While still technically not turning a profit from its operations, cloud-based banking software company nCino exceeded analyst expectations in the second quarter of its 2025 fiscal year. The quarter ended July 31, 2024.
 
The Wilmington-based company reported total revenues of $132.4 million, a 13% increase from the second quarter of 2024. Of that total, $113.9 million came from subscription revenues, which increased 14% year over year.

Ahead of the earnings release, analysts at Zacks Investment Research had pegged nCino’s trend as “mixed.” After reviewing the new information, that advice was modified Tuesday.

“While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future,” Zacks posted.
 
The quarter’s results, announced late Tuesday, also beat the company’s own guidance. At the end of the company’s first quarter of FY25, officials had estimated that their Q2 revenues would land between $130.5 million and $131.5 million, and they forecast subscription revenues of between $112.5 million and $113.5 million.
 
nCino’s net loss for the second quarter, using generally accepted accounting principles (GAAP), was $11 million, an improvement over the same quarter last year, when the company lost $15.9 million. When the numbers are adjusted to exclude non-recurring costs (non-GAAP), nCino’s net income for FY25 Q2 was $15.8 million, compared with a non-GAAP net income of $9.9 million in Q2 of FY 24. Again using non-GAAP, earnings per diluted share in Q2 were $0.14.

"We are pleased to report that we again exceeded quarterly guidance for total and subscription revenues as well as non-GAAP operating income," Pierre Naudé, nCino’s chairman and CEO, said in Tuesday’s news release. "In the second quarter we saw particular strength in the U.S. across both the enterprise and community & regional segments, with increased demand for solutions that span the breadth of the nCino platform including consumer lending and deposit account opening, as well as our Generative AI offering, Banking Advisor. While some macro-economic challenges persist, particularly in the U.S. mortgage market and international markets, we have a positive outlook on the second half of the year."

Naudé expanded on those comments during nCino’s earnings call Tuesday afternoon.

“In the United States, sentiment in the financial services industry has improved quite a bit from a year ago, with [financial institution] balance sheets generally healthy and net interest margin headwinds abating. Buying behavior in both the U.S. enterprise and community and regional [financial services] markets accelerated in the first half of fiscal '25 with gross bookings in the U.S., up 36% over the first half of last year, including mortgage, and up 67% without mortgage. This momentum has been driven primarily by expansion opportunities within our existing customer base as more and more customers embrace our single platform.”

nCino, which purchased home-ownership software company SimpleNexus LLC in October 2022, stands to benefit from a recovering mortgage market, Naudé added.

“We believe we are very well situated to benefit from the expected increase in mortgage activity, including from one of the largest homebuilders in the United States which began the nationwide rollout of the nCino Mortgage Solution in July,” he said in the call.

nCino has continued to expand its global reach, now maintaining two U.S. locations as well as offices in Australia, Canada, Japan, New Zealand, South Africa, Spain and the United Kingdom. Naudé noted that nCino’s international business has been slower to recover than has its activity in the U.S.

“. . . the international markets we operate in remain more challenged than in the U.S.,” he said. “As a reminder, our pipelines outside of the U.S. are comprised primarily of new [customer] opportunities, which do inherently take longer to close in any business climate and can be much more lumpy in light of the large bank nature of this business.

“That said, we do expect our international operations to add a healthy number of new logos in the second half of the year," Naudé continued. “You'll recall on our fourth-quarter earnings call, I said having roughly around 40% of our total gross bookings in the first half of the year is a more normal picture for the year. Gross bookings for the first six months were approximately 36% toward our annual goal, highlighted by overperformance in our legacy U.S. business, while our U.S. mortgage and international businesses were more challenged.”

Company officials released their forecasts for nCino’s third quarter and year-end earnings. For Q3, which ends October 31, 2024, they anticipate total revenues of between $136 million and $138 million, with subscription revenues of between $117 million and $119 million. Using non-GAAP measures, the company estimates operating income of between $21 million and $22 million, and non-GAAP earnings per diluted share of between $0.15 and $0.16.

As of Wednesday morning, nCino shares on Nasdaq had fallen slightly to $30.05 from Tuesday’s close at $34.53.