On August 27, 2024, Ncino Inc (NCNO, Financial) released its 8-K filing for the second quarter of fiscal year 2025, showcasing notable financial achievements and growth. Ncino Inc, a provider of cloud-based software for financial institutions, reported total revenues of $132.4 million, surpassing the analyst estimate of $131.04 million. The company also reported a GAAP net loss of $0.10 per share, which was worse than the estimated loss of $0.08 per share.
Company Overview
Ncino Inc is a provider of cloud-based software for financial institutions. Its software solution digitizes, automates, and streamlines inefficient and complex processes & workflow and utilizes data analytics & artificial intelligence that enables financial institutions to onboard new clients, make loans and manage the entire loan life cycle, open deposits, and other accounts and manage regulatory compliance. It also offers professional services, including configuration & implementation, training, and advisory services. Ncino generates the majority of its revenue from subscription services. The company caters to financial institutions, enterprise banks, regional banks, community banks, and credit unions. The vast majority of its revenue comes from the United States.
Performance and Challenges
Ncino Inc reported total revenues of $132.4 million for Q2 FY25, a 13% increase from $117.2 million in the same quarter of the previous year. Subscription revenues grew by 14% year-over-year to $113.9 million. Despite the positive revenue growth, the company faced challenges, including a GAAP net loss of $11.0 million, although this was an improvement from the $15.9 million loss in Q2 FY24. The GAAP operating margin improved significantly, rising by approximately 650 basis points year-over-year to -6%.
Financial Achievements
The company's non-GAAP operating income for Q2 FY25 was $19.3 million, up from $11.2 million in the same quarter last year. This improvement in operating income is crucial for a software company like Ncino Inc, as it indicates better cost management and operational efficiency. The non-GAAP operating margin also improved by 500 basis points to 15%.
Key Financial Metrics
| Metric | Q2 FY25 | Q2 FY24 |
|---|---|---|
| Total Revenues | $132.4 million | $117.2 million |
| Subscription Revenues | $113.9 million | $99.9 million |
| GAAP Net Loss | $(11.0) million | $(15.9) million |
| Non-GAAP Operating Income | $19.3 million | $11.2 million |
| Cash and Cash Equivalents | $126.8 million | $112.1 million |
Commentary and Analysis
We are pleased to report that we again exceeded quarterly guidance for total and subscription revenues as well as non-GAAP operating income," said Pierre Naudé, Chairman and CEO at nCino. "In the second quarter we saw particular strength in the U.S. across both the enterprise and community & regional segments, with increased demand for solutions that span the breadth of the nCino platform including consumer lending and deposit account opening, as well as our Generative AI offering, Banking Advisor."
The company's performance in the U.S. market, particularly in the enterprise and community & regional segments, has been a significant driver of growth. The increased demand for Ncino's platform solutions, including consumer lending and deposit account opening, highlights the company's ability to meet the evolving needs of financial institutions.
Financial Outlook
Looking ahead, Ncino Inc has provided guidance for the third quarter ending October 31, 2024, with total revenues expected to be between $136.0 million and $138.0 million. Subscription revenues are projected to be between $117.0 million and $119.0 million. The company also anticipates non-GAAP operating income to be between $21.0 million and $22.0 million, with non-GAAP net income per diluted share expected to be between $0.15 and $0.16.
For the fiscal year 2025 ending January 31, 2025, Ncino Inc expects total revenues to be between $538.5 million and $544.5 million, with subscription revenues between $463.0 million and $469.0 million. Non-GAAP operating income is projected to be between $87.0 million and $90.0 million, with non-GAAP net income per diluted share expected to be between $0.66 and $0.69.
Overall, Ncino Inc's Q2 FY25 earnings report demonstrates strong revenue growth and improved margins, positioning the company well for future growth despite ongoing macroeconomic challenges.
Explore the complete 8-K earnings release (here) from Ncino Inc for further details.
