What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-11-30 compared with 2022-09-01 · 130 added, 139 removed, 299 unchanged (47% of the section changed)

32 unchanged sentences

Our sales efforts in the United States are organized around financial institutions based on size, whereas internationally, we focus our sales efforts by geography.

To drive growth and serve customers in the EMEA region, we continue to expand headcount in our UK office.

In fiscal 2020, we opened an office in Tokyo through our joint venture, nCino K.K., giving us another base of operations in APAC in addition to our Australian offices.

As of July 31, 2022, we had 288 sales and sales support personnel in the United States, including SimpleNexus, and 83 sales and support personnel in offices outside the United States.

As of October 31, 2022, we had 275 sales and sales support personnel in the United States, including SimpleNexus, and 75 sales and support personnel in offices outside the United States.

To help customers go live with the nCino Bank Operating System, we offer professional services including configuration and implementation, training and advisory services.

For larger financial institutions, we generally work with system integrators ("SIs") such as Accenture, Deloitte, PwC, and West Monroe Partners, for the delivery of professional services for the nCino Bank Operating System, while we have historically performed professional services for smaller financial institutions ourselves.

We expect larger financial institutions to make up a greater proportion of our nCino Bank Operating System sales and to increasingly outsource professional services for smaller banks and credit unions to SIs in the future.

We expect larger financial institutions to make up a greater proportion of our nCino Bank Operating System sales.

As a result, we expect the mix of our total revenues to become more heavily weighted toward subscription revenues.

To support our growth and capitalize on what we believe is a compelling market opportunity, we have significantly increased our operating expenses across all aspects of our business.

In research and development, we have focused on product improvements and the development of new functionality, while simultaneously leveraging the Salesforce Platform such that our development of the nCino Bank Operating System is heavily focused on vertical-specific solutions for financial institutions.

Similarly, to grow our customer base, we have invested heavily in sales and marketing both in the United States and internationally.

We have also increased our general and administrative spending to support our growing operations and for operating as a public company.

On the Acquisition Date, we acquired SimpleNexus, a leading cloud-based mobile-first homeownership software company in the United States, for an aggregate purchase price of $933.6 million.

As a result of the acquisition, SimpleNexus became a wholly owned subsidiary of nCino, Inc.

Our consolidated results of operations for the three and six months ended July 31, 2022 include the operating results of SimpleNexus from the Acquisition Date.

See Note 7 "Business Combinations" of the notes to our consolidated financial statements included in of Part I, Item I of this Quarterly Report on Form 10-Q for additional information.

Given it was prior to the Acquisition Date, no operating results for SimpleNexus are included in the comparative period for the three and six months ended July 31, 2021.

Our consolidated results of operations for the three and nine months ended October 31, 2022 include the operating results of SimpleNexus from the Acquisition Date.

See Note 7 "Business Combinations" to our consolidated financial statements included in Part I, Item I of this Quarterly Report on Form 10-Q for additional information.

Given it was prior to the Acquisition Date, no operating results for SimpleNexus are included in the comparative period for the three and nine months ended October 31, 2021.

SimpleNexus offers a suite of products that enables loan officers, borrowers, real estate agents, settlement agents and others to easily engage in the homeownership process from any internet-enabled device.

For the three months ended July 31, 2021 and 2022, our total revenues were $66.5 million and $99.6 million, respectively, representing a 49.8% increase.

Our revenues for the three months ended July 31, 2022 include $16.5 million in revenues from SimpleNexus.

For the three months ended July 31, 2021 and 2022, our subscription revenues were $53.9 million and $84.4 million, respectively, representing a 56.6% increase.

Our subscription-based revenues for the three months ended July 31, 2022 include $15.0 million from SimpleNexus.

Due to our continuing investment in growth, we recorded net losses attributable to nCino, Inc.

of $13.7 million and $27.2 million for the three months ended July 31, 2021 and 2022, respectively.

For the six months ended July 31, 2021 and 2022, our total revenues were $128.9 million and $193.8 million, respectively, representing a 50.4% increase.

Our revenues for the six months ended July 31, 2022 include $31.3 million in revenues from SimpleNexus.

For the six months ended July 31, 2021 and 2022, our subscription revenues were $105.0 million and $163.6 million, respectively, representing a 55.9% increase.

Our subscription-based revenues for the six months ended July 31, 2022 include $28.6 million from SimpleNexus.

Due to our continuing investment in growth, we recorded net losses attributable to nCino, Inc.

of $28.7 million and $57.9 million for the six months ended July 31, 2021 and 2022, respectively.

For the three months ended October 31, 2021 and 2022, our total revenues were $70.0 million and $105.3 million, respectively, representing a 50.3% increase.

Our revenues for the three months ended October 31, 2022 include $16.9 million in revenues from SimpleNexus.

For the three months ended October 31, 2021 and 2022, our subscription revenues were $57.1 million and $88.3 million, respectively, representing a 54.7% increase.

Our subscription-based revenues for the three months ended October 31, 2022 include $15.4 million from SimpleNexus.

Due to our investments in growth, we recorded net losses attributable to nCino, Inc.

of $13.6 million and $23.6 million for the three months ended October 31, 2021 and 2022, respectively.

For the nine months ended October 31, 2021 and 2022, our total revenues were $198.9 million and $299.1 million, respectively, representing a 50.4% increase.

Our revenues for the nine months ended October 31, 2022 include $48.2 million in revenues from SimpleNexus.

For the nine months ended October 31, 2021 and 2022, our subscription revenues were $162.1 million and $251.9 million, respectively, representing a 55.5% increase.

Our subscription-based revenues for the nine months ended October 31, 2022 include $44.0 million from SimpleNexus.

Due to our investments in growth, we recorded net losses attributable to nCino, Inc.

of $42.3 million and $81.5 million for the nine months ended October 31, 2021 and 2022, respectively.

Factors Affecting Our Operating Results

1 unchanged sentence

Our future growth depends on our ability to expand our reach to new financial institution 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 financial institutions 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 United States, which markets accounted for 15.0% of total revenues for the three months ended July 31, 2022, and 15.1% for the six months ended July 31, 2022.

In addition, growing our customer base will require us to increasingly penetrate markets outside the United States, which markets accounted for 15.1% of total revenues for the three and nine months ended October 31, 2022.

For new customers, our sales cycles are typically lengthy, generally ranging from six to nine months for smaller financial institutions to 12 to 18 months or more for larger financial institutions.

Reaching and converting potential customers requires that we continue to invest in the growth and success of our sales force both in the United States and internationally.

In addition, 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.

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.

5 unchanged sentences

To help our customers service demand for Paycheck Protection Program ("PPP") loans under the Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, beginning in April 2020, we adapted our Small Business Administration loan solution to the requirements of the PPP and rapidly introduced it to the market.

Using our PPP solution, since the inception of PPP funding, our financial institution customers have processed hundreds of thousands of applications.

Using our PPP solution, since the inception of PPP funding, our financial institution customers processed hundreds of thousands of applications.

In light of the extraordinary nature of this market demand, we offered our PPP solution on one- or two-year terms as well as on a multi-year basis co-terminus with existing contracts.

1 unchanged sentence

We believe that the emergency purchases of our PPP solution, coupled with the disruptive effect of COVID-19 on the economy more generally, may have had the effect of moderating revenue growth rates in fiscal 2022.

In addition, our revenue growth rates in fiscal 2023 and our subscription revenue retention rates may be adversely affected upon the expiration of access and use rights to our PPP solution to the extent such rights are not re-purposed for other applications.

In addition, our revenue growth rates and our subscription revenue retention rates may be adversely affected upon the expiration of access and use rights to our PPP solution to the extent such rights are not re-purposed for other applications.

Interest Rate Environment.

We are continuing to operate in a rising interest rate environment.

To date, we have not suffered a material negative impact as a result of rising interest rates, including with respect to our digital homeownership platform revenue, but we continue to monitor the impact the rise in interest rates and any future rise in interest rates may have on our business.

We are currently operating in a rising interest rate environment as the United States Federal Reserve raises interest rates as a means to manage inflation.

These rate increases have had an impact on the real estate market in the United States and specifically, the demand for mortgages and mortgage-related products and services, which has had a negative impact on our SimpleNexus business.

We continue to monitor the impact the rise in interest rates and any future rise in interest rates may have on our business.

Continued Investment in Innovation and Growth .

1 unchanged sentence

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 heavily in sales and marketing both in the United States and internationally to further grow our business and increase our general and administrative spending to support our growing operations and for operating as a public company.

As such, to capitalize on the market opportunity we see ahead of us, we expect to continue to optimize our operating plans for revenue growth, and as a result continue experiencing operating losses, for the foreseeable future.

We also intend to invest in sales and marketing both in the United States 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

1 unchanged sentence

Subscription Revenues .

typically range from three to five years for the nCino Bank Operating System and one to three years for SimpleNexus.

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 SimpleNexus.

Specifically, we offer:

2 unchanged sentences

• Through SimpleNexus, digital homeownership platform 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 charge as a percentage of the related subscription fees.

• 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.

24 unchanged sentences

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.

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.

4 unchanged sentences

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 continue to increase as we expand our direct sales teams in the United States and internationally to address our market opportunity.

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.

2 unchanged sentences

Research and development costs are expensed as incurred.

We expect research and development costs to continue to increase as we develop new functionality and make improvements to our solutions.

We expect research and development costs to decrease as a percentage of revenues as we leverage the investments we have made to date.

General and Administrative.

1 unchanged sentence

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, which primarily consists of third-party expenses related to the acquisition of SimpleNexus, such as legal and other professional services fees.

We expect that general and administrative expenses will continue to increase as we scale our business and as we incur costs associated with being a publicly-traded company, including legal, audit, and consulting 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)

9 unchanged sentences

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 consolidated statements of operations data for three and six months ended July 31, 2021 and 2022 in both dollars and as a percentage of total revenues, except as noted.

Three Months Ended July 31, Six Months Ended July 31,

The following tables present our selected consolidated statements of operations data for three and nine months ended October 31, 2021 and 2022 in both dollars and as a percentage of total revenues, except as noted.

Three Months Ended October 31, Nine Months Ended October 31,

2021 2022 2021 2022

30 unchanged sentences

The Company recognized stock-based compensation expense as follows:

Three Months Ended July 31, Six Months Ended July 31,

Three Months Ended October 31, Nine Months Ended October 31,

($ in thousands) 2021 2022 2021 2022

6 unchanged sentences

The Company recognized amortization expense as follows:

Three Months Ended July 31, Six Months Ended July 31,

Three Months Ended October 31, Nine Months Ended October 31,

($ in thousands) 2021 2022 2021 2022

Cost of subscription revenues $ 388 $ 4,249 $ 1,177 $ 12,767

Cost of professional services and other revenues — 47 — 47

Sales and marketing 418 2,772 1,253 8,315

Total amortization expense $ 806 $ 7,068 $ 2,430 $ 21,129

Three Months Ended July 31, Six Months Ended July 31,

Three Months Ended October 31, Nine Months Ended October 31,

2021 2022 2021 2022

20 unchanged sentences

Net loss (19.5) % (21.6) % (21.9) % (26.7) %

Comparison of the Three and Six Months Ended July 31, 2021 and 2022

Three Months Ended July 31, Six Months Ended July 31,

Comparison of the Three and Nine Months Ended October 31, 2021 and 2022

Three Months Ended October 31, Nine Months Ended October 31,

($ in thousands) 2021 2022 2021 2022

3 unchanged sentences

Subscription Revenues

Subscription revenues increased $30.5 million for the three months ended July 31, 2022 compared to the three months ended July 31, 2021, due to initial revenues from customers who did not contribute to subscription revenues during the prior period, including customers added as a result of our acquisition of SimpleNexus, and growth from existing customers within and across lines of business.

Of the increase, 36.0% was attributable to increased revenues from existing customers as additional seats were activated in accordance with contractual terms and customers expanded their adoption of our solutions, 14.8% was attributable to initial revenues from customers who did not contribute to subscription revenues during the three months ended July 31, 2021, and 49.2% was attributable to revenues from SimpleNexus.

Subscription revenues were 84.8% of total revenues for the three months ended July 31, 2022 compared to 81.1% of total revenues for the three months ended July 31, 2021, primarily due to growth in our installed base and SimpleNexus.

Subscription revenues increased $58.7 million for the six months ended July 31, 2022 compared to the six months ended July 31, 2021, due to initial revenues from customers who did not contribute to subscription revenues during the prior period, including customers added as a result of our acquisition of SimpleNexus, and growth from existing customers within and across lines of business.

Of the increase, 38.6% was attributable to increased revenues from existing customers as additional seats were activated in accordance with contractual terms and customers expanded their adoption of our solutions, 12.7% was attributable to initial revenues from customers who did not contribute to subscription revenues during the six months ended July 31, 2021, and 48.7% was attributable to revenues from SimpleNexus.

Subscription revenues were 84.4% of total revenues for the six months ended July 31, 2022 compared to 81.4% of total revenues for the six months ended July 31, 2021, primarily due to growth in our installed base and SimpleNexus.

Subscription revenues increased $31.2 million for the three months ended October 31, 2022 compared to the three months ended October 31, 2021, due to initial revenues from customers who did not contribute to subscription revenues during the prior period, including customers added as a result of our acquisition of SimpleNexus, and growth from existing customers within and across lines of business.

Of the increase, 31.5% was attributable to increased revenues from existing customers as additional seats were activated in accordance with contractual terms and customers expanded their adoption of our solutions, 19.2% was attributable to initial revenues from customers who did not contribute to subscription revenues during the three months ended October 31, 2021, and 49.3% was attributable to revenues from SimpleNexus.

Subscription revenues were 83.8% of total revenues for the three months ended October 31, 2022 compared to 81.5% of total revenues for the three months ended October 31, 2021, primarily due to growth in our installed base and SimpleNexus.

Subscription revenues increased $89.9 million for the nine months ended October 31, 2022 compared to the nine months ended October 31, 2021, due to initial revenues from customers who did not contribute to subscription revenues during the prior period, including customers added as a result of our acquisition of SimpleNexus, and growth from existing customers within and across lines of business.

Of the increase, 36.9% was attributable to increased revenues from existing customers as additional seats were activated in accordance with contractual terms and customers expanded their adoption of our solutions, 14.2% was attributable to initial revenues from customers who did not contribute to subscription revenues during the nine months ended October 31, 2021, and 48.9% was attributable to revenues from SimpleNexus.

Subscription revenues were 84.2% of total revenues for the nine months ended October 31, 2022 compared to 81.5% of total revenues for the nine months ended October 31, 2021, primarily due to growth in our installed base and SimpleNexus.

Professional Services and Other Revenues

Professional services and other revenues increased $2.6 million for the three months ended July 31, 2022 compared to the three months ended July 31, 2021, primarily due to the addition of new customers as well as expanded adoption by existing customers within and across lines of business where implementation, configuration, and training services were required.

Professional services and other revenues increased $4.1 million for the three months ended October 31, 2022 compared to the three months ended October 31, 2021, primarily due to the addition of new customers as well as expanded adoption by existing customers within and across lines of business where implementation, configuration, and training services were required.

38.0% of the increase was attributable to revenues from SimpleNexus.

Professional services and other revenues increased $6.3 million for the six months ended July 31, 2022 compared to the six months ended July 31, 2021, primarily due to the addition of new customers as well as expanded adoption by existing customers within and across lines of business where implementation, configuration, and training services were required.

Professional services and other revenues increased $10.4 million for the nine months ended October 31, 2022 compared to the nine months ended October 31, 2021, primarily due to the addition of new customers as well as expanded adoption by existing customers within and across lines of business where implementation, configuration, and training services were required.

41.2% of the increase was attributable to revenues from SimpleNexus.

Cost of Revenues and Gross Margin

Three Months Ended July 31, Six Months Ended July 31,

Three Months Ended October 31, Nine Months Ended October 31,

($ in thousands) 2021 2022 2021 2022

5 unchanged sentences

Cost of Subscription Revenues

Cost of subscription revenues increased $10.8 million for the three months ended July 31, 2022 compared to the three months ended July 31, 2021, generating a gross margin for subscription revenues of 69.0% compared to a gross margin of 71.6% for the three months ended July 31, 2021.

Cost of subscription revenues increased $11.1 million for the three months ended October 31, 2022 compared to the three months ended October 31, 2021, generating a gross margin for subscription revenues of 69.6% compared to a gross margin of 72.4% for the three months ended October 31, 2021.

The decrease in gross margin percentage is primarily due to an increase of $3.9 million in amortization expense for acquired developed technology related to the acquisition of SimpleNexus.

Costs related to Salesforce user fees increased $3.1 million as we continued to add new customers and sell additional functionality to existing customers and other costs of subscription revenues increased $2.6 million due to costs associated with access to other platforms and data center costs.

Personnel costs, including stock-based compensation expense, increased $1.1 million as we added new employees, including the headcount from the acquisition of SimpleNexus.

Personnel costs, including stock-based compensation expense, increased $1.3 million as we added new employees, including headcount from the acquisition of SimpleNexus.

The increase in cost of subscription revenues also included an increase of $0.2 million in allocated overhead costs due to growth supporting our continued business expansion.

We expect the cost of subscription revenues will continue to increase in absolute dollars as the number of users of the nCino Bank Operating System grows.

Cost of subscription revenues increased $21.4 million for the six months ended July 31, 2022 compared to the six months ended July 31, 2021, generating a gross margin for subscription revenues of 68.4% compared to a gross margin of 71.2% for the six months ended July 31, 2021.

Cost of subscription revenues increased $32.5 million for the nine months ended October 31, 2022 compared to the nine months ended October 31, 2021, generating a gross margin for subscription revenues of 68.8% compared to a gross margin of 71.6% for the nine months ended October 31, 2021.

The decrease in gross margin percentage is primarily due to an increase of $11.6 million in amortization expense for acquired developed technology related to the acquisition of SimpleNexus.

Costs related to Salesforce user fees increased $8.6 million as we continued to add new customers and sell additional functionality to existing customers and other costs of subscription revenues increased $7.9 million due to costs associated with access to other platforms and data center costs.

Personnel costs, including stock-based compensation expense, increased $2.2 million as we added new employees, including the headcount from the acquisition of SimpleNexus.

Personnel costs, including stock-based compensation expense, increased $3.5 million as we added new employees, including headcount from the acquisition of SimpleNexus.

The increase in cost of subscription revenues also included an increase of $0.6 million in allocated overhead costs due to growth supporting our continued business expansion.

1 unchanged sentence

Cost of Professional Services and Other Revenues

Cost of professional services and other revenues increased $3.8 million for the three months ended July 31, 2022 compared to the three months ended July 31, 2021, generating a gross margin for professional services and other revenues of 0.7% compared to a gross margin of 10.5% for the three months ended July 31, 2021.

For the three months ended July 31, 2022, personnel costs, including stock-based compensation expense, increased $3.2 million for the professional services team compared to the three months ended July 31, 2021, due to increased headcount, including the headcount from the acquisition of SimpleNexus.

The increase in cost of professional services and other revenues also included an increase of $0.2 million in travel-related costs and an increase of $0.1 million in allocated overhead costs due to growth supporting our continued business expansion.

The decrease in our professional services and other gross margin for the three months ended July 31, 2022 was primarily due to a decline in realized effective billing and utilization rates on our professional services teams.

Cost of professional services and other revenues increased $7.2 million for the six months ended July 31, 2022 compared to the six months ended July 31, 2021, generating a gross margin for professional services and other revenues of 1.1% compared to a gross margin of 5.4% for the six months ended July 31, 2021.

For the six months ended July 31, 2022, personnel costs, including stock-based compensation expense, increased $6.1 million for the professional services team compared to the six months ended July 31, 2021, due to increased headcount, including the headcount from the acquisition of SimpleNexus.

The increase in cost of professional services and other revenues also included an increase of $0.4 million in travel-related costs and an increase of $0.4 million in allocated overhead costs due to growth supporting our continued business

The decrease in our professional services and other gross margin for the six months ended July 31, 2022 was primarily due to a decline in realized effective billing and utilization rates on our professional services teams.

We expect the cost of professional services and other revenues to increase in absolute dollars in the near term as we add new customer subscriptions where we provide professional services.

Cost of professional services and other revenues increased $4.8 million for the three months ended October 31, 2022 compared to the three months ended October 31, 2021, generating a gross margin for professional services and other revenues of 4.1% compared to a gross margin of 11.2% for the three months ended October 31, 2021.

For the three months ended October 31, 2022, personnel costs, including stock-based compensation expense, increased $4.0 million for professional services compared to the three months ended October 31, 2021, due to increased headcount, including headcount from the acquisition of SimpleNexus.

The increase in cost of professional services and other revenues also included an increase of $0.5 million in allocated overhead costs due to growth supporting our business, an increase of $0.3 million in travel-related costs, and a $0.1 million increase in reimbursable travel and related expenses for the professional service organization.

The decrease in our professional services and other gross margin for the three months ended October 31, 2022 was primarily due to a decline in realized effective billing and utilization rates in our professional services teams.

Cost of professional services and other revenues increased $12.1 million for the nine months ended October 31, 2022 compared to the nine months ended October 31, 2021, generating a gross margin for professional services and other revenues of 2.2% compared to a gross margin of 7.4% for the nine months ended October 31, 2021.

For the nine months ended October 31, 2022, personnel costs, including stock-based compensation expense, increased $10.1 million for professional services compared to the nine months ended October 31, 2021, due to increased headcount, including headcount from the acquisition of SimpleNexus.

The increase in cost of professional services and other revenues also included an increase of $0.9

million in allocated overhead costs due to growth supporting our business, an increase of $0.7 million in travel-related costs, and a $0.3 million increase in reimbursable travel and related expenses for the professional service organization.

The decrease in our professional services and other gross margin for the nine months ended October 31, 2022 was primarily due to a decline in realized effective billing and utilization rates in our professional services teams.

Operating Expenses

Three Months Ended July 31, Six Months Ended July 31,

Three Months Ended October 31, Nine Months Ended October 31,

($ in thousands) 2021 2022 2021 2022

6 unchanged sentences

Sales and Marketing

Sales and marketing expenses increased $13.3 million for the three months ended July 31, 2022 compared to the three months ended July 31, 2021, primarily due to an increase of $6.7 million in personnel costs, including stock-based compensation expense, resulting mainly from an increase in headcount on the sales and marketing teams, including the headcount from the acquisition of SimpleNexus.

Sales and marketing expenses increased $11.8 million for the three months ended October 31, 2022 compared to the three months ended October 31, 2021, primarily due to an increase of $7.3 million in personnel costs, including stock-based compensation expense, resulting mainly from an increase in headcount on the sales and marketing teams, including headcount from the acquisition of SimpleNexus.

Amortization expense for acquired customer relationships and trade name increased $2.4 million related to the acquisition of SimpleNexus.

The increase in sales and marketing expenses also included an increase of $2.1 million in marketing costs primarily attributable to in person conferences, an increase of $1.5 million in sales-related travel costs, and an increase of $0.7 million in allocated overhead costs.

Sales and marketing expenses increased $24.2 million for the six months ended July 31, 2022 compared to the six months ended July 31, 2021, primarily due to an increase of $12.9 million in personnel costs, including stock-based compensation expense, resulting mainly from an increase in headcount on the sales and marketing teams, including the headcount from the acquisition of SimpleNexus.

This increase was partially offset by a decrease in expatriate tax equalization expenses compared to the six months ended July 31, 2021.

The increase in sales and marketing expenses also included an increase of $1.0 million in sales-related travel costs, an increase of $0.7 million in allocated overhead costs, and an increase of $0.3 million in marketing costs primarily attributable to in-person conferences.

Sales and marketing expenses increased $36.0 million for the nine months ended October 31, 2022 compared to the nine months ended October 31, 2021, primarily due to an increase of $20.2 million in personnel costs, including stock-based compensation expense, resulting mainly from an increase in headcount on the sales and marketing teams, including headcount from the acquisition of SimpleNexus.

This increase was partially offset by a decrease in expatriate tax equalization expenses compared to the nine months ended October 31, 2021.

Amortization expense for acquired customer relationships and trade name increased $7.1 million related to the acquisition of SimpleNexus.

The increase in sales and marketing expenses also included an increase of $2.8 million in marketing costs primarily attributable to in person conferences, an increase of $2.6 million in sales-related travel costs, and an increase of $1.3 million in allocated overhead costs.

Our sales and marketing headcount grew by 155 from July 31, 2021 to July 31, 2022.

The increase in sales and marketing expenses also included an increase of $3.6 million in sales-related travel costs, an increase of $3.1 million in marketing costs primarily attributable to in-person conferences, and an increase of $2.0 million in allocated overhead costs.

Our sales and marketing headcount grew by 123 from October 31, 2021 to October 31, 2022.

Our acquisition of SimpleNexus contributed to this increase in headcount.

We expect sales and marketing expenses to increase in absolute dollars as we invest in expanding our customer base and user adoption.

We expect sales and marketing expenses to decrease as a percentage of revenues as we leverage the investments we have made to date.

Research and Development

Research and development expenses increased $11.1 million for the three months ended July 31, 2022 compared to the three months ended July 31, 2021, primarily due to an increase of $10.6 million in personnel costs, including stock-based compensation expense, resulting mainly from an increase in headcount, including the headcount from the acquisition of SimpleNexus.

Research and development expenses increased $9.5 million for the three months ended October 31, 2022 compared to the three months ended October 31, 2021, primarily due to an increase of $9.5 million in personnel costs, including stock-based compensation expense, resulting mainly from an increase in headcount, including headcount from the acquisition of SimpleNexus.

The increase in research and development expenses also included an increase of $0.8 million in allocated overhead costs due to growth supporting our continued business expansion and an increase of $0.3 million in travel-related costs, partially offset by a $1.1 million decrease in third-party professional fees primarily attributable to contract research and development spend.

Research and development expenses increased $22.8 million for the six months ended July 31, 2022 compared to the six months ended July 31, 2021, primarily due to an increase of $21.8 million in personnel costs, including stock-based compensation expense, resulting mainly from a continued increase in headcount, including the headcount from the acquisition of SimpleNexus.

Research and development expenses increased $32.3 million for the nine months ended October 31, 2022 compared to the nine months ended October 31, 2021, primarily due to an increase of $31.3 million in personnel costs, including stock-based compensation expense, resulting mainly from a continued increase in headcount, including headcount from the acquisition of SimpleNexus.

The increase in research and development expenses also included an increase of $2.8 million in allocated overhead costs due to growth supporting our continued business expansion and an increase of $0.9 million in travel-related costs, partially offset by a $2.7 million decrease in third-party professional fees primarily attributable to contract research and development spend.

Our research and development headcount grew by 217 from July 31, 2021 to July 31, 2022.

Our research and development headcount grew by 182 from October 31, 2021 to October 31, 2022.

Our acquisition of SimpleNexus contributed to this increase in headcount.

We expect research and development expenses to increase in absolute dollars due to higher headcount as we continue to develop new, and further enhance our current solutions.

We expect research and development expenses to decrease as a percentage of revenues as we leverage the investments we have made to date.

General and Administrative

General and administrative expenses increased $5.9 million for the three months ended July 31, 2022 compared to the three months ended July 31, 2021, primarily due to an increase of $5.3 million in personnel costs, including stock-based compensation expense, from additional headcount as we continued to scale our business, including headcount from the acquisition of SimpleNexus.

General and administrative expenses increased $3.7 million for the three months ended October 31, 2022 compared to the three months ended October 31, 2021, primarily due to an increase of $4.5 million in personnel costs, including stock-based compensation expense, from additional headcount as we continued to scale our business, including headcount from the acquisition of SimpleNexus.

The increase in general and administrative spend also included an increase of $0.3 million in allocated overhead and other general and administrative costs and an increase of $0.1 million in travel-related costs.

Third party professional fees decreased $0.4 million for the three months ended July 31, 2022 compared to the three months ended July 31, 2021, mostly attributable to a decrease in third party professional fees and expenses related to the government antitrust investigation and related civil action disclosed in Note 14 "Commitments and Contingencies" of Part I, Item I of this Quarterly Report on Form 10-Q (the "Antitrust Matters"), partially offset by an increase in fees and expenses related to acquisition costs and other professional fees.

General and administrative expenses increased $12.9 million for the six months ended July 31, 2022 compared to the six months ended July 31, 2021, primarily due to an increase of $11.4 million in personnel costs, including stock-based compensation expense, from additional headcount as we continued to scale our business, including headcount from the acquisition of SimpleNexus.

Third party professional fees decreased $1.2 million for the three months ended October 31, 2022 compared to the three months ended October 31, 2021, mostly attributable to a decrease in third party professional fees and expenses related to the government antitrust investigation and related civil action disclosed in Note 14 "Commitments and Contingencies" of Part I, Item I of this Quarterly Report on Form 10-Q (the "Antitrust Matters") and acquisition costs, partially offset by an increase in fees and expenses related to other professional fees.

General and administrative expenses increased $16.6 million for the nine months ended October 31, 2022 compared to the nine months ended October 31, 2021, primarily due to an increase of $15.9 million in personnel costs, including stock-based compensation expense, from additional headcount as we continued to scale our business, including headcount from the acquisition of SimpleNexus.

The increase in general and administrative spend also included an increase of $2.0 million in allocated overhead and other general and administrative costs and an increase of $0.5 million in travel-related costs.

Third party professional fees decreased $0.5 million for the six months ended July 31, 2022 compared to the six months ended July 31, 2021, mostly attributable to a decrease in third party professional fees and expenses related to the Antitrust Matters, partially offset by an increase in fees and expenses related to acquisition costs and other professional fees.

Our general and administrative headcount grew by 63 from July 31, 2021 to July 31, 2022.

Third party professional fees decreased $1.7 million for the nine months ended October 31, 2022 compared to the nine months ended October 31, 2021, mostly attributable to a decrease in third party professional fees and expenses related to the Antitrust Matters, partially offset by an increase in fees and expenses related to acquisition costs and other professional fees.

Our general and administrative headcount grew by 47 from October 31, 2021 to October 31, 2022.

Our acquisition of SimpleNexus contributed to this increase in headcount.

We expect general and administrative expenses to increase in absolute dollars in the near term, primarily due to higher headcount to support our continued growth, fees and expenses related to the Antitrust Matters, and additional expenses of being a public company.

We expect general and administrative expenses to decrease as a percentage of revenues as we leverage the investments we have made to date.

Non-Operating Income (Expense)

Three Months Ended July 31, Six Months Ended July 31,

Three Months Ended October 31, Nine Months Ended October 31,

($ in thousands) 2021 2022 2021 2022

2 unchanged sentences

Other income (expense), net (255) (0.4) (2,911) (2.8) (325) (0.2) (5,498) (1.8)

Interest expense increased $0.3 million for the three months ended July 31, 2022 compared to the three months ended July 31, 2021, primarily due to a larger balance on our financing obligations for leases for which we are considered the owners for accounting purposes.

The increase of $0.7 million in other income (expense), net for the three months ended July 31, 2022 compared to the three months ended July 31, 2021 was primarily driven by intercompany loans that are denominated in currencies other than the underlying functional currency of the applicable entity.

Interest expense increased $0.7 million for the six months ended July 31, 2022 compared to the six months ended July 31, 2021, primarily due to a larger balance on our financing obligations for leases for which we are considered the owners for accounting purposes.

The increase of $2.5 million in other income (expense), net for the six months ended July 31, 2022 compared to the six months ended July 31, 2021 was primarily driven by intercompany loans that are denominated in currencies other than the underlying functional currency of the applicable entity.

Interest expense increased $0.2 million for the three months ended October 31, 2022 compared to the three months ended October 31, 2021, primarily due to a larger balance on our financing obligations for leases for which we are considered the owners for accounting purposes.

The increase of $2.7 million in other income (expense), net for the three months ended October 31, 2022 compared to the three months ended October 31, 2021 was primarily driven by intercompany loans that are denominated in currencies other than the underlying functional currency of the applicable entity.

Interest expense increased $0.9 million for the nine months ended October 31, 2022 compared to the nine months ended October 31, 2021, primarily due to a larger balance on our financing obligations for leases for which we are considered the owners for accounting purposes, and also due to expenses associated with a credit agreement for a senior secured revolving credit facility of up to $50.0 million we entered into on February 11, 2022 (the "Credit Facility") that did not occur in the prior comparative year to date.

The increase of $5.2 million in other income (expense), net for the nine months ended October 31, 2022 compared to the nine months ended October 31, 2021 was primarily driven by intercompany loans that are denominated in currencies other than the underlying functional currency of the applicable entity.

Income Tax Provision

Three Months Ended July 31, Six Months Ended July 31,

Three Months Ended October 31, Nine Months Ended October 31,

($ in thousands) 2021 2022 2021 2022

Income tax provision $ 356 0.5 % $ 797 0.8 % $ 1,030 0.5 % $ 2,159 0.7 %

Income tax provision was $0.8 million for the three months ended July 31, 2022 compared to a provision of $0.5 million for the three months ended July 31, 2021, and resulted in an effective tax rate of (3.0)% and (3.5)%, respectively.

Income tax provision was $1.4 million for the six months ended July 31, 2022 compared to a provision of $0.7 million for the six months ended July 31, 2021, and resulted in an effective tax rate of (2.4)% compared to (2.3)%, respectively.

Income tax provision was $0.8 million for the three months ended October 31, 2022 compared to a provision of $0.4 million for the three months ended October 31, 2021, and resulted in an effective tax rate of (3.6)% and (2.7)%, respectively.

Income tax provision was $2.2 million for the nine months ended October 31, 2022 compared to a provision of $1.0 million for the nine months ended October 31, 2021, and resulted in an effective tax rate of (2.8)% compared to (2.4)%, respectively.

We continue to maintain a valuation allowance against our deferred tax assets in most jurisdictions, including the U.S.

It is determined by management when a valuation allowance should be recorded, utilizing significant judgement and the use of estimates.

Beginning with the six months ended July 31, 2022, we have adopted, as required, Internal Revenue Code Section 174, as amended by the Tax Cuts and Jobs Act of 2017.

Beginning with the nine months ended October 31, 2022, we have adopted, as required, Internal Revenue Code Section 174, as amended by the Tax Cuts and Jobs Act of 2017.

income tax purposes, the option to deduct research and development expenditures is no longer available and thus requires us to capitalize and amortize these expenditures over either a five- or fifteen-year period.

3 unchanged sentences

Effects of COVID-19

COVID-19 began affecting our business in our first quarter fiscal 2021.

To date, we have not experienced a material increase in customers’ delaying purchase decisions or cancellations nor have we had a material impact from vendors and third-party service providers we rely on.

Beginning in mid-March 2020, we implemented a company-wide work-from-home requirement for all of our employees and suspended all work-related travel.

We have eased some of these restrictions, and now operate under a hybrid work model which allows for voluntary work-related travel.

Employees have the choice to work remotely, voluntarily at an nCino office building location, or both, subject to health and safety protocols and any local ordinances.

COVID-19 began affecting our business in our first quarter of fiscal 2021.

At present, we do not see COVID-19 affecting customers’ decision making, such as delaying purchase decisions or cancellations, nor are we seeing COVID-19 having a material impact on the decision making of the vendors and third-party service providers we rely on.

To the extent COVID-19 has measurably affected our historical financial results, we have noted such effects in the discussion above.

2 unchanged sentences

For further information, please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting Our Operating Results—COVID-19 Effects on Demand for Our Solutions” and “Risk Factors—Uncertain or weakened economic conditions, including as a result of COVID-19, may adversely affect our industry, business, and results of operations," included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2022 filed with the SEC on March 31, 2022.

Beginning in January 2023, nCino will implement an "in-person first" working environment at the Company's headquarters in Wilmington, N.C., in which we expect full-time employees within Wilmington to return to the office on a full-time basis.

Non-GAAP Financial Measure

2 unchanged sentences

We believe that this non-GAAP financial measure helps us to identify underlying trends in our business that could otherwise be masked by the effect of the expenses that we exclude in the calculations of the non-GAAP financial measure.

Accordingly, we believe that this financial measure reflects our ongoing business in a manner that allows for meaningful comparisons and analysis of trends in the business and provides useful information to investors and others in understanding and evaluating our operating results, and enhancing the overall understanding of our past performance and future prospects.

companies, many of which use a similar non-GAAP financial measure to supplement their GAAP results in their public disclosures.

This non-GAAP financial measure is non-GAAP operating loss, as discussed below.

Non-GAAP operating loss.

Non-GAAP operating loss is defined as loss from operations as reported in our unaudited condensed consolidated statements of operations excluding the impact of amortization of intangible assets, stock-based compensation expense, acquisition-related expenses, and expenses related to the Antitrust Matters.

Non-GAAP operating loss is widely used by securities analysts, investors, and other interested parties to evaluate the profitability of companies.

Non-GAAP operating loss eliminates potential differences in performance caused by variations in the extent to which intangible assets are identifiable (affecting relative amortization expense).

Although the calculation of non-GAAP financial measures may vary from company to company, our detailed presentation may facilitate analysis and comparison of our operating results by management and investors with other peer companies, many of which use a similar non-GAAP financial measure to supplement their GAAP results in their public disclosures.

This non-GAAP financial measure is non-GAAP operating income (loss), as discussed below.

Non-GAAP operating income (loss).

Non-GAAP operating income (loss) is defined as loss from operations as reported in our unaudited condensed consolidated statements of operations excluding the impact of amortization of intangible assets, stock-based compensation expense, acquisition-related expenses, and expenses related to the Antitrust Matters.

Non-GAAP operating income (loss) is widely used by securities analysts, investors, and other interested parties to evaluate the profitability of companies.

Non-GAAP operating income (loss) eliminates potential differences in performance caused by variations in the extent to which intangible assets are identifiable (affecting relative amortization expense).

We do not believe acquisition-related expenses and fees and expenses related to the Antitrust Matters are indicative of the Company's ongoing operating performance and hinder comparability with prior and future performance.

2 unchanged sentences

In addition, other companies may use other measures to evaluate their performance, or may calculate non-GAAP measures differently, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison.

The following table reconciles non-GAAP operating loss to loss from operations, the most directly comparable financial measure, calculated and presented in accordance with GAAP (in thousands):

Three Months Ended July 31, Six Months Ended July 31,

The following table reconciles non-GAAP operating income (loss) to loss from operations, the most directly comparable financial measure, calculated and presented in accordance with GAAP (in thousands):

Three Months Ended October 31, Nine Months Ended October 31,

($ in thousands) 2021 2022 2021 2022

5 unchanged sentences

Total adjustments 9,574 20,984 32,049 66,768

Non-GAAP operating loss $ (1,834) $ (2,784) $ (6,167) $ (6,453)

Non-GAAP operating income (loss) $ (3,150) $ 2,540 $ (9,317) $ (3,913)

Liquidity and Capital Resources

As of July 31, 2022, we had $86.1 million in cash and cash equivalents, and an accumulated deficit of $266.4 million.

As of October 31, 2022, we had $106.5 million in cash and cash equivalents, and an accumulated deficit of $288.8 million.

Our net losses have been driven by our investments in developing the nCino Bank Operating System, expanding our sales and marketing organization, and scaling our finance and administrative functions to support our rapid growth.

1 unchanged sentence

To date, we have funded our capital needs through issuances of common stock and operating cash flows.

Beginning in the three months ended April 30, 2022, we supplemented our liquidity with our revolving line of credit.

Beginning in the three months ended April 30, 2022 and again during the three months ended October 31, 2022, we supplemented our liquidity with our revolving line of credit.

In July 2020, we closed our IPO of 9,269,000 shares of common stock (including shares issued pursuant to the exercise in full of the underwriters' options to purchase additional shares) at a public offering price of $31.00 per share, resulting in aggregate net proceeds to us of $268.4 million after deducting underwriting discounts and commissions.

4 unchanged sentences

In addition, our advanced billing and collection coupled with our recent growth has resulted in our cash used in operating activities generally being less than our net operating losses in recent periods.

On February 11, 2022, we entered into a credit agreement for a senior secured revolving credit facility (the "Credit Facility") of up to $50.0 million.

We borrowed and repaid an amount of $20.0 million under such credit facility during the six months ended July 31, 2022.

As of July 31, 2022, the Company had no amounts outstanding or letters of credit issued on the

Credit Facility and was in compliance with all covenants.

On February 11, 2022, we entered into the Credit Facility of up to $50.0 million.

We borrowed and repaid $20.0 million under the Credit Facility during the three months ended April 30, 2022 and borrowed $30.0 million during the three months ended October 31, 2022.

As of October 31, 2022, the Company had $30.0 million outstanding and no letters of credit issued under the Credit Facility and was in compliance with all covenants.

See Note 13 "Revolving Credit Facility" of Part I, Item I of this Quarterly Report on Form 10-Q for more information.

We believe that current cash and cash equivalents as well as borrowings available under our revolving credit facility will be sufficient to fund our operations and capital requirements for at least the next 12 months.

We believe that current cash and cash equivalents as well as borrowings available under the Credit Facility will be sufficient to fund our operations and capital requirements for at least the next 12 months.

Our future capital requirements will depend on many factors, including our growth rate, the timing and extent of spending to support research and development efforts to enhance the nCino Bank Operating System and introduce new applications, market acceptance of our solutions, the continued expansion of our sales and marketing activities, investments in office facilities and other capital expenditure requirements, and any potential future acquisitions.

We expect capital expenditures will be appreciably higher in absolute dollars in fiscal 2023 for planned office build-outs compared to prior fiscal years to accommodate our growth, which we estimate to be approximately $8.5 million remaining to complete at July 31, 2022.

We expect capital expenditures will be appreciably higher in absolute dollars in fiscal 2023 for planned office build-outs compared to prior fiscal years to accommodate our growth, which we estimate to be approximately $4.3 million remaining to complete at October 31, 2022 for fiscal 2023.

We may from time-to-time seek to raise additional capital to support our growth.

7 unchanged sentences

The balance of the redeemable non-controlling interest is reported on our balance sheet below total liabilities but above stockholders’ equity 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.

As of January 31, 2022 and July 31, 2022, the redeemable non-controlling interest was $2.9 million and $3.2 million, respectively.

As part of our joint venture obligations, we expect we may be required to make an additional cash capital contribution of up to $5.0 million to nCino K.K.

As of January 31, 2022 and October 31, 2022, the redeemable non-controlling interest was $2.9 million and $4.1 million, respectively.

As part of our joint venture obligations, we may be required to make an additional cash capital contribution of up to $5.0 million to nCino K.K.

during the course of the current fiscal year.

Summary Cash Flow information for the six months ended July 31, 2021 and 2022 are set forth below:

Six Months Ended July 31,

Summary Cash Flow information for the nine months ended October 31, 2021 and 2022 are set forth below:

Nine Months Ended October 31,

($ in thousands) 2021 2022

3 unchanged sentences

Net Cash Provided by Operating Activities

The $10.7 million provided by operating activities in the six months ended July 31, 2022 reflects our net loss of $57.4 million, offset by $52.2 million in non-cash charges and $15.9 million generated by changes in working capital accounts.

The $6.6 million provided by operating activities in the nine months ended October 31, 2022 reflects our net loss of $80.1 million, offset by $79.5 million in non-cash charges and $7.2 million generated by changes in working capital accounts.

Non-cash charges primarily consisted of stock-based compensation, depreciation and amortization, amortization of costs capitalized to obtain revenue contracts, foreign currency losses related to intercompany loans and transactions, and non-cash operating lease costs.

Cash generated by working capital accounts was principally a function of a $30.3 million increase in deferred revenue, as we expanded our customer base and renewed existing customers, and a $5.4 million decrease in accounts receivable.

The cash generated by working capital accounts was partially offset by a $9.7 million decrease in accrued expenses and other current liabilities, payments of $4.6 million of capitalized costs to obtain revenue contracts, which consisted primarily of sales commissions, a $2.1 million decrease in operating lease liabilities, a $1.9 million decrease in accounts payable, and a $1.7 million increase in prepaid expenses and other assets.

The $20.9 million provided by operating activities in the six months ended July 31, 2021 reflects our net loss of $29.9 million, offset by $23.2 million in non-cash charges and $27.6 million generated by changes in working capital accounts.

Cash generated by working capital accounts was principally a function of a $32.5 million decrease in accounts receivable due to collections from customers.

The cash generated by working capital accounts was partially offset by a $9.2 million decrease in accrued expenses and other current liabilities, payments of $8.0 million of capitalized costs to obtain revenue contracts, which consisted primarily of sales commissions, a $3.0 million decrease in operating lease liabilities, a $2.9 million decrease in deferred revenue, a $1.7 million decrease in accounts payable, and a $0.4 million increase in prepaid expenses and other assets.

The $1.8 million provided by operating activities in the nine months ended October 31, 2021 reflects our net loss of $43.5 million, offset by $33.3 million in non-cash charges and $12.0 million generated by changes in working capital accounts.

Non-cash charges primarily consisted of stock-based compensation, depreciation and amortization, amortization of costs capitalized to obtain revenue contracts, and non-cash operating lease costs.

Cash generated by working capital accounts was

principally a function of a $26.0 million increase in our deferred revenue, as we expanded our customer base and renewed existing customers, a $3.8 million decrease in accounts receivable, a $2.4 million increase in accounts payable, and a $1.7 million decrease in prepaid expenses and other assets.

The cash generated by working capital accounts was partially offset by payments of $4.4 million of capitalized costs to obtain revenue contracts, which consisted primarily of sales commissions, a $1.3 million decrease in operating lease liabilities, and a $0.7 million decrease in accrued expenses and other current liabilities.

Cash generated by working capital accounts was principally a function of a $21.6 million decrease in accounts receivable due to collections from customers and a $4.7 million increase in accounts payable.

The cash generated by working capital accounts was partially offset by payments of $5.8 million of capitalized costs to obtain revenue contracts, which consisted primarily of sales commissions, a $3.2 million decrease in deferred revenue, a $2.0 million decrease in accrued expenses and other current liabilities, a $1.9 million decrease in operating lease liabilities, and a $1.4 million increase in prepaid expenses and other assets.

Net Cash Used in Investing Activities

We used $9.3 million and $1.3 million in investing activities in the six months ended July 31, 2022 and 2021, respectively, for the purchase of property and equipment and leasehold improvements to support the expansion of our business.

The $13.8 million used in investing activities in the nine months ended October 31, 2022 was comprised of $13.9 million for the purchase of property and equipment and leasehold improvements to support the expansion of our business and $0.6 million for an asset acquisition completed in August 2022.

The cash used in investing activities was partially offset by $0.7 million received for a net working capital adjustment from our SimpleNexus acquisition.

We used $3.6 million in investing activities in the nine months ended October 31, 2021 for the purchase of property and equipment and leasehold improvements to support the expansion of our business.

On November 1, 2022 we used $2.5 million for the purchase of preferred stock in Zest AI.

See Note 17 "Subsequent Events" of Part I, Item I of this Quarterly Report on Form 10-Q for more information.

Net Cash Provided by Financing Activities

The $3.6 million provided by financing activities in the six months ended July 31, 2022 was comprised principally of $2.4 million of proceeds from stock issuances under the employee stock purchase plan and $1.9 million of proceeds from the exercise of stock options, partially reduced by payments of debt issuance costs of $0.4 million and principal payments of $0.3 million on financing obligations.

We borrowed and repaid $20.0 million under our revolving credit facility during the six months ended July 31, 2022.

The $9.1 million provided by financing activities in the six months ended July 31, 2021 was comprised principally of $9.2 million of proceeds from the exercise of stock options, partially reduced by principal payments of $0.1 million on the financing obligation.

The $34.6 million provided by financing activities in the nine months ended October 31, 2022 was comprised principally of $50.0 million of proceeds from borrowings on the Credit Facility to expand our liquidity, $3.0 million of proceeds from the exercise of stock options, and $2.4 million of proceeds from stock issuances under the employee stock purchase plan.

The cash provided by financing activities was partially reduced by payments of $20.0 million on the Credit Facility, principal payments of $0.5 million on financing obligations, and payments of debt issuance costs of $0.4 million.

The $12.4 million provided by financing activities in the nine months ended October 31, 2021 was comprised principally of $12.6 million of proceeds from the exercise of stock options, partially reduced by principal payments of $0.2 million on the financing obligation.

Contractual Obligations and Commitments

Our estimated future obligations principally consist of leases related to our facilities, purchase obligations related primarily to licenses and hosting services, financing obligations for leases for which we are considered the owners for accounting purposes and our revolving credit facility when we have outstanding borrowings.

See Note 12 "Leases," Note 13 "Revolving Credit Facility," and Note 14 "Commitments and Contingencies" of the notes to our unaudited condensed consolidated financial statements included in Part 1, Item 1 of this Quarterly Report on Form 10-Q for more information.

See Note 12 "Leases," Note 13 "Revolving Credit Facility," Note 14 "Commitments and Contingencies," and Note 17 "Subsequent Events" of the notes to our unaudited condensed consolidated financial statements included in Part 1, Item 1 of this Quarterly Report on Form 10-Q for more information.

Critical Accounting Policies and Estimates

7 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis