nCino Plunges 20% in 3 Months: Is the Stock Worth Buying on the Dip?

Core Viewpoint - nCino (NCNO) has experienced a significant decline in share price, dropping 19.9% over the past three months, which contrasts with the broader Zacks Computer & Technology sector's increase of 2.2% and the Zacks Internet - Software industry's rise of 17.7% [1] Group 1: Performance and Competition - The underperformance of nCino is attributed to intense competition in the fintech industry, particularly from companies providing similar cloud-based solutions [1] - Despite the challenges, nCino has shown strong sales momentum, highlighted by multi-solution deals and expansion in key markets such as the United States, Japan, and Norway [3] - Over the trailing six-month period, nCino has outperformed industry peers like AudioEye (AEYE) and Synchronoss Technologies (SNCR), which saw share losses of 13% and 3.9%, respectively [4] Group 2: Strategic Partnerships and Acquisitions - nCino's expanding clientele has been a major growth driver, with significant sales momentum in the fiscal third quarter of 2025, including over 30 multi-solution deals [5] - Major deals secured in the fiscal third quarter include an expansion with a top-40 U.S. bank and signing its largest customer in Japan, Tokushima Taisho Bank, indicating strong demand for its solutions [6] - The acquisition of FullCircl is expected to enhance nCino's onboarding capabilities and contribute to an $800 million increase in its global serviceable addressable market [11] - The acquisition of DocFox has improved nCino's platform by streamlining the client onboarding process for commercial and business banking [12] Group 3: Financial Outlook - For the fourth quarter of fiscal 2025, nCino expects revenues between$139.5 million and $141.5 million, with non-GAAP earnings projected at 72-73 cents per share [13] - The Zacks Consensus Estimate for fourth quarter revenues is$140.62 million, indicating a year-over-year growth of 13.69% [14] - The consensus estimate for fiscal 2025 revenues is $540.08 million, reflecting a year-over-year growth of 13.33% [14] Group 4: Valuation and Investment Potential - nCino is currently trading at a premium, with a forward 12-month Price/Sales ratio of 6.15X, higher than the industry's 3.33X [16] - Despite the premium valuation, nCino's strong portfolio, expanding clientele, and acquisitions justify this valuation [19] - nCino carries a Zacks Rank 1 (Strong Buy) and has a Growth Score of B, indicating a strong investment opportunity [19]