nCino (NASDAQ:NCNO) Surprises With Q1 Sales But Quarterly Guidance Underwhelms

Jabin Bastian /
2024/05/29 4:10 pm EDT

Bank software company nCino (NASDAQ:NCNO) reported Q1 CY2024 results exceeding Wall Street analysts' expectations, with revenue up 12.7% year on year to $128.1 million. On the other hand, the company expects next quarter's revenue to be around $131 million, slightly below analysts' estimates. It made a non-GAAP profit of $0.19 per share, improving from its loss of $0.10 per share in the same quarter last year.

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nCino (NCNO) Q1 CY2024 Highlights:

  • Revenue: $128.1 million vs analyst estimates of $126.6 million (1.1% beat)
  • EPS (non-GAAP): $0.19 vs analyst estimates of $0.13 (40.9% beat)
  • Revenue Guidance for Q2 CY2024 is $131 million at the midpoint, below analyst estimates of $132.1 million
  • The company reconfirmed its revenue guidance for the full year of $541.5 million at the midpoint (slightly raised non-GAAP operating income and non-GAAP EPS guidance)
  • Gross Margin (GAAP): 60%, up from 59.4% in the same quarter last year
  • Free Cash Flow of $54.1 million, up from $7.72 million in the previous quarter
  • Market Capitalization: $3.49 billion

"Building on our fourth quarter momentum, we had a great start to the year, achieving our highest first-quarter gross sales in Company history,” said Pierre Naudé, Chairman and CEO at nCino.

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

As you can see below, nCino's revenue growth has been very strong over the last three years, growing from $62.36 million in Q1 2022 to $128.1 million this quarter.

nCino Total Revenue

This quarter, nCino's quarterly revenue was once again up 12.7% year on year. We can see that nCino's revenue increased by $4.39 million quarter on quarter, which is a solid improvement from the $1.75 million increase in Q4 CY2023. Shareholders should applaud the acceleration of growth.

Next quarter's guidance suggests that nCino is expecting revenue to grow 11.7% year on year to $131 million, slowing down from the 17.7% year-on-year increase it recorded in the same quarter last year. Looking ahead, analysts covering the company were expecting sales to grow 14.5% over the next 12 months before the earnings results announcement.

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Cash Is King

If you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. nCino's free cash flow came in at $54.1 million in Q1, up 82.2% year on year.

nCino Free Cash Flow

nCino has generated $78.17 million in free cash flow over the last 12 months, a solid 15.9% of revenue. This strong FCF margin stems from its asset-lite business model, giving it optionality and plenty of cash to reinvest in its business.

Key Takeaways from nCino's Q1 Results

It was encouraging to see nCino narrowly top analysts' revenue expectations this quarter. On the other hand, its revenue guidance for next quarter missed analysts' expectations. While full year revenue guidance was maintained, non-GAAP operating profit and non-GAAP EPS were both slightly raised, showing that growth is in line but that the growth is more profitable. Overall, this was a mixed quarter for nCino. The stock is flat after reporting and currently trades at $30.14 per share.

nCino may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.