10-Q: nCino Reports Q3 2026 Profit, Revenue Growth Amid Acquisitions

nCino, Inc. reported a net income of $6.5 million for the three months ended October 31, 2025, marking a significant turnaround from a net loss in the prior year, driven by subscription revenue growth and strategic acquisitions.

Summary

• Net income attributable to nCino, Inc. for the three months ended October 31, 2025, was $6.5 million, a significant improvement from a net loss of $5.3 million in the same period of 2024.
• Total revenues for the three months ended October 31, 2025, increased by 9.6% to $152.2 million from $138.8 million in the prior year.
• Subscription revenues grew by 11.3% to $133.4 million for the three months ended October 31, 2025, compared to $119.9 million in 2024.
• For the nine months ended October 31, 2025, total revenues increased by 11.5% to $445.1 million, and subscription revenues increased by 13.2% to $389.8 million.
• Net loss attributable to nCino, Inc. for the nine months ended October 31, 2025, was $3.2 million, a substantial reduction from a $19.3 million net loss in the prior year.
• The company completed a $100.0 million stock repurchase program during the nine months ended October 31, 2025, repurchasing 4.0 million shares.
• Acquisitions of DocFox, ILT, FullCircl, and Sandbox Banking contributed to revenue growth and platform capabilities.
• A restructuring plan involving a 7% workforce reduction and office space reductions incurred charges of $10.1 million for the nine months ended October 31, 2025.
• Operating income for the three months ended October 31, 2025, was $11.7 million, a significant improvement from an operating loss of $0.8 million in the prior year.

Sentiment

Score: 7

Explanation: The company demonstrated strong financial improvement, moving to net income for the quarter and significantly reducing its year-to-date net loss. Revenue growth, particularly in subscriptions, is positive, and operational efficiencies are improving. However, increased interest expense, a decline in professional services gross margin, and a decrease in cash and deferred revenue balances warrant a slightly cautious outlook, along with ongoing macroeconomic risks and the preliminary nature of some acquisition accounting.

Positives

• Achieved net income of $6.5 million for the three months ended October 31, 2025, reversing a net loss of $5.3 million in the prior year.
• Total revenue increased by 9.6% to $152.2 million for the three months ended October 31, 2025.
• Subscription revenue, the core business, grew by 11.3% to $133.4 million for the three months ended October 31, 2025, and by 13.2% to $389.8 million for the nine months.
• Gross profit increased to $93.7 million for the three months ended October 31, 2025, from $85.1 million in the prior year.
• Operating income significantly improved to $11.7 million for the three months ended October 31, 2025, from an operating loss of $0.8 million in the prior year.
• Net loss for the nine months ended October 31, 2025, substantially reduced to $3.2 million from $19.3 million in the prior year.
• Strong cash flow from operating activities, increasing to $77.1 million for the nine months ended October 31, 2025, from $65.2 million in the prior year.
• Successful completion of a $100.0 million stock repurchase program, demonstrating confidence and returning value to shareholders.
• Strategic acquisitions (DocFox, ILT, FullCircl, Sandbox Banking) have expanded platform capabilities and market opportunities.
• Research and development expenses decreased as a percentage of revenue (from 23.8% to 19.4% for the three months), indicating leverage from prior investments.
• General and administrative expenses decreased as a percentage of revenue (from 16.6% to 12.7% for the three months), indicating improved operational efficiencies.

Negatives

• Professional services and other revenues decreased by $0.2 million for the three months ended October 31, 2025, primarily due to the mix of solutions being implemented and certain markets yielding lower effective bill rates.
• Gross margin for professional services and other revenues decreased to (12.3)% for the three months ended October 31, 2025, from (5.7)% in the prior year, and to (18.0)% for the nine months from (8.8)%, primarily due to strategic investments and lower effective billing/utilization rates.
• Interest expense significantly increased to $4.3 million for the three months ended October 31, 2025, from $1.7 million in the prior year, and to $13.2 million for the nine months from $5.0 million, primarily due to increased borrowings on the revolving credit facility.
• Cash and cash equivalents decreased to $87.6 million as of October 31, 2025, from $120.9 million as of January 31, 2025.
• Accounts receivable decreased significantly to $86.9 million as of October 31, 2025, from $146.8 million as of January 31, 2025.
• Deferred revenue (current portion) decreased to $152.1 million as of October 31, 2025, from $191.2 million as of January 31, 2025, indicating a decrease in advance payments.
• The company incurred $10.1 million in restructuring charges for the nine months ended October 31, 2025, related to workforce and office space reductions.
• Net loss attributable to nCino, Inc. for the nine months ended October 31, 2025, was still a loss of $3.2 million, despite significant improvement.

Risks

• Future growth depends on the ability to expand reach to new financial institution customers and increase adoption with existing customers, requiring focused direct sales and convincing decision-makers to replace legacy systems.
• Successful implementation of the new asset-based pricing model, which started in fiscal 2025, is a key driver of future success.
• Growing the customer base requires increasing penetration into markets outside the U.S., which accounted for 22.1% of total revenues for the three months ended October 31, 2025.
• New customer sales cycles are typically lengthy, ranging from six to nine months for smaller FIs to 12 to 18 months or more for larger FIs.
• Fluctuating interest rates and inflationary pressures, particularly impacting the U.S. real estate and mortgage market, have negatively affected the U.S. Mortgage business.
• The ability to maintain and build a leadership position requires continued investment in product development, sales, and marketing.
• The company has made several strategic acquisitions (DocFox, ILT, FullCircl, Sandbox Banking), and successful integration and realization of expected synergies are crucial.
• Initial accounting for the FullCircl and Sandbox Banking acquisitions is not complete, and further measurement period adjustments may occur, potentially differing materially from preliminary fair values.
• Exposure to increased interest rate risk due to variable interest rates on borrowings under the $250.0 million revolving credit facility.
• Fluctuations in foreign currency exchange rates can negatively affect revenues and operating results when translated into U.S. dollars, as the company has not engaged in hedging.
• Disclosure controls and procedures or internal control over financial reporting may not prevent all errors and fraud due to inherent limitations, including human judgment, simple errors, circumvention by individuals, collusion, or management override.
• Future capital requirements depend on growth rate, R&D spending, market acceptance, sales and marketing expansion, capital expenditures, and potential future acquisitions, with no assurance of obtaining future financing on acceptable terms.

Future Outlook

The company expects subscription revenues to continue making up an increasing proportion of total revenues. It plans to continue increasing investment in product development to maintain and build its market advantage, and in sales and marketing both in the U.S. and internationally, particularly expanding into credit unions in the U.S. and Europe. Research and development and general and administrative expenses are expected to decrease as a percentage of revenues due to leveraging existing investments and operational efficiencies. The company believes current cash and cash equivalents, along with available borrowings, will be sufficient to fund operations, capital requirements, and stock repurchases for at least the next 12 months.

Management Comments

• "nCino's trusted platform enables FIs to consolidate vendors while optimizing operations by integrating artificial intelligence (AI) and actionable insights to cohesively bring together people and data and thereby enhance strategic decision-making, risk management, and customer satisfaction."
• "Our new Intelligent Solution Framework pricing model helps ensure the value-based positioning and pricing of our products and creates an opportunity to embed intelligence into all our solutions."
• "Starting in fiscal 2025, by moving away from a seat-based pricing model to pricing directly correlated to the FIs assets, transaction or processing volumes, we began to more directly align our revenues to the usefulness the nCino Platform provides as nCino creates efficiencies for our customers."
• "We expect enterprise FIs to make up a greater proportion of our nCino Platform sales."
• "We expect sales and marketing expenses to increase as a percentage of revenues as we expand more into credit unions in the U.S. and on the European continent."
• "We expect research and development costs will decrease as a percentage of revenues as we leverage the investments we have made to date."
• "We expect general and administrative expenses will decrease as a percentage of revenues as we leverage the investments we have made to date."
• "Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures at October 31, 2025... Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, at October 31, 2025, our disclosure controls and procedures were effective at the reasonable assurance level."

Industry Context

nCino operates in the rapidly evolving financial technology (FinTech) sector, providing software-as-a-service (SaaS) solutions to financial institutions. The company's strategy of consolidating vendors and integrating AI aligns with broader industry trends towards digital transformation, operational efficiency, and data-driven decision-making in banking. The shift to an asset-based pricing model reflects an industry move towards value-based pricing, aligning revenue with customer benefits. The company acknowledges the impact of macroeconomic factors, specifically fluctuating interest rates affecting the U.S. mortgage market, which is a key segment for its solutions. Its continued investment in product development and strategic acquisitions, including those focused on onboarding, account opening, indirect auto lending, and advanced analytics/AI, positions it to capitalize on the demand for comprehensive, intelligent banking platforms.

Comparison to Industry Standards

• The filing does not provide specific comparable companies or projects for direct benchmarking. However, it mentions working with system integration (SI) partners like Accenture, Deloitte, and PwC for enterprise FIs, and West Monroe Partners for regional FIs, indicating its solutions are adopted by a range of financial institutions.
• The company's focus on integrating AI and actionable insights into its platform aligns with the industry-wide push for advanced analytics and automation to enhance strategic decision-making and risk management, a trend seen across leading FinTech providers.
• The transition from a seat-based pricing model to one correlated with financial institution assets or transaction volumes reflects a move towards value-based pricing, a common strategy in enterprise software to better align with customer success and industry benchmarks for platform utility.
• The reported subscription revenue growth of 11.3% for the quarter and 13.2% for the nine months indicates a healthy growth trajectory within the SaaS sector, though specific industry benchmarks for this period are not provided in the filing.
• The company's expansion into international markets (22.1% of total revenues from outside the U.S.) is consistent with global growth strategies for successful SaaS companies seeking to diversify revenue streams and capture new market opportunities beyond their domestic base.

Management Changes

Corporate Governance

Legal Proceedings

• The company is involved in legal proceedings or subject to claims arising in the ordinary course of business from time to time.
• Management believes there are no proceedings or claims pending against the company that are likely to have a material adverse effect.
• Litigation expenses for the nine months ended October 31, 2024, included $0.4 million related to a closed government antitrust investigation, a related settled civil action, and a dismissed shareholder derivative lawsuit. No such expenses were reported for the nine months ended October 31, 2025.

Related Party Transactions

• On November 1, 2022, nCino OpCo acquired preferred shares of ZestFinance, Inc. (Zest AI) for $2.5 million, considered a related party transaction due to Insight Partners' beneficial ownership in both entities.
• During the first quarter of fiscal year 2026, the company sold all its shares in Zest AI, recording a realized gain of $1.2 million. At the time of this sale, Zest AI was no longer considered a related party.
• The company holds an interest in nCino K.K., a Japanese company, which is considered a variable interest entity (VIE) and has minority investors. The company is the primary beneficiary and consolidates nCino K.K.
• Redeemable non-controlling interest in nCino K.K. was $12.4 million as of October 31, 2025.

Stakeholder Impact

• Shareholders: Positive impact from the completed $100.0 million stock repurchase program and improved net income for the quarter. Potential future equity financing could be dilutive.
• Employees: Impacted by a restructuring plan involving a workforce reduction of approximately 7% and office space reductions, leading to severance and termination benefits for affected employees.
• Customers (Financial Institutions): Benefit from expanded platform capabilities through strategic acquisitions and continued investment in innovation, including AI technology. The new pricing model aims to align value with customer benefits.
• Creditors: Increased borrowings on the revolving credit facility (up to $203.5 million outstanding) increase the company's debt obligations, though the company remains in compliance with all covenants.
• Suppliers/Vendors: Ongoing business relationships indicated by purchase commitments for licenses and hosting services. Consolidation of vendors through the nCino platform could impact some third-party providers.

Next Steps

• Finalize the accounting for the FullCircl and Sandbox Banking acquisitions within one year from their respective acquisition dates.
• Continue to evaluate and adjust estimates for acquisition accounting until satisfactorily resolved.
• Continue to assess the impact of ASU 2024-03 (Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures) on consolidated financial statements.
• Adopt ASU 2023-09 (Income Taxes) in consolidated financial statements for the fiscal year ended January 31, 2026, requiring additional disclosures.
• Evaluate the impact of ASU 2025-05 (Financial Instruments Credit Losses) on consolidated financial statements.
• Evaluate the impact of ASU 2025-06 (Intangibles Goodwill and Other Internal Use Software) on consolidated financial statements.
• Continue to monitor the impact of the macroeconomic environment on the business, particularly the U.S. Mortgage segment.
• Continue to increase investment in product development to maintain and build market advantage.
• Continue to invest in sales and marketing both in the U.S. and internationally, with a focus on expanding into credit unions in the U.S. and Europe.
• Finalize the Restructuring Plan in fiscal 2026, subject to local law and consultation requirements.
• Potentially seek to raise additional capital to support growth.

Key Dates

Recommendation

The company demonstrated a strong turnaround to profitability for the quarter and significantly reduced its year-to-date net loss, driven by robust subscription revenue growth and strategic acquisitions. The completion of a $100 million stock repurchase program signals management's confidence and commitment to shareholder value. However, the professional services segment continues to show negative gross margins, and the company's cash position has decreased while debt on its revolving credit facility has increased. The ongoing macroeconomic challenges, particularly in the U.S. mortgage market, and the preliminary nature of some acquisition accounting warrant a cautious approach. While the operational improvements and strategic growth initiatives are positive, the mixed financial signals and external headwinds suggest a "hold" position until there is clearer evidence of sustained profitability across all segments and a more stable macroeconomic environment.

Keywords

SaaS, Financial Technology, FinTech, Banking Software, Loan Origination, Digital Transformation, Cloud Computing, Financial Institutions, Mortgage Lending, Customer Onboarding, AI, Stock Repurchase, SEC Filing, Quarterly Report, NCNO