nCino Q2 2027 Earnings Report

nCino EPS Results

• Actual EPS: N/A
• Consensus EPS: $0.27
• Beat/Miss: N/A
• One Year Ago EPS: $0.22

nCino Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $159.14 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

nCino Announcement Details

• Quarter: Q2 2027
• Date: 8/25/2026
• Time: After Market Closes
• Conference Call Date: Tuesday, August 25, 2026
• Conference Call Time: 4:30PM ET

nCino (NASDAQ:NCNO), Inc. (NASDAQ: NCNO) provides cloud-based software designed to help banks, credit unions and other financial institutions manage and modernize their operations. Its platform, known as the nCino Bank Operating System, is built to streamline processes, improve collaboration and provide a unified view of customer and financial data.

The company’s products support commercial, small-business, consumer and mortgage lending, as well as account opening, deposit origination, onboarding, credit analysis, portfolio management and regulatory compliance. nCino also offers tools for workflow automation, reporting and analytics, helping financial institutions replace manual and fragmented processes with digital applications.

nCino was founded in 2011 as a technology initiative associated with Live Oak Bank, a Wilmington, North Carolina-based financial institution, and was later established as an independent company. It serves financial institutions in the United States and international markets, including customers across North America, Europe and the Asia-Pacific region.

nCino Q2 2027 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Second-quarter total revenue rose 8% year over year to $161 million, while subscription revenue increased 10% to $143.5 million. Non-GAAP operating income grew 36% to $40.8 million, and free cash flow surged 170% to $34 million.
• Positive Sentiment: Management raised fiscal 2027 non-GAAP operating income guidance to $171 million–$174 million and free cash flow guidance to $137 million–$142 million. Excluding U.S. mortgage, subscription growth is expected to accelerate to 12% in the fourth quarter.
• Negative Sentiment: Higher-for-longer mortgage rates are pressuring independent mortgage banks and increasing expected churn in the segment. U.S. mortgage subscription revenue forecasts were reduced to approximately $20 million in Q3 and $18.5 million in Q4, although total-year churn expectations remain unchanged at about $25 million.
• Positive Sentiment: AI adoption is gaining traction, with more than 230 customers purchasing Intelligence Units and one-third of customers on the new pricing model already in production. Management cited potential savings of over $5.5 million annually for one enterprise customer from a single Banking Advisor capability and expects AI consumption to become a material long-term growth driver.
• Positive Sentiment: Twenty large U.S. enterprise customers renewed early with average ACV increases exceeding 10%, and 48% of total ACV is now under platform pricing. The company also authorized an additional $100 million share-repurchase program after buying back roughly $165 million of stock during the quarter.

Presentation

[Operator]

Thank you for standing by and welcome to nCino's second quarter fiscal year 2027 financial results conference call. At this time, all participants are in listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star one one on your telephone. If your question has been answered and you would like to remove yourself from the queue, simply press star one one again. As a reminder, today's program is being recorded. Now I would like to introduce your host for today's program, Harrison Masters, Vice President Investor Relations. Please go ahead, sir.

[Harrison Masters, VP of Investor Relations at nCino]

Good afternoon and welcome to nCino's second quarter fiscal 2027 earnings call. With me on today's call are Sean Desmond, nCino's Chief Executive Officer, and Greg Orenstein, nCino's Chief Financial Officer. During the course of this conference call, we will make forward-looking statements regarding trends, strategies, and the anticipated performance of our business. These forward-looking statements are based on management's current views and expectations, entail certain assumptions made as of today's date, and are subject to various risks and uncertainties described in our SEC filings and other publicly available documents, the financial services industry, and global economic conditions. nCino disclaims any obligation to update or revise any forward-looking statements. Further, on today's call, we will also discuss certain non-GAAP metrics that we believe aid in the understanding of our financial results.

[Harrison Masters, VP of Investor Relations at nCino]

A reconciliation to comparable GAAP metrics can be found in today's earnings release, which is available on our website and as an exhibit to the Form 8-K furnished with the SEC just before this call, as well as the earnings presentation on our investor relations website at investor.ncino.com. With that, I will turn the call over to Sean.

[Sean Desmond, CEO at nCino]

Thank you, Harrison, and welcome to nCino's second quarter fiscal 2027 earnings call. I am very proud of the team's consistent focus and execution this past quarter. We continue to deliver on our commitments, once again outperforming all financial guidance metrics and find ourselves very well positioned for the second half of this fiscal year and beyond. Over the last several months, my time on the road with customers, prospects, and partners has continued to validate our strategy. Each interaction, whether in Charlotte, Oklahoma City, New York, Tokyo, Amsterdam, or Jackson, Mississippi, has reinforced how uniquely positioned nCino is to be the trusted global leader in AI-powered banking. With the rapid evolution in technology and market dynamics, financial institutions of all sizes the world over are looking for a trusted partner rather than more vendors, and nCino is increasingly recognized as that partner.

[Sean Desmond, CEO at nCino]

We are the partner the market can count on to innovate and bring the right technology to solve banking specific operational, risk management, and regulatory compliance challenges. Our solutions for lending, onboarding, account opening, and portfolio monitoring run on a unified AI-powered platform, allowing customers to consolidate and streamline operations with one vendor and gain efficiencies other technology companies simply can't match. During the second quarter, we signed multi-year renewals with 20 of our largest U.S. enterprise customers by ACV, representing over $900 billion in assets. All four renewed ahead of schedule with an average ACV increase of more than 10% because they wanted access to nCino's rapidly expanding suite of AI tools and functionality. These customers are some of the largest financial institutions in the country and have the financial and technical resources to build internally if they chose to.

[Sean Desmond, CEO at nCino]

They're proactively doubling down on nCino because we've spent nearly 15 years building the trusted global system of record for critical banking processes. We've done the heavy lifting of building the data foundation, workflows, governance, security infrastructure, and regulatory compliance capabilities of the nCino platform and embedded AI and intelligence throughout. That work is difficult, risky, costly, distracting, and time-consuming, and exactly why so many internal build initiatives at some of the world's largest financial institutions have historically failed. This is also why so many of our customers are telling us they have no desire to attempt to rebuild an incredibly complex tier one mission-critical enterprise application themselves simply because AI has made coding easier. nCino has the product functionality, data, workflow, context, customer relationships and regulatory knowledge and credibility to turn AI into accountable actions and to drive significantly better outcomes for customers.

[Sean Desmond, CEO at nCino]

We believe those advantages have become even more evident to the market since our last earnings call as more customers use our Banking Advisor capabilities in production and realize meaningful outcomes for their organizations. nCino enables financial institutions to drive the specific banking outcomes they want, backed by 15 years of data governance, regulatory tracking, compliance, and the domain-specific context they require. As of the end of the second quarter, 12 of our top 20 U.S. enterprise customers by ACV have already transitioned to our new pricing model under multi-year contract extensions. Approximately 48% of our total ACV is now on platform pricing, up from just 40% last quarter.

[Sean Desmond, CEO at nCino]

New customer wins like Hachijuni Nagano Bank in Japan, who selected nCino for consumer lending, and a growth-focused development finance institution in Germany that selected nCino for commercial lending, are the latest proof points that our unified platform and AI capabilities are resonating on a global basis. nCino's deep banking domain expertise and market-leading product innovation and AI capabilities were clear differentiators against local market competitors, horizontal workflow vendors, and potential internal build options in these recent international sales cycles. These attributes have also been clear differentiators for other customers around the world that are reinforcing their commitment to the nCino platform in the form of expanded and renewed commitments for the next phase of technology and operational transformation. The breadth and depth of our unique platform gives us the confidence to land with any solution and expand across our full suite as our customers' needs grow.

[Sean Desmond, CEO at nCino]

This is especially true in the community and regional bank and credit union markets, where centralized decision-making frequently allows us to sell multiple solutions or the entire platform to a single buyer. The second quarter was no exception in demonstrating this point. A regional bank with over $15 billion in assets expanded its adoption of nCino from commercial lending and treasury management to now include consumer lending. A Seattle-based credit union and portfolio analytics customer since 2014 expanded their commitment to the nCino platform in a major way by adding commercial and small business lending, plus commercial account opening. A community bank in the Northeast expanded their nCino adoption from commercial and consumer lending and account opening to also include mortgage. A credit union with almost $5 billion in assets became a seven-figure ACV customer through an expansion of their existing mortgage deployment to support their strategic growth objectives.

[Sean Desmond, CEO at nCino]

Despite these mortgage wins with depository financial institutions, the higher-for-longer mortgage rate environment is pressing the independent mortgage bank market and driving incremental M&A. While the rate environment remains a headwind to the U.S. mortgage industry, we continue to focus on expanding our market share by adding logos with a market-leading AI-powered experience. To that end, we were pleased to welcome back an IMB customer that left in August 2024 for a less expensive solution. Reliability issues and a cumbersome borrower experience with that solution, along with pushback from their own sales team about losing potential borrowers, brought them back to nCino. Customers and prospects recognize that nCino has been investing in AI, rapidly evolving and advancing our business model, and leading the industry by aggressively incorporating intelligent and AI capabilities into our solutions with measurable results.

[Sean Desmond, CEO at nCino]

As an example, one of our U.S. enterprise customers estimates they can save 160,000 hours annually by utilizing our locate and file functionality, which is just one of our Banking Advisor capabilities. When extrapolated by about $35 per hour to approximate median loan officer compensation according to the Bureau of Labor Statistics, that yields annual savings of over $5.5 million. Again, that level of savings is from using just one Banking Advisor capability. Proof points like this are motivating customers to transition our platform pricing model to gain access to nCino's agentic solutions and other AI initiatives. At the end of the second quarter, over 230 customers have already purchased AI Intelligence Units. We are no longer trying to convince prospective customers that we can lead the transition to agentic AI-powered banking. We are doing it.

[Sean Desmond, CEO at nCino]

The energy and momentum we are seeing in customer and prospect conversations around the globe reflects that conviction. I mentioned during our first quarter earnings call that some customers were beginning to reach the limits of their initial Intelligence Unit bundles. We have recently begun monetizing the sale of additional Intelligence Units as clients come back for more, which is really exciting to see and a strong signal of engagement with our Banking Advisor capabilities. Our focus for the foreseeable future will remain on driving long-term sustainable AI adoption over near-term subscription revenues growth. We do not expect this early additional monetization to materially impact our financial results in fiscal 2027. However, the adoption trends and consumption trajectory we are seeing give us increasing confidence that Intelligence Unit consumption through the adoption of our AI capabilities will be a material driver of subscription revenues growth for years to come.

[Sean Desmond, CEO at nCino]

You may recall us referencing Continuous Credit Monitoring, or CCM for short, which is one of our Banking Advisor capabilities currently driving a meaningful amount of Intelligence Unit consumption. CCM is a great example of how nCino leverages LLMs where they excel and add value. In this case, powering a natural language chat experience paired with our own proprietary predictive models, algorithms, and data. Rather than having credit teams manually review a commercial portfolio on a quarterly, semi-annual, or annual basis, nCino's Continuous Credit Monitoring can assess more than 40 credit and operational indicators on a daily basis and can identify the loans that warrant attention, create the necessary documentation to review, and help guide the next appropriate actions.

[Sean Desmond, CEO at nCino]

This functionality gives relationship managers and credit teams the ability to focus their time on issues requiring careful judgment while giving senior leaders a current portfolio-level view of risk and the ability to drill into underlying exposures in detail. What's important to understand here is that this is not simply an LLM layered onto a bank or credit union's data. Banking requires reliable, traceable, auditable, and governed outcomes. While we use LLMs to summarize and understand intent across multiple data sources, the core of our Continuous Credit Monitoring's functionality is guided by nCino's internally developed, purpose-built deterministic models and algorithms. We use these to consistently apply the same defined rules because a financial institution must be able to reproduce, explain, and defend how every single credit decision was made and how every process was executed.

[Sean Desmond, CEO at nCino]

We believe the Continuous Credit Monitoring functionality will be a meaningful medium-term driver of Intelligence Unit consumption. That's because this isn't just a simple chat interaction. It is performing ongoing, highly complex multi-step processes across critical banking activities. This is software that is actually doing the work of a bank or credit union employee, not just helping that employee do the work. The combination of our unique operational data, deep banking expertise, and tested governance and security infrastructure is what enables nCino to deliver this kind of outcome to our customers in a way that simply cannot be replicated by adding non-deterministic LLM on top of core banking data. I have yet to hear a C-level executive at a financial institution express a desire to automate their business processes on public cloud data.

[Sean Desmond, CEO at nCino]

Conversely, they are as excited about offerings like CCM as we are, and I look forward to updating you on its progress over the coming quarters. Based on the conversations we are having with customers and prospects, we believe financial institutions of all sizes around the world are gaining a better and more clear understanding and appreciation of the uniqueness, value, and differentiation nCino's AI technology provides, which we believe has been a significant driver of the sales momentum we have seen over the past year and continue to see in our sales pipeline today. The pace of product innovation nCino is realizing today would not have been possible a few years ago.

[Sean Desmond, CEO at nCino]

Through our own initiatives and our internal teams' use of AI, we are seeing tighter alignment across product development, engineering, and professional services, allowing us to learn from FDE engagements and customer deployments and incorporate those lessons back into the platform more quickly. It's also great to see that we are attracting extremely strong technical and banking talent that wants to join nCino to help define, build, and deploy the next generation of financial services technology. Attracting and retaining talent is a strategic and stated top priority for the company. We remain laser-focused on execution and continue to make strong progress against the strategy and growth levers we've highlighted over the past year and a half. We continue to focus on what we can control and are energized by the accelerated subscription revenues growth we are seeing in the business outside of U.S. mortgage.

[Sean Desmond, CEO at nCino]

In summary, our business is strong and continues to gain momentum. We continue to see customers up and down the asset size spectrum renew early and expand their use of our AI technology. Our sales pipelines are healthy and diversified across segments, solutions, and geographies. With that, I'll turn the call over to Greg.

[Greg Orenstein, CFO at nCino]

Thank you, Sean. Thanks everyone for joining us this afternoon to review our second quarter fiscal 2027 financial results. Please note that all numbers referenced in my remarks are on a non-GAAP basis unless otherwise stated. A reconciliation to comparable GAAP metrics can be found in today's earnings release, which is available on our website and as an exhibit to the Form 8-K furnished with the SEC just before this call. We are again pleased with our financial results. Total revenues for the second quarter of fiscal 2027 were $161 million, an increase of 8% year-over-year. Subscription revenues for the second quarter were $143.5 million, up 10% year-over-year and also 10% in constant currency. U.S.

[Greg Orenstein, CFO at nCino]

mortgage subscription revenues were $20.6 million in the second quarter, down 1% year-over-year, contributing $100,000 of overperformance in the quarter against our guidance, as noted on slide 14 of our earnings presentation. Excluding U.S. mortgage, subscription revenues in the second quarter increased 12% year-over-year, and also 12% in constant currency, reflecting strong sales execution, which helped deliver approximately $1.3 million of upside to our subscription revenues guidance for the quarter. Professional services revenues were $17.5 million in the quarter, down 3% year-over-year. Professional services gross profit margin was 3% in the second quarter, up 600 basis points over negative 3% in the second quarter of fiscal 2026. We continue to prioritize improving the profitability of our professional services practice over growth in professional services revenues. Non-U.S.

[Greg Orenstein, CFO at nCino]

Total revenues in the second quarter were $36.4 million, up 9% year-over-year and also 9% in constant currency. Non-U.S. subscription revenues were $30.9 million, up 13% year-over-year, and also 13% in constant currency. Non-U.S. subscription revenues were negatively impacted by a slight FX headwind of approximately $200,000 in the second quarter. Non-GAAP operating income in the second quarter was $40.8 million or 25% of total revenues, an increase of 36% year-over-year. As noted on slide 14 of our earnings presentation, of the $3.3 million in non-GAAP operating income overperformance in the second quarter, approximately $900,000 was from incremental gross profit derived from subscription revenues overperformance, and the remaining $2.4 million was driven by disciplined expense management across the organization, with teams executing effectively against plan.

[Greg Orenstein, CFO at nCino]

As expected, our annual customer conference hosted in May drove the sequential increase in second quarter sales and marketing expenses. Free cash flow was $34 million in the second quarter, up 170% year-over-year. Turning to an update on our share repurchase programs. In the second quarter, we repurchased approximately 4.2 million shares of the company's outstanding common stock and open market purchases at an average price of $15.41 per share for a total consideration of approximately $65 million. Additionally, in the second quarter, we finalized the accelerated share repurchase program we announced on March 31, 2026. Under that program, we repurchased approximately 6 million shares of our outstanding common stock at an average price of $16.57 per share for a total consideration of $100 million.

[Greg Orenstein, CFO at nCino]

Since April 2025, the company has repurchased approximately 15.8 million shares of our outstanding common stock at an average price of $18.99 per share, for total consideration of $300 million. Having effectively exhausted all prior repurchase authorizations, our board of directors has authorized another $100 million share repurchase program. We continue to view opportunistic repurchases of our common stock as a compelling use of capital as available free cash flow permits in light of the momentum we see in the business and the sizable global opportunity we have in front of us. Turning to guidance. For the third quarter of fiscal 2027, we expect total revenues of $161.25 million-$163.25 million, with subscription revenues of $143.25 million-$145.25 million, an increase of 7% and 8% respectively at the midpoint of the ranges.

[Greg Orenstein, CFO at nCino]

Excluding U.S. mortgage, our third quarter guidance assumes subscription revenues growth of 11% at the midpoint of the range. Non-GAAP operating income in the third quarter of fiscal 2027 is expected to be approximately $42 million-$44 million, an increase of approximately 8% year-over-year at the midpoint of the range. For fiscal year 2027, we now expect total revenues of $644 million-$647 million, with subscription revenues of $573.5 million-$576.5 million, an increase of 9% and 10% respectively at the midpoint of the ranges. Excluding U.S. mortgage, our updated full year guidance assumes subscription revenues growth of 12% at the midpoint of the range. As noted on slide 15 of our earnings presentation, we are extrapolating the second quarter execution-based overperformance in subscription revenues of approximately $1.3 million to both the third and fourth quarters.

[Greg Orenstein, CFO at nCino]

This is offset in part by an adjustment to our U.S. mortgage outlook, which we believe is prudent to do at this time to account for additional IMB churn resulting from mortgage rates remaining higher for longer. We are now forecasting U.S. mortgage subscription revenues of approximately $20 million in the third quarter and approximately $18.5 million in the fourth quarter, the sequential quarterly variance reflecting normal fourth quarter market seasonality.

[Greg Orenstein, CFO at nCino]

This update represents a reduction in our prior U.S. mortgage subscription revenues forecast of approximately $700,000 in the third quarter and approximately $1.2 million in the fourth quarter. Please note that our overall company churn expectations for fiscal 2027 remain unchanged, but our churn forecast now includes a slightly higher mix of IMB churn, offset by less churn across the rest of the business, with earlier timing assumed that negatively impacts subscription revenues in the second half of the year.

[Greg Orenstein, CFO at nCino]

We continue to expect international subscription revenues to remain accretive to overall subscription revenues growth in each of the third and fourth quarters of fiscal 2027. Notwithstanding that, we now assume FX headwinds of approximately $200,000 in each of the third and fourth quarters. Excluding U.S. mortgage, our full year guidance implies fourth quarter subscription revenues growth of 12% at the midpoint of the range, representing year-over-year growth acceleration of 400 basis points, which we largely attribute to sales momentum emerging from the excitement around our AI strategy and product innovation and continued strong sales execution.

[Greg Orenstein, CFO at nCino]

We are very proud of the progress we have made re-accelerating subscription revenues growth outside of U.S. Mortgage and are excited for the potential to further accelerate total subscription revenues growth in a better mortgage market, as we believe the re-accelerated growth we are achieving this year in the rest of the business is durable. We now expect non-GAAP operating income for fiscal 2027 to be $171 million-$174 million, up from our prior range of $166 million-$171 million. Our updated guidance represents an increase in non-GAAP operating income of approximately 33% year-over-year at the midpoint of the range and non-GAAP operating income margin expansion of approximately 500 basis points.

[Greg Orenstein, CFO at nCino]

We expect to continue delivering non-GAAP operating margin expansion in the ordinary course beyond this fiscal year as the business continues to scale, while balancing the opportunity to optimize subscription revenues growth, which remains our focus and priority. We are quite pleased with the progress we have made in the first half of the year and feel really good about the business right now as a result of the AI and product innovation being delivered by our R&D organization, the execution of our sales teams, and the demand environment and the sales activity we see reflected in our global sales pipelines. For fiscal 2027, we continue to expect net additions to ACV of $60 million-$65 million on a constant currency basis, representing cumulative ACV of $662.5 million-$667.5 million, up 10% over fiscal 2026 ending ACV at the midpoint of the range.

[Greg Orenstein, CFO at nCino]

For full year fiscal 2027, we are again raising our free cash flow guidance to now be $137 million-$142 million, up from our prior range of $135 million-$140 million, representing year-over-year growth of 69% at the midpoint of the range. With that, we will open the line for questions.

[Operator]

Certainly. Our first question for today comes from the line of Saket Kalia from Barclays. Your question, please.

[Saket Kalia, Analyst at Barclays]

Okay, great. Hey, guys. Thanks for taking my questions here. Sean, maybe for you, I was wondering if we could dig into the mortgage business just a little bit more. Maybe specifically, I would love to hit on maybe how your competitive win rates have looked and if there are more opportunities to gain share to maybe help offset some of this market headwind. You had a great example of a win-back. I am curious how you think about sort of win rates and that opportunity for continued market share gains.

[Sean Desmond, CEO at nCino]

Yeah, thank you, Saket. Appreciate the question and where you are coming from. We actually highlighted two wins there, one in a community bank, one in a credit union in the script, and more broadly in the market. While we do see the higher for longer rate environment has been a headwind as called out, we think this is a really good business for us, and we think the IMB market is very important. At the same time, as we talk about these wins in the community bank and credit union landscape, we think continued wins in the core banking sector where there is less volatility and more stability are ready for the taking, both down and potentially upmarket. So we are excited there. It remains adjacent to every conversation as we talk about the power of the platform in the environment that we operate in.

[Sean Desmond, CEO at nCino]

The motions that we run across commercial, consumer, and mortgage give us a diversified portfolio and is absolutely accretive to not only our pipeline growth, but the first half of year momentum we have, and we are really excited about the second half.

[Saket Kalia, Analyst at Barclays]

Got it. That is super interesting. Greg, maybe for my follow-up for you. You noted the revised outlook for Mortgage, which makes a ton of sense given the rate environment that we are in. Can you just recap for us how you are thinking about sort of the non-mortgage part of the business in terms of growth here this year? Maybe just as importantly, what could be the biggest drivers of upside to that non-mortgage part of the business? Does that make sense?

[Greg Orenstein, CFO at nCino]

It does, Saket. Appreciate the question and your time today. Look, excluding U.S. Mortgage, our third quarter guidance assumes subscription revenues growth of 11% at the Q3 midpoint. 12% at the midpoint it implies for Q4, which is an overall growth acceleration year-over-year, 400 basis points. We did want to make clear in terms of mortgage, which as you note, is the higher for longer market that we are going through. Make sure you guys appreciate that and not have that overshadow the rest of the business, which is performing quite well. In terms of drivers for growth, look, we feel really good about our product portfolio overall. Our flagship commercial product continues to have strong demand across the globe.

[Greg Orenstein, CFO at nCino]

Ultimately, I would remind you of the five growth initiatives that we laid out last year, which are AI, international credit unions, cross-selling mortgage to banks and credit unions, as Sean just touched upon, as well as onboarding. To me, the exciting thing to highlight is that while we feel really good about the progress we are making with each one of those initiatives, it is still early, and the accelerated growth we are driving really is not with those fully contributing as we expect they will be able to next year and beyond. We feel like we have planted the seeds for growth. We feel like we have got multiple growth levers to add on to the growth that we are already seeing from a re-acceleration standpoint. We are really excited where we are. We will continue to control what we can control.

[Greg Orenstein, CFO at nCino]

As we talked about in our prepared remarks, and as Sean noted, we'll continue to aggressively try to take logos down in the mortgage business, which is what we were successfully able to do. If you go back a couple of years ago in the, I'll call it more darker days of mortgage, we were able to add a lot of logos and ultimately outpace the churn that we experienced in that, which was, from my perspective, a much more difficult market than it is today, even though we do have headwinds today.

[Saket Kalia, Analyst at Barclays]

Makes a ton of sense, guys. Thank you.

[Greg Orenstein, CFO at nCino]

Thanks, Saket.

[Operator]

Thank you. Our next question comes from the line of Alex Sklar from Raymond James. Your question, please.

[Alex Sklar, Analyst at Raymond James]

Great. Thank you. Sean, first one for you on Banking Advisor and some of the agentic launches. Nearly 50% of the base now on the new platform model. What have you seen on the usage side of things the last three months? You talked about CCM, but any clear-cut skills or use cases where you've been able to replicate the case studies across multiple users, multiple different customers that you've really been able to arm the sales force to kind of go back to base on?

[Sean Desmond, CEO at nCino]

Yeah, Alex, the first thing that comes to mind is we have more and more customers by the day going into production with Banking Advisor and our Digital Partners and agentic capabilities. In fact, year to date, we've more than doubled the customers going into production, which is exciting. Of the core customers that we've named that are on our new pricing model and have adopted our AI capabilities, one-third of those are in production today. All of that trends really well. As you know, in traditional sort of environments where you test in Sandbox and then move to production once you gain confidence, then you see measurable outcomes that you can drive to the bottom line of your business and directly to your balance sheet. Those start to get the attention of the executives in C-suites that sign the checks in the first place.

[Sean Desmond, CEO at nCino]

That's what we're looking for, is to directly correlate those outcomes in production to what we're delivering. While in some cases it still takes longer than we would like to get to production because we have to go through governance and security reviews and all the things that need to be contemplated in the AI world, we're seeing really good momentum there. We call out in the script some of our Continuous Credit Monitoring capabilities. We call out in the script locate and file. If you think about locate and file, for me, really being the floor, not the ceiling. We talked about 160,000 hours annually for one particular niche use case in a single workflow. Remember, Alex, we're delivering workflows across all the motions that we run, onboarding, account opening, loan origination, and portfolio monitoring across commercial, consumer, and mortgage.

[Sean Desmond, CEO at nCino]

If you extrapolate that locate and file potential and capability across all the workflows that we have in production environments over time, hopefully you can tell I'm pretty fired up about that.

[Greg Orenstein, CFO at nCino]

Yeah. Just to add to that, Sean, as we talk about a third of those customers being in production, I think one of the things that's really exciting is we've got a nice queue all lined up as we take customers from signing to implementation to get through testing and then ultimately into production. We see that queue lined up, and I think that's something that's exciting and bodes well. To that point, the $160,000 client savings that Sean referenced, right now they're still in Sandbox.

[Greg Orenstein, CFO at nCino]

We're working with them to get through security, which we will. That's a great example of just the process that you need to go through with our customer base, which is highly regulated, conservative market, before they'll actually go into production and start seeing it live the outcomes that we're able to produce. To Sean's point, we are pretty excited about what we see happening right now.

[Alex Sklar, Analyst at Raymond James]

Okay. I appreciate that color from both of you there. Greg, maybe a follow-up for you just on the ACV outlook. I think it's clear that your intention is not to update that as the year progresses, but as we sit here today at the halfway point, any change in terms of where you are coverage-wise of that outlook relative to last year, or how is seasonality shaping up versus expectations? Maybe any change in terms of international composition of that mix versus prior years? Thanks.

[Greg Orenstein, CFO at nCino]

Yeah. Thanks, Alex. Just to clarify, I said $160,000. It was referring to 160,000 hours that our enterprise customer estimates they'll be able to save with the locate and file. Capability. But no, as you heard in my prepared remarks, we feel really good about where we are in the progress in the first half of the year. Pipelines look good, market demand looks good. As we go into the second half of the year, we are pretty energized here.

[Greg Orenstein, CFO at nCino]

Just to that point, we can note that just last week we signed what we expect to be our largest deal of the year, with an international customer. It is a Q3 deal, so we will talk about it more on the next call. Certainly this early in the second half of the year, getting that out of the way bodes well. Obviously, we have five months left, so we have work to do, but again, we are feeling pretty good right now.

[Alex Sklar, Analyst at Raymond James]

Great. Thanks for that color, Greg.

[Greg Orenstein, CFO at nCino]

Thanks, Alex.

[Operator]

Thank you. Our next question comes from the line of Ryan Tomasello from KBW. Your question please.

[Ryan Tomasello, Analyst at KBW]

Thanks, everyone. I wanted to ask about the Rule of 50 framework that you provided a few years ago and confirm whether or not you still view that as a North Star for outcomes you are looking to achieve. In particular, if the implied 15% subscription revenue growth component of that target was still intact. On that same topic, in terms of Intelligence Units, do you view that as being a necessary contributor to that 15% or potentially additive to that framework depending on how things play out? Thanks.

[Sean Desmond, CEO at nCino]

Yeah. In terms of long-term, we have stated aggressively this year we would hit the Rule of 40 commitment, and we are excited. We feel like we are hitting that early, with expense discipline and with growth re-acceleration year-over-year, quarter-over-quarter. As we think long-term, we expect to remain at that pace, and we expect growth to continue to accelerate and make up a larger portion of our overall delivery mechanism. As far as this year, when we are talking about Q2, we are excited about the trajectory to the Rule of 40. Once we tackle that and read that back, we will set our sights on what growth looks like between now and the path to beyond 40.

[Greg Orenstein, CFO at nCino]

Yeah, Ryan, I think if you go back to our earnings day, our Analyst Day last year, we focused on the Rule of but really more on that 35% non-GAAP operating margin, which again, hopefully everyone is seeing the progress that we have continued to make towards that. We do continue to err on the side of growth. I noted when I was on stage during that Analyst Day that we believe that framework is intact. We have not said anything since then around the top line. Again, I think we are doing the right things, in order to continue to accelerate growth at the company and get back to what we think is a more reasonable level of growth for a company of this quality with the market opportunity we have in front of us.

[Sean Desmond, CEO at nCino]

We are very focused on the growth. When we sit here mid-year, and we beat our aggregate annual operating plan halfway through the year when we are in a position that we signed our largest deal of the year early in the third quarter. It is about growth, and we talk about our growth initiatives, and how they are maturing and how we think about them contributing over time. We will continue to focus on that growth. We have exercised very good discipline on the expense side as well.

[Ryan Tomasello, Analyst at KBW]

Appreciate that. In terms of the ACV bookings targets for this year, can you say what mix of renewals and upsells versus new logos that contemplates? How does that compare to what you achieved last year? If you could also just remind us how that mix in terms of renewals versus net new logos, changes the math around the level of conversion that you would expect to see on this year's bookings into next year's subscription revenue.

[Greg Orenstein, CFO at nCino]

Yeah, Ryan, I think you can assume at this point it's fairly comparable. As we get more and more momentum outside of the U.S., those are generally going to be leaning towards more new logos just because of the white space we have outside of the U.S. But again, we've got a great customer base globally, but particularly here in the U.S., and we have a lot of product to sell to them. Again, I think one of the things we feel really good about is the output from our R&D organization, the acceleration of product. Again, I think that we don't distinguish cross-selling to a current customer or landing a net new logo. For us, it's all ACV. Again, with the breadth and depth of product portfolio we have, we feel like they're both opportunities for us.

[Ryan Tomasello, Analyst at KBW]

Great. Thanks, guys.

[Greg Orenstein, CFO at nCino]

Thanks, Ryan.

[Operator]

Thank you. Our next question comes from the line of Michael Infante from Morgan Stanley. Your question, please. Michael, you might have your phone on mute. Still not hearing anything. Our next question in that case comes from the line of Aaron Kimson from Citizens. Your question, please.

[Aaron Kimson, Analyst at Citizens]

Great. Thank you. Sean, you talked about the symbiosis you're seeing between your product development and implementation teams. As we think about the pace at which you're rolling out new product and the pace at which your heavily regulated customer base is willing and able to adopt those new products, do you feel like the bottleneck to incremental growth today is more on the customer and implementation side or the product development side?

[Sean Desmond, CEO at nCino]

Yeah. You can hear the excitement with the pace of innovation that we're putting out into the market. I have never seen more product delivered in a six-month period than I did the first half of this year. I reviewed that with our product team last week, and we presented that to our board. That pace I expect to continue. As we've talked about both in my comments as well as Greg's here, yes, we're in a highly regulated industry. There's compliance, there's regulation, there are security reviews. To a certain degree, that's just part of the business that we're in. I do expect that there will be more pent-up demand to adopt those features. We will outpace what we're delivering into the market. I expect the product development pace to run ahead of how our customers can actually consume that.

[Sean Desmond, CEO at nCino]

We're seeing that at every segment of the market. Not just enterprise, but in the community and regional spaces as well. That's okay, right? That's just part of doing business. I think you're starting to see some of the narrative overall in the landscape shift around what AI is going to be. You're hearing about the gap between adoption and outcomes, and we have always been focused on the outcomes. We've never taken our eye off the ball on what truly matters. That's driving efficiency into the bottom line for our customers through increased loan cycle times, greater production by role, and that for us remains just a core principle at nCino.

[Aaron Kimson, Analyst at Citizens]

Got it. To build on that, consumer's about 2/3 of the SAM revenues, roughly the inverse. A lot of focus and energy has gone into building out the consumer side of the business, going back to the announcement of the SimpleNexus acquisition in 2021. Given that Frontier models continue to improve and the amount of unstructured data that goes into commercial lending that you can now utilize, do you feel it makes sense to focus relatively more development resources and energy on the commercial opportunity at this time?

[Sean Desmond, CEO at nCino]

Listen, we talk about the platform wins, right? We talk about a balanced portfolio across commercial, consumer, and mortgage. Our flagship and core business is very strong, right? We're very excited that the commercial business in the domestic U.S. market from community up to enterprise is very strong. At the same time, we've called out in the script consumer deals at regional banks. We've called out international deals the largest this year outside of the U.S. So to me, that's the power not only of the platform but being a global company, is a diverse portfolio. We invest accordingly to keep up that pace. We probably have more breadth overall in our commercial pace, and we're making sure we balance the functionality across all lines of business that we serve.

[Aaron Kimson, Analyst at Citizens]

Thank you.

[Sean Desmond, CEO at nCino]

Thanks, Aaron.

[Operator]

Thank you. Our next question comes from the line of Chris Kennedy from William Blair. Your question, please.

[Chris Kennedy, Analyst at William Blair]

Yeah, good afternoon. Thanks for taking the question. It's clear it's not going to materially impact fiscal 2027 results, but is there a way to frame the opportunity with Intelligence Units consumption?

[Sean Desmond, CEO at nCino]

Yeah. We understand where you're coming from with the question. Everybody's got their model out there. I'm not in the business of trying to provide the exact inputs, not knowing those models. But in our business model, we have been very clear that we're confident in our posture this year. We're excited about the growth that we've got both in the first and second quarter, and we're excited about the momentum in the business.

[Sean Desmond, CEO at nCino]

We don't expect to reframe anything for the back half of the year based on Intelligence Units alone. But over time, as those queues that Greg referred to move from development into production, as customers get through security reviews, as customers take on more of our agentic capabilities and Digital Partners experiences, that will show up over time. But for fiscal 2027, we're excited about the business, and we're not changing any of the sort of inputs that you're looking for necessarily.

[Greg Orenstein, CFO at nCino]

Yeah, Chris, as we've been highlighting, for us, it's all about adoption this year. We believe that will lead to material help our drivers from a top-line acceleration perspective, top-line growth perspective. We've got a lot of models here. One gets me more excited than the next. We do have discussions in terms of KPIs and things, but I think the most prudent thing to do is not get ahead of ourselves, and continue to focus on adoption. As we get more and more data points from our customers, more and more outcomes where our customers are realizing the value, like that 160,000-hour example Sean said, I think we'll be able to come to you with more clarity and definitiveness in terms of the model. We understand the question, and again, we'll continue to work towards providing that clarity.

[Chris Kennedy, Analyst at William Blair]

Got it. Thanks for that. Just real quick as a follow-up, can you just remind us of the churn that you expect in fiscal 2027? You mentioned it in your prepared remarks. Just give us a clear update on that. Thank you.

[Greg Orenstein, CFO at nCino]

Yeah. As I said in my prepared remarks, our churn forecast hasn't changed for the year from an aggregate basis, which is about $25 million of churn for the year. Again, it tilted a little bit more towards mortgage, specifically driven by IMBs and less towards the rest of the business. Overall, it stayed consistent with where our forecast has been from the beginning of the year.

[Chris Kennedy, Analyst at William Blair]

Okay. Thank you.

[Sean Desmond, CEO at nCino]

And to drill down one more point, mortgage is about a third of that $25 million. Consistent with last year.

[Chris Kennedy, Analyst at William Blair]

Got it. Thank you.

[Sean Desmond, CEO at nCino]

Thanks, Chris.

[Operator]

Thank you. Our next question comes from the line of Joe Vruwink from Baird. Your question, please.

[Joe Vruwink, Analyst at Baird]

Hi, Greg. Thanks. Your largest customers, I think, spend over $5 million on nCino. So hearing about double-digit increases in ACV with those renewal examples is impressive. I was wondering, can you maybe compare how ACV increases are comparing at renewal more broadly across your customer base? You shared maybe some enterprise examples, but the experience at small regional or maybe even U.S. international. I am wondering if there are certain segments of your customer base that are leaning in more to what nCino can offer.

[Sean Desmond, CEO at nCino]

Yeah. Thanks, Joe. We did call out specifically some of those enterprise metrics, but the reality is, when we think about ACV increase in growth, both in new business and balance across the board, community and regional, up to enterprise banks and across the credit unions as well. Again, that speaks to the power of the platform and a diversified growth strategy.

[Joe Vruwink, Analyst at Baird]

Great. Thanks for that. A question on just price discovery around your AI capabilities. When you sit down with customers and you start walking through what is possible and you hear a customer say there are millions in potential savings that could come from this, how do you think about then broaching the topic of nCino sharing in the savings? Is it a 50/50 split, 25/75? Is this a way to maybe further the conversation beyond just the implication of Intelligence Unit credits and what those are worth and your broader role for that account?

[Sean Desmond, CEO at nCino]

Yeah. I'll point back to our focus on outcomes as has always been clear in we're serving up agentic solutions and delivering an AI. As far as numbers and metrics with calculations, what we look at is a business case, right? With every customer, always have. Before AI and after AI is what does that business case look like? If we can extrapolate those 160,000 hours we're talking about across multiple workflows, that's going to save a customer, we're excited about that. We don't think that fundamentally changes the pricing dynamics. We went through a pretty extensive exercise on the pricing transformation that we rolled out at the beginning of last year. What we want to do, again, is just deliver efficiency to the bottom line of our customers as much as we possibly can.

[Joe Vruwink, Analyst at Baird]

Thank you.

[Sean Desmond, CEO at nCino]

Thank you.

[Operator]

Thank you. Our next question comes from the line of Andrew Schmidt from KeyBanc. Your question, please.

[Andrew Schmidt, Analyst at KeyBanc]

Hi, Sean. Hey, Greg. Thanks for all the commentary this evening. I wanted to ask about the enterprise renewals. Good data points there. I guess when we think about contract duration broadly in enterprise, I typically think about those three to five years. I am curious if there is any deviation in recent renewals, either shorter or longer. When we think about sort of the 10% ACV uplift, obviously the flip to the platform pricing is one component, access to AI modules is another. I think another big part of it is probably sort of additional modules and capabilities you are delivering. I am just curious kind of what is the uptake on the additional sort of module side just beyond sort of the platform and AI component involved here. Thanks so much.

[Sean Desmond, CEO at nCino]

The first part of your question, I mean, terms are generally steady. We do not see a material swing or change in the terms of our contracts in enterprise due to the current time that we are in with the pricing transformation as well as the agentic solutions that we are delivering. That is holding firm. Can you restate the second part of the question with additional modules? I just want to make sure I understood correctly.

[Andrew Schmidt, Analyst at KeyBanc]

Yeah. It was kind of the attribution to there is a 10% ACV uplift, and obviously a part of that is the flip to platform-based pricing, access to AI modules. I would imagine another piece is just delivering more value, additional modules to enterprise customers if that is part of the equation as well. I am just curious if there is just additional uptake there to consider when you think about just these new renewals, enterprise deals beyond sort of the AI modules that enterprise customers are getting access to.

[Sean Desmond, CEO at nCino]

Absolutely there is, Andrew. The 10% is really think about it apples for apples in terms of them buying no new product, but getting the first bundle or the initial bundle of Intelligence Units. For each one of our renewals, our focal point is going to the customer, working with them to see where else we can expand in the financial institution, right?

[Sean Desmond, CEO at nCino]

Which is again, one of the unique things about nCino and our platform story and all the product that we have to sell them, as I referenced earlier. There is much upside as we go into being able to sell them more. But again, just on an apples-to-apples basis with the only difference being the initial bundle of Intelligence Units. We laid out that 10% target last year. After Q4, we confirmed that we exceeded it, and again, we are continuing to see that as we go through this year.

[Andrew Schmidt, Analyst at KeyBanc]

Got it. Appreciate those comments. Very helpful. If you think about professional services, Greg, I get the comment about seeking profitability versus revenue. Makes sense. PS margins continue to be profitable, which is great. I guess, just trying to think about the trajectory from here on the PS side. It seems like some of this efficiency continues. Then I think on the revenue side, as you get more efficient, is there an offset in terms of lower hours required? Obviously, the North Star is efficiency and profitability, but just trying to understand how that works through the model. Thanks.

[Greg Orenstein, CFO at nCino]

Yeah. I think that the PS organization continues to do a good job of making our implementations more efficient. We will continue to focus on, again, driving margin. Again, we will do that at the expense of revenue and get the overall total cost of ownership for our customers down. That is a win for all of us. As we do free up capacity, we are turning those folks into support our FDE engagements as we continue to have high demand for that part of our organization. Again, that is something we are excited about and again, that we expect will fuel more accelerated adoption of Intelligence Units as we deploy our FDEs on a global basis.

[Sean Desmond, CEO at nCino]

Remember I talked about the pace and all that has been delivered the first half of this year. The more output and productivity that we see coming from the R&D organization, the more things we have to deploy. The same thing I would tell you is as we gain efficiencies in our release management and how we actually push out new technologies, we continue to rotate managed services capacity toward the forward deploy engineering group so we can keep pace and avoid the bottlenecks that were referred to earlier in the call.

[Andrew Schmidt, Analyst at KeyBanc]

That makes sense. Sounds like the throughput is really ramping. Congrats, guys. Thanks for the comments.

[Sean Desmond, CEO at nCino]

Appreciate the questions.

[Operator]

Thank you. Our next question comes from the line of Terry Tillman from Truist Securities. Your question please.

[Terry Tillman, Analyst at Truist Securities]

Yeah. Hey, Sean, Greg, and Harrison. Thanks for fitting me in. I'll make them really quick, which is rare for me. In terms of the four enterprise renewals early, that's great to see. I think you said you're now, if I'm not mistaken, 12 of 20 of your top customers in the new platform pricing. I'm curious, could you see a situation that some folks that would've been FY 2028s or calendar 2027s actually move into the second half of this year? Is there anything contemplated around that? Or it could happen, but you're just not going to bank that on that net ACV? I had a follow-up.

[Sean Desmond, CEO at nCino]

Hey, listen, we're out there with an aggressive posture every day, trying to expand the functionality we have in the customer base that we have. So anything is possible. We have a team that's motivated, that's hungry, and has really strong trust, credibility, and relationships in our customer base. If we have alignment with the outcomes our customers are looking and our posture, then why not? We're anchoring to our core actual conservative estimates for this year. Always looking to accelerate.

[Greg Orenstein, CFO at nCino]

Yeah. Terry, we've been pretty consistent over the last few quarters about these accelerated renewals. From a demand perspective, we haven't seen that wane. Some of it is just timing and just working through some of these procurement processes. But in terms of the excitement with what we're doing, the capabilities that our R&D organization are producing, and ultimately, as Sean continues to note, as we focus on the organization, the outcomes we're producing for our customers, we expect that to continue to drive some accelerated renewals over the coming quarters.

[Terry Tillman, Analyst at Truist Securities]

That's great. Just maybe real quick on international, Greg, it was great to hear about an early 3Q deal. That's awesome. Sean, I know you all have been working on kind of leadership changes in the past and then starting to build a pipeline. Are you pretty much all done with all that work and now it's just harvesting, or is there still some low-hanging fruit areas ahead? Just trying to understand if that international could keep kind of outpacing the rest of the business from growth. Thank you.

[Sean Desmond, CEO at nCino]

Sure. Thanks for the question. The platform value proposition is proving to resonate internationally as well as it is domestically. We're excited about the momentum, the outcomes that we're delivering for our customers as we talk about the excitement from EMEA to Asia PAC is real. So I don't think it's dependent on any single individual. Again, the power of the platform and a global team and a machine here where we can ebb and flow. You're constantly going to have changes in your personnel, and a sustainable and long-term viable business model should be able to withstand those. So I don't spend a lot of time right now worrying about do we have the team on the field. I'm excited about the outcomes we're delivering and really proud of the team.

[Terry Tillman, Analyst at Truist Securities]

All right. Thank you.

[Operator]

Thank you. Our next question comes from the line of Nick Altmann from U.S. Bancorp. Your question please.

[Nick Altmann, Analyst at U.S. Bancorp]

Hey. Awesome. Thank you guys. I actually wanted to follow up on Terry's first question, but maybe ask it a little bit differently. If 48% of your base is on the new pricing, what are your expectations for that? Where that should land at the end of the year, and I guess how are those expectations different versus when you entered the year? Thanks.

[Sean Desmond, CEO at nCino]

I think we'll continue at the pace that we've been on. We don't necessarily call out being dependent on a percentage of the customer base being on the new model to meet our fiscal commitments. We continue to execute and do what we said we were going to do with respect to our core financial targets. Certainly we'll be north of 48%. I think that growth will correlate as it has over the past several quarters.

[Greg Orenstein, CFO at nCino]

Yeah, Nick, I think the good news is it continues to go well, ahead of schedule for us. Sales team's doing a great job of working with our customers through these renewals. I think the momentum that we're seeing, we do expect to continue without putting a specific target on it. I'll also note, it was good to hear the U.S. Bank reference. Again, congrats on that.

[Nick Altmann, Analyst at U.S. Bancorp]

Great. Thank you so much.

[Operator]

Thank you. Our next question comes from the line of Ella Smith from JPMorgan. Your question, please. Ella, you might have your phone on mute. Our next question comes from the line of Ken Suchoski from Autonomous Research. Your question, please.

[Ken Suchoski, Analyst at Autonomous Research]

Hey, good afternoon. Thanks for taking the question. Maybe just one on the churn. I think, Greg, you mentioned slightly higher mix of IMB churn offset by less churn on the rest of the business. Maybe just talk about what's driving the improvement on the non-mortgage churn and just which segment does that show up in? Thank you.

[Greg Orenstein, CFO at nCino]

Thanks, Ken. I think just as we kind of separate the businesses as we've done for this call, again, to make sure you guys can appreciate. Ultimately, there's not one specific place. Again, it's slightly higher on the IMB side, I said, and slightly lower on the rest of the business, just based on our forecast at the beginning of the year. As we go into each year, we've got some identified churn based on whatever circumstances, and then we also have some unidentified churn that we do for forecasting purposes.

[Greg Orenstein, CFO at nCino]

As stuff comes up, our teams do a great job of figuring out what's going on. Is there some way that we can mitigate a potential churn risk. I'd say nothing worthy from a churn perspective, again, other than obviously on the IMB side with the higher for longer rates. Again, we see that driving a little bit higher churn, but I think overall, as I noted, no update in terms of where we started the year from an aggregate basis.

[Ken Suchoski, Analyst at Autonomous Research]

Mm-hmm. Okay, great. Just the one comment on the Banking Advisor capabilities. I think you guys called out $5.5 million of savings. It sounds like a lot of savings, call it 40 hours a week and 50 weeks a year that replaces. It's like 80 loan officers, basically. How should we think about the size of this particular opportunity versus some of the other ways customers are leveraging Banking Advisors? Is this like an extraordinarily large opportunity or will these multimillion-dollar per feature, per customer charges be the norm? Thank you.

[Sean Desmond, CEO at nCino]

Yeah. I'll kind of reiterate the comment I made earlier about this being sort of the floor base case, not the ceiling, in my opinion. This is a particular example of a single skill within a workflow and a line of business. If we extrapolate that across the platform, across the solution portfolio, across lines of business, and across the globe as customers take cohorts into production, you can imagine that while we're not putting a number on it's nothing but upside, in our opinion.

[Greg Orenstein, CFO at nCino]

Yeah. Ken, I think the other thing to note is what is really exciting is kind of the funnel of additional capabilities that the team has out. A lot of them are in Sandbox and being tested. But again, on upcoming calls, I think you should look forward to hearing us talk about more similar type capabilities that we think can drive significant value to our customers. We are excited about that.

[Ken Suchoski, Analyst at Autonomous Research]

Exciting stuff. All right. Thank you, Sean. Thank you, Greg.

[Greg Orenstein, CFO at nCino]

Appreciate your questions.

[Operator]

Thank you. Our next question comes from the line of Michael Infante from Morgan Stanley. Your question, please.

[Michael Infante, Analyst at Morgan Stanley]

Hi, guys. Can you hear me now?

[Operator]

Yes.

[Michael Infante, Analyst at Morgan Stanley]

Great. Sorry about that earlier. I just wanted to clarify because I think it got glossed over earlier in the call. When I run the math on organic subscription revenue excluding mortgage and some of the one-timers that you've previously called out, it looks like it accelerated sequentially, grew anywhere between 13% and 14% in the quarter, even with pretty minimal contribution from Banking Advisor. I think that's basically the fastest growth rate in close to two years. To the extent that I'm in the right zip code on that math, why wouldn't the underlying growth rate accelerate in the back half of the year, just given you have easier comps in the second half on one-timers and presumably more contribution from Banking Advisor as we progress throughout the next couple quarters? Thanks, guys.

[Greg Orenstein, CFO at nCino]

Thanks, Michael. Yeah, I don't think we would correct your assessment in terms of growth, which again, hopefully, you guys are hearing our excitement about it, and we're real proud of the team and the focus and the execution. The back half of the year, again, we try to be incredibly transparent with breaking out mortgage so you guys could see the impact of that to the back half of the year. Also highlighting, again, the growth that's implied in Q4 exiting without mortgage.

[Greg Orenstein, CFO at nCino]

Obviously, we'll take some mortgage, less headwinds for mortgage as they come along. Again, I think as you look at the rest of the business, we're feeling good about the trajectory, and our focus is just on continuing to execute, and make sure, again, as you've heard me say before, Michael, make sure we close the deals we say we're going to close, and close them when we say we're going to close them.

[Michael Infante, Analyst at Morgan Stanley]

Thanks, Greg.

[Greg Orenstein, CFO at nCino]

Thank you.

[Operator]

Thank you. Our next question comes from the line of Billy Fitzsimmons from Piper Sandler. Your question, please.

[Billy Fitzsimmons, Analyst at Piper Sandler]

Oh, great. Thanks for taking the question. You guys highlighted how 230 customers are purchasing Intelligence Units today and increasing consumption. For those first customers, you also highlighted how some of the first customers are purchasing additional units. Can we just take a step back here and talk about the progression from initial AI adoption to production deployments and to broader budget expansion? It sounds like one of the things you guys talked about in the prepared remarks is that there's been a little bit of a shift in customer behavior where you're not necessarily needing to go to them and convince them to take action. Many of them are taking action right now. As we think ahead, just help us think about how the Intelligence Unit sales kind of materialize into future subscription revenue streams, and what's that bridge?

[Sean Desmond, CEO at nCino]

Yeah, you have heard us. Appreciate it. I heard most of that. It was kind of in and out in the middle. I think you are talking about what does the trajectory look like for the Intelligence Unit consumption. We will remain very steadfast in that a big update here for this call is the movement into production with customers who have been using our AI solutions in Sandbox and development prior. As those cohorts move in and we have one-third of the customers and twice as many customers in production now as we did at the beginning of the year, then we can actually read back the outcomes, right? We read back the outcomes.

[Sean Desmond, CEO at nCino]

That puts folks in a position where they say, "Okay, if I move from one to more Banking Advisor skills, Digital Partners, what is that going to look like for my outcomes?" We will actually be able to read back to them that gap. That is the major narrative in the macro environment right now is the difference between adoption and actually value we are deriving from the outcomes. As we get into production, that is the place where it shows up.

[Billy Fitzsimmons, Analyst at Piper Sandler]

Perfect. Hopefully I am coming through clear now. I apologize for that. That was the gist of what I was asking. If I could sneak in another one. You guys recently released the mortgage MCP. How do we think about kind of the opening up of the platform and integrations with third-party tools?

[Sean Desmond, CEO at nCino]

Yeah. This is a big milestone for the company. As you can imagine, a large part of our growth story over the years has been our partnerships and the system integrator ecosystem going to market with nCino across all segments and across banks as well as credit unions and IMBs. When we think about giving access to our solution to these partners to go ahead and develop on top of the platform, that becomes a force multiplier for nCino. We have 1,600 employees today. We have talked about rotating the capacity toward our forward deploy engineering groups. If we can really put a multiplier in the SI ecosystem through access from our MCP layer, that really just gives us a proliferation of growth that is hard to put a ceiling on.

[Billy Fitzsimmons, Analyst at Piper Sandler]

Perfect. Thank you very much.

[Sean Desmond, CEO at nCino]

Thank you.

[Operator]

Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Sean for any further remarks.

[Sean Desmond, CEO at nCino]

Yeah. Thank you all for your time this evening. Really hope you can hear our excitement in the business. Proud of our teams, energized by the momentum, and we look forward to continuing to update you all throughout the year. Have a good night.

[Operator]

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Participants

Executives

• Harrison Masters, VP of Investor Relations
• Sean Desmond, CEO
• Greg Orenstein, CFO

Analysts

• Saket Kalia, Analyst at Barclays
• Alex Sklar, Analyst at Raymond James
• Ryan Tomasello, Analyst at KBW
• Aaron Kimson, Analyst at Citizens
• Chris Kennedy, Analyst at William Blair
• Joe Vruwink, Analyst at Baird
• Andrew Schmidt, Analyst at KeyBanc
• Terry Tillman, Analyst at Truist Securities
• Nick Altmann, Analyst at U.S. Bancorp
• Ken Suchoski, Analyst at Autonomous Research
• Michael Infante, Analyst at Morgan Stanley
• Billy Fitzsimmons, Analyst at Piper Sandler