On Holding AG (ONON) Earnings Call Transcript & Summary

So, officially, welcome to the On Labs. Please welcome my bodyguard -- so nothing can ever happen today, whatever I say. No, but welcome to the First Investor Day here at our home base, and it's very powerful to have actually all you people, you're smart people, maybe super smart people. I talked to some of you. It's highly interesting to get all your insights. And it's also the very corner of the world, where our dream originally started here in Zurich. Small years later, the 2 of you will join. And then Caspar and David and myself started this company, this journey, this unbelievable journey more than a decade ago, we were driven by a shared vision, a strong shared vision we had, but also unlevering belief in the power of movement. And I think it's still the statement we all probably a further our mission, ignite the human spirit through movement. And as an athlete for me, it was always about performance and innovation. And as a person, who loves and respect nature and outdoor. It's also about sustainability at the same time. And I think it's also going to be increasingly important. We care about this factor. Most of us in here have kids. I have three, they have also kids, who are left to right. Today, seeing our athletes win still gives me goosebumps. And they win frequently, a year ago, I could have said there was one win, but now there's wins, so I'm super proud. But it's also the daily work with our team, the energy, the level of innovation and the execution I see that gives me goosebumps. We couldn't be more grateful, more happy, more self-thankful for the amazing work that this team is doing. This year also marks the tenth anniversary of us five as partners, as I said, Marc and Martin joined somewhat in summer, late-summer -- Spring 2013. And working together, and we -- since then, we worked together as creators and business builders. I'm happy to say that our partnership has only grown stronger with the growth of On ever since. And we have remain just as energized today as we were a decades ago. So as I said it earlier, there's no one especially, hey, I'm talking about me with a gray hair. He has no hair. But Caspar has a beautiful hair, no one of us is running off. We love it too much. So today, our management team represents every region of the world in which we operate. And it's an honor to partner with the team of such great leaders as you are sitting here in the front row, he's already crying, Alex. As you are as leaders, and we're excited for you to hear from many of them, not all of them, but most of you are being on stage and presenting. And of course, we are also grateful for the [indiscernible] our investors and partners have played in On's journey until today. And you have seen the On business grow and transform over the past several years, and we want to keep you close to this journey, and this is also a special day to invite you here to Switzerland to give you a bit of a glimpse of the insight, who we really are, how different we are. And we want to take you on the next chapter of our growth. We will spend the majority of today sharing insight into our strategy for the next 3 years lying ahead. Those aspirations are formed and strong foundation and they are driven by growth strategies we introduced at our IPO process. It's Marc and Martin that will start with an overview of our progress, since taking us public in 2021, pretty much on the date in September 2021 and the long-term vision we have set out for our business. Then our team will walk through the strategic pillars that we set us up to achieve those goals. And we'll wrap up with an overview of our financial ambitions to come. And of course, we'll save time for questions. If there are any. Hopefully, this time we have time for questions, not like the founder's talk, we had to wrap up quickly. And now I think, of course, as with every -- I think you have -- or is it already up there? No, the disclaimer please. It's important, we're going to reveal some information. You have seen stuff. Please follow this rule. Nobody can probably read it's too small. Do you want to read it out quickly.

No, it's going to take too long.

So yes, with that, I think we'll turn it over to Marc and Martin for the show.

Thank you for the introduction.

Yes, I think we are both much better in talking about goosebumps than about disclaimers. So I sort of still remember a moment of having goosebumps, which was exactly on the September 15, 2021. When we came together as a team on Time Square, but basically all around the world. And Remember, this was after a period of a lot of isolation. And during that period, we as a team had to come through so many challenges. And it was so good to see the team coming together physically and really enjoying this moment. But when we're sitting there on Times Square and taking in that energy, it was very clear, "Hey, we are no longer outsiders." People see the value that we create. They understand we are here for the long term. We have a winning team. We are not going away. And the billboards on Times Square set Dream On and I think nothing else represents our mission as nicely at the slogan. So really be forward-looking, don't be complacent. And there was a lot of hard work going into the IPO, but it also gave us all the motivation that we needed on the days after. And It was literally the morning after maybe getting over some of the drinks to go head down into building our bigger dream. And we went through a similar period this summer with the whole team in building the dream that we are now presenting to you. And I'm pretty sure that tomorrow morning, the team goes with the same aspiration into building the next chapter of On. And it's really all about that team. It's the passion and the dedication that we are so grateful about. But we also want to express the gratitude to all you here in the room and on the screen for supporting us on that journey. Some of you have been with us since the very beginning. Some of you joined more recently. And for us, it's super important today that you actually can finally feel and see the culture and what On is all about here in this building. So what did we do since the IPO? Well, basically, we laid the foundation for a much bigger company in the future. And sometimes, if you look back, it feels like you're on top of the mountain, remembering the earliest days, but then you look ahead and you see all the opportunities that we have, and it feels like, "Hey, we have just started." And you know the good thing is we are here in Switzerland, and we love to climb mountains. So since our IPO in '21, we actually added CHF 1 billion in net sales. Our CAGR 65% since then. We actually just had 6 consecutive record quarters in a row and always exceeding our expectations. And sometimes it's good to look back at the strategies that we set out at the time of the IPO, and I'm sure some of you on the sell side you still have our deck from the Analyst Day as a hard copy on your computer. And in there, we voiced our aspiration to reach CHF 1.76 billion net sales in 2024. So here we are 2 years later, very confident to reach our guidance of CHF 1.76 billion this year. We just reiterated that, that's a year ahead of our original plan. And so today, we want to give you more insights into the next 3. But before we go there, we do want to quickly look back on exactly the strategy that we laid out at the IPO and reflect on that.

I think we actually tried to do this intro without numbers, but you can't resist it because On is so much more than numbers, right? Number -- it's been a huge, huge privilege to spend so much time with this amazing team that is sitting in the first row here. But with all the other people at On that are driving us forward, that are learning quickly that they're adapting to new environments and that are really challenging us and everyone on a daily basis. So what that has led to and what we always were is an innovation company at heart. We're not just here to make shoes or apparel. We're pioneering technology and products the world hasn't really seen before or creating new sensations and removing barriers. This requires a different way of thinking and operating differently. You could say we're running a marathon at the pace of a sprint. To push our innovation forward, we collaborate with the best athletes in the world. It's very, very important to us. We develop products together with them. They have become part of who we are, and I think we've become part of who they are. And that has really led to some amazing achievements, since the listing back in 2021. So you spoke about the CHF 1 billion we added. I'm going to talk about the French Open victory we added. The Araman World Championship title we added and the Boston Marathon win we added. And if Hellen, Gustav Iden, and Ega ] Ben, are winning such amazing titles. That is really a testament to the team, the work the team is doing in here. It's really nice to see how that comes to life and how our athletes are developing at the same pace as On is. So I would say they wouldn't be part of On, if they didn't think we were pretty much dialed in on what we're doing. 2021, when we IPO-ed, we knew we had 4 key areas that were absolutely critical to durable growth. We had to get them right in order to continue our momentum and tackle challenges of scale and innovation. First was brand awareness. We wanted to grow our brand within the run community and beyond. Second was multichannel growth. Our ambition was to expand our geographic footprint to reach more people through various channels. Third one was product portfolio. We set out to deepen our range of available products through innovation. And fourth was operational excellence. We wanted to continue to set up a business the right way so we could handle higher volumes, while realizing opportunities for scale benefits. Ultimately, with the goal to be a more efficient company and a more profitable company in the future. So let's start with the first pillar, which was brand. A very important element in there is brand awareness. So recently, we rolled out a very consistent survey on how we can measure brand awareness globally, and this is also a key element that the team focuses on. What you see on the screen is basically the outcome of our latest brand survey. This shows the percentage of respondents within the countries that you see up here that are aware of the brand On. Now there's a couple of takeaways from that slide, which we quickly want to share with you. First, we're very much convinced that the work that we're doing is paying out. On is significantly increasing brand awareness in all [ markets ] within the local communities, but also on a march on a larger scale. The second one is countries and cities where we're basically really focusing on, they're achieving over proportional growth. So the U.S. has lifted brand awareness very, very, very and much, much, much stronger, since the IPO than some other markets where we put less focus on. Cities like London have significantly outperformed the U.K. as a market because we focused on London. We opened our Regent Street retail store in London, and we saw a significant uplift in the wholesale channel as well as in the e-comm channel. At the same time, the results also show us there's a lot of room to continue to grow. So Switzerland still has 53% left to 100% and all the other markets significantly lack behind Switzerland. So we feel there's ample room for growth to continue to scale on as a brand and lift its brand awareness. But it's not just about brand awareness. Most of you know that On is a running branded heart. We started out as a running brand. And so how are we continuing to be credible within the run community? How do we continue to work with the run committee and we're also counting that. So we have a team, also we have an external partner that counts on to market share on the key running rounds and around the world. And what you're seeing up here is some examples. So in Miami, On has a 15% market share on the running routes in a place like New York, it's 7%. Again, I think 2 messages. Message number one is, we're making progress. This was much, much lower at the IPO. Message number two, there's still a lot of room for growth, which is amazing. And then it's more than just running. So how are we resonating within our core communities that we're tackling beyond running. How are we building cultural relevance. How are we continuing to grow followership on social channels like Instagram and TikTok. Since the IPO our Instagram, TikTok and other social channel followers grew by 94%. And the way they're engaging with On is absolutely amazing. And the way they identify with On is I think a testament to the work that the team is doing. So we're growing brand awareness. We're growing and running. We're running, growing with our core communities, which I think tells us that on the brand side, we're doing a pretty good work. So what about the second pillar, Martin?

Yes. The second pillar was the power of our multichannel strategy. And we have really seen coming that to life during all the challenging times. It proved to be very resilient. But even more important, it reached millions of new customers in a profitable way. And what's super important to understand is that over the last 2 years, we have significantly extended our capabilities and our reach in all the 3 channels. So from own retail to e-com to wholesale. And we are super pleased that our D2C channel has been growing a little bit stronger than our wholesale channel despite the fact that 2 years ago, basically, we were in the middle of the pandemic. But for us, it's really about the harmony of the channels. And so it's equally good for us to see that the growth is really driven by both channels at a similar pace. And we're not only seeing our channels growing at a similar speed, we're also seeing our markets growing at a similar speed. So from the U.S. to U.K., China, Japan and many other markets, we have seen 70% to 100% growth in the last 2 years. And even markets, where we started very early and have already reached a much higher brand awareness like Germany, we were driving 30% growth. And so while we elevated our capabilities in the different channels, we have also extended our geographical reach. So we brought on 20 new markets, since the IPO, making on more global than ever. We took 5 key markets in-house that used to be distributor markets are now direct markets, enabling us to drive much more sales and profitability from those markets. And what's super important to understand, our e-comm channel is more powerful than ever. And Marc has mentioned the brand awareness that is increasing, which is reflected in a high growth of our visitors. Just at the beginning of this year, we launched our new website, which gives us totally new capabilities in showing our products and actually individualizing the journey on the website. And then the fact, and this is very important that our number of members has increased by 9x. It's a super important base for what we want to do in the future. It's really being much more specific, personalized in the journey going forward. What about the other channels?

Which leads us to retail. So shortly before the IPO, you could experience On at its full kind of depth and breadth mainly on our e-comm side. But at the time of the IPO, we actually had one store outside of China that was in New York, and we had 7 stores within China. By the end of this year, we expect to operate in more than 30 stores in total, 10 stores outside of China and 22 stores within China. Now since the IPO and starting to operate kind of a retailer [ Regent ] On also gave us the opportunity to learn. The first big learning we had is we can actually operate retail, and we can operate it profitably. On as a retail company works, our retail stores work. The second thing was On Retail is driving significant brand momentum. In almost all retail locations that we opened so far, new doors have driven a visible uplift in our e-com and wholesale sales. And the third one, On is a very important retail channel to drive our future. On Retail is a very important channel to drive our future apparel growth. We're clearly able to drive an elevated apparel share within own retail in some stores exceeding 20% in a store like Williamsburg, that we just opened in New York, the apparel share is at 16%. All of this gives us a lot of confidence that On Retail will play a very, very important role as part of our channels going forward. And we feel very much that over the last 2 years, we've actually built the foundation for this. Now the last of the channels, but it doesn't mean that it is not kind of the lease. It's actually a very, very, very important one is wholesale. So wholesale plays a very, very important part of On. It's an integral role in reaching new consumers, and it's been very, very important to our growth, since the IPO. We've expanded our wholesale presence, while maintaining very much a premium focus, working with some of the best and largest retailers in the world. Being premium also means being very, very selective with whom we work and very prescriptive in how we roll out doors and how we bring our assortments and products into the different doors. As a result, we have been able to reach a wider, more diverse range of runners and a younger audience than before. We are very much aligned with the design and function of our products. The exciting part here is that with many of these key accounts, we're still at the very beginning of our journey. We expect to unlock significant growth in the years to come as we continue to fine-tune and expand our wholesale presence with our most important partners.

And then coming to our third pillar, which is really driving innovation and sustainability in our products. And we pushed ourselves, since the very beginning to create products in a way like no one else does. And for us, performance and sustainability are cohesive design principles. There are no trade-offs. So since the IPO, we launched the Cloud Neo, the first fully circular performance running shoe that is only available in our unique cyclone subscription program. We launched the first shoe that is made out of captured carbon. And we have so many more things in the pipeline that are coming soon. But at the same time, it was super important for us to broaden our product assortment and to make it much more performant. We're super proud, where we are today that we have now 7 franchises, each contribute more than 5% to our net sales, and we expect more to come and they spread from running with 3 of them sitting and running, which is extremely important 2 all day, 2 to gym and then, of course, your favorite tennis sneaker. And while we broadened the assortment, we also broadened our price ranges. So we extended our price range to the upper while we maintained clearly a premium price positioning towards the bottom, very important because this is driving profitability, and it's also driving the fuel for future innovation.

And finally, I think -- we probably have to talk about the biggest challenge that we had over the last 2 years, mainly because an unbelievably challenging macro environment. I mean, since or since the IPO as a part of the IPO, it was still COVID and we went into huge shipping disruptions and all the capacity came back then we had huge demand shifts. So they were very stronger than originally expected and so on. So it has been, I think, for all who've been part of this journey, very interesting 2 years in operations. And I just want to thank the operations team for the work that they've done, since the IPO because we -- again, we couldn't stand here altogether if we weren't able to react to some of these challenges in such a, I think, very effective and quick way. So what we focused on were mainly 4 different areas. One was happiness delivery which is our work for customer service, then technology infrastructure, automation, which goes into all the areas, but here we mainly talk about physical infrastructure, so logistics and sourcing. And all of these topics ultimately impact our bottom line, but more importantly, they have a big impact on the world. Innovating in our operations gives us an opportunity to lead in thought and action. It's very important and a big part of our ESG strategy. So let's start with happiness delivery. On is a premium company. So we want to be able to deliver premium service and if you're growing at more than 60% every year as a premium company, it's very, very challenging to constantly deliver premium service. So the way we think about is how can we control the key elements that go in there. So how you interact with our consumers, the experience you get, while at the same time, automating what we can. So a lot of the interactions you would have with one of our customer service agents is actually not a customer service agent, but it's a machine speaking to you. And if you actually have human interaction, then we've outsourced a lot of that. What we want to do and what we will continue to do is make sure that the service level that you get and how you think about it and how we train, whether it's people or machines that we do that in a very effective and I think consumer-oriented way. Then the second topic was technology. We're an innovation company at heart. We already said that. So we can't build the highest-performing products without having a high-performing tech infrastructure. Since our IPO, we've implemented a new ERP, we have significantly invested in our digital product creation capabilities. We have upgraded our website, and we have integrated all our key partners into our own digital landscape, be it manufacturing partners or the most important retailers of this world. So this really allows us to operate way more effectively to see how much inventory our retailers are carrying and to be much, much closer on supply and demand planning. The third lever is automation and supply chain. One part of it is freight, which is pretty much about gaining scale and making sure we get the best contracts on the key trade lanes. But the other part is our warehouses that we have across the globe. And what we've done since the IPO, we've invested in semi automation and automation. So our LAX warehouse is semi-automated right now. It's way more productive than it was before. We're in the process of semi automating our Luxembourg warehouse, and we will fully automate our Atlanta warehouse, which should go live by the end of '25 or '26. So which we feel very much this is a very, very good fundamental for future growth. It caters to the profitability that we need, but it also helps us to deal with a constraint in resources that we will continue to see in the long term. We don't believe that we will have unlimited access to human capital to work in the warehouses. So we very much feel we need to get way more efficient than these investments are absolutely key and for the long-term future of On. And then the last pillar is sourcing. So -- when we talk about our product, we also talk about our footprint, and we think about the customer we serve and how that customer is influenced by the products that we create. We want to have a very, very strong sourcing network, and we want to have a sourcing network that is committed to the ESG capabilities that we do have as a brand. For example, we invest significantly together with our partners into solar panels, so our capacity on solar panels that we have on the factories will continue to evolve. And it's very clear that as part of our science-based targets commitment that we have, that our factory network will be powered by renewable energy in the near future. We've continuously also being investing in getting additional capacity with the factories. We've been investing into having a more diversified sourcing footprint in many more countries, while at the same time, upholding our ESG standards. We're very happy with the partners that we have, and we will continue to work with them, but in many, many different countries and not just one. So as we move forward on this path Martin, we intend to carry on an optimized supply chain resilience. Premium quality assurance, stream light cost efficiency, while at the same time, upholding our ESG values and our commitment to our targets.

Yes. And adding all those successes in the strategic pillars together has led to very strong top and bottom line growth. So if you look at the 12 months leading up to our Q2 results and compared this to 2 years ago, then our sales has grown with 65% CAGR. We added 200 basis points gross profit margin, [ 130 points ] adjusted EBITDA margin. But what's much more important is during that time, we built the foundation for a much bigger company in the future. And those times were tough. There were a lot of hard work in there. And I think what both of us helps sometimes to go on a run. Because when you go on a run or you move, then all of a sudden, you spark new ideas and the tension goes away. And this is the mission of On, igniting the human spirit through movement. Now if we look ahead, that will stay, that will continue to be our #1 guiding principle, both towards our fans and to our culture internally.

So presenting in front of you is almost like going on a run. I'm waiting for the tension to go away, but we're not just there yet. So a few more minutes to come with Martin and I. And what we invite you to do now is to visualize 2026 and beyond, because that's what we did over the last couple of months, and we want to quickly take you on the journey together. So first of all, and one of the big kind of revelations we had throughout the process and the vision that will guide us going forward is that On aspires to be the most important premium global sportswear brand, rooted in innovation, design and sustainability. This will guide us. This will guide our thinking going forward, and it will guide our actions. On the next chapter of growth, we feel we have 8 key pillars that are basically built around 3 key areas. And we want to quickly take you through some of these building blocks and talk through some of these areas that will shape our future. First one, Elevate. We have areas where On is already present. We've already built the foundation in those, but we feel there's way more room to come. There's way more growth that we can have in those. Then we have areas that we can expand. But we've just started, but there are so much more that we can achieve there. And then we have new areas that we want to establish, areas like training or areas also like apparel, which very much comes into life in training. So we will continue to dominate in running, while our entrants in training will significantly increase our addressable market. Building On as a true sportswear brand with an increasing apparel share will be very, very important and an important growth driver for the years to come. The role of owned retail as a business will be significantly elevated. On Retail will no longer be just a place for the best physical brand experience in key cities, but it will evolve into a very, very important channel for On overall. We will further elevate our capabilities across all distribution channels and use the combined power of all 3 channels to continue to reach our consumer and new consumers. We continue to expect strong growth across all regions. Given our very low market share that we still have in some of the markets with a very strong brand momentum, we significantly expect to accelerate China as a country. Creating products made for circularity, but fully rooted in performance will continue our sustainability journey. Building a higher brand awareness, together with more focus on our existing customers will allow us to drive significant growth from new and existing customers.

Yes, and with this On will continue to be a growth company as we innovate further. So as we wrap up, maybe please allow me a few more numbers. So first, our premium position being the most premium brand, together with the expansion on individual sports from running to tennis to training, the expansion from footwear to apparel has significantly increased our addressable market. At the same time, you have seen this many times in the past that our products have the power to convert customers that maybe would not identify themselves as premium customers today into our products. So we are constantly tapping into that much bigger market of the general sportswear category. And this gives us a lot of confidence on our financial aspirations. So based on the guidance for this year of CHF 1.76 billion, our aspiration is to double net sales in the next 3 years. So that by end of 2026, our aspiration is to reach at least CHF 3.55 billion. And you know for us, it was always very important to grow top line and profitability at the same time. And we will continue to do so. Our plan is actually to accelerate and to grow our adjusted EBITDA margin in the next 3 years faster than in the last 2. And our aspiration for the end of 2026 is to be at 18% plus, adjusted EBITDA. But everything that you have seen and what Marc quickly introduced and you will see more about is, has the potential to be much bigger, but we all want to start with those foundational targets. So how will we get there? We will spend the rest of the presentation with the team to take us through the different building blocks. But for us, it's all about the people and the culture. This will drive the success of that plan. And really, the culture at On is the horizontal thread across all the different building blocks that we have. And so with that, I would love to hand over to Bianca, who is our General Manager for Europe, Middle East and Africa. And to Noa, our Chief People Officer, both have been with us since more than 6 years, super important on our growth journey so far. And I'm sure you can tell us more stories on what you experienced here. Please come on stage and while you come, we play a little video. [Presentation]

Thanks a lot, Marc and Martin, I'm really excited to be here to talk to all of you about the culture that makes On unique and that I think you've also been experiencing the whole day, since you came in here this morning. My journey at On starts about 6 years ago in Shanghai when we opened our very first tiny, tiny China office, and we're dreaming about the future of On in China and what it would look like with own retail stores, with an e-com business and the whole multichannel distribution. And over the last 6 years, transitioning from -- little movie interment. So we love videos. So -- so over the last 6 years, transitioning from my role leading APAC into the role I now have leading our EMEA markets. I've had the privilege to be in a lot of our hubs and offices in different markets that On has around the world and building high-performing teams across all of those locations, building and continuing to develop the culture that we have at On. And so this is the reason that I'm at On. And also, I'm really excited to be here with Noa, our Chief People Officer. And Noa, your story at on is somewhat similar and also connects very much to culture. So tell us a little bit about it.

Yes. So thanks, Bianca. So I also joined On around 6 years ago. And when I joined On, we were around 100 people globally. Today, we're 2,000. And I remember coming to the office and feeling that something is different, talking to people going on a run and just feeling that this team is something different. And what I know and probably you know as well that when companies grow, culture changes, it shifts, it adapts, sometimes it's just not the same anymore, right? And every time I had the opportunity to stand in front of the full organization to travel to different offices. I told myself, it is just not going to be the same anymore. Now it's not 100 people, it's 200 people, it's 500 people, it's 1,000 people. And I was wrong. Every time I thought, hey, it's just not going to feel the same, it was still very much the culture that binds us together. And we hear that also from our top leaders. So as an example, last week, we were in the mountains with our 50 top leaders. And we talked a lot with the leaders about why they're here, what motivates them. And it was just so inspiring to hear from so many people there who recently just joined that it just feels different. The culture is just something that is -- that -- it's hard to explain in words, but people feel it. And I spoke to some of you just before this presentation, and you also share that. It just feels different. So we hear it from our team. We hear it also from candidates and we actually also hear it from some of the partners that we're working with, and they are interacting with our team on a daily basis. And as I said, most importantly, we hear it from our own team. And one of the biggest proof points for us that the culture actually works is our annual engagement survey. And we do that once a year, and we basically want to know how the team feels and here, again, we always expect the results to change, right? We -- if you think about it, we doubled our team since the IPO. So some of you have met us in the IPO, we doubled our team since then. So we feel things will change. But what is extremely encouraging to see in these results, and these are the 5 top scores of our recent engagement survey in 2023 is that the things that are so important for us in the culture are still very much the strongest in how people feel. So 2 questions here are about innovation. People still feel that they can innovate, people still feel they can challenge the status quo and this is very important for us. People still feel a very strong sense of belonging as being one team. And I traveled to China recently. It was my first time in China, and China is very different to Europe. And I was exposed to so many new things, the new food and new people. And then I entered On office and it feels the same. I was like, am I in Switzerland because people really feel that sense of belonging as being one team. People are very passionate about what they do. And also, it's extremely encouraged to see that people feel On is in a position to succeed over the years to come.

So what is different and what is unique about On's culture? So our culture is best described by the 5 spirits that all go back to the human spirit, which is our mission. And when talking with Noa about what makes the culture special, we suddenly were saying, "Hey, every brand has values. Every brand has a form of spirits." But what makes culture in those spirits unique at On is that everything we do from how we design product, to how we design customer experiences in our stores to how we do learning and development, everything starts with those spirits. They are the starting point of everything we do. And I just want to give you a couple of examples on a few of the spirits. So you see some of the stories and you get behind the scenes. I think walking in here this morning, you already, you felt that probably this is a slightly different company. You didn't get kind of a batch somewhere at a reception and we're guided to your meeting room. You saw that we have a bar and a Barista that basically is where people enter our home. That's where the conversations happen. They happen at the bar. They happen over lunch, they happen all around on labs and not just in Zurich, but across all of our offices. And so the Explorer spirit is the one spirit that goes back to all the way when we started, and it's really about this disruptive nature that makes On, On right? So when we designed the very first On product, this was reimagining what a running shoe could look like. And we bring this way of thinking -- this reimagining really to everything that we do at On. On the team spirit, I think you feel a lot of that also hearing from different members of our team over the course of today. And the way we think about the team spirit is really that On is not a family, On is a sports team. We support each other and we care for each other, but we also challenge each other. We give each other a lot of candid feedback. So if I think about yesterday afternoon, for instance, we had a workshop with one of our most important strategic partners that came in, the moment they left, we kind of got together with the team, and we gave each other feedback on how that went. And this is not me giving the team feedback and saying, "Hey, we could have like guided them a bit more in this direction and done a bit more of that." But actually, they're challenging me and saying, "Hey, Bianca, you need to actually understand this about that account. And for the next time, let's do this a bit differently. And this is something that I love about how we work together as a team. And lastly, the positive spirit, it's all about delivering the Wow. I think it's important to understand that this is not just something that we do internally, but also with our partners with athletes. So when we have athletes, you heard from Gustav earlier coming to On Labs then they're not just up on stage talking to the team from a stage somewhere, but they're actually part of the work that we do, right? They're becoming part of the On team. And so when Roger was here a couple of weeks ago, he wasn't just talking with only on stage about their athlete trajectories and how they now feel. But he was in some of our meetings, talking about forecast quantities for 2024. He brought a birthday cake to somebody on our operations team, pretty sure that made her birthday like a multitude more exciting, but this is how we deliver the Wow. Roger delivers the Wow. All of us, we live by this positive spirit in everything we do. And being from Switzerland as a small home market, which is something that you've heard us say many times, we expanded outside of our home at a very early stage for the brand. And so today, as you know, we have a global footprint with hubs across all continents from Portland to New York to Sao Paulo to our 3 office hubs in Europe with Zurich, Berlin and London to our hubs in Vietnam, where our sourcing team is based to Shanghai, Yokohama and Melbourne. And what has been important and as we've expanded outside of Switzerland early is that we always brought what is truly distinct to On culture everywhere we went. But as Noa's mentioned in her experience in the Shanghai office, there's this thing that is truly on. At the same time, we've always been very local to the locations that we've expanded into, taking local culture, local nuance, language into account. And so maybe the workout or the morning run that you experienced this morning in Zurich felt a bit different than what that would have been like in our Shanghai or in our Yokohama office.

So Bianca mentioned that we're a global team. And in that expansion, we are also very intentional about how we expand our team. And we know that for us to truly be an innovation company and to truly drive the best product we need to invest a lot in these teams. And you see that we have more than 200 people that are working every day on products and innovation. You also see that this team has a lot of people sitting in the global marketing team. And this is -- this team has creatives, has marketeers. And it is actually the largest creative agency in Switzerland as part of our team. And we're also very, very intentional about how we build our teams for the future. So if we know that e-comm is a huge driver for us and also retail over the next few years, we will invest a lot in these teams, not only in the number of people that we hire, but also very much in the culture that we want to bring. So as an example, if you think about retail, most of our team members in 2 or 3 years will be in the retail stores. They will not be in an office environment. So how do we bring that culture that is so important for us and that binds us together into a new environment like retail. So these are things that we're very focused on and also very, very intentional on how we do that. And we can really do that because of how strong we are from an employer branding perspective. And what you see here is that we've won a number of publications on how -- on being an innovative brand and being the best place to work for innovators. And that allows us to tap into talent from different industries and to really bring the best talent here to Switzerland or to other locations. We've hired more than 500 people this year, and we received just a bit less than 90,000 applications. That means that we're very selective on who we bring to the teams, and I spoke to one of you about our recruiting process earlier. Our recruiting process can be longer, right? Sometimes people ask us, "Oh, I'm meeting the CEO or I'm meeting the GM." This is something that is new to me. And we do that because we believe that this is the only way we can build high-performing teams and also protect our culture. So this is something that we are also investing a lot in.

And on the topic of high-performing teams, you saw on the spirits the inclusive nature of On, this is something that is second nature to us. So diversity and inclusion is something that's really within our habits. We have a lot of nationalities at On in Zurich alone. I think there are more than 80 nationalities here. So if you walk through the office, you hear a lot of different languages. And we continue to invest in the diversity of our teams. So 3 pillars that are important to highlight here. We build more and more diversity. Also as we serve more diverse communities around the world as consumers, we want to invest in the diversity of our teams. So we've committed to 50% of all candidates that we bring into the hiring process this year being from underrepresented groups -- that's true at an aggregate level, but also something that we apply on a team basis. So for some teams that might be [indiscernible] background. For some teams that might be gender. For some themes that might be the professional background and experience that people bring. At the same time, we've learned that as we make our teams more diverse, we need to make sure that our inclusive culture continues to develop and that we double down on that inclusive nature that is truly on. And so if you look at our engagement survey, the team feels like they can be their authentic self at On. But this is not something that we take for granted and that as we bring more communities to On, we also need to continue to work on. And probably the most important thing on here is social impact. So how do we scale this inclusion that we live with our teams, to the communities that we operate in and that were surrounded by. And this is where we brought to life right to run. Right to run is our social impact program. If we think about how we came in this morning, and we all put on our running shoes and our gear and we went out for a run or we did Yoga and meditation. This is something that we take for granted. But actually, there are lots of people out there for whom this is not natural because based on disability, based on access, based on inclusion and where they live, actually, they don't have this freedom to move. And so right to run works to break down those barriers. We work with more than 20 partners around the world that do everything from organizing races, supporting those groups on safety, but also lobbying governments. And I just want to give you 2 examples on here. So you have Zach Fridley, here, who's an adaptive athlete, and he started born to adapt. It's a trail race that allows kids, youth, adults with the disability to actually run trails. To dream of one day going to UTMB and racing UTMB. And just the vision, the excitement that, that puts in those kids and people's eyes. I think to me, this is something that is truly inspiring and that goes back really to the mission of On and of who we are. The other example is free to run. So there are a lot of conflict zones like Afghanistan, like Iraq, where women and also other adults don't have access to movement and running. So Stephanie Kash. She's a human rights lawyer and she started free to run in Afghanistan in 2014. We've been working with them. She's supporting women and girls to basically dream of one day running a marathon, being able to run in a safe environment and just watching what they've done and how we've been able to support with free to run on that mission is truly inspiring. And I think that takes us back to where we started and the mission of ON. The connection between movement and the human spirit. And that's a perfect lead over to the brand, part of the presentation. I will now hand over to Alex, who's our brand, Mastermind and Chief Marketing Officer. And as I do that, you'll see a trailer of arguably one of the most inspiring athlete stories. So here's right to race and [indiscernible]. [Presentation]

Great story, so if any of you that want to check that out. It's about a 30-minute documentary very, very much encourage you to go and watch that. Thanks, Bianca for the intro. I need you to come to some meetings next week to give me that kind of setup for the meeting. So I'm here to talk to you about the brand. We've heard about the health of our growth. We've heard about the health of our team and our culture. And also very important is the health of our brand. You would imagine I've had a strong interest in that, a vested interest, equally when I cast my mind back to probably the end of 2016. I was actually working for an agency, On was the client back then, slightly different budgets back then, but that's a different story. I can go into later. I was spoke to David, one of the founders. He said to me, "Hey, you could come over and head up the global marketing team in Zurich." I had to go and tell some friends and families and colleagues, some clients that I was going to move to Switzerland to work for this brand called On, which we were niche back then, let's just say. There were some skeptics in the room, probably a few more skeptics still in the room today. That's okay. We'd like to convince people here at On, but now if I look -- if I chart that trajectory from 2016 to where we are now, we're an even healthier brand than we were today, and also gives me the effort to go back to those people when they actually apply for jobs when they come to On. And I can sometimes push them back and say, no, remind them if there is skepticism back in the day. So let's talk about something we hold very true to our hearts and to our minds. And the brand is something we have cultivated throughout the years. It's something we've got a very strong handle on -- and if I was to ask you to think about the very best brands on the planet. I'm sure many of you have a few that come to mind, probably some of the very similar ones. Maybe some of the competitors of On would come into the mind as well. And if you think about what those brands have done exceptionally well, they've managed to create amazing product. They've had scale. They equally have amazing impact. But it's this cultural relevancy that Marc mentioned earlier that we feel is such an amazing opportunity for us to cultivate, for us to grow awareness, to grow out and to find new fans. So what do we need to do? We need to do 3 fundamental shifts. And to do that, we need to supercharge our brand awareness and at the same time, increase the efficiency of our spend. So we see 3 major shifts on that journey. The first is about these new audiences. So via cultural impacts, how are we going to go out and find these new audiences. This is actually a playbook that we've already developed and deployed to date. So a pitch on the right-hand side there, you can see Ben Shelton at our thanks tennis event in Williamsburg just this year, where we took in Eger, bought the local community together. They had an amazing experience. For those of you that tuned into the U.S. Open, maybe you saw some of the moments have been he popped up in a few people's feed. He had a very iconic put the phone down moment, which managed to become a bit of a TikTok meme. And these at the moment, which truly amplify the brand. So this is even more important given the potential of how things are going to change in the future. So we see the impact that ChatGPT now brings into the media landscape. How the big search engine is going to adapt, how they function, how they -- how we spend our dollars as a marketing team. Rising media costs overall make the competition very fierce for us. So we have an option. We can either do what all the other brands do. We can toe the line and follow them or we can do as we do in the lab, we innovate and we do something different. So on to the second major shift. Authenticity, you hear this word a lot on, and it's something, again, we hold very true to the brand. And it's been so important for us throughout the years. Going back to the very first, specialty run dealers, who are still big fans of the brand. A few more that we've managed to convert over the years. These dedicated runners that have been at the very core of the brand, now we need to expand this out. So when we look at event formats like on track nights, again on a picture on the right-hand side, this was an event format that we rolled out this year to 5 different cities, 5 key cities, where we bring the fury, the energy, the power of run right to the consumers, so people can line up around the track and really feel the energy that in the past they only had when they were on the sidelines. So event formats like this become more of a copy-paste approach. We don't have to reinvent the world every time. As we go to new cities, as we expand into different geographies, we can take these event formats out. At the same time, the key accounts, as mentioned earlier, are untapped new audiences. But through amplification with their marketing dollars combined with ours, making sure our brands align and we tell the right stories. These are new amplifiers for the brand. And with an increased focus in these new communities, you've heard about them training tennis, wider into movement lifestyle. This is going to give us access to even more fans. So for marketers to talk about purchasing. How do we drive purchase at scale. This is all about creating this new playbook to increase efficiency. Third fundamental shift. So we believe that through conversion is how we're going to drive efficiency. So if we look at the appeal of some of the best-known faces, Ben, and Eager, Hellen Obiri and maybe some other people that we can add to the mix, doesn't always have to be athletes. There's some very famous musicians, there's some very famous actors, actresses out there that we can tap into. So how do we take ourselves into a wider audience using those people in those places, those moments to amplify our brand into those new geographies. D2C as you see on the picture again on the right-hand side is a key opportunity for us. We know when we open a store, we uplift, the halo effect that happens to the overall effect of the brand. And these experiences with the communities, these are additional amplifiers. And how do we see that actually put into effect? So back to the famous Ben Shelton moment, recall the benefit, probably call it a trick shot. But we see that just through the moment of those 2 weeks of the U.S. open plus 1000% tennis power searches on our .com plus 100% on.com conversions. Just to frame that, that's within this business. So as we expand these verticals and expand this new reach into communities, we have an amazing opportunity, almost 400% revenue increase just within those 2 weeks. So before I hand over to some very intelligent product team, who I know product is the key moment, I heard earlier from the sessions that everyone was extremely excited. I want to give you a brief look of what's going to come next year. We're extremely excited. It's an Olympic year. This is a big moment for a performance brand. We have an amazing stories to tell new audiences to tap into total new innovations. If any of you did the tour and saw some of the orange glass, if you managed to peak a little bit behind there. You might have seen some of the new innovations, which are truly amazing. This will couple with athlete stories like you just heard from Dominic, and these full body looks to cover a new range of sports. So before I hand over, a marketeer like to show movies. So one last movie before we go into the next. [Presentation]

So thank you very much, Alex. I still remember when you packed your car and arrived here from London down in Zurich, so that has been amazing. And you heard it from many people today and On is an innovation company at heart. So let's talk about innovation and product. And I'm very happy that we are working here on product innovation, next horizons. And we do that in a body that we call the product board that is led actually by the On founders. And we work together with creative scientists, developers, athletes, and we spent a significant part of our year in the lab as founders as well, so of our lives actually. And sometimes it happens that Roger sneaks in and then we work together with Roger on exciting products. And if I look out here through the orange glass, you mentioned the innerlab. So I see around 200 people sitting here and it's amazing how this innovation engine works. So Caspar and myself, who are working in that product engine together with Olivier. But I also wanted to introduce then Gerald, our Head of Product, who works together with the team and then, of course, also Thilo, who is our Chief Design Officer, and actually, Thilo has been here at On from literally day 1. So internally, he is often referred to as the secret force founder add-on. And so Thilo, please tell us at On what's the disruptive force of design that builds On and probably consumer brands in general?

Thank you, David, and I happily do so. So design as a disruptive force and design what does even design mean? This is a question to the audience and as well for the people on the screen, what is design for you. I think very often it gets referred to as looks perhaps sometimes even decoration. But I have to say welcome to Switzerland, and welcome to On's design team. I think design is not decoration and the look is just part of the outcome of what is a very complex design process. So I'd rather think of design as a very powerful tool. I think that's the best definition. And then we think of what this tool can do. I think in the big picture, it can do 2 different things. So first of all, it enables you to build castles in the sky because it offers tools to fire up the fantasy, but then it lets you as well build the same castle on the ground because you need to make all those dreams reality then at some point. More specifically, what design can do is it can identify the essence of a product idea or for example it can serve as a catalyst, when an idea comes up. It can be both a mirror, but it can be as well a projector of ideas. It can inspire better processes. Yes, design can save money or it can drive sustainability. And with all these keywords. You can tell that for me personally and for the On design team, it's as far away as from decorating things, as you could imagine. So to be able to run, I think, the design team successfully in this complex age and time. You cannot have a design team that is monocultural, you need from design researchers to 2D designers to 3D designers to 3D specialists that look into AI to people, who only do colors -- you need to have designers that are straightforward that really manage to land a thing, but then you need as well sketchers and stylists and creative dreamers, and this diversity is absolutely needed to make one whole product range. And what's very important as well, we do have a lot of people with the footwear accessories, apparel background, but we very consciously as well make sure that there are enough people in the team who have other backgrounds because not knowing about footwear or apparel can sometimes be as well an advantage. So -- the design -- this design team consists now of all these leaders, and they make something which is holding up as well high the flag of Swiss design. I happen to be one of the very few Swiss actually in the design team. And the reason why I believe it makes sense to continue actually a great tradition is that Swiss design has been known for being quite rational, boiling down things to a very -- to the very essence and to be quite minimal, yet playful in a functional sense. And this always has been the case, whether it's been with product design, typography, architecture, and it happens very consciously, and we take this very seriously at On to continue this traditionally as well to keep it up in the future and as well to be here for the design place Switzerland working internationally, but out of Switzerland. That's really a big ask to ourselves. This goes with an anecdote. So visual technology or visualized technology, that's a promise that we have add on, when we create products. And similarly to Alex, I remember this moment, where somebody who I knew a little bit and invited me to a footwear design competition. And I thought a little bit, yes, footwear, why not? I love shoes and I love sports, and I was into designing outdoor and sports stuff already back then. And I had to switch my brains on a little bit and ask myself, good, that's a new technology and what do I want to offer. And I think the logic behind visualizing technologies is pretty simple. By visualizing the function of a product, you make a promise, a, that's the rational side, but I think a task of design is to make people curious as well about something. And if people get curious, they want to try it. And we knew back then that if people try it, there is this conversion moment that makes a product very interesting and in a commercial sense then at sometimes, they would probably as well buy it. And so this visual tech, this [ Vistech ], as we call it, it's still here. It happens on all the products that we make. And from a part of a design idea, I think it really became a signature design trademark and as well a mindset in how we work. With this goes, what I call the product integrity, that's a bit the very simplified North Star of what we do in the design team. Functionality and performance is always at the base of what we do. Now the Swiss thing is that the word functionality, it begins with fun. So it's not like a boring part that we have to get over with. But the functionality and the performance, of course, is a lot of research and is very broad of what we look into before we check the materials, which is the sustainability layer. We find it's an absolute responsibility of the design team to drive that factor and only functionality materials, everything has been checked. There is the part of styling, which I think is the last 20%, 30% of the work happening in the design team giving all the results that we've been finding throughout the research and conception phase than a product phase. From this triangle, you can imagine there are 3 steady pipelines that inspire us, when it comes to the aesthetics of things. And those 3 pipelines, they are the aesthetics of sustainability, the aesthetics of innovation and the aesthetics of performance. This is all pretty rational because we can go after a new set of materials. We look into how we can dye or not dye products. How we make processes more environmental friendly. And then how does this reflect in the looks. The aesthetics of performance, this comes through the relentless collaboration with our athletes, where we ask them not only what they have in mind, but of course, we ask them as well to validate the products. This happens subjectively with the athletes, but then we countercheck as well with our sports science team if scientifically, our products really work. So this means a whole product language or a whole product family can be born from a process, which is very tech-led and which is very scientifically led. So here, we have these 2 and last but not least, we have the innovation part, where it's the same game where, for example, with the Cloudsurfer, the beginning was a computer model in which we try to calculate the right that we wanted to give our footwear. So this was the clear goal from the beginning because we wanted to define whether we can steer this ride depending on weight, depending on tempo, depending on distance. And actually, all this research led to a shape that ended up in a whole product range that we now call one of our staples and as well want to grow. There is one more pillar or overarching layer, which we call sui generis which for us means from scratch because behind all the rationales that we see in the 3 other pillars. There is as well one which is really hard to rationalize, which is probably a bit like the magic design layer for many people that tries to regroup all of this and to create silhouettes that just have not been around. So with the silhouettes, I mean, shapes or footwear, shapes of apparel that are entirely new to the market. And the reason why I believe this is so important is that technology gets protected to patents, which is a process and then you have like a somewhat technocratic results, which gives you legal protection, but eventually, people will try to copy you. And what happens if you can establish a design that nobody has ever done before in the market by claiming the design space. And by just being out there with it over time, this is then very hard to take away again. So quickly to illustrate, thanks a lot. We brought these 3 shoes, which look very, very different. I take this one as an example. This is the cloud Nova, which dates back a few years now. When we first developed and through this, we really were not sure if this shoe has a niche in the market. We didn't know really how to call it. It was a running sneaker, but for what audience like, let's be honest, it was a bit unsafe. And now over time, it grew into a really nice stable of ours. And the great thing is it's definitely a silhouette that wasn't there on which we build now a franchise, and I feel this is 1 like typically 1 of those which will be ever ours. And so besides all these rational pipelines that we have through athletes and functionality, this culture of trying to create designs out of nothing, so to say, is a super important validating pillar that cross pollinates with the others and which hopefully leads to what you experience today a bit as an overall and general design language of On. So to conclude, besides the daily, which honestly never feels like a daily, it feels daily new. That's the only part. We're looking into the future with the design team. As you can imagine, right now, AI big topic. How does that support and extend the abilities of our design team, a great journey that we're on. But very important, I would like to recap again quickly now. So yes, we believe that design is a very powerful and disruptive force. We do believe as well that it's no coincidence that some companies that have been very successful in the last few decades use design as a pillar. We will continue to make technology visible, and we will be at the forefront about everything, which is aesthetics of our sustainability, but as well with innovation and performance.

Thank you very much, Thilo for sharing some of the secrets of design add-on. So running is at our very core and On has been born from running. And I think it's probably not just us, right? So ask yourself, when did I first start to run and if you think about that, probably thinking, yes, must be somewhere 2 years old, probably even started to run before you actually started to walk because it was a little bit easier and so I feel it's what makes running so versatile and so universal. It really is a foundational sport. So as we grow up, we demand a lot more as we do from not just running, but from running gear as well, performance lightness, flexibility, comfort right, moisture control, protection against the elements. And so this is what continues to make running so versatile. So a few months back, we actually decided to have an Apple computers to Apple moment, and we dropped the running from our URL, it made our URL much more versatile as well. So it's on.com. Now it's on.com and our ambition extends far beyond running. On it's running core allows us to organically grow to adjacent verticals from the running route to the outdoors, to the trail and On is born in the Swiss Alps after all. But then also to training. We see a lot of athletes, sports omni force that take the running -- that take the running gear from the street to the gym and to their training routines, Tennis and court. So stop and go, stop and go something that's actually inherently also in cloud tech that is a lot about cushion landings, but then explosive takeoffs again. And ultimately, to all day because the sport silhouette today is the new uniform. So we approach these verticals as a premium brand. And you heard Martin saying it, we see the addressable market for these verticals north of 70 billion. So that means that we're just scratching the surface, and I would love to ask Caspar and Gerald to take us on a journey how we're building these sports verticals.

Thank you, David. Yes, it feels like yesterday that we started this brand with a view of putting the fund into the run and keeping away from injuries. Today, On is in the major markets. In the main markets we are in the top 3 as a running brand. We are, by far, the one with the biggest momentum as measured by revenue growth. And as it was mentioned before, we go out on the running rounds and we're counting. And our clear mission is to be the #1 on runners bodies. And today, I feel more than ever, we have a shot at reaching there. Let me walk you through the strategies that we're deploying to actually get to that goal. I'm not saying we're going to reach it within the 3 years, but we're not going to stop until we're there. So our teams have a very powerful method for it, when it comes to how we talk about strategy about how we're going to win in running. And it's basically built on the image of the cloud, and clouds can produce both lightning and rain. And lightning stands for the brand energy that comes out of winning races to inspiration, it gives both to consumers and our own realization and rain stands for, well, make it rain. We also like that here at On. So starting with lightning, there's been a lot of talk about that, I'm not going to go through all the details, but you see 3 very gifted athletes here. You've seen Hellen Obiri take out the Boston Marathon and probably the strongest women's field in a long time. We've seen Gustav Iden literally, shredding the run record in Kona by 3 minutes. And very recently, 2 weeks ago, [indiscernible] Yared Nuguse ran the fourth fastest mile ever breaking the North American, the U.S. record and coming within 0.8 of a second to the world record on the mile that's been standing for 25 years. And let's just say, the late '90s were necessarily the fairest time in sports. So now with these new technologies, people are actually going a lot faster. And so there's this arms race going on within the top running brands of who makes the fastest shoes. And we have put together a team the lightning group here of over 20 engineers, sports scientists, material scientists, and we have leapfrogged our peers to be in the front pack of that race. Now without revealing too much, I can only say as much in 2024 in August next year, our athletes will tow the line in yet again, 2 groundbreaking new speed enhancing technologies that we're not going to reveal today for obvious reasons. Now let's turn our attention to how we're going to make it rain with consumers. Now as you're following this space very closely over the last 18 months, we have significantly and successfully reshaped On's product portfolio to reach even more consumers with even more relevant styles. These products that we've launched in that time period of only 18 months include the Cloud Runner, the Cloud Monster and the Cloud Surfer, which are roughly half of on sales today. Cloud Surfer, of course, being the first one to feature cloud tech phase. Now building on these successes, we will now start to consolidate our technologies, all our products in running into very clear product franchise brands with a view of getting brand name recognition for these brands and enabling our fans to self-select the right products for them. We're going to make it a lot easier for consumers to find the right product and they can say, Well, I'm a reference, I'm in the surfer. I'm going to get surfer -- little surfer, big surfer backs to make it very simple. Additionally, we're asking ourselves, we have all these athletes winning races, going a lot faster. That's great for them. What about me? How can we bring these performance-enhancing technologies to the everyday runner. How can we upgrade your running experience, not for a sub-2 marathon, but for a sub-5 marathon? How can we create the e-bike of running shoes. So more and more, you're going to see these technologies come into these product brand franchises that we're creating and running. And you can upgrade for CHF 40, CHF 50 more into one of these super shoes. We call them the super shoes for mere humans. And the first product to drop will be the Cloud Monster Hyper as of February next year. Overall, these initiatives will also help us to further increase our average price points. That's a very clear goal. Martin mentioned On's will only go up and will allow us to become more profitable and it will further fuel the aspirational quality of being the most premium sports brand out there. To wrap the running section off, we love product. Just a couple of highlights. You've seen this morning some of the innovations on the apparel front. For example, the ultra checked, there's already a new version of that coming. It's getting even lighter. If we continue at that rate, it will go into zero -- into negative weight. Let's see how we get there. We have Cyclone now coming to apparel. We have clean cloud, so capture carbon coming to apparel as well. And then on November 2, the next product based on cloud tech face, the Cloud Eclipse or a Max cushioning product from On will hit the shelves, very good preorders on that. And clean cloud, the capture carbon EVA will roll out to millions of pairs actually starting in '25 already. It's about 2 or 3 years ahead of our initial time line for that. So that was running. You can feel the focus on running. We're not just going to double down on running, we're going to triple down on running, and we will work towards that goal of ours to be the #1 on runners bodies. Now a new baby training, we're very, very excited today marks the official start for the training category, performance training. Now -- you may have seen on your recent visit to a studio or gym near your house, that there's already quite a few members there varying on products. This has happened completely organically. But now we want to start to design to these communities with intent. Starting now in 2024, we will double down on training and build products for and market to these communities, whether it's for high intensity work outs. It's treadmill work, it could be lifting weights or lower intensity workouts like yoga or Pilates. In training, On will lead with apparels, and that's very, very important. For every footwear piece sold in training, there is about 10 apparel pieces. And some of you may have seen some of the pieces this morning, we will focus on the most premium materials as well as the Swiss engineer details and clever features that already set this support. And we will cater to new aspirational consumers, and adding to the growing Aniverse of communities that we serve. As always, On pieces are versatile and transition seamlessly from studio to street, so I expect to see them encounter them outside the gym as well. We will of course, also built purposely made footwear for training. The first one will actually launch very soon in spring. This is the cloud Pulse. It's designed for explosive workouts with intervals of cardio such as running perfect for your favorite high-intensity internal training class or boot camp. We already have very strong interest in the training category from some of our strongest wholesale partners such as DSG, in the U.S. or the premium into sport doors here in Europe. With this, I will hand over to Gerald, our Chief Product Officer, to talk to us about Tennis.

Thank you. Thank you very much, Caspar. And I mean everyone talked about their amazing entrances into this company. I actually joined in 2019, I spent 10 years in Big Tech. And I got a little bit unlucky because today I started, actually, that guy started. So -- here comes a guy, 20 major wins comes into the office day 1 sits at the table and he's like, yes, what about this? What about that? Like he knows stuff. He knows how to do product. He's been there, and he wants to take us on a journey to bring court lifestyle to the next level. And I'm there, I'm like, yes, it doesn't sound familiar at all, but let's go. So I think if you heard about the explorer spirit, if you heard about the 8 building blocks, the strategic building blocks that Martin mentioned, Tennis is very much at the core of that. So together with Roger, we sat down, and we actually haven't stopped since then. So every couple of weeks, he comes in, and these guys walk around with him very casually. There's still a lot of people selfie here, selfie there. And it works really well. And Roger is just not just great at that, but he really has helped us to build a very exciting range of products. Starting with the ROGER Pro that you've seen him playing on his very last few matches. No comebacks, right? All the way down to the lifestyle silhouettes or what Thilo here brought to the table, we're now building an extremely compelling range of court products for all different usages. And Roger now comes with a team. You heard about the Ben effect, so I'm not going to speak about that again. But then there's also Iga, and has been here as well and Iga knows tennis, very different style. These young players, they go completely different on the court. So we had to rethink and restart from scratch, but we have a great team of designers, developers, engineers, we read it a completely new tennis shoe. Now on Iga's feet, probably on your feet, if you like to play tennis or padel or any of that pretty soon in 2024. And then there's that look. Pink, Iga, No, should be Ben, right? So we really mixed it up when it came to the U.S. open. We're super excited about that team being here with us in the product team. Every other week, yes, they have a lot of opinion, but it helps us a lot to really bring that next level gear out for everyone, who is extremely excited about being on the court. But on the court is just part of the game. We're also very much looking at how these athletes help us approve technology to bring it off court. So I saw throughout today a couple of people wearing these court lifestyle silhouettes, all called the ROGER. You wear them. They have cloud tech. They're super light. They're nonleather, AKA, vegan, and they really bring that next level of comfort to your court lifestyle all day wear. Together with the team, we really want to double down on that. And then as you probably have seen with some other brands, it's also all about bringing that lifestyle over to your head to toe. I'm wearing it in black, but it's also available in white. So it will be really all about how we bring that tennis excitement from Roger to Iga and Ben over to the broad range of consumers who now look to us not just for running, but also for tennis. And then we've had some things going on as well with some partners. So we've worked with Kith in New York in the past. We're going to work with a partner called Beams in Japan. With our friend Woody White over in LA, who runs Oyster Tennis Club, also giving access to the courts for underprivileged communities, and we really look at how we can build that community on and off the court for our brand and how they will then help us really to embrace a great tech that starts here all across the world, which I think we already did at the U.S. Open, Alex, it's your video, but I'm going to show it, still quick. Okay. [Presentation]

So if by any chance you're in New York around August next year hit us up, we might find a little spot for you on the court to go playing with these guys. And then we want to round up the 5 verticals with what we call performance all day. It's our vertical where we play, but we keep the performance in there. So why do we call it performance all day? It is our approach to translate great performance product into all day comfort. We have a dedicated team of engineers, who very much focus on that. So when you think Cloud Surfer think what can come next. If you translate that for an everyday use for a consumer that might be a little bit slower than just running and still maintaining that next level of comfort. One example is also the Cloud Nova that Thilo for example, showed, when we originally started the Nova, we sent it to our testing team that until then only tested running shoes. They were like, isn't that a lifestyle product? Like, no, no, just test it. And they came back and they were like, hey, you can actually run in that shoe, maybe not the marathon, but at least the 5K. So I think that's the approach that we really want to take also, when it comes to performance all day. These products, they have to work, maybe for Caspar, not exactly good enough for a long run, but at least for me, it still works. So always rooted in performance is our promise. We never compromise on performance. No matter if it's our cloud waterproof shoes that you're going to wear on a rainy day in New York. Our new challenger jacket that just launched extremely breathable, Noa is supporting the vest version of that and is super lightweight or my personal favorite, the On cap, everything is rooted in performance. And then there is run culture. So run culture is something that we very much care about in this company. It is something that all of us are extremely, extremely keen about. And when you go out for a run, it's just better if you do it as a team. So like this morning, when you broke sweat together and when you came back, it's that different kind of feeling. We share the same passion for stylish gear, a good look, but it's also really about how it performs and how running can become a team sport. If you go out with a crew, it's very addictive. That run culture thing has somehow also translated to something called fashion that you probably heard before. And that intersection of performance and design for us really has become relevant as we've been designing product together with a fashion brand that is called Loewe. So on October 12, we're actually going to launch our first Cloud Tilt silhouette, which is an adoption of what you see on the Cloud Surfer together with them. And then this is really how we tweak comfort, design and everything into fashion relevance. And as we look towards the future, Jonathan, Anderson and team at Loewe, Thilo and team at On. I think there's some exciting products ahead. David, over to you.

Thanks a lot, Gerald. So we feel it and product pipeline for On is incredibly strong. And so I can tell you, sometimes we're getting a little bit itchy because we're working on these products that are still way out and we're itchy to reveal them, but it's an incredible lineup. And we are building winning products in the performance scores. So very much from running, but then also from trail and then from pro tennis. At the same time, we extend the performance core, as you have heard, to an authentic active lifestyle. So running as the most universal versatile sport extends into training, of course, and then trail running and hiking extends into an outdoor lifestyle. So when you travel, when you want to be protected, from the elements very versatile as well. And then tennis extends into a court lifestyle. Of course, Tennis for now 100 years has been influencing fashion lifestyle as well. So it just naturally extends over. And a blend of these lifestyle silhouettes is the new uniform of an active lifestyle in performance all day. So you might ask does On already resonate with the community in these lifestyle corners. And we can tell you absolutely, because over the last years, On has built blockbuster shoe franchises in lifestyle. So these are independent silhouettes from performance footwear, and they are each hitting beyond 1 million pairs. So take, for example, the Cloud X in Training -- in Training lifestyle. The Cloud and the Cloud Nova in performance all day. The ROGER in court lifestyle, and we are very much looking forward then also to the launch of the Cloud Tilt that we have shown, which will also drop in performance all day and then also the cloud horizon, who brings cloud tech phase, our new technology platform to the outdoors and also crosses over to the outdoor lifestyle. So as the same time as On continues to pivot from a footwear to a sportswear brand, it's exciting to see how we are creating full looks and bring the On brand to the full body. So you see how we transition seamlessly from -- the Street then also to the gym and how we also have collaboration partners like, for example, Loewe who build on our very premium apparel collection and integrate some of the premium pieces of On even into their collection. So we continue to work on our performance, promise, feel nothing to feel everything. So beyond looks, apparel will deliver on our performance score. Our vision is to be the most premium global sportswear brand. And this all means that we are working towards our vision. And with that, we are giving you a bit of space to breath, to stretch and to hydrate and we do a break of a few minutes, actually 25 minutes to be precise, right? Before we come back to then talk with the market how we scale the sports in the markets. Thank you very much. [Break]

Hello, I know the break is super fun. But this is more fun. Welcome, cool. How's the presentation going for everyone so far? Interesting, Yes. Okay. Good, good. Well, now it gets really fun because you have all the women on stage that actually make all this s*** happen and bring it to market and also take all the creative innovations and brand stories and impact initiatives that you just saw in the first part of this presentation. The 3 of us are going to walk you through how we actually meet consumers, where we meet consumers and how we expect this to evolve. So I'll do a quick introduction. My name is Britt Olsen. I am the GM for Americas and our Head of Global Commercial Strategy. I have been at On for almost 9 years now. I was the third person in our Portland office, so have been incredibly grateful to see the growth and scale of the business. I also have David to think, I think you should be Head of Recruiting now, maybe after bringing so many of us to the organization and stalking us for months on LinkedIn, but it was a great choice to join in the end. Cool. I'm going to hand it over to Rebecca and Amanda and let you two introduce yourselves before we move into our channel mix.

Awesome. Is this working? Perfect. Hi, everyone. I'm Rebecca Cai. I'm the General Manager of Asia Pacific. I've been with On since 2020, first starting in our Zurich office and then early last year, got the opportunity and call to move over to Shanghai, where I'm now based and very excited to be talking a little bit more about our market approach and then specifically diving into China, which I know has been an interesting topical conversation for a lot of us so far.

And then Hi, everyone. My name is Amanda. So I've been with On -- or I lead the digital team within On, and I've been here a bit over 6 years. So when I joined, we were a whopping 8 people on the e-commerce team selling a few pairs of shoes on a really old rickety website. And so today, it's just really exciting and humbling to be able to just take a moment and share just how far we've come and give just a little bit of a glimpse into what we're dreaming up next. So really looking forward.

And you might have noticed, we're the 3 Americans on the management team, but I think I'm the only one that still lives there. So I'm not used to having so many of you in Zurich with me, so thank you for traveling all the way here. Cool, we're going to dive into channels. So I think what's something really important for everybody here to know is that since the very earliest days in the beginning, we really always built a mindset internally where channels should be complementary and not competition. And this is very much how we've set up our team, and this is how we lead our team to rally around that vision. So we know we have a lot more power in building the brand and closing this awareness gap, when all 3 can play together. But we also respect that each of them have something very uniquely different to bring to On and our consumers. So you'll hear a lot from Amanda today around e-com, but this is where we can really bring the most expressive and digitally scalable version of ourselves to the world. In this environment, we actually often choose brand as a lever over conversion lever just to make a relationship feel a bit more sticky and less transactional and this keeps our customers coming back for more. Amanda will talk about that later. In retail, everyone is excited about retail, right? Okay. I hope so. Because you need to remember, retail and On. This is a place where we really have the opportunity to build our most intimate touch point. So we can be super human, we can convey our design DNA, our innovation DNA. We want On customers to feel when they come into our stores, hopefully the same way that we've made all of you feel today. So you might have known something about On before, you probably interacted with us somewhere. But today, you leave with a feeling and a connection to who we are and what we're trying to build. And last, but not least, wholesale remains a super important channel for On. So not only is it a place where we can and authenticate new product -- it's also a place with some of the most important and biggest partners in the world, where we can scale and amplify what we're trying to achieve. Okay. Great. So hey, a founder favorite story. You may have heard it if you've been in the Aniverse for a little while is the realization that if you start a brand in Switzerland, you actually have to leave pretty quickly, if you want to have scale and impact. So we have had a bit of the forced luxury of being a global brand for over a decade, which I think has given us a really big competitive advantage. So today, On is fortunate enough to operate in 60 countries with over 9,800 partners and distributors over the world. Great. So we have this diverse portfolio of channels. We have different markets. You talked -- Gerald talked to you a lot about verticals. Within each of our 5 verticals, we've identified 12 communities that we consider to be communities and personas and fans that On has a closer deep connection with or we want to have a close and deep connection with. And what that means is that within these channels, we know that we need to tier product and we need to segment products so that regardless or depending on the channel that you go into, you're having a very different personalized based on what you want from On. Now the fun part is making sure that this segmentation strategy and tiering of product head to toe plays across all 3 channels. Good. Outside of channels, we also want to talk to you a little bit about how our markets play across the world and where they're at in their growth phases.

Perfect. So we have a very diverse portfolio of markets from entry stage, to established stage, to even more mature markets. And someone who has now lived in the U.S., China and Switzerland, I've had the opportunity to kind of live in each of those different buckets. And that's really apparent when you talk to consumers. So when I moved over to Switzerland, everyone I told that I worked at On, knew what company I was talking about. In China, I do a lot of introduction. Hey, this is a running Swiss brand that sells global sportswear product. I pointed the shoe. I do a lot of introduction, and that really shows the momentum of the brand that we have and the opportunity that we have in some of these earlier markets. So like I said, in markets like Japan, in markets like China, in markets like Latin America, we are really just getting started. And here, we can not only see a large addressable market size, but we also see the strong growth of consumers in those markets, getting more and more excited about sports. We feel this is a huge opportunity for us as a brand to invite new fans into our products and into our customer experience. Looking at a market like Europe, where we have a more established business in Central Europe, you can also see that there are a lot of majority of markets like France, Italy, Spain, where our market share is around the 5% mark. We're super excited about the momentum of these markets as well and how we're tapping into a diverse community of individuals as well as the young community that we're already reaching in those markets. As Martin mentioned earlier today, we've also introduced training or [indiscernible] training as a new category, which further increases our total addressable market as a brand. As we grow in a lot of these diverse markets, we feel it's super important to tailor our distribution strategy and expansion strategy depending on the consumer landscape and the preferences for that those consumers have when they shop. So in markets like U.S., Germany and Switzerland, where there's a large network of premium wholesale partners, some of them which you mentioned today, they really enable us to amplify our brand story, to connect with consumers and complement some of our direct channels. In other markets, let's take France as an example, we see a limited amount of premium channels as well as specialty partners. And so to move beyond the position that we've already created, we feel it's important to now build meaningful physical store presence to really invest in our own retail network. And our first chapter store is Paris is opening up in the next few weeks. We're super excited and invite you all to come join us for that opening. In a market like China, which you see all the way on the opposite side of Switzerland, we have to fully adapt our multichannel approach given there are very limited wholesale partners that are in that region and the way that customers shop is very different to where they shop in other markets. And so what we do in a market like that is we work with franchise partners, who help to build that multichannel distribution with us and grow that in conjunction with our direct channels like retail and digital. No matter where we are in the world, e-com is a key channel that we feel really connects across everywhere in an opportunity, where we can build close customer engagement. And so to speak more about how we bring this to life, Amanda is going to share more details.

Thank you. So as Britt and Rebecca touched on, each of our channels plays a very specific role in how we reach our customers and essentially grow our fan base. Our approach to e-comm is extremely complementary to our multichannel approach because it's much more than just a transactional engine. But we really view e-comm as core brand-building engine alongside. And this is really our strength and one of our core differentiators in terms of how we position e-commerce compared to a lot of very transactional heavy websites. So there's a few things that e-com uniquely brings to the table. For one, it's the only destination, where you can really feel the entire brand pulse of the organization. So whether it's learning about right to run or signing up for a community event, it all has a home within our digital flagship. It's also where you can have really the most intimate and personalized experience with the brand. And it's also the only destination, where you can see all of the products that On has to offer. Now as a result of our commitment to really focusing on this differentiated experience, our e-com channel does and continues to outgrow our wholesale business. Since 2019, we've tripled the number of visitors On -- on the website and have managed to over-proportionately grow net sales alongside. We also continue to see really strong momentum on the acquisition front. So actually, over 51% of our transactions are still coming from new customers to the brand. Now once customers are really immersed into our e-com environment, they've shown to be extremely captive and loyal. So over the past few years, we've managed to steadily increase the basket values as well have been able to drive really strong both cross category as well as cross vertical shopping behavior. And actually, when we look into our repeat buyers, what we see is that over 40% of them shop for more than one category. We're extremely excited and really just energized by just how loyal the On fan is. Essentially, once you're in, you're in and the stickiness really just grows with each order that our customers make. Now we've come a really long way from the rickety old website that we had back when I first joined. And we've really invested a lot and have built a really strong and premium brand home on.com. We've significantly invested into both our tech as well as our organizational capabilities to really elevate the customer experience across a lot of dimensions. And this comes to life in multiple ways. So for one, it comes to life in our ability to truly personalize the experience based on deep consumer insights. It also comes to life in our ability to provide truly cross-channel brand campaigns. And it comes to life in our ability to provide a really premium and seamless shopping experience to our consumer. We will continue to overinvest in these capabilities. But now in addition, we will also now expand across even more interfaces. And this will give us even more -- this will give our fans even more entry points and touch points into the brand and to experience on. So as part of this expansion, we will launch an own app, and this will be a new and very intimate home for our loyalists and members. We will also further lean into social commerce. Now this is an area that we're already seeing really strong in China. And now we have the opportunity to further expand in these platforms in other markets. And now 4 markets where we might be limited in our ability to reach new consumers through our own e-com alone. We will expand our brand presence through premium marketplaces as well as enable some of our distributor partners to operate e-comm in additional markets, where we're not yet serving. Now the digital space moves extremely fast. And just as the shopping destinations and channels will evolve, so will how consumers actually shop and it's really important now for us that we continue to innovate on the experience layer alongside these really rapid shifts in both technology as well as consumer demands. And so I think one just really good example of this is around conversational interfaces. So there's a lot of buzz and hype around AI at the moment. And I think in and of itself, it's really nothing new, right? We've been leveraging AI through our tech stack and tooling landscape for a long time. But what is fundamentally different is and the disruption we're currently seeing is really on the natural language side. And this has the potential to fundamentally disrupt how you will start to interact with technology. And if you think about it, our generation, we've essentially been topped and really primed and learned how to Google. And just as we've quickly seen the shift from clicks to swipes, we believe we will now start to see the shift from keywords to really fluid conversations. In fact, we're already starting to see this behavior when we look into some of our search campaigns as well as our on-site search behavior. And we will invest into both the UI experiences as well as the underlying intelligence that enables us to adapt to this disruption. We're already in the process of building and piloting these conversational interfaces, and you can expect to start to see these elements become even more elevated and connected across the user journey. But when it comes to building these really intimate and close relationships with our customers, we won't just stop on e-com alone. So in fact, the growth with some of our key account partners as well as the expansion of our own retail store network, which you'll hear even more about opens up many more opportunities for us to provide an even stronger multichannel and just very connected brand immersive experience. And with that, I'll hand it over to Britt to touch on retail.

Cool. Yes, I prime to you that retail is important, so we're going to keep talking about it. Who here has been to a retail store, not including the Zurich for today? Okay. Most of you. Great, especially in the front row, nice. How was it? Feedback? Good, good. We got a lot of thumbs up. Okay. So a lot of people might not know this, but actually a very, very, very first retail store came long before we ever even defined this as a channel or before we even had a team working on it. So about 5, maybe 6 years ago now, we outgrew this very small ground level corner office on 11th in Marshall, in Portland. And Martin and I were packing boxes, moving out to our new office and he said, "Hey, we still have 6 months on this lease, what should we do with the space?" And we're like, "well, I don't know. Let's paint a wall black and hang some shelves on it and put some shoes in there and see what happens." And we did it, and it's been 6 years and the store is still operating and still doing extremely, extremely well. So we're happy that, that team is getting a big new upgrade in the back half of this year, well deserved. So it's very much been an important channel even long before maybe we all realized it. Hey -- sorry, goes back. Nostalgia side, retail has been an incredibly successful launch for On in many ways, and it's something that we're super excited to build. What we see here again with these channels playing together. This is an example that came directly from London, but it's something that we see in many markets where we open new stores, and that is as we opened the London Regent Street location, we saw the baseline and e-comm traffic increased by 3x. We also hear of a really great spillover effect in our wholesale channels in these markets as well. In addition to us seeing that -- it's a really tough clicker there. In addition to us seeing the spillover effect across different channels, I think something that Marc touched on earlier, but that we're super excited about is this validation of On being able to play as a true sportswear brand and a true apparel brand. So we know that in this channel, apparel works for On. You see here a few different ranges, whether it's 16% to 26%. We have some stores where there's actually 30% apparel share. So when it is merchandised, right, and in a very design-driven On way, we know that this has an ability to connect with consumers. And on the very human basis, it's actually a really great testing ground for us to get feedback directly from consumers for our apparel category. So Sam, I'm not going to tell you the number of stores that we're going to open. I know you're going to ask me. But I can at least tell you by the end of the year, we'll have around 30 stores globally, a few of which you can expect be coming soon in places like Portland, Miami, Spitalfields and Paris will open in the back half of this year, priming us for a big Olympic year moment. In Paris, what you see here is a mockup of actually what you can start to expect in our new formatted stores. So we're evolving the customer experience, tying back to a bit the segmentation and tiering approach that I spoke about. So when a consumer walks into an On store, we really want to be speaking more personally to the community. And so what will happen is a very guided merchandised experience where footwear and apparel for a specific consumer type will be merchandised in a store in a much more thoughtful way versus having just apparel and footwear separated. So really trying to use design here to bring the experience together. In terms of formats, I think a couple of years ago, we had mentioned to this analyst group that we were staying very much focused on flagships and global city locations. That strategy has changed slightly, just Given the success and how we want to accelerate this expansion. So we will be moving forward in retail with 3 different operating models. Flagship is very much something that you can expect to see on a high street, we should expect high volume, very big brand presence and more of a chapter store. This is where we want to just boost a community that's probably already a little bit aware of On, but we're really trying to attach to this performance core, building run culture, bringing a lot of brand moments to life. This is something you can experience at Williamsburg as an example. And then the commercial format is meant to be a place where we can scale a bit faster. So these are a lot of the stores that Rebecca mentioned in China. So typically, mall-based locations where you would find that. So we're -- the message that you should take away here is that we are significantly increasing the scale at which we plan to open stores. So we do want to be opening 20 to 25 stores per year. Within that portfolio, you can expect 10-ish percent to be flagship and then the rest would be split 50-50 between chapter and commercial stores. Cool. Last but not least, we have our very important wholesale channel. So this is a channel that helped us gain credibility in the very early days as we enter markets, and it still remains a very important channel for On. So I think something here in some of the words of the biggest and best retailers that I want to point out here are things that we often hear as a team, which is "On is attracting the most diverse customer of any brand we carry " These are direct quotes by the way. Or I've never seen a brand gain such momentum in this amount of time before or my personal favorite, innovation and storytelling drive demand across the industry. On continues to drive deep consumer connection by bringing both to the market at a rapid pace. So what you see here is that we still have significant room to grow and build presence with our newest wholesale partners. We are constantly fighting the ask to expand at a faster pace and to open up in more doors, but we've been incredibly intentional with that pace, and we're extremely careful about who we expand with and when. So currently, you see here, we have roughly 20% penetration in some of our biggest key accounts. It seems like a bit of a coincidence, but I promise there's precision in this math here that it is 20%. And what's important to us now and in the future is that we are actually increasing efficiency of doors. So our teams really should be more focused on making sure that the visual merchandising is right. We're speaking to the right consumer and that fans walking in those doors are getting the true On experience. So efficiency in existing doors versus expanding to new doors. This is about the strategy that we have here. Good. And I actually -- I love that in the early days when On was very, very small, and we had much smaller marketing budgets, we pretty much spent 100% of it on creating in-store experiences with our retail partners. It's been so successful that we actually haven't really changed that approach. So it's very important that we're jointly building storytelling and bringing a little bit of our own DNA and some of what we're learning from retail into these wholesale accounts. This also has given us some really nice accolades, which we feel super fortunate for. So just in the last year alone, On has been awarded Vendor Partner of the Year at REI, Nordstrom and [ Shield ]. So those of you from the U.S. are very familiar with those accounts. This isn't just the best vendor partner in footwear or sportswear apparel. This is the best vendor partner in that retailer out of thousands of brands across all categories. So something to be incredibly, incredibly proud of. And on the performance run side, which is super important, we just had our biggest month ever at Fleet Feet. So again, this is giving us a lot of confidence that with the models that Caspar presented earlier, where we will be the #1 brand on runners' bodies. Great. So I'm going to wrap it up, but I think it's good to remember 3 key things and you all have your laptops, so you probably want to type this out. We want you to remember 3 things. So, one, we will continue to put a very big focus on building and playing all 3 of our channels very, very much together in a complementary way, although it is important to note that D2C growth will outpace wholesale. The second thing you should remember is that we are launching a huge effort to scale our own retail as a channel. And third is that all regions will experience very strong and healthy growth. APAC will grow faster than Americas. Americas will grow faster than EMEA, but all of them will experience very strong growth. Good. Okay. So now that we know APAC is going to be our fastest-growing region, and I know there's a lot of curiosity in the room about China and how we're connecting with consumers there. I'm going to hand it back over to Rebecca.

Thanks, Britt. Yes, very excited to talk to everyone about China. I think many people know that this market opportunity in China is large and that it's a growing segment of -- in the sportswear category, it's already growing at high single digits and is expected to grow at high single digits over the next few years. I think this is something I knew when I moved to Shanghai but going there and experiencing it is something completely different. So earlier this year, I had the opportunity to run a half marathon in Wuxi with my first marathon -- or first half marathon in China. And 30,000 people were running together, this is the energy and excitement that is now coming to life in China. In a city that's not Shanghai or Beijing, it's probably a second-tier city. The level of professionalism, the level of energy of the crowds that are there, the level of energy of just the runners that are there is something that you have to be in the market to experience and what is making us super excited about the growth potential in China specifically. Even in the first half of this year, we already saw double the number of races in all of last year, and we expect that trend to continue over the next few years. And our growth story at On is just at the beginning. Since we've been in the market and since we've opened our first store in 2019, we've been growing at over triple-digit growth rate, gaining more fans to the brand each year. When you look at other brands as well, you can see that we still have a huge room for growth, and we really want to go after and win the hearts of consumers. So to talk a little bit of our approach so far, we believe we have strong product market fit and consumer affinity for a couple of different reasons. And I'll start first with our innovation and products. So that's something that you've heard a lot about today and got to see some of that products so far. But our product really stands out in a crowded marketplace where the Cloud and CloudTec and CloudTec Phase has become an iconic silhouette. So when I go to a premium fitness boutique, in Shanghai, when I go to gyms, I can see Cloud X really all over the place. And it's -- from a data perspective, our Cloud X is one of the top 3 models on Tmall, which is our -- which is the China's digital market platform where a lot of people shop. We also work with athletes to share and talk about our running credibility. So in the middle, you see [ Ati ]. He's a Chinese marathoner. He was just the second fastest Chinese marathoner in Berlin a couple of weeks ago. He is someone who helps to tell our story of authenticity, credibility of running. You can see him here talking about that in our store with customers directly. Lastly, we've invested a lot in consumer activation. So this summer, we had a 10-week program where we went to inspire and educate many customers who are super new to running. And I had the opportunity to go to a couple of these events. It was incredible. Someone came up to me and said, I am so happy that you guys did this summer. I'm new to running. I felt very comfortable here because you have multiple different pace groups. I can go out my own speed. And she said, "I've even improved so much in these past 10 weeks. I started in the slowest pace group, and I'm working in the second fastest pace group." And these are the stories that we are inspired by and that we love to hear in some of these markets where we're gaining brand momentum. As we just talked about earlier, we are very intentional about how we grow and how we tailor our expansion approach to the unique marketplace of China. So, for example, we have a couple of different digital platforms here. And in China, everybody is very mobile first. It's -- people don't use their computers to shop. And so we have gone with a very digital native, social experience and mobile first approach to digital consumers. So we work with the major digital platforms like Tmall, Jingdong and Douyin, which is like a social e-commerce platform similar to TikTok, where we can reach a broad base of consumers and showcase our digital experience. Has anyone here ever watched a live stream shopping experience? I see some great nods, very excited. For those of you who have never, I want you to imagine that you found about On and you want to buy a pair of [ Cloudaways ]. So you can go on to our live stream and you can say, what are the different colors that we offer? And somebody will -- as a host I will put all the different colors and you'll say, okay, let me see that. What does that look like on foot. They can try it on for you. They can show you what it looks like. They can answer your questions. Is it something I should buy half a size up. Is it true to size. This is the kind of interaction that we are developing and we're working on to really showcase and socially talk to our customers throughout the digital marketplaces. We also have in China, something that we launched last year called our WeChat Mini Program. And think about this like an app within the WeChat ecosystem, WeChat is one of the most popular social media messaging platforms in China. And this for us is a connected digital base for our fans, where we can enable our fully integrated omnichannel approach. So as an example, you can register for a community event on this program. You can save the shoe you tried on into that program, and then you can purchase it directly in that program or buy it online using the store finder. So fully integrated approach through that program and something that really connects off-line and online together. From an off-line perspective, we strive to maintain a similar brand image and customer experience regardless if that store is own operated, so we operate it or if it's operated by a partner -- a franchise partner. And so we are building our retail stores in key cities, so key top-tier cities. Here, you see Beijing, Shanghai, Chengdu, where we really can solidify our brand positioning as well as use that as a hub, as I said, to connect directly with consumers. So we do community events. We offer head-to-toe experience, and people can really come in and engage with us as the most close connection physically off-line with them. Complementing this approach, we also partner with select franchise partners that help us to grow the brand in some of our new cities or emerging cities. So things like Wuhan [ Hangzhou, Chongqing ], where we have the ability to really scale more efficiently and amplify our reach to new partners directly through our franchise. So by the end of this year, we will have around 50 stores, both retail and franchise across 18 cities in Mainland China. And as we look to the future, we will continually strategically expand our distribution approach following this tailored marketplace approach which really will deepen some of our presence within those key cities like Shanghai, Beijing, [ Chengdu ], and also add new fans in emerging cities through our franchise partners. All of this will be complemented and connected by that digital landscape. That I showed earlier. And looking forward, we really believe the strength of the brand through our localized brand storytelling through our strong innovation pipeline that's really resonating with consumers and the full integrated approach, we believe we'll continue to strengthen the brand momentum that we have in the region. So now I know a lot of you have been waiting for some of the numbers to come out. So I'm very excited for -- to welcome Martin and [ Sam ] to the stage to talk about financial ambition.

I mean if you have so many amazing products, and you have such a power on the distribution side, makes it actually very easy for us to talk about numbers. It's a very positive thing. So our journey goes quite a long time back as well. We had a couple of adventures inside the office, outside the office. Very happy that we are now co-leading the finance area. So maybe you give a short introduction as well.

Yes. Thank you, Martin. It would have actually been the same [ interject ] that you made. So we think alike. But for me, this goes even further back. So I've been with On for 6.5 years and had the chance to see a few things, also leading the DTC team the last 3 years. But I remember sitting in the McKinsey office as an associate 13 years ago, and Caspar was actually walking in, trying to sell as the first version of the Cloudsurfer and I was like sure I give it a try and I trashed it in less than 30,000. So I was telling him like, hey, I count the month until we come back to a real job. And here I stand now correct that 13 years after and now even in this position, co-leading it with you. Keeping count of all the amazing things we're doing. And super excited for this next plan period. And yes, we can now bring it together what you all heard in how the numbers are going to look.

Good. And before we go into the numbers, there's a bit of rumor in there that we always guide conservatively. And I just want to express again what's our core belief here. It's linked to our culture, and there's a strong belief that if we are in an environment where we put ourselves in a position that we can exceed our goals, it creates much more happiness. And this is what we do, and this is driving also what you experience from us is our guidance philosophy. It's what is also now reflected in our 2023 guidance that is out with 45% growth versus last year on net sales. 50% gross profit, 60% on EBITDA. I hope you got away from us all of the day. There's a lot of confidence in our business at the moment in the long term. We are here for the long term. So durable growth is not just a slogan that we made up. It's a slogan that everyone here in the room lives. And -- that's also reflected in our aspirations for 2026. I already mentioned most of that earlier, and then Sam will take you through this. So we want to double our net sales. We want to exceed CHF 3.55 billion in 2026. We will heavily focus on profitability with an 18% plus target and all of that based on a very solid gross profit margin of more than 60%, really reflecting the premiumness of the brand. And now I'll let you dive into some of the details there.

Yes. So doubling net sales in 3 years actually reflects the CAGR of 60% -- 26% or more, which you know is currently above our long-term guidance of 20% to 25%. And also on the gross profit margin, when we look at our 2023 guidance of 58.5%, we're getting closer to our 60% target, which we clearly reiterate here as our 2026 aspiration. And as we have done in the previous plan period, our profitability, we are focused a lot on profitability. We expect this to grow the strongest out of the 3 financial metrics and to achieve an adjusted EBITDA margin of 18% or more over the next 3 years. So when we now dive a bit into what drives this actually, if we start on the net sales side and when we were sitting down a few months ago and really building up that bottom-up plan and looked at the regions at the channels, we really can say we're in such a fortunate position because we have so much tailwind. And we currently have more runway for growth that we can execute on, given the aspiration for excellence and the focus on the priorities we have. What that means in terms of the geographies? Again, you have heard this now throughout the day, Americas will stay our largest region, followed by EMEA and then APAC. But we're very excited about some of these markets like China, which Rebecca just hinted to, where we see a lot of high growth and that will really help us to further diversify the growth avenues from a geographical standpoint over the next years. We're also very excited about the acceleration opportunities we see in EMEA. You heard this at the beginning in the introduction from Martin and Marc and also in the market section, some larger European markets like Italy or France still have a very low brand awareness, and we see room to accelerate there, especially combined with the accelerated retail rollout, which will fuel those markets a lot. And looking at D2C a bit more holistically, Britt just mentioned it before. We have the clear expectation that the D2C channel will continue to outgrow wholesale. We will build on the strong e-comm platform and expanding e-com platform [indiscernible], of course, leverage this expanding retail network that will happen over the next years. From a category point of view, again, for the ones of you here in the room, you saw it in the product section with a lot of amazing apparel product hitting in this next plan period. So we expect apparel share to increase versus the footwear share, and this will happen across all markets and channels. But again, looking at those apparel shares you saw in the own stores, we many China stores already north of 20% apparel share, Zurich [ at 19% ], Williamsburg at 16%. We really see that apparel can work for On, and we have a lot of confidence in that growth platform. On the gross profit side, again, clear reiteration of the 60%-plus target that we set ourselves. The remainder of the difference we have the increasing D2C share over the next 3 years as well as Martin has mentioned it on the price point, we clearly see a continued premium positioning across all the markets. And we also expect a continued high full price sell-through across all our channels and geographies. And on adjusted EBITDA. It's gone as I said, have the highest CAGR of those 3 core financial metrics. This will, on the one hand, of course, be the flow-through of the increased gross profit margin. But then we also see some clear SG&A improvements that will come to life over the next plan period, starting with the lower distribution costs. Again, you have heard this in the operational excellence part. We have already some ongoing projects in our warehouses in Europe and in North America, which will automate -- which will help us scale. These projects take time to come to life. So the flow-through will be gradual, but it's clear that over the next years, we see those improvements. Also on marketing efficiencies, we see this to come to life. We have a lot of this less mature markets with a low brand awareness, which will increase and which will help us from a marketing perspective. Alex talked about this. And we also have, for example, just to mention, one, the halo effect of the store fleet, which will help a lot to grow the awareness. And then with the general growth of ON, you have the economies of scale. So we also clearly expect to see some personnel and structural efficiencies and infrastructure efficiencies to come through. Last but not least, and this is very important to us. Again, we have mentioned it a few times. In the past, we've always said we have a strong focus on top line growth and on profitability growth. But now over the next 3 years, we really the stronger focus on cash flow. We have, of course, continued areas of investment. So you heard this throughout the day. If you think about our 8 strategic pillars. We have there -- some have more capital investment requirements than others. So we have a few listed here. The accelerated retail rollout, of course, will come with continued investments. You have the physical spaces. You just saw this in the section before we see such a stronger brand awareness and sell-through at our partners if we go in with shop-in-shop installations and trade tools that we clearly plan over the next years to leverage this. And we will also invest in our general infrastructure and technology in offices to drive these operational efficiencies but also to have a greater customer experience and for our people to stay that high employer branding and talent attraction where we want these offices around the world where our culture can be lifted and people come together. Said that, there are clear areas for cash flow optimization. So starting with optimized product life cycle. We're clearly planning to optimize our product life cycle, have a very tailored approach by market, which will improve inventory demand based on the demand and supply signals we see very locally. We also expect an overall inventory optimization to happen as we now transition from this very high growth into durable growth, and that will definitely come to life. As well the higher D2C share growth will help our cash flow in the end. So if we sum this up with the higher adjusted EBITDA margin that we target and this area for cash flow optimization despite the continuous investments, we really expect to have a strong focus on cash flow and generate a strong cash flow over this next 3 years. And I think with that, we can already look a bit beyond '26, and I'll hand it back to Martin.

Yes. And Marc, I think I actually let you talk about numbers first.

So one key takeaway of today is On has 2 CFOs, 2 CEOs, and 3 founders. So absolutely nothing can go wrong. But beyond that, so hey, we asked you to visualize 2026 and beyond. And we hope the past 2 hours, 3 hours kind of gave you some additional insights into that visualization. And we hope it gave you a lot of clarity of what we're trying to do. We're committed to a very long-term growth story. What we're doing, we're doing not for tomorrow. We're doing it for the day after tomorrow and the day after the day of tomorrow and so on. That's what we're doing. And the actions of the teams are guided by that because in the end, that will deliver our long-term success. So 3 key takeaways. We're already on the dream on slide. So we would love to go one back, if that's possible. Number one, we're building the most premium global sportswear brand that is rooted in design, innovation and sustainability. Our actions will be guided by that. Number two, On continues to be a growth company until 2026 and beyond 2026. What we're doing will allow us to continue to grow at the pace of roughly 20% to 25%, not only until 2026, but also beyond. It's very calculated. We're very clear on what we're doing, and we're doing it because we want to be super successful in 10 years from now. We're not building for 2026. We're building far beyond that. And this guides that number, this guides our wholesale decisions. This guides the number of retail stores we're putting up. And then this has to lead to increase profitability.

Yes, which is number three. So really the premium position will guide us in what we do. At the same time, it will allow us to focus on profitability. And we see that our aspiration should not stop at 18% plus. Our aspiration should stop somewhere at 20% plus. And this is where we see ourselves in the long term based on a strong margin profile, based on really premium position of the brand. And so with that, we conclude that session. Again, we will invite you to dream with us to Dream On or as we are now in the second iteration to Dream On and On. And we will continue with taking your questions. And for that, Marc and I will stay on stage, and we will also invite Britt up here and very happy to take your questions. Jerrit will hand out the mics. We take a seat and then...

And remember, we're just getting started.

This one works. All right, I'll be timed first.

See what happens when you have 2 CEOs.

Have to take.

Okay. I'm Abbie Zvejnieks with Piper Sandler. So you talked a lot today about performance, innovation, which is obviously very important to longevity of the brand. You just closed those 200 doors in EMEA that were mainly comfort focused. So can you just talk about how you can use that as kind of a case study for other markets? And do you have any stats on how much performance has grown as a percentage of the business? And then do you need to change the perception of the brand in those markets where you closed the wholesale doors?

I'll probably start and probably Britt can elaborate on how we're continuing to build the future. There were a lot of questions in one question. So let's look back a little bit, right? And I think let's bring it back to what we're continuing to build and what we try to build, and we're building a premium sportswear brand, right? And we're building it with wholesale partners that are tapping into the communities that are rooted in run, that are rooted in tennis, that are rooted in performance all day. And so we've been very, very close to them. We've been growing the brand very deliberately. And over time, we also came to the conclusion that in some markets we probably stretched to be too far on the distribution. So we're constantly reviewing that. we closed wholesale doors or comfort doors in the U.S. constantly, by the way. So we were part of DSW. We're not working with DSW anymore. And now we, as already announced in the Q2 earnings, we were closing some of the doors in EMEA, comfort doors mainly where we feel they're not reaching kind of into the community that we want to reach and some of those sales will also be able to convert to our own channel which is very important to us, and so some other partners that we start to work with. And so this is very much a one-off exercise. And this is not something that you can expect us to now do every year because we are super happy with where we are with our wholesale distribution. We feel we're in the right partners. We feel we have the right products in the right partners. We feel we're in premium partners, and we feel we can grow with them at the right pace. So this is really a one-off. And what we presented today should give you a very clear view on how we continue to build the future.

I would just add because you asked about brand. So Alex touched on it a little bit, and you saw a lot of our athletes up here in slides. We're spending an overproportionate amount of our marketing efforts and brand awareness dollars on running campaigns all the way through the funnel. So you see this through investments in OAC teams, which we've started in the U.S., but now are in all regions. In EMEA, specifically with the topic that you referenced, there's definitely an overinvestment in things like world champs, track nights, athletes specific to these markets. And of course, with the lead-up to Paris, we're really doubling down on those performance running efforts.