nCino stock tumbles after disappointing revenue forecast for fiscal 2025

Shares of nCino, Inc., a leading cloud banking platform provider, fell 14% in after-hours trading on Wednesday, landing at $36.45. The decline followed the company’s fiscal year 2025 and fourth-quarter revenue guidance, which narrowly missed analyst expectations. Despite this setback, nCino’s stock remains up by 26% year-to-date.

The Wilmington, North Carolina-based company forecast total fourth-quarter revenue between $139.5 million and $141.5 million, below the $143.8 million consensus estimate by analysts polled by FactSet. For the fiscal year ending January 31, 2025, nCino projected total revenue of $539 million to $541 million, falling just short of the $541.6 million analyst forecast.

nCino also provided guidance for fourth-quarter subscription revenue performance, estimating it will range between $122.5 million and $124.5 million. Adjusted earnings per share (EPS) for the quarter are expected to be between $0.18 and $0.19.

Third-quarter financial performance exceeds expectations

While nCino’s outlook underwhelmed investors, the company’s third-quarter financial results analysis painted a more positive picture. Revenue for the quarter reached $138.8 million, a 14% year-over-year increase, buoyed by subscription revenue growth of the same percentage. Non-GAAP operating income rose by 38%, totaling $28 million.

CEO Pierre Naudé highlighted nCino’s strong global performance during the quarter, citing over 30 multi-solution deals and a record number of bookings from new customers. Naudé noted that the increasing adoption of banking innovation solutions underscores the demand for comprehensive platforms that streamline customer onboarding, account management, and loan origination.

Net losses also narrowed significantly. The GAAP net loss attributable to nCino decreased to $5.3 million, or $0.05 per share, compared to $16.4 million, or $0.15 per share, in the same period last year. Meanwhile, non-GAAP net income grew by 51%, reaching $24.4 million, or $0.21 per diluted share.

Strategic expansion highlights

The third quarter saw nCino make significant strides in global market expansion. The company completed its acquisition of FullCircl in November, enhancing its onboarding capabilities by integrating data aggregation tools. Additionally, nCino signed major deals, including an expansion agreement with a top-40 U.S. bank and its largest customer deal in Japan with Tokushima Taisho Bank.

In the EMEA region, nCino strengthened its position by securing an agreement with Norway’s largest bank, which will leverage its platform for ESG reporting and credit portfolio management. Furthermore, the company made inroads in Australia with its first Banking Advisor deal, marking an extended relationship with a top-5 Australian bank.

Fiscal 2025 outlook raises questions

nCino’s guidance for fiscal 2025 has drawn scrutiny. The company anticipates subscription revenue growth of $467 million to $469 million and non-GAAP operating income of $95 million to $96 million. Despite these figures reflecting year-over-year growth, they failed to meet the market’s expectations.

The tempered outlook has prompted analysts to question whether macroeconomic headwinds or competitive pressures are dampening nCino’s growth trajectory. However, the company’s $1.095 billion remaining performance obligation as of October 31, 2024, suggests a strong backlog of future revenue.

Investor sentiment and outlook

While nCino’s recent financial results analysis shows operational improvement and global market expansion, the revenue forecast misstep has weighed heavily on investor sentiment. The company’s focus on innovation and cloud banking platform adoption could fuel long-term growth, but near-term concerns over its revenue forecast miss may continue to pressure the stock.