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nCino, Inc. is a software-as-a-service (SaaS) company that specializes in providing cloud-based banking technology solutions to financial institutions. The company offers the nCino Bank Operating System, which is designed to enhance efficiency, transparency, and customer experience for banks and other financial entities. nCino's offerings include subscription-based services and professional services that support the implementation and use of its solutions.
- Subscription Revenues - Provides access to nCino's solutions, including client onboarding, loan origination, and deposit account opening applications, under multi-year contracts. Offers nIQ and nCino Mortgage solutions, along with maintenance and support services.
- nIQ - Charged based on asset size or usage.
- nCino Mortgage - A digital homeownership solution.
- Professional Services and Other Revenues - Offers implementation, configuration assistance, training, and advisory services to facilitate the adoption of nCino's solutions. Services are provided directly by nCino or through system integration partners for larger institutions.
What went well
- nCino is on track to exceed its net bookings targets for the year, with strong gross bookings momentum in both its community and regional and enterprise businesses ( ).
- The company's investments in AI and products like Banking Advisor are driving growth, with 11 new Banking Advisor deals signed in the quarter and plans to include it in every new deal, leveraging their unique data position with consents from 4 of their 10 largest customers ( ).
- Revenue churn has decreased from 9% last year to approximately 5% this year, reflecting improved customer retention and satisfaction with nCino's platform ( ).
What went wrong
- Slowing organic growth: The company projects low double-digit organic growth in Q4, excluding M&A contributions, indicating a potential slowdown in growth momentum. ,
- Increased churn in mortgage segment: Mortgage churn increased due to M&A in the IMB space, with expected mortgage churn for the full year raised from $8 million to $10 million. ,
- Uncertainty over CEO succession: Speculation about CEO Pierre Naude potentially retiring could lead to leadership uncertainty.
Q&A Summary
- Q4 Guidance and Organic Growth
Q: What are the factors contributing to the Q4 guidance reduction on an organic subscription basis, excluding FullCircl?
A: The two main factors affecting our Q4 guidance are increased churn, particularly in the mortgage sector, and the fact that despite the Fed funds rate reduction, we haven't seen mortgage rates come down. Consequently, we're being prudent and cautious in our outlook for the fourth quarter.
- Mortgage Churn Outlook
Q: When do you expect mortgage churn to stabilize, and is the worst behind us?
A: Mortgage churn has shifted from lenders shutting down to M&A activity, indicating a more stable market. While we can't predict exactly when churn will stabilize, the fact that lenders are becoming profitable again suggests that the worst may be behind us.
- CEO Succession Planning
Q: Are there any plans for you to retire soon, and what's the perspective on succession planning?
A: While I have no immediate plans to retire and am passionate about my role, we're committed to diligent succession planning. Our focus is on finding the right person to ensure a smooth transition when the time comes.
- Cross-Sell Potential and Product Integration
Q: When will the newly acquired products be fully integrated, and when can we expect to see material cross-sell impact?
A: Cross-sell is already happening, with over 50% of bookings from non-commercial products last quarter. Integration of acquisitions like DocFox and FullCircl typically leads to a surge in sales once completed. We expect commercial onboarding to become as significant as our commercial loan origination business.
- Impact of FullCircl Acquisition
Q: Can you provide more details on the FullCircl acquisition and its financial contribution?
A: FullCircl enhances our client onboarding and compliance monitoring. It contributed $4 million in subscription revenue this quarter. We're integrating it to offer an unparalleled onboarding experience, which we believe will drive significant cross-sell opportunities.
- Banking Advisor Adoption and AI Integration
Q: How is the adoption of Banking Advisor progressing, and is AI integration affecting sales cycles?
A: We've added 11 new Banking Advisor customers this quarter, and it's now included in every new deal and renewal. Banking Advisor is viewed positively by customers, with no elongation in sales cycles. The incorporation of AI features is enhancing our offerings without causing delays.
- International Market Performance
Q: How is the international business performing, and what factors are influencing it?
A: Our performance varies by region. The U.K. and Ireland are strong markets for us. We've seen positive developments in the Nordics and Japan due to our focused territory approach. We're optimistic about future growth in Spain and considering strategic moves in Germany.
- Optimism Around Deregulation
Q: Is the optimism around deregulation influencing customer demand for larger-scale tech deployments?
A: Yes, there's a positive outlook among bankers regarding potential deregulation, which reduces regulatory burdens. This optimism is driving strategic initiatives, including M&A and increased investment in technology solutions like ours.
- Remaining Performance Obligations (RPO) Growth
Q: What is driving the strength in RPO growth this quarter?
A: The RPO growth is due to solid execution, a healthy mix of net new business and renewals, and strong performance across our community, regional, and enterprise businesses. There were no unusual factors influencing this growth.
- Mortgage Volume Impact on Revenue
Q: At what level of mortgage volume increase would customers exceed contract minimums to impact revenue?
A: It's difficult to specify exact volume levels, as minimums vary by customer. Many minimums were set low due to challenging market conditions. We need to see a sustained increase in volumes across customers before providing more clarity on revenue impacts.
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With the increased mortgage churn due to IMB M&A activity and continued elevated mortgage rates despite a reduction in the federal funds rate, what specific measures are you taking to address the higher-than-expected mortgage churn and mitigate its impact on your subscription revenues?
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You mentioned transitioning to the Intelligent Solution Framework with new platform-based pricing starting in February; can you provide more details on how this new pricing model will impact your revenue recognition and whether there are any risks to customer adoption during this transition?
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You've indicated plans to provide an updated KPI framework starting with the fourth quarter's earnings report; can you share any preliminary insights into which new KPIs you will include, and how they will enhance transparency and help investors better model your business?
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Given that you've struggled to penetrate continental European markets and have seen varied sales momentum internationally, what are the specific challenges you face in these regions, and what strategic initiatives are you implementing to accelerate international growth and market penetration?
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Despite exceeding expectations for revenues and operating income and noting strong sales momentum, your guidance remains cautious; can you elaborate on the factors contributing to this conservative outlook, particularly in light of the expected strong fourth-quarter bookings, and how confident are you in sustaining this growth into next fiscal year?
Q3 2025 Earnings Call
- Issued Period: Q3 2025
- Guided Period: Q4 2025 and FY 2025
Guidance for Q4 2025:
- Total Revenues: $139.5 million to $141.5 million.
- Subscription Revenues: Approximately $122.5 million to $124.5 million.
- Non-GAAP Operating Income: Approximately $23.25 million to $24.25 million.
- Non-GAAP Net Income per Share: $0.18 to $0.19, based on a weighted average of approximately 118 million diluted shares outstanding.
Guidance for FY 2025:
- Total Revenues: $539 million to $541 million.
- Subscription Revenues: $467 million to $469 million.
- Non-GAAP Operating Income: $95 million to $96 million.
- Non-GAAP Net Income per Share: $0.75 to $0.76, based on a weighted average of approximately 117 million diluted shares outstanding.
Q2 2025 Earnings Call
- Issued Period: Q2 2025
- Guided Period: Q3 2025 and FY 2025
Guidance for Q3 2025:
- Total Revenues: $136 million to $138 million.
- Subscription Revenues: Approximately $117 million to $119 million.
- Non-GAAP Operating Income: Approximately $21 million to $22 million.
- Non-GAAP Net Income per Share: $0.15 to $0.16, based on a weighted average of approximately 118 million diluted shares outstanding.
Guidance for FY 2025:
- Total Revenues: $538.5 million to $544.5 million.
- Subscription Revenues: $463 million to $469 million.
- Non-GAAP Operating Income: $87 million to $90 million.
- Non-GAAP Net Income per Share: $0.66 to $0.69, based on a weighted average of approximately 117 million basic shares outstanding.
Q1 2025 Earnings Call
- Issued Period: Q1 2025
- Guided Period: Q2 2025 and FY 2025
Guidance for Q2 2025:
- Total Revenues: $130.5 million to $131.5 million.
- Subscription Revenues: $112.5 million to $113.5 million.
- Non-GAAP Operating Income: $17 million to $18.5 million.
- Non-GAAP Net Income per Share: $0.12 to $0.13, based on a weighted average of approximately 117 million diluted shares outstanding.
Guidance for FY 2025:
- Total Revenues: $538.5 million to $544.5 million.
- Subscription Revenues: $463 million to $469 million.
- Non-GAAP Operating Income: $86 million to $89 million.
- Non-GAAP Net Income per Share: $0.65 to $0.68, based on a weighted average of approximately 117 million diluted shares outstanding.
Q4 2024 Earnings Call
- Issued Period: Q4 2024
- Guided Period: Q1 2025 and FY 2025
Guidance for Q1 2025:
- Non-GAAP Operating Income: $18 million to $19 million.
- Non-GAAP Net Income per Share: $0.13 to $0.14, based on a weighted average of approximately 117 million diluted shares outstanding.
Guidance for FY 2025:
- Total Revenues: $538.5 million to $544.5 million.
- Subscription Revenues: $463 million to $469 million.
- Non-GAAP Operating Income: $84 million to $86 million.
- Non-GAAP Net Income per Share: $0.60 to $0.64, based on a weighted average of approximately 118 million diluted shares outstanding.