On Holding AG (ONON), the Swiss performance footwear and apparel company, has carved a notable niche in a fiercely competitive market. The sharpest observation to be made is that while revenue growth remains robust, sustaining operating margins amidst rising production costs and global expansion will be the true test of its long-term viability. With a reported revenue growth of 29% in recent quarters and a forward-looking estimate of 22-25% over the next two years, the company demonstrates a strong upward trajectory. Yet, the operating margin, currently hovering around 10%, suggests there is little room for error as it scales.
Financial Performance: Growth with Caveats
The financial metrics of On Holding AG paint a picture of a company in a strong growth phase. For the first quarter of 2025 (January to March), revenue figures indicate a year-on-year growth rate of 29%, consistent with the most recent company filings published in May 2025. This is in line with industry expectations for premium athletic footwear, where demand remains resilient. Net sales for the full year of 2024 reached CHF 1.79 billion, with 2025 projections suggesting a moderated but still impressive growth rate of 22-25%, subject to normalisation after post-pandemic tailwinds.
However, the operating margin of 10% for Q1 2025 raises questions about cost management. While this figure is respectable for a company in expansion mode, it lags behind industry giants like Nike, which posted an operating margin of 11.7% for its latest reported quarter in 2025. The cost of scaling production, particularly for a brand reliant on innovative materials and designs like CloudTec, could squeeze profitability if not carefully managed. Additionally, currency fluctuations, given the company’s heavy reliance on international markets (the United States alone accounts for over 60% of sales), pose a persistent risk.
| Metric | Q1 2025 (Jan-Mar) | Full Year 2024 | Industry Benchmark (Nike, Q1/Q4 2025) |
|---|---|---|---|
| Revenue Growth (YoY) | 29% | 29% | 1% |
| Operating Margin | 10% | 9.7% | 11.7% |
| Market Share (Performance Running) | Approx. 2% (Global) | 2% (Global) | Approx. 20% (Global) |
Product Appeal: CloudTec as a Differentiator
Beyond the balance sheet, the appeal of On Holding’s products, particularly its CloudTec technology, cannot be overlooked. This proprietary cushioning system, designed to provide a unique running experience, has garnered a loyal following among athletes and casual runners alike. Market research indicates that the design resonates not only for its performance but also for its aesthetic, which has caught the eye of the fashion-conscious crowd. This dual appeal, bridging sport and style, positions the brand uniquely against competitors who often struggle to balance the two.
Consumer feedback, gathered from various online platforms and industry reports, consistently highlights the comfort and responsiveness of On’s footwear. This aligns with broader trends in the athletic wear sector, where functionality increasingly intersects with lifestyle branding. However, the challenge lies in maintaining this edge as larger players invest heavily in similar innovations. The risk of becoming a fleeting trend rather than a staple brand looms large if product differentiation wanes.
Market Positioning and Sentiment
On Holding AG holds a modest but growing slice of the global athletic footwear market, estimated at around 2% as of mid-2025. In key markets like the United States, which represents its largest single revenue source, the company has achieved approximately a 6% share of the performance running shoe category, up from 5% in 2020. Sentiment from industry observers, including posts found on platforms like X, suggests a growing appreciation for the brand’s trajectory, with one account, MMoney642, noting its appeal to diverse consumer segments.
Yet, the price-to-sales ratio of approximately 5.7x, as reported in July 2025, indicates that the market has already priced in much of this optimism. For comparison, Nike trades at a P/S ratio of around 2.6x, suggesting that On Holding may be overvalued relative to its current fundamentals. Investors betting on sustained growth will need to see evidence of margin expansion or accelerated market share gains to justify this premium.
Risks and Outlook
Looking ahead, several risks could derail On Holding’s momentum. Supply chain disruptions, a persistent issue for the industry, could impact production timelines and costs. Additionally, the company’s reliance on premium pricing leaves it vulnerable to shifts in consumer spending, particularly in inflationary environments. On the flip side, strategic partnerships, such as those with high-profile athletes or expanded retail presence, could bolster brand visibility and sales.
The outlook for 2025 remains cautiously optimistic. Revenue growth projections of 22-25% over the next two years are achievable if the company maintains its focus on innovation and market expansion. However, improving operating margins beyond the current 10% will be critical to proving that this growth is sustainable and not merely a function of aggressive spending.
In conclusion, On Holding AG stands at an intriguing juncture. The combination of strong revenue growth and a distinctive product offering provides a solid foundation, but the path forward demands precision in execution. For investors and industry watchers alike, the next few quarters will reveal whether this Swiss contender can truly run with the giants or if it will stumble under the weight of its own ambitions.
References
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