nCino (NCNO, Financial) stock is experiencing a significant decline today. The company's share price has plummeted by 13.87%, despite publishing second-quarter results that exceeded Wall Street expectations. This downward movement is attributed to management's softer-than-anticipated guidance for the third quarter.
nCino reported earnings per share of $0.14 on sales of $132.4 million for fiscal Q2, surpassing the average analyst target of $0.13 EPS on sales of $131.04 million. The company's total sales saw a 13% year-over-year increase, and subscription revenue grew by 14% to reach $113.9 million. Additionally, nCino achieved a non-GAAP operating margin of 15%, reflecting an improvement of approximately 500 basis points compared to the same period last year. Despite these positive figures, the stock has taken a hit due to conservative guidance moving forward.
For the third quarter, nCino (NCNO, Financial) projects per-share earnings between $0.15 and $0.16, accompanied by sales ranging from $136 million to $138 million. Analysts had estimated per-share earnings of $0.16 on sales of $138.63 million, leading to market disappointment with the guidance.
Looking at the full year, the guidance remains roughly in line with the midpoint Wall Street forecast. The company expects per-share earnings between $0.66 and $0.69 on total sales between $538.5 million and $544.5 million. Analysts had provided forecasts of $0.67 EPS on sales of $541.72 million.
From a valuation perspective, nCino (NCNO, Financial) has a market capitalization of $3.44 billion and, based on the GF Value, is currently considered "Modestly Undervalued" with a GF Value of $37.71. The company's Altman Z-Score stands strong at 6.65, indicating robust financial health, and its Beneish M-Score of -2.91 suggests it is unlikely to be a manipulator. Moreover, nCino's operating margin is expanding, signaling a positive trend in profitability.
However, the company does face some challenges. The warning signs include a medium-level alert for revenue growth slowdown and insider selling activities, with no insider buying reported over the past three months. Additionally, its total assets are growing faster than revenue, which might indicate decreasing efficiency.
In conclusion, while nCino (NCNO, Financial) has demonstrated strong financial performance and growth, the stock is facing short-term challenges primarily due to conservative future guidance. Investors should weigh these factors when considering their position in nCino.
