0001902733-23-000078.txt : 20231129 0001902733-23-000078.hdr.sgml : 20231129 20231129171205 ACCESSION NUMBER: 0001902733-23-000078 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 88 CONFORMED PERIOD OF REPORT: 20231031 FILED AS OF DATE: 20231129 DATE AS OF CHANGE: 20231129 FILER: COMPANY DATA: COMPANY CONFORMED NAME: nCino, Inc. CENTRAL INDEX KEY: 0001902733 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-41211 FILM NUMBER: 231453223 BUSINESS ADDRESS: STREET 1: 6770 PARKER FARM DRIVE CITY: WILMINGTON STATE: NC ZIP: 28405 BUSINESS PHONE: 910-275-5491 MAIL ADDRESS: STREET 1: 6770 PARKER FARM DRIVE CITY: WILMINGTON STATE: NC ZIP: 28405 FORMER COMPANY: FORMER CONFORMED NAME: Penny HoldCo, Inc. DATE OF NAME CHANGE: 20220104 10-Q 1 ncno-20231031.htm 10-Q ncno-20231031
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 2023
OR
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __to __
Commission File Number: 001-41211

nCino, Inc.
(Exact name of Registrant as specified in its charter)
Delaware87-4154342
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
6770 Parker Farm Drive
Wilmington, North Carolina 28405
(Address of principal executive offices including zip code)

(888) 676-2466
(Registrant’s telephone number, including area code)

Securities Registered Pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.0005 per shareNCNOThe Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer
Accelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 113,133,108 shares of common stock, $0.0005 par value per share, as of November 24, 2023.



TABLE OF CONTENTS
Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements that are based on our beliefs and assumptions and on information currently available to us. Forward-looking statements include information concerning our possible or assumed future results of operations, business strategies and plans, trends, market sizing, competitive position, industry environment, potential growth opportunities and product capabilities, among other things. Forward-looking statements include all statements that are not historical facts and, in some cases, can be identified by terms such as “aim,” “anticipates,” “believes,” “could,” “estimates,” “expects,” “goal,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “seeks,” “should,” “strive,” “will,” “would,” or similar expressions and the negatives of those terms.
Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including those described in “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in this report. Given these uncertainties, you should not place undue reliance on these forward-looking statements.
Any forward-looking statement made by us in this report speaks only as of the date on which it is made. Except as required by law, we disclaim any obligation to update these forward-looking statements publicly, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
As used in this report, the terms “nCino,” the “Company,” “we,” “us,” and “our” mean nCino, Inc. and its subsidiaries unless the context indicates otherwise.
i

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
nCino, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
January 31, 2023October 31, 2023
(Unaudited)
Assets
Current assets
Cash and cash equivalents (VIE: $2,019 and $2,555 at January 31, 2023 and October 31, 2023, respectively)
$82,036 $100,475 
Accounts receivable, less allowances of $899 and $2,221 at January 31, 2023 and October 31, 2023, respectively
99,497 62,012 
Costs capitalized to obtain revenue contracts, current portion, net9,386 9,715 
Prepaid expenses and other current assets16,274 18,670 
Total current assets207,193 190,872 
Property and equipment, net84,442 80,557 
Operating lease right-of-use assets, net10,508 8,855 
Costs capitalized to obtain revenue contracts, noncurrent, net18,229 16,293 
Goodwill839,440 838,585 
Intangible assets, net152,825 121,695 
Investments (related party $2,500 at January 31, 2023 and October 31, 2023)
6,531 9,031 
Long-term prepaid expenses and other assets8,101 1,656 
Total assets$1,327,269 $1,267,544 
Liabilities, redeemable non-controlling interest, and stockholders’ equity
Current liabilities
Accounts payable$11,878 $12,526 
Accrued compensation and benefits22,623 13,748 
Accrued expenses and other current liabilities10,897 11,439 
Deferred revenue154,871 130,308 
Financing obligations, current portion1,015 1,429 
Operating lease liabilities, current portion3,874 3,523 
Total current liabilities205,158 172,973 
Operating lease liabilities, noncurrent7,282 6,460 
Deferred income taxes, noncurrent2,797 3,241 
Revolving credit facility, noncurrent30,000  
Financing obligations, noncurrent54,365 53,063 
Total liabilities299,602 235,737 
Commitments and contingencies (Note 12)
Redeemable non-controlling interest (Note 3)
3,589 3,198 
Stockholders’ equity
Preferred stock, $0.001 par value; 10,000,000 shares authorized, and none issued and outstanding as of January 31, 2023 and October 31, 2023
  
Common stock, $0.0005 par value; 500,000,000 shares authorized as of January 31, 2023 and October 31, 2023; 111,424,132 and 113,030,730 shares issued and outstanding as of January 31, 2023 and October 31, 2023, respectively
56 57 
Additional paid-in capital1,333,669 1,382,019 
Accumulated other comprehensive income694 906 
Accumulated deficit(310,341)(354,373)
Total stockholders’ equity1,024,078 1,028,609 
Total liabilities, redeemable non-controlling interest, and stockholders’ equity$1,327,269 $1,267,544 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

1

nCino, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
Three Months Ended October 31,Nine Months Ended October 31,
2022202320222023
Revenues
Subscription$88,290 $104,759 $251,924 $301,996 
Professional services and other17,006 17,183 47,210 50,854 
Total revenues105,296 121,942 299,134 352,850 
Cost of revenues
Subscription26,844 30,605 78,499 89,481 
Professional services and other16,312 17,420 46,180 52,779 
Total cost of revenues43,156 48,025 124,679 142,260 
Gross profit62,140 73,917 174,455 210,590 
Operating expenses
Sales and marketing32,423 38,446 94,274 100,551 
Research and development29,471 29,043 88,287 87,127 
General and administrative18,690 19,334 62,575 59,239 
Total operating expenses80,584 86,823 245,136 246,917 
Loss from operations(18,444)(12,906)(70,681)(36,327)
Non-operating income (expense)
Interest income87 685 115 2,057 
Interest expense(580)(854)(1,849)(3,277)
Other expense, net(2,911)(2,320)(5,498)(2,633)
Loss before income taxes(21,848)(15,395)(77,913)(40,180)
Income tax provision797 1,782 2,159 4,720 
Net loss(22,645)(17,177)(80,072)(44,900)
Net loss attributable to redeemable non-controlling interest (Note 3)
(257)(320)(908)(868)
Adjustment attributable to redeemable non-controlling interest (Note 3)
1,191 (478)2,348 (526)
Net loss attributable to nCino, Inc.$(23,579)$(16,379)$(81,512)$(43,506)
Net loss per share attributable to nCino, Inc.:
Basic and diluted$(0.21)$(0.15)$(0.74)$(0.39)
Weighted average number of common shares outstanding:
Basic and diluted110,897,811 112,951,553 110,434,171 112,484,017 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2

nCino, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)
Three Months Ended October 31,Nine Months Ended October 31,
2022202320222023
Net loss$(22,645)$(17,177)$(80,072)$(44,900)
Other comprehensive income:
Foreign currency translation472 74 1,581 214 
Other comprehensive income472 74 1,581 214 
Comprehensive loss(22,173)(17,103)(78,491)(44,686)
Less comprehensive loss attributable to redeemable non-controlling interest:
Net loss attributable to redeemable non-controlling interest(257)(320)(908)(868)
Foreign currency translation attributable to redeemable non-controlling interest(67)12 (249)2 
Comprehensive loss attributable to redeemable non-controlling interest(324)(308)(1,157)(866)
Comprehensive loss attributable to nCino, Inc.$(21,849)$(16,795)$(77,334)$(43,820)
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

3

nCino, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share data)
(Unaudited)
Three Months Ended October 31, 2022
Common StockAdditional
Paid-in
Capital
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
SharesAmount
Balance, July 31, 2022110,616,050 $55 $1,306,339 $1,219 $(266,392)$1,041,221 
Exercise of stock options145,753 — 1,182 — — 1,182 
Stock issuance upon vesting of restricted stock units181,766 — — — — — 
Stock-based compensation— — 12,499 — — 12,499 
Other comprehensive income— — — 539 — 539 
Net loss attributable to nCino, Inc., including adjustment to redeemable non-controlling interest— — (1,191)— (22,388)(23,579)
Balance, October 31, 2022110,943,569 $55 $1,318,829 $1,758 $(288,780)$1,031,862 
Three Months Ended October 31, 2023
Common StockAdditional
Paid-in
Capital
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
SharesAmount
Balance, July 31, 2023112,661,660 $56 $1,364,757 $844 $(337,516)$1,028,141 
Exercise of stock options106,772 967 — — 968 
Stock issuance upon vesting of restricted stock units262,298 — — — — — 
Stock-based compensation— — 15,817 — — 15,817 
Other comprehensive income— — — 62 — 62 
Net loss attributable to nCino, Inc., including adjustment to redeemable non-controlling interest— — 478 — (16,857)(16,379)
Balance, October 31, 2023113,030,730 $57 $1,382,019 $906 $(354,373)$1,028,609 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

nCino, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share data)
(Unaudited)
Nine Months Ended October 31, 2022
Common StockAdditional
Paid-in
Capital
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
SharesAmount
Balance, January 31, 2022109,778,542 $55 $1,277,258 $(72)$(209,616)$1,067,625 
Exercise of stock options451,147  3,038 — — 3,038 
Stock issuance upon vesting of restricted stock units621,644 — — — — — 
Stock issuance under the employee stock purchase plan92,236 — 2,424 — — 2,424 
Stock-based compensation— — 38,457 — — 38,457 
Other comprehensive income— — — 1,830 — 1,830 
Net loss attributable to nCino, Inc., including adjustment to redeemable non-controlling interest— — (2,348)— (79,164)(81,512)
Balance, October 31, 2022110,943,569 $55 $1,318,829 $1,758 $(288,780)$1,031,862 
Nine Months Ended October 31, 2023
Common StockAdditional
Paid-in
Capital
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
SharesAmount
Balance, January 31, 2023111,424,132 $56 $1,333,669 $694 $(310,341)$1,024,078 
Exercise of stock options447,440 1 3,175 — — 3,176 
Stock issuance upon vesting of restricted stock units1,039,074 — — — — — 
Stock issuance under the employee stock purchase plan120,084 — 2,698 — — 2,698 
Stock-based compensation— — 41,951 — — 41,951 
Other comprehensive income— — — 212 — 212 
Net loss attributable to nCino, Inc., including adjustment to redeemable non-controlling interest— — 526 — (44,032)(43,506)
Balance, October 31, 2023113,030,730 $57 $1,382,019 $906 $(354,373)$1,028,609 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

nCino, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended October 31,
20222023
Cash flows from operating activities
Net loss attributable to nCino, Inc.$(81,512)$(43,506)
Net loss and adjustment attributable to redeemable non-controlling interest1,440 (1,394)
Net loss(80,072)(44,900)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization25,458 37,337 
Non-cash operating lease costs2,879 3,581 
Amortization of costs capitalized to obtain revenue contracts6,160 7,368 
Amortization of debt issuance costs131 138 
Stock-based compensation38,476 41,969 
Deferred income taxes452 881 
Provision for bad debt323 1,124 
Net foreign currency losses5,608 2,275 
Loss on disposal of long-lived assets 161 
Change in operating assets and liabilities:
Accounts receivable32,497 35,455 
Costs capitalized to obtain revenue contracts(8,033)(5,959)
Prepaid expenses and other assets(446)3,374 
Accounts payable(1,732)1,184 
Accrued expenses and other current liabilities(9,182)(7,999)
Deferred revenue(2,883)(23,789)
Operating lease liabilities(2,997)(3,063)
Net cash provided by operating activities6,639 49,137 
Cash flows from investing activities
Acquisition of business, net of cash acquired676  
Acquisition of assets(563)(356)
Purchases of property and equipment(13,889)(3,083)
Purchase of investment (2,500)
Net cash used in investing activities(13,776)(5,939)
Cash flows from financing activities
Investment from redeemable non-controlling interest 983 
Proceeds from borrowings on revolving credit facility50,000  
Payments on revolving credit facility(20,000)(30,000)
Payments of debt issuance costs(367) 
Exercise of stock options3,038 3,176 
Stock issuance under the employee stock purchase plan2,424 2,698 
Principal payments on financing obligations(458)(888)
Net cash provided by (used in) financing activities34,637 (24,031)
Effect of foreign currency exchange rate changes on cash, cash equivalents, and restricted cash(4,098)(762)
Net increase in cash, cash equivalents, and restricted cash23,402 18,405 
Cash, cash equivalents, and restricted cash, beginning of period88,399 87,418 
Cash, cash equivalents, and restricted cash, end of period$111,801 $105,823 
Reconciliation of cash, cash equivalents, and restricted cash, end of period:
Cash and cash equivalents$106,451 $100,475 
Restricted cash included in prepaid expenses and other current assets 5,000 
Restricted cash included in other long-term assets5,350 348 
Total cash, cash equivalents, and restricted cash, end of period$111,801 $105,823 
Supplemental disclosure of cash flow information
Cash paid for taxes, net of refunds$657 $2,244 
Cash paid for interest$1,849 $3,458 
Supplemental disclosure of noncash investing and financing activities
Purchase of property and equipment, accrued but not paid$14,765 $200 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6

nCino, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts and unless otherwise indicated)

Note 1. Organization and Description of Business
Organization: On November 16, 2021, nCino, Inc. (now nCino OpCo, Inc., "nCino OpCo") entered into an Agreement and Plan of Merger (the "Merger Agreement") with Penny HoldCo, Inc. (now nCino, Inc., "nCino, Inc."), a Delaware corporation incorporated on November 12, 2021 as a wholly-owned subsidiary of nCino OpCo, and certain other parties. On January 7, 2022, in connection with the closing of the transactions contemplated by the Merger Agreement, Penny HoldCo, Inc. changed its name to nCino, Inc. and nCino, Inc. changed its name to nCino OpCo, Inc. and became a wholly-owned subsidiary of nCino, Inc.
Merger: On January 7, 2022, pursuant to the Merger Agreement, nCino, Inc. and nCino OpCo completed a series of mergers in which nCino, Inc. became the parent of nCino OpCo and SimpleNexus, LLC ("SimpleNexus"). Each share of nCino OpCo common stock, par value $0.0005 per share, issued and outstanding was converted into one fully paid and nonassessable share of nCino, Inc. common stock, par value $0.0005. nCino, Inc. became the successor issuer and reporting company to nCino OpCo pursuant to Rule 12g-3(a) under the Securities Exchange Act of 1934, as amended. On January 10, 2022, shares of nCino OpCo were suspended from trading on the Nasdaq Global Select Market, and shares of nCino, Inc. commenced using nCino OpCo's trading history under the ticker symbol "NCNO".
On September 8, 2023, SimpleNexus began operating as SimpleNexus, LLC d/b/a nCino Mortgage, LLC ("nCino Mortgage").
Description of Business: The Company is a software-as-a-service ("SaaS") company that provides software applications to financial institutions to streamline employee and client interactions. The Company is headquartered in Wilmington, North Carolina and has various locations in the U.S., North America, Europe and Asia Pacific.
Fiscal Year End: The Company’s fiscal year ends on January 31.
Note 2. Summary of Significant Accounting Policies
Principles of Consolidation and Basis of Presentation: The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") as set forth in the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") and applicable rules and regulations of the Securities Exchange Commission ("SEC") regarding interim financial reporting. Certain information and disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2023 filed with the SEC on March 28, 2023. The unaudited condensed consolidated financial statements include accounts of the Company’s wholly-owned subsidiaries, as well as a variable interest entity in which the Company is the primary beneficiary. All intercompany accounts and transactions are eliminated.
The Company is subject to the normal risks associated with technology companies that have not demonstrated sustainable income from operations, including product development, the risk of customer acceptance and market penetration of its products and services and, ultimately, the need to attain profitability to generate positive cash resources.
In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full fiscal 2024 or any future period.
Variable Interest Entity: The Company holds an interest in a Japanese company (“nCino K.K.”) that is considered a variable interest entity ("VIE"). nCino K.K. is considered a VIE as it has insufficient equity capital to finance its activities without additional financial support. The Company is the primary beneficiary of nCino K.K. as it has the power over the activities that most significantly impact the economic performance of nCino K.K. and has the obligation to absorb expected
7

nCino, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts and unless otherwise indicated)
losses and the right to receive expected benefits that could be significant to nCino K.K., in accordance with accounting guidance. As a result, the Company consolidated nCino K.K. and all significant intercompany accounts have been eliminated. The Company will continue to assess whether it has a controlling financial interest and whether it is the primary beneficiary at each reporting period. Other than the Company’s equity investments, the Company has not provided financial or other support to nCino K.K. that it was not contractually obligated to provide. The assets of the VIE can only be used to settle the obligations of the VIE and the creditors of the VIE do not have recourse to the Company. The assets and liabilities of the VIE were not significant to the Company’s consolidated financial statements except for cash which is reflected on the unaudited condensed consolidated balance sheets. See Note 3 "Variable Interest Entity and Redeemable Non-Controlling Interest" for additional information regarding the Company’s variable interest.
Redeemable Non-Controlling Interest: Redeemable non-controlling interest relates to minority investors of nCino K.K. An agreement with the minority investors of nCino K.K. contains redemption features whereby the interest held by the minority investors are redeemable either at the option of the (i) minority investors or (ii) the Company, both beginning on the eighth anniversary of the initial capital contribution. If the interest of the minority investors were to be redeemed under this agreement, the Company would be required to redeem the interest based on a prescribed formula derived from the relative revenues of nCino K.K. and the Company. The balance of the redeemable non-controlling interest is reported at the greater of the initial carrying amount adjusted for the redeemable non-controlling interest’s share of earnings or losses and other comprehensive income or loss, or its estimated redemption value. The resulting changes in the estimated redemption amount (increases or decreases) are recorded with corresponding adjustments against retained earnings or, in the absence of retained earnings, additional paid-in-capital. These interests are presented on the unaudited condensed consolidated balance sheets outside of equity under the caption “Redeemable non-controlling interest.”
Use of Estimates: The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the unaudited condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions made by the Company’s management are used for, but not limited to, revenue recognition including determining the nature and timing of satisfaction of performance obligations, variable consideration, and stand-alone selling price; the average period of benefit associated with costs capitalized to obtain revenue contracts; fair value of assets acquired and liabilities assumed for business combinations; the useful lives of intangible assets; income taxes and the related valuation allowance on deferred tax assets; redemption value of redeemable non-controlling interest; and stock-based compensation. The Company assesses these estimates on a regular basis using historical experience and other factors. Actual results could differ from these estimates. See Note 7 "Goodwill and Intangible Assets" for a change in estimate for the useful life of the SimpleNexus trade name.
Concentration of Credit Risk and Significant Customers: The Company’s financial instruments that are exposed to concentration of credit risk consist primarily of cash, cash equivalents, restricted cash and accounts receivable. The Company’s cash and cash equivalents exceeded federally insured limits at January 31, 2023 and October 31, 2023. The Company maintains its cash, cash equivalents and restricted cash with high-credit-quality financial institutions.
As of January 31, 2023 and October 31, 2023, no individual customer represented over 10% of accounts receivable. For the three and nine months ended October 31, 2022 and 2023, no individual customer represented more than 10% of the Company’s total revenues.
Restricted Cash: Restricted cash primarily consists of a minimum cash balance the Company maintains with a lender under the Company's revolving credit facility. The remaining restricted cash consists of deposits held as collateral for the Company's bank guarantees issued in place of security deposits for certain property leases and credit cards. Restricted cash is included in other long-term assets at January 31, 2023 and in prepaid expenses and other current assets and other long-term assets at October 31, 2023 on the unaudited condensed consolidated balance sheets.
Accounts Receivable and Allowances: A receivable is recorded when an unconditional right to invoice and receive payment exists, such that only the passage of time is required before payment of consideration is due. Timing of revenue recognition may differ from the timing of invoicing to customers. Certain performance obligations may require payment before delivery of the service to the customer. The Company recognizes a contract asset in the form of accounts receivable when the Company has an unconditional right to payment, and the Company records a contract asset in the form of
8

nCino, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts and unless otherwise indicated)
unbilled accounts receivable when revenues earned on a contract exceeds the billings. The Company’s standard billing terms are annual in advance, while nCino Mortgage's standard billing terms are monthly in advance. An unbilled accounts receivable is a contract asset related to the delivery of the Company’s subscription services and professional services for which the related billings will occur in a future period. Unbilled accounts receivable consists of (i) revenues recognized for professional services performed but not yet billed and (ii) revenues recognized from non-cancelable, multi-year orders in which fees increase annually but for which the Company is not contractually able to invoice until a future period. Accounts receivable are reported at their gross outstanding balance reduced by an allowance for estimated receivable losses, which includes allowances for doubtful accounts and a reserve for expected credit losses.
The Company records allowances for doubtful accounts based upon the credit worthiness of customers, historical experience, the age of the accounts receivable, current market and economic conditions, and supportable forecasts about the future. Relevant risk characteristics include customer size and historical loss patterns. This estimate is analyzed quarterly and adjusted as necessary.
A summary of activity in the allowance for doubtful accounts is as follows:
Three Months Ended October 31,Nine Months Ended October 31,
2022202320222023
Balance, beginning of period$301 $876 $151 $899 
Charged to bad debt expense169 368 323 1,124 
Charged to deferred revenue 981  923 
Write-offs and other(116) (116)(721)
Translation adjustments(6)(4)(10)(4)
Balance, end of period$348 $2,221 $348 $2,221 
Investments: The Company's investments are non-marketable equity investments without readily determinable fair value and for which the Company does not have control or significant influence. The investments are measured at cost with adjustments for observable changes in price or impairment as permitted by the measurement alternative. The Company assesses at each reporting period if the investments continue to qualify for the measurement alternative. Gains or losses resulting from observable price changes are recognized currently in the Company's unaudited condensed consolidated statements of operations. The Company assesses the investments whenever events or changes in circumstances indicate that the carrying value of the investments may not be recoverable.
Note 3. Variable Interest Entity and Redeemable Non-Controlling Interest
In October 2019, the Company entered into an agreement with Japan Cloud Computing, L.P. and M30 LLC (collectively, the “Investors”) to engage in the investment, organization, management, and operation of nCino K.K. that is focused on the distribution of the Company’s products in Japan. In October 2019, the Company initially contributed $4.7 million in cash in exchange for 51% of the outstanding common stock of nCino K.K. As of October 31, 2023, the Company controls a majority of the outstanding common stock in nCino K.K. In October 2023, the Company made a further investment in nCino K.K. of $1.0 million that, including additional investments in nCino K.K. of $1.0 million by exiting third-party investors in October 2023, maintained the Company's ownership of 51%.
All of the common stock held by the Investors is callable by the Company or puttable by the Investors at the option of the Investors or at the option of the Company beginning on the eighth anniversary of the agreement with the Investors. Should the call or put option be exercised, the redemption value would be determined based on a prescribed formula derived from the discrete revenues of nCino K.K. and the Company and may be settled, at the Company’s discretion, with Company stock or cash or a combination of the foregoing. As a result of the put right available to the Investors, the redeemable non-controlling interests in nCino K.K. are classified outside of permanent equity in the Company’s unaudited condensed consolidated balance sheets. The estimated redemption value of the call/put option embedded in the redeemable non-controlling interest was $2.8 million at October 31, 2023.
9

nCino, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts and unless otherwise indicated)
The following table summarizes the activity in the redeemable non-controlling interests for the period indicated below:
Three Months Ended October 31,Nine Months Ended October 31,
2022202320222023
Balance, beginning of period$3,219 $2,995 $2,882 $3,589 
Investment by redeemable non-controlling interest 983  983 
Net loss attributable to redeemable non-controlling interest (excluding adjustment to non-controlling interest)(257)(320)(908)(868)
Foreign currency translation(67)12 (249)2 
Adjustment to redeemable non-controlling interest1,191 (478)2,348 (526)
Stock-based compensation expense1
6 6 19 18 
Balance, end of period$4,092 $3,198 $4,092 $3,198 
1 nCino K.K. stock options granted in accordance with nCino K.K.'s equity incentive plan.
Note 4. Fair Value Measurements
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis
The Company uses a three-tier fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:
Level 1. Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2. Significant other inputs that are directly or indirectly observable in the marketplace.
Level 3. Significant unobservable inputs which are supported by little or no market activity.
The carrying amounts of cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value as of January 31, 2023 and October 31, 2023 because of the relatively short duration of these instruments.
The carrying amount of any outstanding borrowings on the Company's revolving credit facility approximates fair value due to the variable interest rates of the borrowings.
10

nCino, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts and unless otherwise indicated)
The Company evaluated its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting period. The following table summarizes the Company’s financial assets measured at fair value as of January 31, 2023 and October 31, 2023 and indicates the fair value hierarchy of the valuation:
Fair value measurements on a recurring basis as of January 31, 2023
Level 1Level 2Level 3
Assets:
Money market accounts (included in cash and cash equivalents)$17,149 $ $ 
Time deposits (included in other long-term assets)382   
Total assets$17,531 $ $ 
Fair value measurements on a recurring basis as of October 31, 2023
Level 1Level 2Level 3
Assets:
Money market accounts (included in cash and cash equivalents)$54,491 $ $ 
Time deposits (included in other long-term assets)348   
Total assets$54,839 $ $ 
All of the Company’s money market accounts are classified within Level 1 because the Company’s money market accounts are valued using quoted market prices in active exchange markets including identical assets.
Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis
The Company's assets measured at fair value on a nonrecurring basis include the investments accounted for under the measurement alternative. There was no adjustment or impairment recognized for the three and nine months ended October 31, 2022 and 2023, respectively.
Note 5. Revenues
Revenues by Geographic Area
Revenues by geographic region were as follows:
Three Months Ended October 31,Nine Months Ended October 31,
2022202320222023
United States$89,442 $98,526 $254,049 $288,287 
International15,854 23,416 45,085 64,563 
$105,296 $121,942 $299,134 $352,850 
The Company disaggregates its revenues from contracts with customers by geographic location. Revenues by geography are determined based on the region of the Company’s contracting entity, which may be different than the region of the customer. No country outside the United States represented 10% or more of total revenues.
11

nCino, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts and unless otherwise indicated)
Contract Amounts
Accounts Receivable
Accounts receivable, less allowance for doubtful accounts, is as follows as of January 31, 2023 and October 31, 2023:
As of January 31, 2023As of October 31, 2023
Trade accounts receivable$94,729 $57,112 
Unbilled accounts receivable4,920 6,105 
Allowance for doubtful accounts(899)(2,221)
Other accounts receivable1
747 1,016 
Total accounts receivable, net$99,497 $62,012 
1Includes $0.1 million income tax receivable as of January 31, 2023 and October 31, 2023.
Deferred Revenue and Remaining Performance Obligations
Significant movements in the deferred revenue balance during the period consisted of increases due to payments received or due in advance prior to the transfer of control of the underlying performance obligations to the customer, which were offset by decreases due to revenues recognized in the period. During the nine months ended October 31, 2023, $149.9 million of revenues were recognized out of the deferred revenue balance as of January 31, 2023.
Transaction price allocated to remaining performance obligations represents contracted revenues that have not yet been recognized, which includes both deferred revenue and amounts that will be invoiced and recognized as revenues in future periods. Transaction price allocated to the remaining performance obligation is influenced by several factors, including the timing of renewals, average contract terms, and foreign currency exchange rates. The Company applies practical expedients to exclude amounts related to performance obligations that are billed and recognized as they are delivered, optional purchases that do not represent material rights, and any estimated amounts of variable consideration that are subject to constraint.
Remaining performance obligations were $917.1 million as of October 31, 2023. The Company expects to recognize approximately 68% of its remaining performance obligation as revenues in the next 24 months, approximately 28% more in the following 25 to 48 months, and the remainder thereafter.
Note 6. Property and Equipment
Property and equipment, net consisted of the following:
As of January 31, 2023As of October 31, 2023
Furniture and fixtures$10,730 $12,047 
Computers and equipment8,361 8,107 
Buildings and land1
56,379 56,379 
Leasehold improvements28,702 27,563 
Construction in progress673 482 
104,845 104,578 
Less accumulated depreciation(20,403)(24,021)
$84,442 $80,557 
1See Note 12 "Commitments and Contingencies."
12

nCino, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts and unless otherwise indicated)
The Company recognized depreciation expense as follows:
Three Months Ended October 31,Nine Months Ended October 31,
2022202320222023
Cost of subscription revenues$92 $150 $268 $437 
Cost of professional services and other revenues311 457 852 1,375 
Sales and marketing349 450 991 1,334 
Research and development570 731 1,654 2,201 
General and administrative186 300 564 889 
Total depreciation expense$1,508 $2,088 $4,329 $6,236 
Note 7. Goodwill and Intangible Assets
Goodwill
The change in the carrying amounts of goodwill was as follows:
Balance, January 31, 2023$839,440 
Translation adjustments(855)
Balance, October 31, 2023$838,585 
Intangible assets
Intangible assets, net are as follows:
As of January 31, 2023As of October 31, 2023
Gross
Amount
Accumulated
Amortization
Net Carrying
Amount
Gross
Amount
Accumulated
Amortization
Net Carrying
Amount
Developed technology$83,605 $(21,818)$61,787 $83,400 $(34,067)$49,333 
Customer relationships91,710 (13,418)78,292 91,701 (19,917)71,784 
Trademarks and trade name14,626 (2,705)11,921 14,624 (14,624) 
Other919 (94)825 919 (341)578 
$190,860 $(38,035)$152,825 $190,644 $(68,949)$121,695 
The Company recognized amortization expense for intangible assets as follows:
Three Months Ended October 31,Nine Months Ended October 31,
2022202320222023
Cost of subscription revenues$4,249 $3,990 $12,767 $12,431 
Cost of professional services and other revenues47 82 47 247 
Sales and marketing2,772 12,880 8,315 18,423 
Total amortization expense$7,068 $16,952 $21,129 $31,101 
During the third quarter of fiscal 2024, the Company rebranded the SimpleNexus solution to nCino Mortgage, resulting in a change to the trade name useful life. As a result, the Company recorded accelerated amortization to fully amortize the remaining trade name intangible asset. The effect of this change in estimate for the three and nine months ended October 31,
13

nCino, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts and unless otherwise indicated)
2023 was an increase in sales and marketing amortization expense of $10.1 million, which resulted in an increase in loss of operations and net loss attributable to nCino, Inc. of $10.1 million, or $0.09 per basic and diluted share.
The expected future amortization expense for intangible assets as of October 31, 2023 is as follows:
Fiscal Year Ending January 31,
2024 (remaining)$6,125 
202524,499 
202624,334 
202723,127 
20288,669 
Thereafter34,941 
$121,695 
The expected amortization expense is an estimate. Actual amounts of amortization expense may differ from estimated amounts due to additional intangible asset acquisitions, changes in foreign currency exchange rates, impairment of intangible assets, future changes to expected asset lives of intangible assets, and other events.
Note 8. Stockholders’ Equity
At October 31, 2023, the Company committed a total of 34,833,275 shares of common stock for future issuance as follows:
Issued and outstanding stock options1,551,058 
Nonvested issued and outstanding restricted stock units ("RSUs")5,785,669 
Possible issuance under stock plans27,496,548 
34,833,275 
Note 9. Stock-Based Compensation
Stock Options
Stock option activity for the nine months ended October 31, 2023 was as follows:
Number of
Shares
Weighted
Average
Exercise Price
Outstanding, January 31, 20232,009,323 $6.62 
Granted  
Expired or forfeited(10,825)15.52 
Exercised(447,440)7.10 
Outstanding, October 31, 20231,551,058 $6.42 
Exercisable, October 31, 20231,548,183 $6.39 
Fully vested or expected to vest, October 31, 20231,550,771 $6.41 
14

nCino, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts and unless otherwise indicated)
Restricted Stock Units
RSU activity during the nine months ended October 31, 2023 was as follows:
Number of
Shares
Weighted Average
Grant Date Fair
Value
Nonvested, January 31, 20233,531,387 $44.00 
Granted3,516,749 25.57 
Vested(950,771)38.68 
Forfeited(311,696)39.81 
Nonvested, October 31, 20235,785,669 $33.89 
As of October 31, 2023, total unrecognized compensation expense related to non-vested RSUs was $155.3 million, adjusted for estimated forfeitures, based on the estimated fair value of the Company’s common stock at the time of grant. That cost is expected to be recognized over a weighted average period of 2.90 years.
Employee Stock Purchase Plan
The first offering period for the Employee Stock Purchase Plan ("ESPP") began on July 1, 2021 and ended on December 31, 2021. Thereafter, offering periods begin each year on January 1 and July 1.
The fair value of ESPP shares during the nine months ended October 31, 2022 and 2023 was estimated at the date of grant using the Black-Scholes option valuation model based on assumptions as follows for ESPP awards:
Nine Months Ended October 31,
20222023
Expected life (in years)0.500.50
Expected volatility
49.65% - 84.59%
61.66% - 61.86%
Expected dividends0.00%0.00%
Risk-free interest rate
0.22% - 2.52%
4.77% - 5.53%
Stock-Based Compensation Expense
Total stock-based compensation expense included in our unaudited condensed consolidated statements of operations were as follows:
Three Months Ended October 31,Nine Months Ended October 31,
2022202320222023
Cost of subscription revenues$392 $515 $1,120 $1,314 
Cost of professional services and other revenues1,778 2,571 5,564 6,660 
Sales and marketing3,326 4,153 10,144 11,194 
Research and development3,012 4,386 8,457 11,665 
General and administrative3,997 4,198 13,191 11,136 
Total stock-based compensation expense$12,505 $15,823 $38,476 $41,969 
15

nCino, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts and unless otherwise indicated)
Note 10. Leases
Operating Leases
The Company leases its facilities and a portion of its equipment under various non-cancellable agreements, which expire at various times through July 2028, some of which include options to extend for up to five years.
The components of lease expense were as follows:
Three Months Ended October 31,Nine Months Ended October 31,
2022202320222023
Operating lease expense$1,023 $1,225 $2,961 $3,842 
Variable lease expense269 464 809 1,398 
Short-term lease expense124 94 378 328 
Total$1,416 $1,783 $4,148 $5,568 
Supplemental cash flow information related to operating leases were as follows:
Nine Months Ended October 31,
20222023
Cash paid for amounts included in the measurement of operating lease liabilities$3,079 $3,324 
Operating right-of-use assets obtained in exchange for operating lease liabilities1,989 2,142 
Operating right-of-use assets and operating lease liabilities disposed of 115 
The weighted-average remaining lease term and weighted-average discount rate for the Company's operating lease liabilities as of October 31, 2023 were 3.25 years and 4.7%, respectively.
Future minimum lease payments as of October 31, 2023 were as follows:
Fiscal Year Ending January 31,Operating Leases
2024 (remaining)$939 
20253,921 
20262,801 
20271,506 
20281,097 
Thereafter495 
Total lease liabilities10,759 
Less: imputed interest(776)
Total lease obligations9,983 
Less: current obligations(3,523)
Long-term lease obligations$6,460 
16

nCino, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts and unless otherwise indicated)
Note 11. Revolving Credit Facility
On February 11, 2022, the Company entered into a Credit Agreement (the “Credit Agreement”), by and among the Company, nCino OpCo (the “Borrower”), certain subsidiaries of the Company as guarantors, and Bank of America, N.A. as lender (the “Lender”), pursuant to which the Lender is providing to the Borrower a senior secured revolving credit facility of up to $50.0 million (the “Credit Facility”). The Credit Facility includes borrowing capacity available for letters of credit subject to a sublimit of $7.5 million. Any issuance of letters of credit will reduce the amount available under the Credit Facility.
Borrowings under the Credit Facility bear interest, at the Borrower’s option, at: (i) a base rate equal to the greater of (a) the Lender’s “prime rate,” (b) the federal funds rate plus 0.50%, and (c) the Bloomberg Short Term Bank Yield Index ("BSBY") rate plus 1.00%, plus a margin of 0.00% (provided that the base rate shall not be less than 0.00%); or (ii) the BSBY rate (provided that the BSBY shall not be less than 0.00%), plus a margin of 1.00%. The Company is also required to pay an unused commitment fee to the Lender of 0.25% of the average daily unutilized commitments. The Company must also pay customary letter of credit fees.
Borrowings under the Credit Facility are scheduled to mature on February 11, 2024, and the Company may repay amounts borrowed any time without penalty. Borrowings under the Credit Facility may be reborrowed.
The Credit Agreement contains representations and warranties, affirmative, negative and financial covenants, and events of default that are customary for loans of this type. The financial covenant requires the Company and its subsidiaries on a consolidated basis to maintain Consolidated Liquidity of not less than $50.0 million. Consolidated Liquidity is measured as the sum of 100% of unrestricted and unencumbered cash of the Company and its domestic subsidiaries, 75% of unrestricted and unencumbered cash of the Company’s foreign subsidiaries and the lesser of Credit Facility availability and $25.0 million. The Company is also required to maintain at least $5.0 million of the Company's cash and/or marketable securities with the Lender which is considered restricted cash and is included in other long-term assets as of January 31, 2023 and prepaid expenses and other current assets as of October 31, 2023 on the Company's unaudited condensed consolidated balance sheets.
The Credit Facility is guaranteed by the Company and each of its current and future material domestic subsidiaries (the “Guarantors”) and secured by substantially all of the personal property, subject to customary exceptions, of the Borrower and the Guarantors, in each case, now owned or later acquired, including a pledge of all of the Borrower’s capital stock, the capital stock of all of the Company’s domestic subsidiaries, and 65% of the capital stock of foreign subsidiaries that are directly owned by the Borrower or a Guarantor.
The Company had $30.0 million and $0.0 million outstanding and no letters of credit issued under the Credit Facility and was in compliance with all covenants as of January 31, 2023 and October 31, 2023, respectively. The available borrowing capacity under the Credit Facility was $50.0 million as of October 31, 2023.
Note 12. Commitments and Contingencies
In addition to the operating lease commitments described in Note 10 "Leases", the Company has additional contractual commitments as described further below.
Purchase Commitments
The Company’s purchase commitments consist of non-cancellable agreements to purchase goods and services, primarily licenses and hosting services, entered into in the ordinary course of business.
Financing Obligations
The Company entered into a lease agreement for the Company's headquarters in November 2020 in connection with a new lessor acquiring the property. Due to a purchase option contained in that lease, the Company is deemed to have continuing involvement and is considered to be the owner of the Company's headquarters for accounting purposes. As a result, the Company did not meet the criteria to apply sale-leaseback accounting and therefore, recorded an asset and corresponding financing obligation for $16.3 million at inception of that lease. The fair value of the leased property and corresponding
17

nCino, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts and unless otherwise indicated)
financing obligation are included in property and equipment, net and financing obligations on the unaudited condensed consolidated balance sheets, respectively.
In January 2021, the Company entered into an amendment to its November 2020 headquarters lease to provide for construction of a parking deck, which upon completion was subject to exclusive use by the Company. Due to the Company also being deemed to be the owner of the parking deck for accounting purposes, the costs associated with the construction of the parking deck were capitalized as construction in progress with a corresponding construction liability through construction. Upon completion of the parking deck in September 2021, for approximately $17.7 million, the costs of the construction in progress and the corresponding construction liability were reclassified to property and equipment, net and financing obligations on the unaudited condensed consolidated balance sheets, respectively.
In April 2021, the Company entered into a new lease agreement for the construction of an additional office building that is on the same parcel of land as the Company's existing headquarters. Due to a purchase option contained in that April 2021 lease, the Company is also deemed to be the owner of the additional building for accounting purposes, the costs associated with the construction of the additional building were capitalized as construction in progress with a corresponding construction liability through construction. Upon completion of the additional building in November 2022, for approximately $22.4 million, the costs of the construction in progress and the corresponding construction liability were reclassified to property and equipment, net and financing obligations on the unaudited condensed consolidated balance sheets, respectively, and the term of the Company's November 2020 lease for its headquarters and the related parking deck became coterminous with the April 2021 lease. The term of the April 2021 lease expires in October 2037 with options to extend. The purchase option expires if not exercised on or before November 30, 2026.
The leases will be analyzed for applicable lease accounting upon expiration of the purchase option, if not exercised.
Purchase commitments and future minimum lease payments required under financing obligations as of October 31, 2023 is as follows:
Fiscal Year Ending January 31,Purchase commitmentsFinancing obligations - leased facility
2024 (remaining)$725 $1,116 
20253,019 4,543 
20262,761 4,644 
20271,602 3,950 
Total$8,107 $14,253 
Residual financing obligations and assets49,476 
Less: amount representing interest(9,237)
Financing obligations$54,492 
A portion of the associated lease payments are recognized as interest expense and the remainder reduces the financing obligations. The weighted-average discount rate for the Company's financing obligations as of October 31, 2023 was 5.7%.
Indemnification
In the ordinary course of business, the Company generally includes standard indemnification provisions in its arrangements with third parties, including vendors, customers, and the Company’s directors and officers. Pursuant to these provisions, the Company may be obligated to indemnify such parties for losses or claims suffered or incurred. It is not possible to determine the maximum potential loss under these indemnification provisions due to the Company’s limited history of prior indemnification claims and the unique facts and circumstances involved in each particular provision. To date, the Company has not incurred any material costs as a result of such obligations and has not accrued any material liabilities related to such obligations in the accompanying unaudited condensed consolidated financial statements.
18

nCino, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts and unless otherwise indicated)
Legal Proceedings
From time to time, the Company is involved in legal proceedings or is subject to claims arising in the ordinary course of business including the following:
On February 23, 2021, the Company and certain of its officers and other employees were served with grand jury subpoenas wherein the Antitrust Division of the Department of Justice (the "DOJ") was seeking documents and information in connection with an investigation of the Company’s hiring and wage practices under U.S. federal antitrust laws. On February 8, 2023, the DOJ informed the Company that the investigation is closed. No fines, sanctions, actions, or penalties were imposed or taken against the Company or its officers or other employees in connection with the matter, and the costs the Company was incurring cooperating with the investigation have now ceased.
On March 12, 2021, a putative class action complaint was filed in the United States District Court for the Eastern District of North Carolina (the "District Court"). The sole class representative in the suit is one individual alleging a contract, combination or conspiracy between and among the Company, Live Oak Bancshares, Inc. ("Live Oak") and Apiture, Inc. ("Apiture") not to solicit or hire each other’s employees in violation of Section 1 of the Sherman Act and N.C. Gen Stat. §§ 75-1 and 75-2. The complaint seeks treble damages and additional remedies, including restitution, disgorgement, reasonable attorneys’ fees, the costs of the suit, and pre-judgment and post judgment interest. The complaint does not allege any specific damages. On April 28, 2022, the District Court approved settlements between the plaintiff and defendant Live Oak in the amount of approximately $3.9 million and unnamed party Apiture in the amount of approximately $0.8 million. In July 2023, through mediation, the Company and the plaintiff reached a settlement agreement in principle of approximately $2.2 million that remains subject to court approval. While the Company strongly believes that it would prevail on the merits and that it has not violated the antitrust laws, in order to avoid the distraction and expense of protracted litigation and instead continue to focus on its employees and customers, the Company agreed to settle this matter. The Company has accrued for the proposed settlement agreement which is included in accrued expenses and other current liabilities as of October 31, 2023 on the Company's unaudited condensed consolidated balance sheets.
On September 26, 2022, a purported stockholder of the Company filed a complaint in the Delaware Court of Chancery in connection with the series of mergers in which the Company became the parent of nCino OpCo and SimpleNexus. The complaint, captioned City of Hialeah Employees’ Retirement System, Derivatively on Behalf of Nominal Defendants nCINO, INC. (f/k/a Penny HoldCo, Inc.) and nCINO OpCo, Inc. (f/k/a nCino, Inc.) v. INSIGHT VENTURE PARTNERS, LLC, et al., C.A. No. 2022-0846-MTZ, names as defendants, Insight Ventures Partners, LLC., Insight Holdings Group, LLC., the Company’s directors and certain officers, along with nCino, Inc. and nCino OpCo, Inc. as nominal defendants, and alleges that the members of the board of directors, controlling stockholders, and officers violated their fiduciary duties in the course of negotiating and approving the series of mergers. The complaint alleges damages in an unspecified amount. Pursuant to the rights in its bylaws and Delaware law, the Company is advancing the costs incurred by the director and officer defendants in this action, and the defendants may assert indemnification rights in respect of an adverse judgment or settlement of the action, if any. Given the uncertainty and preliminary stages of this matter, the Company is unable to reasonably estimate any possible loss or range of loss that may result. Therefore, the Company has not made an accrual for the above matter in the unaudited condensed consolidated financial statements.
The Company does not presently believe the above matters will have a material adverse effect on its day-to-day operations or the quality of the services, products or innovation it continues to provide to its customers. However, regardless of the outcome, legal proceedings can have an adverse impact on the Company because of the related expenses, diversion of management resources, and other factors.
Other Commitments and Contingencies
The Company may be subject to audits related to its non-income taxes by tax authorities in jurisdictions where it conducts business. These audits may result in assessments of additional taxes that are subsequently resolved with the authorities or potentially through the courts. The Company accrues for any assessments if deemed probable and estimable.
19

nCino, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts and unless otherwise indicated)
Note 13. Related-Party Transactions
On November 1, 2022, the Company's wholly-owned subsidiary, nCino OpCo, acquired preferred shares of ZestFinance, Inc. (d/b/a ZEST AI) ("Zest AI"), a private company, for $2.5 million and is included in investments as of January 31, 2023 and October 31, 2023 on the Company's unaudited condensed consolidated balance sheets. The investment is considered a related party transaction as entities affiliated with Insight Partners, a beneficial owner of the Company, own greater than ten percent of Zest AI. On May 23, 2023, the Company announced a strategic partnership with Zest AI to build an integration into the Company's consumer banking solution to enable lenders with streamlined access to consumer credit lending insights.
Note 14. Basic and Diluted Loss per Share
Basic loss per share is computed by dividing net loss attributable to nCino, Inc. by the weighted-average number of common shares outstanding for the fiscal period. Diluted loss per share is computed by giving effect to all potential weighted average dilutive common stock, including stock options issued and outstanding, nonvested RSUs issued and outstanding, and shares issuable pursuant to the ESPP. The dilutive effect of outstanding awards is reflected in diluted earnings per share by application of the treasury stock method. Diluted loss per share for the three months ended October 31, 2022 and 2023 and for the nine months ended October 31, 2022 and 2023 is the same as the basic loss per share as there was a net loss for those periods, and inclusion of potentially issuable shares was anti-dilutive.
The components of basic and diluted loss per share for periods presented are as follows (in thousands, except share and per share data):
Three Months Ended October 31,Nine Months Ended October 31,
2022202320222023
Basic and diluted loss per share:
Numerator
Net loss attributable to nCino, Inc.$(23,579)$(16,379)$(81,512)$(43,506)
Denominator
Weighted-average common shares outstanding110,897,811 112,951,553 110,434,171 112,484,017 
Basic and diluted loss per share attributable to nCino, Inc.$(0.21)$(0.15)$(0.74)$(0.39)
The following potential outstanding common stock were excluded from the diluted loss per share computation because the effect would have been anti-dilutive:
Nine Months Ended October 31,
20222023
Stock options issued and outstanding2,161,088 1,551,058 
Nonvested RSUs issued and outstanding4,000,187 5,785,669 
Shares issuable pursuant to the ESPP62,781 61,412 
Note 15. Restructuring
In the fourth quarter of fiscal 2023, the Company announced a workforce reduction of approximately 7% and office space reductions in certain markets (collectively, the “restructuring plan”) in furtherance of its efforts to improve operating margins and advance the Company’s objective of profitable growth.
Lease termination costs were accounted for in accordance with ASC 842, Leases. The Company paid $0.8 million in the fourth quarter of fiscal 2023 to exercise an early termination clause to exit a facility during fiscal 2024, which was accounted for as a lease modification.
20

nCino, Inc.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except share and per share amounts and unless otherwise indicated)
The Company incurred charges in the in the fourth quarter of the Company’s fiscal 2023 of $4.8 million in connection with the restructuring plan. The accrual for severance and related benefit costs of $5.0 million for terminated employees was included in accrued compensation and benefits on the consolidated balance sheets as of January 31, 2023 and was paid in the first quarter of the Company’s fiscal 2024.
The Company’s restructuring charges for the three and nine months ended October 31, 2023 were as follows:
Three Months Ended
October 31, 2023
Nine Months Ended
October 31, 2023
Lease exit fees1
Cost of subscription revenues12 $51 
Cost of professional services and other revenues26 118 
Sales and marketing24 100 
Research and development87 352 
General and administrative1 6 
Total150 $627 
1These expenses reduced operating lease right-of-use assets on the unaudited condensed consolidated balance sheets.
The Company had no restructuring charges for the three and nine months ended October 31, 2022.
21

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion of our financial condition and results of operations should be read together with our unaudited condensed consolidated financial statements and related notes and other financial information included in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended January 31, 2023 filed with the SEC on March 28, 2023. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K, particularly in the section titled “Risk Factors.” Our historical results are not necessarily indicative of the results that may be expected for any period in the future. Our fiscal year ends on January 31 of each year and references in this Quarterly Report on Form 10-Q to a fiscal year mean the year in which that fiscal year ends. For example, references in this Quarterly Report on Form 10-Q to "fiscal 2024" refer to the fiscal year ended January 31, 2024.
Overview
nCino is the pioneer in cloud banking. Built by bankers for bankers, the nCino Bank Operating System is a single, multi-tenant software-as-a-service (SaaS) solution that helps financial institutions ("FI") modernize, innovate and outperform. A leader in the global financial services technology industry, nCino is a proven partner that has helped more than 1,850 FIs of all sizes and complexities, including global, enterprise, regional and community banks; credit unions; new market entrants; and independent mortgage banks power distinctive experiences, drive growth efficiencies, and run with full integrity. With nCino, FIs can:
digitally serve their clients across lines of business,
improve financial results,
elevate employee experience and performance,
manage risk and compliance more effectively, and
establish an active data, audit, and business intelligence hub.
nCino was originally founded in a bank to improve that FI’s operations and client service. After realizing that virtually all FIs were dealing with the same problems—cumbersome legacy technology, fragmented data, disconnected business functions, and a disengaged workforce made it difficult to maintain relevancy in their clients’ lives—we were spun out as a separate company in late 2011. This heritage is the foundation of our deep banking domain expertise, which differentiates us, continues to drive our strategy and makes us uniquely qualified to help FIs cross the modernization divide by providing a comprehensive solution that onboards clients, originates loans, and opens accounts on a single, cloud-based platform.
We initially focused the nCino Bank Operating System on transforming commercial and small business lending for community and regional banks in the United States ("U.S."). We introduced this solution to enterprise banks in the U.S. in 2014, and then internationally in 2017, and have subsequently expanded across North America, Europe, and Asia-Pacific ("APAC"). Throughout this market expansion, we broadened the nCino Bank Operating System by adding functionality for consumer lending, client onboarding, deposit account opening, analytics and AI/ML. In fiscal 2020, we acquired nCino Portfolio Analytics, LLC (formerly Visible Equity) and FinSuite as part of our strategy to build out our nIQ capabilities, and we established our nCino K.K joint venture to facilitate our entry into the Japanese market. Additionally, in January 2022, we acquired SimpleNexus, which expanded our capabilities to the U.S. point-of-sale mortgage market. On September 8, 2023, SimpleNexus began operating as SimpleNexus, LLC d/b/a nCino Mortgage, LLC ("nCino Mortgage") as part of our rebranding effort.
We generally offer our solutions on a SaaS basis under multi-year contracts and recognize subscription revenues ratably over the term of the contract. Our customers may initially purchase one of our solutions for implementing a client onboarding, loan origination, and/or deposit account opening in a specific line of business within the FI, such as commercial, small business, consumer, or mortgage. The nCino Bank Operating System is designed to scale with our customers, and once our solution is deployed, we seek to have our customers expand adoption within and across lines of business.
22

We sell our solutions directly through our business development managers, account executives, field sales engineers, and customer success managers. Our sales efforts in the U.S. are organized around FIs based on size, whereas internationally, we focus our sales efforts by geography. As of October 31, 2023, we had 232 sales and sales support personnel in the U.S. and 70 sales and support personnel in offices outside the U.S.
To help customers go live with our solutions, we offer professional services including configuration and implementation, training, and advisory services. For enterprise FIs, we generally work with system integration ("SI") partners such as Accenture, Deloitte, and PwC for the delivery of professional services for the nCino Bank Operating System. For regional bank FIs, we work with SIs such as West Monroe Partners, and for community banks, we work with SIs or perform configuration and implementation ourselves. We expect enterprise FIs to make up a greater proportion of our nCino Bank Operating System sales.
For the three months ended October 31, 2022 and 2023, our total revenues were $105.3 million and $121.9 million, respectively, representing a 15.8% increase. For the three months ended October 31, 2022 and 2023, our subscription revenues were $88.3 million and $104.8 million, respectively, representing an 18.7% increase. Due to our investments in growth, we recorded net losses attributable to nCino, Inc. of $23.6 million and $16.4 million for the three months ended October 31, 2022 and 2023, respectively. For the nine months ended October 31, 2022 and 2023, our total revenues were $299.1 million and $352.9 million, respectively, representing a 18.0% increase. For the nine months ended October 31, 2022 and 2023, our subscription revenues were $251.9 million and $302.0 million, respectively, representing a 19.9% increase. Due to our investments in growth, we recorded net losses attributable to nCino, Inc. of $81.5 million and $43.5 million for the nine months ended October 31, 2022 and 2023, respectively.
During the third quarter of fiscal 2024, the Company rebranded the SimpleNexus solution to nCino Mortgage, resulting in a change to the trade name useful life. As a result, the Company recorded accelerated amortization to fully amortize the remaining trade name intangible asset. The effect of this change in estimate for the three and nine months ended October 31, 2023 was an increase in sales and marketing amortization expense of $10.1 million, which resulted in an increase in loss of operations and net loss attributable to nCino, Inc. of $10.1 million, or $0.09 per basic and diluted share.
Factors Affecting Our Operating Results
Market Adoption of Our Solution. Our future growth depends on our ability to expand our reach to new FI customers and increase adoption with existing customers as they broaden their use of our solutions within and across lines of business. Our success in growing our customer base and expanding adoption of our solutions by existing customers requires a focused direct sales engagement and the ability to convince key decision makers at FIs to replace legacy third-party point solutions or internally developed software with our solutions. In addition, growing our customer base will require us to increasingly penetrate markets outside the U.S., which accounted for 19.2% of total revenues for the three months ended October 31, 2023 and 18.3% for the nine months ended October 31, 2023. For new customers, our sales cycles are typically lengthy, generally ranging from six to nine months for smaller FIs to 12 to 18 months or more for larger FIs. Key to landing new customers is our ability to successfully take our existing customers live and help them achieve measurable returns on their investment, thereby turning them into referenceable accounts. If we are unable to successfully address the foregoing challenges, our ability to grow our business and achieve profitability will be adversely affected, which may in turn reduce the value of our common stock.
Mix of Subscription and Professional Services Revenues. The initial deployment of our solutions by our customers requires a period of implementation and configuration services that typically range from three months to 18 months, depending on the scope. As a result, during the initial go-live period for a customer on the nCino Bank Operating System, professional services revenues generally make up a substantial portion of our revenues from that customer, whereas over time, revenues from established customers are more heavily weighted to subscriptions. While professional services revenues will fluctuate as a percentage of total revenues in the future and tend to be higher in periods of faster growth, over time we expect subscription revenues will make up an increasing proportion of our total revenues as our overall business grows.
Macroeconomic Environment. We are currently operating in a higher interest rate environment as the U.S. Federal Reserve has raised interest rates as a means to manage inflation. These rate increases have had an impact on the real estate market in the U.S. and specifically, the demand for mortgages and mortgage-related products and services, which has had a negative impact on our nCino Mortgage business.
We will continue to monitor the impact the macroeconomic environment may have on our business.
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Continued Investment in Innovation and Growth. We have made substantial investments in product development, sales and marketing, and strategic acquisitions since our inception to achieve a leadership position in our market and grow our revenues and customer base. We intend to continue to increase our investment in product development in the coming years to maintain and build on this advantage. We also intend to invest in sales and marketing both in the U.S. and internationally to further grow our business. To capitalize on the market opportunity we see ahead of us, we expect to continue to optimize our operating plans for revenue growth and profitability.
Components of Results of Operations
Revenues
We derive our revenues from subscription and professional services and other revenues.
Subscription Revenues. Our subscription revenues consist principally of fees from customers for accessing our solutions and maintenance and support services that we generally offer under non-cancellable multi-year contracts, which typically range from three to five years for the nCino Bank Operating System and one to three years for nCino Mortgage. Specifically, we offer:
Client onboarding, loan origination, and deposit account opening applications targeted at a FI’s commercial, small business, and retail lines of business, for which we generally charge on a per seat basis.
nIQ for which we generally charge based on the asset size of the customer or on a usage basis.
Through nCino Mortgage, a digital homeownership solution uniting people, systems, and stages of the mortgage process into a seamless end-to-end journey for which we generally charge on a per seat basis.
Maintenance and support services as well as internal-use or “sandbox” development licenses, for which we generally charge as a percentage of the related subscription fees.
Our subscription revenues are generally recognized ratably over the term of the contract beginning upon activation. For new customers, we may activate a portion of seats at inception of the agreement, with the balance activated at contractually specified points in time thereafter, to pattern our invoicing after the customer’s expected rate of implementation and adoption. Where seats are activated in stages, we charge subscription fees from the date of activation through the anniversary of the initial activation date, and annually thereafter. Subscription fees associated with the nCino Bank Operating System are generally billed annually in advance while subscription fees for nCino Mortgage are generally billed monthly in advance. Maintenance and support fees, as well as development licenses, are provided over the same periods as the related subscriptions, so fees are invoiced and revenues are recognized over the same periods. Subscription fees invoiced are recorded as deferred revenue pending recognition as revenues. In certain cases, we are authorized to resell access to Salesforce’s CRM solution along with the nCino Bank Operating System. When we resell such access, we charge a higher subscription price and remit a higher subscription fee to Salesforce for these subscriptions.
Professional Services and Other Revenues. Professional services and other revenues consist of fees for implementation and configuration assistance, training, and advisory services. For enterprise and larger regional FIs, we generally work with SI partners to provide the majority of implementation services for the nCino Bank Operating System, for which these SI partners bill our customers directly. We have historically delivered professional services ourselves for community banks and smaller credit unions and nCino Mortgage has historically provided professional services directly to its customers. Revenues for implementation, training, and advisory services are generally recognized on a proportional performance basis, based on labor hours incurred relative to total budgeted hours. To date, our losses on professional services contracts have not been material. During the initial go-live period for a customer on the nCino Bank Operating System, professional services revenues generally make up a substantial portion of our revenues from that customer, whereas over time, revenues from established customers are more heavily weighted to subscriptions. While professional services revenues will fluctuate as a percentage of total revenues in the future and tend to be higher in periods of faster growth, over time we expect to see subscription revenues make up an increasing proportion of our total revenues.
Cost of Revenues and Gross Margin
Cost of Subscription Revenues. Cost of subscription revenues consists of fees paid to Salesforce for access to the Salesforce Platform, including Salesforce’s hosting infrastructure and data center operations, along with certain integration fees
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paid to other third parties. When we resell access to Salesforce’s CRM solution, cost of subscription revenues also includes the subscription fees we remit to Salesforce for providing such access. We also incur costs associated with access to other platforms. In addition, cost of subscription revenues includes personnel-related costs associated with delivering maintenance and support services, including salaries, benefits and stock-based compensation expense, travel and related costs, amortization of acquired developed technology, and allocated overhead. Our subscription gross margin will vary from period to period as a function of the utilization of support personnel and the extent to which we recognize subscription revenues from the resale of Salesforce’s CRM solution.
Cost of Professional Services and Other Revenues. Cost of professional services and other revenues consists primarily of personnel-related costs associated with delivery of these services, including salaries, benefits and stock-based compensation expense, travel and related costs, and allocated overhead. The cost of providing professional services is significantly higher as a percentage of the related revenues than for our subscription services due to direct labor costs. The cost of professional services revenues has increased in absolute dollars as we have added new customer subscriptions that require professional services and built-out our international professional services capabilities. Realized effective billing and utilization rates drive fluctuations in our professional services and other gross margin on a period-to-period basis.
Operating Expenses
Sales and Marketing. Sales and marketing expenses consist primarily of personnel costs of our sales and marketing employees, including salaries, sales commissions and incentives, benefits and stock-based compensation expense, travel and related costs. We capitalize incremental costs incurred to obtain contracts, primarily consisting of sales commissions, and subsequently amortize these costs over the expected period of benefit, which we have determined to be approximately four years. Sales and marketing expenses also include outside consulting fees, marketing programs, including lead generation, costs of our annual user conference, advertising, trade shows, other event expenses, amortization of intangible assets, and allocated overhead. We expect sales and marketing expenses will decrease as a percentage of revenues as we leverage the investments we have made to date.
Research and Development. Research and development expenses consist primarily of salaries, benefits and stock-based compensation associated with our engineering, product and quality assurance personnel, as well as allocated overhead. Research and development expenses also include the cost of third-party contractors. Research and development costs are expensed as incurred. We expect research and development costs will decrease as a percentage of revenues as we leverage the investments we have made to date.
General and Administrative. General and administrative expenses consist primarily of salaries, benefits and stock-based compensation associated with our executive, finance, legal, human resources, information technology, compliance and other administrative personnel. General and administrative expenses also include accounting, auditing and legal professional services fees, travel and other corporate-related expenses, and allocated overhead, as well as acquisition-related expenses, such as legal and other professional services fees. We expect general and administrative expenses will decrease as a percentage of revenues as we leverage the investments we have made to date.
Non-Operating Income (Expense)
Interest Income. Interest income consists primarily of interest earned on our cash and cash equivalents.
Interest Expense. Interest expense consists primarily of interest related to our financing obligations along with interest expense on borrowings, commitment fees, and amortization of debt issuance costs associated with our secured revolving credit facility.
Other Expense, Net. Other expense, net consists primarily of foreign currency gains and losses, the majority of which is due to intercompany loans that are denominated in currencies other than the underlying functional currency of the applicable entity.
Income Tax Provision. Income tax provision consists of federal and state income taxes in the U.S. and income taxes in foreign jurisdictions.
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Results of Operations
The results of operations presented below should be reviewed in conjunction with the financial statements and notes included elsewhere in this Quarterly Report on Form 10-Q. The following tables present our selected unaudited condensed consolidated statements of operations data for three and nine months ended October 31, 2022 and 2023 in both dollars and as a percentage of total revenues, except as noted.
Three Months Ended October 31,Nine Months Ended October 31,
2022202320222023
($ in thousands, except share and per share amounts)
Revenues:
Subscription revenues$88,290 $104,759 $251,924 $301,996 
Professional services and other revenues17,006 17,183 47,210 50,854 
Total revenues105,296 121,942 299,134 352,850 
Cost of revenues:
Cost of subscription revenues26,844 30,605 78,499 89,481 
Cost of professional services and other revenues16,312 17,420 46,180 52,779 
Total cost of revenues43,156 48,025 124,679 142,260 
Gross profit62,140 73,917 174,455 210,590 
Operating expenses:
Sales and marketing32,423 38,446 94,274 100,551 
Research and development29,471 29,043 88,287 87,127 
General and administrative18,690 19,334 62,575 59,239 
Total operating expenses80,584 86,823 245,136 246,917 
Loss from operations(18,444)(12,906)(70,681)(36,327)
Non-operating income (expense):
Interest income87 685 115 2,057 
Interest expense(580)(854)(1,849)(3,277)
Other expense, net(2,911)(2,320)(5,498)(2,633)
Loss before income taxes(21,848)(15,395)(77,913)(40,180)
Income tax provision797 1,782 2,159 4,720 
Net loss(22,645)(17,177)(80,072)(44,900)
Net loss attributable to redeemable non-controlling interest(257)(320)(908)(868)
Adjustment attributable to redeemable non-controlling interest1,191 (478)2,348 (526)
Net loss attributable to nCino, Inc.$(23,579)$(16,379)$(81,512)$(43,506)
Net loss per share attributable to nCino, Inc.:
Basic and diluted$(0.21)$(0.15)$(0.74)$(0.39)
Weighted average number of common shares outstanding:
Basic and diluted110,897,811 112,951,553 110,434,171 112,484,017 
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The Company recognized stock-based compensation expense as follows:
Three Months Ended October 31,Nine Months Ended October 31,
($ in thousands)2022202320222023
Cost of subscription revenues$392 $515 $1,120 $1,314 
Cost of professional services and other revenues1,778 2,571 5,564 6,660 
Sales and marketing3,326 4,153 10,144 11,194 
Research and development3,012 4,386 8,457 11,665 
General and administrative3,997 4,198 13,191 11,136 
Total stock-based compensation expense$12,505 $15,823