nCino(NCNO) - 2026 Q2 - Quarterly Report

FORM 10-Q Filing Information General Information This section identifies nCino, Inc. as a large accelerated filer submitting a Quarterly Report on Form 10-Q for the period ended July 31, 2025, confirming compliance with SEC filing requirements and listing its common stock on The Nasdaq Global Select Market - nCino, Inc. is a large accelerated filer, indicating it has a public float of $700 million or more and has been subject to Exchange Act reporting requirements for at least 12 calendar months[2][3] - The company has filed all required reports during the preceding 12 months and has been subject to filing requirements for the past 90 days[2] Common Stock Information as of August 21, 2025 | Metric | Value | | :----- | :---- | | Shares Outstanding | 115,814,720 | | Par Value per Share | $0.0005 | | Trading Symbol | NCNO | | Exchange | The Nasdaq Global Select Market | Cautionary Note Regarding Forward-Looking Statements Forward-Looking Statements Disclosure This section advises readers that the report contains forward-looking statements based on current beliefs and assumptions, covering future operations, strategies, market trends, and growth opportunities, while highlighting that actual results may differ materially due to known and unknown risks and uncertainties - Forward-looking statements cover future results, business strategies, market sizing, competitive position, and growth opportunities[7] - Actual results may differ materially due to known and unknown risks, uncertainties, and other factors, including those detailed in 'Risk Factors' and 'Management's Discussion and Analysis of Financial Condition and Results of Operations'[8] - The company disclaims any obligation to publicly update forward-looking statements, except as required by law[9] Part I Item 1. Financial Statements This section presents nCino, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes on business, accounting policies, and various financial components Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (in thousands) | Metric | January 31, 2025 | July 31, 2025 | | :--------------------------------------- | :--------------- | :------------ | | Total Assets | $1,610,381 | $1,616,017 | | Total Current Assets | $302,249 | $255,085 | | Total Liabilities | $512,783 | $548,854 | | Total Current Liabilities | $251,512 | $248,637 | | Total Stockholders' Equity | $1,089,312 | $1,056,818 | - Total assets increased slightly by $5.6 million (0.35%) from January 31, 2025, to July 31, 2025, while total liabilities increased by $36.1 million (7.04%)[13] - Stockholders' equity decreased by $32.5 million (2.98%) over the six-month period[13] Unaudited Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Operations (in thousands) | Metric | Three Months Ended July 31, 2024 | Three Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total Revenues | $132,403 | $148,815 | $260,490 | $292,952 | | Subscription Revenues | $113,911 | $130,752 | $224,317 | $256,340 | | Professional Services and Other Revenues | $18,492 | $18,063 | $36,173 | $36,612 | | Gross Profit | $78,472 | $88,125 | $155,379 | $174,567 | | Loss from Operations | $(7,906) | $(9,296) | $(11,569) | $(10,809) | | Net Loss attributable to nCino, Inc. | $(11,040) | $(15,257) | $(14,016) | $(9,695) | | Basic and Diluted Net Loss per Share | $(0.10) | $(0.13) | $(0.12) | $(0.08) | - Total revenues increased by 12.4% for the three months ended July 31, 2025, and by 12.5% for the six months ended July 31, 2025, compared to the respective prior periods[17][181] - Net loss attributable to nCino, Inc. increased by 38.2% for the three months ended July 31, 2025, but decreased by 30.8% for the six months ended July 31, 2025, compared to the respective prior periods[17][181] Unaudited Condensed Consolidated Statements of Comprehensive Loss Condensed Consolidated Statements of Comprehensive Loss (in thousands) | Metric | Three Months Ended July 31, 2024 | Three Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | | :------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Loss | $(11,023) | $(13,719) | $(13,320) | $(7,702) | | Other Comprehensive Income (Loss): Foreign currency translation | $540 | $(1,661) | $409 | $(303) | | Comprehensive Loss | $(10,483) | $(15,380) | $(12,911) | $(8,005) | | Comprehensive Loss attributable to nCino, Inc. | $(10,430) | $(15,317) | $(12,686) | $(8,001) | - Foreign currency translation shifted from a gain of $540 thousand in Q2 2024 to a loss of $1,661 thousand in Q2 2025, significantly impacting comprehensive loss[20] Unaudited Condensed Consolidated Statements of Stockholders' Equity Condensed Consolidated Statements of Stockholders' Equity (in thousands) | Metric | Balance, January 31, 2025 | Balance, July 31, 2025 | | :--------------------------------------- | :------------------------ | :--------------------- | | Common Stock (Amount) | $58 | $59 | | Treasury Stock (Amount) | $0 | $(60,598) | | Additional Paid-in Capital | $1,474,413 | $1,510,517 | | Accumulated Other Comprehensive Income (Loss) | $176 | $(121) | | Accumulated Deficit | $(385,335) | $(393,039) | | Total Stockholders' Equity | $1,089,312 | $1,056,818 | - The company initiated a share repurchase program, resulting in $60.6 million in treasury stock by July 31, 2025[25][119][120] - Additional paid-in capital increased by $36.1 million, primarily due to stock-based compensation and employee stock purchase plan issuances[25] Unaudited Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | | :--------------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $59,441 | $72,056 | | Net cash used in investing activities | $(91,925) | $(53,445) | | Net cash provided by (used in) financing activities | $43,159 | $(20,184) | | Net increase in cash, cash equivalents, and restricted cash | $9,321 | $1,956 | | Cash, cash equivalents, and restricted cash, end of period | $126,765 | $123,223 | - Net cash provided by operating activities increased by $12.6 million (21.2%) for the six months ended July 31, 2025, driven by higher accounts receivable collections and non-cash adjustments[28][249] - Net cash used in investing activities decreased by $38.5 million (41.9%) due to lower acquisition spending compared to the prior year[28][251] - Financing activities shifted from providing $43.2 million in cash in 2024 to using $20.2 million in 2025, primarily due to common stock repurchases and net payments on the revolving credit facility[28][252] Notes to Unaudited Condensed Consolidated Financial Statements Note 1. Summary of Business and Significant Accounting Policies This note describes nCino, Inc. as a SaaS company providing software solutions to financial institutions globally, outlining its fiscal year, consolidation principles, and significant accounting policies, including those for VIEs, redeemable non-controlling interests, and foreign currency translation - nCino, Inc. is a SaaS company headquartered in Wilmington, North Carolina, providing software solutions to financial institutions across North America, Europe, Asia Pacific, and South Africa[33] - The company consolidates nCino K.K., a Japanese variable interest entity (VIE), where it is the primary beneficiary, holding 51% ownership[37][53] - One individual customer represented 11% of accounts receivable as of July 31, 2025, but no single customer accounted for more than 10% of total revenues for the three and six months ended July 31, 2024 and 2025[42] Allowance for Doubtful Accounts Activity (in thousands) | Metric | Three Months Ended July 31, 2024 | Three Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Balance, beginning of period | $1,100 | $1,269 | $1,451 | $1,229 | | Charged to (recovery of) bad debt expense | $156 | $(49) | $25 | $153 | | Write-offs and other | $(52) | $28 | $(272) | $(156) | | Balance, end of period | $1,204 | $1,248 | $1,204 | $1,248 | Note 2. Variable Interest Entity and Redeemable Non-Controlling Interest This note details nCino, Inc.'s 51% ownership in nCino K.K., a Japanese variable interest entity, and explains the redemption features for minority investors' common stock, which are callable or puttable starting on the eighth anniversary of the agreement - nCino, Inc. holds a 51% ownership in nCino K.K., a Japanese VIE, and is its primary beneficiary[53] - Minority investors' common stock in nCino K.K. is redeemable (callable/puttable) starting on the eighth anniversary of the agreement, with the redemption value based on a formula derived from nCino K.K.'s and the Company's revenues[54][56] Redeemable Non-Controlling Interests Activity (in thousands) | Metric | Three Months Ended July 31, 2024 | Three Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Balance, beginning of period | $4,105 | $8,729 | $3,428 | $8,286 | | Net income (loss) attributable to redeemable non-controlling interest | $(58) | $(74) | $(223) | $2 | | Adjustment to redeemable non-controlling interest | $75 | $1,612 | $919 | $1,991 | | Balance, end of period | $4,133 | $10,345 | $4,133 | $10,345 | Note 3. Fair Value Measurements This note outlines the company's fair value measurements using a three-tier hierarchy, detailing financial assets like money market accounts and time deposits, and contingent consideration related to the Sandbox Banking acquisition - The company uses a three-tier fair value hierarchy (Level 1, 2, 3) for financial assets and liabilities[58][59][60] Financial Assets Measured at Fair Value (in thousands) | Asset Type | January 31, 2025 (Level 1) | July 31, 2025 (Level 1) | | :--------------------------------------- | :------------------------- | :---------------------- | | Money market accounts | $38,841 | $45,978 | | Time deposits | $339 | $288 | | Total Assets | $39,180 | $46,266 | - Contingent consideration of $8.4 million as of July 31, 2025, related to the Sandbox Banking acquisition, is classified as Level 3, with a maximum potential payment of $10.0 million[63][64] - Unrealized gains from non-marketable equity investments were $0.5 million for the six months ended July 31, 2025, and realized gains from the sale of an investment were $1.2 million[66] Note 4. Revenues This note disaggregates revenues by source and geographic region, providing details on accounts receivable, deferred revenue, and remaining performance obligations, indicating significant future revenues from existing contracts Disaggregated Revenues by Source and Geographic Region (in thousands) | Revenue Type/Region | Three Months Ended July 31, 2024 | Three Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | United States | | | | | | Subscriptions - non-mortgage | $75,748 | $82,483 | $148,739 | $163,238 | | Subscriptions - mortgage | $17,139 | $20,854 | $34,839 | $39,823 | | Professional services and other | $12,038 | $11,970 | $23,588 | $24,796 | | Total United States | $104,925 | $115,307 | $207,166 | $227,857 | | International | | | | | | Subscriptions | $21,024 | $27,415 | $40,739 | $53,279 | | Professional services and other | $6,454 | $6,093 | $12,585 | $11,816 | | Total International | $27,478 | $33,508 | $53,324 | $65,095 | | Total Revenue | $132,403 | $148,815 | $260,490 | $292,952 | - Total revenues increased by 12.4% for the three months and 12.5% for the six months ended July 31, 2025, compared to the prior year[68] - International subscription revenues showed strong growth, increasing by 30.4% for the three months and 30.8% for the six months ended July 31, 2025[68] - Remaining performance obligations were $1.2 billion as of July 31, 2025, with approximately 69% expected to be recognized as revenues in the next 24 months[72] Note 5. Balance Sheet Components This note provides a detailed breakdown of selected balance sheet components, including prepaid expenses, property and equipment (net), and accrued expenses, along with depreciation expense recognized across various cost categories Property and Equipment, Net (in thousands) | Category | January 31, 2025 | July 31, 2025 | | :--------------------------------------- | :--------------- | :------------ | | Furniture and fixtures | $11,712 | $10,992 | | Computers and equipment | $7,193 | $7,171 | | Buildings and land | $56,379 | $56,379 | | Leasehold improvements | $28,046 | $24,358 | | Construction in progress | $627 | $6,685 | | Total Gross Property and Equipment | $103,957 | $105,585 | | Less accumulated depreciation | $(29,004) | $(28,155) | | Property and equipment, net | $74,953 | $77,430 | - Construction in progress significantly increased from $627 thousand to $6,685 thousand, indicating ongoing capital investments[75] Accrued Expenses and Other Current Liabilities (in thousands) | Category | January 31, 2025 | July 31, 2025 | | :--------------------------------------- | :--------------- | :------------ | | Contingent consideration liability | $0 | $8,400 | | Accrued compensation and benefits | $23,626 | $12,488 | | Accrued expenses | $16,239 | $12,766 | | Total | $39,865 | $33,654 | Note 6. Business Combinations This note details nCino's acquisitions of DocFox, Integrated Lending Technologies, Artesian Solutions Limited, and Sandbox Banking, providing acquisition dates, strategic rationale, cash paid, and the allocation of purchase price to identifiable intangible assets and goodwill - nCino acquired DocFox (March 20, 2024) for $74.3 million cash, ILT (April 1, 2024) for $19.9 million cash, FullCircl (November 5, 2024) for $142.4 million (cash and deferred payment), and Sandbox Banking (February 7, 2025) for $62.9 million (cash and contingent consideration)[78][79][86][87][93][94][103][104] - Goodwill recognized from these acquisitions totaled $56.3 million for DocFox, $11.1 million for ILT, $108.5 million for FullCircl (preliminary), and $53.8 million for Sandbox Banking (preliminary)[82][90][98][109] - The acquisitions aim to expand market opportunities, achieve synergies, and enhance the nCino Platform's capabilities in areas like onboarding, account opening, lending, and data connectivity[78][86][93][103][113] Identifiable Intangible Assets Acquired (in thousands) | Acquisition | Trade Name | Customer Relationships | Developed Technology | Total | | :---------- | :--------- | :--------------------- | :------------------- | :---- | | DocFox | $200 | $16,400 | $8,000 | $24,600 | | ILT | $210 | $5,870 | $2,580 | $8,660 | | FullCircl (preliminary) | $1,100 | $26,500 | $9,400 | $37,000 | | Sandbox Banking (preliminary) | $400 | $8,500 | $4,500 | $13,400 | Note 7. Goodwill and Intangible Assets This note summarizes changes in goodwill and details the company's net intangible assets, including developed technology, customer relationships, and trademarks, along with recognized amortization expense and future amortization schedules Goodwill Carrying Amounts (in thousands) | Metric | Amount | | :--------------------------------------- | :------- | | Balance, January 31, 2025 | $1,019,375 | | Acquisitions | $53,830 | | Measurement period adjustments | $(10,413) | | Translation adjustments | $8,155 | | Balance, July 31, 2025 | $1,070,947 | Intangible Assets, Net (in thousands) | Category | January 31, 2025 (Net) | July 31, 2025 (Net) | | :--------------------------------------- | :--------------------- | :------------------ | | Developed technology | $47,210 | $42,074 | | Customer relationships | $106,000 | $109,065 | | Trademarks and trade name | $846 | $487 | | Other | $515 | $294 | | Total Intangible Assets, Net | $154,571 | $151,920 | Amortization Expense for Intangible Assets (in thousands) | Category | Three Months Ended July 31, 2024 | Three Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of subscription revenues | $4,404 | $5,115 | $8,522 | $10,190 | | Cost of professional services and other revenues | $83 | $83 | $165 | $165 | | Sales and marketing | $2,862 | $4,043 | $5,344 | $8,075 | | Total amortization expense | $7,349 | $9,241 | $14,031 | $18,430 | Note 8. Stockholders' Equity This note details changes in stockholders' equity, including the share repurchase program, stock option activity, restricted stock units, and the employee stock purchase plan, along with a breakdown of stock-based compensation expense - In March 2025, the Board authorized a $100.0 million stock repurchase program. As of July 31, 2025, $60.5 million had been used to repurchase 2.6 million shares, with $39.5 million remaining[119][120][121] Stock Option Activity (Six Months Ended July 31, 2025) | Metric | Number of Shares | Weighted Average Exercise Price | | :--------------------------------------- | :--------------- | :------------------------------ | | Outstanding, January 31, 2025 | 811,602 | $7.22 | | Expired or forfeited | (1,627) | $14.70 | | Exercised | (247,346) | $5.19 | | Outstanding, July 31, 2025 | 562,629 | $8.09 | Restricted Stock Units (RSU) Activity (Six Months Ended July 31, 2025) | Metric | Number of Shares | Weighted Average Grant Date Fair Value | | :--------------------------------------- | :--------------- | :------------------------------------- | | Nonvested, January 31, 2025 | 6,105,459 | $32.78 | | Granted | 3,318,737 | $24.50 | | Vested | (1,670,647) | $34.77 | | Forfeited | (802,089) | $31.01 | | Nonvested, July 31, 2025 | 6,951,460 | $28.57 | Total Stock-Based Compensation Expense (in thousands) | Category | Three Months Ended July 31, 2024 | Three Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of subscription revenues | $793 | $830 | $1,355 | $1,494 | | Cost of professional services and other revenues | $2,980 | $3,315 | $5,759 | $6,069 | | Sales and marketing | $4,184 | $3,746 | $8,140 | $6,674 | | Research and development | $5,286 | $3,685 | $9,512 | $7,800 | | General and administrative | $5,596 | $7,040 | $10,278 | $12,393 | | Total stock-based compensation expense | $18,839 | $18,616 | $35,044 | $34,430 | Note 9. Leases This note outlines the company's operating lease agreements for facilities and equipment, detailing lease expense components, supplemental cash flow information, weighted-average lease term and discount rate, and a schedule of future minimum lease payments Total Lease Expense (in thousands) | Metric | Three Months Ended July 31, 2024 | Three Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating lease expense | $1,392 | $1,412 | $2,726 | $2,822 | | Variable lease expense | $647 | $653 | $1,270 | $1,295 | | Short-term lease expense | $58 | $75 | $148 | $127 | | Sublease income | $0 | $(87) | $0 | $(174) | | Total lease expense | $2,097 | $2,053 | $4,144 | $4,070 | - The weighted-average remaining lease term for operating lease liabilities as of July 31, 2025, was 6.18 years, with a weighted-average discount rate of 6.9%[129] Future Minimum Lease Payments (Operating Leases) as of July 31, 2025 (in thousands) | Fiscal Year Ending January 31, | Operating Leases | | :------------------------------- | :--------------- | | 2026 (remaining) | $2,374 | | 2027 | $4,354 | | 2028 | $2,390 | | 2029 | $1,327 | | 2030 | $454 | | Thereafter | $6,273 | | Total lease liabilities | $17,172 | | Less: imputed interest | $(3,215) | | Long-term lease obligations | $9,706 | Note 10. Revolving Credit Facility This note details the termination of the 2022 Credit Agreement and the establishment of a new $250.0 million 2024 Credit Agreement, specifying interest rates, commitment fees, financial covenants, and the outstanding balance and available capacity as of July 31, 2025 - The company terminated its 2022 Credit Agreement and entered into a new 2024 Credit Agreement for a senior secured revolving credit facility of up to $250.0 million, maturing October 28, 2029[135] - As of July 31, 2025, $203.5 million was outstanding under the 2024 Credit Facility, with $46.5 million available borrowing capacity and an applicable interest rate of 6.33%[143] - The 2024 Credit Agreement includes financial covenants requiring a Consolidated Total Leverage Ratio not exceeding 4.00:1.00 and a Consolidated Interest Coverage Ratio not less than 3.00:1.00[140] Note 11. Commitments and Contingencies This note outlines the company's contractual obligations, including purchase commitments and financing obligations, and addresses indemnification provisions and legal proceedings, with no material adverse effects currently anticipated Purchase Commitments and Financing Obligations as of July 31, 2025 (in thousands) | Fiscal Year Ending January 31, | Purchase Commitments | Financing Obligations - Leased Facility | | :------------------------------- | :------------------- | :------------------------------------ | | 2026 (remaining) | $42,813 | $2,330 | | 2027 | $82,713 | $3,958 | | 2028 | $75,867 | $0 | | 2029 | $729 | $0 | | 2030 | $0 | $0 | | Thereafter | $0 | $0 | | Total | $202,122 | $6,288 | - The weighted-average discount rate for the company's financing obligations as of July 31, 2025, was 5.7%[149] - The company is involved in legal proceedings in the ordinary course of business but management believes no pending claims are likely to have a material adverse effect[151] Note 12. Related-Party Transactions This note discloses nCino OpCo's acquisition of $2.5 million in preferred shares of ZestFinance, Inc. in November 2022, which was later sold in the first quarter of fiscal year 2026, realizing a gain of $1.2 million - nCino OpCo acquired $2.5 million in preferred shares of Zest AI in November 2022, which was considered a related-party transaction[153] - The company sold all its shares in Zest AI during the first quarter of fiscal year 2026, realizing a gain of $1.2 million[154] Note 13. Basic and Diluted Loss per Share This note explains that basic and diluted loss per share are identical due to the company's net loss, which renders potentially dilutive common stock anti-dilutive, and provides the net loss and weighted-average common shares outstanding - Basic and diluted loss per share are the same because the company incurred a net loss, making potentially issuable shares anti-dilutive[156] Basic and Diluted Loss per Share (in thousands, except per share data) | Metric | Three Months Ended July 31, 2024 | Three Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss attributable to nCino, Inc. | $(11,040) | $(15,257) | $(14,016) | $(9,695) | | Weighted-average common shares outstanding | 115,180,130 | 115,256,497 | 114,694,001 | 114,657,339 | | Basic and diluted loss per share | $(0.10) | $(0.13) | $(0.12) | $(0.08) | Potential Outstanding Common Stock Excluded from Diluted EPS (Six Months Ended July 31) | Category | 2024 | 2025 | | :--------------------------------------- | :----- | :----- | | Stock options issued and outstanding | 998,618 | 562,629 | | Nonvested RSUs issued and outstanding | 6,362,337 | 6,951,460 | | Shares issuable pursuant to the ESPP | 81,048 | 89,919 | Note 14. Segment Information This note states that nCino operates as a single operating and reportable segment, with the CEO reviewing financial information on a consolidated basis, and provides disaggregated revenues and long-lived assets by geographic region - nCino operates as a single operating and reportable segment, with the CEO reviewing financial information on a consolidated basis[158] Revenues by Geographic Region (in thousands) | Region | Three Months Ended July 31, 2024 | Three Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | United States | $104,925 | $115,307 | $207,166 | $227,857 | | United Kingdom | $13,104 | $18,951 | $25,886 | $36,874 | | Other | $14,374 | $14,557 | $27,438 | $28,221 | | Total | $132,403 | $148,815 | $260,490 | $292,952 | - United Kingdom revenues increased significantly by 44.6% for the three months and 42.4% for the six months ended July 31, 2025[160] Long-Lived Assets by Geographic Region (in thousands) | Region | January 31, 2025 | July 31, 2025 | | :--------------------------------------- | :--------------- | :------------ | | United States | $79,115 | $72,493 | | United Kingdom | $9,760 | $15,740 | | Other | $2,104 | $2,133 | | Total | $90,979 | $90,366 | Note 15. Restructuring This note details the Restructuring Plan announced in the second quarter of fiscal 2026, which included a workforce reduction of approximately 7% and office space reductions, outlining the types of restructuring costs incurred and related liabilities - The company announced a Restructuring Plan in Q2 fiscal 2026, involving a ~7% workforce reduction and office space reductions to improve operational efficiencies[163] Restructuring Charges (Six Months Ended July 31, 2025, in thousands) | Category | Severance Costs | Exit Costs | Asset Write-offs | Total | | :--------------------------------------- | :-------------- | :--------- | :--------------- | :---- | | Cost of subscription revenues | $426 | $53 | $17 | $496 | | Cost of professional services and other revenues | $537 | $139 | $46 | $722 | | Sales and marketing | $1,213 | $128 | $42 | $1,383 | | Research and development | $3,732 | $221 | $73 | $4,026 | | General and administrative | $1,092 | $1,191 | $1,155 | $3,438 | | Total | $7,000 | $1,732 | $1,333 | $10,065 | - Total restructuring charges incurred for the six months ended July 31, 2025, were $10.1 million, with $7.3 million paid in cash[165] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on nCino's financial condition and operational results, including business overview, recent corporate events, factors influencing performance, and a comparative analysis of revenues, costs, and operating expenses Overview nCino is a SaaS company providing a platform to financial institutions to streamline operations, enhance decision-making, and improve customer satisfaction by integrating AI and actionable insights, having expanded offerings through acquisitions and transitioned to an asset/volume-based pricing model in fiscal 2025 - nCino's platform integrates AI and actionable insights to enhance strategic decision-making, risk management, and customer satisfaction for financial institutions[168] - The company has expanded its platform capabilities through strategic acquisitions like SimpleNexus, DocFox, FullCircl, ILT, Visible Equity, FinSuite, and Sandbox Banking[171] - Starting in fiscal 2025, nCino transitioned from a seat-based pricing model to an Intelligent Solution Framework, correlating pricing to financial institutions' assets, transaction, or processing volumes[173] Current Events Key recent events include a leadership transition, the acquisition of Sandbox Banking for $62.9 million, the authorization of a $100.0 million stock repurchase program (with $60.5 million utilized), and a Restructuring Plan incurring $10.1 million in charges, primarily funded through credit facility borrowings - Sean Desmond was appointed President and CEO, succeeding Pierre Naudé, who became Executive Chairman, effective February 1, 2025[176] - Acquired Sandbox Banking on February 7, 2025, for $62.9 million, strengthening data connectivity and streamlining operations[177] - Authorized a $100.0 million stock repurchase program in March 2025, repurchasing $60.5 million in shares by July 31, 2025[178] - Announced a Restructuring Plan on May 27, 2025, incurring $10.1 million in charges during Q2 fiscal 2026 to improve operational efficiencies[180] Factors Affecting Our Operating Results nCino's operating results are influenced by market adoption, revenue mix, macroeconomic conditions (especially interest rates impacting mortgage business), and continued investment in innovation and growth, with expanding market reach and successful new pricing model implementation as key drivers - Future growth depends on expanding to new financial institution customers and increasing adoption with existing customers, supported by a focused direct sales engagement[183] - The successful implementation of the new asset-based pricing model, formally started in fiscal 2025, is a key driver for revenue alignment with platform usefulness[183] - Fluctuating interest rates and inflationary pressures have negatively impacted the U.S. Mortgage business, affecting demand for mortgage-related products[185] - The company plans to continue substantial investments in product development, sales, and marketing, both domestically and internationally, to capitalize on market opportunities[187] Components of Results of Operations This section breaks down nCino's financial results into revenues, cost of revenues, operating expenses, and non-operating income/expense, explaining the nature and influencing factors of each component - Subscription revenues are primarily from fees for accessing solutions and maintenance, generally recognized ratably over multi-year contracts (3-5 years), with pricing shifting to asset size or lending volume[188][189] - Professional services revenues, including implementation, training, and advisory services, are recognized on a proportional performance basis and tend to be a substantial portion of initial customer revenues[190] - Cost of subscription revenues includes Salesforce platform fees, other third-party integration fees, and personnel costs for support services, while cost of professional services is primarily personnel-related[191][192] - Operating expenses include sales and marketing (personnel, commissions, marketing programs, amortization of intangibles), research and development (personnel, third-party contractors), and general and administrative (executive, finance, legal, HR, IT, compliance personnel, acquisition-related expenses, contingent consideration changes)[193][195][196][197] Results of Operations This section provides a detailed comparative analysis of nCino's financial performance for the three and six months ended July 31, 2024 and 2025, covering revenues, costs, gross profit, operating expenses, non-operating income/expense, and income tax, highlighting key drivers and impacts of acquisitions and restructuring Consolidated Statements of Operations Summary (in thousands, except percentages) | Metric | 3 Months Ended July 31, 2024 | 3 Months Ended July 31, 2025 | 6 Months Ended July 31, 2024 | 6 Months Ended July 31, 2025 | | :--------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Revenues | $132,403 (100.0%) | $148,815 (100.0%) | $260,490 (100.0%) | $292,952 (100.0%) | | Gross Profit | $78,472 (59.3%) | $88,125 (59.2%) | $155,379 (59.6%) | $174,567 (59.6%) | | Loss from Operations | $(7,906) (-6.0%) | $(9,296) (-6.2%) | $(11,569) (-4.5%) | $(10,809) (-3.7%) | | Net Loss | $(11,023) (-8.4%) | $(13,719) (-9.2%) | $(13,320) (-5.1%) | $(7,702) (-2.7%) | - Subscription revenues increased by 14.8% (3-month) and 14.3% (6-month), driven by new customers and expanded use by existing customers, including $5.5 million (3-month) and $10.9 million (6-month) from FullCircl and Sandbox Banking[181][204][205] - Professional services gross margin decreased significantly to (25.7%) for the three months and (20.9%) for the six months ended July 31, 2025, primarily due to strategic investments in capabilities and lower effective billing/utilization rates[212][213] - Interest expense increased by $2.6 million (3-month) and $5.6 million (6-month) due to increased borrowings on the revolving credit facility[225][226] - Other income (expense), net, saw a significant increase of $17.4 million for the six months ended July 31, 2025, primarily from foreign currency gains related to intercompany loans[226] Revenues - Subscription revenues increased by $16.8 million (14.8%) for the three months and $32.0 million (14.3%) for the six months ended July 31, 2025, primarily from new and existing customer growth[204][205] - Professional services and other revenues decreased by $0.4 million (2.3%) for the three months but increased by $0.4 million (1.2%) for the six months ended July 31, 2025, influenced by solution mix and effective bill rates[206][207] Revenue Breakdown (in thousands, with percentages of total revenue) | Revenue Type | 3 Months Ended July 31, 2024 | 3 Months Ended July 31, 2025 | 6 Months Ended July 31, 2024 | 6 Months Ended July 31, 2025 | | :--------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Subscription revenues | $113,911 (86.0%) | $130,752 (87.9%) | $224,317 (86.1%) | $256,340 (87.5%) | | Professional services and other revenues | $18,492 (14.0%) | $18,063 (12.1%) | $36,173 (13.9%) | $36,612 (12.5%) | | Total revenues | $132,403 (100.0%) | $148,815 (100.0%) | $260,490 (100.0%) | $292,952 (100.0%) | Cost of Revenues and Gross Margin - Cost of subscription revenues increased by $4.6 million (3-month) and $9.0 million (6-month), primarily due to increased data costs, Salesforce user fees, personnel costs (including restructuring), and amortization of acquired intangibles[210][211] - Cost of professional services and other revenues increased by $2.1 million (3-month) and $4.3 million (6-month), leading to a decrease in gross margin, mainly due to increased headcount from acquisitions, restructuring costs, and investments in AI technology[212][213] Cost of Revenues and Gross Margin (in thousands, with percentages of related revenues) | Metric | 3 Months Ended July 31, 2024 | 3 Months Ended July 31, 2025 | 6 Months Ended July 31, 2024 | 6 Months Ended July 31, 2025 | | :--------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Cost of subscription revenues | $33,367 (29.3%) | $37,992 (29.1%) | $65,147 (29.0%) | $74,117 (28.9%) | | Cost of professional services and other revenues | $20,564 (111.2%) | $22,698 (125.7%) | $39,964 (110.5%) | $44,268 (120.9%) | | Total cost of revenues | $53,931 (40.7%) | $60,690 (40.8%) | $105,111 (40.4%) | $118,385 (40.4%) | | Gross profit | $78,472 (59.3%) | $88,125 (59.2%) | $155,379 (59.6%) | $174,567 (59.6%) | Operating Expenses - Sales and marketing expenses increased by $5.6 million (3-month) and $10.5 million (6-month), driven by higher personnel costs (acquisitions, restructuring), marketing costs, and amortization expenses for acquired intangibles[215][217] - Research and development expenses increased by $0.4 million (3-month) and $3.8 million (6-month), primarily due to internal AI investments and restructuring costs, partially offset by decreased stock-based compensation and third-party professional fees[219][220] - General and administrative expenses increased by $5.1 million (3-month) and $4.2 million (6-month), mainly due to restructuring costs (exit costs, asset write-offs, severance) and increased stock-based compensation, partially offset by lower acquisition-related professional fees[222][223] Operating Expenses (in thousands, with percentages of total revenues) | Expense Category | 3 Months Ended July 31, 2024 | 3 Months Ended July 31, 2025 | 6 Months Ended July 31, 2024 | 6 Months Ended July 31, 2025 | | :--------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Sales and marketing | $31,713 (24.0%) | $37,265 (25.0%) | $59,758 (22.9%) | $70,236 (24.0%) | | Research and development | $34,271 (25.9%) | $34,667 (23.3%) | $64,252 (24.7%) | $68,008 (23.2%) | | General and administrative | $20,394 (15.4%) | $25,489 (17.1%) | $42,938 (16.5%) | $47,132 (16.1%) | | Total operating expenses | $86,378 (65.3%) | $97,421 (65.4%) | $166,948 (64.1%) | $185,376 (63.3%) | | Loss from operations | $(7,906) (-6.0%) | $(9,296) (-6.2%) | $(11,569) (-4.5%) | $(10,809) (-3.7%) | Non-Operating Income (Expense) - Interest expense increased by $2.6 million (3-month) and $5.6 million (6-month) due to higher borrowings on the revolving credit facility[225][226] - Other income (expense), net, increased by $0.6 million (3-month) and $17.4 million (6-month), primarily driven by foreign currency gains from intercompany loan remeasurement[225][226] Non-Operating Income (Expense) (in thousands, with percentages of total revenues) | Category | 3 Months Ended July 31, 2024 | 3 Months Ended July 31, 2025 | 6 Months Ended July 31, 2024 | 6 Months Ended July 31, 2025 | | :--------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Interest income | $321 (0.2%) | $513 (0.3%) | $926 (0.4%) | $930 (0.3%) | | Interest expense | $(1,835) (-1.4%) | $(4,444) (-3.0%) | $(3,312) (-1.3%) | $(8,894) (-3.0%) | | Other income (expense), net | $150 (0.1%) | $717 (0.5%) | $(594) (-0.2%) | $16,814 (5.7%) | Income Tax Provision (Benefit) - The effective tax rate for the six months ended July 31, 2025, was (293.1%), a significant change from 8.4% in the prior year, primarily due to changes in valuation allowance and profitable foreign jurisdictions[227] - The company reduced its U.S. deferred tax valuation allowance by $2.0 million in Q1 fiscal 2026 but increased the UK valuation allowance by $2.5 million in Q2 fiscal 2026[228] - New tax legislation (H.R. 1, the One Big Beautiful Bill Act) signed on July 4, 2025, allows for more favorable deductibility of certain business expenses, potentially increasing future operating cash flows[229] Income Tax Provision (Benefit) (in thousands, with effective tax rates) | Metric | 3 Months Ended July 31, 2024 | 3 Months Ended July 31, 2025 | 6 Months Ended July 31, 2024 | 6 Months Ended July 31, 2025 | | :--------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Income tax provision (benefit) | $1,753 (1.3%) | $1,209 (0.8%) | $(1,229) (-0.5%) | $5,743 (2.0%) | | Effective tax rate | (18.9%) | (9.7%) | 8.4% | (293.1%) | Non-GAAP Financial Measure This section introduces non-GAAP operating income as a supplementary financial metric used by management for internal reporting, decision-making, and performance evaluation, defining it by excluding specific non-cash and non-recurring items to provide a clearer view of underlying business trends - Non-GAAP operating income is used by management to understand and compare operating results, for financial and operational decision making, and for planning and forecasting[231] - Exclusions from GAAP loss from operations to arrive at non-GAAP operating income include amortization of purchased intangibles, stock-based compensation expense, acquisition-related expenses, litigation expenses, and restructuring costs[233][234][235][236][237] Reconciliation of GAAP Loss from Operations to Non-GAAP Operating Income (in thousands) | Metric | 3 Months Ended July 31, 2024 | 3 Months Ended July 31, 2025 | 6 Months Ended July 31, 2024 | 6 Months Ended July 31, 2025 | | :--------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | GAAP loss from operations | $(7,906) | $(9,296) | $(11,569) | $(10,809) | | Amortization of intangible assets | $7,349 | $9,241 | $14,031 | $18,430 | | Stock-based compensation expense | $18,839 | $18,616 | $35,044 | $34,430 | | Acquisition-related expenses | $947 | $1,384 | $5,987 | $2,724 | | Restructuring and related charges | $0 | $10,065 | $0 | $10,065 | | Non-GAAP operating income | $19,298 | $30,010 | $43,743 | $54,840 | Liquidity and Capital Resources This section discusses nCino's financial liquidity, including its cash and cash equivalents, accumulated deficit, and funding sources, detailing the revolving credit facility's utilization for acquisitions and share repurchases, and the redeemable non-controlling interest in nCino K.K - As of July 31, 2025, nCino had $122.9 million in cash and cash equivalents and an accumulated deficit of $393.0 million[240] - The company primarily funds capital needs through common stock issuances, operating cash flows, and its $250.0 million revolving credit facility[241][135] - As of July 31, 2025, $203.5 million was outstanding on the credit facility, with $46.5 million available borrowing capacity[242] - During the six months ended July 31, 2025, net borrowings of $37.5 million were used to fund the Sandbox Banking acquisition and share repurchases[242] - The redeemable non-controlling interest in nCino K.K. was $10.3 million as of July 31, 2025, up from $8.3 million at January 31, 2025[246] Contractual Obligations and Commitments This section refers to the detailed contractual obligations and commitments, including leases, purchase obligations, financing obligations, and acquisition liabilities, as described in the notes to the financial statements - Estimated future obligations include leases for facilities, purchase obligations for licenses and hosting services, financing obligations for leased facilities, and acquisition liabilities[253] Critical Accounting Policies and Estimates This section states that there have been no material changes to the company's critical accounting policies or estimates since the Annual Report on Form 10-K for the fiscal year ended January 31, 2025 - No material changes to critical accounting policies or estimates have occurred since the fiscal year ended January 31, 2025[255] Recent Accounting Pronouncements This section refers to Note 1 for details on recently adopted and recently issued accounting pronouncements not yet adopted - Information on recent accounting pronouncements is provided in Note 1, 'Summary of Business and Significant Accounting Policies'[256] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section discusses nCino's exposure to market risks, primarily from fluctuations in interest rates and foreign currency exchange rates, and assesses their potential impact on the company's financial position and results of operations Interest Rate Risk nCino is exposed to interest rate risk primarily through its cash, cash equivalents, restricted cash, and variable-rate revolving credit facility, though a hypothetical 10% change in interest rates or a 100 basis point change on the credit facility would not materially impact financial results - As of July 31, 2025, cash, cash equivalents, and restricted cash totaled $123.2 million[258] - A hypothetical 10% change in interest rates would not have a material impact on the company's financial results[258] - The 2024 Credit Facility has variable interest rates, exposing the company to increased interest rate risk, but a hypothetical 100 basis point change would not have a material impact[259] Foreign Currency Exchange Risk nCino's reporting currency is the U.S. dollar, while subsidiaries use local currencies, leading to foreign currency exchange risk from translation adjustments and transactions, with a hypothetical 10% change in exchange rates impacting cash, cash equivalents, and restricted cash by approximately $5.6 million - Foreign currency translation adjustments are recorded as a component of accumulated other comprehensive income (loss)[260] - Gains or losses from foreign currency transactions are included in non-operating income (expense), other[260] - A hypothetical 10% increase or decrease in foreign currency exchange rates would impact cash, cash equivalents, and restricted cash by approximately $5.6 million as of July 31, 2025[261] Item 4. Controls and Procedures This section details the evaluation of nCino's disclosure controls and procedures and internal control over financial reporting, concluding that disclosure controls were effective at a reasonable assurance level as of July 31, 2025, with no material changes to internal control identified Evaluation of Disclosure Controls and Procedures - Management, with CEO and CFO participation, evaluated disclosure controls and procedures as effective at the reasonable assurance level as of July 31, 2025[262] Changes in Internal Control over Financial Reporting - No material changes in internal control over financial reporting were identified during the period covered by this report[263] Inherent Limitations on the Effectiveness of Controls - Management acknowledges that control systems provide only reasonable, not absolute, assurance and are subject to inherent limitations such as faulty judgments, errors, circumvention by individuals, or management override[264] Part II Item 1. Legal Proceedings This section states that nCino may be involved in various litigation matters in the ordinary course of business, but management believes no current proceedings or claims are likely to have a material adverse effect on the company - The company is involved in legal proceedings in the ordinary course of business[266] - Management believes no pending proceedings or claims are likely to have a material adverse effect on the company[266] Item 1A. Risk Factors This section indicates no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended January 31, 2025, advising readers to consider all risks as any adverse event could materially affect the business and stock price - No material changes to the risk factors from the Annual Report on Form 10-K for the fiscal year ended January 31, 2025[267] - Readers should consider all risks, as any occurrence could materially and adversely affect the business, financial condition, and results of operation, potentially leading to a decline in common stock trading price[267] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports no unregistered sales of equity securities and summarizes the company's share repurchase activity for the three months ended July 31, 2025, under the $100.0 million stock repurchase program - No unregistered sales of equity securities occurred during the period[268] Issuer Purchases of Equity Securities (Three Months Ended July 31, 2025, in thousands, except share and per share data) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value that May Yet Be Purchased Under the Plans or Programs | | :--------------------------------------- | :------------------------------- | :--------------------------- | :------------------------------------------------------------------------------- | :----------------------------------------------------------------------------- | | May 1, 2025 to May 31, 2025 | 0 | $0 | 0 | $0 | | June 1, 2025 to June 30, 2025 | 692,750 | $26.71 | 692,750 | $40,944 | | July 1, 2025 to July 31, 2025 | 50,919 | $29.27 | 50,919 | $39,454 | | Total | 743,669 | | 743,669 | | - The company repurchased 743,669 shares for an aggregate of approximately $20.0 million during the three months ended July 31, 2025[269] Item 3. Defaults Upon Senior Securities This section states that there are no defaults upon senior securities to report - Not applicable; no defaults upon senior securities[271] Item 4. Mine Safety Disclosures This section states that there are no mine safety disclosures to report - Not applicable; no mine safety disclosures[272] Item 5. Other Information This section discloses information regarding securities trading plans of directors and executive officers, specifically Jeanette Sellers' adoption of a Rule 10b5-1 trading arrangement for the sale of up to 9,968 shares - Jeanette Sellers, SVP of Accounting and Controllership, adopted a Rule 10b5-1 trading arrangement on June 3, 2025, for the sale of up to 9,968 shares of common stock[273] - The trading arrangement is intended to satisfy the affirmative defense in Rule 10b5-1(c) and has a duration until May 29, 2026, or earlier if all transactions are completed[273] Item 6. Exhibits This section provides an index of exhibits filed with the Form 10-Q, including corporate governance documents, certifications from executive officers, and XBRL-related documents - The exhibit index includes corporate governance documents (Certificate of Incorporation, Bylaws), certifications from executive officers, and XBRL taxonomy documents[276] - Certifications under 18 U.S.C. Section 1350 (Sarbanes-Oxley Section 906) are furnished but not deemed 'filed' for Section 18 of the Securities Exchange Act of 1934 purposes, unless specifically incorporated by reference[276] Signatures Report Signatures This section contains the signatures of nCino, Inc.'s President and Chief Executive Officer, Sean Desmond, and Chief Financial Officer & Treasurer, Gregory D. Orenstein, certifying the filing of the report on August 26, 2025 - The report is signed by Sean Desmond, President and Chief Executive Officer, and Gregory D. Orenstein, Chief Financial Officer & Treasurer[281] - The filing date of the report is August 26, 2025[281]