On Holding shares dropped more than 13% in U.S. premarket trading by 05:12 ET after the company reported second-quarter revenue that fell short of estimates, even though earnings beat forecasts. The selloff showed how little patience investors had for a sales miss, even with better-than-expected profit.
The company posted earnings per share of CHF 0.31, above the CHF 0.29 estimate, but revenue came in at CHF 850.3 million, below the CHF 881.4 million consensus. Sales still rose 21.6% on a constant currency basis, led by exceptional strength in the direct-to-consumer channel, which grew 34.3%, while apparel net sales surged 56.2%. Even so, the revenue gap was enough to dominate the quarter’s headline numbers and push the stock lower.
That reaction matters because the quarter did not look weak on every line. Gross profit margin reached 65.4%, up 3.9 percentage points from a year earlier, and adjusted EBITDA margin rose to 19.8% from 18.2%, with adjusted EBITDA totaling CHF 168.1 million. Asia-Pacific also contributed more than 20% of global net sales, underscoring that the business is still expanding across channels and regions. But investors clearly focused on the fact that revenue missed expectations while the shares were already under pressure from the market’s demand for cleaner top-line growth.
The missing piece is why revenue landed below consensus despite those strong channel and apparel gains. One explanation is embedded in the company’s own guidance framework: On said it fully absorbed higher U.S. import tariffs and excluded any tariff refunds, which can leave growth intact while weighing on what reaches the revenue line. The company also expects the direct-to-consumer channel to significantly outperform wholesale in the second half, a signal that much of the full-year plan leans on stronger later-stage selling rather than a broad second-quarter beat.
For the full year, On kept its outlook for net sales growth in the low-20% range on a constant currency basis and forecast adjusted EBITDA margin of 19.5% to 20.0%, alongside gross profit margin of at least 65.0%. At current spot rates, it sees full-year net sales of CHF 3.47 billion to CHF 3.56 billion, with CHF 3.56 billion matching the consensus estimate. The question now is not whether the brand is growing. It is whether the second half can deliver enough direct-to-consumer strength to keep that growth story on track after a quarter when the stock punished a revenue miss more than it rewarded a profit beat.
