""We are marshaling the energy of the company to capitalize on the vertical AI opportunity to drive efficiency into the financials of our customers as well as into our own bottom line."" - Sean Desmond
nCino Inc (NCNO) Q4 2025 Results Analysis: AI-Driven Growth Reacceleration with M&A Synergies and International Expansion (QQ4 2025)
Executive Summary
Summary of quarterly performance and strategic trajectory for investors: Q4 2025 revenue rose 14% YoY to $141.37 million, led by a 16% YoY rise in subscription revenue to $125.0 million. Non-GAAP operating income for the quarter was $24.4 million (17% of revenue), with full-year non-GAAP operating income of $96.2 million (18% of revenue). Net income remained negative for the quarter at $(18.61) million and diluted EPS was $(0.16). For the full year, free cash flow was negative in Q4 at $(10.4) million but positive for the year at $53.4 million. cumulatively, ACV reached $516.4 million at January 31, 2025, up 13% YoY (8% organic), with ACV net retention at 106%. RPO stood at $1.2 billion, with $797 million to be recognized in the next 24 months. The company completed four acquisitions in fiscal 2025 (DocFox, FullCircl, Allegro, Sandbox Banking) and closed Sandbox Banking after year-end, which is expected to yield roughly $1 million annual COGS savings and accretive subscription growth. Management guided FY26 total revenues to $574.5–$578.5 million and subscription revenues to $503–$507 million, signaling a 7% and 8% growth respectively at the midpoint, with ACV additions of $48–$51 million and 19% organic net ACV bookings growth. Importantly, the company emphasizes an AI-first product strategy (Banking Advisor, gen AI and agentic AI) and integration-driven monetization via Sandbox’s API layer, while signaling a disciplined path toward the Rule of 40 by late FY27.
Gross margin: Q4 gross profit $84.36m, gross margin 59.7% (vs. revenue 141.37m); reflecting acquisition-related costs and mix; FY25 gross margin implied around mid-60s to high-50s depending on mix.
Non-GAAP operating income: Q4 $24.4m (17% of revenue); FY25 $96.2m (18% of revenue).
Net income and EPS: Q4 net income $(18.61)m, EPS $(0.16); FY25 net income $(?); Non-GAAP net income FY25 $76.1m, EPS $0.66.
Financial Highlights
- Revenue: Q4 2025 $141.37m, +14% YoY; FY25 $540.7m, +13% YoY; QoQ growth modest in Q4.
- Subscription revenue: Q4 $125.0m, +16% YoY; FY25 $469.2m, +15% YoY; Organic subscription: Q4 $118.3m, +10% YoY; FY25 organic $456.9m, +12% YoY.
- Gross margin: Q4 gross profit $84.36m, gross margin 59.7% (vs. revenue 141.37m); reflecting acquisition-related costs and mix; FY25 gross margin implied around mid-60s to high-50s depending on mix.
- Non-GAAP operating income: Q4 $24.4m (17% of revenue); FY25 $96.2m (18% of revenue).
- Net income and EPS: Q4 net income $(18.61)m, EPS $(0.16); FY25 net income $(?); Non-GAAP net income FY25 $76.1m, EPS $0.66.
- ACV: $516.4m as of 1/31/2025, +13% YoY (8% organic); CC growth 14% YoY; ACV net retention 106% (vs 102% prior year).
- RPO: $1.2B, up 15% YoY; $797m to be recognized in next 24 months; acquisitions added ~$24m to total RPO (and $22m in <24m RPO).
- Free cash flow: Q4 FCF $(10.4)m; FY25 FCF $53.4m.
- Bookings and customers: 549 customers contributing >$100k; 105 >$1m; 14 >$5m in subscription revenue contributions for FY25.
- Guidance: FY26 revenue $574.5–$578.5m; subscription $503–$507m; ACV growth headwinds (FX ~1%), no YoY US mortgage subscription growth assumed; Full-year non-GAAP operating income $107–$111m; non-GAAP EPS $0.66–$0.69; Sandbox contribution ~+$4.5m to ACV; 9% organic ACV bookings growth implied at the midpoint.
- Milestones: 4 acquisitions completed in FY25 (DocFox, FullCircl, Allegro, Sandbox); 100m stock repurchase authorization announced.
- Key thesis: AI-first, platform-centric growth across Commercial, Consumer, Mortgage, and Credit Union markets with international expansion and M&A-driven SAM expansion; favorable long-term operating leverage expected to materialize as bookings reaccelerate and AI-enabled workflows scale.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
141.37M
14.29%
1.85%
Gross Profit
84.36M
18.74%
-0.82%
Operating Income
-5.74M
-96.64%
-596.36%
Net Income
-18.61M
-1 704.31%
-254.34%
EPS
-0.16
-1 668.63%
-252.42%
Key Financial Ratios
currentRatio
1.2
grossProfitMargin
59.7%
operatingProfitMargin
-4.06%
netProfitMargin
-13.2%
returnOnAssets
-1.16%
returnOnEquity
-1.71%
debtEquityRatio
0.22
operatingCashFlowPerShare
$-0.09
freeCashFlowPerShare
$-0.09
priceToBookRatio
3.62
priceEarningsRatio
-52.92
Net Income vs. Revenue
Expense Breakdown
Management Commentary
- Strategy and AI focus: Sean Desmond emphasized staking the company as the worldwide leader in AI banking and accelerating AI-driven capabilities (Banking Advisor) to drive efficiency for customers and the company. Key quote: 'We are marshaling the energy of the company to capitalize on the vertical AI opportunity to drive efficiency into the financials of our customers as well as into our own bottom line.'
- Execution and turnaround plan: Sean outlined leadership changes in Europe, new GTM teams for credit unions, and the emphasis on integrating DocFox and Sandbox to accelerate onboarding and data interoperability. He warned that while momentum will take quarters, the path to reaccelerated bookings is underway. Quote: 'operating with a keen sense of urgency and purpose, we are well positioned to reaccelerate new bookings growth.'
- Management guidance and discipline: Greg Orenstein highlighted that revenue is a lagging indicator of bookings and emphasized a conservative guidance approach with a path to Rule of 40 by ~Q4 FY27. Quote: 'Revenue growth is a lagging indicator of our bookings growth... we are laser-focused on ensuring that we achieve the Rule of 40 in a sustainable and disciplined manner.'
- Market conditions and customer health: Sean noted customers’ improving balance sheets and expected growth in loans and deposits as macro headwinds ease. Quote: 'they’re turning the corner on some of the headwinds that we’ve experienced in the previous years... their balance sheets are healthy and they’re expecting growth in their loan portfolios and their deposit positions.'
- Competitive positioning and pricing: The team discussed platform pricing transition (15% ACV on platform pricing as of 1/31/2025) and a ~1% subscription revenue uplift in FY26 from this transition, with continued pricing realization as migrations complete. Quote: 'approximately 15% of our ACV is on platform pricing, and we expect to complete the transition... over the next 4 years' and 'we are modeling an approximately 1% subscription revenue growth benefit from the pro rata contribution of deals signed in fiscal '26.'
"We are marshaling the energy of the company to capitalize on the vertical AI opportunity to drive efficiency into the financials of our customers as well as into our own bottom line."
— Sean Desmond
"Revenue growth is a lagging indicator of our bookings growth... we are laser-focused on ensuring that we achieve the Rule of 40 in a sustainable and disciplined manner."
— Gregory D. Orenstein
Forward Guidance
- FY26 revenue trajectory: The company guides to $574.5–$578.5 million total revenue and $503–$507 million subscription revenue, implying ~7% total revenue growth and ~8% subscription growth at the midpoint. Management attributes the modest subscription growth in 2026 to FX headwinds (~1% on ACV) and a mortgage-related headwind that compresses YoY subscription growth for U.S. mortgage. They also highlight a back-half weighting of bookings, which suggests stronger second-half visibility than first half.
- ACV and bookings: Expect ~+$48–$51 million in annualized ACV growth in FY26, including about $4.5 million from Sandbox, implying ~19% organic net ACV bookings growth at the midpoint. The company sees meaningful upside from DocFox integration and onboarding rebound in H2 FY26, with full impact on subscription revenues realized in FY27.
- Margin and profitability: Non-GAAP operating income targeted at $107–$111 million in FY26, about 100 bps of operating margin expansion for the full year (with H2 contributing ~200 bps leverage). This reflects investments in sales/marketing (roughly $10 million for the year), international expansion, and R&D efficiencies driven by AI.
- Guideposts for investors to monitor: (1) progression of ACV bookings and ACV net retention (target 106% in FY25, potential upward momentum); (2) progression of international bookings (EMEA execution and Japan wins); (3) onboarding of Sandbox and DocFox integration benefits; (4) progress toward the Rule of 40 by FY27; (5) impact of platform pricing migrations on reported subscription revenue and renewals; (6) macroeconomic conditions driving customer spending and deregulation tailwinds in the U.S. The company asserts that execution and customer adoption will drive a reacceleration in FY27 and beyond.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
NCNO Focus
59.67%
-4.06%
-1.71%
-52.92%
CWAN
73.50%
0.96%
41.60%
3.72%
MLNK
66.50%
-0.22%
-1.81%
-50.41%
ENV
61.90%
-56.30%
-32.20%
-3.70%
MODN
57.70%
-0.59%
0.55%
374.50%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
nCino’s QQ4 2025 results reflect a transformational phase where the company is transitioning from a growth-at-all-costs period to a more disciplined, AI-driven, platform-centric growth trajectory. The combination of a strong ACV base with 106% net retention, ongoing international expansion, and a multiyear pricing transition to platform pricing provides a credible path to higher ARR and improved gross margins as more customers migrate to higher-value, AI-enabled solutions. The FY26 guidance acknowledges near-term headwinds (FX, mortgage churn, onboarding integration lags) but contemplates meaningful bookings acceleration in H2FY26 and a more robust revenue trajectory in FY27 as onboarding solutions, Sandbox integration, and Banking Advisor capabilities scale. The company’s plan to achieve the Rule of 40 by roughly FY27, a notable stock repurchase program, and continued M&A-driven SAM expansion support an attractive longer-term investment thesis, albeit with higher risk given integration timelines and macro uncertainty. Investors should monitor ACV bookings momentum, international market execution (EMEA and Japan), the ramp of quota-bearing sales reps, platform pricing migrations, and the realization of cost efficiencies from FullCircl and Sandbox to gauge the trajectory toward sustainable profitability.
Key Investment Factors
Growth Potential
- AI-enabled Banking Advisor and agentic AI capabilities embedded across the platform, with ongoing integration of Sandbox API hub to unlock data access and gateway functionality, positioning nCino to capture cross-sell opportunities across Commercial, Consumer, Mortgage and Credit Union segments.
- ACV expansion driven by international growth (EMEA and Japan) and higher penetration in non-commercial segments, with 13% YoY ACV growth and 106% ACV net retention in FY25; 19% organic net ACV bookings growth implied in FY26.
Profitability Risk
- Near-term revenue growth remains a leading indicator; macro headwinds, churn normalization, and mortgage market uncertainty may delay gains.
- Pricing transition to platform pricing introduces a ~1% subscription uplift in FY26 with ongoing migration risk and potential earnings volatility until migrations are complete.
- Integration risk from multiple acquisitions (DocFox, FullCircl, Allegro, Sandbox) and potential cross-border execution risks in Europe.
- Competitive dynamics in mortgage and IMB space, potential regulatory changes and deregulation pace affecting customer IT spending.
Financial Position
- Robust liquidity position with cash and equivalents around $121m and a net debt position of approximately $116m.
- Acquisition-driven growth funded via revolving credit facility; Sandbox Banking acquisition completed post-quarter with expected COGS savings of ~$1m annually and accretive subscription growth.
- Free cash flow generation remained positive for FY25 at $53.4m, despite acquisition-related costs; management targets ongoing marginal operating margin expansion and improved leverage through scale.
SWOT Analysis
Strengths
Strong ACV growth and high ACV net retention (ACV 516.4m, +13% YoY; net retention 106%)
Weaknesses
Near-term profitability pressures (Q4 non-GAAP net income -$18.6m; gross margin ~59.7%), acquisition-related costs and integration risk, moderate gross margin vs SaaS peers
Opportunities
AI-first product suite (Banking Advisor, doc validation, continuous credit monitoring) accelerating platform adoption; onboarding and Consumer Lending momentum; international expansion (EMEA, Japan); credit union cross-sell via Allegro; M&A-driven SAM expansion (Sandbox integration)
Threats
Macroeconomic headwinds and delayed bookings recovery; mortgage market volatility; currency headwinds (FX impact on ACV); competition in IMB/mortgage ecosystems; potential regulatory shifts affecting tech investments