Shares of On Holding (ONON 1.26%) were soaring this week after the fast-growing running shoe company posted better-than-expected results in its first-quarter earnings report.
According to data from S&P Global Market Intelligence, the stock was up 24.9% for the week.
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On is outrunning the competition
In a difficult environment for consumer discretionary goods like footwear and apparel, On continued to report strong growth and gain market share.
Revenue in the first quarter rose 20.9% to $559.8 million, which beat estimates of $548 million.
Revenue was up 29.2% on a constant currency basis due to the strength of the Swiss Franc, though that has weakened this year.
The direct-to-consumer (DTC) segment remained strong with DTC up 39%, or 48.7% on a constant currency basis, and now makes up 37.5% of total sales. It's also a high-margin channel for On, bringing on a gross margin of 59.7%, up from 58.3% in the quarter a year ago and approaching its goal of being above 60%.
Performance on the bottom line was strong as well, as adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 27% to $85.3 million, and adjusted earnings per share more than doubled from $0.17 to $0.36, which was well ahead of estimates of $0.15.
Co-CEO Martin Hoffman said, "The first quarter was a very strong start to the year and a further step in the execution of long-term strategy to be the most premium global sportswear brand."
NYSE: ONON
Key Data Points
What's next for On
On is chasing a massive addressable market as it challenges incumbents like Nike, and it's showing no signs of slowing down.
The company reiterated its expectation for at least 30% constant currency growth this year, showing it expects revenue growth to accelerate through the year. On the bottom line, it sees gross margin reaching around 60% and EBITDA margin of 16% to 16.5%.
If On Holding continues to gain market share and maintain its strong revenue growth rate, the stock looks like a good bet to continue to move higher.
