Summary
nCino's FY2023 Q2 total revenues were $99.6 million, up 49.8% year over year. Gross profit was $58.4 million, up 46.2%. Gross margin slipped to 58.6%, down 1.4 percentage points. Operating loss widened to $25.0 million. Net loss attributable to nCino widened to $27.2 million. Diluted EPS was -$0.25. On a non-GAAP basis, operating loss was $2.8 million, compared with $1.8 million a year earlier, and net loss attributable to nCino was $4.9 million, compared with $2.5 million. Non-GAAP net loss per share was $0.04, compared with $0.03. RPO was $907.4 million. Deferred revenue, current portion, was $151.5 million.
Operational highlights were strong. The number of nCino Bank Operating System customers using nCino IQ solutions increased 119% year over year. SimpleNexus grew subscription revenues 73% year over year. SimpleNexus signed 26 new customers in the quarter, including four nCino cross-sells and six competitive replacements. nCino added new logos in Japan, South Africa, and the Netherlands. Rabobank Australia and New Zealand signed to implement the Automated Spreading solution, powered by nCino IQ. ASB, one of New Zealand's leading commercial banks, went live on the nCino Bank Operating System. nbkc went live on Commercial Pricing and Profitability and Automated Spreading.
Cash generation and spending deserve attention. Operating cash flow was $9.5 million in the quarter, down 29.0%. Capital expenditures were $4.6 million, up 514.5%. The MD&A notes that capital expenditures will be appreciably higher in fiscal 2023 for planned office build-outs, with approximately $8.5 million remaining to complete at July 31, 2022. Headcount kept climbing. Sales and marketing headcount grew by 155 from July 31, 2021 to July 31, 2022, research and development headcount grew by 217, and general and administrative headcount grew by 63. As of July 31, 2022, the company had 288 sales and sales support personnel in the United States and 83 outside the United States. Markets outside the United States accounted for 15.0% of total revenues for the three months ended July 31, 2022.
Guidance covers both the near term and the full year. For the third quarter ending October 31, 2022, nCino issued an outlook covering total revenues and subscription revenues, along with a non-GAAP operating loss between $0.75 million and $1.75 million and non-GAAP net loss per share between $0.02 and $0.03. For fiscal year 2023 ending January 31, 2023, the outlook covers total revenues and subscription revenues, with a non-GAAP operating loss between $12 million and $14 million and non-GAAP net loss per share between $0.17 and $0.19. Management says it remains committed to achieving non-GAAP profitability next year.
The filing lists a long set of risks. They include the impact of COVID-19, integration of the SimpleNexus acquisition, security breaches, management assumptions, customer attraction and expansion, competition and pricing pressure, adoption of newer solutions, fluctuations in results, growth management, the Salesforce relationship, acquisitions, customer loss, system availability, culture and employee retention, financial services industry conditions, economic and regulatory conditions including the outbreak of hostilities in Ukraine and higher interest rates, and legal proceedings. The MD&A also warns that expirations of PPP solution access rights may adversely affect revenue growth and subscription retention. The company adopted Internal Revenue Code Section 174, which could reduce operating cash flows in future periods through cash remittances of U.S. federal and state income tax. The nCino K.K. joint venture may require an additional cash capital contribution of up to $5.0 million during the current fiscal year.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2023 | Q1 FY2023 | QoQ | Q2 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $99.6M | $94.2M | +5.7% | — | — |
| Gross profit | $58.4M | $53.9M | +8.3% | — | — |
| Gross margin | 58.6% | 57.2% | +1.4 pp | — | — |
| Research & development | $29.7M | $29.1M | +2.0% | — | — |
| Sales & marketing | $32.5M | $29.3M | +10.8% | — | — |
| General & administrative | $21.2M | $22.7M | -6.6% | — | — |
| Total operating expenses | $83.4M | $81.1M | +2.8% | — | — |
| Operating income (loss) | -$25.0M | -$27.2M | +8.2% | — | — |
| Operating margin | -25.1% | -28.9% | +3.8 pp | — | — |
| Net income (loss) | -$27.4M | -$30.0M | +8.6% | — | — |
| Net margin | -27.5% | -31.9% | +4.3 pp | — | — |
| Diluted EPS | -$0.25 | -$0.28 | +$0.03 | — | — |
Risks
MD&A states the company is operating in a rising interest rate environment and is monitoring the impact that the rise in rates and any future rise may have on its business, including its SimpleNexus digital homeownership platform revenue, which serves independent mortgage banks and is tied to mortgage activity. Management notes no material negative impact to date but flags the exposure going forward.
Operating loss widened to $25.0 million in FY2023 Q2 from $13.2 million in FY2022 Q2 (loss widened), and net loss attributable to nCino, Inc. widened to $27.2 million from $13.7 million; operating margin fell to -25.1% from -19.8% (down 5.3 pp). Management expects to continue experiencing operating losses for the foreseeable future as it invests in growth.
Revenue growth rates in fiscal 2023 and subscription revenue retention rates may be adversely affected upon the expiration of access and use rights to the company's Paycheck Protection Program solution if those rights are not re-purposed for other applications, following the emergency-driven PPP purchases made in fiscal 2021 and 2022.
New customer sales cycles are typically lengthy, ranging from six to nine months for smaller financial institutions to 12 to 18 months or more for larger financial institutions, and growth depends on displacing legacy third-party point solutions or internally developed software at key decision makers.
Total gross margin declined to 58.6% in FY2023 Q2 from 60.0% in FY2022 Q2 (down 1.4 pp), driven by a drop in professional services and other gross margin to 0.7% from 10.5%, which management attributes to a decline in realized effective billing and utilization rates on professional services teams, plus higher acquired developed technology amortization tied to SimpleNexus.
The company is subject to a government antitrust investigation and related civil action (the Antitrust Matters), which drove $2.1 million of fees and expenses in FY2023 Q2 and $3.9 million year to date, and management expects general and administrative expenses to increase partly due to ongoing fees and expenses related to these matters.
Beginning with the six months ended July 31, 2022 the company adopted Internal Revenue Code Section 174, which requires capitalizing and amortizing U.S. research and development expenditures over five or fifteen years; management states this could reduce operating cash flows in future periods through cash remittances of U.S. federal and state income tax. Operating cash flow fell to $10.7 million year to date from $20.9 million (down 48.7%).
Capital expenditures rose to $9.3 million for the six months ended July 31, 2022 from $1.3 million in the prior-year period (up 631.4%), and management expects capital expenditures to be appreciably higher in absolute dollars in fiscal 2023 for planned office build-outs, with approximately $8.5 million remaining to complete at July 31, 2022.
The January 2022 SimpleNexus acquisition for $933.6 million contributed $16.5 million of revenue in FY2023 Q2 and drove higher amortization of acquired developed technology, customer relationships and trade name, increasing costs of subscription revenues and sales and marketing; integration and retention of the acquired business remain execution risks.
SaaS KPIs
All quarters →Organic RPO
Summary, forecast, risks and KPIs are extracted from nCino, Inc.'s SEC filings for Q2 FY2023 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.