Banking & Finance

NCino's Fourth-quarter Earnings Signal Rebound From Liquidity Crisis

By Audrey Elsberry, posted Mar 27, 2024
nCino, headquartered at 6770 Parker Farm Drive, announced its fourth-quarter earnings for its 2024 fiscal year on Tuesday afternoon. (File photo)
Wilmington financial technology company nCino announced its earnings for the last quarter of its 2024 fiscal year on Tuesday afternoon — the sunny report was followed by an almost 20% spike in the company’s stock price on the Nasdaq (NCNO) at market open Wednesday.

The cloud banking software company’s chief executive officer Pierre Naudé called the quarter a “strong finish to a challenging year.” The company’s final quarter of the fiscal 2024 year, ending on January 31, was their strongest gross sales quarter in the past 10 quarters, Naudé said, increasing 23% year-over-year.

Despite the optimistic tone of the call, the company’s leader acknowledged that the challenging first half of the fiscal year, including a liquidity crisis and increased loss of customers in the second half of last year, creates a difficult comparison for the following quarters.

Total revenues were $123.7 million this quarter and $476.3 million in the 2024 fiscal year, both increasing year-over-year by 13% and 17% respectively. Revenues missed analysts' expectations of $124.6 million — a figure predicted by six analysts surveyed by Zacks Investment Research.

Other fourth-quarter results were $1.2 million in net income and earnings at 21 cents per share. Analysts at Zacks Investment Research predicted earnings of 12 cents per share.

The company’s primary focuses are increasing revenue and growing subscription revenues, Naudé said. Subscription revenue grew almost 20% year-over-year.

International business drove 16% of the company’s subscription revenue growth for the quarter and will represent one-fifth of the company’s total revenue. Europe, the Middle East and Africa are nCino’s largest markets outside the U.S., Naudé said.

The company expanded to the Nordics, the United Kingdom and recently acquired South African company DocFox, which provides technology for onboarding and commercial account opening, for $75 million earlier this month.

Naudé said the past quarter reflects a return to normal buying patterns after last year’s liquidity crisis, causing people to hold on to their money, particularly nCino’s U.S. enterprise customers. He predicted this changing of tides to set net sales in fiscal 2025 to be about 50% higher than fiscal year 2024.

Naudé lauded nCino’s team throughout the turbulent macro environment in the past fiscal year. Increased interest rates and customers’ lack of confidence in financial institutions created headwinds in the industry, he said.

“Through the difficult environment, we remain focused on our customers and on product innovation,” Naudé said, “demonstrating our loyalty and commitment to them through the inevitable business cycles.”

The business was able to rebound in fiscal year 2024 because interest rates stabilized, Naudé said, which caused customers to feel more confident moving forward with strategic investments.

nCino’s three artificial intelligence offerings have gained traction with customers due to their actionable insights, according to the earnings presentation. Naudé cited an Accenture study that found banks are likely to benefit from generative AI more than any other industry.

He pointed toward efficiency driving the demand for automated capabilities on nCino’s platform according to customer feedback. Financial institutions face increased pressure to improve interest margins, which can only be improved by boosting efficiency, he said.

“Obviously, it is early in the AI lifecycle, but with our unique perspective on industry demand drivers,” Naudé said, “we believe the opportunity for AI in banks is not hype, it's real.”
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