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At a glance, nCino looks like the kind of fintech investors love to own: a cloud banking platform riding the digitization wave, with sticky subscription revenue, a growing AI story, and expanding non-GAAP margins. The company has scaled revenue from $56.6 million in FY21 to $540.7 million in FY25 while moving from losses to a non-GAAP operating margin approaching the low 20s, according to the 10-K (2025).

Yet when we dig into the filings, balance sheet, and guidance, the picture is more nuanced. NCNO sits in a tricky middle ground: not expensive enough to dismiss outright, but not cheap enough to offer a real margin of safety given slowing growth, heavy reliance on non-cash add-backs, and rising leverage. Our team’s rating is WAIT, with an attractive entry closer to $18 and “trim above” nearer $28.

In other words, this is a name where timing and evidence matter a lot more than hype. The next few quarters — especially FY26 Q4 results and FY27 guidance — will determine whether nCino deserves to be treated as a durable compounder or as a cyclical, highly valued SaaS name waiting for gravity to catch up.

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What does nCino actually do – and where is the growth coming from?

nCino sells a multi-tenant SaaS “banking operating system” that digitizes commercial, small business, consumer, and mortgage lending, plus onboarding, account opening, and portfolio management. The platform typically sits above a bank’s core systems, primarily on Salesforce and AWS, and aims to streamline regulated workflows, compliance, and credit decisions by unifying data and automation in a single layer, as laid out in the 10-K (2025).

A few core facts matter for investors:

Revenue mix: Subscription revenue was $469.2 million in FY25, about 87% of total revenue, with gross margin around 71–72%, per the 10-K (2025).
Services drag: Implementation and professional services operate at structurally negative gross margins (‑13.2% in FY25, and ‑18.0% for the first nine months of FY26), functioning more as a customer acquisition and adoption cost than a profit center, as highlighted in the 10-Q (2025).
Contract structure: Multi‑year, non‑cancellable SaaS contracts (3–5 years), typically invoiced annually in advance (monthly for mortgage), recognized ratably over time. That underpins recurring revenue and remaining performance obligations (RPO).

According to the Q3 FY26 10-Q (2025), nCino had:

Quarterly revenue of $152.2 million (up from $138.8 million year over year)
Subscription revenue of $133.4 million
RPO of roughly $1.2 billion, with about two-thirds expected to turn into revenue within 24 months

That RPO visibility is a real strength — but it’s not enough by itself. We need to understand how fast that backlog is growing, how profitable it is on a GAAP basis, and how much leverage is sitting behind it.

Is NCNO stock a buy in 2026 – or is the risk/reward still skewed?

At a share price of $21.35, NCNO trades like a moderate-growth, profitability-focused SaaS name rather than a high-flying disruptor. But “moderate growth at a reasonable multiple” isn’t actually what the filings tell us.

From our work, three realities stand out:

1. Growth is decelerating.

Subscription revenue grew 15% in FY25, but management guides to roughly 11–11.3% subscription growth in FY26, as noted in the Q3 FY26 earnings release, Dec 3 2025.
Morgan Stanley has reportedly flagged organic subscription growth ex‑mortgage decelerating towards around 9%.
Net retention dropped from 144% to 110% between FY23 and FY25, per the 10-K (2025).

2. Profitability is more optical than economic.

In Q3 FY26, GAAP operating income was $11.7 million, but non‑GAAP operating income was $39.9 million after $28.1 million of add-backs, mainly stock-based compensation and amortization, according to the 10-Q (2025).
For the first nine months of FY26, GAAP operating income was only $0.9 million vs. $94.7 million non‑GAAP, built on $93.8 million of adjustments.

3. Balance sheet risk is non-trivial.

As of Q3 FY26, nCino had $87.6 million in cash and $203.5 million drawn on a $250 million revolver, at an interest rate of 6.16%, per the 10-Q (2025).
Goodwill sits at roughly $1.07 billion with net intangibles of $142.8 million — sizeable relative to the business.
Net debt to EBITDA is over 12x on recent metrics, and interest coverage is thin, as summarized in the valuation assessment from Financial Modeling Prep cited in the report.

At this valuation, the stock still assumes:

Subscription growth in the 9–11% range (not high-single digits)
Non‑GAAP operating margins in the low 20s (not retreating back to mid-teens)
No major goodwill impairments
Deleveraging over time, or at least no step-up in net debt

Our base case value estimate is about $24 per share, with a 45% probability. The bear case value is closer to $18 (30% probability), while the bull case stretches to $30 (25% probability), driven by a true AI- and cross-sell–led re-acceleration.

Given that spread, we do not see enough margin of safety to get aggressive at $21–22 when FY27 guidance has yet to confirm the growth and margin trajectory. For us, NCNO is a hold/watchlist name, not a fresh buy.

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How strong is nCino’s moat in cloud banking?

Despite our cautious stance on the stock, we do think nCino has a real competitive moat — it’s just not invincible.

Switching costs and workflow depth

nCino is deeply embedded in regulated workflows: commercial and consumer lending, onboarding, KYC/KYB, mortgage processing, and portfolio management. Once a bank standardizes these processes on nCino, ripping it out would require:

Multiyear process redesign
Re‑validation with regulators and risk teams
Re-integration with core systems and third-party data providers

The 10-K (2025) explicitly frames this as a key source of competitive advantage, and we agree. This shows up in:

Sustained double-digit subscription growth (15% in FY25, ~11% guided in FY26)
RPO of roughly $1.095 billion (+19% year over year) with $730 million expected to be recognized within 24 months, according to the FY25 earnings release, Apr 1 2025

That’s not a hyper-growth profile anymore, but it does indicate an entrenched position with multi-year revenue visibility.

AI and integration as moat extenders

nCino is layering AI and integration capabilities on top of its workflow depth:

Banking Advisor and Digital Partners: Role-based AI agents that support executives, analysts, and frontline staff in banking workflows. Early deployments at a top-4 U.S. bank and a top-5 Australian bank are highlighted in the Q3 FY26 earnings release, Dec 3 2025 and Digital Partners announcement, Nov 4 2025.
Sandbox Integration Gateway: An orchestration and integration layer for cores and fintech partners, positioned as iPaaS for banking, per the Apr 1 2025 earnings release.
FullCircl and DocFox / Identity Solutions: Tools for onboarding, KYC/KYB, and ongoing monitoring, particularly in EMEA, based on the FullCircl rebrand and Identity Solutions launch, Oct 6 2025.

Together, these moves strengthen switching costs: more workflows, more data, and more AI sitting in the middle of mission-critical processes. But they also raise execution risk — integrating acquired assets, pricing new AI capabilities correctly, and convincing banks that asset/volume-based pricing represents value, not just an upsell.

Our view: the moat is real but not yet fully monetized. It supports mid-teens non-GAAP margin over time, but it does not guarantee high-teens or 20%+ GAAP returns unless integration and pricing are executed very well.

Growth vs. cyclicality: how durable is nCino’s demand?

It’s easy to assume that a “cloud banking” company is a secular growth story insulated from cycles. The filings say otherwise.

Exposed to mortgage, rates, and volumes

Management ties the decline in net retention directly to:

Higher mortgage rates and a weak U.S. mortgage market
PPP-related license roll-offs
Customer M&A in the banking sector

This is spelled out in the 10-K (2025) and echoed in third-party commentary such as MT Newswires via Tiger Brokers, Apr 3 2025. As rates rose and mortgage volumes slowed, mortgage-centric products and certain seat/volume-based contracts took a hit.

Now, nCino is shifting pricing to asset size, transaction, or processing volume for many solutions, with mortgage still tied to seats or anticipated lending volumes. That sounds like a positive — align price to value — but it also means revenue will:

Rise with higher customer asset bases and transaction volumes
Fall or stagnate during downturns or when banks cut lending

Large banks are already pushing back on pricing under the new model, and management has warned of potential concessions, per risk disclosures in the 10-K (2025). That’s a key reason we’re cautious about extrapolating “mid-20s” non-GAAP margins too far into the future.

International execution still has something to prove

International expansion has been another swing factor. According to commentary summarized in MT Newswires via Tiger Brokers, Apr 3 2025 and the FY25 results in Investopedia’s coverage, Apr 2 2025, nCino underperformed its own bookings targets in EMEA and other international regions. That contributed to:

A guidance reset for FY26
A share price drop of more than 30% after FY25 results
Slower organic subscription growth (ex‑mortgage) heading into FY26

For a company still valued on the promise of global, AI-enabled expansion, missteps in international execution are not trivial. We’re not writing off the opportunity, but we’re not willing to pay a premium for it until we see clearer proof in ACV growth and deal wins.

Are NCNO’s margins as good as they look?

Many bullish pieces focus on nCino’s “profitability pivot” and expanding non-GAAP margins. Our view is more skeptical: the margin story is heavily non-GAAP, and a big chunk of the business is structurally loss-making.

Non-GAAP vs GAAP reality

The latest numbers tell the story:

FY25 non-GAAP operating margin: ~17.8%, with guidance of ~21.5–21.7% in FY26, per the FY25 results, Apr 1 2025.
Q3 FY26 GAAP operating income: $11.7 million; non-GAAP operating income: $39.9 million after $28.1 million of add-backs, according to the 10-Q (2025).
Nine months FY26 GAAP operating income: $0.9 million vs. $94.7 million non-GAAP, built on $93.8 million of adjustments (mainly stock-based comp and amortization of acquired intangibles).

Stock-based compensation alone totaled about $71.6 million in FY25, per the 10-K (2025). That’s a real economic cost to shareholders, even though it’s non-cash.

We’re not anti–non-GAAP per se; for software companies, adjustments can be useful. But when the gap between GAAP and non-GAAP is effectively the entire operating profit, we treat the “profitability pivot” narrative with caution.

Professional services as a structural drag

Implementation and professional services are essential for getting banks live on nCino’s platform. They are also a meaningful drag on consolidated margins:

FY25 professional services gross margin: ‑13.2%
First nine months of FY26: worsened to ‑18.0%, as detailed in the 10-Q (2025).

Management attributes this to investments in services teams, AI-related overhead, and complex implementations. We don’t expect services to turn into a high-margin business anytime soon; in fact, the numbers suggest it is a permanent cost of doing business for nCino.

The implication for investors: the ceiling on long-term consolidated margins is lower than some AI-and-SaaS narratives imply. Low-20s non-GAAP seems plausible; mid-to-high-20s may prove optimistic unless services efficiency improves materially.

Balance sheet and capital allocation: quietly raising the stakes

One of our biggest reservations about owning NCNO at current levels is the balance sheet trajectory and capital allocation choices.

Debt-fueled M&A and buybacks

Over the last few years, nCino has layered on acquisitions — SimpleNexus for mortgage, DocFox and FullCircl for onboarding and KYC/KYB, Sandbox for integration — while simultaneously ramping up buybacks. According to Panabee’s May 10 2025 coverage and company filings:

nCino secured a $250 million senior secured revolving credit facility in 2024.
It drew $166 million by FY25 year-end and $203.5 million by Q3 FY26, per the 10-Q (2025).
The FullCircl acquisition alone cost around $135 million, with additional contingent consideration potentially due.
A $100 million stock repurchase program authorized in April 2025 was fully executed by Q3 FY26 at an average price of $25.02 per share, as disclosed in the Q3 FY26 earnings release, Dec 3 2025.
In December 2025, the board approved a new $100 million repurchase program, per the 8-K (2025) and press release, Dec 8 2025.

All this while carrying over $1.07 billion in goodwill and $142.8 million in net intangibles, with interest expense expected to run around $15 million in FY26.

Why this matters for downside risk

The margin-of-safety analysis in our report leans heavily on a few key datapoints:

Net debt to EBITDA of roughly 12x and interest coverage of about ‑0.28x signal minimal cushion if growth or margins disappoint.
Revolver covenants reportedly include a maximum total leverage of 4.0x and a minimum interest coverage of 3.0x. Approaching those thresholds would force management to shrink buybacks, slow M&A, or even raise capital on unfavorable terms.
Any goodwill impairment linked to underperforming acquisitions such as SimpleNexus or FullCircl would reset reported equity and likely compress the multiple.

We don’t see immediate covenant risk today. But the risk is asymmetric: if growth slows into the high-single-digit range and leverage creeps higher, the equity could re-rate sharply before management has time to adjust.

For a value-oriented investor, that’s not the setup we prefer to buy into without a bigger discount.

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What should investors watch in FY26–27?

Given the current “wait” rating, what exactly are we waiting for? We see several concrete checkpoints.

1. FY27 guidance: growth and margin proof point

When nCino reports FY26 Q4 results (expected March/April 2026), we want to see FY27 guidance that at least sustains the mid-single to low-teens growth narrative:

Subscription and ACV growth: at least ~9–10%
Non-GAAP operating margin: stable or modestly higher than the FY26 guided ~21.5–21.7%

If subscription growth is guided down to ~7–8% or lower, or if margins flatten or decline, our base case shifts closer to the bear scenario. At that point, NCNO would effectively be a mid-single-digit grower with a leveraged balance sheet and GAAP profitability still heavily dependent on adjustments — not a profile that deserves a premium multiple in our framework.

2. AI monetization: from narrative to numbers

AI is central to the bull case. Over the next 6–18 months, we’ll be looking for:

Quantitative evidence that Banking Advisor and Digital Partners are driving higher ACV per deal
Case studies and reference wins where AI clearly expands footprint or improves retention
AI upsell metrics discussed explicitly in FY27 commentary and beyond, as hinted in the Digital Partners launch, Nov 4 2025

If the first cohort of Digital Partners deployments doesn’t translate into measurable uplift — and management remains vague about impact — we’ll scale back the AI contribution in our model. In that scenario, NCNO becomes more of a solid, mid-teens non-GAAP margin SaaS name than an AI-powered growth engine.

3. Pricing and churn under the asset/volume model

The new asset- and volume-based pricing structure is a double-edged sword. Key indicators:

ACV growth vs. guidance: if ACV trends below the ~10% FY26 target band for two consecutive quarters, or if management cuts guidance, that’s a red flag.
Customer comments on renewals: any public disclosure of large-bank contract downsizing or non-renewal tied to pricing would be a major negative.
Net retention stabilization: we’d like to see subscription net retention hold around 110% or improve — not slide into the low 100s.

The 10-K (2025) is candid that customers may push back on new pricing structures. We think the next 12–24 months will reveal whether the model expands lifetime value or erodes it.

4. Deleveraging vs. continued financial engineering

Finally, we’ll be monitoring capital allocation closely:

Revolver balance: does it start to fall, or does it drift closer to the $250 million cap?
Free cash flow trajectory: does FCF ramp in line with non-GAAP operating income, or stay muted by stock-based comp and services losses?
Pace of buybacks: does management slow repurchases until leverage is clearly under control, or continue aggressively?

If net debt rises while buybacks remain heavy and free cash flow doesn’t improve, we’ll treat that as a shift toward financial engineering. In that scenario, we’d either cap exposure or exit until we see a credible path back to balance-sheet resilience.

So where does this leave NCNO on a value investing scorecard?

Putting it all together, our DeepValue team lands here:

Quality of business: Above average. Sticky, mission-critical workflows and real switching costs, with growing AI and integration layers.
Growth outlook: Moderate and decelerating. 9–11% subscription growth is realistic, but high-teens or 20%+ is unlikely near term without a major AI or international inflection.
Profitability quality: Mixed. Non-GAAP margins are improving, but GAAP earnings and cash-based returns are still thin once you account for SBC and services losses.
Balance sheet / risk: Elevated. Leverage is meaningful, goodwill is high, and interest coverage leaves little room for error.
Valuation: Not egregious, but not cheap enough to compensate for the above risks. Our base case value is around $24 per share vs. a current price near $21–22.

That’s why our rating is WAIT, not BUY.

We’d become more constructive if:

FY27 guidance confirms at least 9–11% subscription growth with non-GAAP margins ≥22%
Net debt starts to trend down and interest coverage improves
The company provides tangible, repeatable evidence of AI-driven upsell and successful cross-sell of FullCircl and Sandbox into the existing base

Conversely, if FY27 guidance points to ≤8% subscription growth or non-GAAP margins below 20% while net debt rises, we’d move closer to a “avoid” stance. In that world, NCNO looks less like a compounding platform and more like a cyclical, leveraged software vendor priced for durability it may not deliver.

For investors building a watchlist of potential compounders, we think NCNO is worth monitoring — but from the sidelines, with clear triggers for upgrading or abandoning the thesis.

Let DeepValue ingest the latest 10-Ks, 10-Qs, and earnings calls so you can revisit NCNO the moment FY27 guidance drops.

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nCino (NCNO) Deep Research Report: Wait for Clarity on AI Growth, Margins, and Leverage Before Jumping In