nCino (NCNO) Q2 2026 Earnings Call August 26, 2025 04:30 PM ET Company ParticipantsHarrison Masters - VP - IR & Real EstateSean Desmond - Director, President & CEOGreg Orenstein - Chief Financial OfficerTerry Tillman - Managing DirectorRyan Tomasello - Managing DirectorMichael Infante - VP - Equity ResearchAdam Hotchkiss - VP - Emerging Software Equity ResearchAaron Kimson - Vice PresidentAlexander Sklar - Vice PresidentKoji Ikeda - Director - Enterprise Software Equity ResearchCharles Nabhan - MD - Equity ...

Financial Data and Key Metrics Changes - Total revenues for the second quarter were $148.8 million, up 12% year over year [13] - Subscription revenues were $130.8 million, reflecting a 15% year-over-year increase on a reported basis and 10% organically [13] - Non-GAAP operating income was $30 million, representing 20% of total revenues [16] - The company ended the quarter with $123.2 million in cash and $203.5 million outstanding on its line of credit [17] Business Line Data and Key Metrics Changes - The U.S. Mortgage business saw subscription revenues of $20.9 million, up 22% year over year [14] - Professional services revenues decreased by 2% year over year to $18.1 million [14] - The credit union segment added six new logos and 35 cross-sells in the second quarter [6] Market Data and Key Metrics Changes - Non-U.S. total revenues were $33.5 million, up 22% or 19% in constant currency [15] - Non-U.S. subscription revenues were $27.4 million, up 30% or 27% in constant currency [16] Company Strategy and Development Direction - The company is focused on expanding its presence in EMEA and activating the credit union market [5] - nCino aims to leverage AI and data analytics across its platform to enhance customer experiences and operational efficiency [9] - The transition to platform pricing is proceeding as expected, with approximately 21% of ACV converted to this model [17] Management's Comments on Operating Environment and Future Outlook - Management noted that macroeconomic conditions have improved, leading to increased deal activity and sales opportunities [29] - The company expects total revenues for fiscal 2026 to be between $585 million and $589 million, representing growth of approximately 9% at the midpoint [23] - Management expressed confidence in meeting or exceeding the ACV outlook for the year, supported by strong pipeline activity [58] Other Important Information - The company repurchased approximately 750,000 shares at an average price of $26.89 per share during the quarter [17] - The AI strategy, particularly the Banking Advisor, is expected to be transformative for financial services, with over 80 customers already purchasing this technology [9] Q&A Session Summary Question: What are the drivers behind the revenue strength and sustainability? - Management attributed the revenue strength to solid execution and a supportive macro environment, noting increased deal activity [28][29] Question: How is the AI strategy performing, particularly with Banking Advisor? - The AI strategy is resonating well with customers, contributing to wins, and the rollout of agentic workflows is anticipated to enhance this momentum [31][34] Question: What is the status of platform pricing and its impact? - The transition to platform pricing is on track, with expected price uplifts around 10% for renewals, and the largest cohort of migrations will occur in the fourth quarter [40][41] Question: How is the credit union market performing? - The company has seen strong performance in the credit union segment, validating the investment in this area, with opportunities for cross-selling [48][50] Question: What is the outlook for mortgage revenues? - The company expects mortgage subscription revenues to grow approximately 5% for fiscal 2026, up from prior guidance of flat year-over-year [19] Question: How is the international pipeline developing? - There are signs of reacceleration in the international pipeline, particularly in Continental Europe, with strong activity and deal sizes being tracked closely [92][94]

nCino Conference Call Summary Company Overview - nCino is recognized as the leader in cloud-based lending systems, focusing on transforming financial services through innovation, reputation, and speed [2][3] - The company aims to lead in AI banking, addressing long-standing issues in financial institutions by democratizing data and enhancing digital collaboration [3][4] Key Points Industry Position and Strategy - nCino serves 2,700 customers globally, including 15 of the top 30 banks in the U.S. and five of the top seven in the U.K. and Ireland [5][6] - The company is focused on onboarding, account opening, loan origination, and portfolio monitoring across commercial, consumer, and mortgage lines of business [4][5] - nCino's strategy includes leveraging a rich data set to capitalize on vertical AI opportunities in banking [5][7] Financial Performance and Outlook - The customer base is recovering from previous liquidity crises and rising interest rates, with increasing activity in pipelines [12][13] - The company has set a bookings plan for the year, with a midpoint guidance of $3 million more than the previous year [13] - nCino aims to achieve a "Rule of 40" by the fourth quarter of next year, indicating a commitment to balancing growth and profitability [16][17] AI Integration and Product Development - nCino has been proactive in AI product development, with a threefold strategy: Banking Advisor skill sets, Agentic AI, and a data backbone [20][21][24] - The company has already launched 18 Banking Advisor skills and is working on automating workflows to enhance efficiency [21][22] - The focus is on connecting value delivered to fees charged, moving from a per-user model to an outcome-based pricing strategy [25][26] Market Dynamics and Growth Opportunities - nCino is positioned to drive efficiency in banks regardless of interest rate environments, with a sustainable business model that has proven resilient through various economic conditions [27][28] - The company sees significant growth potential in the remaining 70% of the market, particularly in international markets like Japan and EMEA [34][35] - The acquisition of SimpleNexus has strengthened nCino's position in the mortgage space, providing a consistent digital experience for customers [46][47] Competitive Landscape - nCino differentiates itself by offering a global platform that integrates various banking solutions, unlike competitors that focus on point solutions [31][32] - The company is aware of competitors attempting to undercut contracts but remains committed to sustainable business practices [48][49] Future Directions - nCino is currently in a "digestion mode" regarding recent acquisitions, focusing on integration and maximizing the potential of existing resources [52][53] - The company remains open to opportunistic acquisitions but emphasizes growth through current capabilities [53] Additional Insights - The company has successfully navigated challenging market conditions, demonstrating durability and adaptability [28][29] - nCino's approach to customer engagement emphasizes fulfilling promises and delivering measurable outcomes, which is critical for maintaining customer trust [10][11]

Financial Data and Key Metrics Changes - Total revenues for Q1 were $144.1 million, representing a 13% year-over-year increase [18] - Subscription revenues were $125.6 million, up 14% year-over-year on a reported basis and 9% organically [18] - Non-GAAP operating income was $24.8 million, or 17% of total revenues, with net income attributable to nCino at $18.4 million, or $0.16 per diluted share [21][22] - Guidance for total revenues in Q2 is expected to be between $142 million and $144 million, with subscription revenues between $124.5 million and $126.5 million [22] Business Line Data and Key Metrics Changes - Professional services revenues were $18.5 million, an increase of 5% year-over-year, driven by revenue recognition adjustments [19] - Non-U.S. total revenues were $31.6 million, up 22% year-over-year or 23% in constant currency [20] - Non-U.S. subscription revenues were $25.9 million, up 31% year-over-year or 32% in constant currency [20] Market Data and Key Metrics Changes - The company reported strong demand in the market, particularly for AI capabilities and omnichannel experiences showcased at the annual Insight customer conference [8] - A significant $25 billion regional bank doubled its annual commitment to nCino through the adoption of mortgage and consumer lending solutions [10] - An $800 million credit union expanded its relationship with nCino by adopting additional solutions, indicating strong market penetration [11] Company Strategy and Development Direction - nCino aims to eliminate inefficiencies in financial institutions caused by legacy infrastructure, focusing on a unified scalable platform powered by AI [6][7] - The company is pursuing international expansion, with notable progress in Europe and Japan, and sees a large global opportunity [12] - AI is central to nCino's long-term differentiation strategy, leveraging a large process-centric dataset in FinTech [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the financial institution customers' positions, noting healthy balance sheets and growth projections in loan portfolios and earnings [13] - The company is sensitive to macroeconomic conditions but sees encouraging signs of stability in the mortgage market [13][15] - A restructuring event affecting approximately 7% of the workforce was announced, aimed at streamlining operations and enhancing efficiency [16] Other Important Information - The company expects to realize approximately $24 million in gross annualized expense savings from restructuring and other cost-saving actions [26] - Non-GAAP operating income guidance for fiscal '26 has been updated to $112 million to $116 million, reflecting a 19% increase over fiscal '25 [28] Q&A Session Summary Question: How is the underlying demand and willingness to invest with bank clients? - Management expressed confidence in demand, validated by steady interest across solutions and pipeline activity [34][35] Question: What is driving the Professional Services gross margins? - Cost pressure has been concentrated in the community bank space, with efforts to redesign products for efficiency and leverage AI for margin improvement [37][38] Question: What is most misunderstood about the nCino story? - Management believes there is good alignment and understanding of the company's focus on execution discipline and growth initiatives [42][43] Question: How is the omni-channel experience integrated into the platform? - Upgrading to the omni-channel experience does not incur additional costs for existing customers, as it is part of the platform [45] Question: What are the implications of the workforce reduction on future investments? - The reduction was a strategic decision for long-term viability, with expectations of increased efficiency and velocity in software development [54][56] Question: How is AI playing a role in workforce efficiency? - AI is expected to enhance efficiency in R&D and project delivery, contributing to improved gross margins over time [28][56] Question: What are the growth signals for reinvesting cost savings back into the business? - Management is looking at pipeline activity and customer interest in AI solutions as indicators for potential reinvestment [78]

Financial Data and Key Metrics Changes - Total revenues for Q1 were $144.1 million, representing a 13% year-over-year increase [18] - Subscription revenues were $125.6 million, up 14% year-over-year on a reported basis and 9% organically [18] - Non-GAAP operating income was $24.8 million, or 17% of total revenues, with net income attributable to nCino at $18.4 million, or $0.16 per diluted share [21][22] - Guidance for total revenues in Q2 is expected to be between $142 million and $144 million, with subscription revenues between $124.5 million and $126.5 million [22] Business Line Data and Key Metrics Changes - Professional services revenues were $18.5 million, an increase of 5% year-over-year, driven by revenue recognition adjustments [19] - Non-U.S. total revenues were $31.6 million, up 22% year-over-year or 23% in constant currency [20] - Non-U.S. subscription revenues were $25.9 million, up 31% year-over-year or 32% in constant currency [20] Market Data and Key Metrics Changes - The company reported strong demand in the market, particularly for AI capabilities and omnichannel experiences showcased at the annual Insight customer conference [8] - A significant $25 billion regional bank doubled its annual commitment to nCino through the adoption of mortgage and consumer lending solutions [10] - An $800 million credit union expanded its relationship with nCino by adopting additional solutions, indicating strong market penetration [11] Company Strategy and Development Direction - nCino aims to eliminate inefficiencies in financial institutions caused by legacy infrastructure, focusing on a unified scalable platform powered by AI [6][7] - The company is pursuing international expansion, with notable progress in Europe and Japan, and sees a large global opportunity [12] - AI is central to nCino's long-term differentiation strategy, leveraging a process-centric dataset in FinTech [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the financial institution customers' healthy balance sheets and projected growth in loan portfolios and earnings [13] - The company is sensitive to macroeconomic conditions but sees encouraging signs of stability in the mortgage market [14] - Management believes potential deregulation could enhance capital availability and streamline decision-making for customers [15] Other Important Information - A restructuring event affected approximately 7% of the global workforce, aimed at streamlining operations and enhancing efficiency [16] - The company expects to realize approximately $24 million in gross annualized expense savings from restructuring and other cost-saving actions [27] Q&A Session Summary Question: How is the underlying demand and willingness to invest with bank clients? - Management expressed confidence in demand, validated by steady interest across solutions and pipeline activity [34][36] Question: What is driving the Professional Services gross margins? - Management noted price and cost pressures in the community bank space but sees opportunities for improvement through product redesign and AI [37][38] Question: What is most misunderstood about the nCino story? - Management believes there is good alignment and understanding of the company's focus on execution discipline and growth initiatives [44] Question: How does the omni-channel experience fit into the sales strategy? - Upgrading to the omni-channel experience does not incur additional costs for existing customers, as it is part of the platform [46] Question: What are the implications of the workforce reduction on office space and reinvestments? - Management indicated that the office space reduction was part of optimizing utilization and that there are efficiencies to be gained through modernizing software development [50][56] Question: How should the market think about the ACV target and sales productivity? - Management clarified that sales capacity growth was not impacted by the recent workforce reduction and emphasized the importance of pipeline activity [75][78] Question: What are the growth signals for reinvesting cost savings back into the business? - Management highlighted pipeline activity and customer interest in AI solutions as indicators for potential reinvestment [80] Question: What led to the strong international performance? - The Full Circle acquisition significantly contributed to international growth, with optimism around opportunities in Japan and Europe [114]

Financial Data and Key Metrics Changes - Total revenues for Q1 2026 were $144.1 million, representing a 13% year-over-year increase [17] - Subscription revenues were $125.6 million, up 14% year-over-year on a reported basis and 9% organically [17] - Non-GAAP operating income was $24.8 million, or 17% of total revenues, with non-GAAP net income attributable to nCino at $18.4 million, or $0.16 per diluted share [20][21] - The company expects total revenues for Q2 2026 to be between $142 million and $144 million, with subscription revenues between $124.5 million and $126.5 million [21] Business Line Data and Key Metrics Changes - Professional services revenues were $18.5 million, an increase of 5% year-over-year, driven by revenue recognition adjustments [18] - Non-U.S. total revenues were $31.6 million, up 22% year-over-year or 23% in constant currency [19] - Non-U.S. subscription revenues were $25.9 million, up 31% year-over-year or 32% in constant currency [20] Market Data and Key Metrics Changes - The company reported strong demand in the market, particularly for AI capabilities and omnichannel experiences showcased at the annual Insight customer conference [6][8] - A $25 billion regional bank doubled its annual commitment to nCino through the adoption of mortgage and consumer lending solutions [9] - An $800 million credit union expanded its relationship with nCino by adopting additional solutions, indicating strong market penetration [10] Company Strategy and Development Direction - nCino aims to eliminate inefficiencies in financial institutions caused by legacy infrastructure, focusing on a unified scalable platform powered by AI [4][5] - The company is committed to international expansion, with significant progress noted in Europe and Japan [11] - AI is central to nCino's long-term differentiation strategy, leveraging a large process-centric dataset in FinTech [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the financial institution customers' positions, noting healthy balance sheets and growth projections in loan portfolios and earnings [12][13] - The company is sensitive to macroeconomic conditions but sees encouraging signs of stability in the mortgage market [12] - Management highlighted a restructuring event affecting approximately 7% of the workforce aimed at streamlining operations and enhancing efficiency [14] Other Important Information - The company repurchased approximately 1.8 million shares during Q1 at an average price of $22.17, totaling $40.6 million [21] - The restructuring is expected to yield approximately $24 million in gross annualized expense savings [24][25] Q&A Session Summary Question: How is the underlying demand and willingness to invest with bank clients? - Management expressed confidence in demand, validated by steady interest across various solutions and a strong pipeline activity [31][33] Question: What is driving the Professional Services gross margins? - Management noted price and cost pressures in the community bank space but highlighted efforts to redesign products for efficiency and leverage AI for margin improvement [34][36] Question: What is most misunderstood about the company’s story? - Management believes there is good alignment and understanding of the company's focus on execution discipline and growth initiatives [40][42] Question: How does the company view the workforce reduction and office space optimization? - Management indicated that the office space reduction was part of a broader strategy to optimize capacity and improve efficiency [48][51] Question: What are the growth signals for reinvesting cost savings back into the business? - Management looks for pipeline activity and overall sales process health as indicators for potential reinvestment opportunities [72][74] Question: How is loan growth impacting demand? - Management confirmed that loan growth is positively influencing demand for their solutions, particularly in loan origination and monitoring [102][103] Question: What is the outlook for international performance? - Management noted strong international growth driven by acquisitions and optimism about opportunities in Japan and Europe [110][111]

Summary of nCino Conference Call Company Overview - **Company**: nCino - **Industry**: Financial Services Technology (FinTech) - **Key Metrics**: Over $540 million in revenue, primarily from subscription services, and a customer base of over 2,700 financial institutions globally [7][8][9] Core Points and Arguments Financial Performance and Market Position - nCino has established itself as a leader in providing cloud-based solutions for financial institutions, with a focus on efficiency and transformation [8][9] - The company is pivoting towards AI integration, aiming to enhance customer experiences and operational efficiencies [17][20] - nCino's platform is unique in that all customers operate on a single code base, allowing for scalable solutions across various financial sectors [10][46] Growth Opportunities - **Geographic Expansion**: Plans to penetrate markets in EMEA, Japan, and Latin America, leveraging existing partnerships and channel models [11][12][54] - **Vertical AI Opportunity**: Emphasis on AI to transform banking processes, with a focus on onboarding, loan origination, and portfolio management [15][47] - **Cross-Selling Potential**: Significant opportunities exist in cross-selling existing solutions to current customers, with only 30% penetration in commercial solutions and less than 15% in consumer solutions [48][49] Customer Success Stories - Fifth Third Bank reported achieving project success in one-fifth the time and at half the cost compared to traditional methods, showcasing the efficiency of nCino's solutions [21][20] - First Citizens Bank is beginning its journey with nCino, focusing on consumer lending, which reflects the adaptability of nCino's platform to various banking needs [41][42] Strategic Initiatives - **Project SEB0**: An internal initiative aimed at deploying all solutions in under 200 hours, highlighting nCino's commitment to efficiency [22][24] - **Acquisitions**: Strategic acquisitions like SimpleNexus and Full Circle are enhancing nCino's capabilities in mortgage lending and onboarding processes [53][72] Important but Overlooked Content - The company is focusing on change management as a critical component of its partnerships with banks, ensuring smooth transitions to new technologies [39][40] - nCino's approach to market expansion includes not only organic growth but also strategic acquisitions and partnerships to enhance its product offerings [52][53] - The company acknowledges the challenges posed by legacy systems in the banking industry and positions its solutions as essential for overcoming these hurdles [14][18] Financial Outlook - nCino's preliminary financial results for Q1 exceeded guidance, indicating strong performance and growth potential [89][90] - The company expects to achieve its ACV targets, which should lead to accelerating subscription revenue growth in the following fiscal year [91][92] This summary encapsulates the key points discussed during the nCino conference call, highlighting the company's strategic direction, market opportunities, and financial performance.

Core Insights - nCino has introduced new AI-powered innovations aimed at enhancing the efficiency and competitiveness of financial institutions through intelligence-driven automation [1][2][3] - The company has launched the nCino Research Institute to provide economic insights and actionable strategies for banking growth [1][6] Company Developments - Sean Desmond, nCino's CEO, emphasized the company's transition from a workflow pioneer to a leader in global data and intelligence, marking a "new era in financial services" [2] - The latest product enhancements focus on predictive, prescriptive, and personalized tools tailored for banking, leveraging advanced AI to address key challenges in the sector [3][4] Product Innovations - Continuous Credit Monitoring (CCM) provides proactive alerts and risk assessments to identify at-risk relationships early [5] - Quick Quote with Banking Advisor allows for rapid auto loan quotes and streamlined client interactions [5] - Onboarding processes have been simplified through real-time data capture and intelligent document processing, significantly improving client experiences [5] - Document Validation and Mortgage Advisor utilize AI to enhance document validation and mortgage origination processes [5][6] - Commercial Banking onboarding time has been reduced from months to days, with one institution achieving a 74% reduction in document processing time [5] - Consumer Banking account opening time has decreased from 30 minutes to just minutes, reducing customer abandonment rates [5] - Small Business Banking has seen loan decisions accelerated by 62% and application abandonment rates reduced by 41% [5] - Real-time document validation in Mortgage Lending has cut documentation completion time by 47% and inquiries by 68% [6] Strategic Initiatives - The nCino Research Institute aims to analyze economic trends and provide banking benchmark data to help clients navigate an unpredictable economic landscape [6][7] - The institute is supported by a panel of experts focused on fostering innovation and resilience in the financial industry [7] Industry Context - nCino serves over 2,700 customers globally, including community banks, credit unions, and large financial entities, by integrating AI and actionable insights into its platform [9]