Why nCino (NCNO) Stock Is Trading Up Today

Radek Strnad /
2024/03/27 12:21 pm EDT

What Happened:

Shares of bank software company nCino (NASDAQ:NCNO) jumped 20.3% in the morning session after the company reported fourth quarter results with revenue in line with analysts' expectations, but its operating income, EPS, and free cash flow significantly beat, painting a picture of stronger profitability. The company's full-year 2024 guidance confirmed this, as its forecasted EPS blew past Wall Street's projections. During the quarter, nCino's President and Chief Revenue Officer, Josh Glover, announced he would be stepping down to join another company. Furthermore, on March 18, 2024, nCino announced it would acquire DocFox, a solution provider automating onboarding experiences for commercial and business banking clients. The terms of the deal were not disclosed. DocFox was founded in 2016 and has over 450 global customers. Overall, it was a strong quarter for the company. Following the results, Morgan Stanley upgraded the stock's rating from Underweight (Sell) to Equal Weight (Neutral) and raised the price target from $24 to $27.

Is now the time to buy nCino? Access our full analysis report here, it's free.

What is the market telling us:

nCino's shares are very volatile and over the last year have had 15 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 biggest move we wrote about over the last year was 10 months ago, when the stock dropped 12.5% on the news that 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.

nCino is up 4.2% since the beginning of the year. Investors who bought $1,000 worth of nCino's shares at the IPO in July 2020 would now be looking at an investment worth $394.26.

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