Thank you for standing by. My name is Joe, and I will be your conference operator today. At this time, I would like to welcome everyone to the On Holdings AG Q4 and Fiscal Year 2024 Results Call. Operator Instructions. I would now like to turn the conference over to Jerrit Peter, Head of Investor Relations. You may begin.

Good afternoon, good morning to our investor community. Thank you for joining the 2024 Fourth Quarter and Full Year Earnings Conference Call and Webcast. With me today on the call are On's Executive Co-Chairman and Co-Founder, David Allemann, CFO and Co-CEO, Martin Hoffmann; and Co-CEO, Marc Maurer. Before we begin, I will briefly remind everyone that today's call will contain forward-looking statements within the meaning of federal securities laws. These forward-looking statements reflect our current expectations and beliefs only and are subject to certain risks and uncertainties that could cause actual results to differ materially. Please refer to our 20-F filed with the SEC earlier this morning for a detailed discussion of such risks and uncertainties. We will further reference certain non-IFRS financial measures such as adjusted EBITDA and adjusted EBITDA margin. These measures are not intended to be considered in isolation or as a substitute for the financial information presented in accordance with IFRS. Please refer to today's release for a reconciliation to the most comparable IFRS measures. We will begin with David, followed by Martin detailing today's prepared remarks, after which, we are looking forward to opening the call for a Q&A session. With that, I'm very happy to turn over the call to David.

Thank you, everyone, for joining us today, and welcome to our fourth quarter and full year 2024 results call. This is an exciting moment for us as On is celebrating its 15th anniversary this year. On January 6, 2010, my co-founders, Olivier Bernhard, Caspar Coppetti, and I founded On on a cold winter day in Switzerland. This was in the morning; in the afternoon, I boarded a plane to Asia to oversee the production of the On Cloud server model, our first tool. We just got started to dream On. Looking back, the last 15 years was a tough race. It would not have been possible without an incredibly talented and optimistic team that, together with our founders, helped On grow into the global sportswear brand it is today. Our gratitude goes to this highly spirited sports team. While every single year has been a new adventure, 2024 was particularly defining as we solidified our global brand presence. This strength translates to the growth we have committed to. 1.5 years ago, we shared our strategic direction for a 3-year timeframe from '24 to '26 with you. Our strategic ambition is to grow into the most premium global sportswear brand, and our financial ambition is to achieve a 26% net sales CAGR, a gross profit of north of 60%, and an adjusted EBITDA margin of over 18%. Looking at 2024, I'm thrilled to report that we are tracking very well and exceeding our expectations in both top line and profitability. With a very strong constant currency growth rate of over 33%, we have reached CHF 2.32 billion in net sales. This includes an expansion of our D2C share by more than 3 percentage points, extending our superpower to connect deeply with our fans through our own channels. This has further supported premium margins with gross profit margin reaching 60.6% and an adjusted EBITDA margin of 16.7%, validating our path towards our midterm targets. Zooming out, in 2024, On experienced a new level of global brand reach from its community. On is resonating with millions of consumers across more than 80 countries on all continents. Our collaboration with Roger Federer, Zendaya, and FKA Twigs, as well as On's presence as one of the most talked-about brands in Paris last summer, have propelled On's global brand awareness and earned it the prestigious Brand of the Year award by Footwear News. Above all, we are truly humbled by the immense love consumers have for On. The strong engagement and countless On-branded encounters we see everywhere running on trails, in cities, and while traveling exemplify this. The boost in brand strength even overindexes on Gen Z consumers, where awareness in the U.S. more than doubled in one year and has elevated On to one of the most wanted sports shoe brands among teens in the U.S. No wonder that On ranks amongst the hottest brands in our industry on social media. We manage our brand strategy in 3 areas: premium product offerings, strategic partnerships, and a high-impact presence in global markets. First, premium product offerings. To build our parent brand On, we are supporting it with a family of product offerings and brands, each with their own personality and purpose. Take the Cloudmonster, the Cloudsurfer, the Cloudrunner, and the iconic Cloud. These products choose their brands in their own right and allow us to connect with diverse communities and tastes, building lasting loyalty to a franchise even as our products innovate and evolve. Speaking of the Cloud, we just soft-launched the Cloud 6. It's a refresh of an item keeping its signature comfort, versatility, and functionality. The Cloud has grown from a running shoe into an everyday essential and one of our most beloved franchises. It becomes enormous by strengthening our overall brand. And with the full release just days away, we're already seeing strong momentum. Or take the emerging light spray franchise as an example of a product range brand that will support the innovative positioning of the main On brand. In other words, On is building a portfolio of strong product brands that support On as the parent brand. Second, strategic partnerships. We're building love for the On brand through lasting partnerships with exceptional talents and brands. As you know, we started with Roger Federer becoming our partner over 4 years ago. Zendaya is now the voice of the next generation of On. Brand moments like the Air-Tennis match between her and Roger highlight our brand promise to dream On, and the product campaigns have been incredible so far. And you're only seeing the beginning of this partnership; we're in for the long haul. Then think about On's collaboration with FKA Twigs around the superpower of sport combined with cultural influences; it's scaling our training vertical. The marriage between sports and culture has created a unique space for powerful collaborations like the multi-year partnership between FKA Twigs and On. It’s clear: meaningful and lasting partnerships build lasting brands. Third, high-impact presence in global markets. Our world is more fragmented. Life moments and societal topics that once united have become rare and golden. It's harder to combine these universal experiences that connect generations and cultures on a massive scale. On is navigating the noise and distraction with more than just visibility but with creativity, relevance, and the right strategy. Brands that cut through are more valuable than ever. We have 2 key priorities for penetrating global markets: live sports moments and premium retail stores. First, live sports moments. Sports create some of the last and rare life moments that inspire conversations across society. They present generations, cultures, and backgrounds. It's where families gather, nations rally, and the world watches as one. Now, fashion and luxury brands are catching up, recognizing the power of sports and diving into the arena first. From the Paris Games to sponsoring major events like football and Formula One, they are all vying for a piece of the action. And that's where we come in, as a premium sports brand perfectly positioned at the intersection of performance and cultural relevance. They're not just riding the wave; they're at the heart of it. On leverages these insights to cleverly build brand strength and achieve exceptional results. Take, for example, our Super Bowl ad featuring Elmo and Roger Federer captivating millions of Americans and bringing On to the center screen. Through a playful conversation about our logo, they literally put the name of our brand into everyone's mouth on America's most-watched morning show. Online spikes went to new levels, and the marketing was even featured in the New York Times. Elmo perfectly embodies our core value of a positive spirit and bridges generations. Roger and Elmo launched a broader campaign centered around softness and our new Cloud Server tool. In a world obsessed with pushing limits, we encourage runners to embrace soft wins and community. In running, the On Athletics Club and its athletes put training and winning on full display. These personalities inspire our core community. A few weeks ago, the beloved U.S. athlete set a world record for the Banemakermile at the Millers case. He smiled and showcased his win during the live broadcast and social conversations. Our approach to tennis involves creating brand moments around major sporting events and exceptional athletes. This strategy allows us to engage with a wide audience that includes both young and older consumers. At the upcoming Miami Open, we are hosting the second edition of our own clubhouse nights. This event celebrates Tennis at the intersection of performance and culture, setting the vibrant heart of Miami to the pulse of world-class feats at the Clubhouse nights. The massive awareness growth within the young community serves as proof that On is scaling the brand with live moments in sports that can reach across generations. Live sports moments build love for brands. Second, premium retail stores. We are grateful for our online success, but we know the power of major centers. They are the heart of nations and communities. They live in our global consciousness. My first point is the belief in physical own stores, not just for sales but to give On apparel a broader presence and to build a beloved brand in the minds of communities. We're going beyond the traditional sports brand, creating premium store experiences that challenge the norm. In 2024, we launched 19 new retail stores in iconic locations. Think Champs-Élysées in Paris, Victoria Emmanuela in Milan, Rush Street in Chicago, and Emporium Melbourne. These On shoe stores serve as brand-building hubs, essential for our growth. And it's working. In cities like Paris and Milan, we've seen a significant increase in regional awareness, proving that physical presence drives digital momentum. At the same time, we're also building retail presence in newer markets with our first distributor-led retail stores opening in Santiago de Chile and Jakarta just a few months ago. A physical store acts as a flag in the ground, a linchpin for emerging markets for On. In 2025, we look forward to expanding our presence further in other parts of Southeast Asia as well as the Middle East. My second point is that building partnerships with premium wholesale remains a priority for us. Our partners have been instrumental in building the On brand. We have been very careful about growing our wholesale network. This deliberate approach has left us with plenty of room to grow our business and brand awareness with the right partners. A recent example is the street-facing shop-in-shop at Salvage that is attracting a lot of eyeballs for On. This leads me to my third point: the connection between scaling apparel and physical retail, powered by our retail expansion. 2024 marked a significant year for On's apparel business, with elevated collections and brand-building campaigns sanctioned around Zendaya and FKA Twigs. Proprietary research reveals that these efforts have significantly increased consumer perception of On as a head-to-toe sportswear brand. The expansion of On stores is elevating the visibility and growth of the apparel category for On to the next level. In 2025, we will continue to drive apparel categories such as training; our latest training collection was launched in January with the Body Art campaign featuring FKA Twigs to enhance our brand presence. The campaign highlights our approach to training apparel by showcasing an artist integrating high-performance movements with music, arts, and culture. So bottom line, showcasing the On brand head to toe in landmark stores in major cities and in live sporting events remains key to brand growth. To wrap up my opening remarks today, strong brands stand the test of time, which is what we're building at On: a premium global sportswear brand with long-term value and resilience. Our 2024 financial results exceeded our expectations, leading us with confidence and excitement for the future. We believe that the best days are ahead of us. With our exceptional team, strong innovation, and globally relevant brand, we're ready to take On to the next 15 years. We're incredibly grateful to our amazing community of On fans for their loyal support and loyalty. I would like to thank you all for your support, your thoughtful questions, and insights that elevate our thinking. And with that, Martin, over to you.

Thank you, David. I can't wait to celebrate our 15th birthday with our team in a few weeks. Before I talk about our plans and the outlook for 2025, let me expand a bit more on 2024. 2024 has been the first year of our 3-year strategic roadmap that we had presented at our Investor Day in October 2023. During this first year, we have made tremendous progress along each of our strategic building blocks. And we have proven that each building block will elevate the On brand over the next years and towards our mission to be the most premium global sportswear brand. Our financial results are clearly validating our financial aspirations for 2026. At the same time, 2024 already allows us to start dreaming beyond 2026. At the core of our strategy is to win in the running community. During the last 18 months, we have introduced an explosion of new, highly innovative products. We have built new levels of credibility through the wins of our athletes and our presence at the largest running events. We have reached millions of new and existing fans. Our top 3 running franchises, Cloudmonster, Cloudsurfer, and Cloudrunner, have grown between 60% and 140% during 2024. We reached more younger customers than ever before. The share of products sold to customers 35 and younger has increased between 6 and 8 percentage points for the 3 franchises. Other tenants running has seen the strongest growth of all communities. 2024 has been a breakout year for our new verticals, tennis and training, establishing On as a brand of choice for consumers seeking the combination of performance, design, and sustainability beyond our running core. Our ambition to be a true head-to-toe sportswear brand is solidified in the fact that we have reached more than CHF 100 million in net sales from apparel. During 2024, we renewed the vast majority of our products, expanded our product offerings across running, tennis, and training. We introduced different fits and elevated the consistency of our sights. We significantly invested in our capabilities to drive sales growth in key accounts and our D2C channels. While overall apparel net sales on a constant currency basis grew 51% in 2024, apparel in our D2C channels grew by 6%, resulting in a significantly higher D2C mix compared to our footwear category. With that, a parallel setup to drive strong growth, combined with a strong margin profile going forward. Our success in apparel directly correlates to our successes in all retail that David already spoke about. We are now operating in more than 10,000 square meters of retail space. During 2024, we validated that On retail will not only allow us to drive growth around the world but also drive an even higher share of more premium products. Alongside retail, we also continue significant investments into our multichannel distribution, including but not limited to customer data insights, AI-driven automation, online marketplace management, and omnichannel experiences. In 2024, we became an even more global brand, executing towards our aspiration to grow China to 10% of our sales beyond 2026. We expanded our brand and distribution network throughout the country, elevated our team, and started to develop more China-centric products. Last but not least, we took steps forward on our mission to be an industry leader in sustainability. We will share more in our impact progress report that will be published in a few weeks. All of the incredible work our team has done across brand, product, and execution is reflected in the outstanding full-year financial performance, leading ahead of our latest outlook provided in November across all measures. With a constant currency growth rate of 33.2%, we closed the year at CHF 2.32 billion. Our gross profit margin reached 60.6%, reflecting our premium brand positioning and dedication to full-price growth. We've reached an adjusted EBITDA margin of 16.7%, showcasing our commitment to durable growth while investing for success in the long term. With this, we have also proven the ability to drive significant positive cash flow, increasing our competition to close to CHF 1 billion at the end of 2024. Looking at Q4 in isolation, we see the foundations we have built coming into effect, allowing us to achieve the strongest quarterly growth rate of the year. We converted on the incredible brand momentum, benefiting from the increased brand awareness and continued acceleration coming out of the summer and the third quarter. Importantly, we were in a position to execute operationally across the entire supply chain to fulfill the strong demand by remaining disciplined to protect the high share of full-price sales. Net sales grew by 35.7% on a reported basis in the fourth quarter and even 40.6% on a constant currency basis, reaching CHF 606.6 million. We entered the holiday season with the ambition to drive significant growth through our own channels. Both our online and retail formats drove record traffic and the highest ever quarterly transaction volumes, resulting in an overall record D2C share of 48.8% and CHF 296.2 million, significantly higher than any previous quarter in our history. Growth in our D2C channel versus the prior year was 43.4% on a reported and 48.2% on a constant currency basis. Wholesale grew by 29.1% on a reported basis and 34.2% on a constant currency basis in Q4, reaching CHF 310.4 million. This growth continues to be driven by our selective expansion with key accounts like Dick's, JD, and Foot Locker, as well as the expansion of shelf space and market share with many of our existing partners. While our own channels captured a record share of demand in the overall marketplace, we are thrilled that our partners similarly saw exceptional sellout growth through the holiday season, further validating the momentum we are seeing. Let me now move on to the development by region. Net sales in the Americas grew by 28.1% in Q4 and 33.9% on a constant currency basis, reaching CHF 385.1 million. The front-building efforts outlined by David have led to visibly increasing traffic and a very strong performance in both channels, and we continue to be incredibly happy with how our controlled wholesale expansion supports On's reach and accessibility in the region. At the same time, we observed a meaningful acceleration and contribution from high-growth markets in Latin America. Our largest market in the region, Brazil, more than doubled net sales compared to the prior year. Some might say this is a result of the Janega effect, the latest Brazilian superstar and member of the On Tennis roster, with particularly strong growth visible in the apparel business. In EMEA, Q4 marked the final quarter of lingering year-over-year impacts from the strategic store closures at the end of 2023. We are therefore thrilled to see the significant acceleration in EMEA in the quarter, showing the potential of the region to contribute even more strongly to our growth path going forward. Net sales reached CHF 147.4 million in Q4, growing by 31% year-over-year and 33.1% on a constant currency basis. The growth is strongly supported by exceptional growth in some of our more nascent markets in Southern Europe, particularly in France and Italy, where the retail stores in Paris and Milan have created a noticeable halo effect. APAC reached net sales of CHF 74.1 million in the fourth quarter, representing a reported growth rate of 117.5%. On a constant currency basis, growth was even stronger at 124.6%. The incredible growth is visible across the entire region, with Japan and China continuing to be the key drivers in the region. From a smaller base, South Korea, Australia, Hong Kong, as well as markets in Southeast Asia are accelerating significantly and further contributing to the broad-based momentum and success. The standout moment for Q4 was the opening of our second Hong Kong store in November, quickly growing to be on par with our first location and ranking among the top-performing stores in our global portfolio. In December, we also kicked off a brand campaign in connection to Lunar New Year in China, introducing a limited edition collection celebrating the Year of the Snake. The lineup featured fresh colorways and designs along with regional favorites like the Cloud X4 and Cloudtilt and has shown strong sell-through well into 2025. Turning to performance by product. In Q4, net sales from shoes grew by 33.6%, reaching CHF 568.8 million. Growth continues to be driven by our performance running products. As touched earlier, 2024 has been a year of deepening our focus on key franchises. This has clearly paid off in Q4, with the Cloudmonster and Cloudsurfer contributing significantly to the growth. Running is in our DNA, and we are extremely excited to continue to drive our market share with a great product lineup in 2025, kicked off by the Cloudsurfer 2 launched a couple of weeks ago. As you heard from David, we're also extremely excited to further elevate our most iconic all-day silhouette with the launch of the new Cloud. After a period of successfully focusing on the diversification of our product portfolio and expanding our performance running share, the latest iteration of this classic all-day franchise will return to being a significant contributor to growth in 2025 and beyond. While the full-scale launch will happen in a few days, demand from our partners over the past months has been amongst the highest we have seen yet. Adoption is definitely not just about shoes anymore. Apparel grew by a very strong 77.5% in the fourth quarter, reaching CHF 32.6 million. In a D2C heavy quarter, this resulted in an apparel share of over 5% of net sales. Moving down the P&L, reflecting the record high D2C share, the premium position of the brand, our disciplined full-price approach, and favorable FX developments, we reached the highest gross profit margin in our history, 62.1%, marking a 170 basis point increase year-over-year, bringing us to an exceptional 60.6% for the full year and well ahead of our midterm ambition. G&A expenses, excluding share-based compensation, were 50.5% of net sales, up from 48.9% in the same period last year. In order to drive even more brand momentum into 2025, we invested a higher share of net sales into upper funnel marketing campaigns, which is the primary driver for this increase. In addition, we continue to invest in light spray as well as our IT and tech capabilities. We also saw a structural shift from selling expenses into G&A as a result of the consolidation of some of our technology teams and resources into a centralized cross-channel setup. The result in Q4 was an adjusted EBITDA margin of 16.4%, and for the full year, we were able to drive a strong adjusted EBITDA margin of 16.7%, up from 15.5% for the full year 2023 and well ahead of our latest guidance in November. We are very happy with our strong operational profitability, also visible in a very strong net income. This is supported by the strengthening of the U.S. dollar versus the Swiss franc throughout the fourth quarter and the resulting favorable foreign exchange gain of CHF 38 million in our net financial results. Net income in the quarter reached CHF 89.5 million. Moving on to our balance sheet, we slightly increased the level of capital expenditure to 2.8% of net sales in 2024 compared to 2.6% in 2023. This was largely a result of our ongoing retail expansion. One position I'm particularly proud of is net working capital. As a percentage of net sales, net working capital improved from 27.7% in the prior year to 21.5% in 2024. This reflects our culture of innovation excellence and the ability of our team to drive financial strength across the P&L and balance sheet. We achieved an operating cash flow of CHF 510.6 million, more than doubling year-over-year. As a result, our total cash balance stood at CHF 924.3 million at the end of the year, significantly up from CHF 494.6 million at the end of 2023. In summary, 2024 marked a truly exceptional year for On, one that we will not forget anytime soon. Most importantly, it offered numerous proof points that our core strategic building blocks are paying off, validating the ongoing path towards our vision to be the most premium global sportswear brand built on innovation, design, and sustainability. All of the achievements and unique moments in 2024 give us an incredible amount of energy for 2025. As we enter the second year of our 3-year strategy for 2026, we're excited to build upon the foundations established in 2024 and to capitalize on the broad-based momentum our team has generated. You can expect another year with big and bold ambitions to tell our story and continuously expand our reach across new and existing communities worldwide. This will include a strong lineup of new product launches as we take running to the next level in the second half of 2025. Consumers will be wowed by the launch of the Cloudboom Max, the first super shoe for the everyday runner. This year, we will see continued collaborations with talent to inspire across generations, including the launch of Zendaya's first co-created footwear and apparel. As we build our presence in new markets, we are enhancing our physical spaces to deepen brand connection and expand globally, with elevated capabilities driving an even more premium experience at every touch point. Sustainability will be at the core of our innovation efforts in 2025. Our focus will be on building the foundation for rapid scale-up and long-term profitable growth of the light spray innovation. In spring, we will ramp up our production capabilities in Zurich, building a more scalable production facility in South Korea. An additional focus for 2025 will be on operational excellence, investing in our infrastructure to set ourselves up for long-term growth and success. We experienced some challenges in 2024, particularly in the first half of the year, which did not allow us to reach our full potential. We are progressing well on the fully automated warehouse solution at our Atlanta facility and continue to expect the solution to go live towards the end of the first half of 2025. While we expect the transition period may incur incremental costs during that ramp-up phase, this continues to be a key cornerstone of our ability to operate at much higher volumes in the future, generating economies of scale over time. With that in mind, I'm happy to move to our financial outlook for fiscal year 2025. As David pointed out, in 2024, we have tracked ahead of our planned 26% 3-year net sales CAGR, achieving a 33% constant currency growth rate for the year. Driven by the significant momentum we have seen in the business, including a particularly strong second half of the year 2024 and a strong start into 2025. We expect to continue to outgrow our 3-year plan and to grow ahead of the 26% growth algorithm for 2025 while compounding at a higher base. For the full year 2025, we expect to achieve a constant currency growth rate of at least 27%. At current spot rates, across all currencies, we do not expect a sizable FX impact. Therefore, it translates to an outlook of at least CHF 2.94 billion for the year. On a quarterly basis, assuming current exchange rates, we expect some top-line FX tailwinds in Q1 and Q4 and some headwinds in Q2 and Q3. While we do not provide quarterly guidance, I will point out that we expect a slightly higher half-year 1 growth rate versus the second half of the year 2025. This outlook is based on the impact of the operational disruptions we encountered in half-year 2024, as well as the initial sell-in of our largest franchise, the Cloud 6, in Q1. We currently anticipate a gross profit margin of around 60.5%, ahead of our midterm ambition of 60% plus. This already implies an anticipated headwind to our reported gross profit margin from the current U.S. dollar to Swiss franc exchange rates, which is expected to offset further margin improvement driven by the continued expansion of our DTC channel, as well as the ongoing premiumization of our brands. Throughout 2025, we will continue to invest to drive long-term global growth. While we expect to further increase our adjusted EBITDA margin to 17% to 17.5%, and with that, to validate our 2026 target of 18% plus. A huge thank you and congratulations goes to our team for another incredible year, 15 years and counting, and for the opportunity to think bigger than ever before. Thank you all for being a part of our journey, and we look forward to further partnering with you during 2025 and beyond. Let's dream On. With that, David, Marc, and I would like to open up the session to your questions.

Operator Instructions. Your first question comes from the line of Aubrey Tianello of BNB Paribas.

Congrats on the results. I wanted to touch on Cloud 6. Martin, you mentioned it returning to being a significant contributor to growth in 2025. Could you elaborate on that point in terms of some of the segmentation work you've been doing there and the difference between the launch this year compared to the Cloud 5 launch in 2022?

Aubrey, this is David. I'm happy to take this question. The Cloud has become an iconic staple that resonates across generations. We've also seen that the Cloud is increasingly resonating with young consumers as a new essential part of their uniform. So it's back to that basic staple. We're actually going to celebrate it in the classic campaign that starts in the next few weeks. If you look back in shoe history, comfortable running shoes have a history of becoming internal staples. That's what we're really focusing on. We see an incredible mind right now from our retailers and also kind of early signs before actually the launch in the next 2 days.

Your next question comes from the line of Jay Sole of UBS.

Martin, my question is on the guidance, the full year guidance for sales. Can you give us an idea of how you're thinking about growth by region? You mentioned you expect the first half of the year to be stronger than the second half. There's a lot of talk that the overall consumer environment in the U.S. has been a little bit weaker since the end of 2024, possibly due to weather or whatnot. But have you seen that? Can you talk about generally what you've seen in the U.S. so far here in Q1?

Thanks, Jay. Let me elaborate a little bit on the full-year journey, and then Marc will dive a bit into the region, including what we're currently seeing on the demand side. As I pointed out in the remarks earlier, we come out of an incredible 2024. There's a lot of momentum, and we have already seen 2 very strong months across both channels. We also expect a slightly stronger growth rate in half-year 1 compared to half-year 2. Based on the first 2 months and the strength we have seen there, we expect our Q1 growth rate somewhere in the low to mid-30s. We really expect that our D2C share remains at a similar level to Q1 last year, which implies that our wholesale channel will grow strongly, driven by the launch volume of the Cloud 6, as well as other models. Additionally, we are seeing significant sell-in volumes there. At the same time, we continue to see very strong demand in our D2C trials. Thus, we expect D2C to continue to grow strongly. In looking at the rest of the year, we are being prudent in our guidance, given the macroeconomic environment and the discussions we are seeing there as well as the uncertainties that come with it. However, our preorders already indicate strong growth for spring, summer, and fall, and currently, that growth is above what is implied in our guidance. But as I said, given the macro side realities, we want to remain prudent here.

Let me dive a bit into the regions, which reflects our long-term strategy that we have elaborated on extensively. It's crucial for us to stay committed to our strategy of being the most premium global sportswear brand, rooted in performance, design, and sustainability. This message resonates deeply with our consumers. We believe we are less exposed to the normal competitive set that some other brands experience and were able to capture the potential coming from our unique position built over the last years. Additionally, we have seen a doubling of brand awareness in almost all regions. We discussed this in the last earnings call. We are seeing it in Asia Pacific, Europe, and the U.S., and the product launches and innovation stories are helping reinforce this. Furthermore, we anticipate robust positivity, starting from Q1 and extending through Q2, Q3, and Q4. Looking at region-specific growth, Asia Pacific is particularly promising; you saw our Q4 growth rate of over 100%. There’s strong demand anticipated as we open our own retail stores outside of China. For Europe and the Middle East, we're proud of growth in countries like France and Italy, where we've focused significantly. Countries that were historically small are starting to gain traction and contribute significantly. The U.S. is a continuation of the brand growth journey we're on, and we're excited to bring more On retail stores to American consumers over the next 12 months and to focus on strong full-price sell-through, which is part of our Tier 4 performance and is reflected in the gross margin numbers you see.

Your next question comes from the line of James Duffy of Stifel.

Hello, David. Marc, Martin, congrats to the team on inventory and working capital management. We're interested in the investments in consumer insights, and some of the data you shared on younger consumers is really encouraging. Can you speak to where you stand concerning the measurable penetration, distribution, and marketing strategies in '25 and '26 to continue that development?

Very happy to do that, James. As you mentioned, we have seen a very strong acceleration of brand awareness across all countries, especially among Gen Z consumers, where awareness has actually doubled in the U.S. and increased by more than 50% worldwide. This strong momentum and followership are evident on social media as well. We credit this to our blockbuster partnerships with Zendaya, FKA Twigs, Roger Federer, and a lineup of young tennis players. Life sport moments have also played a major role, as seen at the Super Bowl, where we highlighted our brand across generations. The upcoming track nights are also targeted at the younger communities, including our On Athletics Club team. All these life moments are heavily discussed on social media, boosting awareness. These collaborations are meaningful and lasting, with lasting relevance for younger demographics for many years to come. Additionally, retail expansion in key city centers, including New York, L.A., Miami, Milan, Paris, Berlin, Tokyo, Hong Kong, and Shanghai, is tapping into young consumer minds and creating substantial brand visibility. All of this contributes to our global brand awareness across over 80 countries. As you know, brand loyalty not only drives retention but also attracts referrals, especially among young consumers.

James, let me quickly elaborate on your '26 question. What we're trying to do is intentionally integrate our products, brand, and channel to reach the communities we want to target and ultimately drive younger consumer penetration for our products. For instance, when we launch something like the Cloud Zone, we focus on identifying the perfect partners to launch this product alongside and utilizing the best channels for communicating with them. Thus, over the next 2 to 3 years, you can expect us to move beyond traditional brand partnerships and work with the appropriate influencers to align our products with the younger community, utilizing credibility-enhancing channels.

On the numerical side, in 2024, the strength of the business model we are building truly shines. We've achieved very strong growth and profitability ahead of our expectations, while simultaneously investing in brand building and marketing at the highest level in the last 3 years. The premium position and margins we are driving allow us to consistently reinvest in building the brand. Thus, a higher share than last year has gone into upper funnel investments along the strategies David and Marc outlined. This was not just operational volume but really upper funnel investment focused on our future, which drives long-term growth.

Your next question comes from the line of Alexandra Straton of Morgan Stanley.

Congrats on another great quarter and year. I wanted to focus on full-year apparel—great momentum in '24 in that category. I believe the assortment will be fully repositioned. How should we think about that growth in '25? Is it distorted any geography? And bigger picture, how do you think about apparel and what it can be as a percentage of total revenue over time, also in terms of point of differentiation in that category?

Thank you, Alex. We are very proud that, for the first time, we've broken $100 million in apparel sales. There is enormous potential for growth there, and that number should become much larger in the future. We have communicated that in the long term, we target apparel to make up 10% of our revenues. What you can expect to see is that regions with a strong retail presence will likely outperform in apparel percentage-wise. We see a significant correlation between apparel success and our own retail locations. We often project an apparel share of over 20% in our own retail doors. Additionally, expect substantial investment in our e-commerce engine so we can market our apparel collections most effectively. There’s still potential to enhance our offerings in a commercially attractive way to consumers. Moreover, with a more focused and streamlined approach to our collections, we anticipate stronger sell-through rates on specific items, leading to an overall acceleration in apparel growth.

I would like to connect that back to our marketing approach. You will see us connect our apparel and push more to some of our most important partnerships, such as the first co-created collection with Zendaya. We're also executing the Body Art campaign that we've built around it to feature an artist integrating performance with music, arts, and culture. This is poised to be a significant asset for the future of our apparel that will truly resonate.

Your next question comes from the line of Jonathan Komp of Baird.

Martin, can I follow up on the outlook? I know you're building in planned efficiencies. Could you discuss how you're planning the business and where you expect to see efficiencies helping to fuel marketing and margin expansion? Secondly, regarding your other initiatives—how do you track overall to the long-term objectives to reach 10% of revenues or more from apparel, DTC, retail, and China?

Sure, Jonathan. For 2025, we plan to leverage efficiencies in our G&A line, which we currently view as pivotal to reaching a range of 17% to 17.5% in adjusted EBITDA margin. We discussed our warehouse automation project in Atlanta, mentioning that we expect a headwind during the first operational months due to a high fixed cost base. As volume moves into that warehouse, we will begin to see benefits in distribution, either in '25 compared to our full year 2024 picture or a bit later, into early '26. This factor will be a key driver for our profitability targets. Simultaneously, we aim to maintain high levels of marketing spending, in the range of 11% to 12%, allowing us to continue investing into the business moving forward.

With respect to our long-term 10% apparel target, I want to emphasize how interconnected these elements are— retail, brand growth, and China expansion are linked. While we are slightly behind on apparel growth compared to our desired pace, we understand the key elements needed to accelerate this. The retail spaces we are creating will facilitate this growth. We want to prioritize allocating the right retail locations over time and ensure ample space to present our apparel collections effectively to consumers. On retail performance, we are pleased with where we are; it’s simply a question of the speed at which we can secure access to the right locations. Overall, we want larger spaces than we currently have, and you can expect a disproportionate growth in apparel versus store growth in the coming years.

Your next question comes from the line of Nisha Sherman of Bernstein.

I appreciate you're not giving quarterly guidance, but could you provide more specific insights about the cadence through the year concerning some of the headwinds you faced last year? There were European store closures, marketplace allocation shifts, and supply chain disruptions in North America. Could you outline the relative size of these headwinds and their expected timing—were they all H1 weighted, which could assist us in forecasting your relative growth this year? Additionally, on door growth, you raised the topic of retail door growth for wholesale. Last quarter, you indicated 5% to 6% door growth for the upcoming year. Is that still your expectation for FY '25, and is that uniform across all regions?

I can address the wholesale question quickly. Yes, this remains our standing plan. We concluded last year with 10,700 wholesale doors and aim to expand to roughly 11,300. We're thoroughly aligned with earlier communications. You can expect new additions as we partner more with key accounts and expand access with existing partners like Foot Locker, JD, and others.

Focusing on last year's operational challenges, we are homed in on executing our 3-year plan, clearly tracking ahead as all elements show strong efficacy. We highlighted that the second quarter had considerable operational disruptions, particularly from the Atlanta warehouse—it had noticeable impacts on B2C. We expect positive effects in growth rates given improvements in Q1 and Q2.

Thanks for the question, Nisha. The competitive landscape is always evolving. We're very vigilant about our competitors as we monitor their innovation pipelines and their cooperation with wholesale partners. It’s crucial for us that On occupies a different space than many of our competitors by being a more premium brand, allowing us to capture diverse consumer segments at various price points. Our products are focused on performance, design, and sustainability, setting us apart from many others, allowing us to tell compelling stories alongside our influencers and athletes. This focus aids in reaching consumers across our various channels and translates to stronger sell-through based on premium margins. We feel good about our positioning and see positive reception for our strategy in 2025.

Thank you. We have run out of time to take any further questions. This concludes our Q&A session. We thank you for your participation. This now concludes today's conference call. You may now disconnect.