Snapshot

In an era of rapid digital transformation and e-commerce growth, efficiency and speed in warehouse automation have become critical factors in supply chain management. The surge in online shopping, coupled with rising consumer expectations for fast delivery and seamless order processing, has put immense pressure on companies to modernize their warehouse operations and adapt to the changing landscape. Symbotic Inc is making this modernization possible.

The robotics and warehouse automation company designs, manufactures, and deploys advanced robotic solutions to streamline distribution center operations. Their integrated systems combine autonomous mobile robots, advanced software, and custom algorithms to optimize warehouse space, speed up order fulfillment, and reduce operational costs. And by utilizing artificial intelligence and machine learning, Symbotic’s technology continually adapts and improves, ensuring maximum efficiency in dynamic warehouse environments.

Serving a diverse range of customers, Symbotic’s solutions cater to industries such as retail, consumer packaged goods, and manufacturing. With a focus on the North American market, they have successfully deployed their technology in distribution centers across the United States and Canada, delivering significant improvements in efficiency, productivity, and cost savings for their clients, as it automates the processing of pallets and cases in large warehouses and distribution centers for some of the largest retail and wholesale companies in the world including Walmart and Target.

In addition to its robust product offerings, Symbotic has a strong emphasis on ongoing support. By offering comprehensive training, consultation, and maintenance services, the company ensures that its clients can fully leverage the benefits of their technology and achieve a strong return on investment.

Currently, Symbotic is in a growth phase as they continue to expand its market reach and refine its products, while investing in research and development to drive further innovation in the field and maintain its position as an industry leader in warehouse automation.

Background

Symbotic was founded in 2007 by the third-generation C&S Wholesale Grocers owner, Rick Cohen, who saw the potential of robotic automation in transforming warehouse operations. Initially named CasePick Systems, the company began its journey by developing innovative automated material handling solutions that focused on space optimization and order accuracy.

In 2011, the company rebranded itself as Symbotic, which marked a significant shift in its business strategy. This rebranding was accompanied by the expansion of its product offerings, with an emphasis on developing fully integrated warehouse automation systems that combined advanced robotics, software, and custom algorithms.

As Symbotic progressed, so did its affiliation with C&S Wholesale Grocers, which allowed the company to scale its operations and accelerate its growth. By 2014, Symbotic had successfully deployed its cutting-edge warehouse automation systems in multiple distribution centers across the United States.

Over the years, Symbotic has continued to evolve its product range, introducing new robotic designs and software enhancements to better serve the growing demands of the warehouse automation market. In addition to its autonomous mobile robots, the company has developed software solutions for warehouse management, simulation, and optimization, further expanding its product offerings.

In recent years, Symbotic has also focused on expanding its market reach, entering the Canadian market, and also going public to further advance its efforts to reshape the global supply chain.

Leadership

Founder Rick Cohen continues to serve Symbotic as chairman and chief executive officer, along with his ongoing role with C&S Wholesale Grocers as the executive chairman. Cohen spent his life building his family’s business from a regional player to a $25 billion powerhouse that is the eighth-largest privately held company in America. Concurrently, he has taken his extensive experience in the wholesale distribution business, his vision and experience in automation, a track record in entrepreneurship, investment and business development, and deep relationships in various industries, to turn Symbotic into an industry leader in supply chain solutions.

Cohen is joined by fellow C&S veterans, chief technology officer, George Dramalis, and chief strategy officer, Bill Boyd. Dramalis has been responsible for building and advancing all Symbotic’s technologies and solutions, bringing more than 20 years of experience in information services management with global names including Sharp Electronics and KPMG Consulting. While Boyd is responsible for planning and directing various operational, financial, and strategic activities for Symbotic. Also involved in the initial investment by Rick Cohen in CasePick Systems, his legal expertise has been applied to extensive distribution and logistics industry experience.

Customer

Symbotic’s product offerings center around the design and deployment of advanced warehouse automation solutions that streamline distribution center operations, optimize warehouse space, and accelerate order fulfillment. The company achieves this through a combination of autonomous mobile robots, advanced software, and custom algorithms.

Symbotic’s flagship product, the Symbotic System, is an integrated solution that utilizes autonomous robots that travel up to 25 miles per hour to efficiently pick, store, and transport products within a warehouse. These robots navigate the warehouse using intelligent algorithms, ensuring that the most efficient routes and storage locations are utilized. The revolutionary platform accelerates the movement of goods through the supply chain, improves SKU agility, fulfills orders with near-perfect accuracy, and does this all with less inventory and operating costs for customers.

The system is designed to be highly scalable and can be customized to accommodate warehouses of varying sizes and complexities. Systems can be as small as a single football field serving 25 or more stores and can scale to meet the needs of the world’s largest retailers.

Complementing the robotic systems, Symbotic offers a suite of software solutions that manage and optimize warehouse operations. Their Warehouse Execution System software oversees the entire warehouse workflow, from receiving to shipping, ensuring that all processes are running smoothly and efficiently. Additionally, Symbotic’s Simulation and Optimization software enables clients to model and analyze warehouse operations, identify potential bottlenecks, and test new strategies for improvement.

Symbotic’s product offerings are widely adopted by customers from various industries, with notable clients that have implemented Symbotic’s solutions in their distribution centers including:
– C&S Wholesale Grocers: As one of the largest wholesale grocery supply companies in the United States, C&S has deployed Symbotic’s automation solutions in multiple distribution centers to improve efficiency, reduce labor costs, and enhance order accuracy.
– Walmart: The retail giant has partnered with Symbotic to automate its regional distribution centers, leading to significant improvements in warehouse productivity and the ability to handle increased e-commerce demand.
– Coca-Cola: Symbotic’s robotic systems have been implemented in Coca-Cola’s distribution centers to streamline the handling and storage of beverage products, resulting in increased efficiency and cost savings.

The versatility of Symbotic’s solutions allows them to be tailored to the unique needs of each customer, ensuring seamless integration with existing warehouse infrastructures and processes. Additionally, Symbotic’s commitment to continuous innovation enables its clients to stay ahead of the curve in the rapidly evolving world of warehouse automation.

Thematic

Symbotic believes that the global supply chain has reached a point of critical stress, driving an inflection in demand for warehouse automation across all industries. As the labor force shifts toward an older, more highly educated demographic, the warehouse labor pool is shrinking and becoming more expensive, while most well-located distribution centers are either operating manually or utilizing outdated, static mechanized conveyor systems.

The dramatic growth in e-commerce has also increased supply chain complexity by putting pressure on retailers to support multiple sales channels and orders of individual items in addition to cases and pallets. Meanwhile, consumer expectations have evolved to demand a larger variety of items to be delivered quickly and seamlessly. This has placed significant strain on the traditional supply chain and the people who support it.

A key element of Symbotic’s strategy for growth includes further penetrating existing customers’ operations. Its existing customers are large companies, many of which have thousands of stores and hundreds of warehouses and distribution centers. In most cases, the company is serving a portion of these customers’ distribution centers, which Symbotic expects will translate to winning full deployments across additional distribution footprints. Given the size of Symbotic’s serviceable market relative to the size of its current customer base, there is significant room for the company to expand within existing verticals which cover general merchandise, ambient grocery and food distribution, consumer packaged food, and apparel.

In addition, there is an enormous market opportunity from secondary verticals within non-food consumer packaged goods, home improvement, auto parts, third-party logistics, and refrigerated and frozen foods. Over time Symbotic also plans to expand beyond these primary and secondary markets, into additional verticals such as pharmaceuticals and electronics. Effectively, every business that involves the physical distribution of goods through a distribution center is considered a potential customer, ultimately offering a total addressable market of $393 billion.

Financials

Symbotic has been experiencing remarkable revenue growth in recent years, delivering close to $600 million in total revenue for the full 2022 year after blitzing the prior year’s result by more than 135%. That record continued in the first quarter of 2023 as the company initiated a record six system deployments, which led to revenue of $206.3 million for the period, achieving a 168% increase on the prior comparative. Furthermore, demand for Symbotic’s solutions looking ahead continues to grow as the company’s backlog also increased to a record $12.0 billion in the last quarter.

In addition to strong revenue growth, Symbotic has also improved its gross margins and operating expenses following its efforts to establish multiple worldwide outsourcing partnerships to support its robust growth plans.

Looking ahead, Symbotic expects revenue of $205 million to $230 million, more than double the 2022 comparative period. While analysts have consensus expectations of revenue for the full year coming in at $980 million, representing year-on-year growth of 65%. Analysts are also expecting full-year earnings per share to record a loss of $0.07 for FY23, for a 40% improvement on FY22’s loss of $0.13 per share.

Risks/Competition

The competitive environment for Symbotic in the warehouse automation and robotics industry is intense, as several established players and emerging start-ups are vying for market share. With rapid digital transformation, increased e-commerce adoption, and the need for faster and more efficient supply chain operations, companies are investing heavily in technology and innovation to stay ahead of the curve. Major competitors in the space include Amazon Robotics (formerly Kiva Systems), Swisslog, Dematic, and Knapp, who all have well-established solutions and portfolios within automation and robotics solutions for logistics and warehousing.

A major risk of particular note for Symbotic is its significant customer concentration. Walmart accounted for 94% of Symbotic’s revenue in FY22, and continues to form the vast majority of the company’s $12 billion backlog, making it heavily dependent on the retail giant. Any change in Walmart’s business strategy or a reduction in demand for Symbotic’s solutions could obviously have a dramatic impact on the company’s financial performance.

Conclusion

As the world continues to experience rapid e-commerce growth, the demand for warehouse automation solutions has surged. Symbotic’s innovative integrated systems have enabled the company to benefit from this rapid growth as it pioneers the latest technology and developments. If the company can further deliver expansion across the globe, while diversifying its customer base, this success looks set to continue.

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Snapshot

While data-driven markets have historically been quicker to adopt Internet of Things solutions to drive decision-making and improve operational efficiency, physical enterprises are increasingly recognizing the potential benefits of IoT in improving efficiency, reducing costs, and enhancing safety.

Samsara Inc is pioneering this advance with its Connected Operations Cloud, which leverages IoT data from various physical devices and third-party systems to provide businesses with actionable insights and improved operations. Offering a range of applications, including video-based safety, vehicle telematics, apps and driver workflows, equipment monitoring, and site visibility, these applications leverage AI-powered data platforms to provide real-time visibility, analytics, and insights for customers’ physical operations.

The platform captures 1.6 trillion data points of previously siloed information annually, which powers the company’s AI models, making it easier for organizations to access and act on the insights using cloud dashboards, alerts, and reports. As a result, industries across everything from transportation and construction to logistics and utilities can benefit from significant reductions in safety event rates, fuel savings, improved compliance, and reduced insurance premiums, amongst much more, ultimately driving superior safety, efficiency, and sustainability.

Samsara’s focus on innovation and integration with third-party enterprise software systems such as Salesforce, Microsoft, and enterprise resource planning systems has led to rapid customer adoption. Continuing this strong growth stage, the company is focusing on further expanding its customer base both domestically and internationally, broadening its footprint with new offices around the globe, as it aims to take advantage of a rapidly digitizing market. The company also sees a significant opportunity to expand application adoption amongst existing clients, as it enhances its product offerings and adds new data types to the platform, ultimately facilitating opportunities in new use cases, such as IoT developer platforms, manufacturing, agriculture, and smart cities.

Background

Founded in 2015 by Sanjit Biswas and John Bicket, Samsara has emerged as a cutting-edge IoT platform provider focused on connected operations. Biswas and Bicket, both successful entrepreneurs, had previously co-founded Meraki, a cloud-managed networking company that was acquired by Cisco for $1.2 billion in 2012. Drawing from their experience in cloud networking, they set out to develop a comprehensive suite of hardware, software, and cloud solutions that would transform the way organizations manage their physical operations.

In its initial stages, Samsara focused on providing IoT sensors and telematics solutions for commercial fleets, enabling real-time visibility and analytics for vehicle tracking and fuel efficiency. The early success of these products allowed the company to raise enough funding to expand its product portfolio to include video-based safety solutions, which leveraged AI and computer vision technologies to improve driver safety and reduce accident rates. Over the next few years, Samsara’s growth accelerated, driven by robust customer demand and an expanding product line up to encompass asset monitoring, site visibility, and cold chain monitoring solutions, as well as enhance its core fleet management and telematics products.

In addition to organic growth, Samsara has also pursued strategic acquisitions to strengthen its product capabilities and market reach. Notable additions include AgTech IoT start-up AgriSens and industrial computer vision start-up Helios Technologies, which have enabled the company to enhance its AI-driven analytics and computer vision capabilities, as well as expand its footprint in the agriculture and industrial sectors.

Leadership

Co-founder Sanjit Biswas, continues as Samsara’s chief executive officer, having led the company since its inception in 2015. Under his guidance, Samsara has grown into a major player in the IoT and connected operations space, serving a wide range of industries and customers. With a strong background in cloud networking and his previous success with Meraki, Biswas has played a pivotal role in shaping Samsara’s vision, product strategy, and overall growth.

John Bicket also continues to shape Samsara as chief technology officer, having been responsible for the company’s technology strategy and innovation since the beginning. Bicket’s expertise in networking, IoT, and cloud technologies has been instrumental in the development and expansion of Samsara’s product portfolio, including its industry-leading fleet management, telematics, and computer vision solutions.

Customer

Samsara serves a wide range of industries as the comprehensive suite of applications and hardware devices provides private and government customers with a “single pane of glass” for not only managing their entire physical operations, but achieving significant efficiencies as a result.

The company’s video-based safety solution provides businesses with visibility into their fleet operations, allowing them to analyze and archive footage from IoT dash cameras. This information helps reconstruct incidents, exonerate drivers, and reduce costs by refuting fraudulent claims. The integration of AI-based computer vision technology further enables real-time detection of risky driving behaviors for immediate driver coaching and improved safety. Consequently, businesses can achieve material reductions in insurance premiums and improvements in driver performance.

Vehicle telematics encompasses real-time GPS tracking, routing and dispatch, reporting and alerts, maintenance, and fuel management, so that customers can manage their fleet operations with ease, improving on-time arrivals and end-customer satisfaction. Additionally, the suite’s maintenance and fuel management tools help minimize equipment downtime, lower costs, and reduce fuel consumption by identifying wasteful driver behaviors. Samsara’s EV suite further supports businesses in transitions to electric fleets, providing real-time charging station status and alerts, route planning, and usage reporting.

A driver workflow application simplifies daily tasks and compliance procedures for drivers, improving productivity and reducing manual errors, while electronic document capture eliminates paper-based processes, streamlining back-office administration and facilitating more efficient claims investigation. An Electronic Logging Device, registered with the Federal Motor Carrier Safety Administration, simplifies Hours of Service compliance and reduces the costs associated with meeting stringent regulations.

Through real-time location tracking and utilization reporting, Samsara’s equipment monitoring solution allows customers to manage a wide range of assets, from heavy construction equipment to unpowered property like dumpsters and storage containers. The platform’s maintenance features help businesses improve equipment maintenance schedules based on usage and health data, preventing unplanned downtime. Moreover, the solution supports customers with refrigerated trailers by offering real-time temperature monitoring and remote refrigeration control.

While Samsara’s site visibility application uses advanced AI and cloud-based monitoring to transform traditional IP security camera systems. Customers can leverage AI detection to identify workplace hazards and operational inefficiencies, while proactive alerts enable rapid response to unusual activity. The mobile app provides real-time remote visibility across all connected sites, facilitating efficient incident investigation.

With streamlined data management, increased safety, reduced costs, enhanced operational efficiency, improved sustainability, and more efficient regulatory compliance, Samsara solutions offer numerous and lucrative benefits to customers.

Thematic

The global IoT market is expected to expand at a significant rate, driven by the need for greater efficiency, improved safety, and cost reductions across various industries. Additionally, the growing focus on sustainability and the increasing adoption of electric vehicles present tremendous opportunities for Samsara to deliver value to its customers.

In its latest shareholder letter reflecting on FY23, Samsara said it sees digitizing the world of physical operations as a multi-decade journey. Therefore, it is currently focused on balancing growth and profitability. It is targeting a “Rule of 40” defined as reaching a sum of year-over-year revenue growth and adjusted free cash flow margin, consistently, of at least 40%. While also maintaining investment in research and development to continue enhancing its product offerings and ensure that it remains at the forefront of the IoT industry.

Samsara’s growth strategies are currently centered around attracting new customers, expanding its existing customer base, and exploring international and public sector opportunities. To that end, Samsara is investing heavily in its digital sales model, direct sales force, and marketing efforts. The company also leverages its professional services function to develop premium solutions and standalone offerings, helping to secure larger accounts and scale deployments with existing customers. Samsara also works closely with its current clients to identify new use cases and expand the usage of its platform within their organizations, allowing them to upsell additional services and increase customer lifetime value.

With a significant portion of its revenue generated within the U.S., Samsara sees a massive opportunity to grow its international customer base. The company is actively expanding its sales force focused outside of the U.S., establishing international sales territories, and partnering with strategic resellers to reach global markets.

By providing solutions that comply with strict regulations and security requirements, Samsara is aiming to unlock new growth opportunities in the lucrative public sector market, leveraging its IoT solutions to address unique challenges faced by government agencies and contractors. In its latest quarter, Samsara saw significant traction in this space as it added its first State Department of Transportation to an existing public sector account, which now exceeds $1 million in annual recurring revenue.

Building on its existing suite of products that deliver real-world benefits and efficiencies, Samsara’s approach to product development focuses on creating applications that deliver valuable operational insights and drive tangible results for customers. While the company’s AI-powered data platform is the foundation for its extensive suite of applications, Samsara understands the importance of strategic partnerships and acquisitions in driving growth and enhancing its product offerings. Consequently, it actively seeks opportunities to collaborate with leading technology providers and invests in integrations with popular productivity tools such as Microsoft, Google, Slack, and others. This approach not only increases the value and adoption of Samsara’s platform but also raises brand awareness among potential customers.

Financials

Since going public in 2021, Samsara has maintained impressive top-line growth culminating with $652.5 million in revenue for FY23 after delivering a year-over-year improvement of 52%. While its frequently reported metric of annual recurring revenue rose 42% to $795 million. The result came as it had a strong period of large deals with customers who have complex operations at scale and a wide breadth of assets, such as cranes, tractors, vehicles, and buildings. These additions resulted in over 430 large new customers with more than $100K in ARR, taking the company’s total number of large customers to over 1,200.

In addition to delivering top-line growth, the company’s continuing focus on driving operating efficiency improvements across the business as it scales, saw year-over-year leverage improvements across all major functions. Gross margins improved one percentage point to 73% in FY23 driven primarily by cellular and cloud cost optimization due to larger scale.

Looking ahead, management has set guidance for FY24 at total revenue of $838 million to $848 million, representing year-over-year growth of 30%, matching consensus expectations. Analysts are expecting full-year earnings per share to record a loss of just $0.07 for FY24, representing a strong improvement of 49% from a loss of $0.13 per share in FY23.

Risks/Competition

While the market for IoT solutions is highly competitive, dynamic, and subject to rapid technological advancements, the connected physical operations industry is highly fragmented, with most vendors offering software and/or hardware solutions addressing specific industry verticals or solution sets. Samsara’s competition largely targets individual solutions or operational groupings like fleets or facilities.

A wide range of companies including Lytx, SmartDrive, Verizon Connect, Geotab, Omnitracs, Orbcomm, ZTR, and Motorola provide individual solutions competing with Samsara’s offerings across video-based Safety, vehicle telematics, equipment monitoring, and site visibility. However, at this stage, there are few, if any, other known companies that approach the market with a common data cloud across connected fleets, equipment, and sites.

Conclusion

Samsara’s strategic approach to product development, ideal market conditions, and growth strategies have already proven to be highly effective and are continuing to position the company well for global expansion and long-term success.

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After being cooped up at home throughout the covid pandemic, the desire to travel has never been stronger. People are itching to get out and explore the world once again.

For Airbnb, while the pandemic saw bookings for nights and experiences plunge over 70% year-over-year, the company has been able to pull off a dramatic recovery as it rapidly responded to the crisis with significant restructuring and strategic actions. From layoffs and hiring freezes to flexible booking policies and enhanced cleaning protocols, Airbnb wasted little time in taking necessary steps to ensure it had the best chance of emerging as a stronger company and regaining the confidence of travelers around the world.

In addition, when the pandemic hit, the company chose to focus on its most unique feature. It returned to its roots and the everyday people who host their homes and offer experiences, scaling back investments that did not directly support its core business of hosting. This decision has proved critical with people increasingly seeking local stays as the pandemic persisted, providing and distinct advantage that was ultimately a core driver in the company’s recovery.

Today, Airbnb continues as one of the largest travel companies in the world, with over six million listings in over 220 countries. Despite facing challenges from the pandemic, which had catastrophic impacts on competitors within the travel sector, Airbnb has continued to innovate and grow, expanding into new markets and introducing new products and services to continue its growth trajectory.

Background

Born out of a need to make rent payments in San Francisco, Airbnb was founded in 2008 by Brian Chesky, Joe Gebbia, and Nathan Blecharczyk. The trio rented out air mattresses on their apartment floor during a conference and saw an opportunity for a new type of accommodation service. Beginning with the mattresses and couches in living rooms, it quickly grew in popularity as hosts began offering their homes, apartments, and spare rooms.

In 2009, the company raised $600,000 in seed funding, which helped them expand beyond San Francisco. And by 2011, Airbnb had listings in over 8,000 cities worldwide and had raised more than $100 million in funding. The company continued to expand, both geographically, by adding new offices and listing around the world, and by adding new features. The company’s technology has also evolved, with its first mobile app released ten years ago.

As the third wave of the covid pandemic began to ramp up, Airbnb went public in December 2020, raising $3.5 billion in one of the biggest IPOs of the year, valuing the company at $47 billion at the time.

As it has grown in size and popularity, Airbnb has faced increasing regulatory challenges from local governments and hotel associations ranging from concerns about driving up house prices to the need to ban parties in homes rented on the platform. In response, the company has made concerted efforts to work with some local governments and comply with regulations. In other cases such as with China, Russia, and Belarus, it has ceased operations.

Leadership

Airbnb is currently led by co-founder Brian Chesky as the company’s chief executive officer. Chesky has been instrumental in driving Airbnb’s growth and expansion over the past decade and has guided it to become a community of over four million hosts who have welcomed more than one billion guests. He has even been recognized for his entrepreneurial achievements, including being named one of Time magazine’s 100 most influential people in the world.

Fellow co-founder Nathan Blecharczyk also continues to serve the company as its chief strategy officer. Blecharczyk has led the creation of Airbnb’s engineering, data science, payments, and performance marketing teams. His holistic understanding of the business, public policy, product, data, and Airbnb’s long-term stakeholder interests have seen him oversee several industry-first solutions including the Airbnb City Portal, which addresses the needs of cities relating to short-term rentals, along with the company’s reservation screening technology which is critical in identifying high-risk reservations.

Customer

In 15 years, the company has come a long way from mattresses in living rooms to a diverse offering that caters to the needs of various types of travelers including solos, couples, families, and business professionals across the spectrum from budget-conscious backpackers to luxury-seeking jet-setters. Beyond the traditional home-sharing service that allows hosts to rent out their entire home or just a spare room, unique stays now include everything from treehouses, yurts, and castles to provide travelers with a truly one-of-a-kind experience.

While at its core, it remains a platform that connects hosts and guests with authentic accommodations around the world, over the years it has launched several new verticals. Airbnb Experiences has made it possible for travelers to book activities and tours with locals, providing them with an opportunity to explore their destination in a unique and authentic way. The offering has a wide range of experiences available including cooking classes, photography tours, and outdoor adventures.

The addition of Airbnb Plus provided a new tier of accommodations, which offers a collection of high-quality, verified homes that have been inspected and approved by Airbnb. These homes deliver additional amenities and services to guests, such as high-quality linens and personal concierge services.

While in 2018, the company launched Airbnb for Work, which caters specifically to business travelers. This service provides business-friendly accommodations and travel management tools, making it easier for companies to manage their travel expenses and ensure their employees have a comfortable and productive travel experience.

Thematic

Airbnb’s range of products and services has helped it become a popular alternative to traditional hotels. By providing travelers with unique and authentic experiences, the company has established itself as a leader in the travel industry. Furthermore, it has achieved this with the asset-light flexibility of a software company, coupled with a real-world footprint and scale exceeding the largest international hotel chains. Airbnb has also had the benefit of not incurring enormous labor costs, property maintenance, and heavy capital expenditures required by the traditional incumbents it has managed to disrupt. Despite delivering over 50% more revenue per year, Airbnb’s almost 7000-strong workforce is dwarfed by Marriott International’s more than 130,000 employees.

Airbnb has said it is focusing on three strategic priorities:
– Make hosting mainstream – by continuing to raise awareness around hosting, making it easier to get started, and providing better tools for hosts.
– Perfect the core service – based on feedback from guests and hosts, Airbnb will continue making a large number of upgrades to the service looking ahead, improving community support, making it easier to find the right home, and delivering greater value
– Expand beyond the core – by building a foundation for future products and services that will provide incremental growth for years to come

Efforts to deliver on these priorities are already well underway. In November, Airbnb Setup was introduced to make it easy for people to Airbnb their homes. Prospective hosts can now connect with existing Superhosts for free one-to-one guidance all the way through their first reservation. In addition, new hosts also can choose to have an experienced guest for their first booking and receive specialized support from Airbnb. Since the launch of the company’s “Airbnb It” campaign, the number of visitors to its host landing page has doubled. While the number of new active Hosts recruited with the help of Superhosts increased by more than 20% compared to pre-launch.

Also in 2022, Airbnb Categories were introduced, creating a new way of making millions of unique homes discoverable to guests who would have never known existed otherwise. The service is designed to help guests looking for a unique space to discover one-of-a-kind homes via categories organized into curated collections, with over 50 categories of homes chosen for their style, location, or nearby activities. And with more people taking longer trips than ever before, Airbnb also created Split Stays, an innovative new feature that splits a trip between two different homes. As a result, guests can find an average of 40% more listings when searching for longer stays.

While key in rebuilding the confidence of travelers around the world, AirCover is now providing comprehensive free protection for all guests and hosts across a range of issues. Guarantees now ensure that guests are covered in the event a host needs to cancel a booking, if a guest can’t check into their home, or they find their listing is not as advertised. While for hosts, a comprehensive verification system checks details such as name, address, government ID, and more to confirm the identity of guests. Airbnb will also reimburse for damage caused by guests to their homes and belongings or if a guest gets hurt or their belongings are damaged or stolen. In addition, a 24-hour Safety Line provides priority access to specially-trained safety agents in multiple languages.

Unlike many industry disruptors, Airbnb has also managed to deliver its most profitable performances to date, despite slashing its overall marketing investment as a percentage of revenue and shifting its marketing strategy to be more brand-driven and PR-led, and less dependent on search engine and performance marketing. Airbnb now looks at the role of marketing as one of “education” and not “to buy customers”. With the majority of Airbnb bookings coming from past guests, the strong retention has been a powerful driver of growth. Impressively, despite the shift, the company has still been able to introduce Airbnb to millions of new users since the covid pandemic and when combined with a leaner organizational structure, has positioned it well to navigate the challenges of the current macroeconomic climate.

Financials

Airbnb has well and truly emerged from the covid pandemic, delivering another record year in 2022 after revenue of $8.4 billion grew 40% year-over-year, as guest demand remained strong, and all regions saw significant growth with guests once again crossing borders and returning to new cities. The company also benefitted from strong supply growth, ending the year with 6.6 million global active listings, which is over 900,000 more than at the beginning of the year, excluding China. This growth was driven by the global network, where demand drives supply, as well as product innovations that continued to attract new hosts.

The company has also posted its highest-ever adjusted EBITDA ever at almost $3 billion, for more than a 50% year-on-year increase, which the company says demonstrates the continued strength of the business and discipline in managing the cost structure. Net income was $1.9 billion, also making 2022 Airbnb’s first profitable full year.

Looking ahead, management is forecasting to kick off FY23 with total revenue between $1.75 billion to $1.82 billion for the quarter, representing year-over-year growth of between 16% and 21%, after which it anticipates that seasonality in 2023 will be similar to 2022. Consensus estimates have full-year revenue expected at $9.6 billion, delivering double-digit year-over-year growth of 14%. Analysts are also expecting earnings per share to continue its upwards trajectory, increasing 22% year-over-year to $3.42, up from $2.79 in 2022.

Risks/Competition

The market for home-sharing and travel is highly competitive, with many major players vying for market share. Airbnb’s major competitors include other home-sharing platforms like Vrbo and HomeAway, as well as traditional hotel companies like Marriott and Hilton. Additionally, online travel agencies like Booking.com and Expedia also compete with Airbnb for customers. While new entrants have emerged in the home-sharing market, such as Sonder and Lyric, which offer a more standardized and hotel-like experience. These players compete on factors including everything from pricing, customer experience, brand reputation, and the range and quality of offerings.

The covid pandemic had a significant impact on the industry and has created new market conditions. There is now a greater emphasis on health and safety measures with travelers being more concerned than ever about staying in clean and safe accommodations.

However, despite past noise regarding the transparency of Airbnb’s fees, an issue the company has addressed, Airbnb has a large and loyal customer base and global brand recognition. And when coupled with a focus on providing unique and authentic accommodations and experiences, give it a competitive advantage in the market.

Conclusion

From humble beginnings to a global industry leader, there is no denying Airbnb epitomizes an industry disruptor. Having recovered from the covid pandemic as a more efficient organization and continuing to benefit from more focused marketing and a new suite of innovations to keep new and current guests returning, it appears well-placed to build on its record performances.

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Cancer is one of the leading causes of death worldwide, and early detection is crucial for successful treatment. However, traditional screening methods are often invasive, uncomfortable, and expensive.

Exact Sciences Corporation is a leading, global, advanced cancer diagnostics company, developing some of the most impactful products in cancer screening as it works to bring new, innovative cancer tests to patients throughout the world. The company specializes in the development of non-invasive tests and are aiming to make earlier cancer detection a routine part of medical care. From screening to treatment guidance, their services help provide critical information needed to make more informed cancer care decisions.

Their flagship product, Cologuard, is a non-invasive stool DNA test for colorectal cancer that can detect the presence of cancerous or precancerous cells with a high degree of accuracy, making it a more accessible and effective option for patients. It also provides a range of precision oncology tests for breast and colon cancers, along with tumor profiling for patients, and covid-19 testing services.

With an expanding global network of ordering healthcare providers, Exact has provided cancer tests to more than 12 million people. Building on a solid history of consistent top-line revenue growth, the company is currently focused on accelerating its path to profitability through key prioritization efforts. In particular, it is concentrating on further expanding its market reach by partnering with healthcare providers and insurance companies to increase awareness and access to its products.

Additionally, the company is exploring new geographic markets, as it also continues to undertake critical research and development initiatives within colorectal cancer screening, multi-cancer early detection, and molecular residual disease.

Background

Founded by Stanley Lapidus and Anthony Shuber in Massachusetts in 1995, Exact Sciences struggled in its early years including following an initial offering on the NASDAQ in 2001. However, a significant turnaround in the company’s fortunes began with the announcement of a mutual collaboration and licensing agreement with the Mayo Clinic in 2009. In the same year, the company appointed its current CEO and chairman, Kevin Conroy.

By 2014, Exact received premarket approval from the FDA for the use and marketing of Cologuard, a breakthrough that heralded the beginning of a period of rapid growth and the start of its foray into the acquisitions market. In the years following, Exact acquired several companies including Sampleminded, Armune Bioscience, Biomatrica, Paradigm Diagnostics, and Viomics, adding a range of technical capabilities.

However, it was its $2.8 billion purchase of Genomic Health, a genetic cancer detection company based in California, which expanded Exact’s product portfolio markets outside the U.S. The deal led to the opening of Exact Sciences offices in the United Kingdom, France, Germany, Italy, and Japan, and the foundation of Exact Sciences International.

In 2020, Exact responded to the covid pandemic by refocusing a portion of its diagnostic capacity to testing for the disease, becoming one of the first companies in the U.S. to receive FDA approval to provide home testing kits.

While most recently in early 2021, Exact announced its acquisition of Ashion Analytics and plans to collaborate in research with TGen, the City Of Hope’s Genomics Institute, building on its purchase of an exclusive-use license of TGen’s proprietary liquid biopsy-based test technology, Tardis.

Leadership

Kevin Conroy became chief executive officer of Exact in 2009 and chairman in 2014, transforming the organization into one of the world’s premier cancer diagnostics companies with more than 6,500 employees. Conroy has led Exact through the entire journey of development, clinical trial, regulatory approval, and commercialization of Cologuard. This culminated with the test becoming the first medical device or diagnostic to receive simultaneous FDA approval and national Medicare coverage. Before joining the company, Conroy served as CEO and president of Third Wave Technologies, held leadership positions at GE Healthcare, and practiced intellectual property law in private practice. He also currently serves as a director of Adaptive Biotechnology Corporation and is on the board of the American Clinical Laboratory Association and Personalized Medicine Coalition.

Conroy is joined by chief science officer and former president of Minimal Residual Disease and Therapy Selection, Jorge Garces, who brings decades of experience in diagnostics including a focus on the development, clinical trials, and commercialization of liquid biopsy tests in the field of oncology. Prior to joining Exact, Garces served in several president, CEO, and CSO roles with Epigenomics AG, AltheaDx Inc, and Enigma Diagnostics, along with many other leadership positions at Hologic Inc., Third Wave Technologies, Genzyme Genetics, and Athena Diagnostics.

Customer

Exact’s flagship screening product, the Cologuard test, is a patient-friendly, non-invasive, stool-based DNA (sDNA) screening test that utilizes a multi-target approach to detect eleven DNA and hemoglobin biomarkers that are associated with colorectal cancer and pre-cancer.

Exact also provide more than 5,000 predefined genetic tests for nearly all clinically relevant genes, additional custom panels, and comprehensive germline, whole exome, and whole genome sequencing tests. In particular, the company’s hereditary cancer test, Riskguard, helps people understand their inherited risk of cancer, providing them with critical information to make better treatment decisions.

Precision oncology tests marketed under the Oncotype DX labeling deliver actionable insights to inform prognosis and cancer treatment after a diagnosis. Oncotype DX tests serve a range of purposes including identifying breast cancer patients who are most or least likely to benefit from chemotherapy, helping guide treatment decision-making for women with ductal carcinoma in situ, and enabling an individualized approach to treatment planning for patients with stage II and stage III colon cancer. While the OncoExTra test applies comprehensive tumor profiling and sequencing, to aid in therapy selection for patients with advanced, metastatic, refractory, relapsed, or recurrent cancer.

These tests ultimately enable patients to take a more active role in their cancer care and make it easy for providers to order tests, interpret results, and personalize medicine by applying real-world evidence and guideline recommendations.

In late March 2020, Exact also began providing COVID-19 testing. Partnering with various customers to administer testing, specimens are sent to Exact’s laboratory in Wisconsin, where they run the assay and provide test results to ordering providers. However, as the public health impacts of COVID-19 evolve, Exact has said it intends to periodically reassess offering covid testing as the pandemic abates, demand declines over time, and government funding for testing services is reduced.

Thematic

It is widely accepted that colorectal cancer is among the most preventable, yet least prevented cancers. It can take up to 10 to 15 years to progress from a pre-cancerous lesion to metastatic cancer and death. While patients who are diagnosed early in the progression of the disease are more likely to have a complete recovery and to be treated less expensively. Furthermore, as the second leading cause of cancer deaths in the U.S. and the leading cause among non-smokers, each year there are approximately 153,000 new cases of colorectal cancer and approximately 53,000 deaths across the country.

In 2014, the Cologuard test became the first and only FDA-approved sDNA test, while in 2019, the FDA expanded its indication to include average-risk individuals ages 45-49, making it indicated for adults 45 years of age and older. Furthermore, the American Cancer Society has specifically included the Cologuard test as a recommended colorectal cancer screening test for this population. To date, more than 55% of Americans within this group are not up-to-date with screening. As a result, with nearly 110 million Americans at a three-year screening interval and an average revenue per test of approximately $500, this represents a potential $18 billion market for Cologuard tests.

Exact’s core products, Cologuard and Oncotype DX are already generating significant revenue, however, the company has several incremental improvements to these products in its pipeline. Such as Cologuard 2.0, which boasts increased specificity and advanced adenoma sensitivity, aiming to reduce false positive rates. To that end, Exact has completed enrollment of a multi-center study, which is expected to support FDA approval of the enhanced test. While the recent launch of the OncoExTra therapy selection test brings with it next-generation sequencing and comprehensive tumor profiling to provide doctors and their patients with a complete molecular picture of a patient’s cancer to aid in therapy selection.

Exact is also investing in the development of minimal residual disease (MRD) testing, with studies underway for both colon and breast cancers. The company plans to offer both tumor-informed and tumor-naive MRD tests, which can help detect small amounts of tumor DNA that may remain in patients’ blood following initial cancer treatment. By monitoring MRD levels over time, doctors can identify when a patient’s cancer cells are starting to grow again and intervene with additional treatments before the cancer has a chance to progress.

Finally, looking further ahead, the company is developing a multi-cancer early detection test aimed at helping to detect many different types of cancer from a single blood draw. For which initial data was presented data at the European Society for Medical Oncology Congress in September 2022.

Financials

With the exception of a modest tempering throughout the covid pandemic, Exact has been on an impressive trajectory of revenue expansion for the last decade, largely achieving high double-digit and even triple-digit year-over-year growth each year. The company ended 2022 strongly with a record quarter that also resulted in a record full-year revenue that exceeded $2 billion for the first time. Total revenue of $2.1 million, made up of Screening revenue of $1.43 billion and Precision Oncology revenue of $601 million, represented a year-on-year increase of 18%.

Of particular note in its latest results, Exact said it has shifted its focus towards achieving positive adjusted EBITDA as a way to signal a path to eliminate cash burn in 2023. The company’s adjusted EBITDA profit in the fourth quarter at $5 million, was an improvement of $120 million. Furthermore, industry-leading gross margins are powering future positive results and a clear path to free cash flow.

Looking ahead, the company anticipates revenue of $2.27 to $2.32 billion during 2023. This assumes Screening revenue of $1.66 to $1.69 billion and Precision Oncology revenue of $600 to $620 million, along with COVID-19 testing revenue of $5 million. The target represents year-over-year growth of around 10%, also matching consensus expectations. Analysts are also expecting full-year earnings per share to record a loss of $2.22 for 2023, improving over 33% from a $3.35 loss in 2022.

Risks/Competition

With the U.S. market for colorectal cancer screening exceeding more than 110 million eligible individuals, it has attracted numerous competitors.

Exact’s Cologuard test faces competition from procedure-based detection technologies such as colonoscopy, flexible sigmoidoscopy, and “virtual” colonoscopy, as well as other common screening tests, such as the fecal occult blood test and the fecal immunochemical test. Newer screening technologies also include liquid biopsy tests.

Exact is also aware of at least three companies, Mainz Biomed, Prescient Metabiomics, and Geneoscopy, that are seeking to develop or have developed stool-based colorectal cancer tests in the U.S.

However, given all other colorectal cancer detection methods currently in use are constrained by some combination of poor sensitivity, poor adherence, or high cost, the Cologuard test, being the first and only sDNA-based non-invasive test on the market today, compares favorably to the alternatives.

Conclusion

After achieving solid traction with its initial core products, Exact appears to be at an inflection point for not only improving profitability, but backing it up with a growing pipeline of life-changing diagnostics.

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Snapshot

As the world shifts towards electric vehicles and autonomous driving, demand for advanced safety features and connectivity solutions within the automotive industry has surged.

Aptiv is a global technology company that specializes in developing advanced electrical architecture and integrated software solutions primarily serving the automotive sector.

Delivering end-to-end mobility solutions, that enable major manufacturers to transition to more electrified, software-defined vehicles, the company designs and manufactures vehicle components and provides electronic and active safety technology solutions to the global automotive markets. These solutions create both the software and hardware foundations for vehicle features and functionality, often providing the ‘brain’ and the ‘nervous system’ of increasingly complex vehicles, and enabling a new paradigm of integration for vehicles into their operating environments.

Aptiv’s products enable safer, greener, and more connected vehicles, and their technology is used by many of the world’s leading automotive manufacturers. With its primary markets including Europe, North America, and Asia, Aptiv now has a presence in more than 45 countries.

Heavily focused on growing and improving the profitability of its businesses, Aptiv is strategically focusing its portfolio on high-technology, high-growth spaces to create advanced solutions that provide greater functionality and enhance the overall driving experience, while meeting the evolving needs of the automotive industry.

In addition to key partnerships with industry leaders to develop new technologies and solutions, they are also expanding their geographic footprint by establishing a strong presence in emerging markets such as China, India, and Brazil.

Background

Aptiv was originally established as General Motors’ Automotive Components Group in 1994, although along with several other divisions, GM renamed the group to Delphi Automotive Systems in 1995, as it specialized in the development of automotive electronics and electrical systems. The company focused on developing cutting-edge technologies such as advanced safety systems, airbags, and anti-lock brakes, as well as innovations in fuel injection and emissions control.

In 2017, Delphi spun off its powertrain division and renamed itself Aptiv. The newly independent company continued to focus on developing advanced auto systems and software solutions with a new wave of next-gen technologies such as collision avoidance and lane departure warning systems. As well as connectivity solutions that allow drivers to stay connected to the internet and other devices while on the road.

Over the years, Aptiv has acquired several related technology companies as part of its growth strategy, including KUM, HellermannTyton, and Movimento, among many more. These acquisitions have helped Aptiv to expand its product range, global reach, and market share in the automotive, aerospace, defense, and telecommunications markets. As the automotive industry shifts towards electric vehicles and self-driving cars, there is increasing importance on advanced driver assistance systems (ADAS) and autonomous driving technologies.

Leadership

Chairman and chief executive officer, Kevin Clark, has been with Aptiv since 2010, initially serving as CFO of Delphi before becoming COO in 2014, and CEO in 2018. Under his leadership, Aptiv has focused on developing advanced electrical architecture and integrated software solutions for the automotive industry, as well as expanding its global reach. Before coming to Delphi, he was a founding partner of Liberty Lane Partners, a private equity investment firm focused on investing in and building and improving middle-market companies. Clark has also held several executive roles at Fisher Scientific International and Chrysler Corporation.

While Benjamin Lyon is senior vice president and chief technology officer of Aptiv, a relatively new position he has held since December 2022. Lyon has over two decades of experience in senior engineering, developing technology, commercializing products, and executing program launches at leading technology companies including Apple and Astra Space. He is now responsible for ensuring that Aptiv remains at the forefront of emerging and disruptive technology trends and prioritizing longer-term business model opportunities in mobility and adjacent markets.

Customer

As a leading provider of advanced electrical architecture and integrated software solutions for most of the world’s leading automotive manufacturers, Aptiv’s products help to make vehicles safer, greener, and more connected.

The product range includes a variety of technologies and solutions. These include advanced safety systems such as collision avoidance and lane departure warning systems, along with connectivity solutions that allow drivers to stay connected to the internet and other devices while on the road. In addition, autonomous driving technologies are helping to pave the way for the future of transportation and enabling self-driving cars to navigate roads safely and efficiently.

Aptiv’s products and services are organized into three core business units:
– Signal and Power Solutions,
– Advanced Safety and User Experience, and
– Autonomous Mobility.

The Signal and Power Solutions business unit provides electrical systems and components such as advanced wiring, electrical centers, and connectors that improve the efficiency and reliability of vehicles, while also reducing their environmental impact. The Advanced Safety and User Experience business unit provides technologies that improve the safety of vehicles and their passengers, while also making it more intuitive for drivers to interact with their vehicles. Finally, the Autonomous Mobility business unit is focused on developing everything from sensors and software to advanced computing platforms that enable vehicles to operate without a driver.

While it serves several of the world’s top-tier auto manufacturers, one of Aptiv’s major customers and a prime example of the company’s expertise in advanced electrical architecture and integrated software solutions, is BMW. Having worked with the German brand for many years, Aptiv provides an extensive range of ADAS, connectivity, and infotainment solutions including occupant sensing, night vision, blind spot detection, and gesture recognition, among many more.

Aptiv’s business is diversified across end markets, regions, customers, vehicle platforms, and products. Its customer base includes the 25 largest automotive original equipment manufacturers (OEM) in the world, and in 2022, 30% of its net sales came from the Asia Pacific region, which the company has identified as a key market likely to experience substantial long-term growth. In addition, in 2022, Aptiv’s products were found in 18 of the 20 top-selling vehicle models in both the U.S. and Europe and 12 of the 20 top-selling vehicle models in China.

The company has established a worldwide design and manufacturing footprint with a regional service model that enables it to efficiently and effectively serve global customers from the best-cost countries within each continent. This model makes it possible for Aptiv to engineer globally and execute regionally to serve the largest OEMs, which are seeking suppliers that can serve them on a worldwide basis. The large footprint also enables the company to adapt to the regional design variations that the global OEMs require, while also serving key growth markets.

Thematic

In 2022, the automotive industry experienced increased global customer sales and production schedules, despite the ongoing adverse impacts of global supply chain disruptions and increased inflationary pressures. Global vehicle production increased by 5% from 2021 to 2022, albeit with variations across regions. And while OEM demand is tied to actual vehicle production, Aptiv has had the opportunity to grow through increasing product content per vehicle by further penetrating business with existing customers and in existing markets, gaining new customers, and increasing their presence in global markets.

Furthermore, with evolving entrants into the global transportation industry including mobility providers, electric vehicle developers, and smart cities, these new players are expected to provide additional markets for Aptiv’s advanced technologies. As a company with a global presence and advanced technology, engineering, manufacturing, and customer support capabilities, Aptiv is well-positioned to benefit from these opportunities.

Aptiv believes the automotive industry is being shaped by rapidly increasing consumer demand for new mobility solutions, and advanced technologies, including software-defined vehicles, and vehicle connectivity, as well as increasing government regulation related to vehicle safety, fuel efficiency, and emissions control. These societal demands have created three “mega-trends” that serve as the basis for the next wave of market-driven automotive technology advancement. The need to be “Safe,” “Green” and “Connected,” is driving higher growth in products that address these trends, when compared to growth in the automotive industry overall.

Consequently, Aptiv is aiming to continue developing leading-edge technology focused on addressing these trends, and apply that technology toward products with sustainable margins that enable its customers to produce distinctive market-leading products. To achieve this, the company is continuing to invest heavily in research and development, while also partnering with other companies to develop solutions. In addition, it sees an increasing need for full system optimization through next-gen hardware architectures, cloud-native software architectures, and edge-to-cloud platforms, while also expanding into relevant adjacent markets.

Financials

After a modest dip through the covid pandemic, Aptiv’s revenue has continued to improve and exceed 2019 highs. While global automotive production increased by only 5%, the company’s overall volumes increased far more impressively. For the year ended December 31, 2022, the company reported revenue of $17.5 billion, an increase of 12% from the prior year.

It also successfully created a competitive cost structure, while still growing product offerings aligned with the high-growth mega-trends, and re-aligning its manufacturing footprint into an efficient, low-cost regional service model, focused on increasing profit margins. Despite the volatility caused by the global supply chain disruptions throughout 2022, this overall lean cost structure, along with continued above-market sales growth in all regions, enabled Aptiv to achieve strong levels of operating income, while continuing to strategically invest in the future. As a result, for the full 2022 year, the company reported a net income of $531 million.

Looking ahead, management is forecasting to close out FY23 with total revenue of $18.8 billion to $19.3 billion, slightly more conservative than consensus expectations at $19.4 billion, which represents year-over-year growth of 11%. Analysts are also expecting full-year earnings per share to come in at $4.42, for a solid 30% improvement, up from $3.41 in 2022.

Risks/Competition

The automotive industry is highly competitive, with several major players vying for market share. As a leading provider of advanced electrical architecture and integrated software, Aptiv faces competition from some of the biggest automotive brands in the world including German giants, Bosch and Continental. Both of which have a broad range of products, like Aptiv, including everything from power systems, driver assistance systems, and electronic components.

While product quality, cost, and customer service are key competitive factors, as the automotive industry continues to evolve and new technologies emerge, companies that can develop and produce cutting-edge solutions will have a competitive advantage. As a result, Aptiv appears well-placed to continue its growth and success, thanks to its expertise in advanced technologies and its commitment to innovation.

Conclusion

The automotive industry is witnessing a surge in demand for advanced safety features and connectivity solutions as it moves towards electric vehicles and autonomous driving. Consequently, Aptiv’s products which enable safer, greener, and more connected vehicles, have allowed the company to successfully take advantage of these trends and put it on a long-term trajectory of continued growth.

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As people become increasingly health-conscious and active, the athletic footwear market continues to grow. Swiss performance apparel brand, ON, designs, manufactures, markets, and sells its own sports clothing and running shoes, and has carved out a unique premium niche by creating shoes that enhance the running and training experience.

ON’s core product line includes a variety of running shoes that utilize innovative technology to reduce impact and increase comfort. The brand offers a range of unique technology systems and materials providing everything from advanced shock absorbing capabilities, powerful take-offs, and smoother, effortless runs, to enhanced traction and grip whatever the terrain. The company even offers an innovative subscription service.

With a customer base made up of runners and fitness enthusiasts from around the world, the company has already built a strong presence in Europe and the United States, and is now also expanding into Asia and other emerging markets.

Currently in a high-growth stage, focused on broadening its global reach, ON continues to invest heavily in research and development, marketing, and new product offerings, as its growth strategy includes increasing brand awareness, expanding distribution channels, and developing new products that cater to the needs of its performance-seeking customers.

Background

The ON story all started in the Swiss alps when retired athlete, Olivier Bernhard, wanted to create a running shoe with a totally new feel. Teaming up with Caspar Coppetti and David Allemann, also former professional athletes, their goal was to create the most high-performance shoe ever.

They had a vision to create a new type of running shoe that combined the benefits of natural running with the protection and comfort of traditional shoes. The trio inspired by their own experiences and needs as runners to create a product that would help reduce injuries and enhance performance, came up with the experience of “running on clouds” with cushioned landings and power take-offs.

ON’s first product was the CloudTec running shoe, which was launched in 2010. The shoe was an instant success, receiving positive reviews from runners and industry experts alike. The company quickly gained a following and began to expand its product range, introducing new models and styles of running shoes, as well as apparel and accessories.

In addition to expanding its product range, ON has also expanded its geographic reach, establishing offices in several countries, including the United States, Japan, and Australia, to support its international growth. It has also built a network of retail partners and distributors around the world.

Leadership

Olivier Bernhard, a former three-time world duathlon champion and professional triathlete, brought his expertise as an athlete and engineer to ON. His experience in product development and design has been instrumental in the company’s success, as he was responsible for the initial shoe design.

With a background in branding and design, Caspar Coppetti, a former professional snowboarder and graphic designer, helped to create the company’s iconic logo, which features three curved lines representing the company’s core values of design, functionality, and technology. Coppetti also oversees ON’s marketing and brand strategy, working to build the company’s global presence and connect with customers around the world.

While David Allemann, a former professional footballer, has brought his experience in business and marketing to ON. He was responsible for securing the initial funding for the company and has played a key role in developing ON’s business strategy and building its international distribution network. Allemann is known for his innovative approach to business and his commitment to sustainability, which has helped the company establish itself as a leader in the global running shoe market.

Since its founding in 2010, ON has become one of the fastest-growing running shoe companies in the world, with its success due in large part to the vision and leadership of its co-founders, who continue to drive ON’s growth and innovation today.

Customer

ON offers a range of innovative and high-performance footwear, apparel, and accessories for athletes and people with an active lifestyle. Their products are designed to help users to perform at their best and to prevent injuries. With a focus on innovation and sustainability, the company has developed a strong following of fitness enthusiasts around the world.

One of ON’s most popular product lines is its running shoes. With a variety of styles and colors, the shoes are designed to provide the perfect balance of cushioning and support for runners of all levels. Every ON shoe includes CloudTec technology, which consists of individual “clouds” that cushion the foot, absorbing impact, reducing strain, and providing a smooth and stable ride.

Their shoe lines also feature a range of unique proprietary technologies including:
– Speedboard – which bends and flexes, converting the kinetic energy of each landing into a powerful take-off with more speed, for the same effort.
– Helion – a super foam for superior performance and smoother and more effortless runs
– Missiongrip – which gives enhanced traction with a carefully crafted grip-rubber compound that helps runners stick to the ground

While the company’s range of Cyclon recyclable running products uses bio-based, high-quality, and renewable materials to create a line of shoes and apparel designed to be recycled and transformed into new products. In September, the brand unveiled the first shoe made from carbon emissions, called Cloudprime, which was seen as a huge milestone, not only for ON, but for the whole sports industry as a move away from petroleum-based resources.

In addition to running shoes, ON also offers a range of apparel and accessories. Their apparel is designed to be comfortable and functional, with features such as moisture-wicking fabric and breathable materials. While accessories such as hats, gloves, and socks aim to help athletes stay comfortable and perform at their best.

ON’s products are used by a wide range of customers, including professional athletes and fitness enthusiasts. They are quickly becoming a brand favorite in the running and triathlon communities, and many high-profile athletes and teams including the Swiss Olympics and Red Bull Skydive teams, among many others, are choosing ON for their superior performance and innovative design. Their products are also popular among everyday athletes and people who are simply looking for comfortable and high-performance gear.

ON now has a global presence, with customers in over 60 countries around the world thanks to a strong e-commerce presence. The company’s online store features its full product offering and provides the ability to build valuable intelligence through direct conversations with customers. In addition, a network of retail partners includes sporting goods stores, specialty retailers, and department stores. While flagship stores are in major cities such as New York, Zurich, and Tokyo.

Thematic

With innovative technology and strong brand positioning, ON has been proving itself a formidable challenger against incumbent giants like Nike and Adidas, not only attracting a loyal following, but experiencing significant top-line growth in the past few years. And the company is persevering with several strategies in place to continue this growth, including expanding its product line, investing in marketing and sales, and expanding into new markets.

New product lines are continuing to target shoes for a wider range of activities across trail running and outdoor endeavors, allowing ON to reach a broader audience and appeal to runners with different needs and preferences. While heavy investment in marketing and sales to expand its customer base, has seen the company partnering with influencers and high-profile athletes to promote its brand and products.

For expansion into new markets, ON has been growing its retail presence in key territories such as the US and China. There has been a particular focus on expanding its direct-to-consumer sales channels, specifically, investing in its e-commerce capabilities, and launching new online platforms such as a partnership with the WeChat e-commerce mini program in China. These initiatives are aiming to make it easier for customers to purchase its products directly from ON, while also making its products available to customers in new regions.

In addition, ON has been partnering with distributors and retailers to expand its touchpoints and reach new customer segments. Retail partners are carefully selected across wholesale channels including select third-party online-only platforms, based on their compatibility with ON’s premium brand, positioning in the market, and industry expertise.

Going forward, ON also plans to open a limited number of additional retail flagship stores in major metropolitan centers as well as athletic destinations, where it believes it can operate profitably and create further brand momentum.

Financials

Appealing to serious athletes, ON has experienced rapid success and impressive top-line revenue growth in recent years. The company’s net sales for the first nine months of 2022 reached CHF 855.4 million, up 60.3% compared to the same period in 2021, This performance was driven by strong growth in the wholesale channel of 55.6%, well supported by new product launches in 2022. While direct-to-consumer sales rose over 40%, and exceptional growth of 85.2% was achieved thanks to new accounts in the Asia-Pacific region.

In its latest quarter, ON also delivered a gross profit margin of 57.1%, and despite foreign exchange headwinds and temporary supply chain constraints, the company recorded a net income of CHF 20.6 million.

ON is raising its previous guidance by CHF 25 million and now expects net sales of CHF 1.125 billion for the full year 2022, marginally lower than consensus expectations which have the company hitting $1.22 billion in the year, for an impressive 57% year-over-year increase. While full-year earnings per share are forecasted to come in at $0.33, an enormous 126% improvement, up from $0.15 in 2021.

Risks/Competition

Operating in a market with fierce competition, ON is up against well-established global players like Nike, Adidas, Under Armour, Puma, and Reebok, which benefit from significant resources, mature supply chains, and ubiquitous brand recognition. However, the company’s strong focus on creating unique practical technology coupled with superior performance and quality have provided key competitive differentiators against the incumbents.

Furthermore, a key market development in recent years is a significantly increased importance of sustainability and eco-friendliness in consumer buying habits, for which its recycled lines and unique materials have specifically targeted.

Conclusion

ON has experienced significant success and rapid revenue growth in recent years due to its unique product offering and strong brand positioning evolving from its Swiss home. With the company continuing to expand its product line, customer segments, and geographic footprint, it appears well-placed to continue its rapid growth trajectory.

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