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Banking & Finance

NCino Reports ‘solid’ Third Quarter Results

By Jenny Callison, posted Nov 30, 2023
Headquartered in Wilmington, fintech firm nCino released its third quarter earnings this week. (File photo)
Once again, nCino’s quarterly results beat analysts’ expectations. The Wilmington-based maker of cloud banking software released the results of its FY 2024 third quarter after markets closed Wednesday.
 
The company, which is traded on the Nasdaq (NCNO) logged revenues of $121.9 million, a year-over-year increase of 16% from Q2 totals of $105.3 million. Subscription revenues (what clients pay to use the software) increased 19% year over year, from $88.3 million to $104.8 million.
 
Ahead of the report, the financial website Investing.com anticipated slightly lower results, more in line with what nCino itself had forecast for Q3 in its Q2 earnings report: total revenues of between $120 million and $121 million and between $102.5 million and $103.5 million in subscription revenues.

“This quarter analysts are expecting nCino's revenue to grow 14.6% year on year to $120.6 million, slowing down from the 50.3% year-over-year increase in revenue the company had recorded in the same quarter last year,” Investing.com forecast on Tuesday. “Adjusted earnings are expected to come in at $0.11 per share.”

nCino’s actual EPS, according to non-GAAP measures, was $0.14 per diluted share compared to a net loss of $(0.01) per basic and diluted share in Q3 of fiscal 2023.
 
Using GAAP measures, nCino’s net loss in Q3 of fiscal 2024 was $16.4 million, compared to a net loss of $23.6 million a year ago. By non-GAAP calculations, nCino recorded Q3 FY 24 net income of $16.2 million, compared to a $1.4 million net loss in the third quarter of fiscal 2023.
 
Non-GAAP accounting differs from GAAP rules (generally accepted accounting principles) chiefly in that non-GAAP calculations are not required to include non-recurring or non-cash expenses, such as a one-time real estate transaction or equipment purchase.
 
“GAAP net loss attributable to nCino in the third quarter of fiscal 2024 includes the impact of accelerated sales and marketing amortization expense of $10.1 million to fully amortize the remaining SimpleNexus trade name intangible asset in connection with rebranding the SimpleNexus solution to nCino Mortgage,” the company’s news release stated.
 
nCino signed a definitive agreement to acquire home mortgage software provider SimpleNexus in November 2021; it announced this past September that it had officially rebranded SimpleNexus.

“We are pleased with our third-quarter results and the continued momentum we see in the business,” nCino President and Chief Revenue Officer Josh Glover said during an earnings report call Wednesday. “On the sales front, we signed key strategic wins across market segments, geographies, and solutions. We added our largest customer to date for consumer lending in this last quarter, signing a $200 billion bank in the United States. This new customer will leverage nCino across all of their consumer lines of business with both in-branch and digital workflows to modernize their go-to-market approach.”

Two other highlights distinguished the quarter. One was the signing of nCino’s largest customer-to-date in Japan: Yamaguchi Financial Group, an over $150 billion (USD) asset bank as a “net-new” customer for mortgage lending. The second was an expansion deal with a top Irish bank.
 
nCino Chairman and CEO Pierre Naudé noted that the company had another “solid quarter” despite the continued unsettled banking environment.

We exceeded the high end of our revenue guidance,” he said, citing the company’s total revenue and subscription revenue figures. “Once again, we significantly increased profitability, posting a 17% non-GAAP operating income margin even as we continue to invest in the business, specifically in product innovation. Our positive view of the quarter reflects a number of significant product wins across the platform.”

Referring to the sale of consumer lending software to the “$200 billion bank," Naudé continued.

“Over the past several quarters, we have been highlighting the progress we have made maturing our consumer lending product, and we view landing this customer for consumer lending as another validation of that momentum as well as of our overall single-platform product strategy. We also continued the strides in our U.S. mortgage business.

“With years of experience successfully managing through market cycles, our financial strength allows us to continue investing and innovating to expand our market leadership,” Naudé said. “I am confident nCino has the products, strategy, and team to continue driving sustainable and profitable growth in Q4 and beyond.”
 
Officials predict that nCino’s total revenues for its final quarter, which ends Jan. 31, 2024, will be between $123.5 million and $125.5 million, with subscription revenues totaling between $105.5 million and $107.5 million. For the 2024 fiscal year as a whole, it forecasts total revenues of between $476.5 million and $478.5 million and subscription revenues of between $407.5 million and $409.5 million.
 
As of 1 p.m. Thursday, nCino stock, which trades on the Nasdaq exchange, was $27.61 per share. That is down nearly 8% from about $30 per share at Wednesday’s close.
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