Ncino, Inc. ((NCNO)) has held its Q4 earnings call. Read on for the main highlights of the call.
The recent earnings call for nCino, Inc. reflected a mixed sentiment, with notable achievements in subscription revenue growth and international expansion being somewhat overshadowed by challenges in execution within Europe, increased churn rates, and macroeconomic pressures affecting bookings. Despite these hurdles, the company remains optimistic about future growth, driven by new product innovations and significant customer acquisitions.
Strong Subscription Revenue Growth
Subscription revenues for nCino saw a robust increase, rising by 16% year-over-year in Q4 to reach $125 million. For the full fiscal year, subscription revenues grew by 15%, totaling $469.2 million. This growth underscores the company’s strong market position and the value of its offerings.
International Revenue Surge
The company experienced a significant surge in non-U.S. total revenues, which increased by 34% year-over-year in Q4, with a 38% rise in constant currency. This highlights nCino’s successful expansion efforts beyond its home market, contributing positively to its overall revenue growth.
AI Banking Innovation
nCino is leveraging artificial intelligence to enhance banking efficiency, with innovations such as the Banking Advisor product. This technology has dramatically reduced banking processes from days to mere seconds, showcasing the company’s commitment to technological advancement.
New Customer Wins
In Q4, nCino secured over 20 new Consumer Lending deals, including partnerships with two large banks with assets of $50 billion and $80 billion. These wins are a testament to nCino’s competitive edge and ability to attract significant clients.
Expanding Product Offerings
The acquisitions of companies like DocFox and FullCircl are expected to enhance nCino’s product offerings and financial performance. These strategic moves aim to broaden the company’s market reach and service capabilities.
Execution Challenges in Europe
Despite its successes, nCino faced execution challenges in Europe, where sales urgency and effectiveness were lacking. This has impacted the company’s growth in the region, highlighting areas for improvement.
Lagging Revenue Growth
Looking ahead, nCino anticipates lower revenue growth in fiscal ’26 due to trailing factors and challenging year-over-year comparisons. This cautious outlook reflects the complexities of maintaining high growth rates.
Higher Churn Rates
The company reported a total churn of $26 million in fiscal ’25, with mortgage churn accounting for $9 million. These figures indicate challenges in retaining subscription revenue, which nCino will need to address.
Macroeconomic Headwinds
Macroeconomic factors, including rising interest rates and a liquidity crisis, have dampened sales momentum and new bookings growth in fiscal ’25. These headwinds present ongoing challenges for the company.
Temporary Decline in Free Cash Flow
Free cash flow was negative $10.4 million in Q4, attributed to acquisition-related costs and other factors. This temporary decline is expected to stabilize as the company integrates its acquisitions.
Forward-Looking Guidance
In its forward-looking guidance, nCino emphasized a focus on sustainable, profitable growth, leveraging AI to enhance efficiency and customer financials. The company reported total revenues of $540.7 million for fiscal 2025, a 13% increase year-over-year. Subscription revenues grew by 15%, and a strategic shift to platform pricing is projected to add approximately 1% to subscription revenue growth in fiscal 2026. Leadership changes and investments in sales and marketing, particularly in Europe and the credit union markets, are expected to drive future growth. nCino is targeting a 19% organic net ACV bookings growth in fiscal 2026 and aims to achieve the Rule of 40 by the fourth quarter of fiscal 2027. Additionally, a $100 million stock repurchase program was announced, signaling confidence in the company’s strategic direction.
In conclusion, nCino’s earnings call presented a balanced view of the company’s current position and future prospects. While strong subscription revenue growth and international expansion are promising, challenges such as execution issues in Europe and macroeconomic headwinds need to be addressed. The company’s focus on innovation and strategic investments provides a solid foundation for future growth, with leadership confident in navigating the challenges ahead.