nCino NASDAQ: NCNO reported second-quarter fiscal 2027 revenue growth and raised portions of its full-year outlook, as the company highlighted demand for its banking software platform and growing customer adoption of its AI capabilities.
Total revenue for the quarter was $161 million, up 8% from a year earlier, while subscription revenue increased 10% to $143.5 million, Chief Financial Officer Greg Orenstein said. Subscription revenue excluding U.S. mortgage rose 12% year over year, including on a constant-currency basis.
Non-GAAP operating income increased 36% year over year to $40.8 million, representing 25% of total revenue. Free cash flow rose 170% to $34 million. Professional services revenue declined 3% to $17.5 million, though professional services gross margin improved to 3% from negative 3% a year earlier as the company prioritized profitability over services revenue growth.
AI Adoption and Platform Pricing
Chief Executive Officer Sean Desmond said nCino continued to see customer interest in consolidating banking workflows—including lending, onboarding, account opening and portfolio monitoring—on its unified platform. The company is emphasizing AI-enabled functions through its Banking Advisor products and its platform-pricing model.
During the quarter, nCino signed early multiyear renewals with four of its 20 largest U.S. enterprise customers by annual contract value, or ACV. The four customers represented more than $900 billion in assets and renewed with average ACV increases of more than 10%, according to Desmond.
As of the end of the quarter, 12 of nCino’s top 20 U.S. enterprise customers by ACV had transitioned to the company’s platform-pricing model under multiyear contract extensions. About 48% of total ACV was on platform pricing, compared with 40% in the prior quarter.
More than 230 customers had purchased AI Intelligence Units by quarter-end, Desmond said. The company has begun selling additional units to some customers that reached the limits of their initial bundles, though it does not expect that monetization to materially affect fiscal 2027 results. Management said its current priority is building long-term adoption rather than maximizing near-term subscription revenue from the units.
Desmond pointed to Continuous Credit Monitoring, a Banking Advisor capability, as a potential medium-term driver of Intelligence Unit consumption. The feature can assess more than 40 credit and operational indicators daily, identify loans requiring attention and help create documentation for review. He said the product combines natural-language capabilities with nCino’s proprietary deterministic models and algorithms, which are intended to support traceable and auditable banking processes.
One U.S. enterprise customer estimated that nCino’s “locate and file” capability could save 160,000 hours annually. Using an estimated $35 hourly loan officer compensation figure, Desmond said that would equate to more than $5.5 million in annual savings. The customer was still in a sandbox environment while working through security reviews, Orenstein said.
International Wins and Cross-Selling
nCino cited new international customer wins, including Hachijuni Nagano Bank in Japan for consumer lending and a growth-focused development finance institution in Germany for commercial lending. Non-U.S. revenue grew 9% to $36.4 million, while international subscription revenue rose 13% to $30.9 million.
The company also described several expansion deals in the U.S. A regional bank with more than $15 billion in assets expanded from commercial lending and treasury management into consumer lending. A Seattle-based credit union added commercial and small-business lending as well as commercial account opening, while a Northeast community bank expanded into mortgage capabilities.
Orenstein said nCino signed what it expects to be its largest deal of the fiscal year with an international customer early in the third quarter. The company plans to discuss that transaction in more detail on its next earnings call.
Mortgage Headwinds Persist
U.S. mortgage subscription revenue was $20.6 million in the second quarter, down 1% year over year. Management said higher mortgage rates continue to pressure the independent mortgage bank, or IMB, market and contribute to industry consolidation.
Desmond said nCino is pursuing market-share opportunities among banks, credit unions and IMBs, including an IMB customer that returned after leaving in August 2024 for a lower-cost competitor. The customer came back after experiencing reliability issues and a cumbersome borrower experience with the alternative product, he said.
For the full year, nCino kept its aggregate churn expectation at about $25 million, but said the forecast now includes a somewhat higher mix of IMB churn and less churn elsewhere in the business. Desmond said mortgage represents about one-third of the expected annual churn.
Outlook and Capital Returns
For the third quarter, nCino forecast total revenue of $161.25 million to $163.25 million and subscription revenue of $143.25 million to $145.25 million. At the midpoint, the guidance implies 7% total revenue growth and 8% subscription revenue growth. Excluding U.S. mortgage, third-quarter subscription revenue is expected to grow 11%.
For fiscal 2027, the company now expects total revenue of $644 million to $647 million and subscription revenue of $573.5 million to $576.5 million. The midpoint represents 9% total revenue growth and 10% subscription revenue growth, with subscription growth excluding U.S. mortgage expected to be 12%.
The company reduced its U.S. mortgage subscription revenue forecast to approximately $20 million for the third quarter and $18.5 million for the fourth quarter, reflecting expected IMB churn amid the higher-for-longer rate environment. It raised its full-year non-GAAP operating income outlook to $171 million to $174 million, from a prior range of $166 million to $171 million, and lifted free-cash-flow guidance to $137 million to $142 million.
nCino also repurchased approximately 4.2 million shares during the second quarter for about $65 million, at an average price of $15.41 per share. The company completed a previously announced $100 million accelerated share repurchase program and received authorization from its board for a new $100 million repurchase program.
About nCino (NASDAQ:NCNO)
nCino, Inc provides a cloud-based banking operating system designed to modernize and streamline processes for financial institutions. Built on a software-as-a-service (SaaS) model, the nCino Bank Operating System integrates key banking functions into a unified platform, enabling banks and credit unions to enhance efficiency, reduce risk and improve customer experiences.
Founded in 2012 as a spinoff from Live Oak Bank, nCino launched its flagship offering to address the needs of commercial and retail lenders seeking to replace legacy systems.
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