nCino Revenue Jumps 12% in Fiscal Q2

Key Points

• Total revenue of $148.8 million beat guidance and increased 12% year-over-year.

• Non-GAAP earnings per share rose to $0.22, outpacing company expectations.

• Free cash flow (non-GAAP) improved to $12.6 million, while GAAP net losses widened and management guided for slower revenue growth next quarter.

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nCino (NASDAQ:NCNO), a banking technology provider specializing in cloud-based solutions for financial institutions, reported its financial results for the quarter ended July 31, 2025, on August 26, 2025. The company announced GAAP revenue of $148.8 million—12% higher than the same period a year ago and well above its guidance of $142.0–$144.0 million. Adjusted earnings per share (non-GAAP) rose to $0.22, compared to $0.13 last year, outpacing management’s non-GAAP range of $0.13–$0.14. Although non-GAAP results reflected continued improvement in revenue and operating margins, GAAP net losses increased. Management also issued guidance pointing to flat or slightly lower revenue, reflecting a more cautious outlook for the rest of fiscal 2026.

Source: Analyst estimates provided by FactSet. Management expectations based on management’s guidance, as provided in Q1 2026 earnings report.

Understanding nCino’s Business and Strategy

nCino is a software company that serves banks and credit unions through a cloud-based platform. Its primary offerings help automate and digitize core banking processes like loan origination, client onboarding, and lifecycle management. The platform integrates artificial intelligence (AI) and automation, which streamlines workflows for financial institutions and helps them improve efficiency and manage regulatory risk.

Recent business priorities have centered on driving the adoption of AI tools, expanding internationally, and deepening relationships with existing customers. Key success factors for nCino include the ability to deliver productivity improvements through technology, leverage partnerships with large players like Salesforce and AWS, and respond quickly to changing regulatory requirements in different banking markets.

Quarter in Review: Growth, Product Momentum, and Financial Metrics

nCino’s revenue rose 12% year-over-year. Most of this growth came from its subscription software business, which was up 15% year-over-year. This aligns with nCino’s stated intention to focus less on low-margin services and more on growing its core software platform. The company’s non-GAAP operating income increased 56%, with operating margin reaching 20%, up from 15% in the prior year period.

nCino attributed these results to stronger customer demand, progress in signing new clients, and successful expansions with some of its largest banking customers. It also entered new geographic markets, landing its first customer in Spain and increasing traction in the UK and U.S. home building sector. This global expansion remains a pillar of its growth strategy, as nCino aims to serve banks and non-bank lenders worldwide with adaptable, cloud-based tools.

Management continued to emphasize the role of AI within the platform, pointing to ongoing investments in automating banking workflows. Although the company described its approach as “incremental innovation,” using AI for productivity gains among customers and improvements in its own workforce operations, it released 16 new banking adviser capabilities during the quarter. This is especially important as financial institutions face pressure to automate more of their operations.

The company’s partnerships with Salesforce and Amazon Web Services provide technical infrastructure and boost market reach, but instead, nCino continued to focus on deepening relationships with existing clients by selling more of its product suite—such as client lifecycle management tools, which help banks with onboarding and compliance processes. Management highlighted ongoing adoption among UK and Canadian banks as evidence of the demand for these solutions, especially as regulations become more complex.

On the financial health front, nCino ended the quarter with $123.2 million in cash and cash equivalents, but this balance declined from previous periods. The company actively returned capital to shareholders by repurchasing around 750,000 shares for $20 million during the quarter. Over the first half of FY2026, it has repurchased approximately 2.55 million shares for $60.6 million. As a result, the company increased borrowing through a revolving credit facility, which now stands at $203.5 million, raising questions about future capital flexibility if free cash flow does not rise in kind.

Free cash flow improved to $12.6 million for the quarter ended July 31, 2025, compared to $4.6 million a year earlier. Still, increased capital spending, higher spending on share repurchases, and a growing debt balance mean nCino is under more pressure to sustain its recent financial performance. Its GAAP (Generally Accepted Accounting Principles) net loss widened to $15.3 million from $11.0 million in the prior year period, reflecting expenses like stock-based compensation, amortization of acquisitions, and restructuring charges, which are excluded from its non-GAAP results.

This reflects the company’s plan to focus its growth strategy around higher-margin, recurring subscription sales.

Looking Ahead: Guidance and Watchpoints for Investors

nCino’s management forecast total revenues between $146.0–$148.0 million for Q3 FY2026. This represents a slight decrease compared to the most recent results. Subscription revenue, projected at $127.5–$129.5 million, is also forecast to decline sequentially. The company expects non-GAAP operating income to rise to $31.5–$33.5 million, despite possible lower top-line growth. Projected diluted earnings per share will be $0.20–$0.21 on a non-GAAP basis, potentially reflecting a higher share count or less favorable effects from non-operating items.

Management increased its full-year FY2026 total revenue guidance to $585–$589 million, up from $578.5–$582.5 million earlier in the year. The guidance for FY2026 also incorporates contributions from acquisitions, including Sandbox Banking, but the company’s leadership flagged the sequential slowdown as a reflection of tough comparable periods and some seasonality in banking technology spending.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.

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