• Total Revenue: $138.8 million, an increase of 14% year over year.
• Subscription Revenue: $119.9 million, representing 86% of total revenues, up 14% year over year.
• Mortgage Subscription Revenue: $20.7 million, 17% of subscription revenues, with a 16% year-over-year growth.
• Non-GAAP Gross Profit: $93.2 million, a 15% increase year over year.
• Non-GAAP Gross Margin: 67.2%, compared to 66.5% in the previous year.
• Non-GAAP Operating Income: $28 million, a 38% increase year over year.
• Non-GAAP Operating Margin: 20%, compared to 17% in the previous year.
• Non-GAAP Net Income: $24.4 million or $0.21 per diluted share, compared to $16.2 million or $0.14 per diluted share in the previous year.
• Remaining Performance Obligation (RPO): $1.095 billion, up 19% year over year.
• Cash and Cash Equivalents: $258.3 million, including restricted cash.
• Net Cash Provided by Operating Activities: $5.8 million.
• Free Cash Flow: $5.1 million for the third quarter.
• Guidance for Q4 Total Revenue: $139.5 million to $141.5 million.
• Guidance for Q4 Subscription Revenue: Approximately $122.5 million to $124.5 million.
• Guidance for Full Fiscal Year 2025 Total Revenue: $539 million to $541 million.
• Guidance for Full Fiscal Year 2025 Subscription Revenue: $467 million to $469 million.
• Guidance for Full Fiscal Year 2025 Non-GAAP Operating Income: $95 million to $96 million.
• Guidance for Full Fiscal Year 2025 Non-GAAP Net Income per Share: $0.75 to $0.76.

• Warning! GuruFocus has detected 5 Warning Sign with NCNO.

Release Date: December 04, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Ncino Inc (NASDAQ:NCNO) exceeded expectations for both revenues and non-GAAP operating income in the third quarter.
• The company saw an increase in gross bookings, with over 30 multi-solution deals signed and more bookings from new customers.
• Strong sales performance in both the US community and regional markets, as well as the US enterprise market.
• International market momentum, with significant deals signed in Japan, Norway, and Luxembourg.
• Successful acquisition of Full Circle, enhancing customer onboarding capabilities and expanding the platform's reach in Europe.

Negative Points

• Slightly higher churn in the mortgage sector due to M&A activity, impacting revenue expectations.
• Continued elevated mortgage rates affecting mortgage revenue forecasts for the fourth quarter.
• Increased churn forecasted for the fourth quarter, with expectations of $2 million in mortgage churn.
• Challenges in predicting the impact of mortgage volume increases on revenue due to varying customer minimums.
• Potential uncertainty in the market due to ongoing regulatory changes and economic conditions.

Q & A Highlights

Q: Could you help us decompose the fiscal Q4 guidance reduction on an organic subscription base? A: Pierre Naude, CEO: The reduction is primarily due to increased churn and the fact that mortgage rates have not decreased despite the reduction in the Fed's fund rate. We are being cautious and prudent in our outlook for Q4, given these factors.

Q: How are the other pieces of the business performing outside of mortgage, and how is the pipeline shaping up for Q4? A: Pierre Naude, CEO: We have signed significant deals internationally, including in the Nordics and Japan. In the U.S., we signed a large enterprise deal shortly after Q3, which was the largest remaining deal for the year. The pipeline for the rest of the year is focused on smaller deals, and we are optimistic about executing them.

Q: Can you provide more color on the intelligent solution framework and its reception by customers? A: Pierre Naude, CEO: We are receiving positive feedback as the framework aligns with the bank's success and simplifies the buying experience. Customers appreciate the value tied to their loan portfolios, and the renewal process has been easier and simpler.

Q: Are there any updates or customer feedback from the initial cohort of banking advisor customers? A: Pierre Naude, CEO: We added 11 new banking advisor customers this quarter. The adoption is positive, and we are excited about the potential to add more skills to the product. The initial rollout is slow due to regulatory requirements, but we expect to showcase significant productivity improvements at our next conference.

Q: How do you view the cross-sell opportunities with new acquisitions like Full Circle? A: Pierre Naude, CEO: Cross-sell is already proving successful, with more than 50% of bookings coming from non-commercial products. Acquisitions like Full Circle enhance our onboarding capabilities and are expected to drive significant cross-sell opportunities once fully integrated.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.