nCino, Inc. — Form 10-Q Summary
Reporting period: Second quarter and six months ended July 31, 2022; fiscal year ends January 31. Amounts below are in U.S. dollars. The company provides cloud-based software to financial institutions and includes SimpleNexus, acquired January 7, 2022, in 2022 results but not the prior-year comparisons.
Financial performance
| Metric | Three months ended July 31, 2021 | Three months ended July 31, 2022 | Six months ended July 31, 2021 | Six months ended July 31, 2022 |
|---|---|---|---|---|
| Revenue | $66.5 million | $99.6 million | $128.9 million | $193.8 million |
| Subscription revenue | $53.9 million | $84.4 million | $105.0 million | $163.6 million |
| Professional services and other revenue | $12.6 million | $15.2 million | $23.9 million | $30.2 million |
| Gross profit / gross margin | $39.9 million / 60.0% | $58.4 million / 58.6% | $76.0 million / 59.0% | $112.3 million / 57.9% |
| Operating loss | $(13.2) million | $(25.0) million | $(28.6) million | $(52.2) million |
| Net loss attributable to nCino | $(13.7) million | $(27.2) million | $(28.7) million | $(57.9) million |
| Basic and diluted loss per share | $(0.14) | $(0.25) | $(0.30) | $(0.53) |
Quarterly revenue increased 49.8% year over year; six-month revenue increased 50.4%. Subscription revenue rose 56.6% in the quarter and 55.9% for the six-month period. SimpleNexus contributed $16.5 million and $31.3 million of total revenue, respectively, in those 2022 periods. Management attributed subscription growth to SimpleNexus, new customers, and expansion within existing customers.
Margins and expenses: Gross margin declined year over year in both periods. Subscription gross margin was 69.0% for the quarter and 68.4% for six months, compared with 71.6% and 71.2%; professional services gross margin was 0.7% and 1.1%, compared with 10.5% and 5.4%. The company cited higher acquired-technology amortization and lower professional-services utilization and billing rates. Operating expenses grew faster than revenue, reflecting increased headcount, stock-based compensation, acquisition-related amortization, marketing, and continued product investment.
Cash, liquidity, and obligations
- At July 31, 2022, cash and cash equivalents were $86.1 million; cash, cash equivalents, and restricted cash totaled $91.5 million. Total assets were $1.296 billion and current liabilities were $191.1 million.
- Operating cash flow was $10.7 million for the six months, down from $20.9 million a year earlier. Investing cash outflow was $9.3 million, primarily for property and equipment, compared with $1.3 million. Financing cash inflow was $3.6 million. Deferred revenue increased $30.3 million and supported operating cash flow.
- The $50 million senior secured revolving credit facility had no borrowings or letters of credit outstanding at July 31; the full $50 million was available, and the company reported covenant compliance. It had borrowed and repaid $20 million during the six-month period. The facility requires at least $50 million of defined consolidated liquidity.
- Balance-sheet financing obligations were $33.8 million, with a further $16.0 million construction liability. Purchase commitments totaled $14.6 million. Management estimated about $8.5 million of office-building costs remained and expected fiscal 2023 capital expenditures to be appreciably higher than in prior years.
- Remaining performance obligations were $907.4 million; the company expected to recognize approximately 65% within 24 months and 29% in the following 25–48 months.
Changes, outlook, risks, and unusual items
- SimpleNexus acquisition: Preliminary total consideration was $932.9 million, including cash and 12.76 million shares. Preliminary purchase accounting included $162.0 million of acquired intangible assets and $784.5 million of goodwill; valuations and certain liabilities remained subject to measurement-period updates.
- Outlook: No specific revenue or earnings guidance is provided in the supplied filing text. Management expects operating losses to continue for the foreseeable future and plans continued investment in product development, sales, and marketing. Management believes cash and available revolver capacity are sufficient for at least the next 12 months.
- Other operating considerations: The company noted that expiration of access rights to its COVID-era Paycheck Protection Program solution could affect future growth and subscription retention. It was monitoring rising interest rates and reported no material negative impact to date. International revenue was about 15% of total revenue in both 2022 periods; the company does not hedge foreign-currency exposure.
- Legal matters: The Department of Justice is investigating hiring and wage practices. A related putative class action alleges unlawful no-solicitation/no-hire arrangements; settlements with other defendants were approved, but nCino intends to defend itself. The company could not reasonably estimate a possible loss or range of loss and had not accrued a material liability for the described indemnification obligations.
- Other notable items: Six-month stock-based compensation was $26.0 million. Foreign-currency and intercompany-loan effects increased other expense; six-month other expense was $2.6 million. The company adopted the amended U.S. tax treatment for research and development costs, which may increase future cash tax payments. Management reported effective disclosure controls and no material changes in internal control over financial reporting.
Important facts for investors to verify
- How much reported growth reflects SimpleNexus acquisition contribution versus organic customer expansion and new customer wins.
- Whether gross margins, particularly professional-services utilization and subscription margins, stabilize as acquisition-related amortization and operating costs evolve.
- Cash consumption, deferred-revenue seasonality, planned office-building spending, and continued compliance with the revolver’s liquidity covenant.
- Final SimpleNexus purchase accounting and any resulting changes to goodwill, intangible assets, deferred taxes, or contingencies.
- Developments, potential costs, and any eventual loss estimates relating to the DOJ investigation and civil antitrust litigation.
- Effects of PPP solution expirations, interest rates, foreign exchange, and the newly adopted tax rules on revenue retention and cash flow.