nCino Q2 Fiscal Year 2027 Earnings Call Summary

1Key Financial Results and Metrics

Total Revenues: $161 million, up 8% year-over-year.

Subscription Revenues: $143.5 million, up 10% year-over-year; excluding U.S. mortgage, growth was 12%.

U.S. Mortgage Subscription Revenues: $20.6 million, down 1% year-over-year.

Professional Services Revenues: $17.5 million, down 3% year-over-year, with a gross profit margin of 3%.

Non-GAAP Operating Income: $40.8 million, or 25% of total revenues, up 36% year-over-year.

Free Cash Flow: $34 million, up 170% year-over-year.

Share Repurchase: Approximately 4.2 million shares repurchased at an average price of $15.41 per share.

2Strategic Updates and Business Highlights

nCino signed multiyear renewals with 4 of its 20 largest U.S. enterprise customers, with average annual contract value (ACV) increases of over 10%.

Approximately 48% of total ACV is now on the new platform pricing model, up from 40% last quarter.

New customer acquisitions include Hachijuni Nagano Bank in Japan and a development finance institution in Germany.

The company is focusing on expanding its AI capabilities, with over 230 customers purchasing AI intelligence units.

Continuous Credit Monitoring (CCM) and other AI-driven features are gaining traction, with significant potential savings for clients.

3Forward Guidance and Outlook

Q3 Fiscal 2027 Guidance: Total revenues expected between $161.25 million and $163.25 million; subscription revenues between $143.25 million and $145.25 million.

Full Year Fiscal 2027 Guidance: Total revenues expected between $644 million and $647 million; subscription revenues between $573.5 million and $576.5 million, representing 9% and 10% growth, respectively.

Non-GAAP operating income for the full year is projected at $171 million to $174 million, reflecting a 33% year-over-year increase.

Free cash flow guidance raised to $137 million to $142 million, up 69% year-over-year.

4Bad News, Challenges, or Points of Concern

The U.S. mortgage market remains a headwind due to higher interest rates, impacting subscription revenues from independent mortgage banks (IMBs).

The company anticipates increased churn in the mortgage segment, which could affect overall subscription revenue growth.

There are concerns about the pace of customer adoption of new AI features due to regulatory compliance and security reviews, which may slow down the realization of benefits from these innovations.

5Notable Q&A Insights

Management expressed confidence in the mortgage business despite current headwinds, highlighting opportunities for growth in core banking sectors.

The company is focused on long-term AI adoption rather than short-term revenue spikes, indicating a strategic shift towards sustainable growth.

There is a strong emphasis on the relationship between product development and customer implementation, with expectations that product innovation will outpace customer adoption in the near term.

Management reiterated their commitment to controlling expenses while driving growth, aiming for a balance that supports both profitability and revenue expansion.

The company is optimistic about international growth, with recent deals indicating strong demand for nCino's platform outside the U.S.