nCino, Inc. (NCNO): A Bull Case Theory

Core Thesis - nCino, Inc. is viewed positively due to its strong growth potential in the cloud banking sector, particularly among smaller banks, with a current share price of $30.40 and a forward P/E of 37.88 [1][2] Company Overview - nCino operates a cloud banking platform that offers workflow solutions, focusing on areas such as account management and mortgage onboarding, generating 90% recurring revenue with 40% incremental margins [2] - The company benefits from a heavily regulated market with high barriers to entry, demonstrating strong pricing power with 5-7% price increases [2] Market Position and Growth Potential - nCino has only achieved 20% penetration in the $1 billion+ loan banks market, indicating significant room for growth [2] - The company is supported by strong data connectivity across markets and has a nascent AI product that currently reaches just 20% of its potential user base [2] Valuation and Risks - Despite its growth potential, nCino trades at approximately 4x earnings, which is a 50% discount compared to vertical SaaS peers, reflecting its dependence on loan volume affected by lower mortgage origination activity [3] - Recent stock pressure was noted following Insight Ventures' exit of a 33% position, indicating some near-term investor caution [3] - The competitive landscape includes players like Better Mortgage and Morty, and there is additional uncertainty due to an ongoing accounting investigation [3][4] Summary of Investment Considerations - nCino represents a vertically focused SaaS business with sticky, high-margin revenue and clear growth potential, particularly in underpenetrated markets [4] - Investors should consider the company's exposure to mortgage-dependent banks, regulatory dynamics, competitive threats, and pending investigations against the backdrop of potential long-term expansion in digital banking workflows [4]