EPS of $0.05 increased by 291.6% from previous year
Gross margin of 60.0%
Net income of 5.56M
"AI is central to our long-term differentiation and our approach, which we believe leverages the largest process-centric data set in fintech is uniquely powerful." - Sean Desmond
nCino reported a solid start to fiscal 2026 with total revenue of $144.1 million, up 13% year over year, led by subscription revenue of $125.6 million (+14% YoY; +9% organic). Non-GAAP operating income reached $24.8 million (17% of revenue), while GAAP operating income remained negative at $1.5 million, consistent with a growth-oriented SaaS model with higher service and development spend in early-stage expansion. The quarter featured meaningful progress on ACV (annual contract value) with management guiding to a full-year ACV addition of $48–$51 million (including roughly $4.5 million from Sandbox Banking), implying ~19% organic net ACV bookings growth at the midpoint and suggesting an acceleration of subscription revenues into FY27. Free cash flow was robust at $52.6 million, and net cash from operations was $54.3 million, supporting a cash balance of $133.6 million at period end. The company completed a $40.6 million share repurchase (1.8 million shares at $22.17) and announced a restructuring initiative targeting approximately $24 million in gross annualized expense savings, with $7.5–$9 million of one-time costs. Management emphasized AI-driven efficiency gains, product velocity, and omni-channel enhancements as key levers for margin expansion and growth. The commentary underscored ongoing demand across onboarding, account opening, mortgage, and credit union segments, supported by international wins and a continued emphasis on AI-enabled automation to drive long-term differentiation. While macro volatility persists, management signaled resilience in core customers and a macro backdrop favorable to technology-enabled efficiency in financial institutions.
Key Performance Indicators
Revenue
144.14M
QoQ: 1.96% | YoY:12.53%
Gross Profit
86.44M
59.97% margin
QoQ: 2.47% | YoY:17.96%
Operating Income
-1.51M
QoQ: 73.63% | YoY:-197.11%
Net Income
5.56M
QoQ: 129.89% | YoY:286.90%
EPS
0.05
QoQ: 131.25% | YoY:291.57%
Revenue Trend
Margin Analysis
Key Insights
Total revenue: $144.1 million, up 13% YoY; YoY growth per metrics: 12.53% YoY, QoQ 1.96% (see quarterly metrics table).
Subscription revenue: $125.6 million, up 14% YoY; organic growth 9%. Contribution from mortgage revenue was approximately $0.8 million ahead of plan.
Non-GAAP operating income: $24.8 million, 17% of total revenue, driven by subscription growth offset by ~ $0.5 million severance expense.
Non-GAAP net income: $18.4 million or $0.16 per diluted share.
Gross margin: 59.97% (Gross profit $86.44 million on revenue of $144.14 million).
Financial Highlights
Revenue performance and mix:
- Total revenue: $144.1 million, up 13% YoY; YoY growth per metrics: 12.53% YoY, QoQ 1.96% (see quarterly metrics table).
- Subscription revenue: $125.6 million, up 14% YoY; organic growth 9%. Contribution from mortgage revenue was approximately $0.8 million ahead of plan.
- Non-GAAP operating income: $24.8 million, 17% of total revenue, driven by subscription growth offset by ~ $0.5 million severance expense.
- Non-GAAP net income: $18.4 million or $0.16 per diluted share.
- Gross margin: 59.97% (Gross profit $86.44 million on revenue of $144.14 million).
- Operating performance: Operating income of $(1.51) million; operating margin of about (1.05)%. EBITDA: $25.71 million; EBITDA margin 17.0%.
- Net income and earnings per share: Net income $5.56 million; net income margin 3.86%; diluted EPS $0.05; weighted-average diluted shares 116.58–114.78 million.
- Non-U.S. revenue: $31.6 million (YoY +22%), subscription revenue outside the U.S. $25.9 million (+31% YoY).
- Cash flow and liquidity: Operating cash flow $54.32 million; free cash flow $52.60 million; cash at end of period $133.58 million; cash at beginning of period $121.27 million.
- Balance sheet: Total assets $1.651 billion; total liabilities $0.570 billion; total stockholders’ equity $1.072 billion; cash and cash equivalents $133.23 million; total debt $278.35 million; net debt $145.12 million; goodwill $1.0807 billion; intangible assets $161.3 million.
- ACV and guidance: FY26 ACV addition guidance revised to $48–$51 million (including $4.5 million from Sandbox Banking); organic net ACV bookings growth target around 19% at midpoint; total FY26 revenue guidance $578.5–$582.5 million; FY26 non-GAAP operating income guidance $112–$116 million; non-GAAP EPS guidance $0.69–$0.72. For Q2’26, revenue $142–$144 million; subscription revenue $124.5–$126.5 million; non-GAAP opex guidance $23.5–$24.5 million; non-GAAP EPS $0.13–$0.14.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
144.14M
12.53%
1.96%
Gross Profit
86.44M
17.96%
2.47%
Operating Income
-1.51M
-197.11%
73.63%
Net Income
5.56M
286.90%
129.89%
EPS
0.05
291.57%
131.25%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key themes from management commentary and Q&A:
- Strategy and AI differentiation: Sean Desmond emphasized AI as central to nCino’s long-term differentiation and the value of a process-centric data set in fintech, stating, AI is central to our long-term differentiation and our approach, which we believe leverages the largest process-centric data set in fintech is uniquely powerful.
- ACV trajectory and demand signals: Sean highlighted that bookings of new annual contract value are progressing well and that the company remains confident in the full-year ACV plan, noting the market reception at nSight to AI capabilities and omnichannel experiences.
- Omnichannel and product upgrades at no incremental cost: Sean noted that upgrading customers to omnichannel experiences is part of the platform at no incremental cost, emphasizing that omnichannel is a core differentiator and that commercial engagements may still generate incremental ACV when new solutions are adopted.
- Restructuring and efficiency gains: Sean cited a restructuring event affecting ~7% of the global workforce aimed at streamlining processes and accelerating product delivery, signaling a focus on reducing bureaucracy and leveraging AI to improve velocity.
- Share repurchase and capital allocation: Greg Orenstein disclosed the repurchase of ~1.8 million shares in Q1 for $40.6 million, reflecting a near-term emphasis on returning capital and realizing synergies from prior acquisitions.
- Mortgage and international momentum: Management detailed mortgage cross-sell opportunities and notable international wins (Canadian bank add-on, new logo in Japan), underscoring a diversified growth trajectory beyond U.S. on-boarding and portfolio management.
AI is central to our long-term differentiation and our approach, which we believe leverages the largest process-centric data set in fintech is uniquely powerful.
— Sean Desmond
We repurchased approximately 1.8 million shares during the first quarter at an average price of $22.17 for a total consideration of $40.6 million.
— Greg Orenstein
Forward Guidance
Short-to-medium-term viewed with cautious optimism: For Q2FY26, total revenue guidance of $142–$144 million and non-GAAP OI of $23.5–$24.5 million imply a stable growth trajectory, with subscription revenue of $124.5–$126.5 million (8–10% YoY). The company flags that sequential revenue growth will be modestly tempered by not flowing through Q1 over-performance in Mortgage and Professional Services revenues. For FY26, NCNO maintains guidance to add $48–$51 million to ACV (constant currency), including approximately $4.5 million from Sandbox Banking, representing ~19% organic net ACV bookings growth at the midpoint and implying acceleration in subscription revenue in FY27. Revenue guidance of $578.5–$582.5 million represents ~7% growth at the midpoint. Non-GAAP operating income is guided to $112–$116 million, up ~19% vs FY25, aided by ~$24 million of gross annualized expense savings from the restructuring, with some of the benefits flowing to H2. Non-GAAP diluted EPS guidance is $0.69–$0.72 for FY26, with ~119 million diluted shares outstanding. The company notes ongoing AI investments and opportunities to reallocate savings toward product development and AI-driven efficiency. Investors should monitor: (1) ACV progression and renewal rates, (2) gross margin trajectory, especially PSO margins and ongoing AI-enabled efficiency gains, (3) conversion of Q1 overachievement into sustainable full-year results, and (4) execution of international expansion and Sandbox Banking initiatives, which underpin the long-term margin and growth profile.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
NCNO Focus
59.97%
N/A
N/A
N/A
CWAN
73.30%
5.58%
0.58%
244.25%
MLNK
66.00%
4.37%
-1.08%
-75.66%
ENV
98.50%
2.68%
0.43%
312.80%
MODN
56.10%
-4.20%
-1.45%
-145.66%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
nCino's Q1 FY2026 results reflect disciplined execution of a high-growth, AI-enabled SaaS model in financial services. The company benefits from a diversified, cross-product platform and a sizeable set of strategic initiatives (mortgage cross-sell, credit unions, international expansion, and Sandbox Banking) that collectively support a multi-year ACV expansion and subscription revenue growth. The near-term profitability is constrained by restructuring costs and higher PSO-related investments; however, management has signaled meaningful expense savings (gross annualized savings of ~$24M with $7.5–$9M onetime costs) and a path to improved margins through product modernization and AI-driven efficiency. The FY26 target of $112–$116M non-GAAP OI and $0.69–$0.72 non-GAAP EPS, supported by $48–$51M in net ACV additions (including $4.5M from Sandbox Banking), provides a solid framework for profitability expansion into FY27, assuming continued improvement in onboarding velocity and pipeline conversion. Key factors for investors to monitor include: ACV trajectory, gross margin progression (especially PSO), realization of restructuring benefits, execution of international and credit union initiatives, and the degree to which AI-enabled products translate into higher upsell and deployment speed. Given the balance sheet strength, strong cash generation, and an accretive M&A strategy, NCNO presents a compelling, albeit higher-visibility, long-duration growth story within the fintech software ecosystem.
Key Investment Factors
Growth Potential
Robust ACV expansion (guided $48–$51M for FY26, ~19% organic net ACV growth), diversified mix across commercial, consumer, mortgage, and international markets, plus a material AI-driven product velocity with 16 new Banking Adviser capabilities and Sandbox Banking data-integration potential. Cross-sell opportunities (mortgage cross-sell, credit unions, and international banking) and the accelerating onboarding and omnichannel capabilities should support higher subscription revenue growth into FY27 and beyond.
Profitability Risk
Macroeconomic volatility could impact bank IT budgets; mortgage revenue remains volatile despite stability signals; professional services margin pressures in U.S. community banks; execution risk from large acquisitions and integration (FullCircl, Sandbox Banking, DocFox, Allegro) and restructuring costs; potential revenue recognition dynamics from product mix shifts; reliance on AI-driven efficiency gains that may take longer to realize; reliance on large customers for a portion of bookings could introduce lumpiness.
Financial Position
Healthy liquidity with $133.6M cash and equivalents; free cash flow generation of $52.6M supports ongoing buybacks and potential reinvestments; net debt ~$145.1M against a total asset base of ~$1.65B; debt dynamics are manageable given a strong ACV pipeline and potential to monetize AI-driven efficiencies. FY26 non-GAAP OI guidance of $112–$116M and FY26 non-GAAP EPS of $0.69–$0.72 reflect a disciplined cost structure with the majority of Q1 outperformances being redirected into the full-year plan.
SWOT Analysis
Strengths
Cloud-based, AI-enabled platform with integrated lending, onboarding, account opening, and portfolio management across lines of business
ACV growth trajectory with 19% organic net ACV bookings growth target for FY26; diversified customer base including banks, credit unions, and IMBs
International expansion momentum (Canada, Japan, Europe) and strong adoption in mortgage and onboarding modules
Robust cash flow generation (FCF $52.6M) and solid liquidity (cash ~$133.6M); active capital returns via share buybacks
Strategic acquisitions (Sandbox Banking, FullCircl, DocFox, Allegro) enhancing data, onboarding, and indirect auto lending capabilities
Weaknesses
GAAP operating income remains negative in Q1, signaling early-stage margin ramp and higher near-term operating expenses
Professional services margins under pressure in community bank segment; ongoing need to scale automation to improve PSO margins
Revenue mix exposure to mortgage and professional services; potential sensitivity to regulatory and mortgage-market cycle changes
Implementation/friction risk during deployment could affect pipeline conversion and time-to-value
Opportunities
Mortgage cross-sell and credit union market expansion (SAM ~$1B opportunity) with unified platform benefits
Significant international pipeline (Japan, Europe) and expansion beyond UK/Ireland via FullCircl
AI-enabled, agent-centric automation via Sandbox Banking and Banking Adviser capabilities; potential for componentized deployment to accelerate sales
nSight-driven customer evangelism fueling ARR and up-sell opportunities; omnichannel capabilities as standard platform upgrade
Threats
Macro sensitivity and regulatory shifts impacting IT budgets and adoption rates
Competition from horizontal fintech/hyper-scaled vendors expanding into vertical banking workflows
Execution risk associated with integrating multiple acquisitions and realizing projected cost savings
Seasonality and volatility in mortgage-related revenues could affect near-term growth visibility