nCino, Inc. Q3 FY2025 earnings call

• Strong sales momentum in Q3 with gross bookings accelerating quarter-over-quarter and year-over-year, signing over 30 multi-solution deals and more gross bookings from net new customers than the last two quarters combined.
• US community and regional and US enterprise businesses had strong sales quarters, well on their way to exceeding gross bookings targets. Notable signings include an over $10 billion credit union and a top 40 US bank.
• Mortgage had momentum with 11 new mortgage logos added in the US, though slightly higher churn due to IMB M&A; average mortgage customer ACV 15% higher than a year ago.
• International progress: Tokushima Taisho Bank in Japan as largest customer, EMEA team signed expansion with largest bank in Norway and first customer in Luxembourg.
• Acquisition of FullCircl to enhance customer onboarding capabilities, adding data aggregation components; increased global SAM by ~$800 million based on observed attach rates.
• New pricing framework (Intelligent Solution framework) simplifying discussions with customers, expected to benefit subscription revenues.

Total revenues for the third quarter of fiscal 2025 were $138.8 million, an increase of 14% year-over-year. Subscription revenues were $119.9 million, also an increase of 14% year-over-year, representing 86% of total revenues. Mortgage subscription revenues were $20.7 million, or 17% of subscription revenues in the quarter, with year-over-year growth of 16%. Professional Services revenues were $18.9 million in the quarter, growing 10% year-over-year. Non-U.S. revenues were $29.6 million, or 21% of total revenues in the third quarter, up 26% year-over-year, or 23% in constant currency. Non-GAAP gross profit for the third quarter was $93.2 million, an increase of 15% year-over-year. Non-GAAP gross margin was 67.2% compared to 66.5% in the third quarter of fiscal 2024. Non-GAAP operating income for the third quarter was $28 million, a 38% increase year-over-year. The remaining performance obligation (RPO) was $1.095 billion as of October 31, 2024, up 19% over the prior year.

• For the fourth quarter, expect total revenues of $139.5 million to $141.5 million, with subscription revenues of approximately $122.5 million to $124.5 million. FullCircl to contribute ~$4 million to subscription and total revenues in Q4.
• For full fiscal year 2025, expect total revenues of $539 million to $541 million, with subscription revenues of $467 million to $469 million. Non-GAAP operating income for 2025 expected to be $95 million to $96 million, non-GAAP net income attributable to nCino per share $0.75 to $0.76.

• Mortgage churn higher than expected due to IMB M&A; forecasting $2 million churn in Q4 and ~$10 million for full year, up from prior expectation of $8 million.
• Uncertainties in mortgage rate impacts on revenues despite federal funds rate reduction.
• Market volatility and regulatory changes posing risks to business operations and financial results.

Q: Michael Infante asked about decomposing the Q4 guidance reduction on an organic subscription basis, specifically regarding FullCircl contribution and mortgage churn.

A: Greg Orenstein responded that the change in Q4 guidance is due to increased mortgage churn and prudence around mortgage volumes not seeing corresponding rate reductions despite Fed fund rate cuts.

Q: Adam Hotchkiss inquired about the Intelligence Solution framework process with the top 40 institution and feedback on renewals.

A: Pierre Naude stated positive feedback on the framework, with value tied to loan portfolio and simplified buying experience, seeing good initial feedback from customers.

Q: Bobby Dee asked about speculation on Pierre Naude's retirement.

A: Pierre Naude stated he is committed to smooth succession planning, focusing on finding the right person to take over, and enjoys his role at nCino.

Q: Brent Bracelin asked about cross-sell timing with new products like DocFox, FullCircl, Banking Advisor.

A: Pierre Naude noted cross-sell is already occurring with over 50% of bookings from noncommercial products, and acquisitions and integrated solutions will drive sales as they are showcased.

Q: Koji Ikeda asked about mortgage volume increases and customer minimum commitments.

A: Greg Orenstein explained that mortgage volume increases' revenue impact is modeled, but specific clarity awaits more data on individual customer volume histories.

Q: Ryan Tomasello asked about organic subscription growth rate exiting fiscal 2025 and next year's guidance.

A: Greg Orenstein stated Q4 organic growth is low double digits, and guidance for next year will be refreshed on the Q4 call, with M&A considered part of corporate strategy.