wholesale partners are experiencing from our brand. And at the same time, with our premium position, we allow to just convert more sales out of the volume that we are selling, which I think is very important in today's world where especially in the U.S. and parts of Europe, I think a lot of people already use sportswear for a big period of -- part of their day. And so maybe volume growth is more contained in the future, then the opportunity to grow basically the sales.

Okay. I'm going to ask you a CFO question because you do wear both hats. You have prioritized reinvesting into the business to drive growth. Can you talk about how you manage that toggle between growth and margins? And then as those reinvestments wind down, do you see a big margin opportunity looking forward for the brand?

When we look at margin, both gross profit and EBITDA, I think you need to look at two sides. There's one -- if you have high margin, it can be the results of two things that you are doing. So the one thing is you build an amazing business that can scale, that have economies of scale where you build a very healthy margin environment. And we want to do this, and we will make use of every opportunity that we have. On the other side, a high margin can be the result that you simply don't have any ideas anymore where you spend your money. And we have a lot of ideas, and we have a lot of big dreams. And I don't want to have too high margins because then we are not investing enough into the business. We are not following on our dreams.

So the philosophy that we had over the last years will be the same also in the future, we want to steadily increase our margin because it gives us the discipline to do the right things and not to do too many things at the same time. But we want to keep on investing into the brand. We want to be an exciting brand. We want to invest in marketing, and we have big dreams how to invest even more in bigger stories and bigger activations. We want to invest into the team because this is the team that needs to build the future. And ultimately, we are a growth company, and we want to continue to be a growth company.

And the same is true also on the product side. As a premium brand, you need to invest into your product. Otherwise, your customer at one point will see through this and will say, "Well, look, I pay much more, but you give me the same quality that I maybe get from other partners." So a high gross profit margin is not just the result of a good business, is also a risky position that you maybe put yourself in. So we also need to find the right balance. And especially in the running business, the customer is demanding innovation, is demanding investment into your product and we can do this while continuously driving higher margins.

Okay. Another one on margins. There's been a lot of speculation in the last couple of weeks about what might happen with U.S. tariffs. You have put in some mitigation moves this year, pricing, supply chain efficiencies. Do you view those as permanent structural changes that will stay on the P&L regardless of if tariffs get rolled back or not?

Yes. I mean, the nice thing of our premium position is that even before tariffs, we have done so many things right that created a much stronger margin profile that we started to show also in Q3, where we had 65% gross profit margin. So we are digesting the tariffs, and we don't need to basically cut down on our ability to invest in the growth, into marketing, into the people, we can continue to do this. Now if tariffs will be reduced, we have even more to spend, which is a good thing. And I feel also towards the customer the structural changes that have happened there, they will probably stay. At the same time, you can't overstretch the customer. So you also need to be always very careful with pricing and very -- cannot be driven out of a moment. It needs to follow a long-term strategy, which we are doing. But I think, ultimately, what we will see in our industry is a bigger push towards automation. And this is where LightSpray comes in again. Because we cannot rely for so much longer just on manual labor being cheap enough to basically run our business model. And I think we are lacking so much behind in our industry in terms of automating how we manufacture product compared to many other industries that maybe the tariffs are a good moment in time because it allows many brands to spend a lot of money into automating manufacturing, which I think is a good thing for the industry. It doesn't mean that then the manufacturing itself needs to happen in closer to home market, but it just makes us much more independent from all kinds of impacts in the world.

Okay. I think that's a good segue into my next question. So taking a step back, our business has doubled in the last 3 years...

[Audio Gap]

guidance is to grow over the 3-year period with 30% while having 20% -- 23% growth next year at least. And -- as we were talking about this in the beginning, we have a lot of confidence in how we can continue to grow the brand, and we want to continue to grow the brand. And we are already developing products now for '28. So we are very clear in the organization where we want to go on our plan for 2028. And how we are able to grow our addressable market. And that's what we are focusing on. And as said, the pillars of growth are very clear, and they will evolve and the next 5 years will not be a revolution but an evolution. But yes, with a brand that is hot globally and has a lot of momentum, which I think is super exciting for everyone to build.

Okay. So just to wrap up then, coming off this 3-year plan, where you're running ahead of your targets, you've had great operational performance. As you look ahead, what do you think the market is misunderstanding or underestimating most about the brand and about the business?

I don't know if the market is underestimating anything. But usually, what I think is underestimated in our industry is the importance of the people. And because product and the brand and everything that else around is the result of the team. And there is -- there are not many other assets that make this work. It's a team. And -- we are extremely proud of our culture of our team. Last year, we had 200,000 applications for like 600 hires that we did. So we're not only a strong consumer brand, but we're also a strong and attractive brand for talent. And I think this is -- it's another superpower that needs a lot of focus and that needs a lot of work to protect that. But ultimately, only with the right team, you can keep a brand momentum hot and strong, and I think we are very clear about that.

Okay. Martin, thank you so much for the time. This has been really informative. Thank you.

Good afternoon, and good morning to our investor community. Thank you for joining On 2025 Third Quarter Earnings Conference Call and Webcast. With me today on call are On's Executive Co-Chairman and Co-Founder; Caspar Coppetti; and CEO and CFO, Martin Hoffman.

Before we begin, I will briefly remind everyone that today's call will contain forward-looking statements within the meaning of the federal securities laws. These forward-looking statements reflect our current expectations and beliefs only and are subject to certain risks and uncertainties that could cause actual results to differ materially. Please refer to our annual report on Form 20-F for the 2024 fiscal year filed with the SEC on 4th of March 2025 for a detailed explanation of such risks and uncertainties.

We will further reference certain non-IFRS financial measures such as adjusted EBITDA and adjusted EBITDA margin. These measures are not intended to be considered in isolation or as a substitute for the financial information presented in accordance with IFRS accounting standards. Please refer to today's release for a reconciliation to the most comparable IFRS measures.

We will begin with Caspar followed by Martin, leading through today's prepared remarks, after which we are looking forward to opening to the call to a Q&A session. With that, I'm very happy to turn the call over to Caspar.

Thank you, and a very warm welcome, everyone, to our third quarter 2025 earnings call. It is great to be back on this call with all of you and to give you an update on On's global success, which is driven by the exceptional heat around the On brand, our product innovation pipeline and our accelerating profitability.

Today, we're thrilled to share another outstanding quarter for On. Our mission to ignite the human spirit through movement is resonating worldwide and across multiple categories. It is powered by an innovation engine that continues to unlock human potential and create champions on the world's biggest stages. This quarter's performance is the direct result of our premium strategy in action, delivering incredibly strong growth and record profitability.

Net sales in the quarter approached CHF 800 million, growing 24.9% year-over-year on a reported basis and by 34.5% at constant exchange rates. Through our commitment to premiumness, a commitment that runs from our products through our entire value chain and driven by our pursuit of operational excellence. We have also delivered exceptionally strong gross profit and adjusted EBITDA margins. Behind the results is a story of global momentum, how constant innovation, community building and culture relevance are coming together to elevate the On brand as the benchmark for performance and design in premium Sportswear. This success is exceptionally broad-based with significant growth contributions from across our portfolio, in performance and lifestyle footwear and apparel, proving the global appeal of our brand.

The spirit of On was everywhere this quarter. from the crowd lining up for the openings of our new stores in Tokyo, Palo Alto or Zurich to the thousands of people who came to see how LightSpray products are manufactured during Berlin Marathon. To athletes winning major titles across our entire portfolio of sports from track and field to trail running to triathlon and tennis, On strongly connected with audiences around the world. Of nowhere was this connection and energy fell more strongly than in Asia Pacific, our fastest-growing reach. The momentum there is extraordinary, was the fourth consecutive quarter of triple-digit constant currency growth.

In September, Tokyo became our showcase as the city hosted this year's World Athletics championships. On's new Ginza store is one of the crown tools in our retail collection and the world cams provides the perfect opportunity to Express On's innovation and ambition. [ Georgi Bemis, Ditashi Kambucci and Bella Vitiker ] claimed On's first-ever track and field gold medals. These successes matter. Consumers are increasingly watching how brands perform in competition. And On is exceptionally well positioned.

The On proof point for our advanced footwear technologies came 10 days ago when [ Helber ] [indiscernible] won the New York City Marathon against the stacked field of Olympic and world chains. Breaking the 22-year-old course record by almost 3 minutes. We're incredibly proud that she chose to race in the Cloudboom Strike LightSpray. This win clearly demonstrates that our newest technology is being trusted and adopted by the world's best athletes in the most iconic races. Pictures like these define what we mean by athletes-first versus innovation. Our strategy is clear. Technology is proven at the highest level of competition and then refined to deliver the best experience for every type of run.

This elite credibility flows directly to our core performance running franchises, Cloudsurfer, Cloudmonster and Cloudrunner. These are the engines that have won millions of fans and driven our significant sustained growth in the run category.

2025 has been a testament to this strategy. We successfully reenergized the Cloudsurfer franchise. First was the Cloudsurfer 2 in the spray and now with the new Cloudsurfer Max this summer. The commercial momentum is immediate and clear. The newly launched Cloudsurfer Max ranked among the top 5 selling models with key run specialty partners in its very first month. This sets the stage for 2026. We are already seeing a strong order book for the new Cloudrunner 3 and Cloudmonster 3, launching in Q1, while Fall/Winter '26, we'll see the launch of the new [indiscernible] Max showcasing a significant lead in engineering and foam innovations.

And on top of that, on most groundbreaking technology, LightSpray will help redefine the category and elevate our entire running assortment. In Spring/Summer '26, we will bring this championship level technology to everyday runners for the first time with the LightSpray Cloudmonster Hyper. This is our innovation process in action, continuously and obsessively making the best possible products that push the limits of performance.

Of course, On's mission goes far beyond running. We are witnessing a unique moment where performance and innovation are key drivers for fashion and the cultural side guys. On is uniquely positioned to both drive and benefit from this trend. This quarter, our collaboration with Zalando introduced the Cloudstone Moon lending on design innovation was refined expressive style. In tennis, our partnership with Roche Feder has already connected the sport to a much broader audience.

This quarter, we welcomed the music artist Burner boy to our tennis lifestyle brand, who is resonating strongly with the young demographic. These cultural moments are accelerating our connection and traction with Yum!, aspirational consumers, including teams cementing on as a global symbol of modern performance in style that resonates deeply with both her and him.

To summarize, as ever, On is carving its own path. Our premium strategy is working, and we are executing on our vision with precision and discipline. Our relentless focus on innovation has built a durable multidimensional growth engine, an engine that is built for the long run. Fueled by our accelerated global brand heat and awareness, the foundation for our next chapter of premium growth is stronger than ever.

With that, Martin will share more on our strategic and financial highlights in the quarter and our significant raised outlook for the year.

Thank you, Caspar. By staying true to our vision in executing this discipline, we are delivering remarkable, consistent success. This is expiring to experience. Whether on the road to track, the trail or the court, in the term or in the streets, whether on the feed or on the body, On has become a true toe-to-head partner in our customers' lives. That connection makes our entire team incredibly proud and grateful.

What sets us apart is our premium position. Our vision is and will remain to be the most premium global sportswear brand. Premium is an emotion formed in the minds of our sands. We earn it by consistently exceeding their expectations in the moments that matter. They know premium where they find it because they see it. This quarter, Tokyo protect vision to life. The atmosphere was electric. It was 3 years since my last visit and in that time, the team has more than doubled in size and even further elevated how we show up in this vital market. What I saw in Japan was the clearest expression yet of On's premium strategy, a brand that feels completely at home in a culture defined by craftsmanship, precision and design excellence.

At Harmony is perfectly captured in our new flagship store in Ginza. It opened a record demand, delivering the highest monthly sales across our entire retail set in October. The space embodies what premium means for On, performance elevated through design and delivered with care and consistency.

While Japan's set the tone, the broader Asia Pacific region demonstrated the sheer scale of what's possible. Across China, Korea and Southeast Asia, we are connecting with a new generation of younger deeply design conscious customers, proving the global appetite for On's premium performance approach. We saw this again in Bangkok, where our first store opened to the highest daily sales of any store opening in our history. The global demand is a direct result of our customer strategy. Our community is growing but also deepening becoming more diverse, more active and more connected across all our verticals.

While brand awareness is accelerating, the clearest metric of our success is loyalty. Engaged fans are returning at higher rates and crucially buying across more categories, embracing the full breadth of our product universe. [ Parallel ] is an important driver of this evolution. It's fundamentally reshaping how people view and enter our brand. It's becoming a key acquisition channel attracting a growing share of first-time customers by also building lasting value as apparel shoppers buy more frequently and with bigger baskets.

We are also seeing a clear shift towards younger customers in apparel highlighting a sizable and well-defined long-term opportunity. Importantly, we are not building apparel as an add-on to our footwear business, but as a company within the company. Serving the same communities, but with a unique product offering and customer experience. As a result, apparel is driving incremental high-value growth across all our channels.

Operating at this level with such broad-based strength sets an incredible high standard, and it requires flawless execution. This is where our focus on operational excellence and technology is delivering profound results. We are transforming the way we work. We have structurally reduced lead times and enhanced how we plan and run the business with intelligent tools powering our integrated planning. We are building a faster and more agile company that is a stronger partner for suppliers, retailers and consumers. More and more AI becomes a core component to how we operate across all areas of the business and engage with our fans.

All of this is deeply rooted in our culture of innovation and excellence, and it's the daily passion of our amazing team that makes all of this work. from the cheering zone at the Marathon in New York with a LightSpray innovation lab from case shows to the shop floors of front specialty partners. Their energy is what sets us apart. Thank you so much, team.

Our incredible brand momentum and precise execution continued through Q3, delivering another exceptional set of results. We achieved record net sales of CHF 794.4 million, growing 24.9% year-over-year on a reported basis and 34.5% at constant currency. This outstanding top line growth fueled record profitability. The gross profit margin of 65.7% and adjusted EBITDA margin of 22.6% and nearly 50% year-over-year adjusted EBITDA growth.

Our DTC channel once again delivered exceptional growth while driving superior profitability. Net sales reached CHF 314.7 million, an increase of 27.6% year-over-year on a reported basis and 37.5% at constant currency.

Our success is driven by strong synergies between our e-commerce and retail ecosystems. Omnichannel customers are more loyal and deliver materially higher lifetime value. Validating our seamless premium experience. This experience is proud to life in our flagship stores. A recent highlight for me was the opening of our new Zurich flagship. A celebration of our Swiss heritage in a stunning downtown location.

Alongside our new stores, our established fleet continues to excel. We saw standout contributions in Q3 from key locations, including [ Capstead ]in Tokyo, Miami and the Champs [indiscernible] in Paris, proving the productivity and longevity of our retail investments. Our brand strength is mirrored in our wholesale channel. Net sales reached CHF 479.6 million increasing by 23.3% year-over-year on a reported basis and by 32.5% at constant currency. This performance reflects sustained elevated demand from our key account partners.

The enthusiasm for our future pipeline is clear. The fall/winter 2026 sell-in has kicked off with ongoing strong momentum. And our building order book for 2026 already reflects our partner's deep confidence in our rentless innovation.

Turning to our regional development. In the Americas, net sales reached CHF 436.2 million growing 10.3% year-over-year on a reported basis and by 21% at constant currency. This quarter was a pivotal test of our premium strategy as our U.S. price increases came into effect. The results confirmed our view. Demand remained incredibly strong for our premium offerings, clear validation of our brand's pricing power and the impact of our full price strategy. This gives us tremendous confidence heading into the holiday season where our premium positioning and unwavering commitment to full price selling will be a significant competitive advantage.

Europe, Middle East and Africa delivered an outstanding quarter with net sales reaching CHF 213.3 million up 28.6% year-over-year on a reported basis and 33% at constant currency. Our performance highlights the breadth of the brand heat in the region. We are seeing exceptional demand in the U.K., which has firmly established itself as one of our largest global markets. Incredible momentum in newer markets like France and Italy, and the sustained reacceleration in growth across the German-speaking region.

Asia Pacific continues its phenomenal growth, delivering net sales of CHF 144.9 million, up 94.2% year-over-year on a reported basis at an incredible 109.2% at constant currency. APAC is now approaching 20% of our total sales. What was once a new frontier has become a major engine for the brand. The remarkable demand is broad-based. With continued triple-digit growth in Greater China, South Korea and Southeast Asia, amplifying the success we see in Japan.

This increasing regional balance is a core strength, a direct reflection of our global strategy and proof of our ability to drive high-quality growth across all markets.

Moving to performance by product. Both remain our core engine of growth. Net sales from this category reached CHF 731.3 million, an increase of 21.1% year-over-year on a reported basis and 30.4% at constant currency. This access confirms our expanding role in the lives of our sales across every part of their day.

In performance, the Cloudmonster continues to win new fans. And our latest innovations like the Cloudsurfer Max and Cloudboom Max are off to exceptional starts, driving strong results in key sporting goods and run specialty distribution.

Meanwhile in lifestyle, the Cloudtilt, Cloud and the Roger continued to see tremendous demand. This combination of elite performance products and the distinctive edge in the Lifestyle segment is what sets on a part. Our apparel category is rapidly establishing itself as a significant stand-alone growth pillar. Net sales reached CHF 50.1 million an increase of 86.9% year-over-year on a reported basis and an amazing 100.2% at constant currency. This performance was kept by a major operational milestone as we sold over 1 million apparel units in a single quarter for the first time.

This success is rooted in a global and multichannel expansion. With a meaningful and balanced increase in apparel share across all channels and regions.

Now we will move down the P&L. We delivered an outstanding 65.7% gross profit margin, up 510 basis points year-over-year. This result is materially ahead of our expectations. And reflects the power and momentum of our premium brand position. Yet, it is important to understand the components of this result, as it also includes some temporary and one-off factors that should not be extrapolated.

First, the quarter includes a positive onetime adjustment of approximately 200 basis points. This relates to lower-than-anticipated freight and other costs. Throughout half year 1, we saw these lower costs emerging, partly from successful negotiations and scale benefits, but we prudently continue to accrue at our higher prior levels.

Now in Q3, we have confirmed these efficiencies are sustainable and are updating our cost assumptions. This onetime adjustment therefore, represents the release of those accruals related to the first half of the year. Second, the timing lag between our U.S. price increases and the full impact of additional U.S. tariffs led to a slightly positive margin effect in Q3, which should be considered a temporary benefit. Third, the current devaluation of the U.S. dollar compared to the Swiss franc since early April, drives a positive gross profit margin impact of approximately 100 basis points.

Crucially, even after accounting for these effects, our underlying gross profit margin is significantly above our communicated long-term target. This is the result of the structural strength of our business and the great work of our team. Our increasing DTC share, our premium positioning, durable operational efficiencies and economies of scale. These structural effects are expected to be sustained are expected to be reflected in our future results. We also delivered an outstanding Q3 adjusted EBITDA margin of 22.6%, up 370 basis points year-over-year, corresponding to an absolute adjusted EBITDA of CHF 179.9 million.

SG&A, excluding share-based compensation, was 47.1% of net sales in Q3, up from 46% in the prior year. reflecting a deliberate decision to invest in future growth through marketing and our global retail expansion. Importantly, we are funding these strategic investments largely through our operational efficiencies. Our focus on excellence has structurally improved our distribution cost baseline, which continues to decline as a percentage of net sales. This demonstrates our flexibility to thoughtfully reinvest in high-return areas that fuel our long-term brand growth.

While the current FX environment positively impacted our gross profit margin, negatively impacted SG&A and ultimately, also our adjusted EBITDA margin.

Moving to our balance sheet. We continue to demonstrate exceptional capital efficiency. Capital expenditures were CHF 20.5 million or 2.6% of net sales, an improvement of 3% in the prior year. As of the end of Q3, our inventory stood at CHF 380.6 million. As in Q2, inventory volume grew faster than value. Ensuring we are fully prepared for Q4 by reflecting our new operational efficiencies.

The proof of this new efficiency is in the results. Our cash conversion cycle improved again year-over-year. This disciplined working capital management, combined with our strong operational performance, fueled substantial operating cash flow of CHF 157.3 million in Q3. As a result, our cash balance grew substantially, ending the quarter in an exceptional strong position at CHF 961.8 million. With that, let's look ahead.

The consistent success, our strategic focus and exceptional execution has delivered throughout the year, fuel our confidence to deliver a strong finish to the year. Our brand momentum is undeniable, and the first weeks of Q4 have already shown our strategic gains. Alongside major athlete victories, including [ Solvay lobes ], Ironman World Championship win in Kona and Jaana [indiscernible] becoming the youngest tennis champion at the Swiss indoors since 1989. We have created moments that continue to elevate the brand globally.

We launched the Cloud solo, our first ever co-created product with LOEWE and introduced a new capsule collection with Sky hike Farms standard around the Cloud VI. We entered the GCC market with the opening of our first store in Riyadh, Saudi Arabia, just yesterday and opened our first store in Seoul, securing a beautiful ultra-premium location in the Hyundai Mall.

We were thrilled with our performance during Golden Week in [ China ] and our global holiday campaign. Gifting movement is off to a great start, confirming our momentum as we head into the end of the year. This is how our vision comes to life. Winning in performance elevating our brand and showing up in a credible, consistent and aspirational way of our ever-expanding communities.

Therefore, we are raising our 2025 guidance across all 9 items. We now expect constant currency net sales to grow by 34% year-over-year, well ahead of our previous guidance of at least 31%.

At current spot rates, our constant currency growth guidance implies reported net sales reached CHF 2.98 billion. Alongside this top line raise. We now expect a gross profit margin of around 62.5%, a meaningful increase versus our previous guidance of 60.5% to 61%. As outlined before, this new ambition reflects our commitment to full price sales during the holiday season. Sustainable structural efficiencies rooted in our elevating premium positioning, economies of scale, and increasing DTC share as well as the current FX, tariffs and freight cost environment.

On adjusted EBITDA, the exceptional gross profit generation allows us to do three things at once. Absorb material foreign exchange headwinds on our more Swiss franc heavy cost base simultaneously accelerate strategic investments into our brand, technology and innovation pipeline and to raise our profitability forecast for the year.

We now expect an adjusted EBITDA margin of above 18%, a clear step up from our previous guidance of 17% to 17.5%.

Looking beyond 2025, the proven impact of our strategic building blocks and clarity of our long-term strategy provide us with the baseline for continued exceptional momentum. This is first supported by the strength of our product pipeline, validated by our existing order book, driving a trajectory well ahead of the targets outlined at our Investor Day in October 2023. As you will recall, we communicated our goal to top up net sales by 2026, implying a 26% net sales constant certainty growth CAGR over the 3 years.

We are on track to complete the first 2 full years of our 3-year plan with in excess of 33% constant currency growth each year. This sustained and material overachievement gives us the confidence and visibility to update our long-term outlook as we look ahead to the final year of our plan. We now expect a 3-year constant currency CAGR from 2023 to 2026 to reach at least 30%. This implies at least 23% growth in 2026. Based on our current outlook for 2025.

This isn't just about exceeding targets. It's a testament to the unparalleled momentum of our brand. the strength of our strategy and the incredible dedication of our entire team. We are not just meeting expectations. We are redefining what's possible in the sportswear market.

As we look at our midterm profitability ambition, the significantly higher gross profit margin achievement expected for this year provides us with a strong baseline and increased confidence in our ability to exceed our stated gross profit margin target for 2026 despite the full impact of tariffs next year.

Importantly, this allows us to continue to invest meaningfully into the brand, fueling our global momentum by driving even more progress around new technologies and AI. And ultimately, to build an even stronger foundation for continued growth in 2026 and beyond. In line with our established guidance cadence, we will provide a formal guidance update in March when we share our Q4 and full year results.

To summarize, we are thrilled with the continued strength of our brand. We head into the holiday season with high momentum and conviction in our plan, which allows us to look beyond the immediate horizon towards our next phase, where as we like to say, to 3 months. Again, a huge thank you to our teams around the world for their incredible execution and for making all of this possible.

And with that, Caspar and I are happy to take your questions.

[Operator Instructions] First question comes from the line of Paul Lejuez of Citi.

Curious if you could talk about the traction that you're seeing in apparel with any detail that you can give about regional acceptance of that product? And curious how it's performing in DTC versus wholesale accounts? And then just within your wholesale doors, you talk about 1% carry apparel? And any opportunity long term that you think? And when you think about the percent of accounts that carry our footwear, what percent ultimately will cover include apparel.

Thank you, Paul, for the question. We're very excited about the apparel performance. As you've heard on the call just now. We sold over 1 million items now in Q3 for the first time. And apparel excesses together account for about 8% of our total business. That's a new record, and we're well on track of hopefully getting quickly into the double digits there.

So traction is really strong. What drives this is we're really executing on all fronts. So on the distribution side, our own stores play a very important role because we need to be able to showcase the breadth and the beauty of this product. So if you've been to any of our newly opened flagship stores, you'll see that come to life. But we're also doing that, for example, at department stores, wherever we have shop-in-shops we usually lead with apparel, and it's a great way to tell the brand story.

As we break down a bit into which parts of apparel are seeing the most traction, happy to give you a bit of color there. We have an exceptional strong running, training and tennis business in apparel. And within running we clearly see that whenever we do something from the performance side, so we work with our athletes and we bring some of these latest material innovations to broader audiences that resonates very well.

In training. It's all about winning with [indiscernible]. And so the sweet spot there for on seems to be where we have light resistance works, so you had the gym or you're in a class and On brings performance innovation like [ Sensetech ] that we're rolling out now across the lines, but we're also bringing a bit more elevated aesthetic that resonates with our affluent customer.

And then, of course, tennis maybe category even a bit underestimated, just a tennis look whether it's actually the performance here or athlete to air and competition like [ Chovanec ] [indiscernible], the Brazilians are crazy about it. All the way to the lifestyle looks, and you've probably seen what we've done with [ Burna Boy ] just now bringing the tennis lifestyle to wider audiences. All these things resonate extremely well.

Over time, we will definitely attack in additional categories there, bringing it more to movement and stuff that can be worn every day, always with the performance and innovation core. And we also have a very strong jacket business that is mostly reflected in our outdoor and running collections.

Maybe just at a point here because I think it's very important for where we are taking our business model. We said it on the call that really the way we look at apparel as a company in the company and it follows a slightly different distribution model approach. It will be much more heavy, which doesn't mean we are not working with great wholesale partners, as Caspar just said, but retail will play a much stronger role in the physical presence of of apparel. And as a result, our apparel business is expected to drive also superior margin profile into the brand. So we are not only adding additional customers, but also additional profitability.

Your next question comes from the line of Jay Sole of UBS.

Great. My question is just is the growth was obviously very strong in the quarter. At the same time, the gross margin expanded a lot. And the same time your inventory looks very lead. Can you just talk about how you balance driving top line growth versus protecting margins, your premium position, maintaining that scarcity model and just delivering an algorithm, I think it's right for the brand for the long term. but also in a way that is -- allows the company to grow without having any operational issues.

I mean I think this is the result of the amazing work that the team is doing and that we pretty amplified capabilities in the organization across every part. And so we are really able to manage all the three areas that you mentioned in sync. I mean I think on the gross profit margin is just super important to understand that the premium business that we are building is the driver behind the gross profit margin.

And of course, building a premium business also requires incredible discipline in your inventory management in order to protect the high share of full price sales. So this is the essence of what we are building. And you have already seen the power of that business model coming to life in the last 2 years with our gross profit margin expanding constantly. And this has really been the result of the pricing power, the full price discipline, a more DTC focused channel mix, operational improvements and then also economies of scale.

And now in the last months, this has really amplified given the power of our team, our strong team that we have in Vietnam working with the factories. And so we have now really achieved a new level on gross profit margin that we also consider sustainable. And that's, I think, a great place to be given the environment around tariffs. So we are fully in control of our future. We will digest our -- the tariffs and still be well above our long-term target. And at the same time, we can reinvest into the business. We can invest into the brand into technology. But we are fully in control on pricing on doing the right things and also investing into the product. So this is the power of that premium position that we are building.

Your next question comes from the line of Alex Straton of Morgan Stanley.

Thanks so much for all the calls and nice results. Maybe just on the 2026 initial guidance, a 23% rate. Was that a constant currency number? And then can you just elaborate a little bit more on how you kind of get confidence there by region and channel I'm just curious if any geographies or channels or categories should decelerate more than others or what the kind of composition of how you're arriving there is?

Thanks for the question, Alex. Yes, it's a constant currency number. So also the 30% that we gave as a CAGR at a constant currency. I mean I think it's important and we had it in the script already to always be clear on what is our strategic aspiration. And this is to become the most premium global sportswear brand. And -- so the first focus of what we are building is to increase our addressable market. I mean about 75% of the people in our markets don't know about on. So increasing brand awareness, is a key first step. But we are not using a shot can approach to do this, but instead, we are extremely conscious about the different communities and customer groups we are targeting.

So if you take [ Burna Boy ] and Zalando, they speak to a Gen Z customer. If you take Helene [indiscernible] , she builds credibility with all kinds of runners. [indiscernible] Fonseca drives a hype in the brand in Brazil, and I could go on forever. But what is most important is that we are not fishing in the same pond as everyone else, instead, one is really expanding the market of sportswear because in the end, our products give our fans an identity that is really rooted in the innovation and the design that we are bringing to the product.

And so we are bringing fans into our shoes and into the apparel that have basically not used sneakers or performance-inspired apparel before. And so ultimately, we are becoming a bigger part of the life of our consumers. And I think it's very important that this strategy is to set ourselves apart from everyone else in the industry. And it also clearly defines on what we are doing as a next step going into '26 when it comes to products, channels and regions. So there's -- out of that strategy, it's very clear.

If you look on the product side, you can expect a firework of innovation. So we mentioned it on the call early next year, we will update two of our key franchises, the Cloudrunner, the Cloudmonster. Lightspray will become big and it will really revolutionize running. And then we still have a few surprises further down the road for next year. And then you already see the success of apparel and how this is really incremental to the business.

Then in retail, we are continuing to add about 20 to 25 stores on an annual basis as we have done this year. At the same time, we are heavily investing into our wholesale partners. So really, if you will experience on in the physical space in a year from now, it will look very elevated to where it is today. And all of this will drive strong growth in each of our region because that strategy will be working in each of our regions. And of course, we could not give such a strong outlook for next year if we would have doubts about the growth opportunity that we have in our largest regions, Americas. So this is fully embedded in there. And so I think this is the confidence and the strategy that is sitting behind the outlook and the strong increase that we have given on the 3-year plan.

Your next question comes from the line of John Kernan of TD Cowen.

This is [ Krista Zuber ] on for John. Just one on gross margin. You raised the fiscal '25 gross margin expectation it kind of implies a modest expansion for 4Q against your toughest year ago compare. Can you walk us through the various sort of tailwinds, headwinds that support the outlook into 4Q? And separately, I think in the release, you mentioned favorable product costing benefits in 3Q and kind of what is the long-term outlook for that line item. .

Yes. As I just said, I think it's super important to understand that a big part of the upside that we have seen in Q3 or the strong margin that we have seen is really based on the power of the business model that we have built, and we consider this to be long term. If we look into Q4, I think there is still upside in the margin. We put some prudence in here. And then going into next year, that sustained uplift will still be there. And it will help us to more than offset the additional impacts that are expected from the tariffs to come into the P&L.

And on top of that, we are benefiting from the current FX environment from the current freight environment. which will drive additional margin into the gross profit. But really, the important piece is that we have taken a big step above our target that we communicated by improving the business that we have built.

Your next question comes from the line of Sam Poser of William Trading.

Real quick. The -- you said at a conference that you said that the U.S. that you might tone down the U.S. growth, how much of what's going on right now of sort of with the really strong growth in APAC and EMEA. How should we think about the U.S.? And how much is that sort of more controlled growth. It sounds like you're going to do going forward reflected in the gross margin and the outlook for the gross margin?

Thank you, Sam. That's a very thoughtful question. Look, executing a premium strategy takes a lot of discipline. And the comment that we've made repeatedly also on these calls is that we're not chasing growth by adding especially wholesale doors that don't make any sense. We're also not chasing growth by discounting. And I can maybe give you a bit of color around the U.S. We're very happy to see that the price increases that we've done now in July of this year have been very well received, and we see continued demand growth, implying that our affluent consumers are not price sensitive. So I think that's a very important fact as a lot of people seem to be concerned about the tariff impact.

Secondly, our global brand tracker for the U.S. shows that it's one of the regions where we've been the most awareness and we're also gaining with relevance, especially with high income teens and affluent demographics, combined with a high relevance in running. So all the things we do around running, [ Miceli ] [indiscernible] being in the New York City Marathon, these things translate into more demand from consumers.

And thirdly, as you have heard on the call, Q3 saw less season sales. I mean you always have a very small percentage anyway, but we saw even less than we had last year. And we're going into this holiday season with a full price strategy. So we have no discounts coming up. And that's against the backdrop of a very price competitive environment. So we're really staying true to the discipline that the premium strategy demands.

Then when we think about your initial look at '26 and the raise of the 3-year plan, is that would that sort of mean on an FX-neutral basis, that ongoing sort of ongoing double-digit growth in the U.S., but significantly higher growth in Asia and EMEA.

I mean will -- it includes strong growth across all the different regions. As I just said, a lot of the things that we are building they will amplify the opportunity that we have as a brand, the reach that we have as a brand in all the different regions. So our assumption is based on the continued strong growth of the U.S. And so it is on a continued strong growth of Europe and Asia Pacific.

I mean just take apparel, for example, this is a global story. Apparel is as much underpenetrated in the U.S. as it is in Asia Pacific and the growth opportunity is massive in each and every region. We will expand on retail in all the different regions. And then at the same time, we will not change the philosophy that Caspar just mentioned on expanding wholesale. So we still have about 60% of the key account doors from Foot, Dick's and Shady where one is not yet present. And so that's a multiyear opportunity. But again, very much with a focus on building the brand in a very meaningful and controlled way.

Your next question comes from the line of Wendy Liu of JPMorgan.

Congrats on the excellent quarter. I have two questions. One is in APAC, very impressive triple-digit growth. You mentioned super digit in Greater China, South Korea. I was wondering if you could share how much of that comes from space versus same-store sales growth or like-for-like growth?

And then secondly, just a quick clarification question. I think you had your raised guidance implies a mid-20s growth in Q4. We know the tough comps here, but I just wanted to track what are the considerations behind this outlook, which still looks pretty conservative. What are you seeing in trigonal market since October.

Okay. I think in Asia Pacific, we talk about very different markets. Japan is a market where we ended in 2015. We have a strong presence with our wholesale partners. We are very carefully expanding with additional retail stores as we just have opened the one in Ginza. But this is a playbook of growing brand awareness and being where the customer is shopping. If we are looking at most of the other regions, and I include China in that I think on is very much at the beginning of the journey. And here, we see massive same-store growth. And at the same time, we are extremely disciplined in opening additional stores. So the 20 to 25 store numbers that I gave earlier, that was a global number. So it includes China, which means -- we take the same approach as in every other region to very carefully go from one city to the other to build the brand in the right way and to really make sure that there's also a strong performance credibility. And I think that approach just hits an environment where the demand for premium sportswear brand is incredibly high. And we could easily sell more product there, but we see this as a multiyear journey.

If we I think if we look into Q4, and we already gave some color in the prepared remarks. It's always very important to understand what does the holiday season mean for on. For us, the holiday season is a moment to connect with our brands about the right gear for the season that we are in. It's to shop for gifts. But it's absolutely not the moment for us to drive sales through discounts. And as Caspar said before, our commitment to full price sales is first and foremost, the commitment to build the brand long term.

So when we look into Q4, we had a very strong start into October and into November. We spoke about China single days for yesterday 111 and we have seen incredible momentum in Tmall. Our traffic there has been up by more than 250%. And again, it's a full price environment. We achieved our apparel target much earlier than the end of 11/11. And if we're looking into Americas, we had a very strong holiday season last year and we are now expecting that region to be in line or even slightly accelerated in terms of growth compared to what we had seen in Q3. So there's a lot of momentum on a global level.

Your next question comes from the line of Aubrey Tianello of BNP Paribas.

I wanted to ask about profitability. Your EBITDA margin guidance for this year puts you a year ahead of schedule versus your 2026 target. How should we be thinking about the progression of EBITDA margin longer term now that you're surpassing some of these targets, especially, Martin, with your comment that there's structural improvement on the distribution expense line.

Yes. I think -- it's always important to recall the philosophy that we have when it comes to managing our business around profitability. So for us, it's a person for most about investing into the business, investing into long-term growth, which means investing into brand building, into building capabilities, the team technology. And, at the same time, drive additional profitability year-by-year. And we keep on doing this unless there is a moment where ourselves just exceeds expectations, and we can't invest into the business in a meaningful way. And this is a bit what we have seen now in Q3, we were really sales came in much stronger than expected and has driven together with a strong gross profit margin, a high profitability.

So our philosophy of approaching that profitable growth has not changed. And so we will approach next year very much with the same mindset. So how can we invest into the brand? How can we maybe accelerate some of the trends that we are having that will continue to drive growth well beyond 26%. Given the fact that we have a stronger gross profit, we have a solid sales outlook, and we have an improved distribution line. And at the same time, how can we drive profitability beyond the outlook that we gave 3 years ago. So this is the mindset that we are approaching '26 first and then we'll give a precise outlook in March.

Your next question comes from the line of Rick Patel of Raymond James.

You touched on the opportunity with the younger consumer. Can you expand on that? Like what do you define as a young consumer? And how big is that business today? And then can you unpack your go-to-market strategy to acquire these consumers as we think about categories and geographies?

Yes. So we entered the space with running and the running categories is typically a bit older. At the same time, we entered the running category with an entry prevention technology, which made it even older, right? And so really over the last, I would say, about 6, 7 years, we have gained a lot of traction with the young consumers. The -- working with generational talent like Zalando has, of course, helped a lot. And you've seen recently, we started a collaboration with [ Bernard Boy ], to add something more on the -- something that is appealing to male teens as well.

So if you're going across high school in the U.S., especially in a more affluent neighborhood, you'll see the cool kids wearing one, right? That's a relatively new phenom. That's not something we're chasing. It's not that we depend on the market. But it's, of course, very inspiring that we were able to connect to this younger target group. And this start gives us a very long -- very strong LTV. You may have also seen that we have launched a kids line. That is going phenomenally well. It's really hard to keep it in stock. Of course, for the small children, it's the moms and dads buying the product. So we basically leveraging that appeal. But then we have also a kids line, so basically young teams, where we are also seeing very, very strong results.

And that concludes our question-and-answer session for today and also the conclusion of our session. Thank you so much for attending today's call. You may now disconnect. Goodbye.