nCino, Inc. CFO Discusses Financial Performance, AI Strategy, and Pricing Model Transition at Bank of America Global Technology Conference 2025

Key Takeaways

TL;DR: nCino’s CFO highlighted strong Q1 earnings with raised sub. rev. and OP guidance, a strategic transition to a unified, platform-based pricing model, and robust AI initiatives—all underpinning the co’s push toward a Rule of 40 target by Q4 2027. Meanwhile, macro conditions and targeted M&A integration continue to support their global expansion and growth across banking segments.

• Strong Q1 Performance:
  • nCino overperformed sub. rev. by $1.8M (incl. a $1M boost in core biz outside mortgage, and $800K from mortgage)
  • Raised annual sub. rev. guidance by $4M and OP guidance by $5M for the back half, reaching an annualized target of $10M.
  • Emphasis on “executing our sales” w/ increased field sales capacity (+14%) to drive top-line growth.
• Investor Concerns & Macro Outlook:
  • CFO noted that macro headwinds like tariffs or intl. issues have not yet negatively impacted the biz.
  • Optimism exists due to potential deregulation under the current administration, and improvement from the past high interest rate and liquidity crisis environment.
  • Discussions on new CEO Sean Desmond’s impact further reinforce market confidence.
• Pricing Model Transition & ACV Evolution
  • Transition to a Platform-based Pricing Model:
    • Shifted from a seat-based model (historically suited for commercial lending) to a flat, asset-based annual platform fee model, esp. for mortgage and bank businesses.
    • Approx. 15% of the customer base is already transitioned; full integration is expected over a 4-year avg. contract cycle, w/ oppt'ys to accelerate via cross-selling new lines (e.g., consumer to commercial).
    • This change improves rev. recognition by reducing the legacy “waterfall” effect inherent in delayed seat activation.
  • ACV & Waterfall Adjustments:
    • Traditional waterfall rev. recognition from seat-based licenses is phasing out, enabling a more predictable, accelerated rev. model reflecting true platform consumption.
• Investor Day & Rule of 40 Target
  • Unified Platform & Investor Day Highlights:
    • Unveiled the culmination of a multiyear, multi-product R&D initiative at Investor Day, showcasing a unified platform spanning commercial, small biz, consumer, and mortgage segments.
    • The day was marked as the first major exposure of new CEO Sean Desmond to the investment community, signaling renewed investor optimism.
  • Rule of 40 Target:
    • CFO reiterated the focus on sub. rev. growth plus non-GAAP OP margins as the Rule of 40 metric, aiming to reach the target by fiscal Q4 2027.
    • Although FCF per share remains a priority, ongoing pricing transitions and execution could prompt a rebalancing between growth investments and margin expansion if oppt'ys arise.
• AI Strategy & Technological Differentiation
  • Three Pillars of AI Initiatives:
    • Banking Advisor: Launched initially w/ knowledge and credit memo automation tools, now expanded w/ 16 additional GenAI capabilities; priced on a fee-plus-consumption basis.
    • Agentic: Integrating agents into workflows to further automate banking tasks, w/ early feedback from large banks highlighting efficiency gains.
    • iPaaS (Integration Platform as a Service): Through the acquisition of Sandbox Banking, offering seamless API integrations across nCino’s platform, underpinning its unique data set critical for AI advancement.
  • Customer Readiness & Trust:
    • Despite banks and credit unions being conservative, long-term customer trust in cloud banking transitions smoothly to AI adoption; the co leverages its historical data and deep insights to educate this audience.
• M&A Strategy & Integration Plans
  • Recent Acquisitions & Integration:
    • Completed four strategic acquisitions over the past year (example: onboarding tech via DocFox and Sandbox Banking) w/ integration largely complete.
    • Emphasis is on digesting and extracting further value from these assets to bolster the unified platform, rather than pursuing transformational deals immediately.
  • Capital Allocation & Future Opportunities:
    • With a $100M stock buyback announced and over $40M allocated to M&A in Q1, management remains opportunistic yet cautious, focusing on deals that enhance long-term shareholder value.
    • While the recent acquisitions have been mainly tuck-in deals, management is open to larger, transformative oppt'ys if the right market signal emerges.
• Overall Strategic Outlook
  • Execution Focus: The CFO reaffirms that strong execution in closing deals, transitioning legacy pricing, and scaling sales capacity is the key driver behind the optimistic outlook.
  • Long-term Vision: The integration of advanced AI solutions, enhancement of customer platform value, and strategic M&A activities together aim to secure an enduring competitive advantage in the global banking software market.

This comprehensive update provides investors w/ critical insights into nCino’s robust operational performance, strategic pricing evolution, innovative AI initiatives, and measured M&A approach as the co pushes toward a Rule of 40 milestone amid improving macro conditions.

Call Q&A

• Koji Ikeda: What were some of the key takeaways from the quarter and key debates with investors post quarter?
  • Gregory D. Orenstein: We overperformed on top line, total rev., sub. rev., and OP. We raised sub. rev. guidance by $4M and OP guidance by $5M for the year. Key debates include macro impacts, potential deregulation, and the transition w/ new CEO Sean Desmond.
• Koji Ikeda: What were the key takes from the Investor Day and the progression to the Rule of 40 target?
  • Gregory D. Orenstein: We unveiled a unified platform across commercial, small biz, consumer, and mortgage lines. We discussed the Rule of 40 target for Q4 of next year, focusing on executing sales w/ our expanded sales capacity.
• Koji Ikeda: Why not a free cash flow margin target for Rule of 40? What is the relationship between operating income and free cash flow?
  • Gregory D. Orenstein: We are focused on ACV growth, Rule of 40 targets, and FCF per share over time. We are transitioning pricing models, which affects rev. recognition and cash flow. We want more progress through this transition before setting a FCF target.
• Koji Ikeda: What is the new pricing model change and its progress?
  • Gregory D. Orenstein: We shifted from a seat-based model to a platform model w/ a flat annual fee based on assets on the platform. We are about 15% through the transition, w/ Q4 being a significant period for further transitions.