Banking software provider nCino (NASDAQ: NCNO) announced better-than-expected revenue in Q2 CY2025, with sales up 12.4% year on year to $148.8 million. Guidance for next quarter’s revenue was better than expected at $147 million at the midpoint, 0.8% above analysts’ estimates. Its non-GAAP profit of $0.22 per share was 58.1% above analysts’ consensus estimates.
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nCino (NCNO) Q2 CY2025 Highlights:
- Revenue: $148.8 million vs analyst estimates of $143.2 million (12.4% year-on-year growth, 3.9% beat)
- Adjusted EPS: $0.22 vs analyst estimates of $0.14 (58.1% beat)
- Adjusted Operating Income: $30.01 million vs analyst estimates of $24.12 million (20.2% margin, 24.4% beat)
- The company lifted its revenue guidance for the full year to $587 million at the midpoint from $580.5 million, a 1.1% increase
- Management raised its full-year Adjusted EPS guidance to $0.79 at the midpoint, a 11.3% increase
- Operating Margin: -6.2%, in line with the same quarter last year
- Free Cash Flow Margin: 8.5%, down from 36.5% in the previous quarter
- Market Capitalization: $3.27 billion
"We are pleased to report financial results that again exceeded quarterly guidance for total and subscription revenues, as well as non-GAAP operating income," said Sean Desmond, CEO at nCino.
Company Overview
Born from the internal technology needs of a community bank in 2011, nCino (NASDAQ: NCNO) provides cloud-based software that helps financial institutions streamline client onboarding, loan origination, and account opening processes.
Revenue Growth
A company’s long-term performance is an indicator of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last three years, nCino grew its sales at a 19.1% compounded annual growth rate. Although this growth is acceptable on an absolute basis, it fell slightly short of our standards for the software sector, which enjoys a number of secular tailwinds.
This quarter, nCino reported year-on-year revenue growth of 12.4%, and its $148.8 million of revenue exceeded Wall Street’s estimates by 3.9%. Company management is currently guiding for a 5.9% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 4.9% over the next 12 months, a deceleration versus the last three years. This projection is underwhelming and suggests its products and services will face some demand challenges.
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Customer Acquisition Efficiency
The customer acquisition cost (CAC) payback period represents the months required to recover the cost of acquiring a new customer. Essentially, it’s the break-even point for sales and marketing investments. A shorter CAC payback period is ideal, as it implies better returns on investment and business scalability.
nCino does a decent job acquiring new customers, and its CAC payback period checked in at 44.7 months this quarter. The company’s relatively fast recovery of its customer acquisition costs gives it the option to accelerate growth by increasing its sales and marketing investments. 
Key Takeaways from nCino’s Q2 Results
We were impressed by nCino’s optimistic EPS guidance for next quarter, which blew past analysts’ expectations. We were also glad its full-year EPS guidance trumped Wall Street’s estimates. Zooming out, we think this was a solid print. The stock traded up 5.5% to $30.25 immediately after reporting.
Sure, nCino had a solid quarter, but if we look at the bigger picture, is this stock a buy? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
