nCino Crushes Q2: AI Banking Wins
Get ready to dive deep into the latest financial pulse of a company that's truly transforming the banking landscape: nCino (NASDAQ: NCNO)! We're breaking down their Q2 Fiscal Year 2026 earnings call transcript, which unveiled some seriously impressive results and forward-looking strategies. If you're invested in the fintech space, or just curious about how financial institutions are evolving with cutting-edge technology and AI, you're in for a treat. nCino isn't just surviving; they're thriving by empowering banks, credit unions, and independent mortgage banks globally with a unified, cloud-native SaaS platform. Let's unwrap the key takeaways that have investors buzzing!
nCino delivered a powerful second quarter for fiscal 2026, outperforming its own guidance across revenue and profitability metrics. The numbers speak for themselves, showcasing robust growth and operational efficiency:
- Total Revenues: A solid $148.8 million, representing a healthy 12% year-over-year increase.
- Subscription Revenues: Hit $130.8 million, up an impressive 15% year-over-year on a reported basis, with 10% organic subscription revenue growth. This highlights the sticky nature of their core offerings!
- U.S. Mortgage Subscription Revenues: A standout at $20.9 million, rocketing up 22% year-over-year. This segment alone contributed an additional $1.7 million to subscription revenue overperformance!
- Non-U.S. Subscription Revenues: Saw strong growth at $27.4 million, climbing 30% year-over-year (27% in constant currency) with 10% organic growth. International markets are clearly heating up!
- Non-GAAP Operating Income: Reached $30 million, or 20% of total revenues, demonstrating enhanced profitability.
- Cash Position: The company ended the quarter with a healthy $123.2 million in cash, including restricted cash.
- Share Repurchases: nCino repurchased approximately 750,000 shares for $20 million, signaling confidence in its valuation and commitment to shareholder returns.
Looking Ahead: Raised Full-Year Guidance!
Management was so pleased with these results that they raised their full-year fiscal 2026 non-GAAP guidance:
- Subscription Revenues: Now projected between $513.5 million to $517.5 million, up from prior guidance, reflecting 10% growth at the midpoint.
- Total Revenues: Expected to be $585 million to $589 million.
- Non-GAAP Operating Income: Increased to $117.5 million to $121.5 million, a midpoint rise of approximately 24% over fiscal 2025.
This isn't just about hitting targets; it's about exceeding them and setting a higher bar for the future!
nCino's product strategy continues to evolve, with a major focus on embedding AI, data, and analytics across its unified platform. The star of this show is undoubtedly Banking Adviser, their AI-powered interface designed exclusively for financial institutions.
- Rapid Adoption: Over 80 customers have now purchased Banking Adviser, a significant leap from fewer than 20 at the start of fiscal 2026. This rapid uptake underscores the market's hunger for specialized AI solutions.
- Deep Integration & Understanding: Unlike generic AI, Banking Adviser is deeply integrated into nCino workflows. It understands financial products, process flows, regulatory nuances, and the day-to-day realities of banking. This context-aware AI is a game-changer for efficiency and compliance.
- Agentic Workflows: Sean Desmond, CEO, shared exciting news about rolling out "fully agentic workflows" next quarter. These capabilities will fundamentally change how banking professionals do their jobs, moving beyond mere assistance to proactive, intelligent automation. Imagine AI not just suggesting, but executing complex tasks within regulatory boundaries!
- Competitive Moat: nCino believes its decade-plus experience as a cloud banking pioneer, coupled with its deep understanding of banking data and regulatory complexities, positions it uniquely to lead the AI transformation in financial services. They are a trusted data partner, crucial for handling confidential financial information.
- Catalyst for Platform Pricing: The interest in Banking Adviser is so strong that it's even accelerating customer transitions to nCino's new platform-based pricing model, driving early renewals and anticipated price uplifts. This shows the immediate value customers see in these advanced AI capabilities.
nCino isn't just innovating; it's executing a multi-pronged growth strategy that's yielding tangible results across various markets and segments.
- North American Enterprise Strength: The company saw strong activity with its flagship commercial loan origination solution, securing significant expansion agreements with two top 50 U.S. banks and a top five Canadian bank.
- EMEA Expansion: A key focus for fiscal 2026, nCino successfully signed its first customer in Spain, a crucial step in its Continental Europe growth strategy where it sees a $4 billion market opportunity. Furthermore, ABN AMRO Bank in The Netherlands successfully went live with the nCino platform, a testament to the company's ability to handle large, transformational engagements with global financial institutions.
- Credit Union Market Activation: Following the creation of a dedicated go-to-market team, nCino added six new credit union logos and secured 35 cross-sell deals. One expansion deal with a $12 billion asset credit union pushed its annual commitment past the seven-figure mark, showcasing the success of tailored segment-specific strategies.
- Onboarding Opportunity: An existing UK challenger bank customer increased its ACV by over 80% by broadening its adoption to include nCino's onboarding solutions. This highlights the market demand for end-to-end client relationship management on a unified platform.
- Mortgage Cross-Sell & Platform Pricing: Despite a challenging broader market, nCino's U.S. mortgage subscription revenues surged due to concentrated volume gains among large independent mortgage banks (IMBs) and homebuilder clients. Management noted that the platform pricing shift made over the past couple of years is proving beneficial as the industry recovers, driving growth even without a broad market improvement.
Both CEO Sean Desmond and CFO Greg Orenstein emphasized a strong sense of urgency and accountability within the company, driving the impressive results.
- Supportive Macro Environment: Greg Orenstein noted that the macro environment is "more supportive" than what they've seen in recent years, with previous headwinds largely subsiding. This, combined with strong deal activity, creates a fertile ground for growth.
- AI as a Differentiator: Sean Desmond highlighted that AI is a topic in "virtually every customer conversation" and is already acting as a differentiator, helping to close deals and pull customers towards their new pricing framework.
- Focus on Professional Services Gross Margin: While professional services revenue decreased slightly, the internal focus is now firmly on improving gross profit margins through streamlined project execution and AI-enabled deployment initiatives. This strategic shift aims for gradual, meaningful improvements.
- Inorganic Contributions: Acquisitions like Full Circle and Sandbox Banking are contributing to revenue as planned, laying the groundwork for expanded customer lifecycle management (CLM) offerings, particularly in EMEA, and enhanced integration capabilities.
- Rule of 40 Commitment: nCino remains confident in achieving the "Rule of 40" (a common SaaS metric for growth + profitability) around fiscal 2027. Management reiterated that they will always "err on the side of growth" given the immense market opportunity and their unparalleled product portfolio.
Let's look at some of the interesting questions posed by analysts and how nCino's leadership responded:
Q1. What's driving nCino's reaccelerated organic growth, and is it sustainable?
A. Greg Orenstein attributed the strength to solid execution from the team and a more supportive macro environment, with previous headwinds largely subsiding. He noted that deal activity and sales opportunities haven't been this high in quite some time, making the team feel "good about the business" and focused on execution.
Q2. How important are the fully agentic workflows for Banking Adviser, and what's resonating with the 80+ customers?
A. Sean Desmond emphasized that AI is central to every customer conversation and is already contributing to wins. Banking Adviser's deep integration into nCino workflows and its understanding of financial products resonates strongly. He's excited about agentic experiences rolling out even earlier than anticipated, fundamentally changing how people do their jobs, while acknowledging the need for a balanced, mature approach to adoption.
Q3. What kind of uplift is nCino seeing from its platform pricing transition, especially with top banks?
A. Greg Orenstein confirmed that the transition is proceeding well and they are seeing price uplifts consistent with expectations, targeting around a 10% uplift on an "apples-to-apples basis" (no additional product). The biggest cohort of migrations is in Q4, but early signs are positive, especially with the lure of Banking Adviser skills included in the transition.
Q4. Is the strong U.S. mortgage subscription revenue growth due to market improvement or nCino's share gains?
A. Sean Desmond clarified that the growth stems from nCino's execution and market share gains among large IMBs and homebuilder clients, rather than a broad mortgage market recovery. He stated they don't need to rely on external factors like interest rates, but rather on having the "best tech in the marketplace" and disciplined execution.
Q5. How is nCino funding its growth, and what's the stronger driver: macro environment or vertical AI strategy?
A. Sean Desmond stressed that nCino will "bet on ourselves" and the investments it's making, particularly in AI. While an improving macro environment is helpful, AI is seen as a "massive inflection point" that drives outcomes and efficiency, which in turn drives revenue growth. The company focuses on what it can control: delivering unparalleled solutions.