EPS of $-0.13 decreased by 35.7% from previous year
Gross margin of 59.2%
Net income of -15.26M
""Banking Adviser represents an AI-powered interface designed exclusively for financial institutions. Unlike generic AI solutions, Banking Adviser is deeply integrated into nCino workflows and understands financial products, process workflows, regulatory nuances, and day-to-day banking realities. Banking Adviser is evolving to become the primary interface through which our customers will experience increasingly sophisticated AI capabilities and fully agentic workflows, which we plan to start rolling out to the market next quarter."" - Sean Desmond
nCino Inc (NCNO) QQ2 2026 Financial Results: AI-Driven Growth, Platform Pricing Transition, and Global Expansion
Executive Summary
nCino reported a solid Q2 FY2026, delivering 12% year-over-year revenue growth to $148.8 million with subscription revenue up 15% YoY to $130.8 million (10% organic). Non-GAAP operating income was $30.0 million, representing 20% of total revenues, and the company ended the quarter with a strong cash position ($123.2 million) and disciplined capital allocation, including a $20 million share repurchase in Q2 and a total of ~2.6 million shares repurchased year-to-date. Management highlighted momentum across core product lines (Commercial loan origination, onboarding, and mortgage) and accelerated AI initiatives (Banking Adviser) as key differentiators, while continuing to migrate customers to platform-based pricing (approximately 21% of ACV converted so far). The company raised forward guidance for 2026, reflecting confidence in strong pipeline activity, ongoing AI-driven adoption, and higher mortgage-commercial mix. Executive commentary emphasized a robust cross-sell environment in the US and Europe, plus the early-stage but meaningful AI moat that is translating into better deal flow and larger ACV commitments.
Key Performance Indicators
Revenue
148.82M
QoQ: 3.25% | YoY:12.40%
Gross Profit
88.13M
59.22% margin
QoQ: 1.95% | YoY:12.30%
Operating Income
-9.30M
QoQ: -514.41% | YoY:-17.58%
Net Income
-15.26M
QoQ: -374.31% | YoY:-38.20%
EPS
-0.13
QoQ: -360.00% | YoY:-35.70%
Revenue Trend
Margin Analysis
Key Insights
Total revenue: $148.815 million, up 12.0% YoY; QoQ not disclosed for Q2 in the press release but the company notes a quarterly beat against the top end of guidance.
Subscription revenue: $130.8 million, up 15% YoY (10% organic), representing the bulk of revenue and continued mix shift toward higher-visibility recurring revenues.
Gross profit: $88.125 million; gross margin 59.22% (0.5921782078). YoY gross profit up 12.3%; QoQ up 1.95%.
Operating expenses: Total operating expenses $97.421 million; operating income −$9.296 million (operating margin −6.25%). YoY operating income declined by 17.6%; QoQ deterioration noted as the company continues to invest in AI, Go-To-Market, and international expansion.
Net income: −$15.257 million; net margin −10.25%. YoY net income down 38.2%; QoQ down 374% (reflecting ongoing investments and a higher tax provision impact on GAAP-equivalents).
Financial Highlights
Revenue and profitability
- Total revenue: $148.815 million, up 12.0% YoY; QoQ not disclosed for Q2 in the press release but the company notes a quarterly beat against the top end of guidance.
- Subscription revenue: $130.8 million, up 15% YoY (10% organic), representing the bulk of revenue and continued mix shift toward higher-visibility recurring revenues.
- Gross profit: $88.125 million; gross margin 59.22% (0.5921782078). YoY gross profit up 12.3%; QoQ up 1.95%.
- Operating expenses: Total operating expenses $97.421 million; operating income −$9.296 million (operating margin −6.25%). YoY operating income declined by 17.6%; QoQ deterioration noted as the company continues to invest in AI, Go-To-Market, and international expansion.
- Net income: −$15.257 million; net margin −10.25%. YoY net income down 38.2%; QoQ down 374% (reflecting ongoing investments and a higher tax provision impact on GAAP-equivalents).
- Earnings per share (non-GAAP): Diluted EPS −$0.13.
- Non-GAAP operating income: $30.0 million, 20% of total revenues, indicating improving operating leverage from cost controls and efficiency initiatives.
- ACV and bookings: 2026 full-year ACV guidance raised to $564–$567 million (midpoint +10% y/y). Inorganic ACV contributions including Sandbox Banking are expected at $4.5 million. Net bookings in H1 support ongoing confidence in the year-end target.
- Balance sheet and liquidity: Cash and cash equivalents of $123.2 million; total line of credit outstanding $203.5 million; net debt of approximately $146.6 million. Share repurchases totaled ~750k shares in Q2 (~$20 million) at $26.89 per share; combined with Q1 activity, ~2.6 million shares repurchased for ~$60.6 million under the $100 million authorization.
- Cash flow: Net cash provided by operating activities $17.736 million; free cash flow $12.588 million; operating cash flow $17.736 million for the quarter.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
148.82M
12.40%
3.25%
Gross Profit
88.13M
12.30%
1.95%
Operating Income
-9.30M
-17.58%
-514.41%
Net Income
-15.26M
-38.20%
-374.31%
EPS
-0.13
-35.70%
-360.00%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key management takeaways from the earnings call:
- AI and Banking Adviser momentum: “Banking Adviser represents an AI-powered interface designed exclusively for financial institutions... evolving to become the primary interface through which our customers will experience increasingly sophisticated AI capabilities and fully agentic workflows, which we plan to start rolling out to the market next quarter.” (Sean Desmond)
- AI-driven differentiation and deal velocity: “AI is coming up in virtually every customer conversation, and we are already seeing our AI-first approach contributing as a differentiator that helps move deals over the finish line.” (Sean Desmond)
- Platform pricing transition: “Our platform pricing transition continues to proceed according to our expectations, including price uplifts. We have now converted approximately 21% of our ACV to platform pricing.” (Greg Orenstein)
- Geographic expansion and major wins: acceleration in Europe with ABN AMRO go-live and Spain first customer; six new credit union logos; onboarding expansion with UK challenger bank; over $4B continental Europe TAM cited as the backdrop for growth.
- Mortgage momentum and mix shift: mortgage subscription revenues grew 22% YoY in the US with over 50 mortgage customers, about half depositories; management highlighted a 5% YoY mortgage subscription growth guide for Q3’26 versus prior guidance of flat YoY, given stronger early-quarter execution and volume gains among IMBs and homebuilders.
- Execution and expectations: management cited “solid execution” across the team and noted pipeline strength, emphasizing the need to balance rapid AI-driven adoption with risk and compliance considerations. They reiterated rule-of-40 goals for 2027 and signaled ongoing investments in professional services enhancements (Project 70) to improve professional services gross margins gradually over time.
"Banking Adviser represents an AI-powered interface designed exclusively for financial institutions. Unlike generic AI solutions, Banking Adviser is deeply integrated into nCino workflows and understands financial products, process workflows, regulatory nuances, and day-to-day banking realities. Banking Adviser is evolving to become the primary interface through which our customers will experience increasingly sophisticated AI capabilities and fully agentic workflows, which we plan to start rolling out to the market next quarter."
— Sean Desmond
"We have now converted approximately 21% of our ACV to platform pricing."
— Greg Orenstein
Forward Guidance
Short- to mid-term outlook (FY2026):
- Revenue guidance raised to $585–$589 million (+~9% YoY at the midpoint) and subscription revenues guidance to $513.5–$517.5 million (~10% YoY growth at the midpoint), reflecting inorganic contributions from Full Circle and Sandbox Banking (~$5.5 million) and FX tailwinds (~$2.1 million net). The company notes a ~3% YoY headwind in the second half due to one-time 2025 subscription revenues and expects Q4 to be the lowest YoY subscription growth of the year.
- Non-GAAP operating income guidance: $117.5–$121.5 million for FY2026; non-GAAP diluted EPS guidance of $0.77–$0.80 on ~118 million shares.
- ACV target: $564–$567 million, +10% at the midpoint, with net bookings of $48–$51 million in annual ACV and $4.5 million of contribution from Sandbox Banking.
- Third-quarter guidance: Non-GAAP operating income of $31.5–$33.5 million; Q3 revenue implied by guidance is consistent with full-year guidance, but the company emphasizes focus on adoption and integration, particularly related to Banking Adviser and AI capabilities.
Assessment of achievability: The trajectory appears favorable given continued acceleration in subscription growth, a broader AI-driven product adoption, and meaningful European go-to-market activity. Risks include the pace of Enterprise/European deployments, execution risk around platform pricing migration with larger logos, mortgage cycle sensitivity, FX volatility, and the integration risk from the Full Circle and Sandbox acquisitions. Investors should monitor: (1) renewal cadence and velocity in NA/EMEA, (2) AI adoption milestones (agentic workflows rollout), (3) progression of mortgage vs. non-mortgage mix, (4) cross-sell traction into credit unions and onboarding, (5) platform pricing uplift realization in the back half of 2026, and (6) macro/regulatory developments affecting community banks and stablecoins.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
NCNO Focus
59.22%
N/A
N/A
N/A
CWAN
72.00%
4.42%
-0.11%
-2,328.22%
MLNK
52.20%
-0.14%
-2.20%
-42.22%
ENV
15.50%
3.91%
-15.30%
-10.64%
MODN
55.00%
-4.03%
-1.01%
-195.56%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Long-term fundamentals remain favorable given nCino’s AI-first platform strategy, cross-sell opportunities, and international expansion. The Q2 results validate the growth trajectory with 12% revenue growth and 10% ACV growth at the midpoint, supported by AI-driven product adoption and a clear path to the Rule of 40 target by 2027. The company’s ability to monetize AI through Banking Adviser, combined with a disciplined platform-pricing migration (21% of ACV converted so far) and inorganic contributions from Full Circle and Sandbox, should support higher sustainable subscription growth and improved margins over time. The primary near-term sensitivities are mortgage-cycle dynamics, FX variability, and execution risk in European deployments. Investors should monitor the pace of ACV accretion, retention of large enterprise customers, integration progress of inorganic assets, and the realization of AI-driven productivity gains that translate into higher gross margins and profitability.
Key Investment Factors
Growth Potential
AI-enabled platform leadership (Banking Adviser) and continued expansion into EMEA (Spain first customer, ABN AMRO go-live) alongside credit union and onboarding cross-sells position nCino to monetize AI-driven workflow improvements. The 10% ACV growth target and $564–$567M ACV imply meaningful cross-sell and expansion leverage, especially as more customers migrate to platform pricing (21% of ACV converted to date). The inorganic contributions from Sandbox Banking and Full Circle are expected to become more accretive in 2027 as integration progresses and CLM workflows fully roll into the end-to-end onboarding and origination pipeline.
Profitability Risk
Key near-term risks include reliance on mortgage cycle rebound, execution risk in platform pricing integration for large customers, foreign currency fluctuations affecting revenue, and potential slower-than-expected AI adoption across the customer base. The macro environment and regulatory changes (e.g., stablecoins and crypto-related banking) could impact customer demand or add compliance overhead. Competition from other cloud-native fintech platforms and potential delays in go-lives in new geographies remain ongoing threats.
Financial Position
Solid liquidity with $123.2M cash and equivalents and $0.204B drawn on the line of credit; total debt of $269.5M and net debt of $146.6M. Free cash flow positive at $12.6M for the quarter, with ongoing buyback activity (~$60.6M spent YTD) supporting per-share accretion. The balance sheet supports a measured growth trajectory as the company funds AI investments and international expansion while maintaining a disciplined capital allocation framework.
SWOT Analysis
Strengths
Cloud-native, vertical-focused SaaS platform with breadth across commercial, consumer, and mortgage lines.
Early AI leadership with Banking Adviser driving differentiated workflows and faster deal closures.
Active international expansion (EMEA, Spain) and a growing credit union footprint, with ABN AMRO go-live and multiple new logos.
Solid recurring revenue base (subscription) and improving non-GAAP operating margins (20% of revenue) amid ongoing efficiency initiatives.
Positive cash generation and disciplined capital allocation (share repurchases, debt management).
Weaknesses
Negative operating income in Q2 and ongoing profitability challenges as the company scales investments (AI, onboarding, professional services).
Significant reliance on mortgage and related credit channel dynamics, which can be cyclical and influenced by macro rates.
FX headwinds/benefits introduce margin variability; 2H23–2H24 had notable currency effects, creating forecasting noise.
Professional services gross margin has historically lagged and remains a focal point for margin improvement.
Opportunities
Cross-sell across lines of business (mortgage, commercial, consumer) leveraging AI-enabled workflows.
Accelerated ACV growth through platform pricing adoption and large enterprise logo migrations.
Expansion in Europe (Spain and beyond) leveraging new pricing and AI capabilities to lock in multi-year commitments.
Further monetization of Banking Adviser and agentic workflows with faster time-to-value.
Threats
Mortgage cycle volatility and refinancing demand could impact subscription growth and ACV expansion.
Execution risk in onboarding and CLM integration for Full Circle and Sandbox as they migrate to organic revenue streams.
Regulatory and macro developments (e.g., stablecoins and fintech policy) potentially altering demand or increasing compliance costs.
Competitive intensity from other cloud-native fintech platforms and potential pricing pressure.