On Running: Sprinting Into the Public Markets

Image: On Running

Last week, On Running made their public debut.

The footwear brand came hot out of the gates, opening ~50% above their initial asking price.

Launched in 2010, On is known for its outsole technology, aimed to make runners feel like they’re treading on clouds.

By the numbers:

The Swiss-based activewear company has been on a decade-long hot streak, exploding at an 85% 10-year CAGR to reach $463M in net revenue last year.

Can they keep this up on the public stage? Let’s explore their game plan…

Athlete advocacy. Capitalizing on a proven sportswear tactic, On has heavily leveraged its athlete endorsements, particularly from tennis superstar and investor Roger Federer.

Expanding cross-country. Growing aggressively in nearly all of its international markets, On saw North America sales balloon by a staggering 105% in the first half of 2021.

Chasing digital sales. A key driver of revenue, On is leaning into its profitable direct-to-consumer channel, which jumped 37% YoY in the first half of 2021.

Stewarding sustainability. A key trend in activewear, sustainability is now a top brand priority. A frontrunner in this space, On is launching a fully recyclable shoe via a circular subscription model.

Footwear is having a moment.

On is one of multiple footwear companies leading the IPO movement in a $440B global market. In the past few months, Allbirds and Authentic Brands (parent company of Eddie Bauer, Nine West, and more) have filed to go public.

Looking ahead: To date, On Running has only captured 8% of a notoriously crowded footwear market. Between giants like Nike and adidas, and specialty players like HOKA ONE ONE and Brooks, the upstart faces hurdles in all directions.

Of note, while the brand is diversifying into athleisure, apparel (outside of shoes) only makes up 4% of revenue. Moving forward, it may be in its best interests for On to stay on the footwear track and do what it knows best.