nCino, Inc. (NCNO): history, ownership, mission, how it works & makes money

A Brief History of nCino, Inc.

nCino, Inc., founded in 2012, has established itself as a leading provider of cloud-based banking solutions. The company primarily serves financial institutions by offering the nCino Bank Operating System, which streamlines operations and improves customer engagement.

Financial Performance Overview

As of July 31, 2024, nCino reported total revenues of $132.4 million for the three months ended July 31, 2024, compared to $117.2 million for the same period in 2023, reflecting a 12.9% increase. Subscription revenues increased by 14.0%, reaching $113.9 million in 2024, up from $99.9 million in 2023.

Operational Highlights

As of July 31, 2024, nCino employed 206 sales and sales support personnel in the U.S. and 88 personnel in international offices. The company has been focusing on expanding its market presence, particularly in international markets, which accounted for 20.8% of total revenues in Q2 2024.

Recent Acquisitions

In March 2024, nCino acquired DocFox for approximately $74.3 million, funded through a $75 million draw from its revolving credit facility. The acquisition aimed to enhance nCino's capabilities in automating onboarding experiences for business banking.

Additionally, nCino acquired Integrated Lending Technologies (ILT) on April 1, 2024, for $20 million. These acquisitions are part of nCino's strategy to broaden its product offerings and improve its operational efficiency.

Financial Position

As of July 31, 2024, nCino reported $121.4 million in cash and cash equivalents, with an accumulated deficit of $365.9 million. The company’s net losses have been primarily driven by investments in the development of the nCino Bank Operating System and expansion of its sales and marketing capabilities.

Stock Performance

The company has seen fluctuations in its stock performance, with a net loss attributable to nCino, Inc. of $11.0 million for the three months ended July 31, 2024, compared to a loss of $15.9 million in the prior year. The weighted average number of common shares outstanding increased from 112.4 million in Q2 2023 to 115.2 million in Q2 2024.

A Who Owns nCino, Inc. (NCNO)

Major Shareholders

As of July 31, 2024, nCino, Inc. had approximately 115.4 million shares of common stock outstanding. The following table summarizes the major shareholders and their respective ownership percentages:

Recent Stock Performance

The stock price of nCino, Inc. (NCNO) as of July 31, 2024, was $10.30 per share, reflecting a market capitalization of approximately $1.19 billion. The stock has seen fluctuations, with a 52-week low of $7.45 and a high of $22.50.

Financial Metrics

For the six months ended July 31, 2024, nCino reported total revenues of $260.5 million, with a net loss attributable to nCino, Inc. of $14.0 million. This reflects an increase in total revenues of approximately 12.8% compared to the previous year.

Stockholder's Equity

As of July 31, 2024, the total stockholders' equity of nCino, Inc. was approximately $1.07 billion. The following table presents the condensed consolidated statements of stockholders' equity:

Ownership Structure

nCino, Inc. has a controlling interest in nCino K.K., a Japanese subsidiary, which was established with 51% ownership. This strategic move aims to facilitate the distribution of nCino's products in the Japanese market.

Recent Acquisitions

On March 20, 2024, nCino acquired DocFox, Inc. for an aggregate purchase price of $74.3 million, funded through a $75 million borrowing under its Credit Facility. Additionally, Integrated Lending Technologies, LLC was acquired on April 1, 2024, for $20 million in cash.

Investment in Growth

As of July 31, 2024, nCino had $121.4 million in cash and cash equivalents. The company continues to invest in growth, which is reflected in its increasing operating expenses, which totaled $166.9 million for the six months ended July 31, 2024.

Conclusion on Ownership Dynamics

nCino's ownership structure is characterized by a significant presence of institutional investors, alongside insider ownership that indicates confidence from the management team. The company’s strategic acquisitions and investments in its platform are aimed at fostering growth and expanding its market reach.

nCino, Inc. (NCNO) Mission Statement

As of 2024, nCino, Inc. aims to transform the financial services industry by providing a comprehensive Bank Operating System that enhances the efficiency and effectiveness of financial institutions (FIs). The company's mission statement emphasizes its commitment to innovation, customer success, and the creation of a seamless banking experience through technology.

Financial Overview

nCino operates with a subscription-based revenue model, focusing on delivering solutions to FIs that streamline processes, improve customer experience, and drive profitability. The following financial data highlights the company's performance for the six months ending July 31, 2024:

Key Business Metrics

As of July 31, 2024, nCino's operational metrics demonstrate its growth trajectory and market penetration:

Investment in Growth

nCino's strategy involves significant investment in research and development, as well as sales and marketing, to drive future growth:

Recent Acquisitions

In 2024, nCino expanded its product offerings through strategic acquisitions:

Market Position

nCino has established a significant presence in the market, with a focus on enhancing the customer experience and operational efficiency for financial institutions. The company's solutions are tailored to meet the needs of various types of FIs, from community banks to large enterprises.

As of July 31, 2024, nCino's revenues by geographic region were as follows:

How nCino, Inc. (NCNO) Works

Business Model

nCino, Inc. operates primarily on a subscription-based model offering the nCino Bank Operating System, which is aimed at financial institutions (FIs). The company employs a "land and expand" strategy, where they initially secure a contract with clients and subsequently encourage the adoption of additional features and services.

As of July 31, 2024, nCino had 206 sales and sales support personnel in the U.S. and 88 personnel in international offices.

Financial Performance

For the three months ended July 31, 2024, nCino reported total revenues of $132.4 million, up from $117.2 million in the same period in 2023, representing a growth of 12.9%. Subscription revenues specifically increased from $99.9 million to $113.9 million, marking a 14.0% increase.

The following table summarizes nCino's financial performance for the three and six months ended July 31, 2023 and 2024:

Cost Structure

The cost of revenues increased, with subscription costs reaching $33.4 million for the three months ended July 31, 2024, compared to $29.7 million in the prior year. The gross margin for subscription revenues was 70.7%.

The following table illustrates the cost structure for nCino for the same periods:

Operating Expenses

Operating expenses for the three months ended July 31, 2024 totaled $86.4 million, compared to $84.0 million in the same period in 2023. Key components included:

Cash Flow and Financial Position

As of July 31, 2024, nCino had cash and cash equivalents totaling $121.4 million and an accumulated deficit of $365.9 million. The company reported net cash provided by operating activities of $59.4 million for the six months ended July 31, 2024.

The following table summarizes cash flow activities:

Market Position

nCino’s solutions are utilized by various financial institutions, and as of July 31, 2024, international revenue accounted for 20.8% of total revenues. The company continues to expand its market penetration which is crucial for its long-term growth.

How nCino, Inc. (NCNO) Makes Money

Revenue Streams

nCino primarily generates revenue through two main streams: subscription revenues and professional services.

Subscription Revenues

Subscription revenues are derived from fees customers pay to access nCino's software solutions, specifically the nCino Bank Operating System and nCino Mortgage. These revenues are recognized ratably over the contract term, which typically lasts from three to five years. For the six months ended July 31, 2024, subscription revenues reached $224.3 million, an increase from $197.2 million in the same period of the previous year, representing a growth rate of 13.7%.

Professional Services Revenues

The company also earns revenue from professional services, which include configuration, implementation, training, and advisory services. For the six months ended July 31, 2024, professional services revenues were $36.2 million, up from $33.7 million in the prior year, marking an increase of 7.4%.

Cost Structure

The cost of revenues consists of costs related to subscription services and professional services. For the six months ended July 31, 2024, the total cost of revenues was $105.1 million, up from $94.2 million in the previous year.

Gross Profit and Margins

For the six months ended July 31, 2024, nCino reported a gross profit of $155.4 million, compared to $136.7 million for the same period the previous year. The gross margin improved slightly from 59.2% to 59.6%.

Operating Expenses

Operating expenses for the six-month period also increased, totaling $166.9 million in 2024 compared to $160.1 million in 2023. This includes costs related to sales and marketing, research and development, and general and administrative expenses.

Net Loss

Despite revenue growth, nCino reported a net loss attributable to the company of $14.0 million for the six months ended July 31, 2024, compared to a net loss of $27.1 million for the same period in 2023, demonstrating a significant reduction in losses.

Market Presence and Strategy

As of July 31, 2024, nCino employed 206 sales personnel in the U.S. and 88 in international offices, focusing on expanding its reach in the financial institution sector. The company aims to increase its customer base and enhance product adoption through a "land and expand" strategy, which encourages existing customers to utilize more of nCino's services over time.

Recent Acquisitions

In March 2024, nCino acquired DocFox, Inc. for approximately $74.3 million to enhance its offerings in commercial and business banking. Additionally, the company acquired Integrated Lending Technologies, LLC for $20.0 million in April 2024, further expanding its service capabilities.

Financial Position

As of July 31, 2024, nCino had cash and cash equivalents totaling $121.4 million, with an accumulated deficit of $365.9 million. The company has funded its operations through equity financing, customer billings, and a revolving credit facility, which was increased to $100 million in March 2024.