Financial Data and Key Metrics Changes - The company has raised its sales targets multiple times and is tracking ahead of its 2026 margin targets, indicating strong performance relative to competitors who have cut guidance [7][9] - The gross profit margin reached 65% in Q3, showcasing a strong margin profile despite tariff impacts [31] Business Line Data and Key Metrics Changes - The running category remains crucial, with successful franchises like Cloudrunner, Cloudsurfer, and Cloudmonster driving growth [17][18] - The apparel segment, particularly in tennis, is the fastest-growing part of the business, indicating successful expansion into new categories [20] Market Data and Key Metrics Changes - China has become the second-largest market for the company, with Asia Pacific outgrowing expectations [9] - Brand awareness is between 25%-30%, suggesting significant room for growth as 75% of potential customers are not yet familiar with the brand [25] Company Strategy and Development Direction - The company aims to be the most premium global sportswear brand, focusing on innovation, quality, and sustainability [4][5] - There is a clear strategy to expand the addressable market by tapping into new demographics and sports categories [20][21] Management's Comments on Operating Environment and Future Outlook - The management expressed confidence in the brand's growth trajectory, with plans already in place for product development through 2028 [34] - The importance of team culture and talent acquisition was highlighted as a key factor in maintaining brand momentum [35] Other Important Information - The company emphasizes the significance of maintaining a premium brand image, avoiding discounting, and focusing on full-price sales [11][12] - Automation in manufacturing is seen as a future necessity, with the introduction of innovative products like Lightspray [32] Q&A Session Summary Question: How does the company manage the balance between growth and margins? - The management stated that high margins should not come at the expense of innovation and investment in the business, emphasizing a balance between growth and maintaining a healthy margin environment [27][28] Question: What are the expectations regarding U.S. tariffs and their impact? - The company has implemented pricing and supply chain efficiencies as mitigation strategies, which are expected to remain even if tariffs are rolled back [31] Question: What is the company's outlook on the running category amidst competition? - The management reaffirmed the commitment to remain a leader in running, with significant innovations planned for existing product lines [17][18]

Financial Data and Key Metrics Changes - The company has achieved notable margin improvements, with restaurant-level margins approaching 18% after being back in the 17% range [4][24] - The company plans to finish 2025 in the high 17% range, with long-term targets of 18%-20% store-level margins [24][25] Business Line Data and Key Metrics Changes - The company has refreshed its menu with new items such as burritos, burrito bowls, and salads, while also focusing on chicken on the bone [4][11] - New unit growth has been initiated, with 10 new units planned for the year, marking a return to growth after years of low or no growth [4][35] Market Data and Key Metrics Changes - The company operates predominantly on the West Coast, where the consumer environment has been challenging, but it is positioned at the intersection of quick service and fast casual, offering affordability without compromising quality [7][8] - The loyalty program has seen growth, with users visiting 6% more frequently due to targeted discounts [9][17] Company Strategy and Development Direction - The company is focused on a brand turnaround through marketing campaigns like "Let's Get Loco," which emphasizes fresh ingredients and quality [3][4] - The strategy includes expanding into new markets outside California, with a mix of existing and new franchise partners, and leveraging second-generation sites for new openings [27][35] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenging macro environment but believes the company is well-positioned to navigate it due to its value proposition [6][7] - The company is excited about upcoming menu innovations, including chicken tenders and new beverages, which are expected to drive sales [11][12][13] Other Important Information - The company has implemented operational improvements, including a new labor scheduling system and in-store ordering kiosks, to enhance efficiency [20][21] - The company plans to use free cash flow for new store development and remodel existing locations, which have shown sales uplift [38][39] Q&A Session Summary Question: What has been accomplished in the brand turnaround? - The company has launched the "Let's Get Loco" campaign, refreshed its menu, and improved its business model and margins [3][4] Question: How is the company positioned in the current macro environment? - The company feels well-positioned despite challenges, focusing on affordability and value [7][8] Question: What are the main drivers of margin improvements? - Margin improvements have been driven by evaluating supply chain costs, transitioning distributors, and implementing technology for labor efficiency [20][21] Question: What are the long-term targets for margins? - The company aims for 18%-20% store-level margins, with a focus on sales-driving initiatives to achieve this [24][25] Question: How will the company use its free cash flow? - The company plans to use cash for new store development, remodels, and equipment to drive efficiencies [38][39]

Financial Data and Key Metrics Changes - The company reported strong performance in its direct-to-consumer (DTC) business and wholesale channels, exceeding expectations during the holiday period [11][12] - The fourth quarter marked the third consecutive quarter of comparable store growth, with the company successfully maintaining higher average unit retail (AUR) prices without a decline in unit sales [12][14] - Overall revenue from the identified 150 stores for closure is approximately $110 million, with many being marginally profitable or losing money [26] Business Line Data and Key Metrics Changes - The company has diversified its approach across wholesale, international, and retail channels, with all age categories outperforming expectations [11] - The DTC business accounted for about one-third of U.S. retail revenue, indicating a well-penetrated e-commerce operation [29] - The wholesale business is approximately $1 billion of the total $3 billion revenue, with a significant portion coming from exclusive brands developed for major retailers [35] Market Data and Key Metrics Changes - The company is focusing on attracting new consumers, particularly Gen Z parents, who are more open to higher-priced products [14][15] - The shift in consumer shopping behavior post-pandemic has led to a need for store closures and a focus on enhancing the brand's presence in relevant retail environments [22][23] Company Strategy and Development Direction - The company aims to invest in product design and demand creation to resonate with today's young consumers [6][8] - A strategic focus on brand identity is emphasized, allowing each brand to develop its unique identity rather than applying a one-size-fits-all approach [41] - The company plans to close 150 underperforming stores while also remodeling and relocating stores to better serve consumers [22][23] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges posed by rising prices and tariffs but emphasizes the importance of maintaining brand value through quality and style [17][18] - The company expects to achieve growth in sales and earnings by 2026, focusing on long-term sustainable and profitable growth rather than short-term discounts [39][40] - Management is optimistic about the potential for growth in the wholesale business, particularly with key accounts that are focused on attracting new parents [32][33] Other Important Information - The company is enhancing its marketing investments to drive productivity and consumer engagement, particularly through social media and influencers [10][9] - The transition from private label to branded products on platforms like Amazon is seen as a growth opportunity for the company's core brands [36] Q&A Session Summary Question: What are the biggest challenges noticed since the new CEO took over? - The CEO highlighted the need for investment in product design and demand creation to align with consumer expectations [6] Question: Can you elaborate on the holiday performance? - The CEO noted strong performance across all channels, with the ability to maintain higher prices without losing unit sales [11][12] Question: What is the strategy for store closures? - The company plans to close 150 stores identified as low-margin, with expectations of transferring some revenue to nearby locations [22][26] Question: How does e-commerce fit into the overall strategy? - E-commerce is a significant part of the business, accounting for about one-third of retail revenue, and is expected to grow as stores close [29] Question: What is the outlook for growth in 2026? - Management remains optimistic about achieving growth in sales and earnings by focusing on sustainable and profitable growth strategies [39][40]

Financial Data and Key Metrics Changes - The company has reduced its cash break-even level from $900 million in 2022 to approximately $180 million today, representing a $720 million reduction [24][25] - Free cash flow improved from negative $300 million in 2021 to positive $13.1 million in the first three quarters of 2025, marking a $300 million improvement [25] - Adjusted EBITDA transitioned from a loss of $86 million in 2021 to approximately $18 million of positive Adjusted EBITDA in 2025 [26] - The company achieved net income positive of over $3 million in Q3 2025 for the first time since going public [26] Business Line Data and Key Metrics Changes - The company has transitioned from a multi-level marketing (MLM) model to a multi-channel strategy, which includes direct-to-consumer, Amazon/Marketplace, affiliates, and retail [14][15] - The restructuring has led to a significant reduction in employee count from over 1,000 to less than 300 [15][22] - The company has maintained eight consecutive quarters of positive adjusted EBITDA, cumulatively around $50 million [17][22] Market Data and Key Metrics Changes - The general wellness market is valued at $6.5 trillion in 2023, with the fitness and nutrition categories each representing a $1.1 trillion potential market [5][6] - The company has a significant opportunity to expand its retail presence, which has not been previously utilized for its products [13] Company Strategy and Development Direction - The company is focusing on an innovation pipeline with new product launches scheduled between 2026 and 2027, including the 10-Minute Body program and a new P90X program [18][19] - A retail strategy is being implemented to sell previously unretail products, including nutritional supplements under well-known brand names [20][21] - The company aims to address the total addressable market (TAM) of non-exercisers and enhance brand exposure through retail partnerships [21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the turnaround, stating that the company is a year ahead of schedule and financially stable with cash levels exceeding debt [22][24] - The focus is now on innovation and creative exercise-related programs rather than financial survival [22][32] - The management highlighted the importance of adapting marketing strategies to different demographics and the potential benefits of retail exposure [38][39] Other Important Information - The company has restructured its debt, reducing overall interest expenses by 44% [15][22] - The average interest rate on debt is approximately 15.5%, with a cash position of $34 million against $25 million of debt [28] Q&A Session Summary Question: Has the retail rollout process changed? - The retail process is slower than anticipated due to planogram schedules, but the company is actively aggregating retailer responses [34] Question: What could the long-term margin structure look like? - Gross margins are expected to normalize in the low- to mid-70s, with potential for high 80s-90% in fitness and mid-40s-50% in nutrition as retail expands [36][37] Question: What online media has been most effective for the target demographic? - The company has not yet identified the best medium but acknowledges the need to tailor content for different platforms and demographics [38]

Financial Data and Key Metrics Changes - The company has raised its sales targets multiple times and is tracking ahead of its 2026 margin targets, indicating strong performance relative to competitors who have cut guidance [7][9] - The gross profit margin reached 65% in Q3, showcasing a strong margin profile despite tariff impacts [31] Business Line Data and Key Metrics Changes - The running category remains crucial, with significant innovations planned for products like the Cloudmonster and Cloudsurfer, which are expected to enhance market relevance [17][18] - The apparel segment, particularly in tennis, is the fastest-growing part of the business, driven by collaborations that appeal to younger demographics [20] Market Data and Key Metrics Changes - China has become the second-largest market for the company, with the Asia Pacific region outpacing expectations [9] - Brand awareness is between 25%-30%, indicating a significant opportunity for growth as 75% of potential customers are not yet familiar with the brand [25] Company Strategy and Development Direction - The company aims to maintain its premium positioning while expanding its addressable market through innovation and brand awareness [5][10] - There is a focus on balancing growth and margins, with a commitment to reinvest in product development and marketing to sustain brand momentum [28][29] Management's Comments on Operating Environment and Future Outlook - The management expressed confidence in the brand's growth trajectory, with guidance to achieve 30% growth over the next three years while maintaining a 23% growth rate next year [34] - The importance of team culture and talent acquisition was highlighted as a key factor in sustaining brand strength and innovation [35] Other Important Information - The company is focused on avoiding discounting practices to maintain its premium brand image, especially during the holiday season [11][12] - Automation in manufacturing is seen as a critical future direction, with the introduction of products like LightSpray aimed at enhancing production efficiency [32] Q&A Session Summary Question: How does the company view the balance of wholesale growth? - The company sees wholesale growth coming from new partners, new doors, and same-store sales, emphasizing the need to start with customer awareness [25] Question: What is the company's approach to managing growth and margins? - The management stated that high margins should not come at the expense of innovation and investment, aiming for a balance that supports growth while maintaining healthy margins [27][28] Question: How does the company plan to address potential tariff impacts? - The company has implemented pricing and supply chain efficiencies as mitigation strategies, which are expected to remain even if tariffs are rolled back [31]

Financial Data and Key Metrics Changes - The company has reduced its cash break-even level from $900 million in 2022 to approximately $180 million today, representing a $720 million reduction [24][25] - Free cash flow improved from nearly negative $300 million in 2021 to positive $13.1 million in the first three quarters of 2025, a $300 million improvement [25] - Adjusted EBITDA transitioned from a loss of over $86 million in 2021 to approximately $18 million of positive Adjusted EBITDA in 2025 [26] - The company achieved net income positive of over $3 million in Q3 of 2025 for the first time since going public [26] Business Line Data and Key Metrics Changes - The company has transitioned from a multi-level marketing (MLM) model to a multi-channel strategy, which includes direct-to-consumer, Amazon/Marketplace, affiliates, and retail [14][15] - The restructuring has led to a significant reduction in employee count from over 1,000 to less than 300 [15][22] - The company has maintained eight consecutive quarters of positive adjusted EBITDA, cumulatively around $50 million [17][22] Market Data and Key Metrics Changes - The general wellness market is valued at $6.5 trillion in 2023, with the fitness and nutrition categories each representing a $1.1 trillion potential market [5][6] - The company aims to tap into a broader audience by launching retail products, including a new small serve of Shakeology priced below $40 [21][20] Company Strategy and Development Direction - The company is focusing on an innovation pipeline with new product launches scheduled between 2026 and 2027, including the 10-Minute BODi program and a new P90X program [18][19] - A retail strategy is being implemented to sell previously unretail products, enhancing brand exposure and market reach [13][20] - The company is addressing the non-exerciser demographic with new content and products designed to engage this audience [21] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the turnaround, stating that the company is a year ahead of schedule and positioned for growth in 2026 and 2027 [24][32] - The financial flexibility gained from the turnaround allows the company to focus on innovation and creative product development rather than financial survival [22][32] Other Important Information - The company has restructured its debt, reducing overall interest expenses by 44% [15][22] - The average interest rate on debt is approximately 15.5%, with a cash position of $34 million against $25 million of debt [28] Q&A Session Summary Question: Has the retail rollout process changed? - The retail process is slower than anticipated due to planogram schedules, but the company is actively engaging with retailers and aggregating responses [34] Question: What could the long-term margin structure look like on an EBITDA level? - Management indicated that gross margins should normalize in the low- to mid-70s, with potential for high 80s to 90% on fitness and mid-40s to 50% in nutrition as the company grows [36][37] Question: What online media has been most effective for the target demographic? - The company has not yet identified the best medium but acknowledges the need to tailor content for different platforms, noting that audiences over 30 are less engaged with TikTok [38]

Financial Data and Key Metrics Changes - The company is tracking ahead of its 2026 margin targets and is on track to exceed sales targets, indicating strong performance relative to competitors who have cut guidance [7][9] - The gross profit margin reached 65% in Q3, showcasing a strong margin profile despite tariff impacts [31] Business Line Data and Key Metrics Changes - The running category remains crucial, with significant innovations planned for the Cloudmonster, Cloudsurfer, and Cloudrunner lines in 2026 [16][18] - The apparel business, particularly in tennis, is the fastest-growing segment, driven by collaborations that appeal to younger demographics [20] Market Data and Key Metrics Changes - China has become the second-largest market for the company, with Asia Pacific outpacing expectations [9] - Brand awareness is between 25%-30%, indicating significant growth potential as 75% of potential customers are still unaware of the brand [25] Company Strategy and Development Direction - The company aims to be the most premium global sportswear brand, focusing on innovation, quality, and sustainability to expand its addressable market [4][5] - The strategy includes maintaining a premium positioning while expanding into new sports categories, balancing performance and lifestyle [20][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the brand's growth trajectory, with plans already in place for product development through 2028 [34] - The importance of team culture and talent acquisition was emphasized as a key driver of brand success [35] Other Important Information - The company is focused on full-price sales and avoiding discounting, which aligns with its premium brand strategy [11][12] - There is a strong emphasis on automation in manufacturing to enhance efficiency and reduce reliance on manual labor [32] Q&A Session Summary Question: What has driven the outsized growth of the brand? - Management noted that the brand's DNA and premium positioning have been key to its success, with all initiatives aligning with growth targets [8] Question: How important is the running category to On's business? - The running category is foundational, with aspirations to lead in this space through innovation and product updates [16] Question: What are the characteristics for entering new categories? - The focus is on expanding the addressable market and relevance to a broader customer base, particularly in performance and lifestyle sports [20] Question: How does the company balance growth and margins? - Management aims to steadily increase margins while investing in growth initiatives, emphasizing the need for innovation and product development [27][29] Question: What are the implications of U.S. tariffs on the business? - The company has implemented structural changes to maintain margins and continue investing in growth, regardless of tariff fluctuations [30][31]

Financial Data and Key Metrics Changes - The company reported a notable improvement in restaurant-level margins, achieving approximately 17% and aiming to approach 18% [4][22] - The company plans to double its new unit openings in 2026 compared to 2025, with a pipeline that is already under construction [32][33] Business Line Data and Key Metrics Changes - The company has refreshed its menu with new items such as burritos, burrito bowls, and salads, while also focusing on chicken on the bone [4] - The introduction of chicken tenders and a new spicy flavor profile is expected to attract more customers [10][11] Market Data and Key Metrics Changes - The company is positioned at the intersection of quick service and fast casual dining, emphasizing affordability and value in its offerings [7] - The loyalty program has seen a 6% increase in visit frequency among users, indicating a positive response to targeted discounts [8][15] Company Strategy and Development Direction - The company is focusing on a brand turnaround through marketing campaigns like "Let's Get Loco" and menu innovation [3][4] - There is a strong emphasis on operational efficiency, with improvements in labor scheduling and supply chain management contributing to margin enhancements [18][19] Management Comments on Operating Environment and Future Outlook - The macro environment remains challenging, with consumers under pressure, but the company feels well-positioned due to its value offerings [6][7] - Management expressed confidence in achieving long-term targets of 18%-20% store-level margins, contingent on sales-driving initiatives [22] Other Important Information - The company is investing in remodeling existing restaurants and enhancing equipment to drive sales and operational efficiencies [34][36] - The marketing strategy for 2026 includes six campaigns, reflecting a rich pipeline of innovation and a focus on variety and value [13][14] Q&A Session Summary Question: What has been accomplished in the brand turnaround? - The company has launched the "Let's Get Loco" campaign and refreshed its menu, focusing on quality and fresh ingredients [3][4] Question: How is the company positioned in the current macro environment? - The company acknowledges the challenging environment but believes it offers affordable and valuable options compared to competitors [6][7] Question: What are the main drivers of margin improvements? - Margin improvements have been driven by evaluating supply chain costs, transitioning to different distributors, and implementing technology for labor efficiency [18][19] Question: What is the long-term target for margins? - The company aims for 18%-20% store-level margins, with a focus on sales-driving initiatives to achieve this [22] Question: How is the company planning to use its free cash flow? - The company plans to use cash for new store development, remodeling existing locations, and enhancing operational efficiencies [34][36]

Financial Data and Key Metrics Changes - The company has reduced its cash break-even level from $900 million in 2022 to approximately $180 million today, representing a $720 million reduction [15][23] - Free cash flow improved from nearly negative $300 million in 2021 to positive $13.1 million in the first three quarters of 2025, a $300 million improvement [23] - Adjusted EBITDA transitioned from a loss of over $86 million in 2021 to approximately $18 million of positive Adjusted EBITDA in 2025 [24] - The company achieved net income positive status for the first time since going public, reporting over $3 million in Q3 of 2025 [24] Business Line Data and Key Metrics Changes - The company has transitioned from a multi-level marketing (MLM) model to a multi-channel strategy, which includes direct-to-consumer, Amazon/Marketplace, affiliates, and retail [14] - The restructuring has led to a significant reduction in employee count from over 1,000 to less than 300 [15] - The company has launched new products, including the 10-Minute Body program and a new P90X program, which are aimed at expanding its customer base [17][18] Market Data and Key Metrics Changes - The general wellness market is valued at $6.5 trillion, with the fitness and nutrition categories each representing a $1.1 trillion potential market [5] - The company aims to tap into the retail market for its products, which have never been sold in retail before, indicating a significant growth opportunity [13] Company Strategy and Development Direction - The company is focused on innovation and has a robust pipeline of new products scheduled for launch between 2026 and 2027 [17][30] - The strategy includes launching a retail line for its major brands, such as P90X and Shakeology, to increase brand exposure and sales [19][20] - The company is addressing the non-exerciser market with new content and smaller product sizes to attract a broader audience [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the turnaround, stating that the company is a year ahead of schedule and financially stable with cash levels exceeding debt [16][21] - The management highlighted the importance of the innovation pipeline and the potential for significant growth in the coming years [30] Other Important Information - The company has restructured its debt, reducing overall interest expenses by 44% [15] - The marketing expenses have been reduced from over 50% to the low-to-mid-30s percentage, allowing for increased media spending [27] Q&A Session Summary Question: Has the retail rollout process changed? - The retail process is slower than anticipated due to planogram schedules, but the company is actively engaging with retailers for product placement [32][33] Question: What could the long-term margin structure look like? - Gross margins are expected to normalize in the low- to mid-70s, with potential for high 80s-90% on fitness and mid-40s-50% in nutrition as retail grows [34][35] Question: What online media has been most effective for the demographic? - The company has not yet identified the best platform but acknowledges the need to tailor content for different audiences across various media [36][38]

Financial Data and Key Metrics Changes - The company has experienced three consecutive quarters of comparable store growth, indicating a positive trend in sales performance [11][41] - The average unit retail (AUR) has increased, with the company successfully maintaining higher prices without a degradation in unit sales, which is a significant achievement [12][13] Business Line Data and Key Metrics Changes - The direct-to-consumer (DTC) business showed strong performance, with significant growth across all channels including wholesale and international [11] - The company has identified approximately 150 stores for closure, focusing on those with lower margins, which is expected to streamline operations and improve profitability [23][27] Market Data and Key Metrics Changes - The company has diversified its market approach, successfully attracting new consumers from higher household income brackets who are more open to premium pricing [14][15] - The wholesale business remains robust, with a focus on growing relationships with key accounts, particularly in the mass retail channel [34][39] Company Strategy and Development Direction - The company aims to invest in product design and demand creation to resonate with today's young consumers, particularly Gen Z parents [6][8] - There is a strategic focus on enhancing brand identity for each of its brands, allowing them to develop independently rather than applying a one-size-fits-all approach [43] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the need for long-term, sustainable growth rather than growth driven by discounts or one-time events, emphasizing the importance of maintaining brand equity [42] - The company is optimistic about future growth, with expectations set for sales and earnings growth in 2026, supported by recent positive performance trends [40][41] Other Important Information - The company is transitioning its Amazon business from a private label to branded products, which is expected to enhance visibility and sales [36][38] - The supply chain team has successfully diversified sourcing to mitigate costs associated with tariffs, contributing to overall cost savings [20][21] Q&A Session Summary Question: What are the biggest challenges faced by the company? - The company needs to invest in product design and demand creation to align with consumer expectations and preferences [6] Question: How does the company plan to approach reinvestment? - The company plans to gradually increase marketing investments while ensuring a good return on investment [8] Question: Can you elaborate on the pricing strategy? - The company aims to maintain a competitive pricing strategy while ensuring that quality and style remain integral to its value proposition [17][18] Question: What is the plan for store closures? - The company has identified 150 stores for closure, focusing on those that are marginally profitable, with a plan to transfer some revenue to other locations [23][27] Question: How does e-commerce fit into the overall strategy? - E-commerce currently accounts for about a third of U.S. retail revenue, and the company aims to enhance its omnichannel capabilities to meet consumer expectations [31][32]