What Happened:
Shares of maker of operating system for banks nCino (NASDAQ:NCNO) fell 12.5% in the after-market session after the company reported first-quarter revenue that topped analysts' expectations. Earnings per share also beat convincingly. In addition, free cash flow improved significantly, bucking the trend of growing cash burn observed in the last two quarters. However, the guidance was underwhelming and drove the narrative. Revenue and subscription revenue guidance for the next quarter were below Consensus. The full-year revenue guidance was roughly in line. Similarly, earnings per share guidance for both the next quarter and the full year were in line with market expectations. Overall, it was a solid quarter for the company but the guidance left more to be desired.
What is the market telling us:
nCino's shares are very volatile and over the last year have had 44 moves greater than 5%. But moves this big are very rare even for nCino and that is indicating to us that this news had a significant impact on the market's perception of the business. The previous big move was about two months ago, when the company dropped 5.16% on the news that Morgan Stanley's analyst downgraded the stock's rating from Overweight (Buy) to Equal-Weight (Hold) and lowered the price target from $27 to $25.
nCino is down 7.38% since the beginning of the year, and at $24.62 per share it is trading 37% below its 52-week high of $39.08 from August 2022. Investors who bought $1,000 worth of nCino's shares at the IPO in July 2020 would now be looking at an investment worth $267.28.
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