Banking & Finance

NCino Reports Higher Revenues, Higher Costs For Q3

By Jenny Callison, posted Dec 2, 2021
Banking software company nCino reported increased revenues Wednesday for the third quarter of its 2022 fiscal year. The quarter ended Oct. 31.
Total revenues for the third quarter of FY 22 were $70 million, a 29% increase from total revenues of $54.2 million during the third quarter of FY 2021, the company reported. Subscription revenues – payments for ongoing use of nCino’s Bank Operating System (BOS) – were $57 million, up from $43 million year-over-year – an increase of about 32%.
“The third quarter was another strong quarter with impressive financial results, highlighted by 32% growth in subscription revenues, compared to the third quarter of last year, which, as you may recall, was also a very strong quarter,” nCino CEO Pierre Naudé said during an earnings call Wednesday afternoon. He noted that Q3 of FY 2021 included “catch-up revenues” from financial institutions that used nCino software to process Paycheck Protection Program (PPP) loans.
At the same time, nCino officials reported an increase in operating losses for the third quarter of FY 22 compared to the corresponding quarter in FY 21. Using GAAP accounting, the quarter’s loss was $12.7 million, compared to $8.8 million a year ago. Using non-GAAP methods, this quarter’s loss was $3.2 million compared with $2.7 million in the third quarter of FY 21.
The increase in costs reflects nCino’s investments in its global expansion, nCino Chief Financial Officer David Rudow said during the earnings call.
Those costs, according to Rudow, include “additional salespeople on the continent of Europe and increased marketing expenses to further build out our international brand. We also saw a higher level of demand for in-person events, which resulted in incremental spending on conference- and travel-related costs. Research and development expenses for the third quarter of fiscal '22 were $18.6 million or 27% of total revenues, compared to $14 million or 26% through the third quarter of fiscal '21.”
Company officials highlighted several growth indicators of the quarter, which include:
  • The signing of Kiraboshi Bank, nCino’s first customer in Japan. With assets of more than $53 billion USD, Tokyo-based Kiraboshi will use the nCino platform for its Business Financing division.
  • The expansion of nCino’s relationship with a top-50 U.S. bank that initially used the company’s BOS to process PPP loans. “With assets greater than $50 billion, this bank will now use nCino across its end-to-end commercial and small business lending,” company officials said in a news release. 
  • The signing of a new enterprise bank in New Zealand, a new bank in the UK and numerous new community and regional banks across the U.S.   
  • Launched the use of the BOS for a “record number” of customers of different sizes and locations. Perhaps the most noteworthy was Truist Bank, the sixth-largest bank in the U.S. Prior to its merger with BB&T, SunTrust Bank had deployed the BOS. Now, according to nCino officials, more than 2,500 legacy BB&T employees are now using the BOS as well.
  • Early in the fourth quarter of FY 22, nCino signed a definitive agreement to acquire SimpleNexus in a stock and cash transaction valued at about $1.2 billion.
 Naudé said he was excited about the prospective acquisition.

“Our product portfolio now spans treasury management, deposit account opening, onboarding, small business lending and retail lending, all on a single customer-focused cloud platform,” he said during the call. “We believe our platform is a competitive differentiator for us in the market, and we have aligned our entire organization around ensuring each and every one of our products is best of breed.”

SimpleNexus is, in nCino officials’ belief, “the best in the market today and is extremely complementary to our existing business and product suite,” Naudé continued. “While we weren't necessarily looking for our first acquisition as a public company to be of this size and scale, there were many unique and attractive aspects about SimpleNexus. For example, SimpleNexus has an impressive customer base across the U.S. with strong retention and references.”

Naudé also pointed to his company’s repeat recognition by Aite Group.
“Yesterday, you may have seen our announcement that our commercial banking solution was again named best-in-class by Aite Group, an independent research and advisory firm focused on financial services,” he said. “nCino is the only technology vendor to achieve this recognition three consecutive times. This is yet another strong endorsement for our flagship commercial product.”
Looking to the future, nCino expects total revenues for its fourth quarter ending Jan. 31, 2022 to be between $68.5 and $69.5 million, its subscription revenues to total between $57 million and $58 million, and non-GAAP operating losses to run between $8 million and $9 million. That would be a per-share net loss of between $0.09 and $0.10.
For the entire FY 22, the company guidance is for total revenues between $267 million and $268 million, subscription revenues between $219 million and $220 million, with a non-GAAP operating loss between $18 million and $19 million. These calculations do not take into account the acquisition of SimpleNexus, which is supposed to close by the end of nCino’s Q4 FY 2022.
As of Thursday morning, nCino shares were trading at $51.81, a sharp decline from prices over the past three months.
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