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On Holdings stock falls despite earnings beat, record revenue beat

The Yahoo Finance Live team breaks down the quarterly earnings for On Holdings, the company's stock decline, and purchasing patterns.

Video transcript

BRAD SMITH: Also running full steam ahead, popular Swiss running brand On Holdings starting the fiscal year with another record-setting performance. The company posted record revenue, a whopping 80% increase in sneaker sales, and boosted its full-year guidance. Despite all of that, shares they were lower this morning here.

They were higher premarket, so interesting to see them now reverse course and be down by about 8 and 1/2% here. What is also noteworthy here, gross profit margins-- excuse me-- increased to 58.3% from the 51.8% that they had seen last year. Net income margin, that increased to 10.6% from about 6.1%.

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And I think for a company that is in this broader conversation that we've had with New Balance and their CEO, Joe Preston, as well as the CEO of Brooks Running, who Sozzi just saw out at the Oracle of Omaha, Warren Buffett, in Berkshire Hathaway's annual meeting, they've said that running is recession resilient right now and because it's one of the easiest forms of exercise that people can get into, as long as they can get into an affordable shoe.

Now, On is one of the, kind of, more premium-tiered shoes out there, but to see them still doing well, at least in this most recent quarter, I think that signals where some of the athlete's activity or purchasing patterns might still be holding strong right now too.

JULIE HYMAN: Yeah, I guess so. Although lifestyle, they have got an increasing lifestyle business too.

BRAD SMITH: Yeah.

JULIE HYMAN: One note as we watch the stock decline this morning, the shares have almost doubled this year. Remember, they came public back in September of 2021 at 24 bucks a share, and they're still trading well above that level. They've really surged, in the past few weeks in particular, back above that IPO price.

We should mention the co-CEOs of On Holding, Martin Hoffmann and Marc Maurer, are going to join Yahoo Finance tomorrow in the 11:00 AM hour. We're going to dive much deeper into these numbers in an interview you don't want to miss.