Bank software company nCino (NASDAQ: NCNO) met Wall Street’s revenue expectations in Q4 CY2024, with sales up 14.3% year on year to $141.4 million. On the other hand, next quarter’s revenue guidance of $139.8 million was less impressive, coming in 4% below analysts’ estimates. Its non-GAAP profit of $0.12 per share was 35.1% below analysts’ consensus estimates.
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nCino (NCNO) Q4 CY2024 Highlights:
- Revenue: $141.4 million vs analyst estimates of $140.9 million (14.3% year-on-year growth, in line)
- Adjusted EPS: $0.12 vs analyst expectations of $0.19 (35.1% miss)
- Adjusted Operating Income: $24.38 million vs analyst estimates of $24.01 million (17.2% margin, 1.5% beat)
- Management’s revenue guidance for the upcoming financial year 2026 is $576.5 million at the midpoint, missing analyst estimates by 6% and implying 6.6% growth (vs 13.4% in FY2025)
- Adjusted EPS guidance for the upcoming financial year 2026 is $0.68 at the midpoint, missing analyst estimates by 23.4%
- Operating Margin: -4.1%, down from -2.6% in the same quarter last year
- Free Cash Flow was -$10.37 million, down from $5.10 million in the previous quarter
- Market Capitalization: $3.18 billion
"We ended the year strong, with meaningful year-over-year subscription revenues and ACV growth, while continuing to realize efficiencies across our operations," said Sean Desmond, Chief Executive Officer at nCino.
Company Overview
Founded in 2011 in North Carolina, nCino (NASDAQ: NCNO) makes cloud-based operating systems for banks and provides that software-as-a-service.
Banking Software
Consumers these days are accustomed to frictionless digital experiences from online shopping to ordering food or hailing a cab. Financial services firms are notoriously risk averse in adopting modern software, often lacking the resources or competency to develop the digital solutions in-house. That drives demand for software as a service platforms that allows banks and other finance institutions to offer the digital services without having to run or maintain them.
Sales Growth
A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Thankfully, nCino’s 25.4% annualized revenue growth over the last three years was solid. Its growth beat the average software company and shows its offerings resonate with customers.
This quarter, nCino’s year-on-year revenue growth was 14.3%, and its $141.4 million of revenue was in line with Wall Street’s estimates. Company management is currently guiding for a 9.1% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 13.3% over the next 12 months, a deceleration versus the last three years. Despite the slowdown, this projection is healthy and implies the market is forecasting success for its products and services.
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Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly a business can break even on its sales and marketing investments.
nCino is efficient at acquiring new customers, and its CAC payback period checked in at 37.3 months this quarter. The company’s relatively fast recovery of its customer acquisition costs gives it the option to accelerate growth by increasing its sales and marketing investments. 
Key Takeaways from nCino’s Q4 Results
We struggled to find many positives in these results as its revenue and EPS guidance for next year fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 17.4% to $23.24 immediately after reporting.
nCino didn’t show it’s best hand this quarter, but does that create an opportunity to buy the stock right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
