nCino’s third quarter was marked by revenue and non-GAAP profitability that exceeded analysts’ expectations, yet the market responded negatively, reflecting concerns highlighted by management about near-term headwinds and competitive pressures. CEO Sean Desmond pointed to strong momentum in AI adoption and platform expansion across customer segments, but also noted that discretionary spending by financial institutions remains constrained, driving a shift toward more targeted, efficiency-focused technology investments. Desmond emphasized, “Banks remain very aggressive on their tech investment with AI driving the narrative,” while acknowledging that shifts in customer purchasing patterns require continued operational discipline.
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nCino (NCNO) Q3 CY2025 Highlights:
- Revenue: $152.2 million vs analyst estimates of $147.3 million (9.6% year-on-year growth, 3.3% beat)
- Adjusted EPS: $0.31 vs analyst estimates of $0.21 (49.9% beat)
- Adjusted Operating Income: $39.86 million vs analyst estimates of $32.74 million (26.2% margin, 21.8% beat)
- Revenue Guidance for Q4 CY2025 is $147.5 million at the midpoint, roughly in line with what analysts were expecting
- Management raised its full-year Adjusted EPS guidance to $0.91 at the midpoint, a 15.3% increase
- Operating Margin: 7.7%, up from -0.6% in the same quarter last year
- Billings: $109.3 million at quarter end, up 10.4% year on year
- Market Capitalization: $2.85 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From nCino’s Q3 Earnings Call
- Michael Infante (Morgan Stanley) asked about sustainability of operating margin expansion and whether AI efficiencies could accelerate medium-term margin targets. CFO Gregory Orenstein responded that ongoing cost discipline and AI-driven productivity gains should support progress toward their margin goals.
- Saket Kalia (Barclays) questioned the sources of ACV growth and health of the customer base. CEO Sean Desmond emphasized broad-based demand, particularly for AI and automation, with banks increasing tech budgets despite macro caution.
- Alexander Sklar (Raymond James) sought details on large bank commercial expansions and market opportunity. Orenstein explained expansion comes from deeper penetration within existing customers and noted significant white space remains in core commercial lending.
- Charles Nabhan (Stephens) asked about the drivers of mortgage business outperformance and segment dynamics. Desmond cited new wins in large banks and strong traction in independent mortgage banks, with past market share gains now benefiting revenue.
- Koji Ikeda (Bank of America) inquired about factors needed to drive greater expansion activity among existing customers. Desmond highlighted opportunities from cross-selling and platform adoption across commercial, consumer, and mortgage lines.
Catalysts in Upcoming Quarters
Looking forward, the StockStory team will closely watch (1) the pace of AI Banking Advisor adoption and expansion to broader customer segments, (2) successful execution of platform pricing transitions and early renewals, and (3) acceleration of international deals, particularly in EMEA and Japan. Additional focus will be on the impact of operational efficiency initiatives and gross margin trends as the company advances its AI and automation strategy.
nCino currently trades at $24.80, down from $25.57 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free for active Edge members).
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